2010 the year YOU need a PEO

2010 is shaping up to be an especially dangerous year to be a California Employer. We have the national health care debate, massive losses in the unemployment system, and let's not forget workers comp. While we have no idea what will come out of Washington or Sacramento, what we do know is that there will be tough decisions to make and your business is much better off with a seasoned HR professional available to consult with your executive team. PEOs bring this expertise to your business at an affordable cost.

A PEO is a business that specializes in employment just like your business specializes in whatever it is that you do. They create a co-employer relationship and bring many of the advantages of a large business to small businesses. A PEO administers a large group health program, giving them leverage that small businesses can only dream of. This same leverage exists in many places within the employment relationships and nowhere is that more true than in California. California is a great state to live in but it is a tough state to be an employer. Let's look at how a PEO might assist your business when these hot topics hit your inbox.

The Health Care Debate is clearly going to bring change to the employee benefit area of your business. It makes no difference if you provide health insurance or not, the rules are going to be reshuffled and your entire strategy is going to have to be reevaluated. When the smoke clears there will be changes and your business will have to adapt. A PEO will have seasoned professionals that will evaluate the options and be able to help guide your business through the decision that best fits your business. Nobody knows what the outcome of the debate will be, but change is assured and having experience professionals on your team will be critical to your decision process.

Unemployment Insurance is going up but employers are not necessarily going to be helpless victims. Like any fund, when the unemployment peaks and starts to come back to earth the political process in Sacramento will start looking for ways to rebuild the fund and the first wallet they are going to look in is yours. This is the time to make sure that your team has an experienced player that knows how the system works so you can develop strategies for what is sure to be a tough year.

Grab your wallet because Workers Compensation is headed up again and with history as our guide, we know that the increase will not be even or fair and how you manage your business in this area can make a big difference in the bills you pay. We already know that the WCIRB has proposed increases over 20%, and there is probably more than that for businesses that fail to manage this part of their business properly. The base rates and what finally hits your wallet is impacted by many different areas, most importantly your experience rate - that is directly connected to your safety programs. So managing these costs can have a long term impact on the bottom line profitability of your business. Does your Safety Officer do everything they can to manage the experience and make sure that you only pay your fair share? Some businesses end up paying more than their fair share because they do not understand how the system works.

As the Program Director for a regional CEO Roundtable program I have the privilege of personally knowing more that 50 CEOs who run some of the leading businesses in the region and not one of them claims to be a Professional Employer. They are all employers but their focus is like a laser beam on the "Business of their Business", not the business of employment. They are employers because it is required to serve the mission of the business. Their passion is to build or serve the market with a product or service and rarely is that employer services. California has an especially complex set of laws and regulations imposed on businesses and it often gets in the way of serving the mission of the business.

The largest of these companies have Professional HR staff but for the smaller ones this is either not addressed or relegated as an additional duty to someone with little or no background in HR. So it is no surprise that many experience major difficulties in these areas. The liability in HR is often silent until it suddenly hits the business in the form of a law suit or regulatory fine.

I am a serial entrepreneur and have owned and operated small businesses since 1988, and have used a basic strategy of outsourcing everything except for the critical path of the service or product delivery. In other words, I outsource all the things that do not create specific and unique value to my product or service delivery. Because of this strategy I have been a YPP Client since 1999 and I find it one of the most economical and low impact ways of taking care of the employer responsibilities. As I look to next year with all the changes in employer responsibilities in the pipeline, I know that I have YPP monitoring these areas and helping me make the decisions I need to make to implement whatever comes out of Washington or Sacramento.

Like any business decision you have lots of choices when you are selecting a PEO and like lots of other decisions it is the people you chose that make the difference.

Building Harmony in the Workplace

Wouldn't it be wonderful if every workplace operated in a harmonious way? Fortunately, for many companies in our community, this is the case. Organizations with people who work in harmony have capabilities that nurture their capacity for pleasure and work. Ultimately, companies in which people collaborate best will have a competitive edge.

Naturally, conflict is inevitable. People are human and sometimes drama just happens. While some conflict can be good and productive in a dynamic environment where people are challenged to take risks, most conflict is detrimental to an organization... especially if it's not dealt with effectively. Hence, conflict becomes an obstacle that leaders must learn to manage to the benefit of the organization.

Organizational leaders are responsible for creating a work environment that enables people to thrive. If turf wars, disagreements and differences of opinion escalate into interpersonal conflict, you must intervene immediately.

Five key considerations for building harmony in the workplace:

1. Do not avoid the conflict, hoping it will go away. It won't! Conflict that appears to have been superficially put to rest will rear its ugly head whenever stress increases or a new disagreement occurs.

2. Do not meet separately with people in conflict, and leave it at that. It's good to understand each side's point of view. It's even better to bring the individuals together to facilitate communication between the two individuals to help them understand the impact that one is having on the other.

3. You can't force people to like each other, but you definitely can contend for a respectful work environment. Keep in mind that this is one hurdle you will likely never jump over if you don't lead by example.

