optimal knowledge - Optimum HR Systems...optimal knowledge Three years of Optimal Knowledge Page 2 Yesterday, Today And Tomorrow At OSHA Pages 3 – 4 Pages 5 – 6 Pages 6 – 7 Page

The Anniversary Issue

2010three

HR Is A Major Player In The Migration To Customer-First Business…Or Should Be

A Newsletter for the Human Resource Community

What Is The World Of Compensation Coming To?

optimal knowledge

Three years of Optimal Knowledge

Page 2

Yesterday, Today And Tomorrow At OSHA

Pages 3 – 4

Pages 5 – 6

Pages 6 – 7

Page 8 – 9

Recruiting Match Game: Looking Beyond the Resume

E d i t o r i a l N o t e

Optimal Knowledge is published on a quarterly basis for the as-sociates, clients and business partners of Optimum Human Resources Systems.

The Editorial Board would like to take the opportunity to thank you all for your continued sup-port, enthusiastic participation and invaluable contributions.

For comments, suggestions and contributions, please contact [email protected]

Fall 2007

Three Years Of Optimal Knowledge

Editor

Richard WarrenOptimum HR Associates

Richard Warren

Anita Ryan

Vija Kelly

Tom Felling

Eric Heiberg

Chuck Loeper

Dick Lee

Contributing Writers Marcie Levine

Rossitza Ohridska

Stevan Olson

Graphic Design

Vizantia

Ed i t o r i a l No te

Optimal Knowledge is published on a quarterly basis for the associ-ates, clients and business partners of Optimum Human Resource Sys-tems.

The Editorial Board would like to take the opportunity to thank you all for your continued support, en-thusiastic participation and valuable contributions.

For comments, suggestions and contributions, please contact [email protected]

EditorsRichard Warren

Anita Ryan

Dick Lee

Contributing EditorKim Husband

Optimum HR AssociatesRichard Warren

Anita Ryan

Vija Kelly

Tom Felling

Eric Heiberg

Linda Herman

Dick Lee

Katie Birthler

Contributing Writers Rossitza Ohridska

Stevan Olson

Graphic Design

Vizantia

2010 The Anniversary Issue


optimal knowledge2

Continues on the next page

By Richard Warren

Three years ago Optimum Human Resource Systems was asked by a client to set up routine communication regarding “current events” in HR. What evolved from that request is our newsletter “Optimal Knowledge” and the related blog for more time sensitive information. The publication was first delivered by e-mail in PDF format. Since 2009 it is downloadable from the Optimum



optimal knowledge3

Three Years Of Optimal Knowledge (continued)


Dick Warren’s experience spans more than twenty 25 years of hu-man resource management and consulting with organizations rang-ing from start-ups to the Fortune 200, from California to Puerto Rico. This broad exposure has given him an in-depth understanding of the subtleties associated with imple-menting and maintaining positive changes that have credibility with employees, effectively address or-ganizational needs, reduce the risk of litigation and avoid regulatory compliance problems.

About the author:

Yesterday, Today And Tomorrow At OSHA

HR Systems blog. Thousands of peo-ple read it online or printed it to enjoy at their leisure. Optimal Knowledge articles cover a broad range of topics in human capital management, cur-rent news, and announcements to in-depth analysis of important issues on the evolution of HR profession.

The Issues

We focus on one topic per each issue. The first one was dedicated to Affirma-tive Action. The latest one – to Balance: the balance between costs and safety, the balance between office process and staffing. We covered the quest for talent in two issues in 2008, and the evolution of the HR leader in three issues, along with special issues on compliance and on safety and health.

The writers and contributors

All Optimum HR Systems associ-ates contributed with their knowledge and expertise in their fields. Vija Kelly writes on safety and health programs, Dick Lee shares his insights on office process; Anita Ryan covered several topics on employers’ handbooks and employee development. Tom Felling told us his secrets about the process of executive recruiting. Guest writers such as Stevan Olson (our creative di-rector) wrote about employee brand-ing. Richard Warren contributed arti-cles on affirmative action, immigration issues and other compliance topics.

