COVER HRM 13 _may09 25/03/2010 14:21 Page 1
SHINE A LIGHT How Duke Energy’s people are guiding it through some dark times
BECAUSE THEY’RE WORTH IT Recognition remains an essential tool in workforce management
www.hrmreport.com • Q2 2010
Sex change? Why corporate America could benefit from gender reassignment
PLUS NOKIA SIEMENS NETWORKS • PITNEY BOWES • KFC • LESSONS IN LEADERSHIP
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ED NOTE HRMUS13_mar10 29/03/2010 14:53 Page 5
Editor’s note 5
All the small things Employee recognition needn’t cost the earth.
W
e’re all familiar with the phrase, “It’s the thought that counts.” It’s usually employed to mask the disappointment at receiving a substandard gift from a friend or relative. Most of us have been there: a hideous sweater, novelty socks or something obviously picked from the local 7-Eleven at the last minute. The irony is that these kind of gifts really betray lack of thought and failure to take the recipient’s interests into account. A token doesn’t have to be expensive or glitzy, it merely needs to show that some time and effort have been spent over its selection.
It’s a lesson that business would do well to heed. The last few years have been an unsettling time for both companies and their employees. An incredibly challenging economic climate has seen the biggest wave of layoffs and company failures in decades. For many, the prospect of wage increases and bonuses exists only in the realm of fantasy. Simply having a
job to go to on Monday morning has supplanted all other concerns. In this situation, making sure that employees know they are valued takes on a huge degree of importance. Keeping up morale – and by association, productivity – is dependent on workers feeling that their employers are still thinking of them, even in these adverse times. Everyone is aware that budgets are tight and cost cutting is one of the most pressing business priorities, so there is no necessity for such efforts to require huge amounts of expenditure. The smallest things can have a major impact on how people feel about their jobs. It might be a regular dressdown Friday, the ability to send e-cards to colleagues or a message from the chairman thanking people for their hard work. This kind of recognition ranges from inexpensive to completely free. Yet it can make a big difference to employee attitudes, as well as compensating for the economy-dictated lack of more tangible rewards. This is particularly true of
younger workers, the so-called Generation Y-ers and Millennials, whose digital-age upbringings have left them accustomed to instant gratification. In order to keep them focused and engaged, a constant drip-feed of encouragement is required. We might be tempted to criticize this apparent neediness, but really we should be thankful that they can be motivated in a manner that has such limited impact on the balance sheet. Think back to the best present you ever had. Chances are it wasn’t the item with the biggest price tag, but rather something more personal that proved the giver really ‘got’ you. It may be slightly overstating things to say that the best things in life are free, but they can certainly cost a lot less than you might expect. n
Huw Thomas, Editor
“If there are areas where we see that
“As we bring new employees in,
there are some employee
they come into this culture of
important what’s on your business
engagement challenges or morale
health; and we hope that these are
card, but what you really can deliver,
issues, HR actually works to put some
principles that will be embedded in
and what your contribution is to
action plans in place to improve or
them whether they stay or they
your customers’ success” Nokia
turn things around in those areas”
leave” Pitney Bowes’ Johnna
Siemens Networks’ Hans-Jürgen Bill
Duke Energy’s Jennifer Weber (p34)
Torsone (p80)
(p90)
“And at the end of the day, it’s not so
CONTENTS_HRMUS13_feb10 29/03/2010 10:14 Page 6
CONTENTS 6
Skirting the issue With anecdotal reports showing reports show that companies with women at the helm are on average 30 to 40 percent more profitable, Stacey Sheppard asks whether corporate America could benefit from a more feminine touch?
90 Making connections Hans-Jürgen Bill tells HRM about the human implications of turning two companies into one and why job titles just aren’t that important
34
People power Jennifer Weber explains how Duke Energy’s employees are driving the energy giant through some dark times.
28
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CONTENTS_HRMUS13_feb10 29/03/2010 10:14 Page 8
CONTENTS 8
Healthy debate
42
Benefiting the workforce
52
72
The value of reward
52 The value of reward The effects of changing demographics on workplace recognition programs, according to Tom Miller
ROUNDTABLE 42 Benefits Randy Clarkson, Transamerica Worksite Marketing, J. Marc Palmer, ConnectYourCare, Joel Carter, Secova and David Josephs, J.P. Morgan
ASK THE EXPERT 38 Tom Storey, Fairmont Hotels & Resorts 50 Barton Halling, UMR 89 Tom Beauregard, UnitedHealth Group
56 Debt of gratitude In a faltering economy, recognition could be viewed as a target for cost cutting. RPI President Kevin Cronin thinks that would be a mistake
60 The power of recognition
INDUSTRY INSIGHT 108 Brian Harris, NOVAtime 114 Michael McIntyre, The University of Tennessee
KFC’s Misty Reich explains the importance of building employee recognition into the company culture
EXECUTIVE INTERVIEW 86 David Kwasny, RESTAT 112 Laura Bernstein, VisionPoint 120 Jim Haudan, Root Learning 138 Mary Ellen Myhr, Associates for International Research, Inc. small businesses are affected by the healthcare system and her hopes for the reform
80 The best medicine Pitney Bowes’ Johnna Torsone tells HRM that the company’s approach to employee wellbeing could offer a solution to the nation’s big healthcare questions
84 Real world changes 68 Looking after the little guy Molly Brogan of the NSBA explains how
Mark Merrit dissects the route technology is taking PBMs
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CONTENTS_HRMUS13_feb10 29/03/2010 10:14 Page 10
CONTENTS 10
WELLNESS WORKSHOP
116 Designs on e-learning
72 Healthy debate
David Guralnick explains how e-learning can help companies keep training and development costs down
Michael Burcham, Onlife, Adrian Stewart, WellVentures LLC, David Ellis, UnitedHealthcare and Colleen Reilly, Total Well-Being
TROUBLESHOOTER 82 Zachary Meyer, Ceridian Health & Productivity Solutions
94 Reassessing recruitment Kay Kennedy, offers her advice on how recruitment professionals can learn from the economic downturn
A look at the philosophy of Applicant Tracking Systems
14 The brief 16 International news 140 Job market evolution 142 Books 144 Final word – Fred Schmitthammer, Inception Technologies
122 High principles
PROJECT FOCUS 66 Gene Raymondi, eni 110 Diana Durek, MHS
98 Back on track
REGULARS
Patricia Harned talks to HRM about the current state of American business ethics
126 Who’s the boss? HR’s role in developing 21st century leaders
NEXT BIG THING
102 Take a closer look 40 Debbra Palmer, Nike Inc.
Is your background screening program effective?
132 Moving on Michael Washbourn explains the effect that the recession has had on mobility programs
126
Who’s the boss?
56
Debt of gratitude
Looking after the little guy
68
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The Fairmont Turnberry Isle Resort & Club, Miami 14th-16th September 2010
Chairman/Publisher SPENCER GREEN Director of Projects ADAM BURNS Editorial Director HARLAN DAVIS Worldwide Sales Director OLIVER SMART
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HEALTH REFORM How will the new healthcare legislation affect health insurance provisions for employees? On March 21, the Obama Adminstration’s healthcare reform legislation was passed by the House of Representatives, by a vote of 219-212. The legislation, which was signed into law by
President Obama on March 23, will give an additional 32 million Americans access to basic health insurance by 2019. The signing of the bill comes after nearly a year’s worth of political wrangling, and is the culmination of what was often a venomous and uncomfortably personal exchange of views. In one demonstration, baton-wielding police separated furious
demonstrators from the members Such scenes have been symptoof Congress making their way matic of President Obama’s to vote on the reforms. attempts to push Racist and homophothrough the healthThe legislation bic slurs were rewill give an additional care restructuring peatedly hurled at plans that providpro-reform lawed his presidential Americans access to makers walking by; campaign with basic healthcare another was spat such a strong and upon. An observer popular platform. The likened to a scene from the debate should have been about civil rights era half a century ago. doctors, patients, insurance, drug
32 million
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UPFRONT 15 companies and coverage; instead, able to control their healthcare much of the attention has been foplan costs could have to pay a cused on the legal and constitunew 40 percent federal excise tax tional processes required to get on health insurance premiums any potential reform bill passed that exceed certain levels. They into law. could also face annual assessDespite the obvious divisivements of $3000 a year per workness of the reform debate, and er if employees’ share of continued strong opposition from healthcare premiums fails an afthe Republicans, who are seeking fordability test. to have the bill annulled on Beginning in 2013, the legisthe grounds that it goes against lation could also cut the value of certain provisions of the a tax break for employers offerConstitution, the Obama governing prescription drug coverage to ment has vowed to press ahead. Medicare-eligible retirees, which The bill will have farwill most likely discourage reaching effects on the businesses from proMore than lives of ordinary viding such coverAmericans: more age. This tax than 94 percent break is currently of all non-elderly Americans will have of all non-elderly worth tens of milaccess to health citizens will have lions of dollars insurance by access to health insureach year to some 2016 ance by 2016, versus just major corporations. In 83 percent now. Health insurers that same year, flexible spending won’t be able to deny coverage accounts, which make it easier based on pre-existing conditions. for employers to shift costs to And generous subsidies will be employees, could lose value available to lower-income families under a new $2500 annual limit. to help them get cover. An employer survey conThe bill also expands eligibilducted in January by Towers ity for Medicaid as part of its covWatson and the National erage mechanism, as well as Business Group on Health, increasing Medicaid reimbursefound that 71 percent of employments, which will make it easier ers believe health reform will infor patients on Medicaid to find crease the overall cost of doctors who take their insurance. healthcare services in the United The so-called ‘donut hole’ coverStates, while 69 percent believe it age gap in Medicare Part D plans will increase the cost of their is also set to be closed. benefit programs. But what will the reforms The survey also found that mean for the relationship between 35 percent say health reform will businesses, employees and health lead to fewer employers offering insurers? According to industry subsidized benefits. Nearly half observers, employers most likely (46 percent) of employers believe to be affected by the health reform it will decrease employer-sponchanges will be those who mainly sored offering of retiree medical employ lower-income wage workbenefits, while very few — only ers paying premiums that exceed five percent — say it will inwhat the legislation defines as afcrease, and just 27 percent of fordable. employers say it will cause Those employers who aren’t no change.
94%
NEWS IN PICTURES
Unemployed people line up to speak with prospective employers at the LA Career Fair on 23 March. US Treasury Secretary Tim Geithner has warned that 100,000 new jobs need to be created monthly to push the jobless rate down from its current 9.7 percent.
A striking worker wears a t-shirt depicting British Airways CEO Willie Walsh as Hitler at Heathrow Airport in London, UK, on 20 March. The industrial action, which was taken over a dispute about pay and working conditions, has seen 1100 BA flights cancelled out of 1950 scheduled services.
A General Motors employee assembles an SUV at GM’s Lansing Delta Township Plant on 10 March. The carmaker is expected to add a third shift to the two already in operation in response to a February increase in US sales.
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EXTREME OVERTIME The number of British people working 'extreme' unpaid overtime of more than 10 hours a week increased by 14,000 to nearly 900,000 in 2009, according a new analysis of official statistics published by the Trades Union Congress (TUC). According to the TUC, if the average person who works unpaid overtime did it all at the start of the year, they would not get paid until 26 February. However, those doing 'extreme' unpaid overtime of more than 10 hours per week wouldn't start getting paid until April 26. In 2009, over five million people across the UK clocked up an average of seven hours 12 minutes of unpaid overtime a week worth £27.4 billion ($40.9 billion) – or £5402 ($8067) each. Teachers and lawyers are the most likely to do ‘extreme’ unpaid overtime, with around one in five employees clocking up an extra 17 hours of free work a week.
A GREEK TRAGEDY As Greece struggles to rein in its 12.7 percent annual deficit and €300 billion ($400 billion) debt – 120 percent of GDP – a new wave of austerity measures are being introduced which includes public sector workers having to accept a 30 percent cut in their bonuses. Civil servants had previously received bonuses twice a year, but the Greek government needs to implement public spending cuts in order to save €4.8 billion ($6.4 billion) this year. Civil servants’ wages had already been frozen and their allowances cut by 10 percent. Other austerity measures include freezes on recruitment, raising taxes and changing the pension system and raising the average retirement age by two years to 63.5, as Greece attempts to convince the EU to provide a rescue package if it fails to repay its national debt.
WORK FATALITIES Unions in Australia are calling for workplace health and safety law to be strengthened due to a sharp rise in work-related fatalities. Statistics from the national regulatory body, Safe Work Australia, report that there were 177 fatal injuries in workplaces in 2008-9, an 18 percent increase from the previous year. A breakdown of the statistics reveals that worker fatalities rose by 14 percent to 151 in 2008-9, while deaths of bystanders increased by 37 percent to 26. Agriculture, forestry and fishing, and mining were the industries where there were the biggest increases.
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LABOR LACK China’s largest export region, the Pearl River Delta, is increasingly suffering from a lack of low-wage workers. Once dubbed ‘the workshop of the world’ the region is often the preferred location for low-cost manufacturers and boasts nearly a third of the country’s total exports. However, government policies aiming to close the income gap between the country’s richest and poorest inhabitants have prompted an exodus of 22.5 percent of migrant workers from the region in 2009. The lack of low-wage workers has been consistently pushing up wages throughout China’s export hubs and the provincial government of Guangdong province recently announced that it will be raising the minimum wage by 21 percent as of May. Jiangsu province, neighboring Shanghai on the Yangtze River Delta, last month raised its monthly minimum wage rate by 13 percent to 960 yuan.
FEELING PRESSURE Stress levels of business owners in India have decreased in recent years, according to a survey of 7400 business owners in 36 countries by global consultancy firm Grant Thornton. Of the business owners asked, 56 percent now feel stressed compared with earlier figures, which reported that 76 percent claim to feel high levels of stress. The pressure to perform has increased due to the economic crisis, but stress levels of business owners have also risen due to competitor activities and pressure on cash flow. The report showed that the four most stressful countries were Mainland China, Mexico, Turkey, Vietnam and Greece, whilst the least stressful were Sweden, Denmark, Finland, Australia and Canada.
TIME TO UNWIND Companies in Dubai are recognizing the benefits of providing their employees with the time and facilities to unwind at work. Stress-busting recreational areas that have been installed in offices are helping staff to relax and improve their productivity. The pioneering companies that have adopted this approach are now urging other companies to follow suit, stating that the provision of a working environment that gives people the opportunity to unwind and relax goes a long way towards keeping work-related stress at bay. One of the main causes of stress and fatigue is overwork, which can take a hard toll on the body. It can be triggered by working too much or too hard, and can also be caused by not knowing how to manage time well or failing to take time out for rest and relaxation.
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NEXT LEVEL EMPLOYEE RECOGNITION GiftCertificates.com, a leading ward and incentive programs into a provider of incentive solutions, re- single solution, IncentCore helps cently launched a new robust e- you to better align employee behavcommerce platform, IncentCore. iors with your business objectives. From its simple set up, ordering Now you can manage your operaprocesses and reporting, tional excellence, recognithis customizable ontion, idea generation, This line platform is an safety, training, customizable online all-in-one solucompliance, sales platform is an tion for the manperformance and agement of any all of your other solution for the incentive proprograms with management of any gram. one tool. The reincentive program Incentive prosults of your incengrams can be quite a tive program are handful to manage, but maximized with IncentCore. IncentCore can help you pull to- Streamline communications and ingether all the moving parts and crease program participation with track them with ease. IncentCore the click of a button. Reduce your provides program development, administrative costs and maximize web-based platform, online report- your reward budget with this incening, data security, and many other tive management system. customizable elements. IncentCore is the perfect soluThe IncentCore IMS function- tion for every company in need of a ality allows you to establish and au- management tool to assist with intomate program rules. Set up your centive and reward program ademployee nomination process and ministration. Companies small or your award approval process from large, one incentive program or right within the tool. Once the many, points-based system or dolaward is approved, you can identify lar value, IncentCore can be scaled the type of awards available to issue to meet your needs. and customize the communications For more information regarding IncentCore or GiftCertificates.com’s other to the employee. Reporting metrics products, visit www.GiftCertificates.com. are easy to track on a real-time basis. You can even choose to operate multiple incentive programs on one IncentCore platform to ease your administration needs. By integrating all of your re-
all-in-one
FAST FACT
The average salary offer to new college graduates in the Class of 2010 is
$48,351 down two percent from 2009 Source: National Association of Colleges and Employers
FOCUS ON WELLNESS The results of the third annual international wellness survey by Buck Consultants show an increased focus on employee wellness. In the US, more than 77 percent of employers say that they offer some form of wellness program for their workforce, whilst 64 percent indicated that they have a wellness strategy. In every international region outside the US, the main wellness priority is to keep employees fit and healthy so that they can perform their duties with optimal productivity. However, this is slightly different in this country, where the top business priority for wellness programs is to reduce healthcare costs. Improving productivity was the second business priority in the US followed by reducing absenteeism. Another difference that the US registered with other international regions was in the main health risks driving wellness strategy. Whilst Africa, Asia, Australia, Canada and Europe all voted stress as the number one health risk, the US rated lack of physical
activity and exercise as the primary risk. Barry Hall, a Buck principal who directed the survey, puts the increased focus on wellness down to the current prominence of healthcare reform legislation and its support for health and wellness as a preventative measure, and he believes that this could garner greater investment in wellness in the United States. The report highlighted some of the most popular global health promotion resources, including health risk appraisals, gym or fitness club membership discounts, employee health screening and onsite educational classes. In the US, 42 percent of survey respondents reported that they measure the effect that wellness programs have on the cost of healthcare. Of these, 43 percent say that costs have reduced by two to five percent.
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UPFRONT
DRUG PROBLEMS
20
Wonderlic Inc., a provider of on-demand employee and student recruiting, selection and retention solutions, recently announced that the results of its human resource research are consistent with a recent government report by the National Institute of Drug Abuse (NIDA). Over 46,000 students were surveyed for the report, which found that almost onethird had used marijuana and levels of use increased from 8th to 10th grade and from 10th to 12th grade. The results of the survey also indicated that 3.4 percent of high school seniors used cocaine and 10 percent reported using Vicodin, the prescription painkiller, for non-medical reasons. The findings from NIDA’s report support Wonderlic’s research into human resources, which states that current job applicants often have a recent history of illegal drug use. The Wonderlic Productivity Index Background Check found that 23.5 percent of current employees and potential job applicants had recently used marijuana.
FAST FACT
There are now
6.3 applicants for every job opening in the US Source: Bureau of Labor Statistics
CONTROLLING COSTS
duce wasteful spending by eliminating the use-it-or-lose-it mentality, which reduces The primary objective for an employers’ claims expenses that cause health plans to benefits strategy is to control the rapid inincrease premiums. crease in healthcare costs, according to a Many employers find that addressing study sponsored by HSA Bank in late 2009. healthcare cost control with an HSA not In the survey of more than 600 emonly generates savings for the ployers, 33 percent ranked concompany, but also reduces the Employees pay trolling costs as their cost for employees as well. number one strategic beneIndustry data indicates fits objective. To achieve employers on average reless towards their this benefits objective, duce the cost for employtotal costs when they many employers are turnee-only coverage by more have an HSA plan as opposed to other ing to Health Savings than 20 percent as complan types Account (HSA) compatible pared to all plan types. health plans. Aon Consulting and Employees pay less too. Data from the International Society of Certified 2009 indicates that employees pay 15 to 30 Employee Benefit Specialists (ISCEBS) repercent less towards their total costs when leased survey results in late 2009 that stated they have an HSA plan opposed to other that 38 percent of employers offered a conplan types. sumer-directed health plan with the specifCould your organization profit from ic intention to control costs. controlling healthcare costs? You can adEmployers that control costs through dress healthcare costs and create a benefit offering an HSA plan often pay lower prethat is highly regarded by your employees. miums and reduce payroll taxes such as An HSA plan provides a savings vehicle for FICA, unemployment contributions and medical expenses today and into the future, workers’ compensation. Employers can but also serves as a potential retirement recontrol long-term costs with an HSA plan serve. The time is now to make HSAs a part because employees are encouraged to reof your benefits strategy.
15% to 30%
WORKPLACE DISCRIMINATION Discrimination in the workplace reached its second highest level ever in 2009 as the number of workplace discrimination claims received by the Equal Employment Opportunity Commission (EEOC) totaled 93,277, down two percent from 2008. Of the discrimination allegations filed in 2009, 36 percent were based on race, 36 percent
on retaliation and 30 percent on gender. The EEOC also received 22,772 charges alleging age-based discrimination, the victims of which were awarded $72 million in benefits. According to the EEOC, the total amount of monetary relief obtained by victims in 2009 totaled more than $376 million, which is slightly lower than the $376.6 million paid out in 2008 – the year in which the highest number of claims were made.
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NEW EAP SOLUTIONS
Employee Transfer Corporation. “Distressed employees that are Employee Transfer Corporation distracted by financial hardship (ETC) unveils a new program this will be less productive, making spring called My Financial this an issue that companies must Mentor that offers workaddress. The right combiers support services nation of EAP soluand tools that tions can make a will help them difference.” employees that are recover or stay ETC’s new distracted by financial on track program inhardship will be less through the cludes: credit productive, an issue economic crisis. counseling; financompanies must address” The online service cial coaching tools; will assist people with links to third-party noninformation on foreclosure preprofit resources that help with vention, short sales, unsecured foreclosure and loan modificacredit debt, budgeting, new tions; information about the homebuyer advice and more. home-buying process and federal The program is a twist on and municipal grants; real estate traditional Employee Assistance services; moving – self move or Programs and focuses on finanvan line services; access to a nacial problems that American tional foreclosure listing database workers are facing during the (that works primarily with firstmost difficult economic times time homebuyers). since the Great Depression. The The new suite of solutions depressed housing market, rising was inspired by the trend of probforeclosure rates and lack of aclems that ETC’s clients are encess to credit has threatened midcountering. “Not only are we dle-class workers in epic ways. actively providing custom reloca“The magnitude of housetion solutions to our partners, we hold wealth lost in the Great also found ourselves collaborating Recession and the massive numwith them on ways they could ber of people affected is unlike help their workers help themanything else that employers have selves,” adds Martinez-Myers. had to deal with in modern To learn more about My Financial times,” says Frances Martinez Mentor, go to www.employeetransfercorp.com Myers, Senior Vice President of
“Distressed
FAST FACT
37% of workers say they have dated a co-worker at some time during their careers Source: careerbuilder.com
In the last issue of HRM ALAN KAYE, Mattel’s SVP of HR, explained the importance of a strong company culture. “There’s a lot of passion in our organization, which is a big part of how we built this culture,” Kaye told us. “When I recruit at a very senior level there are a lot of skill sets we’re looking for, but if we can get people into our company who have in their hearts the desire to put smiles on kids’ faces, we’re starting with the right stuff.” To read the stories from this issue, head to www.hrmreport.com
PART-TIME TREND Due to the rising cost of healthcare and retirement plans, older Americans are staying in the workforce for longer, according to the nonpartisan Employee Benefit Research Institute (EBRI). Using the latest US Census Bureau data, the EBRI analyzed the proportion of older workers in the labor force and found that the percentage of those aged 55 or older increased from 29.4 percent in 1993 to 39.4 percent in 2008, an increase of 10 percentage points. For those aged 65 to 69, the percentage increased from 18.4 percent in 1985 to 30.7 percent in 2006, up more than 19
percentage points. However, whilst employees are remaining in the workforce for longer, they are increasingly opting for part-time positions as opposed to full-time. The research by EBRI notes that workers now face increasing responsibility for contributing to retirement plans and retiree health insurance and therefore need to save more of their income for these purposes. Many are therefore opting to delay retirement so that they can postpone the need to pay for these expenses and can continue to accumulate savings.
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UPFRONT 24 PAMELA PAULK, VICE PRESIDENT FOR HUMAN RESOURCES, JOHNS HOPKINS HOSPITAL There is now and continues to be a real shortage of skilled care. We’re going to have many more people who are going to be appropriately accessing the healthcare systems. And it’s a healthcare system that’s already facing often long wait times, so it’s just going to exacerbate that problem. What the current economy has done is actually going to make things worse because it’s a temporary blip. People who were going to retire have decided to stay in the field a little bit longer and people who were part-time have added to their hours. So for right now, we feel like we have a pretty good balance. Our vacancy rates are low. Our turnover rates are low. But I think that’s temporary. I’m a real believer in developing your staff internally if you possibly can. The reason for that is most turnovers occur in the first year and often that’s because of poor fit. It may be fit with the culture, it may be fit with the supervisor; it may be fit with the particular job. It may be a number of things. It would be physically unsound to continue to spend all this money to train people internally when there are great people on the outside to bring in. What you do is just cut back somewhat. But I don’t think you can stop it. If you stop it all together then it’s very hard to put back in place. You’re sending the wrong message to your staff. We want someone who not only meets all the check boxes of being technically qualified, but we want somebody who also fits the values and culture of the organization. That might be a little harder to get, but we’ve trained our managers in what to look for. For every employee we have here, 30 percent of their job description – which means at least 30 percent of their evaluation – is customer service. The traditional forms of recruitment are going to get less and less important, which means we’re going to have to learn new skills. Traditionally, you go to colleges, job fairs or put ads into professional magazines; I just think all that stuff is going to become passé in time and it’s going to be based more on social media.
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UPFRONT 25
MORE MONEY
TOP 10
Researchers at Juju.com recently used BLS figures to rank 50 US metropolitan areas in order of the number of applicants per opening. The ten most promising cities for job hunters: Rank/City/Applicants per opening
1 2 3 4 5
6
7 8 9 10
Washington, DC (2.0)
Baltimore (2.7)
San Jose (3.1)
Salt Lake City (3.2)
New York City (3.4)
Hartford, Conn. (3.6)
Denver (4.4)
Boston (4.5) In a three-way tie for 9th place:
San Antonio (5.0) Austin (5.0) Indianapolis (5.0) Pittsburgh (5.1)
In January, Capital One Banking conducted an online survey into the relationship Americans have with their money. The survey results revealed that a quarter of all US employees would forgo vacation and work 365 days a year if that meant that their salary would double. A report published in 2007 by the Washington, DCbased Center for Economic and Policy Research referred to the United States – the only industrialized nation without a mandated minimum annual leave for workers – as the ‘No
JOB CUTS During the last three months of 2009, businesses made 321,569 people redundant in mass layoffs due to financial concerns, organizational changes and a drop in demand for their products. According to the government, a mass layoff is one that involves more than 50 employees. Those areas hit hardest were the Los AngelesOrange County region, which suffered 19,000 job losses, followed by Chicago, New York, the ‘Inland Empire’ region of California and the San Francisco Bay Area. Metropolitan areas are particularly hard hit by these larger incidents of downsizing, because big companies are typically in major cities. However, the rate at which large and mid-sized
BOTTOM 10 Vacation Nation’. The findings of the report detail how a shocking 28 million Americans don’t get any paid vacation and this is particularly the case for low-wage and part-time workers, and for those who work for small businesses. John Schmitt, CEPR senior economist and lead author of No-Vacation Nation, believes that the findings are not necessarily related to the feelings Americans have about vacation, but rather their anxiety about money in these tough economic times.
businesses were laying off workers through the end of 2009 slowed significantly, according to new employment data. For example, 117,000 Californians were laid off during July, August and September, but this figure dropped off to 65,000 from September to December 2009. This represents an important turning point, as it was the first time in three years that the number of layoffs dropped from one quarter to the next. The nationwide toll dropped by about seven percent in the fourth quarter, down from 345,367 in the third quarter of 2009. In the manufacturing sector 83,700 workers lost their jobs, approximately a quarter of the total layoffs. Construction firms made about 83,000 workers redundant. Also 26,000 hotel and restaurant employees and 10,100 retail workers lost their jobs.
The cities with the highest number of job applicants per opening:
40 41 42 43 44 45 46 47 48 49 50
Orlando (9.0)
Memphis (9.4)
Birmingham, Ala. (9.5) Tied for 43rd place:
Providence, R.I. (9.6) Portland, Ore. (9.6) Sacramento (11.2)
Los Angeles (11.9)
Riverside, Calif. (13.4)
Las Vegas (14.4)
Miami (15.8)
St. Louis (19.9)
Detroit (21.6)
UPFRONT HRM US13:25 June
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UPFRONT 26
WAITING GAME According to WorldAtWork’s latest salary budget survey update, many organizations are treading carefully this year when it comes to pay practices and are preferring to wait and see how things go. During the recession, many companies took the decision to freeze pay and substantial numbers are not planning to go back on this decision any time soon. Thirteen percent of US employers cut pay in 2009 and 37 percent of those said they were still in recession and not considering restoring the pay in 2010. Only 29 percent plan to restore pay in full and 15 percent said pay cuts were permanent. Some 52 percent of US employers froze pay for some or all employees in 2009 and nearly a quarter of those have decided to prolong that freeze into 2010 whilst 54 percent of them plan to resume normal pay. Many organizations are still considering pay freezes for 2010.
BARBIE BROUHAHA
RECESSION BACKLASH The effects of the recession are having a detrimental effect on the nation’s workforce according to experts at HeartMath, a recognized authority on stress-reducing and resilience-building solutions. The economic downturn forced many companies to cut back their workforce in order to survive the recession and since then cases of stress and absenteeism have been on the rise amongst the remaining workforce, causing healthcare costs to increase. Those who managed to avoid recessionrelated layoffs have been burdened
with heavier workloads and longer hours, forcing increasing numbers of employees to turn to employee assistance programs for help. A worldwide benefits consulting firm surveyed 282 large companies and found that 22 percent reported an increase in unplanned absences, and 78 percent of employers cited “excessive work hours” as a leading cause of employee stress. Towers Perrin also conducted a survey of 321 companies and found that the 2009 average annual healthcare cost per employee is $9660 – an increase of six percent over their 2008 figures.
