Professional employer organizations go to work for you
Until recently, when an employee of Racine Danish Kringle Co. had a question about a health insurance claim or needed to know how many vacation days they were entitled to, the answer was not always readily available.
That’s because, like many small businesses, the 40-employee bakery did not have a human resources department.
But, exactly one year ago, Mike Heyer turned Racine Kringle into a more professional organization overnight when he linked up with a professional employer organization (PEO).
Now, if one of his employees has a personal problem they can call an 800-number and receive the proper assistance. New hires receive an employee handbook – something that Racine Kringle previously could not offer. If Heyer has a human resources/employment-related question, he can pick up the phone and get an answer right away from his PEO, Synergy, which has corporate offices in Chicago.
“As the company is growing, I really can’t afford a separate human resources department right now,” Heyer says. “They take over that entire process.”
PEO’s are emerging as a means for small to medium-sized companies to obtain affordable employee benefits and acquire professional human resources administration through a single source provider.
While the concept is still new to Wisconsin, more than 3 million people nationally work for an employer who is enrolled in a PEO. According to the National Association for Professional Employers, that figure is expected to grow at an annual rate of between 20 to 30 percent over the next 10 years – an estimate backed up by Wall Street analysts.
“A small business can offer better benefits this way, which becomes a competitive edge,” says Dan Cacchione, vice president with CNA UniSource in Chicago. “Small businesses can now literally offer employee benefits where before larger employers only had access.”
A principal advantage of going with a PEO is the ability to obtain lower worker’s compensation rates. That’s because CNA UniSource can offer group rates by pooling a small business together in large groups, Cacchione says.
Several business owners say the PEO more than pays for itself. Having just completed its first year in a PEO, Heyer says that Racine Danish Kringle saved money, largely as a result of the favorable worker’s comp rates.
Going with a PEO should result in a cost savings of 10 to 15 percent on worker’s compensation insurance for Lurie Glass Co. compared to what the 125-employee company could have done on its own, adds president Marc Lurie.
“Prior to this, we would do everything in-house,” Lurie says. “We are now considered employees of CNA. They do all the HR, worker’s comp and payroll, and they do it on a more cost-effecitve basis than I can do it myself. It also means that the people who were being pulled away from their main responsibilities can concentrate and be more effective.”
What the PEO does is work side-by-side with the business owner to relieve some of the daily frustration, Cacchione says.
“For small businesses of 500 or fewer employees, what we typically hear is that time is at a premium,” Cacchione says. Whether it’s finding time to spend on your business, or away from your business, it’s getting tougher to do everything. By outsourcing your personnel matters, the idea is to make the job of running the business easier.”
Responsibilities for employers continue to increase as far as complying with federal regulations. What a PEO does is step in and take over that responsibility, Cacchione says.
“We become the compliance arm for a small business to make sure that they are doing what they need to from a regulatory standpoint.”
Adds Heyer: “They keep up all of my OSHA requirements, which is something I never really looked at before.”
Other areas overseen by the PEO include the Americans with Disabilities Act, the Family Medical Leave Act, the Civil Rights Act, ERISA, COBRA, HIPAA and EEOC.
Synergy also provides supervisory training and safety awareness. In March, employees of Racine Danish Kringle attended an onsite sexual discrimination seminar.
“It was designed to make sure that we are within the proper guidelines,” Heyer says. “Some people laughed about it, but, my God, we are all sitting on a bubble with this. I thought it was a real proactive approach.”
What first prompted Heyer to make the switch to a PEO was the ability to bring health and worker’s compensation insurance under one roof. But, in the process, he got much more, including payroll service.
Under the arrangement, the PEO establishes a contractual relationship with the employer which establishes it as an administrative co-employer with clearly defined responsibilities. The employer still maintains ownership of the business, and also remains in complete control over personnel decisions.
“People think that if they go this route, they lose control of their business, which is ridiculous,” says Jim Ford, president of Mobile Diagnostics of Wisconsin.
In one complete package, Synergy provides: payroll processing and administration; employment taxes and reporting; group health insurance, worker’s compensation; 401(k) and Section 125 plans; policy manuals and job descriptions; hiring and dispute guidelines, and human resources management.
Optional benefits fits such as denatal and life insurance are available, as are purchasing discounts at major retailers. All PEO plans are individually tailored to the needs of the employer.
As the former chief financial officer for Carson Pirie Scott in Chicago, Ford can appreciate the economies of scale he gains from going with a PEO as the head of a five-employee business.
“For one, you’re crazy to do payroll processing on your own,” Ford says. “Overall, it’s a hell of a total package, and we look professional to our employees. The only thing I deal with is hiring and performance reviews. The rest is theirs. It’s very, very cost-effective. In my mind, even if I were still with a large company, there is no question that this would be the only way to go.”
April 1998 Small Business Times, Milwaukee

