Posted tagged ‘Kansas City’

Forced Ranking – A Good Fit?

January 17, 2011

The debate rages on in performance management circles about the concept of forced ranking – is it a beneficial exercise to rank all employees in a department (or the entire organization) in terms of their overall “worth” to the organization?  I’m going to say yes, but with some caveats and reservations.

Let’s first look at two sides of the argument – starting with the benefits of ranking.  Ranking requires management to a) discuss all employees being ranked, b) be aware of their overall performance and abilities, and c) to make choices.  This information is crucial to know whom to offer development opportunities, whom to include in succession planning, and whom to look more closely at.  This ranking can be extremely helpful in planning a reduction-in-force or reorganization.

On the flip side – raking is hard work.  It requires a sound and well implemented performance appraisal process.  Fundamentally managers must be honest – with themselves, the employees and their bosses.  The ranking also will have a subjective component.  It can be hard to determine the relative value of an engineer versus a sales person – both of whom can significantly impact the company but in distinctly different ways.  Ranking will involve a considerable amount of discussions about difficult subjects and organizations with low trust levels or the inability to deal with conflict will not be able to rank successfully.

One thing that ranking does provide is a reality check.  In a report released by the GAO concerning the Veteran’s Administration, one problem with not raking becomes evident.  Among other things the report looks at the 2007 performance ratings given to VA employees in four district offices.  In those offices, 68-81% of employees were rated “Fully Successful”, 2-10% were rated “Excellent” and 9-28% were rated “Outstanding”.  In none of these offices were any employees rated “Minimally Satisfactory” or “Unsatisfactory”.   I don’t mean to cast dispersions on VA employees, but in any population of that size if the appraisal system is working correctly a more normal-distribution of performance rating should be evident.  There should be about as many people not meeting expectations as there are walking on water.  In all fairness to the VA and the GAO, they recognize the same thing in this report.

I do not support those organizations that annually rank all employees and then automatically fire the bottom 10% to make room for new hires.  I have yet to see a performance appraisal system that is reliable enough to make those decisions.  Clearly, those employees who fall to the bottom of the ranking need a close look as to their future with the organization, but to directly tie termination to a subjective ranking is ill-advised.

Not surprisingly, the Intranet has spawned a new method of ranking your employees.  The website cubeduel.com lets individuals choose which of two coworkers they’d rather work with on a head-to-head basis.  If enough employees rate enough of their peers, the website provides the rankings and scores of who’s the best, and who’s not.   While I can see the visceral entertainment value, I can’t really see anything good coming out of this process – but then there are a lot of things on the Intranet that I really just don’t get.

If you are an owner or manager in a small business, I strongly encourage you to a) have a solid and consistent performance appraisal process in place and then b) spend some time each year ranking your employees.  Don’t do anything rash with what you learn, but I think you’ll find the process will be extremely enlightening and will inform many other decisions about what you need to do to grow your organization.

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Team Construction

November 29, 2010

I spent much of the long Thanksgiving weekend helping my daughter and son-in-law construct a backyard storage shed. It was a tiring weekend, but also both enjoyable and fulfilling.  It was great to be outside (wonderful weather), working with my hands and getting to know my son-in-law better.  But, as so often happens, I started thinking about how I could use that experience in this Blog and what hit me was – construction.

Too often I hear leaders bemoaning the status of their business. For one reason or another, their organization is not being as successful as it should be.  They think maybe it’s the economy, maybe it’s the competition, maybe it’s the wrong time of year.  Whenever I get a chance I stick in the idea – maybe it’s your team.  Too often leaders think that because they are surrounded by good people, who work hard and care about the business then they have done everything they can to build an effective management team.  Unfortunately, sometimes that’s just not so.

In his tour-de-force book The 21 Irrefutable Laws of Leadership, John Maxwell lays out Rule Number 11 – The Law of the Inner Circle.  John states that “a leader’s potential is determined by those closest to him”.  He tells the story of being called to serve as Sr. Pastor of Skyline Church in San Diego. The church was large but the growth had reached a plateau at just over 1,000 members.  He concluded that while most of the senior leaders were good people, they simply had reached the highest level they were capable of reaching.  Over the next few years he transitioned out the weaker leaders and replaced them with the best possible people he could find.  In ten years the congregation had tripled and the annual budget had increased over 6 times.