February saw another example of the light the problems surrounding the issue of power of social media, as adults in the women in so-called STEM professions – blogosphere launched a campaign science, technology, engineering and math. on Twitter and Facebook to con- Despite the calls for more women in these vince Mattel that Barbie’s next oc- fields, fewer and fewer seem to be taking up the challenge and the worry is that cupation should be that of the geek factor is putting many computer engineer. women off. According to The outcry Only the National Center for came after Women & Information Mattel of girls take Technology, only 17 perlaunched advanced placement cent of girls take adan online tests in computer vanced placement tests in poll asking science while in high computer science while in girls everyschool high school, the lowest level of where to choose females among all such exams. whether Barbie’s next occupation should be sur- Similarly, in 2008, only 18 percent of comgeon, architect, news anchor, puter science degrees were awarded to environmentalist or computer women, compared to 37 percent in 1985. Alicia Abella, Executive Director of the engineer. The overwhelming choice was news anchor, but due to innovative services research department at the social media campaign Mattel AT&T Labs, believes that scientists get a hard was forced to relent and go with both time, especially on TV, where as they are often depicted in white lab coats with funky the suggested occupations. The situation has served to high- hair like Einstein, or as cartoon characters.
17%
UPFRONT HRM US13:25 June
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UNION MEMBERSHIP BY INDUSTRY, 2009 PUBLIC SECTOR 7.9 MILLION
DON’T MISS... PRIVATE SECTOR 7.4 MILLION
Other private sector industries
919,000 Leisure and hospitality 349,000
Local government
4,867,000
Wholesale and retail trade
937,000 Construction
958,000 Transportation and utilities
1,144,000
MAKING CONNECTIONS Hans-Jürgen Bill on the challenges of merging two companies P90
Manufacturing
1,470,000
State government
Education and health
1,655,000
2,025,000 Federal government
1,005,000 Source: US Bureau of Labor Statistics
COMPANY INDEX Q2 2010 Companies in this issue are indexed to the first page of the article in which each is mentioned. Adecco 97 Aspire 28, 124 Associates for International Research Inc. 138, 139 Association of Pharmacy Benefit Managers 84 Baldoni Consulting 124 Bank of America 56 Bass Pro Shops 55 Berkshire Associates 99 Ceridian Health & Productivity Solutions 13, 82, 83 ConnectYourCare 42, 45 Creative Services 102 DCI Incentives 59 Dearborn International 61 Deutsche Telekom 28 Double Star 95 Duke Energy 34 Employee Transfer Corp 22, 23 eni 66, 67 Ethics Resource Center 122
Fairmont Hotels & Resorts 11, 38, 39 Giant Impact 119 GiftcCertificates.com 18, 19 Global Learning Resources Inc. 98 Graebel 51 Harlan Evans Inc. 124 HAS Bank 20, 21 Icims 105 Inception Technologies 144, IBC International Association for Corporate & Professional Recruitment 94 International E-Learning Association 116 In Tune 72, 76 J.P. Morgan 42, 49, OBC Kaleidoscope Learning 116 KFC 60 Kohl’s 63 Long John Silver’s 60
Manhatten Management 133 Meet the Boss TV 143 MHS Inc. 7, 110, 111 McKinsey & Company 28 MI Group 135 National Association for Female Executives 28 National Small Business Association 68 Nike Inc. 40, 41 Nokia Siemens Networks 90 Norwegian Cruise Lines 2 NOVAtime 9, 108, 109 Onlife Health IFC, 72 Online Rewards 71 People Click 101 Pitney Bowes 80 Pizza Hut 60 Recognition Professionals International 52, 56, 60 Restat 86, 87 Root Learning 120, 121
Secova 42, 47 Sirva 137 Smartbox 65 Taco Bell 60 Test Country 107 The Miller Company 52 Total Well-Being 72, 74 Transamerica Worksite Marketing 42, 43 UMR 4, 50 UnitedHealth Group 72, 78, 89 University of Connecticut 129 University of Tennessee 114, 115 Upper Iowa University 125 VisionPoint 112, 113 WellVentures 72 Worldwide ERC 132 Yum! Brands 60
REASSESSING RECRUITMENT Kay Kennedy on how recruitment professionals can learn from the economic downturn P94
DESIGNS ON E-LEARNING David Guralnick on how e-learning can help companies keep training and development costs down P116
Women&Leadership_17MAR10 29/03/2010 10:31 Page 28
COVER STORY
Skirting the
issue
With anecdotal reports showing that companies with women at the helm are on average 30 to 40 percent more profitable, Stacey Sheppard asks whether corporate America could benefit from a more female touch?
T
he past decade or so has been pretty significant in terms studies and reports are coming to the same conclusion and based on the reof game changing events and the sheer magnitude of search that is being carried out on the matter, it would be a grave mistake not many of these episodes has rocked the very foundations to ask the question: Do women make better business leaders? of corporate America. Enron, WorldCom and Lehman At a first glance it would be easy to assume that they do not, due to the Brothers now take pride of place in the financial hall of fact that so few women actually make it up to the heady heights of the cshame and as the world still reels from the efsuite or the boardroom. However, the action currently taking place fects of the worst financial meltdown in Europe to rectify this situation would seem to suggest there since the Great Depression, business has been forced to take must be some advantage to having women in leadership Women are a long hard look in the mirror and re-evaluate the way that roles over and above the diversity aspects of corporate it operates. One thing that’s for sure is that the economresponsibility. currently only in ic crisis has put traditional leadership qualities under far In 2002, Norway enacted a law requiring that 40 greater scrutiny as people start to reconsider what it percent of all board members at state-owned and pubmeans to be a good leader. licly listed companies be women by 2008. Since then of profit & A recent leadership report – entitled Tearing Up The political pressure has grown across Europe for compaRule Book, A New Generation of Leaders For 2010 – by nies to increase female representation among their leadloss jobs Aspire, a leader in executive coaching, leadership developership ranks and as a result both Spain and the Netherlands ment, consultancy and research, includes a list of the top 12 least have passed similar laws. In January this year, the lower house admired leaders. The result is a list made up predominantly of male leadof France’s parliament approved a new law forcing companies to lift the ers, and whilst this is understandable given the fact that most leadership roles proportion of women on their boards to 40 percent by 2016. Following are currently filled by men, the list of the 12 most admired leaders in Aspire’s these examples Belgium, Britain, Germany and Sweden are now all conreport tells a very different story: six of the top 12 are women. sidering legislative measures involving female quotas. In fact, only recentAnd Aspire are not alone in suggesting that the leadership qualities that ly, German company Deutsche Telekom, Europe’s largest women offer are being grossly underestimated and overlooked. Numerous telecommunications company, announced that it would voluntarily intro-
11%
Fortune 500 women
27
Patricia Woertz Archers Daniels Midland $17.5m
28 www.hrmreport.com
32
Angela Braly Wellpoint $9.8m
41
Lynn Elsenhans Sunoco $9.8m
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Women&Leadership_17MAR10 29/03/2010 10:31 Page 30
THE CEO GENDER GAP
DESPITE WOMEN MAKING UP ALMOST 40% OF THE GLOBAL WORKFORCE, THE NUMBER OF FEMALE CEOS ACROSS MOST INDUSTRIES REMAINS LOW.
40%
of the global workforce are women
PERCENTAGE OF FEMALE AND MALE CEOS BY INDUSTRY
AGRICULTURE
AUTOMOTIVE
CHEMICALS
ENERGY
ENGINEERING & CONSTRUCTION
FINANCIAL SERVICES
FOOD & BEVERAGE
HEALTH
IT & TELECOM
LOGISTICS & TRANSPORT
MEDIA & ENTERTAINMENT
MINING
PROFESSIONAL SERVICES
REAL ESTATE
TEXTILE
TRAVEL & TOURISM
FORTUNE 500 COMPANIES RUN BY WOMEN
SOURCE: WORLD ECONOMIC FORUM’S CORPORATE GENDER GAP REPORT 2010 FIGURES TAKEN FROM 600 COMPANIES ACROSS 16 INDUSTRIES
30 www.hrmreport.com
duce a quota aiming to fill 30 percent of upper and middle management jobs with women by the end of 2015. Whilst the proportion of female leaders is particularly low in Europe – on average 11 percent of board seats in European companies are held by women – the situation in the US is only marginally better; roughly 15 percent of the board members of Fortune 500 companies are women. However, for many critics these statistics are far from acceptable and calls are being made to increase the number of women on boards and in executive roles. There may not be the same debate here in the US about legal quotas, but concerns are still being voiced loud and clear. Betty Spence is President of the National Association for Female Executives and part of her role is to collect data on the top companies that female executives can work for. NAFE ruins an annual awards that recognizes the top 50 companies and the work that they do in promoting the advancement of women through the ranks. Spence is clearly perturbed by the distinct lack of women in senior-level management positions, but she is particularly troubled by the disappointing numbers of women who are in roles where they are actually running the business. “Women are currently only in about 11 percent of profit and loss jobs,” says Spence. “As evidence emerges that companies with women at the top are more profitable than companies without women at the top, the fact that women should still only be in 11 percent of these positions is clearly an error on the part of companies. To let that talent be within your walls and not be using it for profit makes absolutely no sense.”
“When you go back 10, 15, or 20 years when women were aspiring to the board there was a very strong expectation that in order to be successful you had to be like a man, but I’m not so sure that expectation is still there” And the figures do seem to support her point. Some of the companies in her top 50 list do indeed have women at the helm and a few of them certainly appear to have outperformed companies with male CEOs. According to NAFE, even Wall Street backs this concept: stocks of the 12 Fortune 500 companies with women CEOs rose an average of 50 percent in 2009, compared to the benchmark for US stocks, the S&P 500, which rose an average of 25 percent. Spence goes on to explain how a recent report released by Hedge Fund Research Inc. found that between January 2000 and May 2009 hedge funds run by women returned nine percent gains compared to 5.8 percent for those run by men. “This is clearly a dreadful misuse of talent,” she says. “If you’ve got the women within your organization that can do this, put them to work and have them do it.” She cites figures from McKinsey & Company that suggest companies run by women are 40 percent more profitable, and similar figures from Catalyst, a non-profit group working to expand opportunities for women in business, that suggest companies run by women are 30 percent more profitable. “If companies are that much more profitable when they do this, then only a fool wouldn’t follow that advice,” says Spence.
Women&Leadership_17MAR10 29/03/2010 10:31 Page 31
LEADERSHIP TRAITS: WOMEN RULE! % saying this trait is more true of...
Men
Women
20
50
Honest Intelligent
14
Hardworking
38
28
Decisive
28
44
Ambitious
33 34
Compassionate
34 5
Outgoing
80
28
Creative
47 11
62
Note: Traits listed in order of the public’s ranking of their importance to leadership. “Equally true” and “don’t know ” responses are not shown.
WHY AREN’T THERE MORE WOMEN IN TOP EXECUTIVE POSITIONS? Major reason
Minor reason
Women who try to rise to the top get held back by the old boy network
49
28
Doors have not been open long enough for women to make it to the top
44
34
There are few women in high corporate positions to inspire others
38
36
Women are discriminated against in all areas; business is no exception
35
32
Women’s family responsibilities don’t leave time for running a corporation
34
34
Generally speaking, women don’t make as good bosses as men
16
Generally speaking, women aren’t tough enough for business
15
26
26
Note: “Not a reason” and “don’t know ” responses are not shown.
Fortune 500 women
52
Indra Nooyi PepsiCo $13.4m
53
Irene Rosenfeld Kraft Foods $17m
75
Ellen Kullman DuPont $4.4m
www.hrmreport.com 31
Source: Pew Research Center
Clearly, with figures like these being thrown around, the issue merits investigation – particularly as many companies are still struggling with the legacy of the economic crisis. Like Spence says, who wouldn’t want to run a more profitable company? Employing women in senior-level positions would appear to make sound business sense and if this is indeed the case it’s worth examining what it is exactly that women can bring to the table. Joanna Barsch is a director at McKinsey & Company, a global management consulting firm, and the leader of The Centered Leadership Project. She has also recently co-authored a book entitled How Remarkable Women Lead: The Breakthrough Model for Work and Life. As far as she is concerned there are a number of important distinctions between the attributes of women and men, as well as differences in their leadership style. The main differences that she alludes to relate to the five core principles of Centered Leadership. “There are a couple of things that women do on average that would be good for men to do as leaders. The most important one is anchoring what the company does in meaning, in other words, providing a sense of purpose that is shared within the company,” says Barsh. “Research shows that this tends to be more important to women than pay and status, which are generally more important to men.” The second thing that Barsh notes is that women recognize positive emotions in the company and use them to mitigate the fears that employees have and that reduce their will to work. “The positive emotions of joy, happiness and love are very strong and can actually be great strengths for a company. So a woman leader, recognizing the power of emotion in the workplace, is more able to lead effectively.” Barsch goes on to explain the third advantage that women have: instinct. She refers to a theory by psychologist Shelley Taylor called ‘Tend and Befriend’ which states that women tend to build and nurture community and that makes the company stronger. “I have interviewed a fair number of women at the top, and they talk about their role as a leader very much thinking about the organization as a family. Anne Mulcahy was a great example of that when she was leading Xerox. You have to pay attention to all the people and value everybody,” says Barsch. “Brenda Barnes who leads Sara Lee is another who talks about it that way,” she says. “Andrea Jung who leads Avon, is a third person who thinks about family all the time, and recognizes that the individual facing her across the worktable is a person who has a family, who is not just a work unit, but a human being. And that humanistic notion is one that I think women who are moms and family leaders can bring to the workplace.” The fourth aspect that Barsh highlights is the fact that women tend to lead in a more collaborative manner than men do. “I've seen ample evidence of women being far more collaborative, gaining far more input from the company, and being able to make decisions that are based on taking a lot more in. It’s not that women are worse at decision-making. They just make decisions more collaboratively, which is a different form of decision-making, and maybe more effective in times when it’s really uncertain and you don’t have all the answers yourself,” she explains.
Women&Leadership_17MAR10 29/03/2010 10:31 Page 32
Spence agrees with Barsh on this matter and cites another study pubthe milestones at the same rate as the men are hitting them. But Barsch lished by Catalyst in October 2005 entitled Women “Take Care”, Men “Take also puts it down to women having a different understanding of leaderCharge”: Stereotyping of US Business Leaders Exposed. Spence says that there ship. has always been a certain perception that men are much better at making de“We define leadership in our book not as being at the top of the compacisions and moving forward, but that this isn’t necessarily true. ny, but as making your mark in whatever you choose. And because of the im“Studies are now finding that men may make decisions based on a single portance of meaning to women, they have a much richer and broader strategy whereas women have a bigger overall strategy when they’re making definition of what it means to make a difference,” says Barsh. their decisions, and they also pull in more view points. So what Catalyst conShe believes that men view pay and status as the goal and therefore cluded in the study is that there were no real differences in skills, only differgetting to the top is important to them. However, women look much more ences in styles of management,” explains Spence. for what is going to make them happy and make their lives worthwhile, The final characteristic that Barsh identifies is that women tend to be she says. more risk averse. She believes that perhaps because women leaders have Collins agrees and when asked why there are so few women in seniorthis sense of meaning and a strong sense of community and responsibililevel positions she says: “Because a lot of women don’t really want to do it. ty for everyone in the company, they may act more cautiously. I don’t think it’s because women can’t do it. I believe that a lot of women, However, this appears to be a very confrom Generation X and Generation Y, look at the tentious issue, predominantly due to the wordsenior levels and say ‘You know what, I’m not rePERCENTAGE OF COMPANIES BY NUMBER OF WOMEN ing of “risk averse.” Spence certainly thinks that ally sure whether I want to make those sacrifices EXECUTIVE OFFICERS (2009) this is a misconception. She refers back to her and I’m not really sure whether that’s the style or ... 31.7% earlier comment regarding the Hedge Fund the atmosphere of somewhere that I want to 29.2% Research. “It’s not that women aren’t risk takwork’”. Combine this with the work-life balance ers, it’s that they seem to be managing risk a issue and a style of work that is perceived to be 21.2% whole heck of a lot better than many men are quite aggressive and Collins says that it’s not sur17.9% managing risk,” she says. prising that many women decide not to go down Samantha Collins, the founder of Aspire, this route. also doesn’t subscribe to the view that women When we take a look at successful female take less risks; she thinks they have a different apleaders from the Baby Boomer generation, many proach to risk, which is more closely related to of them succeeded in the only way they could – by ethics. “I think women take a more calculated risk imitating men. Authoritarian, direct and controlZERO ONE TWO THREE and when it comes to something that goes against ling leadership was the hallmark of the 1970s busiWOMEN WOMEN WOMEN OR MORE WOMEN strong value or ethics, they’re not going to do it. nessman, and women were not exactly welcomed So when you think about the whistle blowers in into the ranks of management. the last 10 years, like for Enron or WorldCom, “Those women who have adopted a more masthey’ve all been women. Now to be a whistle blower, that’s a huge risk. But culine style in order to compete with their male peers probably had to work they’re doing it because it went against their values,” she says. three times to 10 times as hard to reach that senior level position,” says Collins. “So am I saying that women are more ethical than men? I’m not saying “One of the dangers is that the women at that level think they have to be a that, but I am saying that when it comes to risk and an attitude towards risk, super woman and portray this perfect image of somebody who is a brilliant I think men and women approach it differently and I think that’s a good banker or a brilliant lawyer, a super model, a wonder woman at home, and a thing,” says Collins. sex siren. You know, the perfect outfit,” she continues. So whilst men and women would appear to have very different ways of Now that these women have made it to the top, Collins believes that they doing things and contrasting leadership styles, there is nothing really to sughave the opportunity to uncover some of these layers and start to show a more gest that one style is overtly or definitively better than the other. And if this is human, more authentic side to themselves. Particularly in terms of role modthe case, why are women struggling to break through the so-called glass ceilels, Collins points out that younger women working their way up the ranks ing – if indeed one actually exists? want to be able to look up to female role models who are human and who Clearly the fact that women are the child bearers cannot be ignored have strengths and weaknesses. “When you go back 10, 15, or 20 years when here; taking time out to raise a family would obviously impact the career women were aspiring to the board there was a very strong expectation that in of any woman, or man for that matter. Electing to work part-time or take order to be successful you had to be like a man, but I’m not so sure that extime off for children means that women often find that they’re not hitting pectation is still there,” says Collins.
Fortune 500 women
100 32 www.hrmreport.com
Mary Sammons Rite Aid $5.2m
131
Carol Meyrowitz TJX $8.6m
147
Anne Mulcahy Xerox $10.9m
Women&Leadership_17MAR10 29/03/2010 10:32 Page 33
“Studies are now finding that men may make decisions based on a single strategy whereas women have a bigger overall strategy when they’re making their decisions, and they also pull in more view points” “Some of the skills that have been more traditionally attributed to women have consistently been underrated as soft, fluffy and girly, and I think that’s had its day now. What we’re realizing is that those skills are absolutely needed in order to get the best out of people and to really encourage people to want to enjoy their time at work,” she explains. So perhaps we are skirting the issue with all this talk of whether corporate America needs more women at the top. Maybe it’s part of a far greater discussion on leadership. This time last year, the New York Times columnist Nicholas Kristof reported that some of the most interesting discussions at the World Economic Forum in Davos, Switzerland revolved around whether we would be in the same mess today if Lehman Brothers had been Lehman Sisters. The consensus, he wrote, was that the optimal bank would have been Lehman Brothers and Sisters. Men and women bring vastly different perspectives, skills, mentalities and communication styles to business and a company that can capitalize on what both have to offer will inevitably benefit in the long run. After all, a board or executive team that can draw on the different styles of men and women will undoubtedly profit – perhaps even in monetary terms – from better decision-making. Whether more women make it to the top or not, what is undeniable is
199
Brenda Barnes Sara Lee $9.3m
255
that a more feminine approach is needed to leadership. The new generation of leaders take jobs in companies they believe in and want make a difference and be challenged. They are frustrated by hierarchies, work-life balance, and a lack of opportunities to do what they came for. “Once companies start realizing that this is the case and a whole generation of women, and a lot of men, want something different from seniorlevel positions, then there is a chance for them to start changing the way they do things. And I think that might be the wake-up call that’s needed,” says Collins. In the foreword to Aspire’s report, Tearing Up The Rule Book, A New Generation of Leaders For 2010, Collins writes: “This new century needs a new generation of leaders who are more transformational and embrace their feminine qualities. The old school style of many politicians and corporate CEOs is on the way out and transformational leadership behaviors are on the way in. The time for a new rulebook is here and women and men who operate with the highest integrity, think beyond short-term profit, have a vision for the future and are not afraid to prioritize their family and personal life will not only survive but thrive in a new decade. This is a new era for women as leaders.” I for one would certainly like to believe her. n
Andrea Jung Avon $11.1m
269
Laura Sen BJ’s Wholesale Club $2.6m
www.hrmreport.com 33
FEATURE
Jennifer Weber explains how Duke Energy’s employees are driving the energy giant through some dark times.
I
f the fi nancial crisis and subsequent economic downturn have taught us anything, it is that no one is immune to the potential impacts. Even providers of seemingly essential commodities like power have felt the pinch as individuals and businesses attempt to cut costs by reducing the amount of energy they use. Less demand means less revenue and this has left companies like Duke Energy, which provides gas and electricity to some four million customers in the US, with some tough choices to make. For Jennifer Weber, Chief Human Resources Officer at the energy giant, balancing the needs of her people with those of the organization has been a major professional challenge since she came into her current role in 2008. Weber is emphatic about one thing when it comes to being a successful HR professional: it’s all about the business. “One of the things I always tell individuals who are interested in entertaining a career in HR is to make sure that you focus on being a good businessperson fi rst and an HR expert second,” she says. “If you’re going to focus some developmental time, focus it on learning the business, understanding the business drivers, understanding how the company that you’re supporting makes money, understanding the P&L and the balance sheet.” It’s a lesson that HR has been learning in recent years and something that needs to be taken on board if people specialists are going to retain their seat at the table.
PEOPLE Jennifer Weber.indd 34
29/3/10 10:24:09
POWER Jennifer Weber.indd 35
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The trick is to develop the more conventional areas of HR expertise in support of the challenges faced by the organization. “HR facilitates a lot of decisions around things that can save the company money or cost the company a lot of money,” Weber continues. “It also controls things that impact the health and well-being of the organization in terms of employee engagement and in terms of productivity. Understanding what the business drivers are, how those vary by area, is very important.” The growing realization that a company culture can be a key differentiator gives HR an opportunity to take the lead. This is particularly true for Duke Energy, which has faced the challenge of building a coherent culture at a company largely formed from a series of mergers and acquisitions. Weber explains that having clearly defined ideas of what a culture should be and driving that through senior management has been key. In addition, an attitude she describes as ‘take the hill’ is essential in Duke’s work to meet its goals, particularly in our current climate. “When there’s something that we need to get done – such as recently, because of the economic downturn we’ve had a focus on cost management – this company has a way of knowing how to take the hill and how to go get it done,” Weber says. “That’s something that really needs to be leveraged in times like this.”
Dark days The impact of these tough times cannot be underestimated. Organizations of all types have had to weather huge challenges, with large-scale job losses becoming an increasingly common feature. In these situations, HR finds itself in an unenviable position, squeezed between its commitment to preserving the bottom line and loyalty to its people. So what are the qualities that have allowed Weber and her team to work through this rocky period? “I think one of them is tenacity,” she replies. “It’s keeping the energy levels up and making sure of that. It’s also about agility. It is unbelievable how unpredictable our environment is these days. Just when we think volumes in our business are starting to show some signs of recovery, we look out a few more months and we see visible signs that we are going to continue to be below where we’ve performed historically in terms of demand for our product.” Weber tells us of a heavy focus on cost-savings and acknowledges that this can have a big impact on company morale and energy levels. However, she is adamant that the company’s management is leading from the front in maintaining an air of positivity. “We have a very dedicated, very high energy senior team,” Weber explains. “I would say a lot of that comes not just from them. Everybody is wired in a way that they’ve got a very diligent focus on the business and a lot of energy that they put into it. But (CEO) Jim Rogers does as well. If you ever see him in action, he’s got a lot of enthusiasm for this business. He’s been in the business and in the industry almost his entire career. “He is incredibly high energy, and that inevitably rubs off on all of us. We’re all looking forward to a time when we’ve turned the corner in terms of our economy, and we do start seeing some recovery in terms of the demand for our product and services. But in the meantime, I think that this has gotten the adrenaline going in all of us to not lose our
Out in front Weber explains p the necessity of developing leaders. I believe that there are attributes of leadership that can certainly be taught. I absolutely believe that, and we actually structure our o curriculum around leadership competencies. In our selection process we consider those competencies when we hire and when we move somebody into a key role. We look at those and we say, ‘Is this individual either already exhibiting these attributes, or do we believe that they actually have the potential to learn them?’ So we do invest time and resources in the teaching part of leadership, and I believe that many aspects of leadership can be learned. I do think among some leaders there are certain things that come naturally, so you don’t have to invest as much time and attention. But nobody’s perfect, and everybody can continue to improve in their capabilities and their leadership style. In these times, because they’re so unpredictable and so unprecedented, I think it has become a time that has really challenged leadership. The people who it’s come naturally to or who have invested in their own self-development and developing their leadership skills, are probably faring better across many companies than those that haven’t made that investment or haven’t been mindful of it.
focus. We’ve done it through getting together routinely and collaborating on various solutions and challenges that we’re facing.” But energy can only do so much. Cost saving on any meaningful scale inevitably results in headcount cuts, a traumatic reality both for the employees who leave and those who successfully dodge the bullet. Nonetheless, Weber insists that the kind of relationship that exists between Duke and its people goes at least some way towards diminishing the pain caused by reductions in staffi ng. “We do engagement surveys of our employees every year,” she says. “The most recent survey came just after we froze merit increases in 2009. So in the summer of 2009 we do our engagement survey, and our engagement levels were higher than they’ve been for many, many years. I think that is a reflection of employees’ appreciation for having a job, because so many people around them – their neighbors, Jennifer Weber their family members – have been impacted by this recession and have lost jobs. We had a lot of write-in comments to that effect.”
Skill sets Even in challenging times, an organization cannot neglect preparing for its future. More than many other industries, power and energy is going through a technological revolution. It is essential that people on the front line keep pace with this development. “One of our first priorities is
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to figure out ways that we can retool our current employees to meet some know how ready are we behind them to backfill the skills and leadership of the needs that we’re going to have in the future,” Weber confirms, citing they bring into those roles,” Weber says. “So we look at those kinds of metthe developing smart grid as just one area that is going to require a whole rics and see how we’re doing, and we identify areas of weakness.” new set of skills. “Our employees and our managers know that that’s a fundamental part of our strategy, and I think people appreciate that. That being said, we do try to bring in people from the outside where we have strategic needs, so that we’re always getting an influx of new talent and new ways of thinking and doing things.” Continuous learning is another way that Duke ensures its workforce is fit for the future, and Weber believes it is a key factor in building an organization that is stronger in every respect. “You build a company that thinks in terms of innovation and comes up with innovative ideas,” she Plans are put together to work out how to accelerate development of says. “You build a culture of diversity and inclusion. I think all of those key individuals so they are ready to fi ll new roles in the future, and engagethings are an outgrowth of being a learning environment. We certainly ment is central to this process. “We look at engagement,” continues Weber. make investments, like a number of companies do, in a learning and de“We can cut that every way under the sun. If there are areas where we see velopment curriculum for our employees.” some employee engagement challenges or morale issues, HR works in supThis learning environment applies to people at all levels in the organiport of the area to actually put some action plans in place to improve or zation, ensuring that development goes on from top to bottom. “We have turn things around. things that are very targeted to new supervisors and managers in terms “We look at retention across areas, where we have had historically of helping develop their skills,” says Weber. “We have things targeted at high retention in our industry and with our company. Those are some of mid-level managers that we designate and determine are high potential; the things that we look at and track and monitor. The board is increasingly we send them to something we call a strategic leadership prointerested in this, so every December Jim Rogers and I are in gram at UNC, which is customized to Duke Energy. Our front of the board talking to them about how we’re doing executives are actively engaged in partnering with the on all these metrics.” Duke Energy: professor who is delivering the curriculum to make Ultimately though, HR is the business of quick facts sure that it’s Duke Energy-specific.” people. Metrics and data are vital in their own Weber also tells us about something called way, but the human connection at the heart of 18,680 employees the CEO Challenge. High potential employees the function cannot be ignored. “I think we do are presented with real-world problems facing a very good job of that,” Weber states. “I don’t $57 billion in assets the business and asked to work on solutions think we would be viewed as trusted advisors 35,000 megawatts of owned capacity over the course of several months, ultimately to our businesses if we weren’t flexible enough presenting their ideas to senior leadership. to not be so wedded to the metrics that we can’t 50,000 square miles of service territory Another key spoke is the continuous rotation manage and accommodate the subjective judg4.5 million customers of talent. “Th is is actually a philosophy of Jim ments related to people and their readiness and Rogers,” Weber explains. “Just when somebody’s their growth and their development. By and large, starting to feel comfortable in their role, he believes most of the decisions of how to move people, what their it’s time to move them. I agree with that philosophy, and next growth opportunity is, who’s going to take on what many of us do and have embraced that. So in multiple levels of responsibilities, are largely subjective in nature. leadership you’ll fi nd that we rotate people around pretty routinely so “We talk about their competencies. We talk about their track record we make sure that they’re constantly stretching, challenging themselves, and performance. But we also talk about some of the softer intangibles and growing professionally.” that fit in chemistry with the team, their ability to develop others and their managerial effectiveness. We address all those things. This is now Making progress my second year of going through this process with the company. I find it A critical component of the HR function at Duke Energy is proacvery refreshing. At least at the senior table I find that people challenge each tive career progression and succession planning. “We have various job other quite a bit.” categories, and we routinely track,” says Weber. “We look at these numbers So does Weber have any parting words of advice for those seeking and ask ourselves how we are doing. Every year we look at movement and to build a successful career, be it in HR or in another area of business? progression, we look at diversity metrics and we look at readiness. We go “Always seek out opportunities to challenge yourself,” she replies. “That through a fairly time-intensive succession planning process with the comallows you to round out your professional growth. At the point in which pany every year.” Weber explains that close attention is paid to the talent you feel like you’ve got it down, you know your job, when you’re feeling pipeline, making sure there is capacity to replace any people who may leave really competent, take yourself out of your comfort zone and go learn unexpectedly. “If somebody were to win the lottery or there was someone something new.” In a business environment as unpredictable as today’s, we tapped on the shoulder and wanted to move to a new role, we need to it’s a sentiment that makes a great deal of sense.
