Riches of Estate

Technology’s Fast 50

Corrections or additions?

These articles by Melinda Sherwood were published in U.S. 1 Newspaper on August 11, 1999. All rights reserved.

Employee Turnover: Calculating the Costs

The notion of the "replaceable employee," the

cog in the wheel, is officially an anachronism in today’s workplace.

For years, people have been hearing rumors about the high cost of

employee turnover, and now Kepner-Tregoe, the international research

firm at 17 Research Road in Montgomery Township, has compiled a study

quantifying those costs. Relying on detailed surveys of nearly 1,300

managers and workers, and utilizing the Turnover Costing Model developed

by the Saratoga Institute, Kepner-Tregoe has calculated that replacing

a typical information systems engineer, for example, costs a company

$34,000. Make that $40,000 to replace a mid-level manager, or nearly

$103,000 for a journeyman machinist.

In a 100-plus page monograph entitled "Avoiding the Brain Drain,"

Kepner-Tregoe gives several reasons why businesses lose big when they

lose just a single employee. A new hire, according to the study led

by Peter M. Tobia, director of Kepner-Tregoe’s Business Issues

Research Group, only works at a fraction of experienced employees.

That means loss of customers, which in effect means additional sales

expenditures to win back customers. The drain on organizational memory

and worker morale can’t be measured in numbers, but it’s a very real

phenomenon nonetheless.

Kepner-Tregoe’s survey asked managers and workers in several different

industries to make realistic assessments of several workplace issues.

Kepner-Tregoe also identified 11 companies as "retention leaders,"

companies that know how to keep their best workers. Among them: Corning,

Hallmark Cards, Johnson & Johnson, Hewlett-Packard, Motorola, Steelcase,

and Xerox.

Companies that attract and keep employees do not use financial "carrots,"

or hire roaming masseuses, either. According to the study, most people

leave a company because they don’t feel valued by the organization

or feel there is no room for advancement. Keeping your employees,

then, really comes down to basic management skills: an open dialogue

between upper management and mid management, mid-management and workers,

and investing time in your employees. Kepner Tregoe suggests companies

do the following:

Develop employee careers, not just jobs. Corporations

should think of employees as being on a continuum — a career path

— and help them meet those goals within the organization by supporting

their performance at every point along the way. Institute uniform

standards, allocate appropriate resources, and get feedback from workers.

Create a "culture of caring," where management

and employees alike demonstrate integrity and follow ethical codes

of behavior. The company should do whatever is necessary to demonstrate

that employees are important — even if that means putting their

money where their mouth is.

Develop a stair-stepping process for conflict resolution.

High performers often leave jobs because of conflict with a supervisor.

Create "alternate avenues" to circumvent an immediate supervisor,

maintain an "open door policy," and establish a proactive

employee relations department.

Take stock, then take action. Look at the data about different

employee pockets — age, gender, job class, length of services,

and department — to discover where problems typically occur. Then

find a way to keep employees.

Keep your eye on high performers. The stars set the tone,

according to the study, for the whole business. You can tie rewards

to performance, but you should offer more than just stock options.

Indulge an employee’s creative urges, for example. Offer them opportunities

to learn more and escape from the daily grind. Hallmark Cards, one

of the retention leaders, offered creative retreats for its employees.

Approach people management as a strategic business issue.

Put people needs at the top of business priorities.

Keep it a work in progress . Always request feedback and

encourage questions.

For the full report on "Avoiding the Brain Drain," call

Kepner-Tregoe at 609-921-2806.

— Melinda Sherwood

Top Of Page
Riches of Estate

You have a modest home, a 401K plan, and $300,000 in

life insurance. You don’t call yourself rich, but in fact, your estate

could be worth far beyond what you expected. "It’s not uncommon

to see individuals walking around with a total estate of a million

or more," says Scott Borsack, a partner at the law firm

of Szaferman, Lakind, Blumstein, Watter & Blader PC at the Quakerbridge

Executive Center. "No one feels wealthy at that number because

some of it you can’t touch."

