May, 2011

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Article Index

MN Manufacturing Economic Update
Article by: Dr. Ernest Goss

For the month of April 2011 reported May 2, 2011. Minnesota’s leading economic indicator from the monthly survey of supply managers was above growth neutral for the 21st straight month at 60.9, down from 67.9 in March.


Healthcare Reform: What Every Business Needs to Know
Article by: Gregory Peters

Since healthcare reform became law more than a year ago, employers have been asking questions such as:  Will I be required to offer health insurance to my employees?  How much will premiums increase?  How does this affect our business? 


Lean Leader of the Month: Mike Grengs
Article by: Mike Grengs

Each month the Manufacturers Alliance features a Lean Champion from MN based manufacturing companies. Our intent is to share insights learned from your peers so you may benefit from their experiences. If you would like to recognize a local Lean champion, send an email to kirbys@mfrall.com.


Avoiding Hiring Disasters
Article by: Kelly Rietow, P.H.R., MBA

As I sit in my basement enduring the third tornado warning in 2 days, I have plenty of time to reflect on disasters – natural and otherwise.  In the workplace we invest a tremendous amount of time and money to recruit, select, train and embed new staff members into our organizations.  Sometimes it works out well, and sometimes we find ourselves watching a train wreck unfolding. 


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MN Manufacturing Economic Update

For the month of April 2011 reported May 2, 2011. Minnesota’s leading economic indicator from the monthly survey of supply managers was above growth neutral for the 21st straight month at 60.9, down from 67.9 in March.

Components of the index for April were new orders at 65.0, production or sales at 65.9, delivery lead time at 60.4, inventories at 57.2, and employment at 56.2. “Durable goods manufacturing continues to benefit from healthy international sales and new orders. Computer and electronic component manufacturers and food producers also reported upturns in business activity for the month,” said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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Healthcare Reform: What Every Business Needs to Know

Since healthcare reform became law more than a year ago, employers have been asking questions such as:  Will I be required to offer health insurance to my employees?  How much will premiums increase?  How does this affect our business? 

Although the answers to some of these questions remain unknown and many details of healthcare reform need clarification, this article provides an overview and summary of the changes most important to employers.

Recent Changes for Health Plans

Effective January 1, 2011 for health plans with calendar-year reporting periods (or the first day of the 2011 plan year for health plans with other reporting periods) the following changes were implemented:

  • Pre-Existing Conditions.  No pre-existing condition limitations allowed for children under 19 (effective January 1, 2014, eliminated for everyone).
  • Lifetime Limits.  No lifetime limits on minimum essential benefits. 
  • Annual Limits.  No “unreasonable” annual limits on minimum essential benefits 
  • Rescissions.  No rescission (cancellation) of participants.
  • Non-Discrimination Testing.  Non-grandfathered*, fully insured plans must undergo non-discrimination testing (currently a requirement for self-insured plans only).  This is similar to the top heavy discrimination testing for 401(k) plans.  Nevertheless, in December 2010, the IRS published a notice stating it will not enforce these new requirements until it issues regulations or other guidelines.
  • Adult Dependent Coverage.  If a plan offers dependent coverage, it must offer coverage until age 26 (grandfathered plans must cover these dependents only if the dependent is not eligible for other employer sponsored coverage).
  • Internal and External Appeals Procedures.  Non-grandfathered plans must provide for certain internal appeals procedures (including an external review process).
  • Preventative Services.  Non-grandfathered plans are required to cover certain preventative services (i.e., immunization and infant screenings) without cost sharing.
  • Flexible Spending Account Changes.  Regardless of when the reporting period begins, effective January 1, 2011, over-the-counter medications cannot be reimbursed through a health Flexible Spending Account, Health Reimbursement Account, Health Savings Account or Archer Medical Savings Account without a physician prescription.  This change does not affect medical supplies (i.e. bandages), medical equipment (i.e. bandages), prescription drugs, insulin (even if purchased without a prescription), diagnostic devices such as blood sugar test kits, contact lenses, eye glasses, medical devices, co-payments or deductibles.

*A grandfathered health plan is a plan that was in place and had at least one participant enrolled on March 23, 2010.  Although re-enrollment and new employee enrollment does not affect a plan’s grandfathered status, certain changes such as reducing or cutting benefits causes a plan to lose its grandfathered status.

Employer “Pay or Play” Mandate

The employer pay or play mandate requires that, effective January 1, 2014, large employers offer insurance to employees or pay a pro rata penalty of up to $2,000 per year, per full-time employee.  A “large employer” is one that employs at least 50 full-time equivalent employees during the preceding calendar year.  A full-time employee is an individual averaging at least 30 hours of service per week, calculated on a monthly basis (excluding seasonal employees working less than 120 days during the calendar year).  Although an employer is not required to offer coverage to part-time employees (or pay penalties for not offering coverage to part-time employees), hours worked by part-time employees are included in the calculation of a “large employer” (by taking the total monthly hours worked divided by 120). 

