HRM US 14 by GDS International

International flavor How Coca-Cola blends the different ingredients in its global people recipe www.hrmreport.com | Q3 2010

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EDITORS NOTE | HRM

Getting together

Why open innovation will play a key role in shaping the industry’s future.

ou could argue that anything done in a new way, however small, can be counted as an innovation. Introducing innovation at a game-changing level, however, is not so simple, and it’s only going to get harder for the pharmaceutical industry. Twenty years ago, in the glory days of the 1990s, when pipelines were flowing and big pharma was busy chasing down and providing remedies for the more readily treatable diseases, introducing an ‘innovative’ drug was relatively easy. These were the blockbusters, the billion-dollar cash cows that gave the industry the solid financial footing that allowed it to weather the recent downturn. But all good things must come to an end. Much of the low-hanging R&D fruit has been picked, and the remaining diseases are more difficult to design treatments for and tend to be found in smaller patient populations. On top of that, research from Sanford C. Bernstein estimates that generic erosion will knock between two percent and 40 percent off the revenues of the top 10 pharmaceutical companies between now and 2015, while only four of the 10 have pipelines containing products sufficiently valuable to offset these losses. And according to the latest annual life sciences research from intellectual property group Marks & Clerk, more than eight in 10 (82 per cent) of those working in the drugs industry believe big pharma

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“Pharma, biotech and AMCs will work more and more in collaboration. That’s where the innovation will come from” Mike Mentesana, Global Pharma and Life Sciences R&D Leader, PwC (Page 34)

will be unable to innovate sufficiently from within to replace blockbuster drugs going off-patent. If companies are going to survive, they will have to look for new ways to come up with innovative compounds. This is where the idea of ‘open innovation’ comes in – the relaxing of the boundaries between a company and its environment so that they become more permeable, allowing innovations to move easily inward and outward. The concept is gaining hold within the pharmaceutical sector: giants such as Pfizer, Roche, sanofi-aventis and Bayer have programs in place to increase external collaboration and improve their R&D productivity. In this way, the innovation deficit will spark an evolution, as companies are forced to change and adapt to the new environment in which they find themselves. While it may be painful in the short term, in the long run it is bound to make the industry stronger, as those that get it right become more flexible and better placed to cope with change. Which can only be a good thing for our collective wellbeing.

Huw Thomas Editor

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HRM | CONTENTS

World leader Like it’s products, Coca-Cola’s employees are found all over the globe. Huw Thomas speaks to Chief People Officer Ceree Eberly about the challenges of directing a truly international workforce

On the up

Ground force Stan Litow explains how corporate social responsibilty efforts rooted in communities across the world are growing a new generation of global leaders

Stacey Sheppard looks at some of the companies who are taking a leading role in the advancement of women and asks what HR professionals can do to ensure that this seemingly untapped talent pool can achieve its full potential

You get what you give Why being ‘good’ has become more important than ever

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HRM | CONTENTS

40 The blueprint Defined contribution retirement plan design is an opportunity too good to miss, says David Wray

52 Fiduciary friendly tune-up Kent Peterson outlines the six best practices for retirement plan investment fiduciaries

54 Wake up call

Alex Douzet

Gold sponsor

Is time running out to tackle the looming retirement crisis?

58 Tomorrow people Accenture’s Ellyn Shook explains how technology is accelerating the HR function and bringing coherence to the consulting firm’s international workforce

62 Making your move John Baldoni explains why presence matters so much in the leadership game

66 Coaching success Karen Tweedie outlines the benefits professional coaching is having on business development processes

104

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72 Utilizing e-learning experiences By Josh Baron

76 A better way to work The economic case for flexible workplaces

78 Inclusion and diversity best practices Shirley Engelmeier explains the best practices for successful and sustainable inclusion and diversity programs

80 The paradox of global leadership Mike Thompson explains the importance of rethinking leadership development

92 A recruitment revolution Why social media is rocking the recruitment industry

82 Mixing up Microsoft Kelly Chapman tells HRM about the tech giant’s program to build a more diverse workforce

104 The generation game Techniques to attract, manage and retain Millenials

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HRM | CONTENTS

Industry Insight

Details

140

60 Dr. Gregory Kasten Unified Trust Company 74 David Leasure Colorado Technical University 96 Alex Douzet TheLadders.com 116 Cassie Alvey Mrs Fields

Roundtable 42 Retirement

Workshop 88 Recruitment

108 A natural ﬁt Denine Woodrow reveals why uniformed employees enhance the image of their companies

110 Bears for business Marilyn Freundlich reveals why more companies are recognizing and rewarding their employees with a bear hug

134 138 140 142

Corporate philanthropy Technology forecast Wellness Books

143 Photo finish 144 Final word: Shannon Rickert Ceridian

112

112 Credit where credit’s due Recognition remains an essential tool in motivating employees through the downturn and into the recovery

118 Be the ofﬁce hero A thrilling approach to retain and reward employees, by Debbi Stuart

120 Tomorrow’s world What to expect from HR in the coming decade

122 The beneﬁts of customization Lisa Kime explains how a tailored benefit plan and network solution increases efficiencies and decreases health care costs Lisa Kime

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124 Engagement party Keeping employees involved and focused in a post-recession world requires some new tactics, says Lisa Tesvich

128 From house to home Why corporate housing is proving an attractive option for extended stays

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The HR Summit 2010 14 - 16 September 2010 The Fairmont Turnberry Isle Resort & Club, Miami

Find Out More Contact HRM (+1) 212 796 2000

The HR Summit is a three-day critical information gathering of the most influential and important executives from the human resources industry. The HR Summit is an opportunity to debate, benchmark and learn from other industry leaders.

