Dealing with the Minimum Wage Hike & Proposed OT Rule (Episode 9)

January 23, 2018

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Darcy Grabenstein: Hello from SmartLinx Solutions! In today’s podcast, we’ll talk about tips on how organizations in states, counties, and cities that have approved a minimum wage increase can manage this going forward. We’ll also discuss the new overtime rule that may be headed our way this October. Our guest today is Ken Bator, owner of Bator Training & Consulting. Ken has 20-plus years of experience in helping organizations reach new levels of effectiveness. Over his career as a management planning, culture building, and strategy expert, he has served as an executive of three different financial institutions and has assisted many small to medium-sized businesses. Welcome, Ken.

Ken Bator: Thank you, Darcy. Thanks for having me on the show.

DG: Sure. Before we dive into today’s topics, can you tell us a little bit about the services that your consulting business offers?

KB: I’d love to, Darcy. We basically offer practically anything that would fall under branding, culture building, or strategic planning. Anything from, say, brand messaging creation to team building programs to full strategic planning facilitation, but the main service I’m really excited about lately is we’ve offered an introductory service, which we call the B + C + S Audit, which stands for brand, culture, and strategy. It’s a more robust brand audit and gives ― especially new clients or ones that are trying to try us out, for instance ― it gives them a glimpse into possibly some of their obstacles and how to overcome them, whether they hire us or not, frankly.

DG: Yeah. I want to touch on that in a little bit. Let’s dive into our topic. I want to give our listeners a little bit of background first. As of 2018, 18 states along with 19 cities and counties have approved increases in the minimum range. They range from a 4-cent increase in Alaska up to a dollar increase in Maine. Of the states with increases, I find it interesting that Missouri has the lowest minimum wage at $7.85 an hour and Washington State the highest with $11.50 an hour. It should be noted, though, that the federal minimum wage is $7.25 an hour, and that hasn’t increased since July 2009. A total of 29 states in the District of Columbia have minimum wages that are higher than that federal minimum.

For organizations in areas mandating an increase, Ken, how can businesses manage this change? I just want to add that the long-term care industry, as you know, employs many hourly workers. This industry is also facing staffing shortages, so cutting staff might not be an option. Consumer costs are already high, so that might not be a solution. What are your thoughts on all this, Ken?

KB: To wrap it up in word, of course I’ll expound on that, is: adapt. It’s not that much different in adapting to any other change, and frankly, if 19 states are planning on increasing the minimum wage, you can pretty much be sure that the other 31 aren’t that far to follow. Regardless of where you’re located, you need to begin thinking differently. A couple of things specifically is, one, I always believe that the solution is within. I think it starts with our people and, most importantly, to stop thinking about employees as an expense and thinking of them as a true asset. I truly go back to the old Stephen Covey ways of seven habits and all that fun stuff and leading people, and not just managing people. When we look at it and say, all right, well, we got to pay this individual 11 and a half dollars per hour, even if we’re thinking from an accounting standpoint, if I’m going to pay $11.50 for something, I at the very least as an entrepreneur and a businessman want to get at least maybe $12, $13 for the value out of that 11 and a half dollars.

We need to think, well, how can we do that? What we first have to start doing is treating our people like labor and treating people as a solution to our problem. Get them involved. Whether it’s long-term care, or a restaurant, or a bank, or whatever service organization it is, is get people involved, and let them know, hey, this is coming down the pike. This is how it’s going to affect our business. Let’s come up with some ideas on how we can make your experience as an employee a positive one, regardless of what we’re paying you. Frankly, everybody should probably be paid more regardless of what the government says, and let’s come up with some real solution collectively on how to take care of that.

Now, a couple of solutions that you may want to think of with your people are processes and systems. For instance, a lot of times we can put together service standards and actually write down as a team some process improvements in how we’re going to approach our job so that maybe something that would historically take us an hour to do, if we systematize it, maybe it only takes us a half hour to do. That gets more productivity out of our time, but if we do that with our people, then there’s already buy-in rather than something else, something additional just being pushed down from management. Also, as part of the solution in getting the entire team involved, let’s look at actual expenses. People are an asset, but the bleach that’s sitting in our cabinet, that’s a true expense. The lightbulbs that are sitting stacked up in the back room, that’s an expense. Unlike people where we can ask them, well, how can we get more productivity and a better experience for everybody to get more out of everybody, you can’t ask a lightbulb, hey, how can we get more out of you?

