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<b style="color: blue">Human Resource Associates</b>
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<span class="heading">HR - On The Job</span>
<p class="issue">Pareto's Magic Numbers</p>
<p class="subtitle">The 80/20 Rule</p>
<p>At a staff meeting many years ago, one of our employees reported that 80 percent of her billing came from 20 percent of her clients. Surprised, I asked, “What did you get from the other 80 percent of your clients?” She replied, “I got the other 20 percent of my business of course.” Once the laughing quieted down, we took a closer look at our other operations and found that 80/20 rule popping up in a lot of places. Since then, we have occasionally tested that rule with our clients and it seems to hold up almost everywhere.</p>
<p>Although not precise or statistically accurate, as a guideline, the 80/20 rule is an excellent tool that can be used in many ways. The numbers are not always exactly 80 and 20 but are usually remarkably close. Is this some new discovery uncovered through our current technology? Not at all.</p>
<p>In 1906, Italian economist Vilfredo Pareto created the mathematical formula to describe the unequal distribution of wealth in Italy. His studies found that 80 percent of the wealth in the country was owned by 20 percent of the people. Based on those studies, Dr Joseph Juran, working in the United States in the 1940s, recognized this as a universal, natural principle that he called “The vital few and the trivial many.” In his analysis, he stated that 20 percent of almost anything is responsible for 80 percent of almost everything! The concept became broadly known as “Pareto's Principle of the 80/20 rule.”</p>
<p class="section">Does Pareto's Principle apply everywhere?</p>
<p>Understanding that the few (20 percent) of anything are vital and the many (80 percent) are more trivial does seem to be universal. In Pareto's studies, he discovered that 80 percent of all the defects in a factory's products were caused by 20 percent of the work process. Project Managers have since found that 20 percent of the work (the first 10 percent and the last 10 percent) consumes 80 percent of the time and resources. The major work product (80 percent) only eats up 20 percent of the time and resources.</p>
<p>As studies continued, the discoveries became more useful; 20 percent of your stock items use up 80 percent of your warehouse space. Eighty percent of your stock comes from 20 percent of your suppliers. Eighty percent of your sales comes from 20 percent of your sales staff, and 20 percent of your employees will cause 80 percent of your employee problems. Eighty percent of your revenue is created by 20 percent of your employees, while it takes the remaining 80 percent of your employees to create only 20 percent of your revenue. Do those creating 80 percent of your revenue get 80 percent of your compensation budget? I'm sure they don't. No more than the idea that the group creating 20 percent of your revenues should only get 20 percent of your compensation budget. But shouldn't it at least be significantly leaning in that direction?</p>
<p class="section">What's the real message?</p>
<p>The value of the “Pareto Principle of 80/20” is to remind us to focus on the “vital few,” the 20 percent that matters most. Not to ignore the “trivial many,” the 80 percent that is so much less productive, but to focus more on what matters most. When unending fire drills and mini-emergencies are eating up your day and your life, remind yourself to identify the more important 20 percent on which you need to focus. If something on your list needs to slip, should it be from the vital, most important 20 percent or the trivial 80 percent?</p>
<p>There is much to say in favor of supporting, developing, and nurturing the 80 percent. But, find out where to draw the line on how much concentrated effort is a good investment and how much is wheel spinning. Cutting off the 80 percent and thereby losing 20 percent of your revenue can still wipe you out. However, don't spend 80 percent of your time, energy, resources, and assets chasing 20 percent of your revenue. Concentrating your efforts on the biggest return would seem to be a wiser choice.</p>
<p>It's not only about working smart, but is also about working smart on the right things. </p>