A Controlled, Professional and A Proven Format This inspired and professional format Focused Environment has been used by over 100 executives as a

Legal Information The advertising and articles appearing within this publication reﬂect the opinions and attitudes of their respective authors and not necessarily those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All material within this magazine is ©2010 HRM.

rewarding platform for discussion and learning. Chairman/Publisher Spencer Green Director of Projects Adam Burns Editorial Director Harlan Davis Worldwide Sales Director Oliver Smart Editor Huw Thomas Managing Editor Ben Thompson Associate Editor Rebecca Goozee Contributors Ian Clover, Ross Densley, Lucy Douglas, Jodie Humphries, Diana Milne, Nicholas Pryke, Julian Rogers, Stacey Sheppard, Marie Shields, Timon Singh Creative Director Andrew Hobson Design Directors Zöe Brazil, Sarah Wilmott Associate Design Directors Tiffany Farrant, Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson Online Director James West Online Editor Jana Grune Project Director Kevin Mulrane Project Manager Robert Fishkin Sales Executives Chris Winn, David Resnik, Telina Pedro, Priya Sood, Dylan Gordon, Rebecca Hunt, Marisa Esposito Finance Director Jamie Cantillon Production Director Lauren Heal Production Coordinators Renata Okrajni, Aimee Whitehead Director of Business Development Richard Owen Operations Director Jason Green Operations Manager Ben Kelly

Subscription Enquiries +44 117 9214000, www.hrmreport.com General Enquiries info@gdsinternational.com (Please put the magazine name in the subject line) Letters to the Editor letters@gdspublishing.com

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GDS International GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: info@gdsinternational.com

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HRM | UPFRONT

Lessons from BP’s crisis

P’s Deepwater Horizon oil disaster, the biggest oil spill in history, is continuing to wreak havoc on the ecosystem and the local economy as well as seriously denting the company’s bottom line – its credit rating currently stands just two notches above junk states according to Fitch Ratings. But that’s not all. The oil spill is also damaging its employer brand. The oil giant has accepted that it is “absolutely responsible” for cleaning up the spill, which began on 20 April after an underwater explosion on its Deepwater Horizon oil rig ruptured the riser pipe, kick starting a chain of failures that highlighted just how susceptible oil drilling equipment can be. However, BP insists that faulty equipment at the rig’s contractor, Transocean, is ultimately to blame. Either way, there are currently 13,000 workers working around the clock in an effort stem the ﬂow and reduce the impact on the environment by

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35,000 barrels escape everyday

13,000 workers trying to stem the ﬂow

cleaning up what has already been released into the ocean and onto the beaches along the southern states’ coastlines. The US Coast Guard estimates that about 35,000 barrels escape everyday. And it’s those workers that could be putting themselves in harm’s way – particularly the immigrant fisherman – due to improper training and a lack of proper equipment, according to the Los Angeles Times. The newspaper stated that fishermen hired by BP have reported nausea and breathing difficulties after contact with oil and dispersant, prompting a Louisiana lawmaker, Charlie Melancon, to call on the federal government to open mobile clinics in rural areas to treat them. The US Environmental Protection Agency, which has been monitoring air quality on the Gulf shoreline, 50 miles from the oil leak, has detected petroleum odours strong enough to cause sickness.

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UPFRONT | HRM

BP spokesperson Max McGahan says: “The safety and health of workers is our top priority and we continue to investigate the government reports of illness from ﬁshing vessels employed in the clean up. Workers with health issues are encouraged to report their conditions without fear or reprisal.” However, these efforts may not be enough, as workers continue to report sickness claims to the federal agency. The US Occupational Health and Safety Administration is now monitoring reports of worker sickness in order to track the short and long-term impact of the spill. Patrick R. Tyson, who was director of compliance, deputy assistant secretary and acting assistant secretary for OSHA during the 80s says that BP hasn’t “really put the effort they need to in order to ensure that the people they’ve hired are properly protected and trained”. Tyson goes on to explain that HR executives

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7 out of 10 consumers believe BP has handled the crisis poorly

Strong petrolium odours detected

50 miles from oil leak

would do well to absorb some lessons from the crisis if they want to avoid their reputation going the same way. Indeed, according to the Pew Research Center, seven out of 10 US consumers have said that BP has done a poor or only fair job in handling the blowout and spill, whereas prior to the oil spill the company were the number one brand in the gasoline category on the Customer Engagement Loyalty Index. Now the oil giant is last in the category, behind even Exxon, which has been dogged by the Exxon Valdez oil spill for over 20 years. Attracting and keeping talent is set to become increasingly difﬁcult as negative attention surrounds the ﬁrm. It remains to be seen just how BP will convince current and potential employees that it remains an employer brand they should be proud to associate with. The oil spill is certainly set to be more than simply a black mark on BP’s reputation.

25/06/2010 15:22

HRM | UPFRONT

Motivating when times are tight

ccording to Motivating People: Getting Beyond Money, a recent McKinsey survey, three non-cash motivators – praise from immediate managers, attention from leaders, and a chance to direct projects – are at least as effective as the three most highly rated monetary ones. Non-ﬁnancial incentives

make employees feel that their companies value them, want to foster their professional development and take their wellbeing seriously.