Tom Peters says “every organization is perfectly organized to achieve the results it’s currently achieving.”  So, if you want to improve your results, you’ll have to do things differently than you are now and one of those ways is to restructure – starting at the top.

Finally, Patrick Lencioni in The Four Obsessions of an Extraordinary Executive says that Discipline number one is to “build and maintain a cohesive leadership team.”  That leadership team will “build trust, know each other’s strengths and weaknesses, openly engage in constructive ideological conflict, hold one another accountable for behaviors and actions, and commit to group decisions.”  Does that sound like your leadership team?

Nobody likes to fire someone else – especially if that person is a good, hard working friend.  But, that’s the life of a leader.  You have to do what is best for the organization even when it is personally difficult.  Hopefully you can make the transition one that is dignified and respectful.  Possibly that person can stay in the organization but in a different role that better suits their skill set.  Maybe you can help them transition to another organization where they can be more successful.  But it’s your company, and you have to make the hard decisions.

So, if your organization isn’t achieving what you want, look around you. Are you surrounded by the best possible people for the jobs you need done?  If not, think about making some changes and when the dust settles you’ll know you’ve done the right thing.

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Employee Engagement – The New Face of HR

November 11, 2010

Al most 10 years ago my good friend Leigh Branham published Keeping The People Who Keep You In Business – his first book examining the concept of employee engagement.  He followed that in 2005 with The 7 Hidden Reasons Employees Leave and most recently, with co-author Mark Hirschfeld, they’ve published Re-Engage – How America’s Best Places to Work Inspire Extra Effort in Extraordinary Times.

The underlying theme of the first two books is that the vast majority of “uncontrollable turnover” is in fact “controllable”.  In general, people don’t join new organizations as much as they leave their current organization.  And unfortunately, they tend to “check-out” long before they actually leave.  Employees leave because they don’t feel connected – they aren’t treated well by their supervisor – they don’t feel valued –they aren’t given meaningful work.  Fixing these things (sometimes easier said than done) will keep employees “engaged” – hence the new book.

In this book Leigh and Mark delve in to the mountains of data collected through the “Best Places To Work” database – millions of employee surveys from over 10,000 companies – sifting out what works and what doesn’t.  They followed up on this data with interviews of employees and executives.  What comes out is a vast amount of information, stories and tips and tips about how any company can take proactive steps to get their employees re-engaged with the business.

I don’t think I’ll spoil anything by recounting here the Six Universal Engagement Drivers they uncovered:

  1. Caring, competent and engaging senior leaders
  2. Effective managers who keep employees aligned and engaged
  3. Effective teamwork at all levels
  4. Job enrichment and professional growth
  5. Valuing employee contributions, and
  6. Concern for employee well being.

If you look at any of those six items and immediately recognize them as issues in your organization I encourage you to read this book.  You’ll find a chapter dedicated to each of these drivers with data and case-studies to help you fully grasp their concepts and how you can address these issues.

Employee engagement may sound like a trendy buzzword – but whatever you want to call it you need to find ways to make sure that your employees care about your company and your customers.  If they do that, your business will be successful, and that’s what it’s all about.

As a final note – to all those veterans who have served our county and sacrificed so much so that all of us can appreciate the freedoms we enjoy every day – thank you.  We wouldn’t be the country that we are without your efforts, and we’ll never forget what you’ve given us.  Happy Veterans’ Day!

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The Value of Volunteering

October 29, 2010

Times are tough.  Companies have reduced the size of their workforce and are trying to do more with less.  Is this really a good time to talk about volunteering?  On the job?  You bet it is.

Many will recognize the benefit of corporate philanthropy.   But those worthy causes need more than money – they need time – the hands, feet, minds and hearts of people.  Organizations can benefit from establishing a program that allows employees to do some amount of volunteer work on company time.  I found several research papers on the subject in a very quick search: Can Corporate Volunteering Support the Bottom Line?; Measuring the Value-Added Benefits of Employee Volunteering; Corporate Citizenship and Reputational Value; and Measuring the Business Value of Corporate Philanthropy. I’m not here to endorse any of these  (or to pretend I read then thoroughly) but they all have the same theme – it is to the organization’s financial advantage to have an active philanthropy program that includes volunteering.