Michael Cudahy will receive the 2005 Headliner Award at the Milwaukee Press Club’s Gridiron and Awards Dinner on Saturday, May 7. The award is given annually to a person who is making a positive impact on the community.
Cudahy has contributed to the community as an inventor, entrepreneur, philanthropist and activist.
“We’re pleased to recognize Mr. Cudahy for his many years of service to the community,” said Roger Stafford, president of the Milwaukee Press Club. “Few individuals have given the financial and leadership support he has given to the cultural life of Milwaukee.”
Cudahy, 81, is the current president of The Endeavors Group LLC. He is the retired former chairman and chief executive officer of Marquette Medical Systems Inc., a Milwaukee company he founded in 1965 that has since become a division of GE Healthcare.
In recent years, Cudahy redeveloped the Pabst Theater in Milwaukee and is currently leading the development of the Discovery World at Pier Wisconsin on the city’s lakefront.
His philanthropical legacy is already cast in stone, as he serves on the boards of the Pabst Theater, the YMCA of Metropolitan Milwaukee, the Milwaukee Art Museum, the Greater Milwaukee Committee for Community Development, the Milwaukee Symphony Orchestra, the St. Ann Center for Intergenerational Care, the Wisconsin Conservatory of Music and other organizations.
Discovery World at Pier Wisconsin will become an educational resource for freshwater exploration and preservation unlike any other in North America, Cudahy said.
The project is the latest chapter of the Cudahy family odyssey that began when Michael’s grandfather, Patrick Cudahy, immigrated at the age of 3 months with his parents from the potato famine of Ireland to Boston, Mass., in 1849.
“The Irish were not welcome in Boston at that moment of American history. Signs posted in business places said, ‘Help wanted. Irish need not apply,’ an early bit of discrimination in America, perhaps brought on by the British in Boston or the disorderly conduct of some of the many Irish,” Michael Cudahy wrote in his autobiography, “Joyworks.”
Of course, Patrick eventually acquired ownership in a local meatpacking plant, which grew to become Patrick Cudahy Inc. in Cudahy.
Patrick’s ownership in the company was passed along to Michael’s uncle, the eldest son, in accordance with Irish tradition.
Michael’s father, John C. Cudahy, went his own way, earning a law degree at the University of Wisconsin before launching a career of political activism. John C. Cudahy was named by President Franklin D. Roosevelt to be the American ambassador to Poland, Ireland and Belgium.
The Gridiron and Awards Dinner will take place at the Wyndham Milwaukee Center Hotel, 139 E. Kilbourn Ave. The dinner will honor the winners of the 75th annual Excellence in Wisconsin Journalism and Collegiate Competition.
The Press Club’s annual Sacred Cat Award for outstanding achievement in journalism will be presented at the dinner to William L. Allen, recently retired editor-in-chief of National Geographic magazine.
At the dinner, Allen will share his experiences and viewpoints cultivated from a 25-year career of traveling around the world.
The emcee of this year’s Gridiron and Awards Dinner will be Caroline Lyders, morning co-anchor at WISN-TV Channel 12. Milwaukee futurist David Zach will serve as the guest commentator at the dinner.
The public is invited to attend the dinner. For more information, visit www.milwaukeepressclub.org or call Gloria Gappa-Grundeman at (414) 588-9571.
April 29, 2005, Small Business Times, Milwaukee, WI