Financial Incentive

Effectiveness

Frequent use

% of respondents answering ‘extremely’ or ‘very effective’

% of respondents answering ‘always’ or ‘most of the time’

Performance based cash bonuses

Increase in base pay

Stock or stock options

Praise and commendation from immediate manager

Attention from leaders

Opportunities to lead projects or task forces

Nonfinancial incentives

Remote working trends Microsoft commissioned an online survey earlier this year to assess opinions about remote working, revealing five major trends:

Employers are perceived to be less supportive of remote-working programs, although there has been no signiﬁcant change recently in the number of companies reported to have a formal policy.

Bosses are perceived to be less than supportive of remote work than peers and colleagues.

Employees say avoiding the commute and being more productive are key beneﬁts.

Even if they have the desire, a supportive environment and a belief that they can competently work from home, most employees do not take advantage of the opportunity.

Employees conduct business in unusual places when working remotely, including bathrooms, movie theatres and even at funerals.

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UPFRONT | HRM

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HRM | UPFRONT

Change in store for learning, training and development

he major change affecting learning and development in the next ﬁve years will be a greater integration between coaching, organizational development (OD) and performance management to drive organizational change. Almost half (46 percent) of learning and development practitioners forecast this development in a Chartered Institute of Personnel and Development (CIPD) annual survey, with four in 10 (37 percent) saying there will be a greater responsibility devolved to line managers. The ﬁndings of the Learning and Talent Development 2010 survey of over 700 practitioners – launched at the CIPD annual HRD Conference – also uncovers the most effective learning and development practices currently in use, which are inhouse development programs (56 pecent) and coaching by line managers (51 percent). And 82 percent of practitioners use coaching within their organizations, a large growth this year compared to 69 percent in 2009. E-learning is the practice that has increased the most in the past year, with six in 10 (62 percent) organizations saying they use it more now than in 2009. In-house

development programs are also used more by 58 percent of organizations, and coaching by line managers is used more by 56 percent. Unsurprisingly, attendance at external conferences, workshops and events has decreased the most with tighter budgets – a quarter (26 percent) of organizations are using it less. Dr John McGurk, Learning and Talent Development Adviser, CIPD, says: “The results from this year’s survey are refreshing and show that learning and development practitioners are ahead of the curve, even during these difficult economic times when budgets continue to be cut. The CIPD have argued for a long time that integration between coaching, organizational development (OD) and performance management should be a major focus to really drive sustainable organizational performance and change. The findings also reflect our position that practitioners should work more closely with line managers as they are better able to fine-tune learning and development to specific employee needs. The next five years are going to be crucial for learning and development.”

60% of consumers say it is of some importance to buy brands from green companies Very important Somewhat important Not important

USA

22%

59%

16%

19%

62%

16%

France

11%

58%

30%

Germany

34%

54%

Australia

18%

64%

15%

57%

40%

47%

50%

44%

49%

China 2%

India 3%

Brazil 7%

Meeting rental needs

he relocation industry was built on meeting the needs of homebuyers, but the industry is experiencing an evolution today marked by the rise of the renter and use of temporary assignments. More than half of employees permanently relocating and more than 90 percent of employees on temporary assignments prefer to rent. Employee attitudes toward rentals has also evolved as the housing crisis has made people wary of buying a new home or selling an existing home in a down cycle. Taking a fresh look at the unique rental-related needs for employees is proving to be a corporate competitive advantage to recruit and retain high performance employees while striking a balance between attracting and retaining the best employees and cost-containment to keep mobility programs within budget.

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For example, assignments lasting up to three months will often require corporate apartments. Short-term apartments or rental homes should be considered for stays lasting more than three months. Area orientation tours from local specialists with knowledge of the market, including awareness of available rental units and market-speciﬁc rental practices, is critical in helping employees ﬁnd the right neighborhood to meet their needs. Depending on the length of the assignment, furniture rental is often a wise strategic solution as part of the mix of services compared to the alternative high cost of shipping furniture and helps accelerate the transition into a new location. Families can settle into their new apartments or homes right away and employees can immediately be more productive. For more information please visit www.cort.com

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HRM | INTERNATIONAL NEWS

Labor shortage

Slow gains

Reducing red tape

A Canadian energy industry labor shortage is looming, predicts a recently released study. The Petroleum Human Resources Council of Canada predicts a dramatic turnaround with last year’s layoffs of thousands of energy workers turning into a labor shortage in 2010, warning that more than 100,000 new workers may be needed in the next decade. The report is already hitting home at Devon Canada. The Calgary-based subsidiary of a US energy giant needs to add 130 people this year. The extra people are needed for its office and the field as it brings on stream a $1-billion doubling of its 35,000-barrel-a-day Jackfish in situ oil sands project. But that’s just the tip of the iceberg, says Human Resources Manager Colleen Warrellow, noting Devon is forecasting the need to add 800 more oilsands workers by 2020 as it continues to grow production.

The US Labor Department reported that the number of workers ﬁling new claims for unemployment dipped 10,000 to 453,000 for the last week in May, while payroll processor ADP showed that private companies added a modest 55,000 jobs in May, less than most economists were expecting. In fact no matter how the data is looked at, the US economy continues to fall short on the unemployment front, with numbers of unemployed staying high as those looking to rejoin the labor force compete with new college graduates.