“The growing realization that a company culture can be a key differentiator gives HR an opportunity to really take the lead”
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ASK THE EXPERT
Memory maker At Fairmont Hotels & Resorts it’s not only the guests that are left with lasting memories
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urning moments into memories for guests is our mission at Fairmont Hotels & Resorts. It happens when we provide our customers with authentically local experiences in properties with unrivalled presence. But the key – and what sets us apart – is the faces of Fairmont, our 30,000 colleagues around the world who deliver warm, engaging service. Our colleagues and their charming, distinctive service differentiate Fairmont’s guest experience from other luxury hotel companies. An authentic colleague engagement strategy is integral to making our workforce feel valued and motivated – and we do it by turning moments into memories for our colleagues. “When I get feedback from our guests about what makes Fairmont special, it’s always about our service, it’s always about our colleagues,” affi rms Tom Storey, the brand’s President. “Our colleagues are the heart and soul of our company; strong fi nancial and revenue
results are a function of having satisfied guests, and satisfied guests can only be the product of satisfied, motivated colleagues.” The building blocks of Fairmont Hotels & Resorts culture – teamwork, empowerment, respect, integrity, loyalty, pride, innovation, empathy, philanthropy – are inextricably linked to fulfi lling our mission of turning moments into memories for our guests. We host a number of programs and partners to support our culture and to measure its correlation with both colleague and guest satisfaction. ‘Service Plus’ is Fairmont’s comprehensive human resources platform that embodies its philosophy to select the best; lead with the best; train and develop; and recognize and reward. The strategy begins with hiring talented colleagues and leaders who, together, create the kind of exceptional workplace that inspires an exceptional guest experience. “Our colleagues teach each other to be involved in their community, involved with our guests, and to respect their colleagues regardless of level or position,” says Storey. “The
family feel gives us the success that we’ve had over the years.” Fairmont’s Service Plus Memory Maker Recognition Program is designed to reward colleagues in a meaningful, personalized way. Any colleague may nominate a peer for being a Fairmont brand ambassador. ‘Memory Maker’ awards recognize specific displays of thoughtfulness and creativity. Fairmont’s popular Destinations and Friends & Family travel programs enable its colleagues and their social circle to stay with Fairmont at a discounted rate. Th is 30,000 strong ‘sales force’ is recognized with Travel, Earn & Win, a promotion that earns colleagues $10 for every room night consumed through the Friends & Family program. All participants are also entered in a monthly random prize draw. The top ‘colleague booker’ every month wins a trip for two anywhere in North America. “Travel, Earn & Win is an opportunity to reward colleagues for their ongoing efforts during this difficult economic climate, and generate additional revenues for our hotels and communities at the same time,” says Storey. The result? The program has been very successful with Fairmont colleagues generating more than $26 million in additional revenue in 2009. Empowerment, innovation and creativity are fostered at Fairmont with the Ideas Count program. Colleagues share their best practices with other hotels on myfairmont.com, the company’s internal website. The best ideas are adopted throughout Fairmont’s portfolio, and their creators are recognized annually with Ideas Count awards. Fairmont is proud to be among Canada’s Top 100 Employers 2010 for an 8th consecutive year – the only hotel company named to the list. It also earned the prestigious distinction as one of the country’s 10 Most Admired Corporate Cultures in 2009 when it was selected from a group of over 400 corporations by Waterstone Human Capital, a leading professional recruitment and human resources consulting firm. Our exciting innovations, rewards and recognition programs are just the beginning. With 59 hotels in some of the world’s most unforgettable destinations, our colleagues work where others only dream of visiting.
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NEXT BIG THING
TECHNOLOGY FOR EMPLOYEE WELLNESS Debbra Palmer explains how the latest innovations from Nike could help inspire employees to engage in a healthier lifestyle.
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f inspiring employees to make health a priority is part of your employment brand, you may want to take a look at two user-friendly Nike innovations – Nike+ and NIKEiD. Employees can greatly benefit from wellness programs that provide inspiration and boost overall health in the workplace. While budgets may not support on-site sports or wellness centers, it is possible to get employees moving by incorporating a simple, customizable wellness program. Nike+ technology and personalized NIKEiD rewards are tools that can easily bring a wellness program to life. Nike+ makes it easy to boost participation through healthy competition. Slipping a transmitter chip into shoes that support Nike+ or plugging into Nike+-enabled workout equipment allows runners to track distance, pace, calories and time, as well as the ability to chart workout stats and progress on their iPod Nano, iPod Touch, iPhone, or Nike+ SportBand. After working out, users sync Nike+ to their computers, and workout data is automatically sent to nikeplus.com. Online, users can visually monitor progress, set goals, connect with others, and participate in challenges. Based on first-hand experience, Nike Wellness Center Manager Meghan Simmons singles out Nike+ as a good way to boost participation through healthy competition – an important component of wellness-focused activities and events. “Any company can engage their employee population with Nike+ to create challenges and motivate with incentives and rewards at meaningful milestones,” Simmons says. Nike+ delivers many of the benefits of
working with a personal trainer – and more. challenge a rival organization to foster team The system includes workout scheduling, morale. digital coaching, a mapping feature, a social Employees can easily broadcast their media widget, and an online forum for confitness successes on social media platforms necting with friends and such as Facebook – anchallengers around the other means to maintain world. On iTunes, users can motivation. Consider purchase customized workthe value of employees out mixes to amplify their engaged in a company fitness regimes. Nike Sport wellness program and Music selections include actively promoting their original albums by artists employment brand. To De La Soul and The Crystal link ones Nike+ profi le to Method, audio workouts, popular social media apas well as special coaching plications, users simply mixes with music led by adjust settings to autoathletes such as Alberto matically send workout Salazar, Lance Armstrong status updates to Faceand Serena Williams. Adbook and Twitter. ditionally, employees can To encourage employDebbra Palmer is the Employment participate virtually from ee engagement, consider Branding Director at NIKE, Inc. anywhere in the world. outfitting the most enthuwhere she is a member of the Human Resources Organization Nikeplus.com has more siastic participants with Effectiveness and Business Planning Center of Excellence. than two million members customized athletic gear. worldwide, who have colUsing NIKEiD.com or the lectively logged more than NIKEiD iPhone app, Nike 175 million miles. With Nike+, employees shoes, bags, hoodies and tees can be customnever have to train alone again. ized in company colors and team names or sloThe Nike+ experience is a great team gans. If this type of incentive exceeds budget, builder. At Nike for example, the footwear and try rewarding activity with gift cards that can apparel teams challenged each other to see be applied toward individual purchases. which side could collectively log the most miles Nike+ is a sophisticated technology, but in a given timeframe (footwear won!). fundamentally it is a tool that makes working Challenges continue to spring up between out more fun, accessible and rewarding. If the genders, levels of seniority (this is a great way goal is to increase employee participation in for executives to interact), departments and wellness and fitness programs, let Nike+ do countries. Try a companywide competition or the heavy lift ing.
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ROUNDTABLE
Benefiting the workforce Cash is no longer enough today to recruit and retain top talent in business. Providing an attractive benefits plan is just as important. Three industry experts give HRM an insight into the importance of employee benefits.
Today’s offering of employee benefits can be the biggest source of confusion for many employees. What is the best way of properly communicating voluntary benefits options to employees? Randy Clarkson. Many factors determine the best strategy in communicating voluntary benefits. Ideally, employees should receive their voluntary benefits information from one source. Equally important though is the employee’s education prior to, during, and after enrollment. This is the company’s opportunity to provide value to each employee by continuing to engage and remind them of their benefit
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Randy Clarkson is the President of Transamerica Worksite Marketing, a division of AEGON USA. He has been in the insurance industry for 28 years, starting his AEGON career in 1991. During his tenure at TWM, Clarkson has increased sales by opening new distribution channels, building new relationships and expanding product offerings.
opportunities. Most importantly, the communication should detail the value provided by the employer for all employee benefits, including voluntary benefits. A company’s competitive edge in terms of employee retention and cultivation is a dynamic position and process. Choice is important, and a complete enrollment and communications plan – one that involves the employee – is paramount. J. Marc Palmer. Clearly, many employees are confused by their benefits offerings and do not understand the significant benefits that healthcare and other tax-advantaged accounts can offer. We feel that this confusion is not the fault of the employees, but is instead due to how these benefits are communicated, which is often based on theory instead of scientific proof. Contrary to traditional communication methods based on theory and delivery a “one size fits all” message, ConnectYourCare applies scientifically proven methods for better communicating with employees. We deliver a behavior-centric approach to drive enrollment in healthcare accounts and maximize tax savings for both employees and employers. Core to our communications strategy is leveraging groundbreaking Consumerology research conducted by our parent company, Express Scripts, to better understand employees’ behavior and communicate to them in a way that helps them understand the benefits of these accounts. For example, we weave proven behavioral economics principles into our open enrollment materials, which help deliver our customers enrollment increases of up to 30 percent over their previous administrator and corresponding increases in payroll tax savings. Joel Carter. Employees face daily difficulties choosing the best benefits package in an environment of increasing health care costs and limited support staffing in HR. Offering multi-dimensional communication and enrollment capabilities in a variety of supportive formats serves the best interest of both the employer and the employee. Employing an online environment that facilitates initial benefit planning based on employee specific data, information and modeling tools will empower employees to find their own answers to HR questions. A true participant advocacy call center is a critical element and provides supportive information and assistance to the employee throughout the process. Leveraging new communication mediums such as webinars, blogging and twitter should be used to engage em-
ployees in today’s environment. Traditional media continues to be a critical component, so providing compelling print media that is easy to understand and visually appealing is an absolute must. Implementing supportive enrollment and communication solutions that strike a balance between high-tech and high-touch employee support will best reinforce not only the value of a company’s benefit offering, but the value the company places on the employee. David Josephs. Communicating early and often, and senior management buy-in are the two keys to communicating any benefit plans to your employee base. A well thought-out communications plan introduced over several months before the actual enrollment period gives employees time to understand the benefits offered, get questions answered and reduces confusion during the busy enrollment season. The more employees know about their benefits plans and options the more confident they are when it’s time to choose one. When we engage with an employer, J.P. Morgan offers a wide variety of educational materials; everything from traditional printed brochures to online interactive tools. Meetings, either in person or by webcast, are another great way for employees to learn and to ask questions. And when senior management take an active role, whether by attending employee meetings or sending personalized letters to employees’ homes, it adds a tremendous amount of credibility to the program. To what extent can the range of employee benefits on offer enable companies to stay competitive in the marketplace in terms of employee engagement and retention? JMP. With so much public scrutiny on healthcare offerings coupled with tougher economic times, employees are looking more and more at their benefits packages. However, many companies find it difficult to offer rich benefits without breaking the bank. Companies that cannot find that fine balance risk losing talent, which compromises long-term viability.
J. Marc Palmer serves as the CEO for ConnectYourCare, driving the migration to CDH and preserving the organization’s industry reputation as an account management solutions leader. Additionally, as Vice President of Strategic Planning and Development for Express Scripts, Palmer’s achievements contribute to their overall success and recognition as a Forbes 130 company.
Healthcare accounts and other tax-advantaged accounts, like transportation accounts, offer employees tax savings without imposing significant costs on the employer. In fact, since payroll taxes are reduced by the amount of the contributions, these accounts actually end up saving employers and employees money in the long run.
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Many employees are recognizing the long-term benefits of Consumer Directed-Healthcare and seeking CDH plans from their employer. JC. Too often companies neglect or underestimate the true value of their benefit offerings in a down economy. High performers and top candidates still have options in the marketplace and are arguably in greater demand as employers look to maximize productivity and boost returns. To attract and retain these individuals, companies must focus on communicating the value and overall positive compensation impact of their benefits structure. According to the Bureau of Labor Statistics, nearly 30 percent of true total compensation is attributed to benefits costs. Unfortunately, most employers neglect to communicate the economic value of these employer contributions to health and welfare, retirement, income protection and work/life plans. Embracing pre-employment and ongoing total compensation statements as a tool to define and showcase the true value of these benefit offerings has been proven to positively impact employee retention and enhance overall employee satisfaction with the benefit plans and structures provided by a company. DJ. Offering a range of benefits can certainly help employers remain competitive in the marketplace. However, equally important is ensuring that the choices on offer are responsive to the needs of employees and their loved ones. In our experience managing HSA Programs, we’ve found that employers who have well-designed programs, including attributes such as differential premiums and employer contributions to HSAs, provide their employees greater control over their healthcare decision-making, something very positive. Employers who take an interest in the wellbeing of their employees over time are demonstrating a long-term commitment to them. RC. With budgets tightening and workloads increasing, it’s important to retain key people whose experience and institutional knowledge keep their business running smoothly. Savvy employers know a good benefits package does more than just support retention. It is key to productivity as well. And, when a company offers a wide range of voluntary, often portable, benefits, immediate perception is favorable for the company’s reputation and image. A good benefits package though is only as good as the communication between the employer and benefit advisor. Effective discussions between these two should include a review of past plans, missing coverage, and updated employee information. The employer and benefit advisor should strive to know the workforce. Practical and vital voluntary benefits can elevate a company’s reputation, employee perception and increase loyalty. The healthcare debate has dominated headlines in recent months. How will a potentially changing medical environment affect voluntary benefit schemes? JC. With the recent shift in the make-up of the Senate, it appears that incremental change to healthcare reform has replaced sweeping global change, at least for now. What the actual make-up of this ‘incremental change, will look like will ultimately determine the true
Joel Carter is Vice President Client Services & Business Development, Secova. He focuses on developing and delivering world-class HR and benefit administration solutions to Fortune 500 companies and state and local governments. Carter is a frequent speaker at industry events and has authored papers on the proper design of benefits administrative processes and outsource initiatives.
impact on the voluntary benefit landscape. However, many in the industry are predicting a greater emphasis on voluntary benefits as a means to enhance not only base levels of coverage but to provide a broader range of supportive offerings for all employees. One thing all of us can be certain of is that benefit providers will be enhancing their voluntary product offerings and will be presenting them aggressively to the marketplace. Companies must carefully analyze whether these offerings will fit into their overall strategy and must be prepared to invest in communication and support mechanisms to ensure that the true value of these products are communicated to employees. DJ. With the current uncertainty around healthcare reform it’s difficult to say what impact a changed environment will have on voluntary benefits. However, many voluntary benefits, particularly accountbased programs, have been shown to meet the expressed goals of healthcare reform: to improve outcomes by encouraging preventive care and reduce costs by helping people get more engaged with their healthcare decisions. RC. The voluntary benefits industry has a history of analyzing the marketplace and expanding product offering to fit employer needs. A look at our evolution demonstrates the point. Traditional individual life products are a cornerstone for voluntary benefits. The industry is responding to employers’ interest in supplemental products and has expanded to offer more than fifteen ranging from legal to health, vision and dental. Transamerica Worksite Marketing is a f lexible company poised for all healthcare debate outcomes. If the result is broadened benefits for more Americans, there will be an equally increased demand for supplemental benefits to compliment major plans. If there is little or no change after the debate, voluntary benefits will still be viable as employers look to maintain or expand coverage for employees while minimizing cost increases. Regardless of any healthcare reform, any result will cause employers to make decisions they had on pause. JMP. We think that the changing healthcare environment will not only drive the adoption of consumer-directed healthcare (CDH) accounts as a voluntary benefit, but as an overall benefits strategy. In
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fact, a new study by Towers Watson predicts that a huge percentage of large companies in the US will move to completely replacing their PPO plans with CDH plans in 2010-11. However, it is critical that companies choose administrators that are poised to handle any regulatory change. Administrators that cannot quickly adjust to changing regulations will have to invest significantly into their infrastructure, often drawing resources from other parts of the organization and straining operations. Benefits executives should examine their current administrators closely and ask critical questions about their capability to handle possible regulatory changes before renewing contracts for the 2011 plan year. With the current economic climate being quite tough, many employers have had to consider or even implement cut backs in the benefits they can offer employees. Is this a good idea and what are the alternatives?
David Josephs is Managing Director and Head of Consumer-Directed Healthcare, J.P. Morgan. He has worked on J.P. Morgan’s CDH and HSA programs from their inception. Prior to joining the bank he worked directly for health insurers, as well as a management consultant to health plans. He served as a legislative assistant to a member of Congress and US Senator, handling healthcare issues.
DJ. Cutting back on employee benefits or worse, eliminating them entirely, is certainly not something employers want to do. However, reducing benefits is not as detrimental to employee morale as decreasing working hours or eliminating jobs. In a down economy, I think most employees understand the realities of the tough choices and trade-offs employers sometimes have to make to remain in business. Many companies seeking lower-cost alternatives have adopted a Consumer-Directed Health Plan (CDHP) strategy, which shifts some of the healthcare costs to employees. CDHP products offer tangible cost benefits while still providing employees with the flexibility to manage their healthcare needs. From an employer and individual basis, the expense control that you get from a CDHP product, whether it’s an HSA, a Flexible Spending Account or a Health Reimbursement Arrangement is very attractive in today’s markets. Premiums tend to be lower and at the same time, they reduce a company’s tax liabilities when employees make pretax contributions. RC. In the face of the current economic environment, it’s painful to think of a company having to consider or implement a reduction in their benefits. When faced with that situation, the company must research and weigh its options carefully. The objective will always be to lower premiums without lowering coverage for the employee. Transamerica has developed
HealthPak, a product package that addresses this situation. Employers can modify existing medical plan designs and then offer supplemental benefits like critical illness, accident or life to their employees. HealthPak combines these supplemental benefits to help bridge any gaps in coverage. As Newton said, “for every action, there is an equal and opposite reaction.” Reducing employee benefits is never a good idea. Voluntary benefits still offer the employees the benefit of choice and flexibility to design a plan to meet the unique needs of the employee and family.
“CDHP products offer tangible cost benefits while still providing employees with the flexibility to manage their healthcare needs” JMP. Instead of cutting back, employers should look for more economical benefit plans. A high-deductible health plan coupled with a Health Savings Account (HSA) not only reduces premiums but also delivers significant payroll tax savings. One of our clients, a large national bank, offers an HSA to its employees and had 6780 employees enroll for the 2010 plan year with an average contribution rate of $2423. These accounts deliver annual employer payroll tax savings of about $1.25 million, and a combined employee tax savings of about $4.9 million. This isn’t even counting the millions in premium savings that the bank enjoyed. Another ConnectYourCare client, Zions Bancorporation, began implementing a CDHP (consumer-directed health plan) in 2005, and since it was first introduced, the company and its employees have saved more than $10 million in healthcare costs. From 2006-2009, the percent increase each year in healthcare costs fell from its prior double digit levels to below 5 percent. Employees understand and appreciate the plan, and, on average, contribute $2200 to their HSAs and $1600 to their FSAs (Flexible Spending Accounts) annually. JC. Economic realities of today and the need for companies to remain viable during this downturn have driven organizations to aggressively reduce or mitigate increases in all areas of spending; including annual benefit spends. In an attempt to manage these costs, some companies are increasing employee cost sharing through higher contributions or benefit plan design changes. Others invest in more innovative programs aimed at reducing the ultimate driver of employer benefit costs; namely their annual claims spending. Historically, these initiatives focused on wellness and other preventative measures which, while imminently valuable, have a longer-term payback and don’t satisfy today’s requirement for immediate cost savings. Forward-looking companies are embracing alternative tactics such as Dependent Eligibility Audits, where participants are required to validate that their enrolled dependents meet the company’s eligibility requirements, to ensure plan rule compliance and achieve significant and immediate cost savings that outperform any plan design or cost share change.
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ASK THE EXPERT
IN THE DRIVING SEAT
CDH plan designs. For example, many plans include benefit dollar rewards for health risk assessment participation and even completion of employer-sponsored biometric testing. Th irdly, rolling out reward programs for specific disease and chronic conditions can help. Th is innovative strategy is designed to motivate members to control their targeted chronic conditions in order to avoid incurring catastrophic claims later on. The idea is to provide special monetary funds to assist these members in pursuing and engagaking your CDH strategy toward its potential has to ing in disease prevention education, coaching, wellness and lifestyle start with really knowing where it is today. Did you programs, and medical care for those managed conditions. To ensure come in with an initial strategy that compliance, the members shouldn’t be allowed to was complex in design? If so, it’s carry these special targeted reward incentives over not necessarily too late to explore to the next year. Th is strategy helps alleviate the ways to simplify your plan offering whether it is fear among plan sponsors and members alike of a matter of adjusting the mechanics of your CDH selective choice. options or maybe limiting some of those options Finally, it is advisable to introduce an additionuntil your population gains a better understandal CDH plan option based on a different account ing of the program. type or with a different fi nancial risk threshold. Did you set the foundation for consumerism Th is strategy can be as basic as adding a health rethrough a strong, expansive education campaign? imbursement account (HRA) to an existing flexible Helping members ‘do the math’ and understand the spending account (FSA) or introducing a health substantial personal impact behind pursuing and savings account (HSA) option to go along with an achieving improved health status is a powerful apHRA. HSAs were not as popular as HRAs or FSAs proach toward generating ground level CDH buy-in. initially, due to the immediate cash flow impact and Barton Halling is Vice President of Do you understand the profi le of your popularisk they present in allowing full portability and the Product Management for consumer driven and emerging markets for UMR, tion as it relates to readiness for change? Setting eventuality dollars leaving the plan upon employee the third-party administrator (TPA) incremental, progressive CDH strategy depends on termination. unit of UnitedHealthcare. Halling leads efforts to aggressively leverage this base knowledge. After that, there is a myriad Or it may be a matter of reconfiguring design the unique competitive position of UMR, with core functionality and of paths to consider. strategies such as employer contributions or caps capabilities at the convergence of the Firstly, there is a need to emphasizing prevenon rollover amounts. Th is practice can discourage health and wealth industries. tive care. More than likely, you are already paying savings over time since once a member meets a preventive care at, or close to, 100 percent. If not, cap, there is no more incentive to continue to save. you should consider doing so as preventive care Much like a 401(k) retirement account, the longcan save you and your members significant dollars by heading off more term vision of growing assets and fi nancial security from the risk of serious health conditions before they can develop. A rich preventive potential expensive healthcare events is what drives fi scally prudent care strategy can drive enrollment in health coaching and disease manconsumer behavior in the fi rst place. agement programs. It can also help reduce anxiety from employees considering a ‘high deductible’ consumer plan option. Secondly, it is a good idea to introduce a reward incentive for pursuing specific behaviors. Pre- and posteffective date incentives continue to play important roles in helping people move toward healthier decisions and improved fi nancial wellness. Members need to have a reason, or better yet, several reasons to embrace consumerism, especially when it’s offered as an option to a traditional PPO plan. Carrot vs. stick continues to be a perennial decision point when thinking through incentives. CDH strategies are no different in that respect. Incentives can be as simple as price and the positioning of employee premiums on the CDH option more favorably as it relates to other traditional plans. But traditional events tied to incentive rewards work effectively within
Barton Halling explains how to take a basic consumer-driven health (CDH) plan to the next level.
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RECOGNITION
The value of reward Tom Miller tells HRM how the changing demographics of the workforce are affecting the way companies structure their reward and recognition programs.
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he American workforce has changed drastically over the past decade. In 2000, the term ‘millennial generation’ was coined, and it came to symbolize a group of young people who differ greatly from the generations that went before, as Tom Miller explains: “Prior to that, there were generational differences, but they were incremental. The boomers weren’t that different from the World War II generation. Their line of thinking about work was: ‘We’ll show up and do great work and keep our noses to the grindstone, and we’ll be rewarded when we perform.’ “Then these millennials came along – young people who have grown up playing soccer, where everybody gets a trophy and they don’t keep score, and
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everybody has a wonderful game and there are no mistakes. Which makes for a very different outlook.” Miller, who is CEO of The Miller Company, as well as past President of Recognition Professionals International, counts himself as part of the boomer generation, who he says don’t always appreciate how lucky they’ve been. “I don’t think this boomer generation is actually as smart as we think we are. I think we got a little bit lucky over the past few decades. When they write the history books 100 years from now, this era will be highlighted for technology and productivity gains and some of the amazing things that we take for granted. When we step back and look at it, we live in a very different work envi-
Miller ED_17MAR10 29/03/2010 10:19 Page 53
determine how hard I want to work for you or if I want to work for you or when I want to work.’” It can be difficult for older, established workers to understand this new outlook, but Miller says it’s essential for companies to move with the times and ensure their view of their employees is up to date. “I have come to realize and appreciate that there’s some real truth in what this generation is trying to get done. You may get people wanting to argue it and push back, but that won’t happen. The old days of showing up early, getting there before the boss does and leaving after the boss leaves are gone. “In my company, we’ve gone to the new way of thinking. Nobody punches a clock. We don’t even have a vacation policy: you take it when you need it. I had to swallow hard, and sometimes I still do because there are more gray areas now. You have to look and determine what got done as opposed to measuring work by time and effort. “The concept of power in the workplace now is very, very different. From a generational standpoint, there’s a major amount of change going on within work. I was in a meeting yesterday with a client that recognizes that they now have two workforces. They’re a unionized organization with a rigid, stationary recognition/reward system and their older employees are OK with that. But this new workforce they’re trying to build, they need to treat differently. “These are pretty exciting times for someone who’s going to bring it back to our interest in the reward and recognition, incentive space. It’s very interesting and engaging, because it’s very much about changing human behavior on an individual level and a group level.”
New recognition
ronment and even a social environment than we did 30 or 40 years ago. “There’s some guilt around things that we did or didn’t do when we grew up, and we wanted it to be different for our children. This is Tom Miller how things like the concept of helicopter parenting arose. Helicopter parents are parents who hover over their children and don’t allow them to grow up. They’re going to job interviews with them. They’re going to college admissions interviews with them. “Translate that to the workplace and what companies are dealing with is a generation coming out of college, probably younger than 30, that has high expectations of a work experience. They are not willing to work and then be rewarded. Instead, they say, ‘Tell me what you’re going to do for me, and I will
Miller believes a lot more thought now goes into what is recognition in terms of strategy as well as tactics. Where once recognition was all about time and effort, now companies are being very thoughtful about implementing behavioral-based recognition. “It’s a concept of observing right behaviors and right practices and communication,” says Miller. “Recognition and reward has evolved to include much more communication and training and cognitive understanding, rather than simply looking at an outcome and saying, ‘This happened the way it was supposed to,’ or ‘It happened, whether it happened the way it was supposed to or not, so we’re going to recognize you.’ “This new type of recognition fits the millennial generation much better, and taking a step back from that, it relates to human behavior. What do humans need and what are we looking for out of not only a work experience, but a life experience? Companies are understanding that and dealing with that and being honest about that in a much healthier way.” While companies may be changing the way they view their employees’ needs, this has not always been translated into outcomes. People are still accumulating points and redeeming them for merchandise or experiences, or being recognized symbolically, or being sent on trips. However, even these
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corporate recognition/reward systems are much more closely aligned now with corporate cultures than they were 20 years ago. The recent financial crisis has led to businesses cutting back in many areas, including rewards and recognition. Miller points out that whether or not a company does this depends on whether it views its recognition program as an expense. “I’ve seen two broad approaches,” he says. “One is that an organization views recognition and reward as an overhead and an expense and they cut it back. And the other is that they view it as a communication tool, as a means to engage employees. I’ve seen companies that work very hard to continue to have a great recognition and reward system. “The reality is that every company now is looking at all of their line items. Companies are being smarter about what they spend, and we’re all hating it. Nobody wants to go through it, but I think we will look back and see that there were some good things obtained out of that and one of those was realizing the value of a dollar, what we are getting back for the money we spend. “One of the big changes I’ve seen over the last couple of years is an effort to determine return on investment. If we’re going to recognize or incent someone, we’re going to make sure that it works. If I’m investing $1, I want to get back at least $1.01.”
Smart companies know that people’s desires for the things they want out of life are still the same, that they still want to be recognized for what they do. They want to be valued by someone, whether it’s their family or workplace or friends. “If you think about Maslow’s hierarchy of needs,” Miller says, “it’s a pyramid, with the base being safety and security needs, and in the middle of it are those ‘tell me why I’m important’ needs. We’ve moved down the pyramid a bit. When we’re doing well and jobs are plentiful and everybody is making money, we are in the middle of that space where you can get more mileage out of telling people why they matter. Now people are concerned with safety and security issues, and that’s a poor place to be focusing a lot of effort on recognition and reward. “If a company is going through lay-offs, it would be ridiculous for them to focus on recognition and rewards. You’ve got to get through the lay-offs. You’ve got to stabilize and you’ve got to ensure the people that are there, that the ship is safe.” The challenge can be to reassure remaining staff while not making them feel that money is being spent inappropriately. “It’s very difficult. There absolutely is some reality to the group psyche and the pain that is felt when coworkers are laid off. You can’t recognize in the midst of that. Executive lead-
Accountability The difficult financial period we’re curMaslow’s hierarchy of needs rently passing through has also had the effect of driving innovation and accountability in morality, creativity, the recognition space. Miller believes this is spontaneity, healthy, because it has forced companies to problem stand on what they say they do, on what they solving, lack of prejudice, say they believe, and prove it. “Effectively, our Self-actualization acceptance of facts clients are looking at us and saying, ‘You say self-esteem, confidence, this stuff works. Prove it. Show me why.’” achievement, respect of others, Esteem respect by others Companies that don’t have an expense view of recognition/reward have realized that friendship, family, sexual intimacy Love/belonging even though they’re not going to be giving out big pay raises or big bonuses, and there are hirsecurity of body, employment, resources, morality, Safety the family, health, property ing freezes or they’re having to lay people off, they still need to recognize those who are probreathing, food, water, sex, sleep, homeostasis, excretion ducing and carrying the brand message, are Physiological loyal and working hard to help them get through the difficult times. That sentiment does exist, says Miller, but unfortunately there are still quite a few companies that don’t buy into that, and still it as expense. ers, human resources, the people departments need to be very aware of the Miller cautions against taking a smug view of your workforce, believing heart rate, the cultural emotions that are going on within the company and that because there are fewer jobs available, you don’t have to work to keep then respond accordingly. I’m not aware of any linear scientific way to do that. your employees happy. It is true that jobs are few and far between and there’s It’s a bit like a family or a marriage. You know when it’s time to appreciate a lot of fear out there, and fewer people want to change. “The balance of power your significant other and you know when it’s not. has shifted back a bit and employees aren’t nearly as vocal about their de“In good times and bad there are going to be shifts that have to be made. mands,” he points out. “In many ways there’s an unspoken, ‘I’m just glad to One of the things you want your recognition and reward system to be is very have a job’ mentality.” flexible, so that it can adjust and adapt to the cultural environment.” n However, he also emphasizes that: “People are showing up with a griTom Miller is President and CEO of The Miller Company. Prior to founding the company in mace and putting their time in, but wait until things come back around and 1992, Miller spent six years in the performance improvement and recognition industry. He is past President of Recognition Professionals International and has served as a board member they’ll be leaving the companies that are not treating them well and apprecisince 2005. Miller is a graduate of Baylor University, has studied at Oxford University in England and has a Master of Science degree from HEC University in Paris, France. ating what they contribute.”