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<p align="center"><b><i>Have an employment question?</i></b></p>
<p align="center">Send it to <a href="mailto:[email protected]?subject=From HR On The Job">[email protected]</a>.</p>
<p align="center">Please include Company Name and Association in your e-mail. Company identification will be kept confidential.</p>
<hr />
<p class="heading">Hitchhiking on the Information Highway</p>
<p><b>Dateline:</b> February 2011</p>
<p><i>(Note: Although we attempt to provide the HRU update on the first of each month, we are normally delayed awaiting the release of several monthly government statistical reports. We will hereafter update the information as each report becomes available without waiting for all of them to be released.)</i></p>
<p class="section">Laws You Should Know About</p>
<p class="subsection">Let's Talk Cash</p>
<p>“Okay Melissa, I was able to convince the boss to okay your 4% increase, but you're the only one getting a raise, so you absolutely cannot tell any of the other employees.” But two days later you have three other employees separately coming to you complaining about how unfair this is. So you go back to Melissa, “I thought I was clear that you were to keep your pay raise confidential.” Melissa replies, “But they asked me straight out, and I didn't feel comfortable lying to my friends.” You reply, “I don't want to hear it. I'm rescinding your raise and you can forget about that trip to the annual convention.”</p>
<p>Is that how you would react? I think many of us might. Well, if you would have, Melissa would have a labor violation charge against you if she chooses to file it. The National Labor Relations Act (NLRA) gives employees the right to discuss wages, benefits, job conditions and other terms of employment freely. By refusing them that right you are in violation of the NLRA. And, in our example above, you would be guilty of retaliation. <em>More lawyers.</em></p>
<p class="quote">
“If you lend someone $20 and never see that person again,<br />
it was probably worth it.”<br />
- Mickey Gorman
</p>
<p class="subsection">Federal Leave vs. State Leave</p>
<p>The federal Family and Medical Leave Act (FMLA) requires that employers with 50 or more employees must allow their eligible employees up to 12 weeks of unpaid leave each year for family medical purposes. Some states also have laws requiring employers to allow eligible employees with unpaid leave. (Some states require paid leave.) However, some of those state laws allow leave for purposes not allowed in the federal law. For example, some states further allow leave for the medical needs of “spousal equivalents”. So if an employee is granted 12 weeks of leave under the federal FMLA law, and then later requests leave for a “spousal equivalent', you must grant the additional six weeks for that purpose. However, in some cases you can grant the state allowed leave first and by doing so fulfill the requirements of the federal law at the same time. Check with your attorney to assure your rights as well as your obligations and be sure employees are aware of both laws. <em>More paperwork.</em></p>
<p class="quote">
“Some days you're the pigeon<br />
and some days you're the statue.”<br />
- Maxine
</p>
<p class="subsection">Employment at Will in New York</p>
<p>Most of us know that in most states (all but two, Montana and Oregon), the Employment at Will (EAW) statute is law and it allows both the employee and the employer to cease their employment relationship at any time and for any reason. As an employer you face many situations that can endanger or negate your EAW rights. One of the most often occurring situations is when the employer and the employee enter into a written employment contract wherein wages, benefits and/or the terms of employment are listed and the agreement is mutually signed. In many disputes this document is considered a contract and becomes the sole definition of the terms of employment and negates not only your EAW rights but may also negate your entire employee handbook. If, in addition, the often used statement “This document represents the sole agreement between the parties” is included, it further endangers those company rights.</p>