UK Business Secretary has announced an action plan to bring an end to the ‘excessive’ employment regulation that is stiﬂing business growth, particularly in the small business sector. The Reducing Regulation Committee will be chaired by secretary Vince Cable and enforce a new approach to new laws and regulations, ensuring that costs are being properly addressed across the entire British economy. He also announced an immediate review of all regulation in the pipeline for implementation, which has been inherited from the last government.

Work-related suicides At least 16 people have attempted suicide at Foxconn so far this year, with 12 succeeding in killing themselves. The company assembles iPhones, iPods and iPads for Apple as well as working for HP, Dell, Sony, Nokia and Nintendo. The reasons for the sudden spate of suicides remain unclear,

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however, the military-style working regime at Foxconn’s Longhua plant, in which more than 300,000 people work, has been criticized. Workers are forbidden to talk on the production line, even in their short breaks, and many have complained of feeling lonely and alienated inside the giant factory.

25/06/2010 15:23

INTERNATIONAL NEWS | HRM

See you next year ESA’s simulated Mars mission is currently underway as volunteers shut themselves into the Mars500 isolation project for 520 days. The plucky six – Diego Urbina and Romain Charles from Europe, Sukhrob Kamolov, Alexey Sitev, Alexandr Smoleevskiy and Mikhail Sinelnikov from Russia and Wang Yue from China – will live in conditions as close as possible to those of true Martian astronauts. The hatch will remain closed until November next year

and the crew will have to manage using only the stored food and equipment and only electricity, water and some air will be fed into the compartments from the outside. The ‘astronauts’ will work eight hours a day, with weekends free and have taken plenty of ﬁlms, books, musical instruments and entertainment with them. And while they can exercise up to two hours a day, they are only allowed one shower per week.

Safety ﬁrst Toyota has been reassigning top engineers and executives to new safetyrelated duties – a move that could slow product development and curb the company’s breakneck expansion. Since its global recall crisis in January, Toyota has been adding layers of bureaucracy, including task forces, rapidresponse teams and a business reform committee, even a new division to improve safety and prevent a relapse. Even before the recall crisis, Toyota’s human resources were stretched to the limit. President Akio Toyoda has said repeatedly that the problems stem partly from the inability of human resource development to keep pace with Toyota’s explosive international growth.

Free coffee? With thousands of staff forced to make do with little or no pay since the introduction of a new payroll system at Queensland Health, management offered workers a ‘complimentary’ regular coffee, tea or hot chocolate, Staff were told that the AUS$3.20 cuppa was thanks for being “exceptionally patient and understand-

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ing” during the ﬁasco. It was offered as hundreds of workers discovered they had been short-changed again in the latest fortnightly pay cycle. However, within an hour of the ﬁrst memo promising free coffee, staff were issued a follow-up email warning that complementary coffee was limited to one per person.

25/06/2010 15:23

HRM | UPFRONT

Recruiters need to start “telling the truth” says top HR think-tank

R professionals and line managers at the sharp end of recruitment are at risk of undermining the whole talent management process according to a leading HR think-tank. At its latest meeting the Ochre House Network think-tank, which includes over 650 major employers such as GE, IBM, NCR, PwC and Telefonica O2, pointed out the necessity of giving a clear and honest picture of corporate culture, even if this countered public perceptions. “The problem is that in recent years HR specialists and line managers have learned from professional recruiters to ‘sell’ jobs heavily,” says Ochre House’s Helena Parry, who leads the think-tank. “However in many instances this has gone too far.” To prevent a mismatch between truth and perception line managers must be educated to deliver the right messages about the role and the organization and must buy into this. Furthermore, messages should be simple and small in number to avoid miscommunication. HR and line management need to understand that messages cannot be delivered by one speciﬁc set of individuals – often the best ‘storyteller’ is a mirror of the potential recruit. “Unless recruitment is effectively joined up to the rest of the talent management process it can actually end up doing it serious damage,” says Parry. “Individuals need to get a clear and honest picture of the role, the organization and its culture. Failure to do this can only lead to mis-match, staff attrition and poor morale across the board.”

USI Consulting Group enhances service offerings

SI Consulting Group has recently introduced several new retirement plan and benefit administration solutions to help employers in the current environment. Enhancements to the retirement plan services include a Form 5500 EFAST2 Solution, unitized account services, retirement plan fee/service audits, plan compliance and documentation reviews. The EFAST2 Solution assists retirement plan clients in meeting the DOL mandated electronic filing requirements for all retirement plan Form 5500 filings commenc-

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ing with the 2009 plan year. The EFAST 2 Solution is part of our defined contribution and defined benefit plan suite of services. Through the Direct Solutions program, unitized accounts provide plan sponsors the ability to offer customized 401(k) investment options. Employers can provide top performing managed portfolios, or other unique assets, as mutual fund alternatives and employees can sell or exchange units on a daily basis. Plan fiduciaries looking to ensure a competitive fee and service structure can have

a customized report prepared showing how they can reduce costs, streamline services and enhance their retirement plan servicing environment for plan participants. In addition to the retirement plan enhancements, USI Consulting Group has added dependent eligibility audit services and standalone participant call center support services to our health and welfare beneﬁt administration capabilities. These services complement our full outsourcing/ co-sourcing services platform. For more information, please visit www.usicg.com

25/06/2010 15:23

What do countries think about green brands? It would be legitimate to think that with the US coming out of a recession, shoppers would be more pre-occupied with the economic downturn than saving the planet, and according to the ﬁfth annual ImagePower Green Brands Survey that appears to be the case, although there is a growing concern for green practices.