4. Remember, the participants are not the only ones affected by the conflict. Everyone is influenced by the tension! People feel as if they are walking on egg shells in the presence of the antagonist. Your team members may take sides and cause division in your organization.

5. Do not allow problem employees (those negative instigators) to overpower your organization. After you've done all that you can to coach and counsel those individuals, consider parting ways with them.

An organization is better equipped to handle conflict if it has laid a strong foundation. Working in a way that builds harmony can be learned both at the individual and group level. The key is practice! Extinguishing dysfunctional patterns and habits, and replacing them with new ones that reflect the company's values will result in a harmonious workplace.

YPP Book Club

Emotional Intelligence, by Daniel Goleman


We've all had that employee who we hired with such great expectations. Their resume was impressive, including both experience and education that indicated they could be a star employee, and they generated such confidence during their interviews. However, they failed to engage with other staff, de-motivated co-workers, and just generally failed to perform. What happened?

The 10th Anniversary Edition of Emotional Intelligence provides a lot of insight into how this happens. Daniel Goleman was one of the people who put the concept of Emotional Intelligence (EI) at the forefront of discussions about the "ingredients of life success". Since the original book was published, EI has spread globally, far beyond Goldman's expectations. Educators now assess "social and emotional learning", and companies now routinely evaluate EI in hiring, promoting and developing their employees. We selected it for this months Book Club because we have been surprised by how many times recently we have heard EI used in discussing concerns about employees.

The EI concept challenges the idea that IQ, while a measure of intellectual ability, also equates to the probability of success. One myth that has developed since the original publication is that EI accounts for a full 80-100% of career success, and Goleman makes it clear that this estimate doesn't take into account some other factors. However, there is data that indicates IQ accounts for only about 20% of career success and that Emotional Intelligence is a much stronger prediction factor, particularly in positions where the ability to control and motivate oneself, control impulse and emotions and have empathy and hope are important. How many positions do you have where these abilities are not important?

Chapter 10 brings the concept of EI straight to the workplace, with examples of how low EI impacts it. Goleman conveys his belief that the workplace where empathy and compassion for employees conflicts with accomplishing the organizations goals is outmoded. Instead, EI is essential to the workplace of today. A quote from a psychologist at Harvard Business School captures this idea: "...the virtuoso in interpersonal skills is the corporate future."

What the rapid embracing of EI since the original publication means for our businesses is the early development, at the grade school level, of assessments and education focused on EI, so we will have an opportunity to hire people who have stronger development in this area. In the meantime, it's important to screen, coach and develop towards strong EI to ensure the best probability of success of our employees. For YPP's recommendations in this area, see our HR article this month Emotional Intelligence: It Takes More than a High IQ.

While the book has a lot of psychological detail, it is worth reading to understand the interplay between IQ and EI, and help improve your workplace and success.


For more information on the "Business Case" for EI, see: http://www.eiconsortium.org/reports/business_case_for_ei.html.

Emotional Intelligence: It Takes More than a High IQ

"Emotional intelligence is the ability to sense, understand, and effectively apply the power and acumen of emotions as a source of human energy, information, connection, and influence." Robert K. Cooper. Ph.D.

As Human Resource professionals we experience firsthand the complexities and challenges of managing people in organizations each day. We often find ourselves completely baffled when really smart people act very "un-smart", sometimes sabotaging their careers and personal lives in ways that seem inconsistent with their IQ scores. The flip side of the coin is the individual with only average intelligence who consistently excels in their career and personal lives at a level far above what their IQ score would lead us to expect.

Could it be that IQ measurements are only giving us part of the picture or have we even been measuring IQ in a meaningful way? All of us have encountered high IQ individuals whose career/personal lives just don't seem to jive with their high IQs. Obviously IQ alone isn't telling the story. If it did then everyone with a high IQ would be a star performer in their professional and personal lives. We could just hire people with the highest IQs and all of those messy HR issues and performance problems would be a distant memory. We all know that just isn't the case and as early as the 1970's and 1980's the theory of "emotional intelligence" began to be put forth as the missing link in the IQ puzzle. Daniel Goleman's book "Emotional Intelligence: Why It Can Matter More Than IQ" was first published in 1995 and continues to be considered a groundbreaking work on the subject although the body of literature on the topic has become very substantial.

The true significance of the theory of Emotional Intelligence or EI really struck me recently when my nephew, a college psychology major, enrolled in a full semester course that uses Goleman's book as a text. Our subsequent discussions have been enlightening as I've come to understand that Emotional Intelligence is now viewed as a mainstream concept and fully embraced by many in the academic and business communities.

So what exactly is Emotional Intelligence and what role can it play in your business life? The fundamentals of EI based on Goleman's model are fairly straightforward: to be successful requires the effective awareness, control and management of one's own emotions, and those of other people. Ok, so what if an employee lacks EI? Is it something we are born with or can it be developed throughout the course of our lives? The question has been studied and debated extensively. The definitive answer remains a work in progress because we are constantly increasing our understanding of human psychology and how the brain really works. For now we will leave the minutia to academia and focus on the question from a practical employee management perspective. The bulk of the available literature says yes, your employees and managers can improve their EIs.