For example, an employer with 40 full-time employees and 20 part-time employees (each working 24 hours per week, or 96 hours per month) is considered “large employer” by the following calculation:

  • 20 part-time employees x 96 hours per month = 1920 /120 = 16 FTE’s + 40 full-time employees = 56

In the above example, if the employer did not offer health insurance coverage to its full-time employees, it would be assessed the following penalty:

  • 40 full-time employees – 30 (by law, employers may subtract the first 30 full-time employees from the calculation) = 10 x $2,000/employee = $20,000 / 12 = $1,667 per month. 

Additionally, large employers are required to offer “affordable” health insurance to full-time employees or pay the penalty.  Employer coverage is considered “unaffordable” if:  (1) the employee’s share of the premium for self-coverage is more than 9.5% of the employee’s modified adjusted gross household income or if the employer’s share of the cost of benefits is less than 60%; and, (2) an employee obtains a tax credit for coverage through a state exchange.   

W-2 Reporting Delayed

On March 29, 2011 the IRS issued a notice stating that employers are not required to report the cost of health care coverage on employee’s W-2 forms until January 2013 (W-2’s for the 2012 calendar year).  Additionally, small employers (those who issue less than 250 W-2 forms for the 2011 calendar year) will not have report the cost of employee health care coverage until 2014 (W-2’s for the 2013 calendar year). 

1099 Reporting Requirement Repealed

Included in the healthcare reform law was a requirement that, effective January 1, 2012, employers issue a Form 1099 to any entity for which it received over $600 in goods and services during the course of the year.  Fortunately, on April 14, 2011, President Obama repealed this requirement.    

Status of Healthcare Reform

A number of lawsuits have been filed challenging the legality of healthcare reform.  Despite these legal challenges as well as recent notices from the Departments of Labor and Treasury extending or waiving the timeline for enforcement of some requirements, employers should continue to implement the changes outlined in this article in order to avoid any unnecessary fines or penalties.

Gregory L. Peters, is an attorney with Seaton, Peters & Revnew, P.A. whose practice is limited to representing employers in labor and employment matters. Mr. Peters has worked with companies in all areas of employment counseling, employment litigation, labor arbitration, union organizing and labor negotiations. Mr. Peters can be reached at (952) 921-4607.

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Lean Leader of the Month: Mike Grengs

Each month the Manufacturers Alliance features a Lean Champion from MN based manufacturing companies. Our intent is to share insights learned from your peers so you may benefit from their experiences. If you would like to recognize a local Lean champion, send an email to kirbys@mfrall.com.

 

Where did you receive your Lean training and experience?

My early experience was in Quality and I was interested in the writings of Deming, Juran, Feigenbaum and others.  Later, I worked in Operations and started to learn of Lean through reading and attending Manufacturers Alliance events.  I learned mostly by trying what I read or learned; I had a great staff of people who were all open to trying new techniques and approaches.  For the past eight years I have been focused on learning, teaching and implementing Lean.  I received extensive training through Honeywell and have had the opportunity to work with others experienced in the TPS (Toyota Production System).


How, when, and why did you get introduced to Lean and what fuels the passion?

In the 1990’s I had the pleasure of leading an operations group that had a lot of individuals eager to experiment and contribute new ideas.  We were space-challenged and this drove a lot of our thinking.  We were learning the TPS and tried many Lean techniques to meet our requirements and improve our performance.  Not only did we achieve outstanding results, but we had a good time doing it.  We had a cohesive team that was very process improvement focused. So, I have seen the benefits of a Lean culture and continue to base my efforts on that Lean thinking.


What are your current Lean oriented activities?

Honeywell has a very comprehensive process for implementing Lean.  Over the past several years we have implemented all the Lean “tools” and have made significant cultural changes, including creating the management system needed to maintain and continue to improve the operating system.  We are currently focused on achieving the next level of performance by continuing to learn, and improve our systems.


What were the lessons learned from leading or training your team on a Lean project?

A strong Case for Change, or an overdriving need for change, would be beneficial to making the sweeping behavioral and cultural changes needed to become a Lean enterprise.  Prior to beginning our Lean journey, our site was one of the top performing sites in Honeywell; this created a lot of issues when we started talking about changing how we operate.  What problem were we trying to solve?  In many cases, the leadership had to move ahead on blind faith, confident that the changes they were making would pay off in improved performance.  Over time, we started to see productivity and inventory improvements; this helped to reinforce our commitment to the new methods.  One benefit of our strong prior performance is that we have been able to maintain a common sense approach to our Lean implementation, keeping elements of how things used to be done when it was the right thing to do.