The future

During the last three years, Optimal knowledge published 10 issues and 50 articles. Some of them represent

timeless information that is useful for any HR manager. With this in mind, we have started to publish flagship articles from varios issues on our blog site in a PDF format ready to be downloaded as individual papers. The first of them is already available.

We also welcome any request for publishing a PDF of your favorite article – just drop us a line at [email protected] and we will be glad to prepare the PDF and publish it on the blog.

The legislation establishing OSHA was enacted in 1971. The enabling law was based on the premise that if standards were published, compliance could be assured through the threat of unannounced inspections and fi-nancial penalties in the form of fines. Has it worked? Yes, in that the rate of fatalities, accidents and injuries has plummeted since OSHA was founded. No, in that compliance has not been universal and the same citations are issued repeatedly. OSHA has re-sponded by cajoling, educating and offering compliance guidelines and as-sistance, especially since the advent of easy electronic communications. Problems, however, persist. More-over, in spite of the numerous out-reach programs, resentment of and hostility toward the agency continues to increase. Often this is due to em-ployers perceiving OSHA enforcement as capricious. Additionally, many inspectors in the field appear to be

trying to micro-manage compliance.

Where OSHA sees itself today and where it plans to go tomorrow was revealed in two ways this year: testimony before the congress on why the OSHAct should be revised,

and the publication of OSHA’s stra-tegic plan for the next six years.

OSHA Administrator David Mi-chaels, testifying at a Senate hearing stressed that the OSHAct must be up-dated in order to better protect Amer-ica’s workers from injuries and death. The OSHAct has not been signifi-

By Vija Kelly



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Yesterday, Today And Tomorrow At OSHA (continued)

Vija Kelly has more than 27 years of experience training and con-sulting with industry on regulatory compliance issues. Working with companies as small as 10-person machine shops and as large as 3M on both health and safety and envi-ronmental issues has given her the hands-on experience to deal with the toughest regulatory compliance issues that face industry today.

An excellent teacher and public speaker, she specializes in educat-ing organizations on their regulato-ry compliance responsibilities. She writes several columns on com-pliance issues for trade magazines and publishes a newsletter to keep clients abreast of changes in EPA, DOT and OSHA regulations. She has also produced customized writ-ten training materials for all man-dated training.

About the author:cantly modified in its 40 year history. Some of the points he raised include:

● Too often employers compare the benefits of not complying. If compli-ance costs outweigh the penalties for breaking the law, they opt to “gam-ble” with their workers’ lives

● OSHA needs better tools to enforce safe working conditions

● Substantial statutory changes must be made to OSHA’s penalty structure and enforcement program

● Something needs to be done about the fact that currently OSHA cannot force an employer to fix an identified hazard if the employer has contested the violation

Monetary penalties for violations of OSHA rules have been increased only once in 40 years despite inflation.

● The current maximum penalty for a serious violation, one capable of causing death or serious physical harm is $7000

● The current maximum penalty for a willful violation is $70,000.

● The current average penalty for a serious violation is about $1000

● Targeting the most egregious and persistent violators

● Strengthening regulatory capabili-ties

● Focusing more resources on pro-tecting high-hazard, vulnerable and hard to reach worker populations

● Reviewing and restructuring penal-ties to ensure penalties imposed are consistent with the seriousness of the violation and act as effective deter-rence to violators

● Enhancing and strengthening com-pliance assistance for small business-es

OSHA intends to measure its success by:

● Reducing fatalities associated with the four leading causes of workplace fatalities

■ Falls

■ Electrocutions

■ Caught in or between accidents

■ Struck by accidents

● Increasing the number of hazards abated including

■ Hearing loss in manufacturing

■ Illnesses in general industry

■ Amputations

● Increasing awareness of OSHA rights, responsibilities and programs

OSHA’s attempts to have the en-abling legislation amended passed in the House of Representatives, but failed in the Senate. The stra-tegic plan remains in place. What we expect is tighter enforcement, resulting in more fines to counter-act the negative outcome OSHA re-ceived in the hands of Congress.