Question:
I read your article in the Feb. 4 issue of Small Business Times, and it got me thinking about what makes a workplace a more employee-centered “place to be.” I feel that much of what you talked about rang true for me. But as I look back on jobs I have liked or not liked, one of the most important factors for me is what the company’s image is in the community. Are they seen as supportive of the community? Are they linked to programs and/or projects that are improving the quality of life for residents in the community? Are they giving back?
I also know from years of nonprofit experience, that work environments that support employees (whether it is allowing them to volunteer on boards or committees or just letting them sell Girl Scout cookies in the lunchroom) with their efforts to be a part of making the community a better place to work and live, are viewed in a more positive light.
As a member of a nonprofit who has benefited by these “grassroots” employee-driven programs and projects, and as a professional who has the pleasure of working with employee volunteer representatives, I think this type of team building and development tool is often overlooked, yet it is an important part of employee satisfaction. These programs/projects often teach them leadership and project management skills they may not have received in the workplace.
What do you think?
Answer:
The concept of “servant leadership” is at the heart of what you are describing. Most researchers acknowledge Robert Greenleaf as the person who originated this approach. He wrote a book on the topic about 30 years ago. Underlying this leadership philosophy is the belief that the most effective leader is the one who serves the people. Implicit in this approach is the belief that leaders define success by the impact their actions have on others. Helping people become all that they can be becomes an overriding objective rather than solely focusing on the bottom line.
In order to accomplish this end, servant leaders:
–Serve the needs of organization members.
–Meet the needs of those they lead.
–Develop employees to the fullest.
–Coach others.
–Facilitate personal growth in all who work with them.
–Listen and build a sense
of community.
As you can see, this is a fairly radical departure from the typical concept of what leaders are supposed to do (i.e., lead). Servant leaders seek first to serve by addressing the needs of their followers. Because of this, some researchers have called servant leaders, virtuous leaders – individuals who focus on leading others with a focus on moral character, doing the right thing, etc. Recent years have seen a resurgence in the focus on values, principles, doing well by others, etc., and this helps explain why we are hearing more about servant leadership these days.
Generally speaking, researchers who have examined servant leadership suggest that the following attributes are the foundation for this approach:
–Humility – Servant leaders are humble and open to the criticism
of others.
–Altruism – Servant leaders strive to better the common good.
–Vision – Servant leaders challenge their followers to serve the needs of the constituents and to stay focused on achieving the desired end.
–Trust – Servant leaders create open environments and encourage others to get –Empowerment – Servant leaders give their power to their people. They turn them loose to pursue their goals with maximum autonomy.
–Service – Service is at the heart of servant leadership. Servant leaders focus their energies to the fullest on meeting the needs of others.
It is worth noting that servant leadership is applicable to any organizational setting. It is interesting to me, though, that you mention your background in the nonprofit sector. In many instances, nonprofit organizations have practiced servant leadership without thinking about it. That’s simply the way the organization has operated. In this regard, nonprofit organizations have outpaced many for-profit organizations whose focus has been solely on the bottom line.
What is to be gained by examining servant leadership or studying those organizations that employ it? Why should organizations pursue servant leadership? I think you make a strong case for it in your question when you highlight the impact that service-oriented leaders and employees have on the community. Frankly, the building of community, whether it be at work or away from work is central to the concept of servant leadership.
And, by turning attention to community, we turn attention to what I like to call the “other bottom line” – corporate culture. There are many definitions of corporate culture, ranging from the simple (e.g., “The way we do things around here”) to the complex (e.g., “The shared and relatively enduring pattern of basic values, beliefs and assumptions in an organization”). Suffice to say that when we are talking about corporate culture, we are talking about how the business does business – the words it uses, the messages it sends, the behavior it expects, etc.
A corporate culture that is guided and affected by servant leadership is going to be much different than one that is guided and affected by the use of a single criterion for success (i.e., maximum monetary profit). You illustrate this beautifully in your question.
One servant leader with whom I am familiar has gone so far as to draw an organizational chart in which the employees are at the center. As the president of the company, he believes his principal purpose is to make sure his people have what they need to meet their goals. If this means that he must fill in on the frontline so that one of his employees can make it to his or her child’s concert, baseball game, etc., his response is, “No problem. That’s what I’m here for.” His people are loyal and extremely committed to him and the company. He and his people have, in essence, built a sense of community within the company.
Want to build a sense of community? Then, start practicing servant leadership.
Daniel Schroeder, Ph.D., of Organization Development Consultants Inc. (ODC) in Brookfield provides “HR Connection.” Small Business Times readers who would like to see an issue addressed in an article may reach him at (262) 827-1901, via fax at
(262) 827-8383, via e-mail at
schroeder@odcons.com or via the
internet at www.odcons.com
April 29, 2005, Small Business Times, Milwaukee, WI