DG: You could try!

KB: We can ask our people and say ― yeah. You could try. I would question your sanity if you did that, but I’ve seen it many, many times. If you go to the people and you create or leverage what’s already hopefully a good team environment, they can tell you ways to cut expenses. Hey, we don’t need all of these towels, or we don’t need reams and reams of paper over here. There are ways that we may be able to cut certain things that are going to find more funds in the balance sheet, so they’re not going to superfluous but actually going to our people who we want to support anyway.

DG: Right. I have to ask you. Can higher minimum wages actually be a good thing for employers, and why or why not?

KB: Yeah. Darcy, as a businessman and entrepreneur myself, it always ― it scares me a little bit when government forces this change on us, but the fact is, whether it’s a government regulation, or a law, or anything else in the environment, eventually we’re going to have to adapt to it. I think, if we try to look at it as a positive, maybe this pushes more managers, business owners, entrepreneurs ― and whether it be long-term care or other businesses ― to truly be leaders. To look and say, all right ― to use my example before, if we’re going to pay somebody 11 and a half dollars per hour, let’s make sure that we’re truly connecting and creating some employee engagement and getting the most out of that individual. Even more importantly, make sure that we have the right individual so that we can truly get our value out of that individual rather than simply looking for the lowest common denominator of, well, we simply have this position to fill. Let’s fill it. Let’s try to force a square peg into a round hole because that’s what we need right now and move on. I think, from a positive standpoint, if it truly pushes managers to become more of a leader, to really connect with employees and to mentor them and get more out of those folks in the right way, then, yeah, there is some positive that can come out from that.

DG: Oh, good point. Thank you. Now I’m going to do another little backgrounder. We’re going to switch gears, and talk about the overtime rule that may come our way. While the minimum wage increase favors employees over employers, a new overtime rule that’s been proposed by the Department of Labor may have the opposite impact on the workforce. The proposal which could surface, as I said, in October deals with salary thresholds and overtime.

Last year, a Federal District Court judge invalidated an Obama era Fair Labors Standards Act regulation that would’ve required employers to pay overtime to workers making less than about $47,000 a year, which was up from $23,660 to be exact. While it’s possible that the Department of Labor will do away with the threshold altogether, many in business expect it to be lower. More like $32,000 to $35,000. Meanwhile, bills in the House and Senate actually propose a higher threshold of about $48,000, but those lack Republican support. For long-term care, like many industries, as we know, labor makes up the largest chunk of their operating costs, so management is always striving to minimize overtime. Ken, given all the possible scenarios that I mentioned, how do you think this will impact employers?

KB: Employers that are proactive, I think the impact will be lessened, and I talked about that a little bit earlier in terms of anticipating some costs and anticipating the fact that, hey, we might have some more overtime. How do we try to prevent that from a positive standpoint? How do we go to our team and create systems and processes that are written down, that are put together by our team so there’s instant buy-in to help reduce the need for overtime? Again, as I often joke with my clients, maybe I’m naïve, but I truly believe that if we go to a problem, we propose the problem that we’re having in our business with our team, that more times than not we’re going to get positive solutions back, so putting those systems in place, and making people understand the cost of overtime. Letting them in on the problem and saying, hey, this is going to be of detriment to us come next year, or 10 months from now, or six months from now, or whatever it may be. How can we as a team help to prevent this and help to prevent these costs and be proactive if we see a particular shortage because of vacations or possibly busy times and so forth? How can we be proactive on making sure that overtime is kept to a minimum?

Those folks that truly are proactive and do that, I think that they’ll be fine. The ones that want to lament about overtime costs and not try to do something about that with their team ahead of time, they’re going to see some major issues. They are going to see some overtime costs provide, unfortunately, a real negative impact to their bottom line.