What are the next steps in the Lean journey for your company?

Our next challenge is to expand our operating system to other functional departments and to key suppliers.


How would you describe peer-to-peer education & training?

It is invaluable.  Being able to share with others who, even though they may be in a different industry, have had similar experiences is very advantageous.  It is similar to expanding your own years of experience by leveraging the experience of others.  When I teach, I often talk about the need to gain perspective.  How do you know what is possible if you have never seen it?  True, you can read, but there is nothing better than talking to someone who has been there and has the experience.  Peer-to-peer sharing accelerates your learning and reduces the likelihood of going down the wrong path. Another benefit is the support you receive from talking to others who are struggling with the same issues.  You quickly see that you are not the only one facing a particular challenge; just hearing the support of others gives you the strength needed to persevere.

It's not enough to understand the principles of Lean manufacturing. Success lies in implementing them in your company and the Manufacturers Alliance can help. If you have thought of being the Lean Champion for your company consider enrolling in the Lean Practitioner Certification - a 6 month practical application program. Learn More

Mike Gengs is the HOS Site Lead at Honeywell Plymouth-Aerospace. Their plant manufactures radiation hardened microelectronics for the defense and space industry as well as, precision pressure sensors and magnetic navigational products. michael.grengs@honeywell.com

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Avoiding Hiring Disasters

As I sit in my basement enduring the third tornado warning in 2 days, I have plenty of time to reflect on disasters – natural and otherwise.  In the workplace we invest a tremendous amount of time and money to recruit, select, train and embed new staff members into our organizations.  Sometimes it works out well, and sometimes we find ourselves watching a train wreck unfolding. 

How did the articulate and engaging job seeker turn into a controlling, “my way or the high way” manager?  While we cannot predict every on-the-job behavior or quirk a new hire will exhibit, our selection and onboarding processes can improve our success rate.  Consider incorporating the following suggestions:

Recruiting and Selection practices:

  • Clearly articulate your values and culture in your job postings.  Let job candidates know whether your culture supports innovating risk taking or stable solutions.  If your organization values collaboration and teamwork, let people know – the cowboys will not apply.
  • Ask the candidate open ended questions.  What type of work environment do you work best in?  Tell me about the best / worst boss you have ever worked for.  What type of work situations do you not enjoy?
  • Incorporate culturally oriented interviewing questions.  Tell me about time you worked on a major project with a team.  What was your role?  What worked / didn’t work with the project?  How did you offer alternative ideas or raise concerns when you thought the project was going astray?
  • Use the STAR interviewing method.  Make sure candidates fully answer questions by using the STAR method, making sure the responses are Specific, Timely

Question

Specific Situation

Task – what was (s)he working toward

Action – what the person specifically did

Results

Tell me about a project…..

Describe a situation in which…

How have you…

 

 

 

 

 

Orientation and Onboarding practices:

Your selected candidate most likely has the technical skills and experience to succeed, but (s)he may or may not have a good understanding  of “how” things actually get done in your organization.  This can be particularly disastrous if the new employee is managing others and needs to work cross-functionally.  The following ideas can help new managers become productive more quickly:

  • Partner the new manager with a successful manager in another department to “learn the ropes”
  • Allow the manager sufficient time to get to know his staff before implementing radical changes
  • Focus initially on what the manager needs to know to establish credibility within her department, before focusing on broader cross-company projects.
  • Meet regularly with the new manager to discuss projects, answer questions and provide feedback on progress.  Gradually incorporate information about how the department fits in with other groups, contributes to organizational goals, etc.
  • Schedule HR and the new manager time to get to know each other and how employee issues are addressed in the organization – hiring, recognition, performance management, discipline, etc.
  • Create a Supervisor’s Handbook, to guide supervisors step-by-step through common HR issues.
  • If the person has never been a supervisor before, consider enrolling him in a supervision course at the community college or nearby association.

Whether your new employee is a manager or not, remember to balance what you need the employee to know, with what the new person wants to know.  Creating a balanced and reasonably paced onboarding process can help employees quickly develop relationships, become productive and hopefully avoid future hiring disasters.

Sneak Peek! The Manufacturers Alliance is now offering Supervisory Training specific to manufacturers in two separate series - Essentials of Leading for Results and Leading Down New Paths. Learn More

Kelly Rietow specializes in creating practical systems and tools that fit the culture, engage the workforce and develop organizational capabilities. For details Contact Kelly at 763.228.8496 or roosolutions@comcast.net

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