Commentary: by Steve Jagler of SBT

The news that Delphi Corp. intends to close its two Oak Creek plants and eliminate about 1,000 United Auto Workers jobs isn’t exactly a wake-up call. After all, America has been hitting the snooze alarm for some time now.

We all know the up side to free markets and global trading: We get to buy $45 bicycles and the like at Wal-Mart.

However, this equation also has an ever-expanding dark side, and Oak Creek’s predicament is a microcosm of that dark side. Gone will be hundreds of family-supporting jobs. Jobs that not only paid living wages, but provided health care benefits and vacations. In turn, those workers went out and spent their hard-earned money, buying vehicles, boats, televisions, computers and myriad other items. In effect, that money supported other jobs and businesses in the region.

What came around went around.

When I was growing up in Oak Creek, I knew dozens of friends whose parents worked at the Delphi plant. Those parents got up every morning and went to work. In return, they were able to make a living that enabled them to send their children to college or maybe buy a cottage up north.

They were living the middle class American dream. If they worked hard, they were rewarded for it, and they could even afford a comfortable retirement with a pension.

Today, that dream is eroding from the outside in.

Just beyond the gates of the Delphi plant, Oak Creek’s Howell Avenue has become a generic, neon, retail strip mall. Most of the stores and restaurants pay wages that do not support families. Most do not provide health benefits to their employees.

Consider this: More than 40 percent of the enrollees in Badger Care, Wisconsin’s health care benefits program for the working poor, are employees of Wal-Mart. Think about that for a moment. Small businesses are paying taxes to cover the health care costs of Wal-Mart employees.

Many businesspeople have been throwing up their hands in resignation and saying, "Well, what are you going to do? We’re for free trading."

Former President Ronald Reagan was in favor of free trading, too. However, Reagan understood that "free" trading doesn’t really  happen without "fair" trading. He demanded that foreign markets stop undercutting the American dollar. Before other countries could have access to American markets, he demanded concessions in return. Such concessions resulted in Toyota building several automotive plants in the United States, where they hired American workers.

In his weekly radio address on Sept. 7, 1985, Reagan said, "I’m committed to and will continue to fight for fair trade. American exporters and American workers deserve a fair shake abroad, and we intend to see they get it."

The laissez-faire, weak-kneed resignation that the United States is powerless to demand trade concessions from other countries seeking access to our lucrative society started en masse during the Clinton administration and accelerated during the Bush administration. These policies have resulted in a record national trading deficit.

When people question these policies, they’re accused of being protectionist or isolationist.

Poppycock. This is not an either/or equation. Let us hope we’re done hitting the snooze button. The future of the American middle class is at stake. In the end, we are all in this together. After all, if the middle class dies, who is going to buy your company’s goods or services?

Firstlogic, Inc., a La Crosse-based global provider of enterprise information quality solutions, today announced the formation of a Federal User Group to serve Firstlogic federal customers and business partners. The new initiative creates a forum for customers to share data quality best practices, identify similarities in technical requirements and solution deployments. The inaugural meeting of the Firstlogic Federal User Group will take place Thursday, March 31, at the Crystal City Marriott at Reagan National Airport in Arlington, Va. Agenda items include a training track on advanced matching techniques and a question and answer session with Firstlogic’s federal, project management, development and professional services teams. Firstlogic also announced that Jim Young, a staff consultant with EWSolutions, has been named the chairman of the user group. For more information on the Firstlogic Federal User Group meeting and to register for the event, visit http://www.firstlogic.com/federal.

