Video surveillance of employees could bring on lawsuit
Employers using video surveillance to monitor their employees’ activities in the workplace need to proceed with caution, according to a Milwaukee labor and employment attorney.
Current estimates are that nearly one quarter of the nation’s work force is currently subject to video surveillance.
“Under the Electronic Communications and Privacy Act, the federal law which regulates the interception of electronic and oral communication, an employee may sue his or her employer for intercepting any wire or oral communication by that employee,” says Timothy L. Stewart, a labor and employment attorney at Davis & Kuelthau law firm.
Some Courts have held that an employer may be able to avoid liability under that law by using video surveillance systems that do not include audio recording devices, Stewart said.
Built-in exceptions to liability under the law include:
? The prior consent exception. If one of the parties to the conversation recorded has consented to the recording of the conversation, then there is no liability for interception or recording of the conversation.
? Reasonable expectation of non-interception exception (for oral communications). In order to be able to sue his employer, the employee must be able to show that he had a reasonable expectation of non-interception. The best way for an employer to defeat this expectation is to give a blanket notice to its employees that they are being monitored. The more specific the notice is about the monitoring, the more likely an employee would not have a reasonable expectation of non-interception. For example, the notice might contain the exact location of all recording devices.
“Public employers may be at greater risk when using video surveillance equipment because of the constitutional implications involved,” said Stewart.
“Generally, the public employer is prohibited from violating its employees “reasonable expectation of privacy,” which is mandated by the Fourth Amendment of the U.S. Constitution.”
A 1997 federal court case held, however, that the use of soundless video surveillance equipment by a quasi-public corporation (a telephone company) to monitor the workplace did not infringe on its employees’rights.
Whether the use of video surveillance equipment is a mandatory subject of bargaining in a unionized workplace remains in question. The National Labor Relations Board recently held that the use of hidden video surveillance equipment was indeed a mandatory subject of bargaining. However, the federal Court of Appeals with jurisdiction over Wisconsin held in 1993 that electronic surveillance was a management right.
Because of the inconsistency of arbitration decisions, it is difficult to predict whether video surveillance is a mandatory subject of bargaining. However, it seems clear that concealed video surveillance without notice to employees is more susceptible to abuse by the employer and therefore, may give an arbitrator or court more reason to rule that it should be a subject of bargaining.
April 1998 Small Business Times, Milwaukee

SBT editor
While the year 2000 computer bug issue may pose gloom and doom for millions of businesses, it’s comforting to know that those of us in the publishing business are pretty much immune from the problem – at least the majority of us who rely on Apple computers.
Apple computers will not die when the clock strikes midnight on Dec. 31, 1999. The company’s Macintosh computers have always had the ability to transition past the year 2000, Apple reports.
Apple says its Mac operating systems can correctly represent dates through the year 2040, and that its date-and-time utility covers dates to the year 29,940.
Owners of some older, non-Macintosh Apple II models who use old operating systems, however, will have to update their operating systems.
A further advantage of Apple computers is their ability to recognize that Feb. 29, 2000 does exist. The year 2000 is a leap year and, apparently, many computers aren’t programmed to accept Feb. 29 that year as a valid date.
While the Mac operating systems are basically free of the year 2000 problem, some software Mac operators use may be affected. Those include the popular Microsoft Word and Excel programs. Excel, for example, doesn’t realize that Feb. 29, 2000 exists. And, depending on the version of Word being used, that software could force your computer to lock up or fail to locate files dated beyond Dec. 31, 1999.
One of Microsoft Websites, at www.microsoft.com/CIO/articles/Y2K_issues&solutions.htm, has more on the problems and what to do to correct them.