Most consumers think the environment in their country is on the wrong track 47% 48% 54% 48% 42% 29% 57% 66%

USA UK France Germany Australia China India Brazil

Wrong Track

34% 37% 33% 40% 43% 65% 36% 30% Right Track

Cost is the biggest factor for consumers choosing green labeled products

E M P LOYE E B E N E F I T P R O G R A M S TO FIT YOUR NEEDS USI Consulting Group, one of the nation’s largest employee benefit consulting and outsourcing firms, assists employers by providing the following services:

• Defined Benefit • Defined Contribution

• Actuarial • Investment Advisory • Beneﬁt Outsourcing • Employee Communications

USA | UK | France | Germany | Australia Countries that felt green labelled products were too expensive

1 China Countries that found green labelling confusing or untrustworthy

• Legal & Compliance

2 India | Brazil Countries that found there was a limited selection of green products to choose from

CONSULTING GROUP L GROUP www.usicg.com EMPLOYEE BENEFIT & RETIREMENT PLAN SERVICES Boston, MA • Chicago, IL • Cincinnati, OH • Dallas, TX • Fort Lauderdale, FL • Glastonbury, CT • Houston, TX • Knoxville, TN • New York, NY • Plymouth Meeting, PA • Washington, DC

(860) 633.5283 • information@usicg.com

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15 15:06 06 25/06/2010 15:23

HRM | UPFRONT

In my view Toni Lynn Chinoy argues the case for tough love.

eadership is not and never will be the same. Over the last two years we have experienced many disappointments and betrayals by those in whom we placed our trust. To solve any major problem, we must always seek root issues. Rather than a crisis in ethics, the seeming collapse of our leadership may have been a symptom of a succession system that was broken on many levels. As a leadership advisor in Fortune 100 organizations over the last 10 years, I have noticed a growing sense of entitlement, as well as an increasing impatience with career progression. Bright, competent individuals expected to continue their advance at the same rate they had experienced as younger employees. Unfortunately, the math does not work. There are fewer jobs at the higher levels. If these young and talented people did not move forward in a time frame they deemed acceptable, they often used their disappointment as a reason to move on, peddling and often inﬂating their credentials for the rank they desired. When they got what they wanted, as they sometimes did, they were too often unready for their assignment. Rarely did they see their performance issues as related to their own lack of preparation for their responsibility. Instead, as the pressure increased, they would seek the next assignment. The economy seemed to support them in their quest for more title, more power and greater incentives. Why would unseasoned and untested young people continue moving up the food chain when they were not really ready? It was too easy to do. HR departments were faced with losing their talent or keeping up with this demanding group of individuals and their expectations. Our organizations were confronted with either creating the roles, titles, and compensation packages as a means to keep their employees engaged, or losing them to companies who were willing to do so. Instead of learning how to make difﬁcult decisions that might make them look bad in the short term, many of our leaders became masters of creating the illusion of success. They created more and more complicated business models, which allowed them to continue impressing their audiences. Unfortunately, they had to run faster and faster in order to outrun the inevitable recognition that they

UPFRONT.indd 22

were building a house of cards. We cannot just blame our leaders. Too many of us have participated in the evolution of ‘illusion’ as a business practice. If someone dared to tell the truth, they were punished by a system that did not know how to handle tough or unsavory outcomes.

What we are facing There are many would-be leaders who continue to think of themselves as the elite. Even as they refuse to accept the responsibility that comes with all of the perks, many have become frozen in indecisiveness and control freak tendencies that reflect their lack of maturity. Others persist in perpetuating the illusions of success with even more complicated and unstable business practices. Who will ‘take on’ these people who make our overall situation more and more fragile? If there was ever a moment in which the HR community had an opportunity to increase its relevance to its businesses, this is that moment. To develop seasoned, modest, and courageous leaders from a group of entitled, spoiled bureaucrats who have learned to shut out negative feedback takes serious intent, sophisticated skills, and audacity. It cannot be overstated how difficult the intervention will be and how necessary it is. Leadership is not an intellectual exercise. It is a kind of wisdom and courage under adversity. If HR is to help create these leaders for the future, they must take on the current leaders and find the right processes and choices to cultivate the ‘up and comers’. Our new leaders must be tough, patient, humble and wise. HR must prepare with the same diligence that our Special Forces prepare for combat. Learning to be ‘tough’ is not easy. Standing up to spoiled, entitled leaders will be your worst nightmare. But, it must be done. We have no choice. If we don’t learn how to do tough love on ourselves and each other, the economy will continue to do so.

Toni Lynn Chinoy is the founder of Harlan-Evans, Inc (a leadership training ﬁrm) and an executive coach, helping leaders make tough decisions in the face of resistance. She has written and published many books on leading through crises and manages her own blog, Shortcuts to Grace.