The program does not have to be complicated – here are two simple examples from my past.  Company A was a business-to-business publishing company staffed heavily with writers, editors, etc.  The company president wanted a corporate volunteer program that involved children and books.  The solution – each office established a relationship with a local Head Start program and employees would visit the Head Start twice each month for roughly 30 minutes and read books to economically disadvantaged kids.  They would then donate the books they read to the facility to use or give to the children as they saw fit.

Company B was a small life insurance company who did not want to focus their corporate outreach in a specific area.  Instead they staffed two internal committees of employees (all volunteers).  One group was given a budget (in dollars) and they sorted through requests for financial contributions, evaluated them and ultimately recommended to the President who the company should give money to and how much they should give.  The second group was given a budget of hours and looked for opportunities in the community to invest those hours.  Some activities (e.g. Christmas in July and Blood drives) happened during the work day.  Others (supporting the local PBS channel’s fund-raising Telethon) happened off-the-clock.

In both cases the employees were excited to help the company give back to the community.  This excitement translated back to the office and resulted in a more positive work environment, lower turnover, and increased productivity.  The company’s reputation also benefited through the positive interactions with the community.

So, if you are looking for a way to build moral, improve your corporate reputation, and not spend any incremental dollars – then give your employees the opportunity to do some on-the-clock volunteer work.  Everyone will benefit.

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Why You Need HR

October 11, 2010

We work mostly with small businesses that have fewer than 150 employees.  They often ask two questions: Why do I need HR and when do I need a full time HR person?

First things first – the simple answer is because HR saves you money.  While HR is usually a expense-center for most business, having an effective HR function should cause your business to be more effective, and therefore save you money.  If HR is not making your business better – you need a new HR team.

An effective HR function should yield you a higher level of worker satisfaction.  Effective HR will: ensure that your company has practices in place to treat employees equitably; ensure that compensation and benefits are competitive; and that employee relations issues are handled appropriately.  These activities will reduce the number of dissatisfied workers, and if you’re thinking, “does morale matter?” then you haven’t been managing very long.

An effective HR function should reduce both the amount and the associated cost of unplanned turnover.  Turnover can cost an organization between 25 – 100% of an employee’s annual salary.   While unplanned turnover results in the direct expense to replace the employee, there may also  be additional costs to train the replacement worker and possibly lost production while the position was open and during the training period.

Everyone is talking about the increased cost of medical insurance so it’s no surprise that benefits are expensive.  An effective HR function should make sure that you are offering the right benefits, at the right cost to your employees.  Similarly HR should make sure that you are paying the right people the right amount of money including base compensation and incentive plans.

Finally, HR should help you avoid the cost of non-compliance.  Most employment laws have fines and penalties associated with non-compliance.  You might be at risk for hiring employees who do not have the legal right to work in the United States.  Based on your hiring, promotion or pay practices you could be inadvertently discriminating against members of a protected class.  You might not have the appropriate labor and employment posters posted in the appropriate places.  You might not be calculating overtime correctly or inadvertently come afoul of some other wage and salary issue.  The cost of non-compliance can be steep.

The second question is when do I need to hire an HR professional for my business. The rule of thumb for most of my career has been that you need 1 HR person for every 100 employees.  Traditionally in larger “high touch” environments that number might drop as low as 1 for every 60.  But, in recent years the numbers have begun to climb.  HR staffs are more frequently supporting as many as 150-200 employees with 1 person (although these organizations often have strong corporate HR function). 

The bottom line is that every business that has employees ultimately has employee problems.  An effective Human Resources function will save you money and improve the performance of your business.  And as your business grows, plan on 1 HR professional for every 100 employees as a guide.  Of course, you can always consider using a highly competent outsourcing company, but that’s for another day.

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Street Coaching

September 13, 2010

I recently heard of a woman who worked as an Executive Coach. She had PhD and a Masters degree in Psychology and Counseling and felt confident that no one could be an effective coach without similar academic training. I also know a guy who calls himself an Executive Coach. He attended a two-day seminar to learn how to be a coach. Both felt they were appropriately prepared. Personally I’m somewhere in the middle. I’ve got a good education, but not in Counseling or Psychology. I’ve been to lots of seminars – but none on coaching. But, I’ve spent over 20 years as an HR executive – coaching. I’ve been helping mangers manage, and executives lead. The woman I mentioned I’d call an “academic” coach and the guy maybe a “seminar” coach. As for me, I call it Street Coaching.