Old-line managers are out of touch
Roadblock:
Morale in the company remains consistently low. People complain about their work, their coworkers, the other departments, and especially about management. Some are very open about saying the better-than-average pay scale is the only thing keeping them there. The owners and managers of the firm can’t understand what the problem is. For decades profits have been excellent and their employees have been generously compensated. The company has grown, as has its reputation with both customers and competitors.
Problem:
The culture of the company is rooted in the past. While the leaders are able to point with pride at their success, new managers and leaders are not being developed to help the firm maintain and build on that success. Existing managers remain focused on assigning tasks and monitoring results rather than on supporting and developing their people. Communication is from the top
New managers must become tomorrow’s leaders.
down and employees are valued most for doing just what they are told to do. Competition between departments is evident, especially between production and sales. The leadership believes that money is the primary motivator and is unaware of the other factors that create job satisfaction. This autocratic style worked in another day and time but is out of sync with today’s working environment.
Solution:
Over time, the leadership must shift the culture of the company and develop a participatory and collaborative environment. New managers must be groomed to become tomorrow’s leaders and current managers must change their leadership style. Employees want and need the opportunity to share both responsibility and accountability. It’s time for management to relinquish some of its control.
As managers become coaches and mentors, their relationships with the employees will strengthen. Morale will rise and complaints diminish when communication becomes a two-way street and people are valued for their ideas as well as for the work they do. With an open, participatory environment where everyone feels a significant part of the team, this long-established company will be in the best position for continued growth and profitability.
Solutions to Roadblocks are provided by The Performance Group Inc, of Brookfield. Small Business Times readers who would like to see a “roadblock” addressed in this column can contact the company at 784-2922 or via e-mail at perfgrp@execpc.com.
April 1998 Small Business Times, Milwaukee

Program helps students develop critical thinking

Employees at Firstar’s New Berlin bank thought it would be a worthwhile endeavor to help schoolchildren gain insight into the work world through New Berlin’s “Adopt-a-School” program.

They accomplished that, and more.

When a group of 21 students from the Glen Park Elementary School showed up at the bank last month, the seven Firstar employees who participated gained insight into their own jobs, as well.

“At one point, I told one young man my title,” recalls Mike Simmer, senior vice president with Firstar’s Retail Financial Group. “He responded politely, letting me know that was all well and good, but he wanted to know what I really did. These kids were positively inspiring.”

The New Berlin Chamber of Commerce was instrumental in getting Firstar and Glen Park together in 1997. Through the “Habits of the Mind” program, students learn what it takes to make it in the business world.

“This was much more than your basic ‘see-the-vault-and-here’s-how-we-count-coins tour,'” Simmer says. “I was amazed at the thought that went into the students’ questions. They focused on the kind of life skills – the qualities and skills required to do an important job in any field.”

The Adopt-A-School program was the result of hearing from many businesses in the community that they are having trouble finding workers with the proper skills, says Rick Eckart, executive director of the New Berlin Chamber.

“This has been a fantastic program – well-received by the students, administrators, parents, and the employees of the bank,” Eckart says. “They’re learning a lot about the way they think and approach their jobs through helping the kids in this program. I was very impressed by how articulate and bright these students were and how eager they were to participate and learn. The employees and officials at the bank were also impressed with the program – definitely a win-win.”

The New Berlin program is part of Firstar’s commitment to support young people and education, says Firstar’s Randy Duke. Over the course of 1997, representatives of the bank and members of Glen Park’s faculty met a number of times to study the “Habits of the Mind” concept. They developed a plan which incorporated pertinent discussion and activities into the school’s curriculum during the first two months of this year, leading up to a March 10 visit at the school.

“Habits of the Mind” is an element of a program called “Dimensions of the Mind,” originally developed at the Mid-Continent Regional Educational Laboratory in Aurora, Col.

The students’ interviews centered on how the bank employees themselves use “Habits of the Mind” thinking, which includes critical thinking which encompasses accuracy, clarity, open-mindedness, respect and restraint, creative thinking, and evaluating feedback.

Robin Talbott, office manager at Firstar’s Waukesha office on Silvernail Road, was an enthusiastic participant in the program.

“I thought it was awesome,” Talbott said. “I think if every school would begin teaching Habits of the Mind, when the kids enter the workforce it would make a real difference. I was amazed at how focused they were when we met with them.”

Talbott would like to mirror the New Berlin program in the Waukesha area. Talbott was impressed with how the students asked questions about how a given job relates to a person’s life.

“It was most definitely a great refresher for all of us and how we relate planning, for example, to our everyday lives,” Talbott says. “I’ve never felt so good about a school program. It’s the first time I ever walked away feeling it was definitely something that can have a positive impact not only on me in my life but on my staff as well.

“A 6th-grader asked me about evaluation and what kind of feedback I give to my employees,” Talbott recalls. “That floored me.”