25/06/2010 15:23

UPFRONT | HRM

Relocation, relocation

groundbreaking look into the attitudes and priorities of highly qualified professionals at a time of uncertainty in the global recruitment market, the 2010 Hydrogen Global Professionals on the Move Report uncovers a clear willingness of professionals at a time of uncertainty and flux in the global recruitment market. Conducted by a consultancy project team from ESCP Europe business school, the report examines the opportunities and motivations for mid and senior-level professionals working abroad. Based on the responses of 3155 professionals from over 70 countries, some 94 percent of respondents were already working abroad or interested in doing so, seeing international experience as a key means of both fast-tracking their careers and boosting personal development. And research reveals that greater earning potential is not in itself a top priority for this demographic when looking to work abroad, suggesting a post overseas must have the right fit with their overall career/life plan to be worth the move. A breakdown of the data on gender grounds reveals that while more men say they would definitely move abroad, more women are actually in jobs overseas. The US, UK and Australia were consistently the top three countries preferred by this demographic. However, in most cases the popularity of certain countries does not correlate with where recruitment is most buoyant, with demand for professionals in certain sectors greater in the Middle East and Asia. Almost 64 percent of respondents said they were willing to work abroad for up to five years, gaining some valuable international experience and then returning to their home base.

Source: 2010 Research Survey by ESCP Europe on behalf of Hydrogen Group

The findings: Would you ever consider relocating and working abroad? 36.73% Definitely yes 28.21% I am already abroad 16.83% Quite possibly 11.79% Potentially 4.67% Probably not 1.77% Definitely not How long would you be willing to spend abroad? 37% 3-5 years 27% 1-2 years 19% 10 years plus 11% 5-10 years

What reasons would prevent you from relocating?

6% Less than one year

29.17% Safety/security 23.00% Political climate 18.72% Lack of cultural ﬁt 6.59% Language barriers 6.57% Lack of professional perspectives 4.05% Climate 3.96% Geographical distance 3.46% Lack of leisure opportunities 3.10% Other 1.38% Visa issues/work permit

For what reasons would you consider relocating? 15.58% To fast-track my career 15.21% Better quality of life 14.27% Personal development 11.93% Cultural differences 10.40% Greater earning potential 7.33% Other 6.86% New experiences 6.49% Better living conditions 4.32% Better climate 4.09% Better job opportunities 3.62% Quality of school system

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25/06/2010 15:23

HRM | UPFRONT

The best jobs in America

CareerCast.com has just released a comprehensive ranking of the best careers in the country, ranking the jobs on criteria including stress, working environment, physical demands, income and hiring outlook for 2010. 10. Dental hygienist

A dental hygienist’s job consists of helping a dentist in their day-to-day work, including diagnostic and therapeutic aspects of the practice. An assistant may also be tasked with keeping records and handling patients. Median salary: $32,380

9. Accountant Accountants analyze ﬁnancial information for various entities and usually work a standard 40-hour week, but many work longer hours, particularly during yearend auditing or tax seasons. Median salary: $54,630

8. Statistician A statistician works with statistical analysis and problem solving in both the public and private sectors. Median salary: $65,720

7. Paralegal assistant One of the common entry-level positions in the legal ﬁeld, paralegals assist attorneys in the preparation of legal documents, collect afﬁdavits and research cases for more senior individuals in the legal profession. Media salary: $46,120

6. Mathematician This job is more than carrying around textbooks and drawing sine curves; mathematicians are tasked with solving problems for businesses and work on complex global issues. Although this is a highly-rated job, it is down from its number one spot last year. Median salary: About $100,000

5. Historian Historians usually specialize in a certain area, analyzing historic information and building knowledge upon their work. The BLS describes historians as specializing in a country or region, period or ﬁeld, who may also do work outside the ofﬁce or classroom setting. Median salary: $48,520

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UPFRONT | HRM

4. Biologist Biological scientists study living organisms and their relationship to the environment, and often work both in the lab and in the ďŹ eld. Areas of study range from the small scale of microorganisms and DNA to larger-scale animal anatomy and even migration patterns. Median salary: $76,320

3. Computer systems analyst Computer systems analysts help organizations use technology effectively and incorporate rapidly changing technologies into existing systems. Median salary: $69,760

2. Software engineer Software engineers are one of the occupations projected to grow the fastest between 2006-2016 according to the BLS. This profession applies computer science and mathematical analysis to design, develop, test and evaluate software and systems. Median salary: $79,780

1. Actuary The best job in the country is that of an actuary. In an economy permeated by risk, the actuary becomes quite relevant, as they deal with the ďŹ nancial impact of risk and uncertainty, calculating the likelihood of events and how companies can build strategies to avoid negative impact on the bottom line. Median salary: $82,800 02

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Source: cnbc.com

25/06/2010 15:24

HRM | UPFRONT

Five minute interview Jeremy Roffe Vidal, Group Human Resources Director for Capgemini, reveals the importance of keeping up with the latest technology. It’s been said we are a people company. We are a knowledge company and we are a company of people who are passionate about technology, so the acceptance level is such in our organization that I would assume is much higher than in other companies. The challenge is more around keeping up with the latest in technology than here’s a new technology. In our type of business the countries of the local union need to understand their local markets. It’s absolutely fundamental. That means that we have nationals running the ofﬁces in various countries. It’s absolutely important to us because they have to understand the local economical and commercial dynamics as well as of course the cultural way of managing people. We run our training and development through the Capgemini University. The Capgemini University is a small little castle in the north of Paris where we can invite up to 500 people for a training session, but it’s more than a place, it’s a true global curriculum. In 2009 we have done two things. One is that we have moved the university to a roll base curriculum, so that means wherever the employee is in the world they can access the university through the internet and that type of training will enhance current performance within the organization. This has completely changed the way we address training – we have not put someone in a classroom and tried to ﬁll the classroom, but we’ve put the employee at the center of the training.