Anyone can be a street coach – but that doesn’t mean it’s easy to become one. There is no formal training, although some training probably won’t hurt. Being an effective street coach does take experience – better yet let’s call it practice. Here are 4 C’s that make street coaching work.

Caring – Before you can coach someone, you have to care about them and their situation. You have to put yourself in their shoes, understand where they are and where they want to go. That doesn’t mean you have to have done everything they’ve done – but you do have to understand the situation, the dynamics and the goal. As John Maxwell says – “They don’t care how much you know until they know how much you care.”

Candid – What makes street coaching different than therapy is that there is an in-your-face quality to it. A good street coach doesn’t “waste” time exploring the motivation behind your client’s actions. It’s not about whether you had a good relationship with your Father. It’s about what are you going to do the next time this situation comes up. Street coaching is about changing behavior to get results and my experience says that you will be more effective if you don’t beat around the bush. That doesn’t mean you have to be rude, angry or abusive. It simply means that you have to be direct.

Consistency – as a good friend of mine says “for someone to hear your message you have to repeat it seven times.” While I can’t find the research behind this I believe it to be true – especially when you are talking about management skills and related behaviors. While your client may intuitively understand the coaching you give them the first time you say it – it is not likely that they will internalize it and begin to practice it immediately. You’ll need to say the same thing over and over again using different communication methods before it really begins to stick.

Concise – Have you ever asked someone’s advice and then had to listen to them give you that advice for hours on end? An effective street coach spends 2-3 more times listening than they do talking. So when they talk they need to use their words effectively and be concise. Back to John Maxwell – one of his 21 Irrefutable Laws of Leadership is the Law of EF Hutton – because as the commercials used to say “When EF Hutton speaks – people listen.” Because a good street coach doesn’t talk just to hear himself speak – people will listen and pay attention.

If you want to be an effective street coach, try practicing these 4 C’s. And then keep practicing over, and over, and over ….

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What Is It About Office Bullies?

August 26, 2010

It seems like every office has one. Some person who appears to enjoy making everyone else’s life miserable. Their general behavior tends to leave a wake of angry or crying teammates. They are a common point of discussion around the water cooler and someone is always complaining about what the bully did to them recently.

 The problem is that for some reason the boss never does anything about the bully. Why is that? Because, too often the bully is also a key member of the team.  They are the top salesman, or the most valued professional, or even “the public face of the company”. The boss doesn’t want to confront the issues because he’s afraid that he’ll lose the production or support of the bully. Quite the conundrum, isn’t it?

From my perspective the answer is “no.”  These people are cancers to an organization. While they may have tremendous individual productivity and contributions, the negative affect they have on their coworkers over the long-haul far outweighs their individual production. They need to be dealt with, and if necessary be excised from the organization. Sure, you’ll need to plan for the loss of their contribution, but you can’t be held hostage by it.

If you’re the boss and you’ve got a bully in your midst, it is your job to confront the situation. But I hear you thinking, “Bullies are tough – how do I confront them without getting beaten up myself?”  You deal with bullies the same way you deal with other performance issues – with facts and consistency.

Start by gathering data. Who had negative interactions with the bully – when did it happen – what were the consequences?  How is the bully affecting your business?  Then you have a direct and honest conversation. Recognize the positive contributions of the bully (thank you very much) and address the issue of bullying. Create the clear expectation that bullying behavior will not be tolerated by your company – in fact it’s probably already prohibited behavior as defined in your Employee Handbook.

Keep in mind that most of us are not trained psychologists. Don’t try to get inside the bully’s head to figure out why he/she behaves badly. The “why” isn’t your problem.  You also don’t need to get into an argument about what really happened or why the bully acted the way she did. You simply need to set the expectation that behavior that demeans others or causes hate and discontent to spread through the office will not be tolerated. If the bully says “But I never did that,” then you say “Fine – that means you shouldn’t have any problem not doing it in the future, because if you do there will be consequences.”