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RECOGNITION
Debt of gratitude In a faltering economy, recognition could be viewed as a target for cost cutting. RPI President Kevin Cronin thinks that this would be a mistake.
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evin Cronin knows something about timing. Following a 21 year career at Bank of America, where a range of roles eventually resulted in him leading recognition and reward strategies for the company, he left two years ago, just before the wheels fell off the global fi nancial system. During his fi nal decade at BoA, Cronin was involved with developing new ideas to engage and retain a workforce that was going through some major demographic shift s. Now President of Recognition Professionals International, we caught up with Cronin to get his thoughts on where recognition has been, and where it’s going. How do you think the changing demographic of the workforce is making a difference to the way that recognition programs are structured and designed? I think one of the greatest impacts is the younger generation. The Gen Y and the Millennials are used to instant gratification. If we look at their mindset, they’re known as gamers. They like to be able to play and to get instant reward and instant feedback. It’s not so much they want to be given something tangible, but they want some praise and they want to know that they’re doing a good job. If they’re doing a project that’s going to last 90 days, they’re going to expect probably every two weeks a compliment to let them know that you value what they’re doing. If you don’t give them that compliment, that gratification and feedback,
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during that 90-day period they’re going to be disengaged and they’re not going to keep focused on the job. Is that a particularly difficult task for people charged with keeping these kinds of workers engaged? I think it makes it challenging as a manager of a diverse team. You’ve got to really know your people. You’ve got to know what really motivates them, what type of recognition they like to receive, because an older generation person will say, “Hey, that person’s getting all the attention. I’ve been doing this job for 25 years.” You’ve really got to be able to balance that out so you give the right amount of feedback to each of those groups and really keep them engaged and keep them cohesive. It’s also making sure that when you onboard someone into your company that you’re, one, hiring the right people; but two, you’re really getting them to understand your culture too, so they will learn how your company works and how they can fit into that and have that understanding from day one. Does the presence of two very different demographic groups like Baby Boomers and Millenials in the workplace lead to any friction?
“The younger workforce is incredible at multi-tasking and at their technology skills, where oftentimes, the older workforce is not as technology-enabled” I actually see it as a great benefit, because you’ve got people with great skill sets on either side. The younger workforce is incredible at multitasking and at their technology skills, where oft entimes, the older workforce is not as technology-enabled. So I think there are great things to learn from each other. They can learn and work together and be a very cohesive team if things are structured the right way. Times have been tough of late. What role does recognition have to play in motivating people during these difficult periods? In the purest sense, recognition is a great lever for a manager to be able to leverage their team. People come to work concerned about if they’re going to have a job, maybe concerned if their wife or partner is going to have a job, how they are going to make their mortgage payment, and support children if they’re in school and college. There are a lot of worries. I think if managers were to stay in their office, shut their door and not go out and be involved with their team, they’re not going to have a sense of what’s on their mind. That’s going to distract from what happens or doesn’t happen at work and productivity is going to drop immensely. But recognition allows managers to be actually involved in coaching their employees, developing them, giving them praise and feedback, and letting them know that what they do is important. It keeps them focused on the vision, mission, and the goals of that company, so that people are more productive. If we’re not out there giving
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praise and saying thank you and letting people know they’re good at their job and that their work does make a difference, all these other concerns that are happening outside of work are going to eat away at their productivity. I think a lot of companies that have actually turned off all the recognition reward programs because of fi nancial concerns are seeing about six months down the line that they don’t have the tools they once had. As a result a lot of companies will see other programs and other spend creep up and all of a sudden people will start ‘padding’ their office supply account to go out and buy the rewards that previously they used to be able to get through the company. So you’d say that making recognition a target for cost cutting could lead to further expenditure down the line? You are going to pay eventually in the retention of your employees if you want to keep your key talent. Otherwise your engagement will drop. And then your customer satisfaction and ultimately your profits are going to drop, because your employees aren’t feeling valued, they’re not feeling like you want them there. While everybody may understand that bonuses or raises may be cut, pure recognition, such as sending an e-card, costs nothing. There are a lot of companies that have realized they went too far and turned off everything, when they should’ve kept the pure recognition element, because those are simply what managers should be taught and trained to do in engaging and involving their workforce.
basis are more engaged with buying from that company. Their satisfaction levels are higher, and certainly those customers then become walking brand ambassadors for your company, because if someone were to ask, “Hey, I need this service, where should I go?” they’ll say, “Oh, well call Mike” or “Call Pete or Jane over here at XYZ Company, because they do a great job of taking care of me.” In the light of the economic climate, can comparatively cheap recognition and reward schemes take up the slack normally handled by bonuses or raises? Companies have got to have the right base salary and right package of benefits to attract someone to come work there and be competitive in the marketplace. Now assuming that a company has that and they say, “All right, for the next year we can’t give a raise,” I think certainly recognition reward can play into how you help compensate someone for the raise you can’t give them, how you help keep them engaged and valued. People will understand the challenges of the economy going on at hand, but then companies need to do a better job of talking about their vision of that. But I think to engage them throughout the year with the recognition reward program certainly yields a lot more results than a company that chooses to do nothing.
Managers that use the programs more often have high retention and often have higher customer satisfaction scores
One of the challenges with recognition programs is that it can be difficult to effectively gauge ROI. Are there any ways that it can be measured so that it makes more sense to the balance sheet? I certainly think there are ways you can measure a program, and those measurements oft en need to be built in the forefront of designing that program. There may be some hard measures and there could also be some soft measures in any type of program you do. Most companies today do employee engagement surveys or associate satisfaction surveys. Th at’s one very good measurement of their direct manager; do they receive enough feedback and recognition for doing a good job, are they valued? If you were to design a sales incentive program that’s tied to productivity, you can measure either new product sales or listed revenue based on the same period in time from last year given historical data of the company. I think there’s a lot of measurement you can do there. I also think companies that are very smart are realizing that if you really look at the measurement and activity that’s happening from a recognition rewards standpoint with a manager that’s very good at it, and then maybe those that don’t do a good job at leveraging programs, and you start to peel back that data, you can fi nd that managers that use the programs more often have high retention and often have higher customer satisfaction scores. Those things defi nitely tie into what that work team is giving out. They see that their manager values them, and then the customers that they take care of on a daily, weekly or monthly
You’ve been in the business for quite a while. What are the biggest changes you’ve seen in the way recognition is handled? Technology is one of the biggest enhancements that can work for recognition reward programs, but it can also work against it. With the younger workforce being so technology-enabled, its important for a company to make sure they keep up the investment of building out a technology solution that has a robust social networking element as a
“There may be some hard measures and there could also be some soft measures in any type of program you do” part of that program. It might include e-cards that employees can send to each other, possibly not even for recognition, but maybe for somebody’s birthday, maybe someone’s anniversary, maybe for someone getting married, or having a child. It’s vital to keep evolving that program so that it’s a great way for people to go to that recognition reward portal to really be interactive in helping recognition of each other. I think that’s one of the greatest enhancements but all recognition shouldn’t be electronic. It still needs to have a face-to-face element. You still need to have the verbal praise, it may be one-on-one and it may be in a group meeting, and getting managers to understand the right balance of what’s needed with that is always a challenge.
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RECOGNITION
The power of recognition In an interview with our sister media channel MeetTheBoss TV, KFC’s Misty Reich explains the importance of building employee recognition into the company culture.
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ince 1995, the fi rst Friday of March has been set aside as Employee Appreciation Day. Created by a founding board member of Recognition Professionals International, this dedicated day is a way of focusing the attention of all employers, in all industries on employee recognition. Recognizing the achievements of employees is more than just a nice thing to do for them. It is also a communication tool and a powerful motivator that can help to enhance employee engagement, performance and retention – something that has become more important than ever since the economy took a turn for the worse. And whilst a day dedicated to employee appreciation is a step in the right direction, surely the people who work for us deserve to have their achievements recognized far more than once a year if they are to feel
truly appreciated? After all research shows that one of the top behaviors of successful leaders is the ability to recognize the contribution of others. Given that many businesses wouldn’t be where they are today if it weren’t for the contribution of their employees, a little recognition doesn’t seem like a lot to ask. Th is idea is nothing new of course, even Voltaire, the 18th century French writer and philosopher, could see the benefits of appreciation and is often quoted as having said: “Appreciation is a wonderful thing: It makes what is excellent in others belong to us as well.” Companies and HR professionals alike would do well to take note of this sentiment. It’s all very well to say that people are your greatest asset, but how many companies in reality actually live their values and treat their workforce as such?
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One company that certainly does is Yum! Brands, one of the world’s largest restaurant companies with more than 37,000 restaurants in over 110 countries and territories. Amongst its well-known restaurant brands are KFC, Pizza Hut, Taco Bell and Long John Silver’s and its successful retail operations mean it is now ranked 239 on the Fortune 500 list. Misty Reich is Vice President of Human Resources UK and Ireland for KFC and she says that a strong corporate culture is the foundation of Yum! Brands. “It impacts your performance day-today, it impacts whether you want to stay there, it impacts how you feel about the company and whether you want to invite other people to come to work there,” she says. “In times like this, when you might be tightening the belt around pay, around rewards and benefits, or even training, for some companies, you would hope that you have a culture that’s sticky enough, that makes people want to stay and has them engaged. We like to talk about people falling in love with our company, and it takes a special culture for people to stick with it when times get tough,” explains Reich. To ensure that Yum! Brands could benefit from this special culture, the company’s Chairman, David Novak, appointed himself the architect of company culture and built it from scratch. “When we spun out of PepsiCo David Novak took eight or nine months out and actually went and met with what he thought were the best companies and took bits of the culture from each one of them to build ours,” explains Reich proudly.
"Given that many businesses wouldn’t be where they are today if it weren’t for the contribution of their employees, a little recognition doesn’t seem like a lot to ask." And luckily for Yum! Novak didn’t forget the importance of recognition. “Now our employees tell us that recognition is one of the highlights of our culture,” says Reich. “We believe that everybody – no matter what country they live in or how senior they are – likes to be recognized. And here at Yum! we do fun, silly, crazy recognition. Every leader in our company has a personal recognition award that represents something that they hold as a truth. So recognition is a hallmark that people would defi nitely mention,” she says assertively. She goes on to talk about a recent poll that was conducted in which employees were asked “What are the one or two words that you feel best
defi nes what it feels like to work here?” The number one response was apparently “friendly”, closely followed by “supportive”. “They talk about it feeling like a family, with the added element of high levels of accountability. We believe in peoples’ capabilities and we trust in their positive intentions and their ability to get things done, so that’s why it feels quite supportive,” explains Reich. Yum! is well aware that its people don’t just play a role in its success – they are the reason for its success. Consequently, the corporate values of Yum! – otherwise known as the ‘How We Win Together Principles’ – are built around a “People Capability First” philosophy in which recognition features highly. “As you go around the world, the recognition element exists everywhere in Yum! globally, but the magnitude, the amplification and how it comes across is different,” says Reich. But generally, the culture is already well defined and has effectively cascaded throughout the company so for Reich it’s not really a case of adapting it or changing it and she describes her role at KFC more as ‘keeper of the culture’. With this in mind, her top three priorities as far as HR goes are: great recruitment; great people development; and building a culture that makes people want to work for KFC and want to stay. And things seem to be moving forward smoothly for Reich, although she did face some tough challenges when she first came to the UK business. “In 2007 we didn’t recruit as a business, we had outsourced to recruitment agencies. We were using 23 agencies and were spending a lot of money. When you’re in a growth business, as an HR director, one of the things that you have to be able to do reliably and very well is recruit great talent and we weren’t doing that well,” says Reich ruefully. “So one of the things that I did, and it was a big challenge, was start to shift the mindset of the business around what the HR team is meant to be focused on. Although we outsourced our recruitment at that time to agencies, we did all of the employee relations for our restaurants in-house, and what I wanted to do was turn that around. What we want to be famous for is great recruitment and people development. We need to do employee relations well, but we don’t need to be famous for that,” she asserts. Reich explains that part of the challenge was to convince her HR team that they could be great recruiters and that recruitment could be brought in-house. Most of the team were employee relations specialists so what Reich was asking them to do represented a big shift. But she was convinced that nobody should be able to recruit for them better than their own HR team. “One of the things that has to be true and has to be in place for you to
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recruit well from inside is that you have to have people recruiting for you who absolutely love your business,” says Reich. However, she does admit that there are some niche roles out there that her team will never be good at recruiting for as they do it so seldomly. In those cases it is important to have great partners in place that have been strategically selected and who share the passion and excitement about the business. In order to facilitate this transition from outsourced recruitment to in-house recruitment, Reich had to spend a lot of time talking to the HR team and helping them to see that the end result was actually something tangible. She also brought in specialist help to support what she was trying to achieve. “I brought the best recruiter from my recruitment team in the US business here for an eight-month assignment, and her only job was to teach my team how to recruit,” says Reich. And it clearly worked as today KFC have a successful recruitment team and have brought recruitment in-house. Just over two years later Reich sees it as a signature differentiator. “We’re not perfect, but we see ourselves as great recruiters and people developers, and I think that’s been a big shift,” she says. People development, and obviously leadership development is something that falls under the umbrella of responsibilities that Reich holds in her position as VP of Human Resources. To a certain extent, Reich believes that leadership is something that can be taught. “I learn every day as a leader. If I look back over the last six months, or over the last year at where I was as a leader and how I coach my team and the role that I play for them, I have changed dramatically, hopefully for the better,” she says. “In our business we value know-how building as it’s one of our cultural principles and I think leaders can learn to be better leaders. One of the things that we believe is that in our company we all have to be focused on leading, developing and coaching leaders to be stronger.” On the other hand, however, Reich says that although leadership can be taught, not everybody is cut out to be a leader. “In my experience people who don’t have self-awareness probably can’t develop beyond where they are,” she says. True leaders need to be capable of recognizing where their strengths lie, what their weaknesses are and be ready to learn and develop in those areas where they are lacking.
"We’re not perfect, but we see ourselves as great recruiters and people developers, and I think that’s been a big shift," For Reich, recognizing employees with leadership potential and ensuring that they are given the opportunities to progress requires strong succession planning. “From an HR standpoint there’s a framework and infrastructure that helps us to identify people who are developing as leaders, gage how far along they are on that journey and identify where we think they can go,” says Reich. One of the ways that KFC helps to develop its leadership talent is a thorough on-boarding process. “Executives are used to stepping in day one, trying to make an impact and demonstrate their value. But we’ve
got a 90-day plan to teach and help them to integrate into the culture and into the business,” says Reich. She goes on to explain why KFC has adopted this strategy: “Firstly, because that makes them more successful once they come through that on-boarding process. And secondly, it teaches them how important it is to us that we be an organization that values learning, so much so that even the most senior executives in our business are going to pause for 90 days when they first join and just focus on learning.” So as far as Reich is concerned this is an integral part of her role. “It is very important to create an environment and a culture that values learning, that makes it safe to not know the answers, and recognizes and rewards people who are know-how gatherers and knowhow builders.” For those looking to move into more senior HR roles Reich has some valuable advice: “Know the business. To be a business leader you need to understand what is it that the business is trying to accomplish. From that point start talking about how the people resources in that business can drive towards that.” But she also recommends any potential HR managers to avoid the bureaucracy of HR. “As HR professionals we get caught up in our jargon and focused on the policies and procedures. It’s important that you’re most focused on the business and being a business leader.”
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PROJECT FOCUS
More than 85 percent of all employees participated in the program to some extent, with more than 75 percent completing all three of the minimum requirements. The results demonstrate an exceptional response compared with typical corporate wellness programs that can generally expect to involve no more than 30 percent of their population with traGene Raymondi ditional wellness offerings. In addition to the great participation rates, the company was also able to accumulate aggregate data on specific risk areas for their population at large. Furthermore, eni was able to identify modifiable risk factors n January 2008, eni launched an in-depth wellness program that most affected employees and focus programming to target topics designed to suit the needs of large business clients. The flagthat were of greatest concern. ship program included a Fortune 500 leading provider of The company also experienced an unexpected result from the conpayroll and human resource services with more than 12,000 centrated focus on a wellness program: a marked increase in EAP particiemployees in more than 120 branch locapation. The wellness program increased employees’ tions across the nation. awareness of their existing personal assistant and By designing a customized, highly interactive clinical care management benefits, which eni also wellness program, eni helped their client achieve provides. These services help to round out the wellamazing results. Participation levels exceeded 85 ness benefit. Engaging these offerings helps to depercent, a stellar figure compared to the average of crease work/life-balance-related stress and promotes 30 percent participation for wellness programs naemotional wellbeing – important aspects that fall tionally. And while employees benefited personally under the umbrella of a holistic wellness approach. from a successful wellness program, the company The keys to the success of this program were received relevant, actionable data to help reduce the highly individualized service, excellent promocosts of healthcare, absenteeism and other modifition and a high level of management involvement. able factors. Th roughout the year, there was extensive promoThe program began with a close collaboration tion to make the program very visible to the embetween the eni team and members of their client’s ployees and encourage their involvement. Wellness Gene Raymondi is the founder and staff to develop a program that would meet specific Coordinators were readily available to assist with Chief Executive Officer of eni. Over the past 25 years, Raymondi earned corporate goals while energizing and engaging emquestions, via both phone and email, and HR his reputation as an innovative leader and active pioneer in behavioral ployees as individuals. representatives and frontline managers became inhealth delivery systems. He continues An incentive program spurred participation formed and supportive advocates of the program. to create dynamic EAP, Wellness and work/life solutions that maximize with genuinely valuable rewards, such as eligibility Employee response was overwhelming; positive employee engagement, wellbeing and productivity within large for lower healthcare deductibles and a points system feedback poured in from all over the country from organizations across the nation. that involved monetary rewards for higher-level employees who were excited about the new wellness participation. initiative. There was a wide range of positive feedThe minimum requirement for participation back with many expressing appreciation that their was the completion of three steps: a blood screening event, an online employer was concerned about their health and wellbeing. Others noted Health Risk Assessment questionnaire, and a commitment to being a that the program stimulated an awareness of previously unidentified non-smoker or to signing up for a smoking cessation program sponsored health risks that they will now be able to address. by the company. The program placed priority on helping each individual become more aware and active in pursuing a healthier way of life. All participants could access lessons, articles and resources through their individualized web portal, as well as receive live assistance from health professionals, including their health coaches and personal wellness coordinators. The points tracker system was a key element that put employees in control of their own personal wellness programs. By logging on to a password-protected, personalized wellness homepage, participants were able to track their health related efforts and to earn points throughout the year. They earned points for a wide variety of activities, from staying up to date with appropriate medical screenings and attending health and wellness seminars to working out on their own and meeting other fitness goals. Employees earned monetary rewards based on their level of participation.
WORKING OUT
on a wellness initiative that improved the health of both a company and its employees.
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HEALTHCARE REFORM
LOOKING AFTER THE LITTLE GUY
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Molly Brogan of the NSBA explains how small businesses are affected by the current healthcare system and how healthcare reform could impact the workers they employ.
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mall businesses play an integral role in the US economy and have traditionally been a strong driver of job growth and innovation. However, they are at a distinct disadvantage when compared to larger companies due to the current US healthcare system, which imposes a heavy tax on small businesses and their employees. Molly Brogan is VP of Public Affairs at the National Small Business Association and knows all too well how the current healthcare system affects small business. In a survey conducted by NSBA recently, 69 percent of small businesses stated that they would like to be able to offer health insurance to their employees, but only 38 percent were actually in a position to do so. The main obstacle that small businesses are faced with when trying to offer health insurance is of course cost. “It’s just so expensive, especially for small businesses and it also changes on a very volatile basis,” says Brogan. “From one year to the next the average health insurance premium increase can be as much as 25 percent and this is simply not a cost that an employer is able to budget for as it changes so much depending on employee characteristics.” She explains that the cost of health insurance can vary depending on the age of employees, the state of their health and, in some states, whether they are male or female. “Just trying to navigate and understand all of the complexities is very difficult, but fi rst and foremost, cost is the number one reason why small business can’t offer health insurance,” explains Brogan. The reasons smaller companies fi nd it harder to offer health insurance are manifold but amongst the most important are high broker fees, fi xed administrative costs and adverse selection. On average, small businesses pay up to 18 percent more per worker than large fi rms for the same health insurance policy, making them less likely to provide health insurance for their workers. “Most large companies self-insure,” says Brogan. “Essentially what that means is that they carry any kind of expected risk on their own books. So in essence they are their own fi nancial backstop if somebody gets very sick. For small businesses, most of them have to go to an insurance company that provides that fi nancial backstop and when you’re using a third-party provider it’s typically more expensive.” According to a report published in July 2009 by the President’s Council of Economic Advisors (CEA) entitled The Economic Effects of Healthcare Reform on Small Businesses and their Employees, only 49 percent of fi rms with three to nine workers and 78 percent of fi rms with 10 to 24 workers offered any type of health insurance to their employees in 2008. In contrast, 99 percent of fi rms with more than 200 workers offered health insurance. The report also highlights the disparity between the numbers of employees at smaller and larger companies who have no health insur-
ance. It states that 29 percent of non-elderly adult workers at fi rms with fewer than 25 employees were uninsured in 2007, whilst just 10 percent of workers in fi rms with 500 or more employees were uninsured. Brogan blames this on the fact that smaller companies face far greater volatility than their larger counterparts. “When you are a large company you have many more people to balance out the risk,” says Brogan. “So if you hire one person who is 60 years old and in poor health, it’s not going to impact your overall pool that much because you have, for example, 10,000 people in your pool. If you only have 10 in your pool, as a small company may, and you hire one person who’s 65 with poor health, that will cause the premiums for everybody to go up significantly because there aren’t enough young, healthy workers in your pool to off set that older, less healthy worker.” Problems like these have left unacceptable numbers of employees unable to access healthcare in this country. Statistics show that of the approximate 47 million uninsured people, roughly 20 million are smallbusiness owners or employees. Furthermore, new analysis by the CEA shows that the current situation of rising costs and declining coverage is unsustainable for small business given that healthcare is currently costing small businesses $1 billion in lost profits annually. So faced with these circumstances, what can small fi rms do to ensure that they can offer health insurance to their employees? Well, as Brogan points out, many employers are now moving towards highdeductible health plans in conjunction with a health savings account. Th is means that both employers and employees can contribute to the savings account pre-tax. The limit for 2010 on how much can be saved is $5950, and all healthcare costs are paid out-of-pocket and then reimbursed from the savings account.
Small business in the US More than half of people in the US private workforce – 70 million people – work for or run a small business, according to data from the US Small Business Administration Office of Advocacy and the US Census Bureau. Since 1989, small business has created 93.5 percent of all net new jobs, totaling 21.9 million new jobs in the past 19 years – or 4000 jobs per day. Small businesses – those with less than 500 employees – comprise 99.7 percent of all US private employers, or 29.6 million businesses, and create more than half of US gross domestic product.
Programs like these are becoming a popular option as they are typically cheaper for employers and allow them to shift more of the cost on to employees. Whilst this is helpful for employers, it does mean that employees must take greater responsibility for their own healthcare. Th is is not always met with the greatest enthusiasm, considering that over the past decade, average annual family premiums for workers at small fi rms have increased by 123 percent, from $5700 in 1999 to $12700 in 2009.
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Healthcare challenges Sixty-nine percent of small businesses surveyed in 2008 said they want to offer health insurance, however only 38 percent were able to do so – down from 67 percent in 1995. According to a recent NSBA survey, 97 percent of small businesses have been subject to increased premiums since 2005. The ability to offer health insurance is creating a significant competitive disadvantage for small firms, as 99 percent of large businesses offered health insurance in 2008. Of the 47 million uninsured people in the US, roughly half are small-business owners or employees.
Source: NSBA
Due to a discrepancy in the tax code, self-employed individuals are prohibited from fully deducting their health insurance premiums, resulting in an additional 15.3 percent tax that no other individual is forced to pay. US families currently spend 26 percent of their annual family household income on health insurance, and projections show it will jump to 46 percent in 2016. Since 2005, more than one-fifth of small businesses reported annual premium increases in excess of 20 percent. In 2008, 28 percent reported an increase in excess of 20 percent.
The cost of health insurance premiums has increased by 119 percent since 2001, far outpacing inflation, which increased 29 percent.
The US spends roughly $2.4 trillion annually on healthcare, with employers dedicating 13 percent of their payroll to health insurance. In Japan, less than four percent of payroll is dedicated to health insurance.
Since 2001, the very smallest companies, those with three to 24 employees, have experienced the highest premium increases of all US firms – often two to four percentage points higher than large businesses.
Fifty-eight percent of small businesses that reported premium rate increases were unable to provide employees with salary increases and 39 percent held off on hiring a new employee.
In many circumstances though, the employee taking responsibility for their own healthcare is certainly more appealing than the alternative – reductions in headcounts, which is something that employers are increasingly being forced to consider. “We do an economic report twice a year and we just published our 2009 year-end economic report in which we asked, ‘How have you coped with the rising cost of healthcare?’. When we asked the same question back in July of 2009, 15 percent said that they reduced their workforce. When we asked in December 2009, just six months later, that jumped up to 20 percent. So one in every five small companies is having to lay workers off because of the cost of health insurance, which is startling,” says Brogan. Although healthcare reform is nothing particularly new, Obama’s reform has the potential to dramatically improve the situation of small business in the US. “I think it stands to have a significant and positive impact, if they do it the right way,” says Brogan. “Some of the bills that we’ve seen most recently – the Senate bill and especially the House bill – don’t do anything to really reduce or contain costs for small businesses. Premiums will still be increasing. If there are decreases for a handful of businesses it’s going to be a very modest decrease, no more than three percent, the Congressional Budget Office has estimated.” Furthermore, not all of the proposals offer attractive solutions to the NSBA. For one, it has declared itself opposed to any mandated pay-or-play provisions that would encourage more employers to offer coverage and penalize those that do not by requiring them to pay into a pool to help subsidize the cost of coverage for the uninsured. “First of all, we think it’s not a good policy idea. The whole concept of tying health insurance to your work was started back in the 1920s when that was seen as a good way to offer better compensation, without having to actually give cash out. As times have changed and as
healthcare has become more and more expensive, it’s become a huge competitive disadvantage for small companies,” explains Brogan. “What that basically means is that if you work for a big company then you’re getting a better benefits package, and more compensation. And that’s not really fair. Our organization believes ideologically that health insurance is something that ought to be driven by individuals and by consumers and not necessarily via employers,” she continues. Th is represents the foundation of the reforms that Brogan and the NSBA would like to see introduced. “One of the key proposals that we’ve been talking about for the last six years is individual mandate. If you have everybody in the system – including younger, healthier people who are opting out because they don’t think that they are going to need any kind of major healthcare – then that balances all the different risks of people of different ages and different health statuses.” However, the NBSA is also a proponent of improved quality in the healthcare arena and supports more direct pay-for-performance plans. “We think the best way to pay for it is not through tax on Cadillac plans or a tax on the wealthy, but through limiting the deduction that people get on their health insurance,” says Brogan. In addition, she would like to see the federal government playing a greater role in creating fair and reasonable rating rules as well as developing a basic minimum plan that covers preventative care and hospitals. Even though President Obama’s health reforms have now been signed into law, a number of questions remain. And as die-hard opponents against change continue to delay and obfuscate, the fight isn’t over yet. What is certain is that we are at least taking steps in the right direction. A US where healthcare was not reformed would be home to as many as 72 million uninsured people by 2040. While debate rumbles on about what this new bill could eventually cost, could we truly afford not to make changes?
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WELLNESS WORKSHOP
Healthy debate HRM readers submit their wellness questions to our panel of experts. THE PANEL
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Michael Burcham, Onlife’s Executive Director, has over 25 years of experience in healthcare. In addition to a bachelor’s degree and MBA, Burcham has a doctoral degree in health administration from the Medical University of South Carolina. He teaches Healthcare Innovation and Entrepreneurship in the Owen Graduate School of Management at Vanderbilt University.
Dr. David Ellis is National Medical Director for UnitedHealthcare’s Customer Analysis and Solutions. Prior to this, he was Senior Medical Director for North Texas and Oklahoma, and before that practiced Primary Care Medicine in Texas. He studied at the University of Toronto and completed residency at Queen’s University. Dr. Ellis has practiced in both the Canadian and American healthcare systems.
Adrian Stewart has two decades of experience in the healthcare and wellness arenas. With his partner Travis Haws, he founded WellVentures LLC in 1999 as a pioneering strategy company in population wellness and lifestyle change. He is the architect and designer of InTune, a highly innovative incentive wellness solution for large and small employers.
Colleen Reilly is the President and Founder of Total Well-Being, a leading provider of comprehensive and turn-key corporate wellness program solutions. As a passionate lifestyle change advocate, Reilly has become a sought-after expert, speaker and consultant for organizations looking to turn a wellness and benefit program into a firstclass operation.
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Arlin K. Pauler, President, High Point Consulting asks: How do you choose the right wellness program for your company? And why is company culture important? Adrian Stewart. Wellness these days can mean anything from a pedometer to free flu shots. With HR resources already stretched most companies are turning to third party companies to help them. The first step is to ensure you have a complete strategy, not one or two components packaged as a comprehensive offering. It should have a full communications campaign to attract employees, make sure the lifestyle interventions being offered are action-based healthy living programs not just passive information. Incentives fulfillment should be easy and built in. It should have comprehensive measurement and reporting. Without these essential components already in place you will be challenged to get real outcomes.
