Business Management Q&A

June 2004 » Business
Dear Dave, My employer has been hinting around that he will retire soon, but he has not fully prepared the next generation to maintain the firm going forward.
David M. Wahby

Ownership Plan Assistance

Dear Dave,
My employer has been hinting around that he will retire soon, but he has not fully prepared the next generation to maintain the firm going forward. At a recent meeting, we asked him to elaborate on his exit strategy and he admitted that he has not prepared one - he plans to leave by the end of this year! He admits that he is not sure where to begin, but thought that calling an attorney out of the phone book might be a good way to start.

There are three of us interested in taking over this firm, but we don't have a clue about where to turn for good, solid advice. Could you point us in the right direction?
R.W.,Neb.

Dear R.W.,
I definitely do not recommend picking an attorney from the phonebook as a way to begin. You need to be certain that the individual or firm you retain is experienced in these matters (preferably with plans for professional service firms).

One way to proceed is to contact other engineers you know who may already have gone through this process to see if they could recommend someone. Next, check with your local and state engineering professional groups to see if they could offer you a referral. Also, consider discussing this matter with your accounting firm. Chances are, your accountants know someone who is qualified to assist you with developing a transition program.

Whomever you consider, make sure they are experienced in ownership transition, and be sure to contract several of their past clients directly to discuss those firms' satisfaction with the guidance and service received.

Overtime Pay

Dear Dave, I want to modify the benefits package for my firm to provide additional benefits to professional employees. Where can I find information regarding available options and governing law? I am considering overtime pay for salaried employees, but have been advised that federal law prohibits this. However, I'm aware of several firms that do pay all employees overtime. Are they breaking the law, or am I just misinformed?
D.M.,Va.

Dear D.M.,
Yes, many firms do pay ┬ôsalaried┬” staff for hours worked above and beyond the standard work week, and that generally is not illegal. What is illegal is if you were to dock or otherwise deduct salary from these individuals should they happen to come up a couple of hours short during a pay period. However, this is a tricky legal matter and you definitely need to seek proper legal advice before making any changes to your payroll practices.

As of press time, there is pending legislation to overhaul the federal wage and hour rules completely. The new law could very well have an impact on who is and who is not considered eligible for overtime pay, as well as the methods by which overtime is determined. For a definitive answer to your question, you should contact the U.S. Department of Labor, Wage and Hour Division for your area (see the government pages of your phonebook). Otherwise, you may wish to review your questions and proposed changes with a local attorney who specializes in wage and hour issues.

Bonus Standards

Dear Dave,
I work for a small engineering and surveying firm. The last couple of years have been tough because of a variety of reasons, and no bonuses have been paid to anyone. This year is starting out much better and the potential for a year-end bonus seems much more likely. Regarding bonus amounts, is there an industry standard?
B.H., Colo.

Dear B.H.,
According to a 2003 survey conducted by Wind2 Software in Ft. Collins, Colo., discretionary distributions reported by the sub-group of 80 engineering firms who participated in the survey worked out to an average (mean) of 5.43 percent of total firm revenue. Unfortunately, the survey did not breakdown this percentage by staff classification. However, for detailed salary and benefit information, you can review CE News' annual salary surveys (www.cenews.com), which are published each May. Data also is available from ZweigWhite, PSMJ, and other companies.

David Wahby is president of Wahby & Associates (www. wahby.com), a management consulting firm serving A/E clients. He can be reached at 616-977-9756 or via e-mail at wahby@wahby.com.


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