The Bentley Co. of Milwaukee is expanding into the Madison market with a new office and has launched another company to streamline its services.
The Bentley Co., which is based at 8600 W. Bradley Road, will have a grand opening Feb. 8 for its new office in Madison at 2924 Marketplace Drive.
The firm also has formed BMG Corp., a new company that offers integrated program management services and property investment, development and management services.
Todd Bentley, vice president for BMG, will lead its property development activities in Milwaukee.
The new Madison office for The Bentley Co. and BMG Corp. will be overseen by vice president Peter Szotkowski.
"Madison and the Dane County area are such a vibrant market, and we are very pleased with the project base we established in 2004," Szotkowski said.
Szotkowski already has landed his first project in the Dane County market, as The Bentley Co. will construct the new Deer Park Buddhist Center north of the Village of Oregon. The Bentley Co. will construct the new $2 million, 16,000-square-foot facility.
The Buddhist organization has outgrown is current temple in Oregon, Szotkowski told SBT.
Szotkowski brings a Madison insider connection for business to The Bentley Co., as he most recently was a principal at Affiliated Construction Services Inc. in Madison.
The Bentley Co., which was founded in 1848 by John R. Bentley, is the nation’s oldest family-owned and operated general contractor, with six generations of family leadership.
Thomas Bentley III, the firm’s chief executive officer today, noted that BMG Corp. will enable The Bentley Co. to provide "one-stop shopping" for its clients.
"The concept of one-stop shopping is hardly new, but for business owners, brokerage companies, developers and their investors, streamlining and systematizing the program development and the building process can accelerate return on investment," Thomas Bentley III said.
The company hopes to grow its staff and its presence in the Madison market, according to spokeswoman Christine Plewa.
"We just keep growing and growing. After 157 years, you wouldn’t think that would be possible, but it is," Plewa said.
February 4, 2005, Small Business Times, Milwaukee, WI