By Vija Kelly



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What Is The World Of Compensation Coming To? by Linda Herman

In the U.S., executive compensa-tion is under more scrutiny than ever before. This started with the collapse of companies like Enron and subse-quently Arthur Anderson. The first en-compassing legislation that affected executive compensation as a result of these corporate meltdowns was Sarbanes-Oxley Act. Attention has increased with the 2007 meltdown of Wall Street beginning with Lehman Brothers and AIG. While many com-panies diligently monitor executive pay levels and tie all variable compen-sation to the success of the organiza-tion, there were many who suffered as a result of these larger companies taking too much risk. Actions such as securitizing very risky assets (i.e., now considered “toxic” mortgage as-sets) and selling them as highly rat-ed securities left many individuals, foundations, endowments and other institutional investors with worthless investments. Even though the SEC supposedly had checks and balances in place to monitor and prevent things like this from happening, they failed.

As a result, more regulations have been put in place, most recently the passing of the Dodd-Frank Wall Street Reform & Consumer Protection Act. Although this act will pertain primarily to publically traded companies, there still are ramifications and ‘best prac-tices’ for privately held firms. Many of our privately or closely held clients choose to follow suit. Many compa-nies are also taking steps to follow these guidelines even before the SEC provides further regulations. Some of the highlights of the Dodd-Frank Act that may be of interest include:

■ “Say On Pay”. Already required of financials accepting TARP mon-ey, “say on pay” requires that companies include a resolution in their proxy statements ask-ing shareholders to approve, in

a non-binding vote, the compen-sation of their executive officers. A separate resolution will be re-quired to determine whether the “say on pay” vote takes place ev-ery one, two or three years.

■ Golden Parachutes. If not ap-proved as part of the “say on pay” vote, companies must so-licit shareholder approval via a separate non-binding vote where shareholders are asked to ap-prove a merger or similar extraor-dinary transaction that would trig-ger golden parachute payments.

■ CEO Pay vs. Median Employee Pay. The SEC will be required to adopt rules requiring that compa-

nies disclose the median annual total compensation of all employ-ees (except the CEO), and the ra-tio of the median employee total compensation to the CEO total compensation.

■ Disclosure of Employee or Di-rector Hedging. Companies must disclose whether any employee or director is permitted to purchase financial instruments that are de-signed to offset, or hedge, any decrease in the market value of equity securities granted or held directly or indirectly by the em-ployee or director. (In the trigger-ing events for the recession, some firms were hedging against the very loans they were making.)

Photography: Michael Glasgow



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What Is The World Of Compensation Coming To? (continued)

HR Is A Major Player In The Migration To Customer-First Business … Or Should Be

About the author:

With over 25 years of experience as a leader in compensation roles, Linda Herman understands the challenges of leading compensation in organizations of all sizes. Her corporate leadership background includes senior level roles at Fortune 500 companies, including Thrivent, Ameriprise, and Best Buy. Her consulting experience includes working in a wide variety of industries, including health care, manufacturing, casinos, financial services, grocery chains and many employee-owned organizations. Linda holds a bachelor’s degree in education from the University of Wisconsin-Oshkosh and a master’s degree in business administration from the University of St. Thomas.

■ Clawbacks. Restating financials is found more than one would like to see for many companies. Now, for any restatement of financials, companies will recover from the executive, or former executive, any excess incentive compensa-tion that was more than what the restated financials calls for. (Claw-backs had already been addressed under the Sarbanes-Oxley Act.)

Other rather standard executive com-pensation items that will be affected in light of the focus on executive pay are the use of perquisites, severance and change-in-control arrangements.

Since Sarbanes-Oxley, the Com-pensation Discussion and Analysis (CD&A) section of proxy statements was already required to be written in a straightforward, transparent man-ner that allows clear understanding. Under the Dodd-Frank Act, it is likely that the CD&A will have not only have to be written in a transparent manner, but one that compels shareholder ap-proval for the compensation packages as this will be a primary source of in-formation on “say on pay”. Compen-sation committees (typically a stand-ing committee on almost all Boards)

will likely have to provide more ac-tive engagement in reaching out to shareholders on compensation issues. Let’s hope that doesn’t somehow get as obnoxious as our political ads.