Bullying behavior is a matter of will, not of skill. People don’t need 30 days to stop being a bully. They need to stop today, and if they exhibit that behavior again tomorrow there will be a problem.

The only way to stop a bully is to draw a line in the sand and take a stand. Sometimes it’s tough being a manager, but if it was easy, they wouldn’t need you.

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Appraised and Confused – Another Look at Performance Appraisals

August 16, 2010

Let’s admit it.  Everyone hates performance reviews – managers hate to do them and employees hate to have them done to them.  Here are some of the primary reasons appraisals don’t work. 

1)      It is a one-sided process whereby the supervisor, in a very parent-child model, formalizes his/her opinion of the employee’s performance, but does very little to gather or incorporate information from other sources.

2)      The reviews are based on poorly written, out-of-date goals that were usually set without getting the employees input or buy-in.

3)      The process is subjective and uses value laden words like “competent” and “superior”.

It’s no wonder people hate them, but for now they are a fact of most businesses life.  Hopefully we can all agree that employees want and deserve honest feedback.  Possibly we can agree that there are some benefits (although they may be slim) of having well written honest feedback on file.  (Note the qualifiers on the last sentence – poorly written performance reviews in a personnel file are actually worse than not having anything at all.) Finally, most managers don’t get to make Performance Review Policy – it comes from someplace higher up.  So, if we agree that we hate them but we have to do them, how can we do them better and less painfully?

I’ve got an idea … you and the employee fill out the appraisal form together.  I can hear some of you hyperventilating so I’ll give you a minute to recover.  Yes, that’s what I said, do it together.

Imagine this … a manager and employee sit down at the beginning of the year and pull out a blank review form.  They both acknowledge that this form will need to be completed a year hence, and neither one is really looking forward to that process (a little boss-employee bonding period). They then discuss all of the parts of the form, what the different sections mean, how the terms are defined etc.  Through that process they reach a common understanding of the form, the definitions, and the process.  This meeting is mandatory.

Then, throughout the year they both go about their jobs.  Hopefully, the manager remembers that part of her job is giving the employee specific, timely and constructive feedback on his performance.  She coaches, corrects and congratulates as the year goes on.  Hopefully the employee remembers that part of his job is to ask for, and accept, feedback on his performance.  Finally, it’s time for the big day.

The manger and employee sit down and have an honest and frank discussion about the employee’s performance.  Because they’ve been talking about it all year there should be no surprises. Then they pull out a blank form and fill it out, together.  They negotiate some of the ratings if necessary but at the end of the meeting the form is complete and signed off on by both participants.  No surprises, no parent-child psychology, no wailing and gnashing of teeth.  Just a mature conversation about what has happened over the prior year.

Do you think it could happen?  As Ghandi said, “You must be the change you want to see in the world,” and as Master Yoda said, “Do or do not, there is no try.”  Let’s make them both proud.

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Transitions

August 2, 2010

It seems like either directly or through family I’ve witnessed quite a few transitions in the last 9 months.  I’ve seen retirements, weddings, births, deaths, job losses, new jobs, school years ending and beginning again, moving out and moving in again.  All this got me into a very reflective mood this morning.  The one thing about transitions is that as long as you are alive, they never end.

In HR, we are tasked with facilitating a lot of these changes.  We (partnering with management) hire people, transfer them, promote them, give them wage increases (and decreases), terminate them, retire them and occasionally mourn the death of them.  Why is this important?  Because managing these transitions well might be the most important things we do.  Here are a few suggestions that I have found help me make these transitions go as well as possible.

Be Present – While being physically present is great, being mentally present is critical.  When assisting with any of these transitions you need your head in the game.  Don’t be checking your email or sorting through stacks of paper on your desk when you are talking to someone about any of these changes.  Make them your focus.

Be honest – I’m not saying you need to follow Jim Carey’s model from the movie “Liar Liar”, but you should always be honest.  Honesty sometimes means saying “I’m sorry but I can’t answer that question,” but every time you try to hide a performance based termination behind a “reduction in force” you diminish yourself and the organization.