Firstar provided the students with professionals to interview regarding how they use Habits of the Mind-type thinking every day in their jobs or even in their personal lives.

“They’re not teaching the students what to think, but how to process their thoughts,” says Robert Figueroa, Firstar-New Berlin’s office manager.

April 1998 Small Business Times, Milwaukee

Making a company Year 2000-compliant involves auditing each and every computer program used by the company – a labor-intensive process which can take anywhere from six to 18 months. Every line of programming has to be checked. Some of it is written in computer languages no longer used or understood.
How did we get into this mess in the first place?
Back in the 1960s, ’70s and ’80s, storage space on mainframe computers was valuable, and it was cheaper to skip two digits in the standard date field: MM/DD/YY. The date “19” was assumed. Programmers carried the concept over to personal computers, which received a boost in performance by carrying the two-digit date field.
According to Year 2000 guru Peter de Jager, the problem is largely software-related. Current estimates are that as much as 90% of software code is potentially infected by the Year 2000 problem.
Here’s what Jeff Ray, vice president of emerging technologies for Detroit-based Compuware, says businesses need to think about when it comes to a Y2K fix:
Step 1 – Identifying the problem
First of all, assume you have a problem no matter how small your business. Next, develop some kind of strategy for remedying the problem. If you have one, your information technology specialist needs to come up with a plan.
Make a technical case that states how he/she intends to go about finding the problem. There are many products available that scan and look for these infections. One such product is called JumpStart 2000. Keep in mind that you’re going to get a lot of hits for things that won’t fail. These are called “false positives.”
Step 2 – Fixing it
There are three common ways for fixing the Y2K faults.
The most permanent way, and the most expensive, is to turn two digits into four. But once it’s fixed, it’s fixed for good.
Next is the most commonly recommended approach called “windowing.” This method tricks the computer into thinking it’s dealing with the proper century.
“We recommend to our clients that they use windowing because it is reasonable in cost, and manageable,” Ray says. “The only problem, potentially, is that you might have a problem 50-60 years down the road, because you haven’t permanently fixed it. But by then, the odds are that computer language will have changed.”
Windowing is like a sliding window: when you get evidence of infected date, say the number is “90” and the computer doesn’t know if it is 1890, 1990, 2090. So, take a pivot date, such as 1970; this embeds a little bit of logic in the computer. If the two-digit number is greater than 90, it points it toward the proper century.
“We think it is the preferred strategy because it means we don’t have to expand the date fields in our files,” says Jim Bloom of Milwaukee Public Schools.
If you run an insurance company and you are dealing with calculations that span backwards, you could have some problems with the windowing method, Ray says.
The third way is to use a sub-routine.
Another way to fix it is to replace the code.
Step 3 – Testing it
You’ve gone through and identified the bugs and performed your fix. But, you won’t know whether it is fixed until you test it with future dates to see if you get the right answer.
“Companies in our industry have never done a good job of software testing,” Ray says. The challenge with testing is you’re dealing with floating rules; the rules don’t stay constant. It’s very easy to test for getting the same answer, Rays says. You have to be very clever in time-dimensional testing. The hard part is: How do you test when the rules change? The most important part of testing is to involve the end user.
“You have to involve the guy who uses the actual table, the Subject Matter User (SMU),” Ray says. “You cannot test for stuff you don’t know the answers to. Begin the testing discussions before you start altering the code. Capture a snapshot of all the answers the system has today before you mess with your code.”
Anyone who relies on outside suppliers or e-commerce should be concerned with this, Ray adds. About nine months ago, auto companies woke up to that fact because they rely on outside suppliers. It’s not enough to say, OK, fine, we’re sound. You need to validate through your providers and suppliers that they are compliant. The auto industry is going through this process, as is the securities industry.
“The Street Test” is a massive undertaking which will take place on Wall Street this summer.
Finally, don’t let the weeds grow back. Make sure that the outside contractor who comes in to work on your system when the tax code changes must be made is aware that he’s dealing with a Y2K-compliant system. If someone is coming in, make sure that those changes will not corrupt the Year 2000 compliant system.
April 1998 Small Business Times, Milwaukee