Adele B. Lynn's book "The Emotional Intelligence Activity Book" , offers the following five sets of talents as critical to EI development. I am including these in their entirety as a concise framework from which to begin examining EI:

Self Awareness and Control - This talent comprised two separate skills. The self-awareness component demands intimate and accurate knowledge of one's self and one's emotions. It also demands understanding and predicting one's emotional reactions to situations. One who is emotionally competent at self-awareness is also fully aware of one's values and core beliefs and knows the impact and effect of compromising these core components. The self control component requires full mastery of being in control on one's emotions. Both positive and negative emotions are challenged in the most productive manner when one controls the emotion versus having the emotion control the person. The person with mastery and control of emotions can anticipate and plan emotional reactions to maximize effectiveness.

Empathy - empathy requires the ability to understand how others perceive situations. This perception includes knowing how others feels about a particular set of events or circumstances. Empathy requires knowing the perspective of others and being very able to see things from the value and belief system of the other person. It is the ability to fully immerse oneself in another's viewpoint, yet be able to remain wholly apart. The understanding associated with empathy is both cognitive and emotional. It takes into consideration the reasons and logic behind another's feelings or point of view, while also allowing the empathic party to feel the spirit of a person or thing.

Social Expertness - Social expertness is the ability to build genuine relationships and bonds with others that are based on an assumption of human equality. It allows people to genuinely express feelings, even conflict, in a way that builds rather than destroys relationships. Social expertness also enables a person to choose appropriate actions based on his or her feelings of empathy. The talent of social expertness allows caring, support, and concern to show for fellow humans in all of life's situations. Social expertness also demands that one read social situations for readiness, appropriateness, and spoken and unspoken norms. Resolving conflict without compromising core beliefs or values is an important component of social expertness. High social expertness also allows for strong networks on both a professional and personal level that can be enlisted readily when needed for aid.

Personal Influence - Personal influence is the ability to inspire others through example, words, and deeds. It is the ability to lead others by way of social expertness. Personal influence is the ability to read situations and exert influence and leadership in the desired direction. It is also the ability to confront issues that are debilitating to relationships, goals, missions, or visions. Personal influence is, in addition, exhibiting motivation for one's visions, missions, core values, and beliefs.

Mastery of Vision - Mastery of vision requires that the individual has the ability to set direction and vision guided by a strong personal philosophy. The ability to communicate and articulate with passion regarding direction and vision are also essential to mastery of vision. The talent serves as the inner compass that guides and influences one's actions. This inner compass also provides resilience and strength to overcome obstacles. It is the inner motivator and the guardian angel of our purpose. Mastery of vision allows us to know who we are and what we are compelled to do with our lives. When our actions words are consistent with this personal philosophy, it is our sense of authenticity. When inconsistent, it is our sense of stress and discomfort.

So, you may be asking, why does any of this matter to me as a business owner or manager? For those of us who address HR issues on a daily basis it doesn't require psychologists or academics to tell us EI is important. We seldom receive calls about employee issues that are rooted in a lack of IQ but each and every day we address issues with employees and managers that are EI based. Employees and managers with low EIs cost you time and money. High EI performers will quickly flee a situation where managers and coworkers are lacking good EI's. A frustrated high EI employee may not know the technical term but will know the work environment is "off" and seek a more positive and constructive job opportunity.

The concept of EI and its relevance to work/life success has become integrated into the framework of even the largest corporations. "Interpersonal communication and other so-called soft skills are what corporate recruiters crave most but find most elusive in M.B.A. graduates," says the Wall Street Journal. "The major business schools produce graduates with analytical horsepower and solid command of the basics - finance, marketing and strategy. But soft skills such as communication, leadership and a team mentality sometimes receive cursory treatment." Wall Street Journal.

While you may not have the time to become fully conversant in the language of EI that doesn't mean your company cannot derive benefit from the concept. You can easily implement some basic business practices that can help improve your company EI. For instance, when you are recruiting new employees include a few behavioral interview questions that will give you some indication of the applicants EI. As an example, ask someone about a work situation that was frustrating and listen carefully to how they respond. Do they have a balanced view or is their first response to lay blame or take all the credit for the solution? Another opportunity to up the EI in your organization is by consciously and consistently modeling communication and behavior that supports improved EI. It may be tempting to use some of the trendy pop EI assessment instruments you will find on the internet and in various popular books. While these can be a lot of fun and offer some personal insight we urge caution with these as hiring or promotion tools. Profiles International, the company we use for our psychometric assessment instruments has been working to develop a comprehensive EI assessment instrument for more than 5 years. The instrument is still in development and testing, since they have found it very difficult to develop a reliable tool that will meet validation standards, so if some of the best professionals in the world are proceeding cautiously we urge you to do the same.

As managers, if we can better maximize individual effectiveness we can achieve better organizational results. Working with our employees and managers to raise their EIs is an opportunity to improve the quality of their lives, their job performance, the work environment and ultimately your bottom line. So where to begin? In addition to the two excellent books cited here you can log onto www.eiconsortium.org and find a substantial number of recommended books and articles.