<p>With that in mind, a 2009 New York law requires that all companies employing commissioned salespeople must have a mutually signed agreement spelling out the terms of employment. If that document is not carefully worded, employers can also lose their EAW rights and the ability to enforce their employee handbooks. Labor law consultants are advising that the within that state required document, the company adds the EAW statute and a statement that the employee agrees to abide by the company's employee handbook as does every other employee, except where it conflicts with this document. <em>More lawyers and more paperwork.</em></p>
<p class="quote">
“The beatings will continue<br />
until morale improves”<br />
- Anonymous HR Director
</p>
<p class="section">Laws You Will Hear About</p>
<p class="subtitle">But May Wish You Hadn't</p>
<p class="subsection">Ditto the Rest of The Country</p>
<p>A similar law to the New York state law above, is now being proposed by the federal U.S. Department of Labor (DOL) that will require all employers to provide all new hires with a written notice of pay days, pay rates and overtime rates, not just the usual “1 ½ times” statement but the actual overtime hourly rate calculated for each employee. In preparing such documents employers should also assure the protection of their EAW and employee handbook rights. Unless otherwise derailed, the new law goes into effect April 1, 2011. <em>More HR Consultants and more paperwork.</em></p>
<p class="quote">
“The trouble with the world is that<br />
the stupid are cocksure and confident<br />
and the intelligent are full of doubt.”<br />
- Bertrand Russell
</p>
<p class="subsection">Exempt vs. Non-Exempt New Requirements</p>
<p>The DOL Wage and Hour Division is considering a proposed rule requiring employers to perform a written job classification document for every employee considered to be exempt (salaried). Uncle Sam does not like to see employees who are exempt from any of his laws. So when he sees salaried employees who are exempt from the overtime laws, he wants you to convince him that it's legitimate. Under this new law, employers will have to prepare a job description for every salaried employee and follow that up with a written explanation of why this job is exempt. That analysis must be legally sound and directly referenced to the conditions defined for exempts under the Federal Labor Standards Act (FLSA). <em></em>More consultants and more paperwork.</em></p>
<p class="quote">
“Is the Earth the insane asylum for the universe?”<br />
- Anon
</p>
<p class="subsection">Stop That Truck!</p>
<p>The Department of Transportation (DOT) wants to cut the number of hours a truck driver is allowed to work in one 24 hour period from eleven hours a day (with breaks) down to ten. Industry leaders say that the records show that this doesn't reduce the number of accidents but will require more drivers to deliver the same amount of goods. It will also require more trucks, more time, higher rates and higher costs and slower delivery for all goods. <em>More costs.</em></p>
<p class="quote">
“To open a business is easy.<br />
To keep it open is very difficult”<br />
- Chinese Proverb
</p>
<p class="section">Uncle Sam Wants You</p>
<p class="subtitle">To Get More Junk Mail</p>
<p>The U.S. Postal Service will be in the news a bit more this year. They may be looking for a bailout for their union pensions, they will likely be ending Saturday delivery and they just cinched a deal with bulk mailers across the nation to expand their services. Since the inception of the internet, e-mail, on-line banking and social media, very few people are writing letters or paying their bills by check. Most of the so-called “snail mail” we get is junk mail advertisement. Although much of the public has been in favor of laws cutting down on junk mail, the postal service loves their No. 1 customer. And they like to take care of their customers. So in January they made some changes to the regulations that apply to them. For a long time bulk mailers have not had to provide the name of the mail recipient to whom they were sending their mail, they only had to have the name “Resident” or “Current Occupant” and the address and zip code. Under the new rules the address will no longer be required, only the zip code or mail route will be necessary. No longer will bulk mailers have to acquire or buy address lists. However, under the new rules, the bulk mailer must provide enough mailers for every home, apartment, business or building that entire zip code or mail route. <em></em>More paper from the bulk people, more paper for the mailer deliverers and more paper for all of us.</em></p>