Answer of Kit Vernon, Blue Horse, Milwaukee: Selecting the right agency is no different from successful performance in your company’s other operations. Yet few executives do it often enough to achieve even minimum competence. However, some simple, common-sense approaches will help you do it efficiently.
Identify the specific attributes you seek in priority order. Build the rest of the process around finding the agency which matches up best.
Agencies will claim they’re skilled at a wide range of activities. Some are; none is equally adept at everything. Make sure agencies prove their expertise through recent client work, and provide client references.
Which agency attributes are most important?
Your first reaction will probably be “creative.” But what’s most important varies from company to company. Perhaps you value strong marketing and strategic skills, or specific market experience. For others, media negotiating or media planning may be at the top of the list. Or you might favor integration of a full range of communications activities.
The person with the most agency contact should be charged with culling agencies to a reasonable number, distributing information to them, and facilitating the selection process. The weight of each person’s vote will vary from company to company, but the people who’ll work with the agency on a frequent basis should have an important voice in the decision.
It’s finally time to start talking. Make the first call to your current agency. Tell that agency you’re conducting a review and why. If the current agency will be seriously considered, tell it. If not, thank the owners and tell them you’ll be naming a new agency. Don’t do the firm the “courtesy” of involving it unless it has a real chance. Don’t try to hide the review. Chances are it will find out anyway.
Most companies interview too many agencies. They think saying “We reviewed questionnaire responses from 42 agencies” makes them look thorough and important. In fact, a “cattle call” is an almost certain sign of an amateur who hasn’t done the necessary homework or someone looking to impress management.
Well-managed reviews rarely include more than six to eight agencies. Do your homework and narrow the field before serious conversations. Visit Websites. Ask knowledgeable friends, colleagues, media reps and vendors for their suggestions.
If some names pop up repeatedly, give that firm a closer look. Informal discussions with more agencies is okay, but limit RFPs or questionnaires to serious contenders.
RFPs often take dozens to hundreds of hours to answer. Don’t waste the agency’s time, or yours, unless there’s a fair chance the agency might be selected.
Invite the select few in for an exhaustive interview. Before the meeting, tell them precisely what you expect from them, in qualifications and in the meeting. Make sure your questions really work at finding who meets your priorities.
Your team’s chemistry with the agency is important. Before a good relationship can occur, you must like and trust the agency and want to work with them. Never hire an agency you aren’t excited about, just because they scored highest on a scale. If you don’t like it now, you probably won’t like it any better in a year.
Many clients ask for speculative creative presentations. In most cases, it’s a waste of time. It’s extremely rare that agencies get enough background to produce meaningful work. “Spec work” is scarcely ever produced. But agencies generally feel they have to do it, if asked.
The selection of an agency is a grueling, expensive process, for both agency and client. Don’t subject yourself or a group of agencies to it unless you truly seek a partner for the long-term. If you need only short-term project help, you can find an agency to help you. But the process, and your expectations of agencies, should be much different.
Make a commitment to the agency you hire. The cost, the learning curve and the disruption of your program make this absolutely necessary. Good client/agency relationships are like a good marriage. They require respect and effort from both sides. the right advertising agency?e right advertising agency?
Answer of Todd Robert Murphy, Todd Robert Murphy Communications, Milwaukee: Running a small business is what you do best. Whether you intend to grow your company or keep it small, you’re in business to make a profit. You need customers. You need to advertise.
As a small business owner, you may have no idea how to do that. That’s why you need an ad agency. The advertising industry is changing rapidly. No longer are agencies accessible only to large companies. Smart agencies are positioning themselves to meet the needs of small businesses like yours.
An advertising/public relations agency is, first and foremost, a consultant and advisor for all of your advertising, marketing, promotional and public relations needs. You should use your agency as you would your other professional consultants, such as your attorney or your accountant.
Your ad budget will depend on the type of business you’re in, the size of your company, your competitive situation, the media consumption habits of your potential customers, their buying season and many other factors.
Your agency can help you decide on an appropriate, cost-effective campaign. Advertising is something that , if done right, pays for itself.
A true full-service agency is a one-stop shop, providing strategic planning, marketing plans, creative and production services, media strategy, and placement for all types of print, electronic and other paid advertising, as well as collateral (brochure) design and production, public relations, media relations and public affairs.
A good agency handle both small projects and large campaigns – and treats them with the same respect.
What if an ad rep says you don’t need an advertising agency?
Think about it. A salesperson representing a single media outlet has a vested interest in getting control of as much of your advertising budget as possible. It’s called a sales commission. Advertising agencies make money on media commissions, too, but they have no vested interest in recommending one station over another, or one media over another. The agency’s commission is the same regardless of which media outlets it recommends.
Your business is your business. If dealing with advertising reps is wasting critical time you could be devoting to something else, you need to turn it over. A good agency will save you time and money while reaching more of your target audience.
The key to a good agency is that they can do it faster, better and cheaper than you could do it yourself.