“Take the time to thoughtfully design your wellness initiative to ensure real engagement and real results” Michael Burcham
The second step is to choose an approach that has some risk for the provider on your employees’ participation. Make sure the deal is not neutral about participation or even worse the provider has a built-in business incentive for people not to use their services. Thirdly consider what sort of support your HR team is looking for in deploying and operating the program. Wellness is not an off-the-shelf strategy. It depends on reiteration and adapting to the information you find out about your particular employee population. Evaluate how much resource your provider is willing to commit after the product is launched; will they work with you on refining the strategy? You want a wellness partner who is going to stick with you after launch. Culture is important but it can also be an outcome of a successful wellness strategy that the employees perceive as beneficial to their own lives and health. The right wellness strategy will enhance and build on existing cultural values of the company and represents an opportunity for the company to make a strong statement to employees about what it values. The two go hand in hand. Colleen Reilly. While it’s important to have healthy, happy and engaged employees to improve productivity and lower healthcare costs, it’s not that easy to do. But organizations that make wellness a part of their business philosophy are the ones that will see the returns. Below are some key elements to better understanding and building a culture of wellness. Understand the dynamics of change. A key factor in implementing a wellness program is the ability to enact change within an organization. Leaders at the organization need to view this change as necessary to succeed. Plan a systematic approach for change. To implement an effective wellness program, organizations must determine their employees’ readiness levels, examine the population’s cultural elements, and communicate openly with employees about the changes that will happen as a result of the new programs.
Create motivational tools. Nudging your employees to embrace a wellness culture can be a challenge. However, if you have a white-collar industry with people on the move, a high-tech solution will be a better cultural fit, whereas a manufacturing environment may be better served with an on-site wellness program. Incorporate team support into your program. Social relationships and team-based support are integral in building a culture of wellness. For longterm benefits, all workplace wellness programs need to incorporate elements that focus on having individuals motivate and encourage one another. Continue to make wellness a priority. Once a wellness program is implemented, examine its successes and areas for improvement and then adjust program components accordingly. While helping to establish wellness programs for multiple companies in various lines of business, I’ve learned that in one form or another, all of these elements are essential to motivating an organization to effectively build wellness into its culture and achieve positive change. Michael Burcham. Choosing the right wellness program is essential to having both a healthy, engaged workforce and being able to reduce the trend of escalating healthcare costs. But identifying the right program for your company is no simple task. To provide a framework for this decision, use of the FOCUS model – Find, Organize, Clarify, Understand and Select – can help clarify the process. Find senior management support to set the vision and support the resources from which action plans flow. Genuine backing from senior personnel also brings credibility to the wellness initiative. Organize the team to develop and execute your program. Success is only achieved with internal champions who work collaboratively with industry experts to keep your wellness initiatives vibrant, meaningful to the participants and producing results. Clarify the data available. Begin with a structured health risk assessment and biometric screenings for the staff, an assessment of the company culture to support wellness and a thorough evaluation of the workforce (remote, whitecollar, factory, education levels, cultural biases). Understand the options that are most likely to engage your employees. Through interest surveys, determine which types of programs support the needs identified in ‘C’ that will pro-
“Employees who make healthy lifestyle choices (big or small) can be on the road to healthier living which may result in fewer health claims” David Ellis
duce results and be fun! Avoid ‘cookie-cutter’ programs. Offer variety: web tools, coaches, challenges, education and interaction. Select the partner and the program elements that will best help you help your employees. Measure and monitor your progress. Take every opportunity to support the program both in words and actions. Unquestionably, poor health habits and chronic diseases rob individuals and families of their health and quality of life. They also represent major costs to employers in the form of healthcare and disability costs, lost productivity
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and absenteeism. Take the time to thoughtfully design your wellness initiative to ensure real engagement and real results. David Ellis. Many organizations are turning to wellness programs to address the rising cost of healthcare; however, choosing the right one requires much thought, planning and strategy. It’s important that a company chooses wellness programs that are culturally relevant and based on their five-to-10-year goals. The first step is to understand your population’s health status and risks. An aggregate health assessment, a comprehensive review of claims data and
“You can unleash the power of social influence to change behavior, especially in workplace wellness programs” Colleen Reilly worksite wellness screenings can be key sources for evaluating risks and establishing a baseline of your employee’s health. Develop and implement a flexible multi-year worksite strategic plan that is relevant to your company culture and risks. If your company is focused on measuring medical ROI, consider an outcome-based program that rewards employees for normal weight, blood pressure, cholesterol, etc. If your goal is retention and recruitment, rewards for participation may be a better fit. Employees who make healthy lifestyle choices (big or small) can be on the road to healthier living, which may result in fewer health claims.
Emily Ernst, Lead Benefits Analyst, CACI, Inc. asks: Is there a place for social networking in wellness? How can a support group of peers motivate and inspire people to participate? Colleen Reilly. Social networking is more than keeping in touch with friends on Facebook or Twitter. It’s a great way to keep people motivated, online or off. “People are connected, and so their health is connected,” says Nicholas Christakis, MD, one of the leading medical researchers in the country. In a study Dr. Christakis conducted with James H. Fowler, PhD, the researchers found that an individual’s risk of becoming obese was much higher when a person in his/her social network becomes obese. When a spouse is obese, the person’s risk of becoming obese increases 37 percent. With an obese sibling, the person’s risk increases 40 percent, and with a mutual friend who is obese, the risk factor increases by 171 percent, according to the study entitled ‘The Spread of Obesity in a Large Social Network Over 32 years’ published in the New England Journal of Medicine. Clearly, your social group can have a significant impact on your health. But it doesn’t have to be a negative one. You can unleash the power of social influence to change behavior, especially in workplace wellness programs where people spend 30 or more hours together each week. Support groups and social networking can inspire participation in activities that lead to good health. ‘Walking Wednesdays’ is a wellness initiative where employees are encouraged to stay active throughout the workday by taking a walk outside during breaks. One rainy Wednesday, one of the walking team members sent out an email, encouraging the group to walk inside the building that day. The rain may have made it easier to ignore their commitment that day, but the long train of walkers winding through the office was infectious, encouraging all they passed to join in.
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Creating healthy behavior isn’t easy, but if you utilize peer support and social networking, it isn’t impossible either. Sheila McCarrey, HR, Amway asks: How do you overcome cultural resistance to wellness programs? David Ellis. There will be no return on investment if your employees don’t participate in your wellness program. Helping individuals become aware of their modifiable health risks and engaged in their personal health can be a great way to affect change. Visible support and participation from senior leadership is an important aspect for building buy-in with employees as well as creating a cohesive wellness team within your employee population. Compelling communications early and often are critical to success. It’s important to select interventions that are appropriate for the workplace culture and set expectations for employee activation. Incentives for participation can help engage and activate your employees to adopt the behaviors that may have the greatest impact on individual health. And lastly, be sure to evaluate, measure, fine-tune the plan and celebrate successes. Adrian Stewart. Studies bear out that cultural resistance stems from a number of factors including poor communication, lack of resource commitment, and the ever popular ‘do what we say not what we do’ management approach, all of which undermine positive organizational objectives. Overcoming cultural resistance to a wellness program or any other initiative not only requires changing or improving the factors above, but understanding that cultural resistance is a corporate fact of life and one to be acknowledged and embraced rather than ignored.
Some leaders embrace mandating employee participation in wellness in order to remain eligible for health benefits. This approach does work, but the question to ask is whether this approach will produce more or less resistance, resentment and cultural divide. You may drive a high percentage of employees in the direction you want, but research shows that there will be a cost. The most obvious penalty will be a significant participation decline in subsequent years. Your data may be less reliable because employees who feel imposed upon will see lower intrinsic value of the information for themselves. Principally, human beings respond much better to carrots than sticks. Inspiring rather than requiring participation will not only bear long-term program results, but will over time, help to remove cultural skepticism and an-
“Human beings respond much better to carrots than sticks” Adrian Stewart tagonism as employees become convinced of the organization’s commitment and positive support. If you have the right program and your leadership is committed to it personally and professionally, then the single most important factor for overcoming cultural conflict will be simply staying the course! By remaining committed, serious and undeviating in your course, those forces working against you will relent as the naysayers eventually convert into champions. n
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WELLNESS
The best medicine Pitney Bowes’ Johnna Torsone tells HRM that the company’s approach to employee wellbeing could offer a solution to the nation’s big healthcare questions.
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revention is better than cure. Though such a sentiment may appear to be self evident, it has taken quite a while for business to catch on. However, spurred by the rising costs of healthcare, organizations are now starting to take notice. Once looked upon as little more than an insignificant element of a traditional treatment-focused healthcare offering, wellness programs are steadily gaining prominence. Even President Obama is exam-
ining how wellness can be used to address the nation’s mounting healthcare woes. But for Pitney Bowes’ EVP and Chief HR Officer Johnna Torsone, the benefits that wellness can bring come as no surprise. For nearly a decade, the company has been refi ning its approach to employee healthcare, with every step taking it further from the old reactive model. The results show that a more proactive approach can reap big benefits. “That was the big thing that Pitney Bowes discovered,” says Torsone. “Now it’s everybody. There are more
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and more companies that have recognized that. That was the ‘aha moment’ that Pitney Bowes came to in the early part of the century; we recognized that we needed to educate people. We needed to design our plans so that people would engage and be incentivized to engage in the healthy maintenance of those chronic diseases and undertake behaviors that would help them not get into those chronic diseases in the first place.”
such as smoking cessation, weight reduction or even just promising to wear a seatbelt when driving. Perhaps most importantly, all this self-improvement is supported by a monetary incentive. You might think that being helped towards better health would be reward enough for participants, but Torsone argues that effectively changing ingrained attitudes requires a great deal of persuasion. “There are some companies that have built penalties into their pro-
of healthcare. There’s only so much that those of us that are subsidizing healthcare can do to bring the cost down if individuals don’t cooperate with us. There are things you can do to help make that happen, but ultimately there’s a joint responsibility here.” Torsone is hopeful that the elevated profi le of the healthcare debate will have a big impact on the perception of wellness both inside and outside business. “It requires us to begin to educate our populace on a substantial scale about the kinds of things I’m talking about and really build their willingness to take part in that agenda,” she says. “Over time, our employees have learned this. As we bring new gram, for failure to do some of these things,” employees in, they come into this culture of she says. “Up to now we’ve taken a different health; and we hope that these are principles approach to that. We’ve made it much more of that will be embedded in them whether they a carrot as opposed to a stick.” But even with stay at Pitney Bowes or they leave. We think these incentives, making the shift to wellness that ultimately these principles have to be is a slow process. embedded in other parts of the system. Oth“None of these things, by the way, are things erwise unless you keep people here for the that work in a very short period of time,” she long term, you don’t get the benefit of it. That’s continues. “It takes time to build up to what we why we’re so evangelical about this. Because call a culture of health. It’s a relationship with if they come into our workforce not having employees over a period been in similar strucof time where they come tures, then we’re startto recognize that what ing from ground zero you’re doing is designed with them.” to help them, not just the However, Torsone is company. We’ve seen that strong in her conviction in those instances where that the wellness-based people have engaged in approach to healthcare this and seen the results being pioneered by of it, the connection to the companies like Pitney company is just astoundBowes offers a viable ing.” model for a new national Building this sense of strategy. “I hope that any connection is vital. Moving program, whether it’s away from the old ‘take public or private, should a pill and feel better’ apbe following some of the Johnna Torsone is Executive Vice proach requires employees principles that we’ve laid President and Chief Human Resources Officer at Pitney Bowes Inc. to understand the role they out,” she says. “In some have to play. “Up until now of the cases where we we’ve believed that educahave some very high cost tion, incentive and legitimate cost sharing is the healthcare plans, which are not efficiently best way to go,” says Torsone. “When employees designed nor structured to the type of incencan understand what things actually cost they tives we’re talking about, they need to change can take responsibility for making sure they get because I don’t think they’re sustainable. I the most efficient use out of the system, not just don’t think we can continue to not have the us. We’re asking them to be a partner with us in kind of efficient focus that we do on health. this, and I think that’s the most important eleIf we don’t do it, whatever system it is, I don’t ment of what is missing in the public discussion see it being sustainable.”
"It takes time to build up to what we call a culture of health"
At the heart of Pitney Bowes’ plan is a targeted response to the most commonly occurring, and therefore most costly, illnesses that affect the workforce. “One of the chronic diseases that drove our cost was diabetes,” continues Torsone. “We knew that if people maintain themselves appropriately then the cost at the back end from complications of failing to keep their insulin levels at the required amount would be significantly higher. What we’ve done is we’ve tried to remove the barriers around cost to drugs and from procedures that help them maintain themselves on chronic diseases like diabetes, asthma and high blood pressure. We’ve made it easier for them to stay on the appropriate medication to do that. As a result of that we’ve seen our cost for emergency room visits and significant complications from those diseases go down.” Key to making wellness pay is bringing the workforce on board. Employees need to know what value these programs can bring. “I would say it’s a combination of education, plan design, actual provision of services and subsidizing things like wellness visits, vaccinations and screenings,” says Torsone. “We keep designing our plans to help discover problems before they become major issues so that employees can take responsibility for trying to stay healthier and trying to remove barriers around the utilization of tools and medications that will keep them productive and well as opposed to allowing it to get much more severe.” Torsone tells us about Healthcare University, a branded program designed to steer people down the path to better health. Employees agree to focus on four or five key points,
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TROUBLESHOOTER
Kick-starting a wellness program How do you orchestrate and enhance your existing wellness initiatives to be more effective? Zachary Meyer tackles your questions. gram. Commitment by an organization’s leaderincidence of challenges with weight manageship is critical to a program’s success. Further, ment issues. employee interest in wellness appears to be high. Partner with an organization like Ceridian to Outreach and engagement: HRA data is analyzed build a program that meshes your existing welland the top 25 percent of employees with at-risk beness groups with programs that will better assess haviors are identified. Ceridian health coaches conthe health of your employee population and adtact employees and ask them to enroll in a health dress behavioral issues with health coaching. coaching program. The identity of at-risk employees The first step would be identifying a would be kept confidential from the school district. resource to be focused on the program and accountable to the success. Your Health coaching: Based on the assessment, you may school district may even be able to want to offer weight management, tobacco cessafund and hire an onsite wellness cotion, stress management and cardiovascular health ordinator. Dedicating an employee coaching programs. resource to manage the program ?” would further demonstrate that Incentives program: Offering a generous incenthe administrative, such as cutting the annution is committed to creating al health insurance premium a culture of wellness. in half for employees who enThe wellness coordinator roll in, and complete, a health would partner with a Ceridian coaching program, can be account representative to highly effective. Incentives are choose the right blend of proanother critical component to grams for your employee popubuilding a successful program lation. Having a dedicated and need to be built around employee with the sole responyour goals and budget. sibility of managing wellness programs is a huge step toward Measurement: Working with implementing a program built Ceridian, you may determine for success. that you want to conduct a parZachary Meyer is the Executive The following Ceridian ticular number of biometric Vice President and General wellness program elements screenings and health risk assessManager of Ceridian Health & Productivity Solutions. are examples of what may be ments as well as achieve a certain selected and implemented by enrollment rate in the health the school district: coaching programs within the first year after the program is launched. The key is Health risk assessment (HRA): The HRA developing realistic goals upfront so that you know identifies overall strengths and weakness of the what to measure and when. employee population. You may want to offer this a couple of time periods each year to enThe power of partnership: When partnering with sure everyone has a chance to participate. After Ceridian, you can count on an effective working rereviewing the assessments, you may find that lationship with the power of our know-how on your your district has a low incidence of employees side. Together, we can tailor a program to help you with stress and who use tobacco, but a higher cultivate a healthier, more productive workforce. ■
public schoolly r u “O : s e t i r w s i o Ann from Iallsinabout 1000 employees – moofsfter district h o work in 15 schools that ies women – wh chool programs and activit l. We full-year s ntary through high schooeady from elemele of smaller programs alr gest have a coup Vegetables Club and a Big feel (Fruit and ht contest) but I don’t not Loser weig eaching everyone. I’m alsost like we’re r e addressing the greate build a sure if we’rur employees. How can we onneeds of oogram, and how can I dem sful better pr at the program is succes strate th Zachary Meyer says: It’s great that your district recognizes the importance of wellness programs. Studies show that most Americans will get some form of chronic disease such as cancer, diabetes or cardiovascular disease in their lifetime and most are caused by unhealthy, modifiable behaviors. While changing behavior isn’t easy, it’s exactly where worksite wellness programs can make a difference. Working with a vendor like Ceridian can enrich your existing program and improve utilization and results. For your school district or any business, illness prevention can be a significant cost-saving strategy. And for employees, it’s a convenient way to stay healthy, happy and working. It sounds like your greatest challenge is that your home-grown wellness groups are limited in reach and there’s not an effective way to measure success. You also have no way of assessing employee health risk factors. There are, however, a lot of positive opportunities in your situation too. Your administration appears to be committed to funding and supporting an employee health and wellness pro-
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PHARMACY BENEFITS
Real world changes
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ith the accelerated invention of technology in the past decade, pharmacy benefit managers (PBMs) have had to adapt both their market and methods to ensure they continue to deliver the results expected by their clients. Mark Merrit,
Mark Merrit maps the potential routes business technology could take in the name of PBM advancement. President and CEO of The Association for Pharmacy Benefit Managers, has a clear perspective of the industry and how its evolution into the technological age is having an impact across the board. “It’s extremely important to how we bring down costs,” Merrit asserts in relation to the rapid development of business technology.
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“Particularly with technologies like electronic prescribing. Th is enables patients and doctors to have medical records where all the different drugs that they have been prescribed and all their many different doctors are in one place. That allows massive safety improvements because then doctors can see if duplicate drugs have been administered or if unsafe drugs have been prescribed which are dangerous when in interaction with other drugs that some other doctor has prescribed.” Indeed, there are huge cost savings available with electronic prescribing, as it reduces waste and duplication, and also helps doctors and the pharmacist the PBMs work with to observe when more generics are available. Moreover, the attraction of a 90-day supply or home delivery service provides further cost-saving tools. However, this doesn’t equate to an easier time for PBM providers. “Some of the challenges are actually in the public policy arena. For instance, there is going to be geometrically greater use of expensive biotech medicines, which is going to transform the face of what America sees as pharmacy right now. They won’t just be pills, they’ll be things taken intravenously through injection and other ways. The challenge is that these are very good, but very expensive products; currently you’re not allowed to make generics of these. “So, that literally costs hundreds of billions of dollars because you can’t drive any competition for these drugs and the drug companies can charge whatever they feel like without any fear of being undercut by a competitor. So we do need what we’re calling biogenerics legislation, or legislation to allow generic biologies to be approved by the FDA. “The broader challenge is that as the American population ages and as more medicine is focused not on invasive procedures but preventative procedures, the utilization is going up tremendously and there’s more reliance and more spending on drugs.” Thus, the key to success will come from an ability to make sure that spending is undertaken in the most effective and efficient way possible as the healthcare system continues to transform into more of a preventative model given the ongoing healthcare debate. But to what extent will this impact the PBM sector? “Generally speaking, if there are more covered lives that’s good for PBMs because we can’t help people who don’t have insurance coverage,” Merrit continues. “Another thing is that there’s a mindset among human resources managers, CFOs and CEOs of companies where they have to get more modern about how to save money. “In other words, a lot of people may want to get medications through home delivery, but many companies don’t pursue it that much; or they don’t realize the cost savings that are available; or they just take a passive approach to those kind of innovations because they’re not familiar with how rapidly things are changing in the pharmacy space.” As such, human resources leaders are pushing for original thinking to look at ways of utilizing cutting-edge technology tools; tools that are already available but not used as widely or effectively as they should be.
“Chronic diseases need to be managed at the pharmacy level different than acute situations. Most of the drug spending in America is on chronic medications relating to blood pressure and depression. These are drugs that people are going to be taking for the rest of their lives. Many times they could get it much cheaper in a 90-day supply via mail coming to their home directly, as opposed to having to go to the drugstore every month to pick up their fi ll. “Many employers are starting to think, ‘Why don’t we manage chronic and acute drugs differently and simply start people with home delivery for chronic medications and let them choose to opt out and go to a drugstore if they want to?’ “Another issue which is more of a physician issue is electronic prescribing, as I mentioned previously. It’s a great innovation; everybody recognizes it, but only about 10 percent of physicians use it. They’re much more comfortable simply hand-writing a script. It’s easier for doctors but it’s bad for patients and doctors, because the doctor never knows if the script got fi lled.” With an estimate of about 30 percent of all prescriptions written by doctors never getting fi lled, the problem becomes exacerbated by the knock-on effect of doctors and physicians then not knowing how the patient is getting on. To combat this, the use of electronic prescribing not only tracks the patient’s movement’s post-script, but affords doctors the knowledge of whether the patient collected their prescription. However, the economic crisis over the past 12-18 months has had an impact on the PBM space. “On the negative side, if there are fewer people with health benefits because they no longer have jobs, just on a business level that’s not helpful to anybody, including us. On the other hand, as economic problems mount, companies are more likely to aggressively use the tools that we offer, such as mail service pharmacy, more generic utilization and so forth. “Certainly policy-makers and politicians have been wanting newer ways to save money in all aspects of healthcare, including pharmacy. One of the challenges is often they look to political or ideological solutions as opposed to just fi nding out what works in the marketplace and using more of it. Our hope in programs like FEHBP, the Federal Employees Program, is that policy-makers will look at it as they have for years – it’s one of the best programs in America; very high consumer satisfaction among federal employees; no evidence that it is wasteful in any way and no evidence that it needs to be ‘fi xed’.” Merrit’s hopes for the future remain simple yet true to the cause: “I hope that policy-makers would look at things that are broken, fi nd solutions that have already worked in the real world and try to implement them more as opposed to meddling in ways that could be harmful in some programs that are working very well already.” It becomes clear that reform is an open issue; change is an open issue. But the bottom line remains: change will only be fully accepted if it is based on applied knowledge from the ‘real world’.
"there are huge cost savings available with electronic prescribing, as it reduces waste and duplication"
Mark Merrit is President and CEO of The Association for Pharmacy Benefit Managers.
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EXECUTIVE INTERVIEW
Crystal clear cost David Kwasny discusses the need for greater PBM pricing transparency and the benefits that this can bring.
What impact is the current debate about PBM pricing transparency having on providers? David Kwasny. RESTAT is taking transparency to its logical end point – cost plus. Pharmacies are very excited about working with an independent PBM that will not compete with retailers by migrating prescriptions into a mail service owned by the PBM. Pharmacies welcome the opportunity to provide discounts that will actually benefit the payer/client as opposed to the PBM. They also relish the occasion to have the payer and member gain visibility to the price retailers make available in order to effectively and openly compete for business. RESTAT’s model passes discounts to payers and frees the pharmacies to openly compete for business based on the value proposition offered by the pharmacy, beginning primarily on price. RESTAT is promoting ‘cost clarity’, where a member and a payer can clearly see that pharmacies can differ on price and levels of service/convenience, however being assumed that the patient outcome is never in question. Is it the responsibility of government or of private business to resolve issues surrounding pricing transparency? DK. RESTAT believes the free marketplace bears responsibility for resolving this issue but other PBMs may require legislation to provide pricing transparency. A new PBM pricing philosophy is required to address this issue and RESTAT is perfectly positioned to execute this new strategy. RESTAT is the only PBM in the country with the independence and experience to deliver this pricing change and new reality. RESTAT is privately held. We are not burdened with the legacy costs of a dispensing infrastructure (inventory, technology, personnel). Lastly and most importantly, we’re independent. We have the trust of the providers, which allows for sharing of sensitive pricing information without fear of reprisal or economic security.
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David Kwasny RPh, was promoted to President of RESTAT in 2009 after having served as VP of Sales since 1997. Prior to joining RESTAT, Kwasny worked for ProVantage, Script Card and Health Care Pharmacy Providers and for the Kmart Corporation’s AmeriKind Pharmacy Network. He graduated from Temple University School of Pharmacy in Philadelphia, PA, and was inducted into the school’s Gallery of Success in 2007.
What benefit can businesses and their people experience when they opt for a PBM option with a more collaborative approach? DK. The client’s needs and the needs of their members, coupled with the needs of the pharmacies providers, become aligned so that everyone benefits. Cost clarity is provided along with the positive outcomes that are assured from pharmaceuticals. Previously, only the outcome was assured. Now a member can access cost plus transparent pricing to go along with their high quality prescription medication, whether it is filled at the Mayo Clinic or Wal-Mart. Everyone benefits with the Align model. Can users expect to get the same quality of services from plans such as this? DK. Absolutely. Employers and members can select and determine the experience they prefer. Pharmacies are given a chance to compete on
price, value, convenience, etc. The pricing offered is based on acquisition cost plus a profit margin and a dispensing fee. Pharmacies of varied settings and retail philosophies will compete by pricing their value proposition to the consumer clearly and appropriately. Our goal is to foster competition openly based on the merits of the consumer experience. A member can choose a 24-hour pharmacy, a pharmacy conveniently located, a pharmacy with a drive-through window, a pharmacy with a walk-in clinic, one with a grocery, or in a discount setting. The choice made by the member will be made based on their need and their desire to invest their time and co-pay dollars appropriately and in an equitable exchange for value. The member/consumer will make this value election, not unlike any other consumer purchase. It is RESTAT’s goal to furnish the consumer with all relevant information to make an informed empowered economic decision. n
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ASK THE EXPERT
Wellness works Tom Beauregard explains how wellness programs can play a meaningful role in health reform and help lower costs.
E
scalating healthcare costs are outpacing inflation at an alarming rate. Obesity and diabetes trends in the US and a related lack of patient awareness and engagement will continue to fuel cost increases and ultimately bankrupt our healthcare system. More than a third of Americans are obese and nearly 57 million individuals are pre-diabetic. The cost of care for these conditions represents a significant financial burden to individuals, families, and businesses.
“Wellness initiatives should be structured such that employees are inclined to assume responsibility for their personal health and wellbeing. In some cases incentives may not be necessary” To curb long-term medical costs, a growing number of organizations have begun to adopt wellness programs. In 2008, 77 percent of employers offered some form of a health and wellness program to their employees. The wellness strategy spectrum is broad but the common objective is to encourage personal recognition of health risks and personal responsibility for behavior to improve an individual’s health status and reduce long-term expenses. Wellness programs come in many forms from simple models that offer health assessments, biometric screening opportunities and wellness benefits to more advanced models that bifurcate populations based on health status and personal behavior and offer financial incentives for following evidence-based care standards and clinical outcomes. The health reform legislation recently passed by Congress recognizes the potential benefits of active investment in wellness and takes steps to promote advanced wellness initiatives. Both the
Senate and House bills provide grants to emidentified a series of best practices that help orgaployers for the establishment and adoption of nizations build, expand and grow a successful wellness programs. Likewise, both bills create wellness program. community task forces that would identify and Firstly, it is important to assess your populadisseminate evidence-based recommendations on tion and design plans that cater to its specific the use of clinical and community prevention serhealth risks, status and readiness to change. Next, vices. Once implemented, this legislation will imit is necessary to secure leadership commitment, prove the delivery of preventive healthcare and support and participation for the program and secure greater participation from Americans navisibly invest in wellness initiatives at the highest tionwide. Healthcare consumers have already level of an organization. demonstrated widespread support for wellness iniBuilding a program that focuses on behavtiatives – among those emior change across the healthployed full or part time, 82 care continuum will allow you percent report feeling positive to engage all participants in about employer-sponsored behavior change, regardless of wellness programs. health status. You should also In designing an effective leverage data to proactively wellness program, employers identify health risks and permust carefully consider the sonalize programs. This data program’s target population can be used for analysis to deand incentives. Program crevelop personalized action ators should determine who plans that address all factors benefits most from a wellness that influence behavior. initiative, whether that be all It is also necessary to develeligible individuals, or highop compelling communications cost populations – those with and incentives and to create inTom Beauregard is an Executive the greatest immediate recentives that are appropriate Vice President of UnitedHealth Group and the Executive Director turns. and effective. Furthermore, it is of the UnitedHealth Center for Health Reform & Modernization. Additionally, wellness important to create a culture of initiatives should be struchealth in which health and wellPrior to UnitedHealth Group, Beauregard was the National tured such that employees being are promoted through a Practice Leader for Hewitt Associates. He has over 20 years are inclined to assume revariety of channels; use health of healthcare leadership sponsibility for their personportals to keep members enexperience and is one of the industry’s leading experts on the al health and wellbeing. In gaged and aware. Finally, you forefront of dramatic change. some cases incentives may need to openly track and evalunot be necessary; in others ate results and progress in order they may be part of a yearly plan, or included as to motivate participants. an outside reward. It’s important to note that sucWellness programs are a critical component cessful wellness programs do not yield instant of a modernized healthcare system. These progratification. It takes time to change behavior. grams manage costs while helping employees live Implementation requires as much thought, planhealthier, happier lives. Over time, expanding ofning and strategy as any other organizational iniferings and incentives will give way to a worktiative. To that end, UnitedHealth Group has place culture of true wellness. n
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FEATURE
Making connections
Hans-Jürgen Bill tells HRM about the human implications of turning two companies into one and why job titles just aren’t that important.