Michael DeBakker’s story is one of tragedy, perseverance, survival and rebirth. And that just covers the past 12 years.
DeBakker and his first wife, Peggy, founded Milwaukee Broach Co. Inc. in 1985. The company began as a manufacturer of components used in jet engines for military and commercial aircraft.
Like many startup companies, Milwaukee Broach, lost money in its early stages. By its third year, however, the company was turning profits, and its workforce grew to 150 employees in the early 1990s.
In those early stages, DeBakker might have seemed like the movie character Rocky before his first big fight, feeling he was unstoppable on his way to the top.
Then the first punch came. An economic downturn slowed the company’s growth, stalling profits.
The slowdown was followed by a second, more direct punch in 1993, when tragedy hit DeBakker’s family and the company. Three times. DeBakker’s wife died of breast cancer. His father, Donald DeBakker, and his plant manager, Gerald Goodchild, each died of strokes.
Suddenly, DeBakker was a single father of two boys, ages 8 and 11, and the president of a company that faced an uncertain, precarious future.
However, his tribulations continued. A third punch sent DeBakker and Milwaukee Broach staggering against the ropes.
The company was embroiled in a bitter lawsuit between 1995 and 1997 over the value of shares held by a minority shareholder. Although the case was settled in 1997, DeBakker said the time, energy and capital spent to fight the claim took a heavy toll.
To survive, his company needed an influx of cash, and it came from DeBakker’s personal savings.
"We had to pay off the lawsuit when it was settled, and when the company isn’t doing real well, it falls onto the owner," DeBakker said. "We were also in a time of recession, battling on both ends."
Somehow, he never lost faith.
"When you’re an owner, the money doesn’t matter as much as the success. With all the blood, sweat and tears, if I made it through that, I felt like we could make it through and persevere," DeBakker said.
However, fate was not done battering DeBakker and Milwaukee Broach.
A potential knockout punch came with the terrorist attack of Sept. 11, 2001, and the recession that followed. The Menomonee Falls-based company appeared to be dead in the water, DeBakker said.
Seven employees had to be laid off, and DeBakker asked his management staff, including himself, to take a voluntary 20-percent pay cut to keep the company afloat.
The company was hemorrhaging money, posting "huge red numbers," DeBakker recalled.
Things got bad enough that DeBakker even reached into his own personal finances – again – to keep the lights on.
"All I could do was be honest with the management team," he said. "They understood where we were and knew I was personally funding this company to go forward. It was hard to keep focused – but that’s where our people stepped up. They never lost their focus.
"Every owner gets there," DeBakker said. "You have to decide if you’re going to delve into your personal wealth. It’s lonely out there. Ultimately, that decision comes down to you pacing the floor at 3 a.m. It also comes down to your family and the people helping you from the outside. Those were tough days."
Determined to survive, DeBakker and his management team deployed a three-pronged corporate strategy. They invested $1.5 million in new equipment and invested in training their employees. Perhaps most importantly, they diversified the company’s product line. The management team was determined not to allow the company to be subjected to another economic slowdown in the cyclical aircraft industry.
By branching into automotive parts, hand tools and electric generating equipment, Milwaukee Broach began serving a more diverse lineup of industries to pick up the slack when the aircraft industry dipped.
By December 2003, orders started coming in from the company’s diversification plans, thanks to an aggressive sales staff, DeBakker said.
"And that month, we got a huge defense contract," he said. "We got a huge one for power generation, as well."
In January 2004, some of Milwaukee Broach’s aircraft manufacturing clients started placing new orders, as their businesses began to rebound.
Today, Milwaukee Broach is on the rise. The company posted $3.2 million in revenues for fiscal 2004, and DeBakker is forecasting about $4.2 million in revenues for fiscal 2005.
That is a remarkable turnaround, considering how DeBakker and the company have overcome death, recessions and a lawsuit.
DeBakker said he thinks of his employees as family, because many of them have been with the company since its early days. DeBakker said his feelings about the employees, paired with his commitments to faith and his own family, helped him through the darkest times.
Milwaukee Broach has grown from a small shop into a company that does global business from three locations in the United States. In addition to the Menomonee Falls plant at N52 W13821 North Park Drive, the company has facilities in Antigo and South Carolina.
Like Rocky, DeBakker took his punches and kept getting back up, somehow stronger each time.
All seven employees who were laid off have been hired back, and five new employees were hired last year. Two more employees were added recently, and the company will hire additional staff this year, DeBakker said.
DeBakker said some of the credit for Milwaukee Broach’s survival should go to his advisory board.
One of those advisory board members, Stuart Schroeder, an attorney with The Schroeder Group, a Waukesha-based law firm, said DeBakker’s positive relationships with his employees, vendors and customers kept the business alive.
"There were times when Mike was remaining upbeat when some of his advisors, including yours truly, were not so sure he was going to be able to do it," Schroeder said. "He has had a real wonderful attitude while going through all this. That was the key thing which allowed him to persevere. He has a wonderful relationship with his suppliers and his employees. People are willing to give him time and go that extra mile for him – they had faith in the guy that he would be able to do it."
Today, DeBakker faces much more manageable problems than he has in the past.
"We’re actually trying to slow down a tad," he said. "You have to be careful when you look at how heavily you get involved with a customer. Pre 9-11, we had three major customers. Now we have 10 major customers who make up 75 percent of our sales."
DeBakker has remarried and has two more children with his wife, Kristin.
"I need to give credit to my wife and her family for their support," DeBakker said. "They walked the floors with me at 3 a.m."
Michael DeBakker has gone the distance.
Location:
N52 W13821 North Park Drive, Menomonee Falls
Product: Components for jet engines, power-generating turbines, the automobile industry and hand tools
Number of employees: 40
Annual Revenues: $3.2 million in fiscal 2004
February 4, 2005, Small Business Times, Milwaukee, WI