<p class="quote">
“Government is the great fiction<br />
through which everybody endeavors to live<br />
at the expense of everybody else.”<br />
- Fredrick Bastiat
</p>
<hr />
<p style="text-align: center"><sub>© William J. Cook</sub></p>
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<span class="heading">Labor Stats</span>
<hr />
<b>Federal Minimum Wage</b>
<hr />
<p align="center">
<b>$7.25</b>/hour<br />
</p>
<hr />
<b>Average Income</b>
<hr />
<table>
<tr><td /><td class="u">January 2011</td><td class="u">January 2010<td></tr>
<tr><td class="i">Hourly</td><td class="b">$19.34</td><td class="b">$18.91</td></tr>
<tr><td class="i">Weekly</td><td class="b">$645.96</td><td class="b">$629.76</td></tr>
</table>
<hr />
<b>Federal Povery Level</b>
<hr />
<table>
<tr><td class="i">one person</td><td class="b">$10,956</td></tr>
<tr><td class="i">family of four</td><td class="b">$21,954</td></tr>
</table>
<hr />
<b>IRS Mileage Allowance</b>
<hr />
<p>As of January 1, 2011</p>
<table>
<tr><td class="i">business</td><td><b>51</b> cents/mile</td></tr>
<tr><td class="i">medical or moving</td><td class="b">19</b></td></tr>
<tr><td class="i">charitable</td><td class="b">14</td></tr>
</table>
<hr />
<b>Postage</b>
<hr />
<table>
<tr><td class="i">1 oz</td><td><b>44</b> cents</td></tr>
<tr><td class="i">postcard</td><td class="b">28</td></tr>
</table>
<hr />
<b>Population</b>
<hr />
<table>
<tr><td class="i">world</td><td class="b">6.9 billion</td></tr>
<tr><td class="i">U.S.</td><td class="b">311.9 million</td></tr>
</table>
<p align="center">
<i>one birth every </i><b>8</b><i> seconds;</i><br />
<i>one death every </i><b>11</b><i> seconds;</i><br />
<i>one new immigrant every </i><b>45</b><i> seconds;</i><br />
<i>net gain of one person every </i><b>15</b><i> seconds.</i>
</p>
<hr />
<b>U.S. Civilian Workforce</b>
<hr />
<table>
<tr><td /><td class="u">January 2011</td><td class="u">January 2010</td></tr>
<tr><td class="i">Total</td><td class="b">153,186,000</td><td class="b">153,353,000</td></tr>
<tr><td class="i">Employed</td><td class="b">139,863,000</td><td class="b">139,378,000</td></tr>
<tr><td class="i">Unemployed</td><td class="b">13,863,000</td><td class="b">14,842,000</td></tr>
<tr><td class="i">Want A Job</td><td class="b">6,410,000</td><td class="b">5,912,000</td></tr>
<tr><td class="i">Unemployment Rate</td><td class="b">9.0%</td><td class="b">9.7%</td></tr>
</table>
<br /><hr />
<b>U.S. Workforce Productivity</b><br />
<sub><i>(The amount of goods produced, divided by the number of work hours it took to produce it)</i></sub>
<hr />
<table>
<tr><td class="i">1992</td><td class="b">3.7%</td></tr>
<tr><td class="i">1993</td><td class="b">0.5%</td></tr>
<tr><td class="i">1994</td><td class="b">1.3%</td></tr>
<tr><td class="i">1995</td><td class="b">0.9%</td></tr>
<tr><td class="i">1996</td><td class="b">2.5%</td></tr>
<tr><td class="i">1997</td><td class="b">2.0%</td></tr>
<tr><td class="i">1998</td><td class="b">2.6%</td></tr>
<tr><td class="i">1999</td><td class="b">3.3%</td></tr>
<tr><td class="i">2000</td><td class="b">3.4%</td></tr>
<tr><td class="i">2001</td><td class="b">2.9%</td></tr>
<tr><td class="i">2002</td><td class="b">4.6%</td></tr>
<tr><td class="i">2003</td><td class="b">3.7%</td></tr>
<tr><td class="i">2004</td><td class="b">2.8%</td></tr>
<tr><td class="i">2005</td><td class="b">1.7%</td></tr>
<tr><td class="i">2006</td><td class="b">0.9%</td></tr>
<tr><td class="i">2007</td><td class="b">1.9%</td></tr>
<tr><td class="i">2008</td><td class="b">1.8%</td></tr>
<tr><td class="i">2009</td><td class="b">+5.8%</td></tr>
<tr><td class="i">2010 1st quarter</td><td class="b">+2.8%</td></tr>
<tr><td class="i">2010 2nd quarter</td><td class="b">-1.8%</td></tr>
<tr><td class="i">2010 3rd quarter</td><td class="b">+2.3%</td></tr>
<tr><td class="i">2010 4th quarter</td><td class="b">+2.6%</td></tr>
<tr><td class="i">2010 overall average</td><td class="b">+3.6%</td></tr>
</table>
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