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hen Nokia Networks and Siemens Communications joined together to form Nokia Siemens Networks in 2007 the company instantly became one of the largest communication organizations in the world. Not only that, it also required that two workforces numbering tens of thousands of people in more than a hundred countries had to somehow form a seamless whole. Though some of this work had been done by the time Hans-
Jürgen Bill became Head of Human Resources in 2009, there remained plenty of work to do. It’s a task that would have been daunting for even the most seasoned people professional. For Bill, the test was even greater. Despite a long and distinguished career in the communications industry, this is Bill’s fi rst HR role. One of the biggest challenges of this new role is the continuing integration of workforces from two very different organizations, on a
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worldwide scale. Adrian McLean, a consultant hired by the new company to help facilitate cultural change, likened the merging organizations to a shoal of fish and super tanker. “In Nokia the dominant image was of a shoal of fish,” McLean said. “What this represented was the valuesdriven, self-organizing capacity inside Nokia. A lot of people had a sense of having freedom, but the coordination occurs through adherence to some strongly felt and shared values.” The driving force within Nokia was teamwork, with far less emphasis on the individual. By contrast Siemens, with its more rigid and hierarchical structure, represented the tanker, moving forward with power and momentum and possessed of numerous floors and levels. According to Bill, the new organization is essentially a blend of its two parents. “It has more flexibility than the super tanker, but a little bit more order than the shoal of fish,” he states. “But we are moving into some new fields. We are developing as a known company, with a heritage of two fi ne companies. We have our own values and our own company setup and our own company understanding.” Merging these two entities into an effective whole was a process that involved a certain amount of pain. Layoffs were unavoidable, with around 10,000 existing staff leaving Nokia SieHans-Jürgen mens Networks since its 2007 foundation. On the fl ip side, 15,000 new people have since joined the organization. Though this process has undoubtedly caused a great deal of upheaval, Bill believes that there have been upsides. “I even think it is rather positive that you have this kind of ex-
“I believe that cultural change or mindset change is an ongoing task for each and every company”
Hans-Jürgen Bill was appointed Head of Human Resources, Nokia Siemens Networks, on 20 April 2009. Prior to this role Bill was Head of West South Europe region for the company. In that role, he led the company’s operations and activities in a diverse market comprising of 30 countries, working with many of the world’s largest global operators. He held this position since the formation of Nokia Siemens Networks in April 2007, building a strong team and organization for the region. Prior to Nokia Siemens Networks, Bill held a range of diverse roles at Siemens which he joined in 1983. From 1994, he was Head of Siemens Mobile Networks in Indonesia. In 1998, he became Head of Region CentralEast and North Europe for Siemens Mobile Networks and then served as Head of Operations and later as Head of Asia Pacific for Siemens Mobile Networks.
Bill change of people, so that you get new ideas in,” he says. “When you look where we have hired people, specifically in the areas where our markets are still growing, like India, China, the US and some other parts of the world like South America, that has been an advantage. “We also have to change the business, in that we are transforming from more a system and equipment led business, into a soft ware and services led business, which obviously also requires different skill sets and different capabilities and competencies of people.” Nonetheless, for those employees who weren’t new recruits, the obstacles of instilling an entirely new culture remained. Bill seems largely unfazed by what looks like a major challenge, instead viewing it as simply another component of business development. “I believe that cultural change or mindset change is an ongoing task for each and every company, specifically in the fast changing environment that we are in as Nokia Siemens Networks. “Of course, when you do an integration kind of merger there are some specific topics you need to look at. But generally, you need to continue with that. The market is changing. The environment is changing. You need to adapt your capabilities, your competencies, the specific topics you’re looking at in the company, your focus area. From this point of view, transformation is an ongoing topic. I’m quite sure that it never ends. And the environment we are in today is defi nitely different from
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NOKIA SIEMENS NETWORKS – BIG NUMBERS the environment that was there when we made a huge impact on the overall strategy,” he the decision to go into this merger.” says. “We are part of the strategy and we Bill identifies the move into this new busiare part of the business. We are support1.5 billion ness environment as a far bigger hurdle than ing the business. With the right talent people connect simple cultural alignment. The requirement interaction and retention, with the right through the to effectively balance immediate and future values, with the right leadership, I think company’s goals is central to being prepared for whatthere is a huge impact on the overall networks ever lies further down the road. “At the end company strategy. That is what we are of the day, you need to fi nd the right balance doing daily. We obviously have kind of between short-term and long-term measures a people agenda, which is a base for and and short-term and long-term success,” he also, part of the overall Nokia Siemens explains. “Each company needs to survive in Networks strategy. It’s a very important the short-term as well, and that is what we are cornerstone.” trying to balance out with different incentive Bill’s view of business and HR being systems we have on the short-term and longinextricably linked comes as no surprise. term view. With a degree in telecommunications “But what is even more important, from and economics and numerous previous Serves 600 communication service my point of view, is that we’re also balancing management roles at NSN and Siemens, providers globally the ‘what’ part and the ‘how’ part in our perhe is an HR executive with an unusually formance evaluation for our leaders within the strong grounding in the corporate world. company. So we have, on one side, a focus on “HR should be part of the business and the ‘what’ part. That’s the numbers, the mileHR should support the business,” says stones, the revenues, whatever you’re judging Bill. “One of the preconditions for that is there. The ‘how’ part is the behavior of the that you understand the business you are More than leaders. And the behavior is, of course, somein. We think that here, it’s an advantage, 60,000 thing that needs to be very sustainable, at the that somebody coming from the business employees in end of the day. What we’re doing is to balance and understanding the business is also 150 countries that out. So that means if somebody is good driving the human resources part of the at the ‘what’ part, but not good at the ‘how’ part, he is not going to be company, and would contribute more to the success of the company.” successful within this company in the long-term.” But could there be disadvantages to someone without specific people experience being in a role like this? “Somebody not coming from an HR People power function is not very knowledgable about all the HR processes, all the HR A constant question asked of HR leaders is how much their work needs,” concedes Bill. “At the beginning, that is something somebody obtruly affects the wider actions of the business. Bill is adamant that he viously needs to learn. But we have a lot of HR professionals within Nokia has a major part to play. “I think the human resources department has Siemens Networks who are definitely covering all these topics as well.”
Global network, local approach How Nokia Siemens Networks handles its worldwide workforce, accoding to Hans-Jürgen Bill “The challenge is that on one side, you need a global set of values, a global set of measures for the entire workforce that you have throughout the company. But you also need to be regionally relevant. So, of course, you can’t compare people in China with people in the UK, for example. “A different setup is needed there, different requirements in terms of developing the people in a different environment, and in a more or less competitive environment. We try to get a balance between our global and regional requirements and needs. “For example, we don’t have global research. These kinds of things we do on a very regional level. So we have different regions within the country, and we try to adapt to the needs of the local workforce.”
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A top priority for Bill’s HR organization is fostering talent and ensuring that the Nokia Siemens Networks’ internal population mirrors that of the many territories in which the company operates. “One of the major topics is defi nitely leadership,” he says. “We think that it’s going to change a company, and that it’s defi nitely needed to transform a company into the new areas where you are active. The second point is talent, which also takes in diversity. We’re investing more in gender diversity. And though we aren’t perfect on national diversity, we are doing quite well in that area. Looking into our executive board, for example, we have six different nationalities within this executive board. We are also investing in youth. So getting new people on board, having close cooperation with universities in different countries of the world. It’s also an investment being active in this. At the end of the day, I think what is necessary is that you have a balanced workforce with experienced people and with younger people who have more drive. And that is what makes a company succesful in the medium and long-term.” Despite this interest in fi nding and supporting the next generation of workers, Bill believes that demographic issues are not the most important when it comes to having a cohesive and effective workforce. “From my point of view, it’s very much based on the values we have as a company,” he says. “That is independent of whether somebody has been in the company for a couple of years already, or is just joining new. We feel that people appreciate that this company has values, and that we live the values as much as we can. And it’s also a bit dependent on the growth areas we see in the different regions of the world. That also means that we’re shift ing workforce into the areas where we’re doing more business, where there is more growth. Specific to the growing service business is that it’s a very regional, a very local business, so service people need to be close to our customers. I wouldn’t say that it’s really an age issue, in terms of that. It’s rather an issue of where your business is located or where your growth areas are.”
In or out? To outsource or not to outsource – that is the question “It’s a huge word “outsourcing.” HR plays a very important role in driving the strategy of a company, so I wouldn’t outsource that generally. But there are specific fields where outsourcing could make sense and that we’re looking at. For example, it isn’t essential to have your payroll administration within the company. We’re looking into other fields where it makes economic sense for the company. “But there are some areas where, from my point of view, it simply doesn’t make sense, so HR needs to understand the business. If you want to select the right people and promote the right leadership skills for your company, then you should know the company and the requirements of the business and the customers.”
What’s in a name? One of the more unusual features of Nokia Siemens Networks’ organizational structure is the way it has done away with much of the hierarchy of job titles that has come to characterize the corporate environment in so many companies. In its place is a far more streamlined set of roles that apply across the entire business. While this process was largely welcomed, it did run into resistance in certain areas, notably the US where attachment to the tangled network of SVPs, EVPs, Presidents and Chairmen was more profound. “It was an issue,” Bill explains. “If you do such a major cultural change, you will inevitably fi nd some resistance. There were some areas and some regions in the world where people were very
much used to these kinds of titles. We had quite a clear line on it at the beginning, though we were also making certain exceptions.” Ultimately though, time was invaluable in people settling into this new structural culture. “Time really helped us very much here,” Bill continues. “People just developed into it. What really counts is the competency of your business partner – and not the title. Our customers got used to it. Our sales – which are equally important – got used to handling this no title policy. There might be still some areas in the world where we have the odd exception. But I think with 90 percent of the company, we are defi nitely handling that, as it fits to our culture. And at the end of the day, it’s not so important what’s on your business card, but what you can deliver, and what your contribution is to your customers’ success.”
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STAFFING
REASSESSING RECRUITMENT Kay Kennedy, President of IACPR, offers her advice on how recruitment professionals can learn from the economic downturn and how they should be approaching the recovery.
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In what ways has the economic downturn affected the professional recruitment industry and what lessons have recruitment professionals learned from this experience? Kay Kennedy. Corporate recruitment professionals have learned that a sound performance measurement process is critical, whatever the economic situation. Yes, a strong, tested system is essential when looking at promotions and raises – but it is even more valuable when a corporation is considering lay offs. Good performance measurement – applied consistently by knowledgeable managers – can help support better and fairer decision-making. Retained search professionals have had it forcefully brought home that you can’t neglect marketing efforts when times are good, no matter how busy you are, and that you need to have a diverse client base so that you’re not overly dependent on any one client for work. Many firms have also been using the slower business environment to take a hard look at their quality control processes and operations – a chance to improve how they go to market and execute.
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the next decade due to the eroded bonds of trust that the economic downturn created between them and their employees. Do you think this is the case? KK. I don’t think companies will feel the impact immediately – too many people are still out of work. But as disgruntled employees leave and strong talent at the executive level is more at a premium, an eroded employment brand will be an issue. Those companies that have treated their employees with dignity and respect – whether it’s helping ease a transition or making sure those who stay are fully engaged and their concerns heard – won’t feel the heat. Those corporations that have been less than candid in their dealings with employees at all levels need to act now to “right the wrongs.” But you don’t become a “most admired” company with a few quick fixes – there needs to be a consistent commitment to your employees.
The past year or so has been very difficult for recruitment professionals everywhere as many companies have been forced to downsize. In what ways have recruitment professionals been able to help ease this transition? KK. For corporate recruitment professionals, the challenge has been how to help downsized executives move forward when company budgets are very constrained, so that formal outplacement services or termination packages are kept to the minimum. In many cases, companies have turned to long-term retained search partners and asked them to help these executives make the next move. From candidates, corporations and search firms, I am hearing about close collaboration – and a real sense that right now we all need to help each other. When downsizing occurs, the remaining employees are often expected to maintain levels of productivity with fewer resources. How important is it in this situation to ensure employee engagement? KK. There is research that shows that productivity in a severely downsized department suffers more from low morale than lack of resources, even three months after the downsizing. It does a company no good to tell half-truths or ignore the pressing issues. The message to those leaving, to those remaining, to shareholders and vendors, and to the community at large must be sincere, based on the truth, forward-looking and repeated often. What can be expected in the next weeks and months? What is the company doing to support past, current and future employees? How will the company be moving on? Sugar coating is not the answer – and simply feeds damaging rumors.
What considerations should a downsized organization engage in before re-staffing in response to improved economic conditions? KK. Many companies are hiring on a temporary basis – part-time employees or hourly consultants – before making a commitment to full-time positions. This helps ease the current burden of what can be overwhelming workloads – and also allows corporations to see how an executive might fit long-term with a corporation’s goals. I am hearing of more and more of these “interim” employees moving into full-time positions.
“It’s easy to get bogged down in day-to-day problems – but developing great leaders and implementing strong talent practices are still essential to organizational success” How has the development and evolution of Web 2.0 and social media affected the professional recruitment arena? KK. LinkedIn, Twitter, YouTube, Facebook and all the rest have tens of millions of participants. And, as companies and employees are populating the new social media in droves, search firms and corporations alike are turning to these same platforms to help identify and provide background on potential candidates. However, firms need to have best practices in place for engaging with these media and institute formulized policies that could hold up to legal scrutiny, whether you are using the media to promote your firm or to source candidates.
During the economic downturn, many employers chose to scale back their graduate recruitment plans in order to create short-term cost savings.What impact will this have on those companies as we emerge from recession? KK. Whether it’s bringing in new talent or supporting those executives already in place, companies can’t lose sight of the long term. It’s easy to get bogged down in day-to-day problems and immediate solutions – but developing great leaders and implementing strong talent practices are still essential to organizational success, in up times or down. Firms that don’t have a strategic vision for how they will be building exceptional leadership, today and down the road, will seriously lag behind their competitors.
We face major shifts in demographics over the next few years and estimates suggest that within a decade or so there will be up to four different generations in the workforce. How will recruitment professionals have to adapt their practices in order to best communicate with these different groups? KK. I think most firms are already reaching out to younger candidates in new ways – like through social media – to identify potential candidates and market new positions. But nothing can replace in-depth interviewing skills, strong assessment techniques and thorough background checks – these are the foundations of any successful search. n
Recent research by PricewaterhouseCoopers has revealed that many once-powerful employer brands may be unable to attract top talent in
The International Association for Corporate & Professional Recruitment (IACPR) is a professional organization bringing together the corporate recruitment and retained search communities to share best practices in an environment of trust and confidentiality.
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RECRUITMENT
Back on track A look at the two main philosophies prevalent in the world of Applicant Tracking Systems.
P
eople are the primary asset to any organization. Granted that may seem like an overly obvious statement to make, yet many companies often begin to blur those boundaries when recruiting. People can become words on a resume, dissected to the ‘n-th’ degree, which is understandable considering the potential investment an employer is about to make. However, what has become clear to many recruiters throughout the years of interviewing and placing candidates is that the ‘perfect candidate’ does not exist. There are too many comparable factors to include: a balancing act of strengths versus weaknesses; a recruiter’s wish-list that will never be fulfi lled; and of course the sheer volume of applicants that is too timeconsuming to look through. With the acceleration of business technology and management systems in the past decade, the search for that elusive candidate is back on track – but now with more realistic parameters. Welcome to the world of the Applicant Tracking System (ATS). Now, one could wonder why a recruiter would want a soft ware system to track an applicant as opposed to purely fi nding the right person for the job? But the name is reflective of what these tools are designed to do. Kevin Wheeler, President and Founder of Global Learning Resources Inc., explains: “Their primary purpose is to store resumes, retrieve them through search engines based on keywords and track a candidate’s progress through telephone screens, interviews, and either an offer or a rejection. In fact, all the most popular Applicant Tracking Systems are designed around the philosophy that the resume is central to recruiting. These systems enable the resume to be stored, retrieved and matched against a requisition.”
However, what Wheeler refers to is the corporate model of an ATS; it neglects to take into consideration the relationships and intangible traits of people. Th is means that there is usually no way to gather and retrieve information about people who have not expressed an interest in a specific job. “There are a few systems, however,” continues Wheeler, “that are based on another and more useful philosophy that people and relationships are central to recruiting. “The agency world has been using tools that are more aligned to the relationship philosophy for some time now. They use Applicant Tracking Systems that are designed to facilitate relationships, store contact
“All the most popular Applicant Tracking Systems are designed around the philosophy that the resume is central to recruiting. These systems enable the resume to be stored, retrieved and matched against a requisition”
information and regularly communicate with candidates. Historically, HR and corporate recruiting has little interest in relationships of ‘selling’ jobs or people, and more interest in process and the ability to meet legal challenges. “The agency world, on the other hand, has been built on relationship development and candidate communication. They often do not
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Top five things to look for in an Applicant Tracking System bother with resume storage, and instead are inexact and that candidates who meet 1. Flexibility: An ATS should be configurable keep track of potential candidates’ contact the critical requirements but lack other to work within your established process information and a few notes about the requirements maybe the preferred choice.” rather than force you to make compromises. candidates to help in their communicaThus, we return to the idea of the new Your needs should dictate the type of data tion and to jog their memory about them. ‘perfect candidate’. Someone who fulfi ls the captured. When the need arises, they search through general competencies whilst maybe lacking 2. Functionality: A good ATS will allow you their notes and past communications to in other desirables will become more of an to quickly and easily unlock its potential. potential candidates and, when they fi nd a asset to an employer in the long-term as they The best ones will integrate candidate potential fit, they re-establish contact and still have space to grow, learn and progress. assessment tools and direct job board request a resume.” More importantly, this often fosters a newposting and can even predict which job Fortunately, this is slowly becoming found loyalty for an employer – one who boards will be most effective. the model corporate recruiters are using. has nurtured ability, developed strengths 3. Affordability: An ATS should pay for itself, Th is is fortunate for two main reasons. The and helped to shake off prior weaknesses. reducing both time-to-hire and cost-perfirst is that the agency model can obtain This is certainly a principle that a sound hire. Subscription-based pricing will enable candidates far quicker, and do so based recruiter will understand when utilizing you to prove the effectiveness of the ATS on ‘talent pools’ and understanding the the advantages of an ATS. without committing significant funding. needs of the business. Secondly, matching As such, instead of looking for that 4. Reliability: Take a good look at the vendor. humans to jobs requires a certain amount ‘perfect candidate’ who fits a precise need, Are they recognized as a leader in talent of flexibility – something databases are not recruiters will store information on a acquisition management, with a list of equipped to provide. Furthermore, corpowide variety of people who may be a fit for satisfied customers to prove it? Can they rate recruiters often spend vast amounts future positions. As needs arise, they can deliver 24/7/365? If not, look elsewhere. of time looking at resumes they will never scan their contacts list, make phone calls 5. Integration: Can the ATS be integrated use, and then storing them in their ATS. and are led to an appropriate candidate with back-end systems and other thirdWhilst this is done more for legal comvery quickly. Moreover, by using their perparty applications? If so, you’ll extend pliance than anything else, it still causes suasive powers, they also influence hiring its effectiveness and simplify the lives of unnecessary time-costs and inefficiencies managers to consider candidates who everyone involved in personnel matters. within the process. would otherwise have been passed over beConversely, agencies rarely search cause they were not exact matches to a reqSource: www.taleo.com resume databases or try to match requiuisition. In relation to this, Wheeler states: sitions to resumes. “Th is is a futile effort “Tools that provide flexibility in data entry, for the most part,” asserts Wheeler, “because hiring managers are never allow networking and candidate communication and allow recruiters to sure of exactly what they want and expect to be influenced by candidates make ‘fuzzy’ matches to candidates will emerge as the winners in the and recruiters. A well-executed recruiting model assumes that matches overcrowded ATS marketplace.”
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BACKGROUND SCREENING
Is your background screening program effective? By Kellie O’Shea 102 www.hrmreport.com
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t’s 3:07 pm on a Friday afternoon before a holiday weekend. Just as you allow yourself to consider the forecast for the long weekend ahead, the phone rings. Before you can even say your name, you hear the heavy breaths of panic on the other end of the line. There has been an incident with one of your employees and he has just been taken out of the building in handcuffs. In the following hour you learn that the incident involved your employee raping a female client. Your mind races as you wonder, who is this guy? Didn’t we do a background check on him? How did we miss this one? The answers begin to become clear as your research reveals that the employees background check report shows no criminal record was found or listed. At 5:25 pm your phone rings again. Th is time, it’s a local television reporter asking about the incident at your location and if you have any comment about the history of the convicted felon and registered sex offender working for your company. Your next call is to your background screening vendor to fi nd out how and why this could have happened. Why do you conduct background checks if they aren’t going to protect your employees and your company against these situations? The short answer is there is nothing you can do to surface every, or even any, criminal record conviction a potential employee may have. Despite what you see on television, a criminal history search involves complex layers of pre-determined methodologies and resources in order to apply the best techniques to yield the best results for each search.
Buyer beware In the age of technology, it is tempting to search electronic databases that provide inexpensive and instant results. Products that are marketed as ‘comprehensive national criminal check’ and ‘access to over 300 million criminal record for less than $20’ are alluring to employers that are looking to cut costs. Used properly, national criminal searches are a good supplement to employment screening programs, however, these databases can also come with potential pitfalls. Unless you are conducting a criminal record check through the Federal Bureau of Investigations (FBI), National Crime Information Center (NCIC), Criminal Justice Information Systems (CJIS) or some authorized agency to perform a national criminal record search generally conducted using fingerprints, there is no government endorsed national criminal check that is easily accessible online and offered to employers and the general public. There are, however, privately owned criminal record database searches available through wholesalers or resellers of such information. Be careful to distinguish between the two. Privately owned criminal record database searches typically search by name only and can surface a number of potential matches. When you receive these reports, it is imperative that you research whether the name listed is your applicant or not. Why? You fi rst want to know if this is your applicant before you take any adverse action. According to a 2007 Special Report published by the Bureau of Justice Statistics, 6.4 million US households reported one or more types of identity theft . Additionally, if you are outsourcing your screening to a Consumer Reporting Agency
(CRA) and you may not hire the applicant based on the information in the report provided, you are required under the Federal Fair Credit Reporting Act (FCRA) to give the consumer opportunity to dispute the information contained in his or her report. Conversely, ignoring potentially adverse information and hiring the candidate without verifying it sets up a potentially dangerous liability under negligent hiring. Negligent hiring is when an employer can be held liable for the acts of their employees when they knew or should have known that the employee was unfit for a particular position. The Bureau of Labor Statistics reported that employers lose 79 percent of negligent hiring lawsuits and the average jury award in employment-related lawsuits exceeds $1.6 million. According to the Workplace Violence Research Institute, the average out-of-court settlement is $500,000. Criminal searches at the county court level are public record and the best source for up-to-date criminal record information. Unfortunately, this information is generally limited to records in a single county jurisdiction and will not surface information from other jurisdictions. Some states may require additional criminal record searches at the district, municipal and/or lower court level. Criminal searches conducted at the court level, although not instant, provide the most accurate information for matching identifiers, uncovering active warrants and disposition information and detail. Many states offer comprehensive statewide criminal record repositories that are accessible and generally provide compiled criminal record information from across the state. It is imperative that a statewide database be tested against court level searches to ensure accuracy before an employer and/or screening vendor utilizes a statewide criminal record database in lieu of court level searches. Either way, court level searches should always supplement any statewide criminal record surfaced. Statewide criminal record repositories vary by state and employers must be aware of any statutory requirements or regulations to utilize a specific statewide repository, such as criminal searches on candidates that will work with vulnerable populations, or any requirement or interpretation of regulation to employ only court level criminal record searches. In some cases, specialized, release forms and/or notarization may be required before a state will process a statewide criminal record search. Some states will require an employer and the screening vendor agent (if applicable) to undergo an in-depth certification process before criminal record information will be released. These states are typically referred to as ‘close record states’. An assessment of each state’s source and process must be evaluated before an employer can reasonably defend or promote a screening program’s methodologies. If an employer or screening vendor will or will not offer statewide criminal record searches in specific states, this should be addressed at the outset to avoid potential problems that may arise because of it. Another level of criminal record searches to consider is at the federal level. Th is is a search of the US District Courts either by onsite record searches or electronic access. Electronic searches (for federal convictions only) can be conducted nationally, by state or per US District Court. Federal searches generally require additional research as they contain limited identifier information so broadening the search scope to a national search can add layers of research to find and match identifiers. Federal
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searches can also include the US Court of Appeals. It is important that employers understand and agree with the type and source used in a federal criminal record search. Sex offender registry searches should always be included as part of the criminal record search when a candidate will care for, potentially interact with or even have access to a vulnerable population. In-home workers, contractors and sub-contractors should also be checked against the sex offender registry. According to a 2006 CBS Report, Mississippi officials estimate that 2000 sex offenders relocated across the country in the wake of Hurricane Katrina. Many of them have failed to register in the states in which they now live. Be aware that sex offenders can be listed on a registry with no criminal history indicated on a background check. Employers should consult state laws on utilizing sex offender registry information. Some cities and states have passed legislation to limit the use of sex offender searches for employment purposes unless the candidate will work with an at-risk population.
Check and balance
that the Social Security Trace does not integrate with or search any master fi le list of Social Security Administration (SSA). The Social Security Trace/Address Verification is an intelligence tool sourced through database and/or Credit Bureau information that identifies alias names and/or previous addresses associated with the provided Social Security Number (SSN). It is used to identify possible names or addresses that should be searched as part of the criminal record search. Employers should fully understand the procedure their vendor (if applicable) uses as it relates to the Social Security Trace.
The look back period The next step is to defi ne the look back period of the criminal search. How far back should your criminal search extend? Are you searching for criminal records using the current address of the potential candidate? Th is search scope works if the candidate has resided at this address for some length of time but consider that your candidate just moved to this address six months ago. How comfortable are you trusting that this candidate has no incidents in jurisdictions in which they previously resided? Extending searches to previous addresses is a critical element in conducting criminal record searches. Ideally, your search should extend as much as necessary to surface any patterns of behavior or underlying conduct. The industry standard is seven years, however this can vary in regulated industries or by statute. Some regulated industries require that the search scope extend back to the age of adulthood.
Employers lose 79% of negligent hiring lawsuits
How do you know that the names and addresses provided by the applicant are correct? After all, those are the names you’ll be searching in the jurisdictions they provided as their address. Suppose the applicant did not fully disclose all of his or her addresses and/or names suspecting that you might actually fi nd the criminal record they are trying to hide. Most screening vendors will use a Social Security Trace or Address Verification search as part of the criminal record search. Note
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The look back period is the timeframe used to identify all addresses Employers will want to ensure the search methodologies and scope in which the candidate, at a minimum, has resided, for example, in are consistent for each applicant at least across job function. If you’re the past seven years. All levels of the criminal record search should be conducting a criminal record search at the county and/or statewide level, conducted in accordance with the established look back period includfederal level and a sex offender registry search in all jurisdictions where the ing county, statewide (if available), federal, sex offender searches and applicant has resided for the past seven years searching all names provided national criminal database (if apand surfaced through the Social plicable). Each court, state database Security Trace, this methodology and federal search maintains crimiand scope should be applied for all Back to reality nal record information for varying candidates within this job function. The scenario presented at the outset of this piece is lengths of time. A criminal record unfortunately not fiction. When an employee was hired to search can yield criminal conviction Summary work as an unsupervised sitter in a private assisted living information that is much older than The US Bureau of Labor Stafacility in Colleyville, Texas, he lasted just weeks before he seven years. tistics reports that there were more allegedly raped a 77-year old Alzheimer patient. It wasn’t long before the company learned that this employee had At a minimum, criminal record than 7000 occupational homicides a history of violence and sexual assault. The stunning searches should search the jurisdicnationwide during the relatively revelation was followed by a negligence lawsuit. tions where the candidate has resided stable economic period of 1997for the look back period, however, 2007. Statistics will reflect the effect Applying the protocols we’ve identified above, there were a number of issues that occurred during this background many employers extend the scope to of our current economic climate check: include employment jurisdictions as during the next measured report. well as addresses where the candidate With this in mind, many employQ: What sources were used as part of the criminal record has attended school. Broadening the ers will experience the unfortunate search? A: The company used a privately owned criminal database search to include additional jurisdicreality of workplace violence. Just search only. tions can help to identify criminal as there is no way to guarantee a records where the applicant has escandidate has no criminal record, Q: Was a Social Security Trace used as part of the criminal tablished a nexus. employers cannot control every record search to identify possible alias names and/or previous addresses associated with the provided SSN? A key element in a background aspect of every employee’s acA: Yes. The company did run a Social Security Trace. screening program is searching alias tions. Even background checks This employee had an alias name that surfaced on the names. Alias names can include cannot eliminate the chance of background check report. maiden names, previous names or some unforeseen and unfortunate Q: Was there a comprehensive statewide criminal record names your applicant may otherincidents. However, with the right repository available but not used? wise be known as. At a minimum, safeguards in place, employers can A: Yes. Texas does offer a criminal history conviction screening programs should search considerably reduce the risk. search of public records through the Department of Public the current provided name of a canIt is ultimately an employer’s Safety’s Computerized Criminal History System (CHS) but the company conducted a privately owned database search didate, however, it is important to responsibility to understand their only. It is recommended in Texas that county court searches note that failing to search maiden, screening program’s sources, also be conducted to supplement CHS. County court search alias or other surfaced names cresearch methodologies and scope in this case could have revealed that this employee (under ates a major gap in surfacing crimito reduce risk. Conducting backan alias name) spent 11 years in prison following a conviction of aggravated sexual assault of a female child. nal record information. In some ground checks supported by the cases, the candidate will disclose an due diligence of the screening Q: Did the criminal record search look-back period extend additional name on an employment program’s methodologies can to previous addresses? application or release form but the significantly help employers in A: No. The company used a criminal database search only. employer or screening vendor does defending liability claims and Q: Did the criminal record search include a direct sex not conduct a criminal record search respond positively with best busioffender registry search that also extended a look-back on the provided name because the ness practices to the court of period to include previous addresses? methodology is to search current public opinion. Understanding A: No. Had the company checked the Texas Department of Public Safety Sex Offender Registry, they would have seen names only. Th is protocol must be vulnerabilities in a criminal histheir employee listed as a registered sex offender. addressed in every program. Some tory screening program can help questions to apply to your own employers drastically reduce their program include: Does the criminal exposure but only if they know record search automatically search every alias name surfaced on the where and what they are. It is best to address these questions well in Social Security Trace or must a separate request be made? How many advance of the startling phone call on Friday at 3:00 pm. names does the criminal record search allow? Are there additional costs Kellie O’Shea, PHR, represents Creative Services, a Boston-based background for running alias names? If so, after how many? investigation company.
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INDUSTRY INSIGHT
Clocking in Time and attendance solutions are becoming increasingly important business tools for workforce management, says Brian Harris of NOVAtime.