It is your inheritors who may see most of the money — very briefly,

perhaps. If you write a simple will, says Borsack, who specializes

in tax, trusts, and estates for the law firm, you risk losing half

of that money to taxes and court proceedings. You can learn how to

plan your estate more carefully at a free seminar on Thursday, August

12, at 7:30 p.m. at the Princeton Hyatt. Call 609-275-0214. The Hyatt

seminar will be repeated Tuesday, August 17, at 7:30 p.m. and it will

be offered Thursday, August 19, at 10:30 a.m. at the Holiday Inn,

Jamesburg.

A Brooklyn native, Borsack earned a BA in economics and political

science from Brooklyn College, Class of 1984, before receiving a law

degree from Case Western Reserve University in Cleveland in 1987,

and a masters of law and taxation from NYU School of Law in 1991.

Estate law varies, says Borsack, according to the size of the estate.

There are three general categories: individuals with estates under

$650,000, those with estates of $650,000 to $1.3 million, and those

whose estates exceed $1.3 million.

Some commonly overlooked tricks to keeping those estates intact:

The "unified credit" for federal tax purposes

allows each citizen to pass $650,000 on to another free of tax. Husbands

and wives together can pass $1.3 million free of tax. "A lot of

married couples fail to use the credit," says Borsack. "They

write a simple will that says `I chose to leave everything to my spouse,’

and their failure to use the credit could cost the children hundreds

of thousands of dollars." On a $1.3 million estate, $248,000 to

be exact.

Transfer the life insurance policies to a trust. "Everyone

assumes there is no estate tax paid on the death benefits of a life

insurance policy," says Borsack, "but if the survivor hasn’t

consumed that balance and wants to pass it on to the next generation,

they’re only going to be able to pass on 45 cents on the dollar."

Unless the money is in a trust. "Trusts don’t die, and because

they don’t die, they don’t pay any estate taxes," says Borsack.

"On a $1 million dollar policy you can save $500,000."

Durable powers of attorney allow survivors to access money

tied up in accounts, such as a retirement account, in case you or

your spouse becomes sick and unable to govern financial affairs. Otherwise,

it’s a court hearing to have the sick party declared incompetent.

"But if the individual takes the time to write up a durable power

of attorney, someone could step in and access the retirement account,"

says Borsack. "The cost is incredibly modest and in comparison

to the cost for a guardianship proceeding it seems almost free."

This is smart advice that even the most prudent planners often

overlook, says Borsack. "If you put a hundred people in a room

who had estates between $650,000 and $1.3 million, less than five

would know about the unified credit," says Borsack. "Congress

doesn’t go around advertising the existence of this benefit. They’re

not in the business of doing that. But we are."

— Melinda Sherwood

Top Of Page
Technology’s Fast 50

Shake the hands of CEOs in New Jersey’s fastest growing

technology companies at the 1999 New Jersey Technology Fast 50 on

Wednesday, August 18, at 8 a.m. at the Sheraton at Woodbridge Place.

More than 200 people are expected to attend the awards ceremony, which

recognizes the state’s 50 fastest-growing technology-based companies

based on revenue growth between 1994 and 1998. The program is sponsored

by Deloitte & Touche LLP, First Union National Bank, the Nasdaq-Amex

Market Group, New Jersey Technology Council, Regional Business Partnership,

and University Heights Science Park. For more information and reservations

contact Dillon Waltner at 973-672-0120. Cost: $35.

To be considered for the New Jersey Technology Fast 50, entrants had

to be headquartered in New Jersey, manufacture a technology-related

product, and reap revenues of at least $50,000 in 1994. The 50 fastest

growing companies have already been selected, but their rankings won’t

be announced until the ceremony. Many are from Central Jersey, including

Ariel, CommTech, Cytogen, Hexaware Technologies, i-STAT, Medarex,

MultiModal, Novasoft Information Technology, PD-LD, Sensors Unlimited,

T/MAC, and Total-Tel Communications.


Next Story


Corrections or additions?


This page is published by PrincetonInfo.com

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

Facebook Comments