Be empathetic – I’m not a real touchy-feely HR guy.  My skills lean toward the analytical rather than the social, but it’s critical during many of these times that you need to let the person know that you can relate to what they are going through.  Sometimes people have to hear bad news and when they do, they want to know that someone else knows that this news will not make them happy.  That doesn’t mean you have to agree with them, or that you should avoid the situation.  They just need to know that you care about them, as an individual, and you know this might be difficult.  Provide that emotional support.

Fight for what’s right for both the organization and the individual – HR is often full of gray areas.  We’ve got shelves full of policies and procedures.  We’ve got forms coming out of our ears and usually we know exactly the way something is supposed to happen.  We design these systems and processes for consistency and to protect the organization.  But sometimes the standard procedure isn’t the best alternative for all parties involved.  Sometimes we need to bend here, or give-a-little there.  I’m not talking about breaking any laws, but I am talking about using common sense rather than hiding behind “consistency”.  Do what’s right, and if it is not your call, then press on the decision maker to truly understand all sides of the issue.

So, on this Monday morning, sit back and be a little philosophical with me.  Make sure you are helping manage transitions that matter in people’s lives.  You’ll be glad you did.

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Exempt or Not Exempt – That is the Question

July 29, 2010

The battle rages on between management (aka the oppressors) and labor (the oppressed) about who should be paid overtime.  Management does not want to pay overtime.  They feel that time tracking and reporting slows down business, people like to be recognized for what they do – not how many hours they work, and it saves money.  Labor wants everyone to be paid overtime, to be compensated for the labor they put into the business.  They want what’s right!  Making the rules is the federal government and depending on which party is in power they are either seen as defending the oppressed or supporting fair competition.  There are no winners in this battle royal.

Okay, so that may be a bit over the top, but the base arguments are there.  So the question is:  who should be paid overtime?  The governing legislation is the Fair Labor Standards Act (FLSA) adopted in 1938 and amended many times since.  The FLSA governs minimum wage, overtime, child labor laws, and record keeping. It is enforced by the Department of Labor – Wage and Hour Division.  Enforcing the FLSA is one of the Obama administration’s high priorities and the enforcement division has recently been expanded with more investigators (to defend the oppressed).

The FLSA contains a provision stating that in general, individuals should be paid at 1 ½ times their normal pay rate for any hours worked in excess of 40 hours in one work week (aka overtime).  However, there are other provisions that allow some workers to be “exempted” from the overtime provisions of the FLSA – hence the term “Exempt” – while those who do not meet the qualifications to be exempted are called Nonexempt.   Frequently the terms “Salaried” and “Hourly” are used as synonyms for “Exempt” and “Nonexempt” but they do not necessarily mean the same thing.  There are salaried jobs that are nonexempt and exempt jobs who closely track their hours.

The FLSA contains several different “tests” that can be used to determine if a job can be classified as exempt.  There are income tests and education tests. There are management level tests and inside/outside test (for sales people).  All in all I believe it is one of the most poorly written pieces of federal legislation HR professionals deal with. It is wholly subject to interpretation and similar jobs are often evaluated differently in different companies.

But there is one “simple” test that I use when talking to managers that really cuts to the chase.  Does this job (the person doing the job) regularly make independent decisions on matters of significance?  If yes, they are probably exempt.  If no, then they are probably not.  Unfortunately, that “simple” test doesn’t sound too simple.  We have to agree on the definitions of regularly, independent and significance.  Regularly doesn’t have to mean daily, but it can’t mean monthly.  Independent does not have to mean full authority to do whatever they want, but it does mean really exercising discretion and not following a pre-ordained policy nor having every “decision” affirmed by a superior.  A matter of significance does not have to mean life or death, but it is not ‘where should we go for lunch’.

An exempt employee should regularly use their education, experience and judgment to perform tasks that will materially affect the success of the company. That could mean hiring or firing staff, deciding on the proper accounting treatment of a transaction, or negotiation the purchase or sale of product or materials, establishing budgets and marketing plans, or any number of other things. The key is that if these things are not done well there could be a real impact on the company.

So I encourage you to lay down your arms and set away from this battle field.  There are no bright lines, no clear right or wrong, and hopefully no real oppressed or oppressors.  There is only a vaguely written piece of legislation and lots of interpretation in the offing.  Good luck to you – and God speed.

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