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oday’s demanding business requirements, and the thin line between success and struggling to survive in today’s landscape, highlight the reason why time and attendance, or workforce management solutions, have become an important tool for businesses of all sizes. Not only do economic factors drive labor decisions, but compliance factors are becoming more and more of a business driver in managing workforces. Access to real-time data and the ability to effectively manipulate this data for labor costing and reporting solidifies the role of time and attendance in the business world today. Businesses are often slow to adapt to some of these challenges and grasp technology that is able to address these issues. Companies often feel there is no need to address legacy systems that ‘just work’ and therefore do not take advantage of the automation, savings, and compliance tools made available in today’s workforce management solutions. As companies do begin to undertake the process of implementing, or replacing a time and attendance solution, there are many variables that make the decision-making process complicated. One major issue facing the time and attendance industry today is quality of solutions and
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the consolidation of providers. While there are a number of providers in the industry, many of the current solutions have been built on aging and proprietary platforms. To further complicate the time and attendance landscape, providers are consolidating with each other thereby reducing the available choices to today’s businesses. It’s important that the remaining players in this industry continue to update their solutions in terms of technology, functionality and usability to be able to meet the business requirements of today and those of the future. Continued consolidation of solutions and solution developers threatens the ongoing advancement and evolution of workforce management solutions. Technology is also very important in the time and attendance industry, and those providers that are embracing technology and developing on standard platforms are separating themselves from other solutions because of their ability to easily integrate with third-party products and solutions. Many companies have invested heavily in enterprise systems to address ERP, accounting, scheduling, and business intelligence requirements. Because of this, today’s time and attendance vendors must be able to interface with
these critical, costly systems. The use of current, as well as emerging, technology must be incorporated to provide real-time interfaces to these systems to move data in and out. Furthermore, those vendors focusing on technology are able to scale and add solutions to meet evolving business requirements. The development of open standard interfaces, transports, and solutions will help time and attendance solutions become more strategic in the overall suite of enterprise applications. Companies may not realize the goldmine of information that is contained within a time and attendance solution. Most often, these workforce management solutions are considered part of the payroll process when, in reality, time and attendance is the foundation of labor costing and effective cost management. To increase access and the usability of this labor costing data, vendors continue to develop software and tools. An increased collaboration between vendors of workforce management solutions and enterprise application providers will help business maximize the potential of the data stored within time and attendance. The other major discussion point in the time and attendance industry is compliance. Companies have seen the governments’ focus shift from compliance support to compliance penalties. In addition to the increased scrutiny from enforcement agencies, companies must also observe the possibility of employee claims. The ability to automate policy and report on violations provides proactive tools for workforce management thus minimizing liability. While time and attendance solutions have developed significantly over the past decade, from manual punch solutions to complex systems, the next five years will redefine the industry. Biometrics provided the last significant contribution to cost savings, process updates and new solutions; however, new technologies such as web services, standardized interfaces, transports and open platforms will differentiate vendors and be the foundation of strategic solutions for years to come. n
Brian Harris serves as the Director of Professional Services for NOVAtime, overseeing all customer-facing activity from pre-sales to support. Harris focuses on the alignment of process and technology with today’s ever changing business-critical issues.
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PROJECT FOCUS
Emotional intelligence Measuring emotional intelligence is a scientifically valid way to predict and improve the emotional and social skills that are critical to workforce performance, says Diana Durek.
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electing and retaining the right people in the right roles is among the most challenging responsibilities of all HR managers. Each year in the US, billions of dollars are invested in shaping and evaluating human capital strategies and in implementing and measuring selection and development initiatives. Trying to discover just the right combination of systems and criteria for your organization can seem like seeking the Holy Grail of sustainable success. Part of the challenge is making the best of limited information. When hiring, HR managers often feel as though they are missing a piece of the puzzle – and they often are. Traditional selection criteria, such as technical credentials and professional experience, provide little indication of how candidates will contribute to organizational culture, interact with colleagues or tolerate stress. Though these emotional and social abilities are a vital determinant of professional success, they are often deemed unquantifiable and left out of selection initiatives. They needn’t be. Standardized measures of emotional intelligence, or EI, offer a scientifically validated means of predicting and improving the emotional and social skills that are critical to workplace performance. By using assessments of emotional intelligence to differentiate between individuals who excel in a particular job function and those who do not, numerous businesses and government agencies have transformed the efficacy of their selection and development processes. For example, The US Air Force (USAF) worked with Multi-Health Systems (MHS), a global leader in psychological publishing and testing, to assess the emotional intelligence of 1500 USAF recruiters. Using the Emotional
Quotient Inventory (EQ-i), MHS identified five attributes that separated successful recruiters (those who achieved at least 100 percent of quota) from unsuccessful ones (those who achieved less than 70 percent of quota). MHS’ analyses indicated that the most successful recruiters were alike in their high levels of assertiveness, optimism, flexibility, self-direction, and stress-tolerance. MHS assigned relative weights to these key attributes and used them
tion officers. New recruits who were hired on the basis of their emotional skills, and participated in targeted EI-based training, collected 163 percent of quota over 3 months. In order to successfully realize the full potential of emotional intelligence initiatives, EI expert Dr. Cary Cherniss suggests infusing emotional intelligence into the organization in a variety of ways. “Multiple infusion helps to normalize and generalize the concept,”
“Traditional selection criteria, such as technical credentials and professional experience, provide little indication of how candidates will contribute to organizational culture, interact with colleagues or tolerate stress”
as the basis of a new formula for recruiter selection. The implementation of this formula resulted in a 92 percent reduction in turnover; factoring in the costs of hiring, training and settling a new hire into place; this translated into a $2.7 million saving for the USAF. Similarly, one of the largest debt collectors in the United States worked with MHS to improve the productivity of its workforce. Using the same process, MHS compared the EQ-i scores of the comapny’s star collection officers (those who collected at least 100 percent of quota) against the low performers (those who collected up to 47 percent) to determine the specific factors that contribute to high performance. These profi les greatly enriched the selection criteria for new hires, as well as the creation of development programs for collec-
Cherniss says in his Guidelines for Securing Organizational Support for Emotional Intelligence Efforts. “It also creates a culture in which people are repeatedly reminded of what they have learned and thus are more likely to apply it on the job.” A systemic approach means considering not only the organization’s selection system, but also how they develop and reward their employees. As a human capital strategy, emotional intelligence can be worked into a multisystem solution, aligning initiatives such as succession planning, hiring, coaching and leadership development with business goals. Diana Durek, Senior Advisor at MHS, is an expert in the area of emotional intelligence and its bottom-line impact on selection, development and leadership initiatives.
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EXECUTIVE INTERVIEW
The evolving landscape Laura Bernstein outlines the top trends currently impacting today’s training and development practitioners.
What are the most significant trends currently affecting the learning business? Laura Bernstein. In a nutshell, continual advances in technology and the extension of the global world have had the most impact. The most exciting trend I see is the value now being placed on training. In what ways is technology having an impact on the training industry? LB. For years the training profession has found itself somewhat at odds, locked in a central debate regarding the most effective use of technology and how best to blend various training modalities to achieve the greatest impact on learning. We hear a lot about e-
LB. Contrary to what we talk about the most, the biggest challenge has nothing to do with location. Mostly, it has to do with an organization’s ability to provide consistent training across the company, while maintaining the flexibility needed for local implementation. Learning professionals are tasked with providing the right blend of content in a variety of formats to meet multiple delivery needs. While it may seem simple on the surface, being able to design and deliver training that yields similar outcomes is a greater challenge when the methods of delivery can seem inherently at odds with one another; for example, training in a facilitated classroom and selfstudy e-learning.
“Success in today’s business climate demands that training be viewed as the new business imperative” learning, m-learning, wikis and podcasts, and who knows what tomorrow will bring? What is important today is understanding that it’s no longer merely about seamless integration of training methodologies; it’s about instant accessibility, flexibility and portability of content and the affordability ratio. Can you tell us more about portability? LB. Although there are variations in defi nition, typically this refers to having training content that can exist in a variety of platforms without losing context and learning value. Th is becomes extremely important when deploying training to dispersed employee audiences. What are the challenges with reaching geographically dispersed work teams?
In what ways has widespread globalization of business required organizations to approach learning and training in new ways? LB. First, globalization isn’t just about location and language translation; it’s about building a global mindset and working effectively across multicultural boundaries. Training and development professionals must now develop expertise in designing and delivering training, which emphasizes cultural and intercultural competency and also develops diversity maturity. High-performing leaders must be able to foster respect among a multigenerational workforce, lead a global team, mediate cultural confl ict and effectively address micro-inequities in the workplace. Is it helpful to be bilingual or multilingual? Sure, but it’s secondary.
Laura Bernstein, President and CEO, VisionPoint, is an acknowledged master trainer and innovative business executive. She has been an active contributor to the training industry throughout her career, developing award-winning training programs and leading diverse teams.
How has the perception of training changed over the last couple of years? LB. As is typical in a down economy, some organizations slashed training budgets and stopped investing in the development of their greatest asset – their people. However, many companies seized the opportunity to view training as a key business strategy – one that would retain top talent while they weathered the economic storm. Employers expect certain technical competency and many are willing to pay for continuous education. However, the focus for training in 2010 is much more extensive than technical capability. Dollars and time spent on the needs of emerging leaders, company-wide inclusion initiatives and regulatory compliance efforts are on the rise.
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INDUSTRY INSIGHT
How to survive a crisis: Lead before the storm hits Michael McIntyre explains the need for leaders to demonstrate their leadership ability every day if they hope to successfully lead their team through a crisis.
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he age-old saying, “Adversity doesn’t build character – it reveals it” has an important leadership corollary: Lead before the crisis hits. In the midst of the current economic crisis, many executives are learning this lesson the hard way: once the waters surge, the winds wail and the ground shift s beneath your feet, there is not enough
time to figure out who you are or what you stand for – or to communicate that to your team. For better or worse, your credibility as a leader has already been established in the minds of your team members. The leaders who will be effective during and after any crisis are the ones who have demonstrated their leadership ability well before the storm arrives. In fact, the tough tasks leaders often face in the midst of a crisis underscore the
crucial importance of practicing the principles of ‘every-day leadership’. For example, during a crisis, leaders often ask their teams to make a leap of faith: “I know times are tough, but we can get through this!” If the leaders haven’t talked straight and delivered with team members in the past, there’s little chance that team members are going to line up behind the leaders and follow them into the unknown. Everyday Leadership Lesson: establish credibility and trust with your team. During a crisis, leaders often ask their teams to make sacrifices for the company: “We’ll need to cut way back on all non-essential expenses, like travel.” If the leaders haven’t already demonstrated genuine concern for team members and built up some relationship credit, there’s little chance that team members will get excited about enduring personal pain for the sake of the company. Everyday Leadership Lesson: Express your respect for and commitment to your team.
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During a crisis, leaders often ask individuals to make sacrifices for their teammates: “If we each take a 10 percent pay cut, we won’t have to lay anybody off.” If the leaders have created an independent, competitive culture, there’s little chance that team members will start making
our own maintenance, rather than outsourcing it.” If the leaders historically have discouraged change and innovation, team members are not likely to embrace change during a crisis. Everyday Leadership Lesson: Create a culture of flexibility and innovation.
“Effective leaders don’t wait until crisis hits to define themselves – they do that every day” the wellbeing of their co-workers a high priority. Every-day Leadership Lesson: Create a culture of teamwork and collaboration. During a crisis, leaders often ask team members to do things differently or do things they’ve never done: “We’ll need to start doing
During a crisis, leaders often ask team members to get back to basics and focus on core competencies: “Focus on what we do best, and stop doing peripheral activities.” If the leader has allowed the company to spread itself too thin and lose sight of its core compe-
tencies, team members will have a tough time distinguishing and giving up non-value-added activities. Everyday Leadership Lesson: Identify and communicate the core competencies of the organization. During a crisis, leaders often ask team members to base critical decisions on core values: “If we say customers are important, then let’s do what’s right for customers.” If the leader has been unclear, inconsistent, or quiet about the organization’s core values, then team members will struggle to figure out the right thing to do. Everyday Leadership Lesson: Clarify the core values of the organization. Effective leaders don’t wait until crisis hits to define themselves – they do that every day. Michael McIntyre, PhD, is the Director of the Professional MBA program at the University of Tennessee College of Business Administration and a leadership development coach in all of the college’s executive-level MBA and leadership programs. He is an industrial-organizational psychologist with expertise as a corporate trainer, management consultant and executive coach; his focus is on internal strategic planning to help organizations reach their performance goals.
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TRAINING
David Guralnick Guraln explains how e-learning can help companies compani keep training and development costs down if it is well designed to meet employee needs.
Designs
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imitations on people’s time, a more geographically dispersed workforce and budget constraints means that bringing people from across an organization together for face-to-face training can be a near on impossible task. However, this does not negate the need for organizations to invest in training and development. In fact, quite the opposite is true as training and development is increasingly seen as a key factor in employee motivation and retention. As challenges have arisen making traditional methods of learning more problematic, employers have had to seek alternative methods of educating their workforce to ensure both their performance and their progression. Technology has started to play a greater role in overcoming the challenges of time, budget and resources and e-learning is increasingly touted as a way of fi lling this gap. David Guralnick is President of the International e-learning Association and President of Kaleidoscope Learning. He specializes in the use of technology to improve job performance and he designed what is considered to be the first ever learn-by-doing simulation for corporate use in 1991. He believes that the defi nition of what actually constitutes e-learning has broadened over the years. “I look at corporate e-learning as meaning the use of technology to improve job performance,” says Guralnick. “I tend to think that e-learning is often focused too much on training and not enough on just-in-time performance support, which is something that can really change the way people do their jobs and make it easier for them. But both of these things come under the umbrella of e-learning.” In the past e-learning has come under fi re somewhat as research has shown that although attitudes vary greatly between companies in different sectors and with different forms of work organization, there is a wide-spread fear that e-learning can lead to social isolation. One possible reason for this is a fear of lack of teacher support, or a lack of peer group interaction. “I think it is a legitimate perception as people have different preferences,” says Guralnick. “The defi nition of social isolation is a funny one though because what it means to be social has changed so much in today’s world. If your defi nition of social requires something to be done in person then this could be a valid concern. But I do believe there is plenty of room for social interaction and this is something that Web 2.0 technologies are giving us: a way to communicate and bond fairly well with people you don’t necessarily see in person.” The advent of Web 2.0 and social media has lead to a movement away from up-front training, which Guralnick is happy to see, as he believes that many companies tend to over-train to a certain extent. Now that
companies are adopting less of a top down approach to training it provides employees with more ways to communicate with one another. On the other hand though he is also wary of this technology and says it has promoted a movement towards unstructured information only. “It is certainly is useful for some things, but it doesn’t replace expertise entirely, and it doesn’t replace people with years of experience who have expertise in structuring information in the right ways – ways that people can really use it and apply it on the job,” says Guralnick. “There’s a tendency for people to go overboard with new technologies and I am concerned about that going forward.” Perhaps another major concern around e-learning is that those people who wish to engage in it require certain special skills in order to make the most of it, in particular the ability to use all the new technology on offer. “Generally this shouldn’t be the case, but sometimes it is,” says Guralnick. “Technology often leads the way rather than good design and thinking about what’s right for the end user. If you design an e-learning product well – keeping the goals, the audience and what you are trying to teach them in mind – then it really shouldn’t be too difficult to use,” he explains. Something that Guralnick has noticed is that a lot of technology is being thrust out into the market very quickly, which causes problems as people get confused by the offering, especially if it doesn’t meet their
“What we were able to do for them was create a just-in-time reference system for their cell phones, which could access information about the kinds of parts that they need” needs. “Th is can give e-learning a bad name and I think it has suffered because of that. I don’t think it’s the technology itself that makes it difficult for people engage in e-learning, but I do think there is a group of people who struggle with some of the things on offer,” says Guralnick. Generally speaking, all sectors of the corporate world could fi nd potential in e-learning. Clearly there will be some sectors that are better suited to using it than others, but in most cases it can bring benefits for any role in which the use of technology can make the job easier, more efficient and more enjoyable. An example that Guralnick cites is fiber optics technicians, a group that you wouldn’t necessarily think had that much to gain from e-learning as they often work out in the field. “What we were able to do for them was create a just-in-time reference system for their cell phones, which could access information about the
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One client has saved over $150 million in improved performance
kinds of parts that they need. They are often faced with a thousand different parts and even the most experienced technicians were having to call back to the office for more information and guidance,” says Guralnick. “Generally, in today’s world, Etechnology is in everything and if it’s well designed it can play a role in everything.” As ever technology continues to evolve at breakneck speed and in recent years e-learning has been accompanied by a parallel movement towards what has become known as M-learning. The two have also started to converge somewhat with the development of more sophisticated mobile devices. “As a general mobile devices, particularly the smaller ones, usually work best for short, just-in-time learning and for performance support – for something that’s going to help you do your job rather than for something that’s part of your training,” says Guralnick. For times when more upfront training is required Guralnick suggests doing that online, on a computer, where you have more of a screen real estate, as he puts it, and can sit and concentrate for longer periods of time. But he emphasizes that mobile devices are incredibly useful, particularly since the iPhone and other smartphones have become so widely used. Even netbooks can now be used for m-learning when a slightly bigger screen is required. The main benefit of both e-learning and m-learning for employers is obviously being able to save money by improving job performance. For Guralnick, improving performance is not just about people doing their jobs better but also about happier, more engaged employees who feel that the company is doing something to make their lives easier. “If you design things to support the workflow that people have and thereby help them to improve it and do things in a more comfortable way, you’re going to do pretty well,” says Guralnick. Conversely, he says, if you create products – whether they’re on mobile devices or on computers – that your employees fi nd more aggravating than anything else, such as page-turning e-learning or things that really don’t seem to apply well to the job, and they feel forced into doing it, educational research shows that you will not improve job performance, but you are more than likely going to alienate your employees. “It really comes down to designing the right products for the situation,” says Guralnick. “If you employ the right kind of design strategy, you can do pretty well at improving your returns both fi nancially and by improving the overall employee culture.” One of the main obstacles that many employers come across with elearning and m-learning however is how to measure any improvements in job performance. There are things that can be done, says Guralnick, but measuring improvements will always be difficult unless you can isolate what you are trying to measure from other things that might be taking place within the company that may impact performance. “You have to defi ne the metrics and ask what it means to be good at a certain job. Are employees being efficient? Are they being accurate? That does take some thought but I do think it is well worth it in terms of evaluating if what you are doing is working,” explains Guralnick. For most companies, especially in this difficult economic climate, making sure that any investments in training and development deliver
a good return on investment is of paramount importance especially when budgets are still tight. And if done correctly e-learning and m-learning can help companies keep training and development costs down. “The main thing really is to spend your money wisely. Generally, if you only spend a couple thousand dollars, you’re going to get pretty much zero return on that,” says Guralnick. “So I think you are better off, even when budgets are tight, trying to select those areas that are going to have the most impact on your organization. You need to get the right people to design and build something that will actually affect performance – then there could be huge savings.” One particular client that Guralnick worked with has calculated that over approximately five years they have managed to save over $150 million in improved performance. He stresses that this kind of return cannot be gained by simply spending $1000 but it can be done by spending $500,000, which for many large enterprises isn’t that big an investment yet it provides worthwhile returns. “When money is tight I would advise trying to pick the hitters rather than trying to cover everything in a very minimal way as this just ends up with you wasting small amounts of money in lots of places rather than making an impact from one or two larger projects,” explains Guralnick. However, with the wealth of new devices hitting the market – particularly Apple’s new multi-media iPad – new opportunities will certainly arise in the e-learning arena. But as Guralnick points out, it will probably take time for the corporate world to adopt new devices and decide to spend money on them . “New devices are going to provide new ways to help employees work better, faster and more comfortably. In particular, more mobile devices means better performance-support opportunities, which I’m always in favor of. “Ideally it’s going to drive more new thinking and hopefully we won’t see people trying to translate simple e-learning and just putting it on a new device. As time goes by, we will not only see the iPad but all sorts of different, smaller more advanced devices and all of that should get better and better over time,” says Guralnick. He is certainly excited about the raft of possibilities that new technologies offer to e-learning. One thing in particular that interests him and that he has been experimenting with is more advanced simulation technology. “It’s a little bit too new for corporations at this point, but we have been experimenting with technology and brainwave sets,” concedes Guralnick. “These are headsets that can supposedly tell a computer exactly what a person is thinking. They can be used to teach something as simple as customer service as this little headset can detect whether you are starting to feel anger towards a customer, which is something that perhaps you wouldn’t acknowledge otherwise.” Whilst Guralnick admits that this does start to get into the realms of Big Brother slightly, he is also very excited by the prospects that this kind of simulation technology could offer to training and development and e-learning in particular. So perhaps one day soon we’ll all be taking part in training courses in virtual worlds similar to Second Life. It may sound incongruous, but Guralnick tells us that as more advanced programming is developed this kind of thing could become a reality.
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EXECUTIVE INTERVIEW
In the mix Jim Hauden details the benefits of a blended learning approach.
What was the relevance of e-learning when it came onto the scene? Jim Hauden. The early value proposition was cost efficiency and speed. It allowed people to learn without being in the same classroom, and it was sustainable in terms of materials. Digital learning was a way to more efficiently share and store information. Unfortunately, it was boring and ineffective. But recently, people are seeing learners as customers. People can explore information in their own time at their own pace. Businesses like e-learning’s ability to create “motion in learning” through scenarios and feedback, and it’s much more compelling. Root is a proponent of blended solutions – paper and digital. Why not one or the other? JH. We create with what works with users. At times, e-learning is best; sometimes, a live, small group is the answer. We’re always conscious of the learner, of the mix of learning experiences that provide the optimal outcome for the business. The best learning comes from combining facilitated learning, social learning, and individual learning. The ability to think, learn, and apply knowledge with others and then practice before taking a risk is how most of us learn. Using technology in combining all these learning forms makes quality e-learning an effective part of an overall learning solution. Root approaches learning as a system. How do systems relate to learning? JH. We often use an example of trying to assemble a 1000-piece puzzle without seeing the box top. People need to see the big picture – the system – before the individual parts make any sense at all. When we frame the whole so people can see that entire system, they’re curious about their connection to it. Learning has the most value in complex issues that are the greatest inhibitors to significant improvement. If we want people to act
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formation with the learner makes it relevant.
For over 20 years, Jim Haudan, CEO and Chairman of Root Learning, has helped organizations unleash hidden potential by engaging people in their work. He partners with leaders of major companies worldwide to build creative ways to execute strategy.
differently, they have to understand the complex systems of our businesses. Within any system, components are constantly in motion, so people need to see the direction – where it’s moving and how.
What’s the potential promise for e-learning? JH. It’s the ability to understand how to make cause-and-effect more transparent within our systems. We don’t often get to see the consequences of what we do. Technology lets us rehearse the causes and see the effects immediately. If technology can help us to quickly understand how actions lead to outcomes, we can unquestionably create better results. Technology allows us to instantly find whatever we need to know. The promise of e-learning is putting learners in the driver’s seat, to focus on accessing, assimilating, and compiling information that is most important to find. We’re in trouble as long as e-learning is defined by the creator of the method rather than by the desires of the end user. The best e-learning really isn’t designed to help people perform better in the workplace; it’s a tool for enabling extended conversations. How does Root determine the best solution to a learning need?
“The best learning comes from combining facilitated learning, social learning, and individual learning”
What are the best practices for making learning ‘engaging’? JH. Our book, The Art of Engagement, tells how to capture people’s discretionary effort to create results using storytelling, visualization, and other creative ways. It’s ‘engaging’when every learner says, ‘I get it! This is exciting! I see how I fit, and I know how to make a difference!’ This won’t happen if we just ‘tell the learner what to learn.’ Involving, inviting, and exploring in-
JH. Our process starts from the genuine curiosity of ‘what it’s like not to know.’ We ask good questions and uncover the right approach for that audience. We engage clients in what’s possible. Then we use our 20 years of experience to build, deploy, and sustain relevant learning. We excel at group and individual e-learning, simulations, gaming, and scenarios. We also have the consulting capability to help clients with the entire spectrum of learning needs. n
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ETHICS
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High principles Now in her fifth year as President of The Ethics Resource Centre, Patricia Harned talks to HRM about the current state of American business ethics. Have you seen many changes in trends in the years you have been working with the Ethics Resource Centre (ERC)? Patricia Harned. Yes and no. Some things never change. I think that the field itself has become quite complex. The number of regulations that apply to businesses with respect to ethics and compliance has grown exponentially in the time that I’ve been here. But some of the basic things that companies struggle to figure out how to prioritize – ethics, scandals, conduct – those have not really changed a whole lot. The National Business Ethics Survey is conducted every two years – with the one preceding the 2009 report obviously being the 2007 report. Since that time, with the recession and the economic crisis, industries have been turned on their heads in many ways.
we found was the opposite – the impact of the recession has been that ethics are good. People are being more careful and more mindful of company standards and they’re more willing to report misconduct when they see it. Why do you think that is? PH. I think it’s probably two things. One, the people that are most likely to really engage in wrongdoing are probably laying low, they want to keep their jobs at the moment. But also, some of the difficulties we’ve seen in the financial services industry have led business leaders to talk to their employees about how they’re going to do their business and how they’re going to survive in a way that employees have interpreted as being very ethical in what they’re doing. So, I think ethics has become much more of a daily part of discussions during this timeframe.
“When ethics is a performance goal, people take it more seriously”
What impact would you have expected the recession to have had on work like that? PH. We fully expected when we were fielding that survey that the findings would be terrible, that in the recession people would be driven to cut corners, to sacrifice the standards of the organization just to be able to stay in business. And when people tighten their belts and they’re operating out of a sense of fear, you would think that all the rules don’t apply anymore, you just need to survive. In fact what
Just after the release of the 2009 survey, you were quoted as saying: “Research suggests that the improvement in ethical conduct will be temporary.” What do you think the focus should be for those companies that are trying to instill an ethical sensibility into their workplace culture? PH. I think the first step is to do some kind of assessment of their organization right now, to be sure that the findings
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from this research are applicable to their own organization. It is very likely that with most companies, their cultures are stronger right now. Employees are feeling better about ethics, but they need to make sure that that’s the case. If it is, then the second step is to try to figure out, ‘what is it that we’re doing differently right now that we need to maintain when things are better?’ There’s something about the way people are supervising employees, the way they’re talking to their employees, that if they can continue that kind of an effort, misconduct won’t go back up. It’s just that when it goes back to business as usual, I think we change our priorities and our focus. And that’s why it rises and falls. How easy do you think it would be for business leaders to maintain the sorts of practices they’ve developed in these tough times? PH. I don’t think it’s terribly difficult to do and I think a reason for that is that right now it’s just a daily part of business. What’s difficult is trying to make sure that you recognize the ethics element to everyday business decisions and that you point it out and make it known. That’s not a difficult thing to do, but it is difficult to remember that it’s important.
things are going right? Moreover, are people more inclined to report misconduct in times of recession or is it the case that they would rather protect themselves and their job position? PH. I think that they’re always important. I actually think that they’re more important during times when things are going right. And that’s because those are the times when we see more problems taking place. But it’s always important that employees feel that they have a way to report wrongdoing when they observe it. I do think that there’s a stronger sense of not wanting to stir trouble because you don’t want to lose your job. That said, I also think that employees, when they work in organizations where they think ethics is a priority, they’re very willing to raise these concerns when they ERC ACTIVITIES have them. It’s mostly driven by the culture of the organization. If they fear that they’re going to experience retaliation for reporting, they won’t raise the concern. But if they think they’ll be supported, they will, because they do care about the overall long-term interest of the company.
Looking forward into the coming months and years, as the economy shows signs of stabilizing, what can leaders really do to ensure that ethics remains at the forefront of National Surveys: ERC conducts biennial surveys of ethics proReturning to the subject of the reworkers’ minds and is an integral grams, issues and culture using a national sample of employees in cession and the impact that’s had part of business culture? business and government. Results are compared to data from preon not just the most recent survey, PH. Well I think there are a couple of vious years and to national norms. ERC’s data is widely used in but comparisons between the 2007 things they can do. The first is to enbusiness, government and academia. to 2009 survey and the 2000 to courage their boards to put someone 2003 survey also covering periods on the board committee that has an Proprietary Surveys: ERC conducts confidential workforce surof recession. What sort of trends do expertise in ethics so that at the very veys for corporations and industries and assesses programs and you see between the two? highest level of the organization, ethical culture for municipal and federal government agencies. PH. The first trend was that during ethics is a priority. The second is to Results are analyzed and benchmarked, allowing the ERC to recthose time frames, we saw a signifiidentify some behaviors that are charommend improvements. cant rise – or an improvement – in acteristic of ethics being a priority overall company ethics. That positive and make them performance goals. The ERC Fellows Program: Chief ethics and compliance officers trend went away after the recession When ethics is a performance goal, from business and government meet twice yearly to address ethics and government scrutiny of business people take it more seriously. And issues in the workplace and form working groups for further exreceded. But the other thing that we then the third thing is to help superploration and discussion. saw within that data was also that emvisors understand that they have a ployees’ perceptions of their business critical role and one of the things that leaders were much more positive they need to do is to help employees during those two timeframes than they were when it’s business as usual. And really feel supported in raising issues when they encounter them. again, I think that goes back to the fact that when there’s not a recession, when we’re experiencing good productivity and business success, business Okay. So, to bring things back to the present – what’s been happening over the first few months of 2010 with the ERC? leaders focus on the bottom line in the way they talk and what they prioritize PH. We are actually just about to release a supplemental report pertaining and how they go about doing their work in a way that employees lose confito more specific research on topics. The first report will be more about misdence that they’re ethical leaders. conduct in the recession; the next report coming out after that will be looking at employee engagement and the impact of ethics on their overall So, would you say that it’s a fair assumption to say that open, inforengagement with the company. mative channels are more important in time of recession or when
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LESSONS IN LEADERSHIP
WHO’S THE
BOSS HRM asks Toni Chinoy and John Baldoni about the challenges of developing an effective 21st century leaders, and the role HR has to play in the process.