While the Internet is taking the world by storm, it hasn’t brought everyone into its grasp. Not yet, anyway.
For those unfamiliar with the basics, Wauwatosa’s Terri Liska offers some background information on the Internet and its World Wide Web. Liska is the founder and owner of Cyber-Dog Marketing Solutions, a Internet-focused marketing agency.
The Internet offers businesses two useful components: e-mail and the World Wide Web. You might consider the Internet as a highway, and the Web as stores and other businesses and organizations along that highway; e-mail is the postal service.
The prime attribute of the Web is its ability to store and allow for the easy transfer of graphical information – pictures and other visual elements. Without that attribute, it would only be practical to send textual information over the Internet.
Thus, Websites can offer words, still and moving pictures, and sound – all in a package that can be accessed via other computers which are hooked up to the Internet.
A further attribute of Websites is interactivity. You can track the number of people looking at your site. And you can set up sites that allow immediate reader response, including purchases – “electronic commerce.”
E-mail is another use of the Internet that offers quick, individual or broadcast communications. Both text and graphics can be e-mailed.
To get on the “information superhighway,” you need an Internet Service Provider (ISP) such as America Online or Exec PC. Having a provider allows you or your firm to create a Web page and have e-mail capability.
Your ISP is connected to what are called “hubs.” There are fewer than a dozen hubs in the United States, Liska says.
The hubs, besides being connected to each other, are connected to your ISP (or other providers) where they connect the ISP computers (servers) to you via a phone or cable line which is in turn connected to your computer.
When someone looks up your Website’s Internet address or Uniform Resource Locator (URL), your URL represents a series of what are called protocols, which are transmitted through the telephone line and are followed to the source of the protocol (which is your ISP). When it finds the protocol, it grabs all text and graphics stored on the servers for your Web page at your ISP and is able to display the information to the user.
E-mail works almost the same way. When you establish an account with your ISP, you are assigned an e-mail address. The mail is stored in your unique “mailbox” at your ISP. A number of “aliases” can be set up, allowing one e-mail address to have different names.
April 1998 Small Business Times, Milwaukee

Or does it represent an impediment to redevelopment?
All but the purist preservationists have to wonder about the insistence among city officials to save the decrepit Gipfel Union Brewery building in downtown Milwaukee.
The building has been an eyesore in downtown Milwaukee for years.
Now, with engineers saying the building is facing imminent collapse, it’s fostered another bother: city officials have blocked two of the four lanes on the busy stretch of Juneau Avenue fronting the property.
City officials say the structure, built in 1853 and now the oldest brewery building in the city, should be saved, not only for its significance to the city’s brewing history, but also because of its rare federal-style architecture – a plain style which offers few distinguishing characteristics.
The building owner and city government forces have been battling over the future of the property. The owner wanted to tear it down; the city wants it preserved.
A prospective savior has emerged who says he’ll determine whether it makes economic sense to buy the property and make a brewpub.
But one look at the building makes the passerby wonder what all the preservation fuss is about.
If razed, it’s not likely the community would lament its passing the way it did the loss of the North Western railroad depot. Few would notice.