A couple simple suggestions for the path to follow:

1. Privately or publically held:

■ Keep your management incen-tive programs clearly linked to the organization’s performance. It is just good business.

2. Public:

■ Save headaches by taking every measure to state financials cor-rectly the first time. (Avoids hav-ing to add the “executive collec-tion agency” department to your finance area.)

■ Be able to explain your executive compensation to a fifth-grader in terms they will understand.

3. Private:

■ Consider calculating the ratio of your CEO pay to the median of everyone else. Might prove to be an interesting experiment.

by Linda Herman


By Dick Lee HR takes care of customers, not employees, right? Well, not exactly.

While customers are taking charge of buyer-seller relations, companies are scrambling to adopt more customer-friendly policies and practices. But as anyone experienced in helping compa-nies migrate from “inside-out” (com-pany-first) to “Outside-In” (customer-first) will tell you, it ain’t easy. It ain’t easy because sufficiently changing policies and practices requires chang-ing organizational design. Which is…or should be… part of HR’s portfolio.

Photography: Georges Nijs



optimal knowledge7

HR Is A Major Player In The Migration To Customer-First Business … Or Should Be (continued)

About the author:

By Dick Lee

Going Outside-In requires organizational redesign

Experts and quasi-experts have written a number of books about this migration. Some good, most regretta-bly naïve―and almost all written from a customer-experience or customer relationship perspective, with a smat-tering about pumping up employees into a lather thrown in. But late last year, Harvard B-School professor and specialist in organizational dynamics, Ranjay Gulati, weighed in on this topic with a new book, “(Re)Organizing for Resilience.” His take stunned (and in some cases “stung”) many involved in the exercise of “going Outside-In.”

The shock came from Gulati describ-ing the migration in organizational de-sign and development terms, rather than just “how can we be nicer to cus-tomers?” While HYM has been singing this same song for a number of years, we lack Gulati’s clout and credibility. Thus, we were thrilled when the book came out and have cited it innumerable times in Linkedin groups covering dif-ferent aspects of going from I-O to O-I.

Silos are like icebergs – only partly visible and dangerous as hell

In a nutshell, Gulati explores what’s required organizationally of compa-nies going Outside-In, and arrives at a core conclusion. The critical con-straint facing companies headed in a customer direction comes from func-tional silos wanting to continue being the basis for organizational design―instead of allowing fulfilling customer needs to serve as the organizing prin-ciple. He maintains that silo pushback sinks more attempts to become cus-tomer-driven than any other factor.

In our experience, he’s absolutely cor-rect.

But Gulati does not espouse doing away with silos altogether. He be-

lieves that’s impractical. Like creat-ing a body with no bones. Instead, he suggests cutting silos down to size―AND, empowering a customer advocacy person or function with “clout” (Gulati’s term) to ensure that disparate functions work synchro-nously in the service of customers.

Reward for HR

Does that make you want to “close the door” to HR and hide behind it in the safe confines of employee mat-ters? Hopefully not. Most organiza-tions sorely lack internal resources with organizational design insight. And even when companies engage external resources like HYM to help lead O-I migrations, without a func-tion-neutral, organizational design/development resource internally for us to partner with, we’re forced to scale all the way up the ladder to C-level executives to present our organi-zational observations and issues―not what they want to be dealing with hands-on, except in small business.

Realistically, HR is the only potential

Photography: Gur Dhalial

choice for filling this void. Either that or hiring another set of consultants, this time from the O.D. side―and having two sets of outside consultants shap-ing how a company will look organi-zationally is a disaster in the making.

Helping your companies respond effectively to growing customer power with customer-focused or-ganizational design is an opportu-nity waiting to be seized. However, there’s always a flip side of the coin.

