Sunday, November 25, 2007

Things are Tough All Over...But Needn't Be

This Thanksgiving weekend I did something I'm a bit embarrassed to admit:  I caught up on all the business magazines and WSJs sitting in my "to read" pile.  It's Sunday and the workweek begins tomorrow, but I wanted to make this comment based on a consistent underlying theme I found weaving through much of what I read.

The theme: until Americans become fiscally responsible, we will continue to sink economically.

Yesterday, the WSJ explained that as far as the subprime mess, we ain't seen nothing yet.  Turns out that all the headline grabbing foreclosures have NOT been the result of the ramping up of adjustable rates but, rather, first year foreclosures by those would couldn't make the bills with the ORIGINAL, subprime rate which enticed them into the purchase in the first place.  In the first part of next year, when the rates jump on maturing adjustable mortgages, it will get much uglier.

As the credit market continues to tighten, we are seeing it starting to impact the commercial real estate market.  Meanwhile, important heads are rolling on Wall Street and we are days or weeks away from the once inconceivable $100 oil both U.S. and foreign car dealers continue to push mega-SUVs on an increasingly fiscally reckless American public.  Economic indicators suggested a bleak holiday sales season, but Black Friday saw unfazed Americans whipping out the plastic and the credit purchases will continue on Monday when the big Web retailers pull out the stops and discount their own stuff.

The problem is this:  the people buying these SUVs and charging up their credit cards for Christmas are, for the most part, the same across-the-board Americans who (at best) irresponsibly or (at worst) fraudulently provided the so-called "stated income" which qualified them (with the help of unscrupulous brokers) for the mortgages which are now triggering this somewhat slo-mo version of fiscal Armageddon.  This perpetually-abused Canadian dollar is eye-level with its U.S. counterpart and the Euro towers condescendingly down upon the once-almighty greenback.  U.S. supermodels are demanding contract renewals in Euros, not dollars, and it takes a sub-prime U.S. mortgage to spend a week on the French Riviera.

As America's might languishes, business -- global business -- explodes around the world, which has the very embraced economic efficiencies the U.S. has preached since the WWII...and forgotten since September 11th.

Ask yourself these questions:

1-What does the U.S. economy look like if we subtract the people employed by the military, its contractors, and the Homeland Security "army" resulting from September 11th?

2- Optimistically assuming that the U.S. can win this war and reduce the terrorist threat to America, how will the U.S. private sector absorb these good people once this war ends and, hopefully, once the terrorist threat is minimized?

3- After years of the government hitting U.S. H-1B employers with massive "U.S. Training Fees" to subsidize the training of U.S. students, why are U.S. colleges STILL not graduating even a fraction of the technology, science, and allied health graduates U.S. employers need?

Right now, the answer is simple: because as a nation we are talking globally but operating xenophobically, and it is really not working very well at all.  In addition to the staggering cost of this war and its aftermath, the integration of this massive government workforce into private sector can ONLY happen in a growth-driven economy where Americans understand that if we do not embrace global economic truths, we will be left out of the benefits of the global economy.  And the sheer idiocy of the notion that U.S. kids could effectively be bribed into careers which are of absolutely no interest to them is now a historically proven fact.

One simple act of Congress can begin the changes necessary to put us back on track.   Bipartisan legislation eliminating bogus training fees and giving the U.S. IT, healthcare, and pharmaceutical industries the number of H-1B visa they need to staff, build, and grow -- with a valid H alternative for registered nurses -- would be signed by President Bush and would trigger:

1- the end of the exodus U.S. companies like Microsoft were forced to begin earlier this year when the proposed immigration reform failed.

2- the ability for U.S. employers who rely upon foreign talent to fill job vacancies to plan future plants, R&D, and growth in the U.S., just as they did when the temporary increase of H-1B numbers, leading to steady U.S. job growth for AMERICANS;

3- a proactive response by U.S. healthcare providers to establish excellence in geriatric care for the legions of Baby Boomers headed into their Golden Years.

4- American's rightful restoration as an industrial innovator and leader properly able to care for the health of its population.

Fat chance anything like this will happen before the election, and even then, in this "blame the immigrants" climate which fails to distinguish illegal aliens from desperately needed skilled foreign workers, It won't be an easy thing to do.

But at least there will be some real deals on Hummers, right?

Tuesday, November 20, 2007

Why GCs are Embracing Workforce Compliance

InsideCounsel magazine recently reported the results of an innovative study undertaken by another publication, Corporate Board Member magazine and FTI Consulting.  In the survey/study, over 1000 General Counsels and board directors were asked about the steps they are taking to mitigate risk within their organizations.  The eye-opening results suggest that the "ostrich head in the sand" approach to compliance is being rapidly replaced by a growing awareness of the risks of federal and state enforcement and the catastrophic damage enterprises face when they do not take broad scope compliance seriously.