E-learning is made accessible to everybody across the company and I think that this is absolutely essential when you are in such a diverse global company, giving accessibility to employees who are with us or who are with our clients because you will appreciate having knowledgeable people on the other side of the line. So we have to ensure we constantly train people. This is speciﬁcally important in this very fast moving technology environment, which is competently evolving very quickly, and so we have to keep up with that. Technology does not replace the dialogue between the manager and the employee. And I think this dialogue is absolutely fundamental. We have put more focus on using technology like conference calls or videoconferences and this has brought people almost closer to one another. I also think that interactions have become faster simply because you don’t wait for somebody to travel to a place, you just pick up the phone. Another aspect that we have put in place – a social networking platform – is currently being tested. We have more than 3000 consultants around the world and knowledge

and client input is absolutely fundamental. The idea is to see if such a platform can bring the people closer to one another, and so we are testing that in order to measure the potential beneﬁts. Capgemini has shown a certain resilience through the recession. We were of course impacted by the crisis, but probably not as much as other types of industries. As an industry where you have simply have knowledgeable, employable e,ployees there were still job openings. We’ve built a more loyal work force as we have continued to invest in our people. People come into our company because they want to develop a career. And it’s much stronger in an environment like ours than you may ﬁnd in other types of industries. We need to understand is that our technology environment has evolved and we need to ensure that our workforce understands the new technology environment. The economic crisis has pushed a different buying behavior from all angles and so we needed to train and we needed to be close to our people and to help them throughout this evolution.

I’m a big fan and strong supporter of elearning, and in fact e-learning has allowed us to increase training participation by 160 percent in 2009, which was the equivalent of 2.9 million hours of training across the world. While most companies have reduced their training budgets, we were able to actually increase it in 2009 by using e-learning.

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UPFRONT | HRM

Consumers are more concerned about the economy than the environment 68% UK

58% 25%

67% Germany

35%

China

57%

32%

79% France

USA

35%

17%

59% India

72%

37%

51%

Brazil 25%

More concerned with the economy

41%

Australia

More concerned with the environment

Company index Q3 2010 Companies in this issue are indexed to the first page of the article in which each is mentioned. Accenture 58, 134 Adecco 112 AMD 98 American Express 134 Apple 62 Ascensus 2 Aspire 36 Berkshire Associates 88, 91 Best Buy 115 Boston College Center for Corporate Citizenship 98 BridgeStreet 5, 130, 131 Brooks Brothers 108, 109 Build-A-Bear Workshop 110, 111 Campbells Soup Company 98 Ceridian 144, IBC Cisco Systems 76 Citi 134 Coca-Cola 28 Colorado Technical University 74, 75 Corporate Housing Providers Association (CHPA) 128 CORT 16, 17 Council of Economic Advisors 76 CPI Qualiﬁed Plan Consultants, Inc., 42, 43 DCI Incentives 103 Digg 104 Dow Chemical Company 98

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dp woodrow & company, llc 108 Facebook 92, 104 Fidelity Investments 9 Fiduciary Benchmarks 42, 49 General Mills 36 Gift Card Partners 7 Green Mountain Coffee Roasters 98 Groupon 104 Guardian Life Insurance Company 42, 45 Hay Group 112 IBM 36, 68, 98 InclusionINC 78, 79 International Coach Federation 66, 67 JP Morgan 11, OBC LinkedIn 92 LKT Consulting 124 LogicaCMG 66 Marist 72, 73 Mashable 104 Mattel 134 McKinsey & Company 36 Meettheboss.com 87 Microsoft 82 Mrs. Fields 116, 117 Napster 104 National Association for Female Executives (NAFE) 36 Nike 104

Operitel Corporation 65 PeopleScout 88, 89 Pfizer 134 PricewaterhouseCoopers LLP 120 Profit Sharing/401(k) Council of America 40 Prudential Retirement 42, 47 Recognition Council 112 Rideau Recognition Solutions 112 Securian Financial Group 52, 53 Six Flags 118, 119 Southerwestern College 61 Spotify 104 SVI 80, 81 SVM 127 T Rowe Price 57 TheLadders.com IFC, 95, 96, 97 TiVo 104 Trussway 122 Twitter 92 UMR 122, 123 Unified Trust 50, 51 United Healthcare 34 USI Consulting Group 20, 21 WellPoint. Inc 36 Wine Library 104 Woothemes 104

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HRM | COVER STORY

d l r o W leader Like it’s products, Coca-Cola’s employees are found all over the globe. Huw Thomas speaks to Chief People Ofﬁcer Ceree Eberly about the challenges of directing a truly international workforce.