DG: Right. Right. Ken, you mentioned earlier your formula for business success, B + C + S, branding plus culture plus strategy. As a marketing professional, I’m really interested in this concept. You’ve even written a book by that name. I think our listeners will be interested in all three components even though I’m really interested about the branding part. You refer to it as exceptional customer experiences, and in the long-term care industry, I think we could equate this with quality care and positive outcomes. Could you tell us a little bit more about that formula and how it ties into employee experience or engagement? Those are, as you know, current buzzwords in HR circles. It’s even something we at SmartLinx have focused on in our own eBooks and other resources, so tell us more.

KB: Certainly, Darcy. It’s all about the experiences today, even from a marketing standpoint. As you know, marketing is just one important piece of the overall branding process. There’s a lot that goes into it. In short, it’s my belief that it’s very, very difficult to create a positive experience for your clients, your customers, your members, your guests, your patients, whoever you call who you serve, if you don’t have a positive experience for your employees first. Is it possible? Sure. Only in the extreme examples, and you’re usually throwing money at a problem. From an HR standpoint, you have a revolving door on unemployment.

I truly believe if you start with the C, which is the culture part of the B + C + S formula, and truly connect with your employees, then you’re going to build a better brand. Basically, what the B + C + S formula does is it allows us to answer three really, really critical questions in business. Again, whether we’re running an assisted living community, or a restaurant, or a bank, or a nursing home, or what have you, it answers the questions of, one, what’s the image we want to portray out in the public. Two, what’s the experience we need to create both for and through our employees, and how do we drive more of the right business to our business? If we want to be a high-end, for instance, assisted-living community ― and I’ve dealt with a few of those, so I’ll use that as an example ― then we need to make sure that our employees have a positive experience and are allowed to provide an upscale experience for all those who take advantage of our service.

The last thing I’ll mention on the B + C + S formula is I often joke that, as much as I would like to say that I was just that brilliant to come up with the B + C + S formula, it was actually the opposite. I was always one of those guys in school who actually had to study for weeks and weeks and weeks to get a good grade. Nothing ever came easy. In business, I always thought, well, how does all this work together? If we want to empower our people and we also want to re-engineer our processes and we want to have Six Sigma, how does all of this fit together? I would bounce around from different seminars and books, and then eventually it came to me. It really comes down to the image, the experience, and the planning of our business or, in other words, the brand plus the culture plus the strategy. That’s how eventually, after many years, the B + C + S formula popped into my head.

DG: Got it. I was just thinking as you were talking that, in the long-term care industry specifically, it tends to sometimes suffer from a less than stellar image in the public’s eye. What do you think can be done to turn that around?

KB: That’s a twofold question. I think, from an industry standpoint, that’s an association job. I think there are associations out there that support the long-term care industry. They need to do a very high-level job of branding the positive qualities of the industry itself. Much like we have “Beef. It’s What’s for Dinner,” or “Got Milk,” or things of that nature, but even more important than that, it comes down to the individual long-term care provider. If you have in your business a negative image and you know this as well as anybody, Darcy, then you need to put out the proper brand messaging based on your uniqueness of why your long-term care service is better than anybody else’s.

What makes you unique? Is it extra quality time with people? Is there something from a technological standpoint of, hey, we provide this specific app that you can track different aspects of long-term care? Whatever that is and those are just examples, we need to take it upon ourselves that if we do feel and see that we have a negative brand image then, darn it, we have to go about telling our unique story and getting it out there, and make sure as well that that unique story is true. If we say that we’re a unique provider of long-term care services, then we better darn well be able to prove that and show that through the actual experience that the people we serve will experience, if that makes sense.

DG: Right. Yes, all good points. Thank you, Ken, so much for sharing your expertise with us today, and to all our listeners, thank you for tuning in. For more information on Bator Training & Consulting and its services, visit btcinc.net. That’s B-T-C-I-N-C-dot-net. If you’d like to learn more about SmartLinx Solutions and our fully integrated suite of Workforce Management Solutions, including modules that will help you reduce overtime, visit us online at smartlinxsolutions.com.

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