More contacts build stronger relationships
Ever have the gut feeling that you’ve made a sale, but then, somewhat unexpectedly, someone else in the company changed his mind and left you out in the cold?
When salespersons limit their customer contact to just one person, they have a one-dimensional connection. Influencers have a big say in many company’s buying decisions, and smart sales people are getting to know them.
A rep for a computer networking firm told me he had 33 people to sell as one customer. One was purchasing, three were management, and 29 were end users who had reservations about the new system.
If the 29 users weren’t sold on him and the system, the sale might well be lost to a competitor. After an extensive series of fact-finding meetings and demonstrations, the sale was made. All 29 endorsed his system to their supervisor and management.
While most sales won’t have that many buyers, it’s a sure bet that more than one person will have influence.
Some companies insist you communicate with one person only. So be it. Just make sure you’re not putting his success – and your future sales growth – in jeopardy by working with limited information. And, don’t rely too heavily on that customer for continued sales growth.
In order to have a true partnering relationship, you have to become more involved.
The best place to start is at the top. When calling a prospective customer, ask for the president before asking for purchasing. [You’ll probably get an extremely helpful executive secretary who can give you other names.]
Contact, and stay in touch with, each of them by phone or mail. They should know your name – and you should know theirs.
With current customers, find out who approves your type of expenditures, who will be the end users, who manages the end users and who are the buying assistants. There may be others, too, but as a start, get connected to those people who influence the purchase of your product or service. Their input to you is vital.
Other ways to make multiple connections include asking to sit in on a portion of a group meeting or attending open house events.
Nobody has to tell you that businesses are putting more demands on their people to be productive and cost-effective. They, in turn, place more demands on their vendors. You can stand out from the competition by building deeper, partnering relationships. To them, you become more than just a vendor, you become an indispensable resource.
10 tips
For Building Contacts
1 Always start at the top
Keep in touch with everyone you talk to.
2 Put yourself in the buyer’s shoes
Think in their terms.
3 Learn their buying process
Who reviews or approves proposed purchases?
4 Ask to meet with end users
Their input is vital, and they’ll appreciate being asked.
5 Suggest doing a group Q&A meeting
Brown-bag vendor lunches are a great way to meet influencers.
6 Be pro-active in contacting management
But don’t leave the buyer believing you’re going over their head for the sale.
7 Follow up with everyone
Send “thank yous” to all contacts, and stay in touch with them.
8 Attend open house events
Be visible, and get to know their staff.
9 Make the corporate office contact
Get to know influencers at the main or regional offices.
10 Create a two-way dialog
Get to know influencers, and let them get to know you.
Joe Guertin is president of Joseph Guertin & Associates, an Oak Creek-based speaking, training and coaching firm. Your comments are invited at 414-762-2450, or jguertin@tcccom.net.
April 1998 Small Business Times, Milwaukee

But with so much change taking place in today’s workplace, are employee handbooks still essential? Yes, they are.
However, outdated handbooks can pose a legal trap for business owners and their supervisors, based on court decisions in which an employee handbook was determined to be an employment contract, prompting the judge to prevent or reverse a termination decision and substantially fine the employer.
A review of the evolution of handbooks provides insight into why some employers believe handbooks create more risks than benefits.
Prior to 1964 (passage of Title VII of the Civil Rights Act), “at-will” employment was not challenged. In fact, court decisions confirmed that the at-will employment doctrine was strong – employers or employees could terminate the employment relationship for any reason, at any time.
Under at-will employment, employers had no reason to think that employee handbooks could be interpreted as employment contracts. Consequently, handbooks were written to be informational and often included a touch of “PR” – for example, welcoming employees and indicating the company was looking forward to a long and prosperous relationship with them.
The term “permanent employee” was commonly used in handbooks in the 1960s, ’70s, and ’80s. Presumably it was a convenient way to distinguish from “temporary employees,” and not meant to be interpreted literally.
Besides Title VII, numerous laws were enacted in the late ’60s and ’70s that eroded at-will employment. Many were much-needed and had excellent intentions. In response, however, employers began to establish policies and document their actions to protect themselves against legal claims that they were violating these laws.
Many companies gave their employee handbooks a major overhaul in the late ’80s, after a few creative individuals convinced a few equally creative judges and/or juries that statements in handbooks constituted employment contracts, and therefore negated or drastically altered the at-will employment relationship.
The Wisconsin Supreme Court contributed to the transformation of employee handbooks with a landmark decision in 1985. It ruled that an express contract was created when an employee (the plaintiff) accepted a handbook that contained a “just cause” standard for terminating employees.
The continued erosion of at-will employment over the past 10 years provided ammunition for those who argued that handbooks should be construed as employment contracts and thus limit an employer’s right to terminate. Handbooks found to create an employment contract typically include references to:

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