The catchword du jour is "Enterprise Risk Management", or ERM, and it's actually the latest incarnation of something that's been around for over a decade.  In 2002, the Sarbanes-Oxley Act turbocharged the need for internal controls, and public companies scrambled to comply.  Here's what how Wikipedia defines ERM:

  • "In business, Enterprise Risk Management (ERM) refers to the methods and processes used by organizations to manage risks (or seize opportunities) related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.

But Sarbanes-Oxley didn't really address the more mundane aspects of corporate governance and risk reduction dealing with operational compliance issues.  Instead, the Bush Administration, through the aggressive effort at enforcing laws already on the books, has prompted this new push toward comprehensive, enterprise-wide risk reduction.  Consider the findings of the aforementioned survey:

  • 75%= GCss who spent more time on compliance in 2006 than in 2005

  • 48%= GCs who spent more time on ERM in 2006 than in previous years

  • 35%= GCs who said that governance changes are the focus of their ERM Assessments

  • 57%= GCs who would seek personal ERM advice from outside counsel [emphasis supplied]

That last statistic is the -- hang on, another French term coming, I'm on a roll today -- raison d'être for the cost of most risk management today: utilization of outside counsel for the implementation of operational methodologies designed for daily use.  The facts are:

-Most attorneys -- no mattar how high their hourly fee -- are about as qualified to design a company-wide regulatory compliance implementation scheme as they are to command the Space Shuttle.  It takes a combination of legal expertise, intimate understanding of client IT and administrative processes already in place, and process management wizards to establish a viable ERM suitable for daily use by all employees.

-The new ERM focus goes far beyond the technicalities of Sarbanes-Oxley to address everything from Social Security "no match" letters to I-9 compliance to EEO, ADA, and other federal, state, and sector-specific requirements which can cripple a company during one swift inspection or audit.

Which brings me to my point:  yes, it takes top tier legal expertise to define the requirments of ERM and distill them into a distinct series of client tasks.  But the difference between a visually impressive compliance plan which no one understands and therefore cannot implement and a practical, usable compliance plan embraced throughout the organization for its ease of use and simplicity is one thing: process integration. 

Email me to discuss what we can do establish a bullet-proof Workforce Compliance Manangement plan for your company.

Thursday, November 1, 2007

Workforce Compliance: Outside Counsel vs. Outside SOLUTION

Counsel to Counsel magazine ran an interesting article in its October 2007 issue entitled "Choosing the Right Outside Counsel"  The article is a helpful analysis of what GCs should look for when reaching outside of their own corporate resources for the solution of a legal matter.

The article begins with an astute analysis of the increasing focus on corporate ethics and the need for transparency.  Among the suggestions the writer mentions to assist in house attorneys in finding outside counsel are networking forums, law firm networks, and, of course...peer review ratings.  (Double disclosure before I continue:  1- Martindale, the benchmark for attorney peer rating co-publishes the magazine along with InsideCounsel; 2- My Martindale A/V rating is a badge I've worn proudly for a decade and half and despite where I'm going today in this article, I still believe Martindale Hubbell to be the single best identifier of excellence in attorneys.)

The article, in and of itself, is great; the underlying premise -- that GCs must go to "outside counsel" for legal solutioning, is what is flawed.  Agreed: the vast majority of corporations are not quite at an aggressive "think outside the box" stage of legal evolution.  Still, the notion that outside law firms are the ONLY option is terribly mistaken.  A new generation of solutions is here for large corporations, and some of the mightiest have been blazing the path toward outside legal solutioning.

Consider James Buda, vice president and general counsel for Caterpillar.  Five years ago, at the 2002 Law Vegas, Mr. Buda met the attorneys of 10 law firms and told them in no undercertain terms that the party was over and the rules were changing.  When Mr. Buda headed Cat's litigation department in the 90's, the company relied on over 400 outside law firms for litigation; he trimmed that down to 20. And these 10 in Vegas were the half which remained after he became GC in January 2002.

You can read the full article here (in fact it is from Corporate Counsel magazine, Inside Counsel's predecessor) but the bottom line is that Mr. Buda totally reinvented Caterpillar's litigation solution to save the company a great deal of money while consolidating control and making the firms accountable for performance via a grading system. 

GCs like Mr. Buda are few and far between and bucking the trend of historical outside firm outsourcing is no small feat.  But in areas LIKE litigation support, intellectual property, contract management and my own area of immigration and labor law compliance, smarter alternatives continue to evolve for folks who, like Mr. Buda, want a better SOLUTION, not just another firm letterhead.

Compliance needs to be integral.  Talk to me and let me show how our solutions can affordably and seamlessly infuse bulletproof workforce compliance into your company.  Think outside the box and your company too can walk the way of the Buda.