With some risk, but…

The good news is that HR educational programs, particularly at the graduate level, are providing much more rigor-ous organizational design training than in the past. The bad news is that many of you received your HR education in the past. But that shouldn’t stop you.

While getting yourself into profes-sional situations you’re not specifically trained for carries risk, working in a relative vacuum where no one else has the training mitigates much of the risk. And as long as you’re committed to learning what you don’t already know, taking an active organizational design role at a time when many organiza-tions will be forced to reorganize can be a substantial career opportunity.

Dick Lee helps companies reduce

work complexity and streamline

operations. He focuses on O/S

(office/service) process, including

HR. Dick’s one of the founders

of the global “outside-in” process

approach that designs work

around customers/employees.



optimal knowledge8

Recruiting Match Game: Looking Beyond the Resume

By Tom Felling

Good executives are hard to find. High performers are in demand in today’s tough economy, and experienced leaders are scarcer than ever because so many baby boomers are retiring right now. Employers face a tough challenge placing the right candidates in the right positions.

Professional vs. interpersonal skills

HR pros know that while employers certainly want a candidate who has the professional background and skills to do the job, they also want one who is a good fit for their corporate cul-ture. The résumé tells only half the story; personality tells the other half. It’s up to the recruiter to help find the balance between a candidate’s profes-sional and interpersonal skills.

In theory, the ideal applicant is good at everything, bringing both the right

technical background and dynamic leadership to the table. In practice, however, most employers acknowl-edge that ideal candidates are rare, and they’re willing to accommodate a defi-cit in one area if it’s offset by strength in another. For instance, an advertis-ing agency looking for a design team manager might hire someone with a strong history of motivating creative workers (interpersonal skill) even if he or she is not experienced in the ad




optimal knowledge9

Tom Felling has over 30 year

of business experience with 23

years in the executive search in-

dustry. He is also nationally re-

garded as one of the most dedi-

cated and insightful professionals

in the business. Founded in 1987,

Felling & Associates has gained

a solid reputation through suc-

cessfully executed challenging

searches. Felling specializes in

placing talented individuals with

unique backgrounds in technical

manufacturing, finance, software

and various service industries.

About the author:

Recruiting Match Game: Looking Beyond the Resume (continued)

By Tom Felling

world (professional skill). Conversely, an auto manufacturer that needs an assembly line foreman might prefer to hire someone with an auto production background (professional skill) even if he or she is not the easiest person to get along with (interpersonal skill).

Work–life balance

As important as the balance between a candidate’s style and the hiring company’s style is the balance with-in the candidate’s own life. The best performers are those who are able to keep up with professional and person-al responsibilities and who enjoy and find fulfillment in their jobs. Too much emphasis on either aspect can lead to either burnout or underperformance. Balance and fit help predict the lon-gevity and success of the employ-ment.

Identifying this equilibrium is where executive recruiters have a chance to shine. First, the recruiter must be-come familiar with the hiring com-

pany’s corporate culture and policies to get a feel for the kind of candidate who is likely to fit in and succeed there. Then the recruiter must identify suitable applicants through thorough interviewing. Here are some things the recruiter needs to probe care-fully to be sure he/she does not step over the line into illegal questioning:

● How does the candidate identify and balance priorities?

● Does the candidate manage his/her time efficiently?

● How important is it that the job be demanding? Satisfying?

● What are the candidate’s hobbies?

● How does the candidate manage his/her spiritual life?

● How is the candidate involved in community service?

● What are the candidate’s family obligations?

Photography: Giorgio Montersino

● How does the candidate judge his/her own job performance?

Making the match

Once the recruiter is familiar with the needs and preferences of both parties, it’s time to arrange that blind date of the business world, the first interview. If the chemistry between employer and candidate is right, it could be a match made in heaven—or at least in HR.

optimal knowledgeA Newsletter for the Human Resource CommunityA Newsletter for the Human Resource Community

Optimum Human Resource Systems801 Twelve Oaks Center Drive, Suite 815BWayazata, MN 55391

Telephone: (952) 476-6477Fax: (952) 476-7625

e-mail: [email protected]: [email protected]

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