With regards to the impact of the economic crisis, do you think it has put considerably more pressure on leaders in all industries? Toni Chinoy. Absolutely, and there’s a trend that I’m seeing, which is interesting because I predicted that it would happen, though I didn’t realize that it would happen this fast. And it’s happening around and to some of my clients. One of the things I see happening is that we have been over inflating leadership titles for people in order to keep good people in organizations. In several of the organizations I work with they are going to people and they’re downgrading their position. So a Vice President in today’s world would look like a silly child next to a Vice President from 20 years ago in terms of experience, sophistication, savvy and business acumen. Th is recognition is occurring as a result of the crisis, they’re going through some of the organizations I work with and doing adjustments of both title and compensation. It’s necessary because I think we’d overinflated it. Because it was too easy for people to move on in a booming economy, companies were trying to figure out how to keep them. So you have young un-savvy 40 year olds with Vice President titles who had been out placed by this economy and they’re having a lot of trouble fi nding jobs that they think are worthy of their positional status. I keep trying to caution them and say, “You’re not where you think you were. You need to go back.” So that’s the big one from my perspective.
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John Baldoni. I think there’s always pressure on business leaders to perform, and in times of recession, absolutely. You are challenged to do more with less, but that’s a continual thing. But when times are tough, the pressure to perform and to at least keep your head above water is always there, and so within a challenged economic environment leadership comes to the fore. And what do I mean by leadership? Essentially a working defi nition for me is doing what the organization needs doing, and it means making those tough, hard decisions that only leaders can do. I do believe in distributed leadership decision making, but when it’s the significant, tough questions, those will get kicked upstairs and that’s when you need leaders of good character to make those hard decisions. If you want to move up the ladder you’re going to be faced with challenges. There’s a difference between management and leadership. Management is the taking care of systems, getting things done on time and on budget. Leadership, anyone can do at any time at any level in an organization. It’s a way of doing what’s right for the organization as well as for yourself, and it also involves decision making. Can leadership be taught? Without question, but does it make a leader to take a course in leadership? No. That’s a conscious decision to say, “I want to be in charge. I want to have autonomy. I want to be responsible. I want to be accountable.” Those are the aspects of leadership. HR often likes to focus on the positives, but in the kind of business climate we have been facing over the past few years, that just hasn’t been possible. Do you think leaders are prepared enough to do the nasty jobs as well as the pleasant ones? TC. Just from my experience base, my sense is that HR leaders are generally fairly well
prepared technically to handle things like compensation issues. But they aren’t tough enough, they don’t know how to have the tough discussions, whether the discussion be something emotional like a layoff or even taking on bad behavior in the organization in an effective way, particularly at the higher levels. I think the biggest thing that I’d say to HR people is; “You have to learn not to be naïve and that some of your leaders are doing things that are damaging to both the organization and individuals in the organization and you have to be prepared to stop it and to take it on.” But what generally happens is they can have somebody come to them and say, “Th is person is abusing their power.” And the HR people step back from it and say, “Oh, I’m sure you’re mistaken.” And they can’t realistically look at the evidence and see that a lot of these behaviors are deliberate and they are a reflection of the competitiveness of a tight economic situation. HR leaders need to be prepared to face off against the disruptive behaviors of this tight competition within the organization to keep the jobs and to keep moving up. JB. When times are good, doing what the organization needs doing can be fun because we may start a new business, we may hire new people, may open a new facility. All of those are good things, but in challenging times you do have to lay off people. You do have to cut expenditures, and those are painful decisions. The challenge of doing what’s good for the organization ironically it’s not always good for individuals, but if the organization does have to downsize or right size, you have to make that decision and you have to do it cleanly and quickly and with dignity. A truly inspirational leader can be a tremendous boon for an organization, but can leave a major hole if they are suddenly out of the picture. For example, Steve Jobs decision to take a step back for a period last year had big implications for Apple. How can companies deal with situations like this? JB. It’s all about good succession planning. You should develop who’s next at every level, and that starts at the frontline management all the way to senior level management. Th is is something that General Electric has done well. It’s when you groom your next leaders, especially those at the top, it’s not that you’re grooming the leader for the challenges he or she facing today, but that you’re grooming the leader for the challenges he or she will face in the future. Most organizations don’t do that, but that is the great challenge because nothing stays the same. We are always
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SWEET EMOTION John Baldoni explains that business success isn’t just about an MBA.
A
Toni Lynn Chinoy has written multiple texts on leadership, bullies, power games and more. She is the founder of Harlan-Evans, Inc., a consulting firm specializing in effective organizational change and coaches senior leaders on how to respond to crisis. Her book, Handling Critical Moments with Grace takes the reader through many examples of how to handle critical, life-defining moments with grace.
presented with new and different challenges. You need leaders of capability, but you also need leaders of vision who can see around the corner and take that organization to meet those challenges when they arise. Now, that does not mean that every new leader needs to fundamentally change the organization. But they need to be prepared for when new opportunities, as well as new challenges, arise. Those men or women must have the wherewithal to deal with that challenge, be it a crisis or an opportunity. Looking at GE, one of the things that Jack Welch did when he handed off to the next generation, was the same thing he did in his own career. When he replaced Reg Jones in 1981, he decided he was going to run a very different GE than Reg Jones did, and likewise he expected his successor, Jeff Immelt, to run GE in a very different way. Every senior leader needs to let go. You’re no longer in charge, but can that person handle the next big challenge, the next big crisis? That’s what you’re looking for in your next level senior leadership.
n MBA certainly makes you a managerial candidate and perhaps might even get you labeled as a high potential. However there’s an old saying in HR that IQ gets you hired but it’s EQ, your emotional quotient, that gets your promoted. Part of your emotional quotient is, of course, your ability to relate to others. Leadership is all about relating to others, but it’s also that willingness to exert autonomy, responsibility, and live with consequence. If you’re an accountable person, if you get your work done on time and you prove your credibility, that’s step one. Then your challenge is to become a person of influence. It’s about how you effect change in your own organization, how you make things happen for the good of the organization. Are you a positive force? That’s
part of the leadership equation and that is what you do over time. How you bring people together around a common cause, that’s your leadership quotient. That is what brings you to the fore. It’s interesting how you measure this. There was a gentleman that I once did a keynote speech for who spoke to me about how he hires, and it was very much about how he looks for team players. When he interviews he looks for how many times they use the word ‘we’ and how the candidate talks about collaboration. So that’s the kind of person you want to identify and gradually give more and more responsibilities to. Leadership is not a solo act. It’s about bringing others together for common cause. To effect good for the organization you need that ability. So a good leader needs that EQ, the ability to relate to others.
TC. If we can step back and look at it as a change issue, as opposed to just a vital personality leaving, the fi rst thing you do is you celebrate. There has to be a celebration of what they contributed, and then there has to be a re-visioning of where we’re going from here, and it doesn’t have to be about that personal-
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THE RIGHT TO LEAD Toni Chinoy suggests that an inflexible idea of culture can cause problems
I
f the culture is punitive to people that reach out and speak out or raise concerns, you’ve got to help – and this is an interesting distinction. Normally what people will say is you’ve got to fi x the culture so that leadership can blossom. I’m saying something very different. I’m saying you have to go to the individual and teach them how to cope with the culture as it is in order to be a leader. In doing that they will actually shift the culture. The culture will not shift until it’s been fi xed at the individual level. Th is means helping people to revamp their belief systems about security, about what their responsibility as a leader is, and giving them skill sets for taking on adversity and obstacles to being a strong leader. The strong leaders that I know are getting beaten to pieces right now, and they are often getting beaten by HR people, to be very blunt about it. With some of the cultural issues that we’re confronting with HR and 360’s and performance feedback, some of the strongest leaders we have are getting beaten up because they make people uncomfortable or they make people feel bad. We have to stop that. Yes they need skills and they need to be more adept at fi nesse, but you cannot take away their right to lead, and that’s what we’re at risk of doing.
John Baldoni is an internationally recognized leadership consultant, coach, author and speaker. His newest book, Lead Your Boss, The Subtle Art of Managing Up, was selected as a notable leadership book for fall 2009. In 2010 for the second consecutive year, John was named one of the world's top 25 leadership experts by Top Leadership Gurus International.
ity anymore. It means looking at the basis of what’s been created because of this personality as jumping off point and building the future from that jumping off point with a lot of gratitude towards what has already occurred because of this personality. As opposed to thinking of it as a downhill or a negative or a diminishment of the organization, it’s an organization that has been readied by Steve Jobs to go to the next step. Have we got a vision for what that next step looks like and do we know where we’re going? And it’s regrouping around what the organization is as opposed to what the person is. Who’s responsible for that? That’s the fundamental thing about what we’re talking about here. Leadership belongs to every single person in the organization. I don’t care if they’re hourly, I don’t care if they’re on the janitor
crew, every single person owns that one, and it is a belief system that has to be instilled. Can HR play an influential hand in that? Of course, they’re in the perfect position to do so. But they have to recognize that it’s not their job. It is the job of everyone there. All they have to do is frame it as a way of thinking about the job for those that need to pick up the machete and start swinging it. When it comes to HR professionals also being effective business leaders and partners, do you see evidence of this happening? What sort of qualities do HR people need and can these types of skills really be taught? TC. It’s both a skill set and it’s a competence and clarity about what they’re dealing with. Are people even close to being prepared for
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this now? Not in my world. I don’t see them getting training in it, and I certainly don’t see them skilled at it. It is a skill set, and some people are better prepared because they’re more born to it than others. It has a lot to do with a person’s ability to be very logical about what is actually occurring as opposed to couching it in all sorts of belief systems that may or may not apply. JB. HR has earned a seat at the table. It is now a strategic partner because as the organizations grow and develop they need to know what their people can do, what can they not do, who do they need to hire, what do they need to train and develop for. HR should take the lead, and does take the lead, in that. Without question there are two big things going on right now. One is that there’s going to be a wave of retirements from the baby boom generation; so now is HR’s time to prove itself in talent management, to groom that next generation. My newest book Lead Your Boss is all about how to lead from the middle, how to lead your boss, how to influence change, how to make things happen. HR is in that role. They are leading from the middle. They are the voice of employees. They need to exert it. They need to provide opportunities to groom and develop their people, and I think the good HR departments are doing that. But I think they need to be a little more assertive and use their influence, use their understanding of employment trends, economic trends, market trends. There’s a strong movement within HR in mployer of the corporate world of being an em employer ho ould strive choice. I think every company should
Top 12
Top 12
least admired leaders
Most admired leaders
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Fred Goodwin
Robert Mugabe
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David Cameron
Tony Blair
Bankers
George W. Bush
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Gordon Brown
to become an employer of choice. e. What W does nd of that mean for me in HR? What ki kind w people do we have to hire? How
Source: Aspire/Customer Interpreter
do we develop them? How do we compensate them? How do we grow them? How do we become a high performing organization? Those are the questions that senior management looks n to HR to help answer, and when an HR has answers to those or can sitiion help formulate answers, they position w themselves as a strategic leader,, which is fitting for their role.
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Barack Obama
Richard Branson
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Hillary Clinton
Angela Merckel
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Oprah Winfrey
Vince Cable
David Cameron
Michelle Obama
Dalai Lama
Margaret Thatcher
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RELOCATION
MOVING ON Michael Washbourn, President of Worldwide ERC, explains the effect that the recession has had on mobility programs and how relocation service providers can help ensure the success of international assignments as we head for economic recovery.
T
here was a time when relocation packages were seen as recruitment tools by companies who were seeking to attract the best talent in a competitive market. Relocation programs routinely included benefits such as company home purchase options, allowances for temporary housing, help paying for childcare and the transportation of house contents. However, since the economy took a turn for the worse and took the employment and housing markets with it, many of these benefits have been curtailed as companies have looked to relocation as a way to cut costs.
One man who knows this story all too well is Michael Washbourn, President of Worldwide ERC, the professional workforce mobility association. Both the recession and the stagnant housing market in the US have had a dramatic impact on the domestic and global mobility programs of most companies. “On the US side, companies are more closely scrutinizing the need to move employees before extending a job offer that will require relocation, as nearly 50 percent of employees are homeowners, and home sale costs in this economy can be significant,” says Washbourn. For this reason there is currently a discussion regarding the revision of home sale programs so that they can better meet the needs of employers and employees in this turbulent market. “Tighter funds, closer scrutiny of mortgage qualifications and a sluggish housing market slows the entire relocation process, from the home sale through various relocation services from the old location to the new one. Lower home values have also prompted some employees to refuse a relocation altogether,” says Washbourn. On a more global scale he notes that the economic downturn is having a far greater affect than the US housing market. In many markets, he says, the traditional three to five year expat has been replaced with project and shorter-term assignees. Europe has seen a particular downturn in mobility and in some cases Washbourn says that some companies have even sent assignees home. Asia has been less affected by the downturn and there has been a reported increase in mobility to Africa. “But across the board, companies are concerned with cost and are becoming more sophisticated and targeted in their policies and programs to support mobility,” says Washbourn. “We believe that the number of people being moved outside the US remains somewhat static, but the less expensive, short-term assignee has in many cases replaced the highly expensive longer-term full package expatriate”.
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GLOBAL RELOCATION TRENDS In its 2009 Global Relocation Survey Brookfield Global Relocation Services quizzed 180 respondents from companies representing a total worldwide employees population of 9.8 million. The survey results reflect the following trends in relocation:
• China was named as the top international assignment destination, but was also named as the top emerging destination, the country representing the greatest challenge for expatriates, the country representing the greatest challenge for program managers and the location with the highest rate of assignment failure. • 68% of respondents indicated that their companies were responding to economic conditions by reducing assignment expenses. • When asked how their companies planned to reduce the cost of assignments the two most common measures cited were reductions in policy offerings or amounts (32%) and increased reliance on local hiring (21%). • Respondents reported that 53% of revenue was generated outside the headquarters country. • The top two methods of preparing for global expansion were evaluating programs to ensure that needs were met (81%) and aligning objectives and needs (78%). • Critical relocation challenges included assignment cost (46%), finding suitable candidates (39%), controlling policy exceptions (33%), career management (30%), retention of expatriates (29%), and inability to use experience after repatriation (22%). • 33% of respondents reported that expatriates were promoted more quickly, and 35% reported that they obtained new positions in the company more easily. But 35% also reported having left the company within one year of returning. • 42% of all survey respondents increased their reliance on outsourcing since the 2008 report – a record high percentage. • 29% of US respondents indicated that they currently outsource their international assignment program. For more information visit www.brookfieldgrs.com
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HR departments have found themselves faced with the need to economize during the recession and consequently they have had to revise their relocation policies in order to achieve the necessary savings. “In the US, approximately 70 percent of organizations have made changes to their policies in the last year – most of which address challenges created by the housing market,” explains Washbourn. Some companies, he says, have had to tighten marketing restrictions to reduce the time it takes to sell homes and some have even had to adopt more tiered approach to policies where different levels of assistance are offered based on longevity and or experience. Others have had to increase the number of days of temporary living that they provide to homeowners. There have been some interesting tactics employed by HR departments looking to revise their policies. Some examples of this are adding or enhancing a home sale bonus for incentive for employees who fi nd buyers for their homes; adding a requirement to the home sale program that requires employees to list their homes within a certain percent of the buyout offer in order to qualify for home sale assistance; and modifying policy to provide loss-on-sale assistance to more employees. “Globally, efforts to reduce costs and locate work into more costefficient areas have prompted more outsourcing, backrooming and offshoring of manufacturing, processing and call centers,” says Washbourn. “There has been a steady decline in traditional expatriate packages to help control costs, localization is more prevalent and short-term assignments are used more frequently.” The need to change policies regarding relocation has not only affected HR departments, but has also fundamentally changed the way that relocation providers conduct business. The tightening of requirements for credit and loans during the recession means that they have had to become far more flexible in their approach.
continuing education expenses,” says Washbourn. “The recession has increased the consultative relationship of the relocation service providers and their clients. In fact, many corporations rely on their partnership to help them review and right-size their workforce mobility policies to fit the current environment. Solid relationships and close monitoring of the relocation process between the client and service provider results in a well-managed, cost efficient move,” he continues. Given the particularly volatile environment workforce mobility professionals have been faced with, the need for more innovative solutions and programs has increased greatly. One of the solutions that Washbourn alludes to is the so-called ‘incent to rent’ program, which is designed to make renting in a new location more attractive than purchasing. He says that these programs not only save company costs for closing costs in the new location and resale costs on a future move, but the employee can likely retain their homeowner benefits for a later move. Another solution that is increasingly being considered is the employment of locals as opposed to relocating staff. Washbourn also explains that there has been more awareness of the need to build skills in crisis management; talent mobility and assessment tools; career counseling, coaching and outplacement; online marketing and professional networking; and managing people and teams from a distance. Incorporating green initiatives into workforce mobility programs is also gaining traction, and there is interest in developing hyper-local data, which Washbourn explains as explicit and “fi ne-grained” information about locales being delivered via technology from blogs to satellites. However, it would appear that the worst of the economic turmoil is now behind us and as we start to emerge from recession companies will inevitably be looking once again at expanding as a way to maximize revenues and capitalize on new opportunities. In which case international assignments will become increasingly important. Outsourcing to relocation providers is one way that companies can ensure that expansion plans run smoothly. “International assignees face an imperative to comply with tax, labor and immigration laws. Outsourcing of tax, immigration and employment law functions enables companies to get this highly specialized and technical help, which helps manage risk for both the employee and the company. Similarly, expertise in security, as well as research on cost of living and housing data often lies with outside specialty providers,” says Washbourn. “Many companies also outsource various other facets of mobility management. Destination and home fi nding expertise in the host location, counseling the transferee and family, and processing and tracking of expenses are all functions that some companies elect to have done by outside service partners. There is no fi nal answer here, as some companies prefer to have in-house staff perform some of these functions, and some companies believe it is more efficient from a cost and process perspective to keep these functions off staff. Regardless of the approach, companies are recognizing that international mobility requires special training and skills,” explains Washbourn.
China
is the world’s most popular international assignment destination
“In the US, approximately 70 percent of organizations have made changes to their policies in the last year – most of which address challenges created by the housing market” Washbourn explains that in many cases staff levels have been reduced and operations responsibilities have been spread across a smaller workforce, requiring more multitasking. Services and products have also been examined to ensure that they focus on the most effective and valuable areas. Incorporating hard budget caps and streamlining budgets and projections are also essential actions that continue to be employed by relocation providers. “More companies are taking advantage of technology for team meetings and professional development to reduce travel, accommodation and
Mike Washbourn SCRP, GMS, Pfizer, Inc. is the 2010 Worldwide ERC President.
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EXECUTIVE INTERVIEW
Smart move Mary Ellen Myhr explains how to optimize your global mobility program by aligning costs with business needs.
We are experiencing the worst economic environment in memory, yet international business is still crucial for companies based in the US and elsewhere. How has this environment affected international mobility at these companies? Are companies implementing cost cutting measures? Mary Ellen Myhr. Not all companies and economic sectors have been affected by the downturn in the same way. Companies in heavy manufacturing and shipping, for instance, continue to struggle with severe financial conditions, while pharmaceutical companies have done well. European-based companies have not been affected as much as their US-based counterparts. Also, international business is more important to some companies than to others. Thus cost cutting, while common, is not a priority for everyone and companies have responded to the downturn in different ways. Also, the manner in which costs are trimmed depends on the company, the industry and the markets in which the company operates. Cutting costs may actually harm some companies by reducing their ability to recruit needed talent. For those companies where cutting costs is a priority, what are the easiest ways to do it? MEM. The quickest way to reduce the costs of an international assignments program is to reduce the number of assignees by repatriating them to the home location. In many cases, localizing assignees can also be less costly. The quickest way to reduce the cost of existing assignments is to reduce allowances tied to external market factors. For example, many rental markets have declined in the last two years. Reducing assignee rental guidelines allows companies to save on new assignments, but in some cases companies can also reduce the cost of existing assignments by negotiating leases down. The same is true for Cost of Living Allowances (COLA); companies are sometimes hesitant to re-
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maintain high levels of subsidy for strategic assignments while reducing costs for developmental assignments. However, even for companies facing dire financial constraints it is crucial to review proposed cost cutting measures carefully in light of the business needs driving each assignment. Cutting too deeply or eliminating the wrong types of support can jeopardize business goals if the right talent cannot be recruited to the necessary location, or the assignee and family do not sufficiently adjust after arrival. The focus needs to be on value, not just on cost.
Mary Ellen Myhr is Senior Manager at Associates for International Research, Inc. (AIRINC). She is responsible for mobility program strategy and policy consulting; and developing new products, service offerings, and new client relationships. She has over 20 years of experience in mobility, developing and supporting strategic and operational solutions for global companies.
duce allowances even when exchange rate changes suggest that they should. While these measures may seem obvious to those experienced in mobility, many companies miss such opportunities. What are some other ways to reduce costs that may generate benefits in the long run? MEM. Some companies are reducing subsidies within the framework of existing policies and eliminating some entitlements altogether. Companies that had already trimmed packages are reviewing elements previously left off the table, such as lowering housing budgets, reducing or eliminating incentives, adjusting hardship allowances for transfers within a region, and switching to a more conservative COLA methodology. Finally, some companies are developing alternative packages that offer the flexibility to
“Cutting too deeply or eliminating the wrong types of support can jeopardize business goals” How does a company maximize the value it receives from its mobility program? MEM. Costs must be in alignment with the business needs driving mobility. Some companies have relatively simple and straightforward needs – one type of assignment to a small number of similar locations where assignees return to the home location upon completion; business units in similar industries with similar financial constraints. Here, a relatively simple and straightforward policy and administrative infrastructure may be sufficient. Other companies have complex needs – multiple assignment types to a large number of dissimilar locations where assignees may go on to subsequent assignments; business units engaged in multiple industries. Complex needs may require complex delivery, such as flexibility within one policy or multiple policies for different assignment types. Simple needs – simple delivery. Complex needs – complex delivery. Aligning delivery (cost) with needs leads to value. n
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IN THE BACK 140
THE EVOLUTION OF THE JOB MARKET
In as little as 20 years time, the landscape of the job market is likely to have changed beyond all recognition. But while new jobs are likely to be created, some are likely to fall by the wayside; lost forever as a distant memory of years of employment gone by. While advances in technology and mobility will create roles that otherwise sound like something out of a science fiction movie, jobs that are – by their very definition – more ‘hands on’ are reportedly at risk of become obsolete by, say, 2020, at least according to job market analysts.
Heading for extinction So just what are the jobs that are likely to be swallowed up thanks to technological advancements, machines and a distinctly less human approach...?
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Store assistant
THE NEW ORDER
The concern here is really two-fold. First is the fact that job security in this field is likely to decline as the online shopping arena goes stratospheric, and analysts believe that in-store assistants will become surplus to requirements as existing stores install selfservice scanners and robotic shelf stackers. What’s more, analysts also believe that all jobs that center on dealing with cash handling and paper money – including bank tellers and toll booth operators – could easily become obsolete as consumers rely more and more on credit and digital forms of money.
Soldier Analysts believe that, with time, the need to send army men and women to war will begin to wane as machines become more and more capable of going into battle alone. Already developments in the use of unmanned combat aircraft vehicles (ACAVs) suggest that the role of the fighter pilot may well be the fi rst to fall foul of machinery.
As society and technology evolve, what jobs are likely to come into being to serve our future society…
Construction worker
Nano-medic
According to futurist Joel Barker, while much construction work continues to be done by hand, 3D printing may change that. Barker believes that, instead of printing one layer of ink on paper, stereo lithographic printers – capable of printing multiple layer of material to make three-dimensional structures – may become the norm. He believes that such structures could then be used to construct houses on a mass scale – in a matter of hours.
Nanotechnology has the potential to revolutionize healthcare for the next generation, particularly in the areas of diagnosis, prevention and treatment. The healthcare industry is hoping to harness the qualities of nanotechnology in order to provide healthcare, which operates purely from a preventative state, identifying and stopping potential sources of disease/illness in the body before they even get started. A new range of nano-medicine specialists will obviously be required to administer these treatments.
CD store manager It’s official: the music world is going digital. And while die-hard aficionados of the compact disc aren’t likely to go down without a fight, for the average music fan, the days of trawling through Tower Records to fi nd a limited edition Pink Floyd record are long gone. The fact is that, over time, as music producers go digital, retailers have to do the same. What’s more, for even the most hardened CD collector, compact discs simply don’t have the same flair as vinyl records: as such CDs also miss out on laying claim to that classic ‘vintage’ label as well.
Body part maker Due to huge advances in bio-tissues, robotics and plastics, the creation of body parts – from organs to limbs – will soon be possible requiring body part makers, body part stores and body part repair shops.
Old age wellness managers / consultants / specialists Drawing on a range of medical, pharmaceutical, prosthetic, psychiatric, natural and fitness solutions to help manage the various health and personal needs of the aging population.
Union manager The concern here is that there already seems to be a growing trend of unions with depleting numbers. Analysts believe that unless unions address this trend over the next few years, union organizers will become obsolete. According to futurist Alvin Toffler, union leaders have already been too slow and “may soon disappear” because they have failed to “show any sign of wanting to reverse their 20-year membership decline.” Toffler also notes that the “labor movement has not come to terms with the knowledge economy at all,” and instead warns that union leaders should adapt to the needs of workers in knowledge, science and technology sectors.
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Avatar manager / devotees / virtual teachers Avatars could be used to support or even replace teachers in the elementary classroom, i.e. computer personas that serve as personal interactive guides. The Devotee is the human that makes sure that the Avatar and the student are properly matched and engaged.
Social ‘networking’ worker There may soon be the need for a new breed of social workers who help those in some way traumatized or marginalized by social networking. Young people today are increasingly hanging out on the internet and social workers will need to be where their clients are.
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IN REVIEW 142
Hot off the press HRM takes a quick look at the some of the books currently clamouring for space on your shelf.
The Future of Work T By Richard Donkin B
The Future of Work presents a cohesive argument for a fundamental change in attitudes to work – one that ccould create a healthier society capable of meeting the expectations and concerns of a developing economy. By looking at the forces shaping the future of employment, this book concentrates on seven significant B themes underpinning change in the modern workplace: demographics, talent, measurement, networks, th health, age and leadership. h H HRM SAYS: Separating popular myths from truly transformational trends, Donkin has produced a fasccinating read for anyone with responsibility for people at work. An essential guide for using technology to intelligently manage your staff. in
How Remarkable Women Lead: The Breakthrough Model for Work and Life H By Joanna Barsh, Susie Cranston, Geoffrey Lewis B
F of unique ideas about successful leadership, this book is based on five years of proprietary research on Full Centered Leadership and raises provocative issues such as whether feminine leadership traits are better C ssuited for our fast-changing, hyper-competitive and increasingly complex world. HRM SAYS: Th rough lessons and insights based on the stories of successful leaders, this book provides a H practical p plan for breaking through at both work and in life.
Coaching Skills for Leaders in the Workplace C By Jackie Arnold B A Acting as a mentor or coach for staff is something that is often required of senor managers and executives. Th is book provides valuable advice for anyone looking to set up a successful coaching program that will help to motivate and retain staff. h H HRM SAYS: A must read for anyone looking to move into a coaching role within a business, this book is ffull of useful tools and exercises to facilitate that transition.
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Where Future Leaders Learn
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FINAL WORD 144
SURVIVAL OF THE FITTEST Fred Schmitthammer explains how HR professionals should be using technology to ensure they survive difficult economic times.
T
he business world has undergone metamorphic changes over the last two years. Communities were subject to business failures, downsizing, layoffs, budget cuts and benefit reductions. Th is has made the human resources field very challenging. Employees and managers are feeling the stress of more work with fewer resources. There is a level of fear because employees and managers do not know how to work under these conditions. All aspects of the organization need to restructure to work in this new environment. Technology is the way for the HR professional to manage a higher workload with fewer resources, distribute information, and provide communication channels beyond email and telephone. Th is generation has never experienced unemployment rates in the double digits. The United States has not experienced double digit unemployment since 1983. Because of this long period of prosperity, human resources management teams today do not have experience to manage such a downturn. Most have not experienced the massive layoffs, budget cuts and benefit reductions that have occurred in the last few years. Decisions on how to make the human resources organization efficient will need to be made carefully and deliberately. It is amazing how most organizations spend such little time and money to improve the efficiency of the human resources department. The single biggest expense for a business is their labor cost. However, they stay with legacy management systems and manual processes to manage this very expensive resource.
With the new economy, all organizations are being forced to look at new ways to get the same amount of work done with fewer resources. Technology is everywhere. It is amazing how many ways technology touches our daily lives. From our cellular phones we can read our email, browse the internet, set them to remind us about meetings, and oh yeah… they make telephone calls too. The cellular phone is a perfect example of merging technologies that were once separate, however when working together allow us to be much more efficient. Technology is also merging in the human resources industry. How the human resources professional harnesses this technology is what allows them to be highly efficient and cost effective. Human resource information systems (HRIS) are a necessity in the current business climate. The modern HRIS is becoming centralized. They are either hosted on a private network or on the internet. They are accessed with an internet browser like Internet Explorer, Safari, or Firefox. This centralization allows the system to be accessed by different levels of the organizations. The modern HIRIS allows access by employees, supervisors and managers alike. This allows each level of the organization to enter data, run reports and disseminate information across levels and back to the human resources department. In addition to merging the internet and human resources data, the modern HRIS should also use other technologies that we use in our everyday lives. Social networking tools such as Twitter, Facebook and LinkedIn should be used as a communication method between the HRIS and the rest of the organization. Other technologies such as text messaging, email and the telephone should also be incorporated to provide maximum access to necessary information and to send information to the human resources department. In addition to the merging of technologies, the modern HRIS must merge business functions in the organization. A complete system should include the ability to use social networking, manage timecards, calculate gross wages, schedule, interface to accounting/payroll systems, and much more. The modern HRIS should be a merging of all of this information in to a complete record of information about the employee and the organization. A modern HRIS is one of the few business expenses that can pay for itself with a quick return on investment. By eliminating duplicated functions, merging useful technologies, and centralizing information, the human resources professional needs to use technology to provide a better workplace and cut costs to help the company survive in these difficult times.
“Technology is the way for the HR professional to manage a higher workload with fewer resources distribute information, and provide communication channels beyond email and telephone”
Fred Schmitthammer is the President and CEO of Inception Technologies and is the chief architect of Inception’s InfiniTime Labor Management System. He has used his extensive background in biometrics, application development and database design to develop innovative business applications for the business community for 25 years.
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Inception Technologies ad:25 June
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JPMorgan ad 2:25 June
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