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HRM | COVER STORY

espite its domestic image as an American icon on a par with Uncle Sam and apple pie, Coca-Cola is truly an international phenomenon. Walk into a shop or café just about anywhere on Earth – from Azerbaijan to Zambia – and there is a high likelihood that you’ll fi nd a Coke in the fridge. An estimated 94 percent of the world’s population recognize the famous red and white logo, elevating it to the very top tier of global products. In addition to its flagship offering, the company also produces more than 500 other brands, sold in 20 million outlets and consumed by around six billion people. In effect, Coca-Cola is almost as ubiquitous as water, with a consumer base of staggering international diversity. The company’s people are a mirror image of its customers, working in markets and communities dispersed across the globe. It might be reasonable to expect that managing such a varied workforce would be a major headache for the person in charge. Cannily though, Coca-Cola have got around this potential stumbling block by appointing a HR leader whose international credentials are above reproach. Ceree Eberly took up the role of Senior Vice President and Chief People Officer in January 2010, the latest upward move in a 20-year career with the fi rm that has seen her working everywhere from Latin America to Asia to Africa. When we manage to grab a few minutes out of her busy schedule, she is in the process of completing the move back to the US from the UK, where she has been living and working for the past three years. It was the possibility of such a varied and wide-ranging professional life that was one of the key attractors for Eberly when she joined Coca-Cola two decades ago. “When I came to Coke I was actually looking for diversity of experience and an opportunity to build my career, and I’ve always wanted to work and live abroad,” she says. “I saw that as a wonderful opportunity. My fi rst boss with Coke said to me, ‘If you just put your head down and focus on adding value and really contributing to the business, you’re always going to have an opportunity and you’ll never have to want for a job’. “My focus has been really learning about our business, being a contributor to the business, but also, when opportunities came my way, being willing to grab those. As result, I’ve had just a fantastic experience learning our global business. Living and working on three continents, seeing the world in a very diverse and different way I think has really helped prepare me well for this job.” In Eberly, Coca-Cola have a people specialist with an unusually strong devotion to the corporate entity she represents. “It comes naturally because I love our brands and I love our business,” she says. “When I’m in the UK I

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spend weekends going into stores like Sainsbury, Tesco, Waitrose and McDonalds. I go and just look at our consumer purchasing patterns, I look at what’s in the aisle at the grocery store, what people buy, what they drink. I go into the competition and look at that as well.” It’s unlikely that many executives of Eberly’s stature spend their spare time conducting independent market research, but it is all part of her background in the company’s business activities. Unlike some HR professionals who have spent their entire careers in the people function, Eberly’s wider range of business experience has given her a much more comprehensive view of the organization. Th is in turn allows her to run the company’s people function in a manner that more directly benefits the business. “It’s not just a nice thing, it’s actually essential and crucial to be successful,” she says. “I think that my experience being business focused is kind of the first order of business and really using that as a lens to do the work that I do is probably the greatest enabler for me.”

Coca-Cola employs nearly 93,000 people – a stark contrast to 1898, below

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124rs yebausiness Business sense Eberly sees this hard business experience as a vital component of any effective people function. “I’m not talking about just Coca-Cola,” she continues. “I think if you really look at successful HR professionals, they’re not what we call personnel administrators. They’re really fully engaged in the business, they truly understand what drives business performance, they work with leadership teams in how to make the business more effective and efficient. They’re looking at building a strong leadership capability and talent for the future. So yes, I would say it’s probably missing in some industries and in some functions, but I would say with Coca-Cola that’s actually been one of the key focuses that we’ve had in building our capabilities.” Eberly gives the example of a recent trip to Tokyo where she recorded a video with the head of the Japanese

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“It’s part of one of our ongoing initiatives to continue to build up what we call our business muscle. This involves learning about the business, but also being more effective as professionals in the businesses that we’re engaging with”

business giving an overview of the company’s work in the territory. The video covered topics such as the importance of people, what’s being done to build the pipeline of talent and what’s happening around culture and work environment. “The next day, that was fed live by WebEx to our whole global community,” Eberly explains. “It’s part of one of our ongoing initiatives to continue to build up what we call our business muscle. Th is involves learning about the business, but also being more effective as professionals in the businesses that we’re engaging with.” Eberly’s recent activities in Japan are just one facet in the ongoing challenge of instilling a coherent company culture in an organization as globally dispersed as Coca-Cola. How do you go about connecting employees who might be separated by massive geographic, cultural and linguistic barriers? “We use the opportunity in the markets that we serve around the world,” Eberly responds. “We’re a diverse culture because we’re global and I think what we’re doing is a better job of building global networks, sharing best practices, using the diversity and experiences in the market really to build a more collaborative and effective result in the market.

COVER STORY | HRM

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The female of the species Eberly outlines Coca-Cola’s efforts to advance women throughout the organization. There’s still s a lot of work to do, but I’m actually very proud o of the work that we have done to advance women in leadership positions. We do have a priority as a leadership lea team to recruit, develop and advance women at all levels and across all functions. wome It It’s very relevant for us and there are a couple of examples exam of what we’ve been doing. I just returned from Asia Paciﬁc, where we established a Women’s Global Leadership Council in 2007. This is really Glo focused on setting a global strategy with the foc Chairman of the company around strategies Ch to attract and develop women across all lines of the business, and thinking about what are we w doing to attract the talent and what are we w doing to continue to accelerate women in leadership positions? I was recently in Tokyo where this Global Women’s Leadership Council met. In addition to that we did a joint meeting in th the Pacific Rim, with all of our countries across Asia Pacific, where they have the next level down of Women’s Leadership Council for that geography. In addition to that we have just initiated the chapter in Japan. So we had an opportunity to meet with the women locally in Japan who were part of that local chapter. So we’re seeing the effort that we’re doing globally just naturally migrate all the way down to the local markets. We also recently had a global midlevel Women’s Leadership Development Forum where 40 women came in from around the world. We do this twice a year, and basically we brought all these women in from around the world and we had a very targeted development focus session on experiential learning, communication and presentation skills, where they met with senior leaders. Sheryl Sandberg, the COO of Facebook, came in and spoke to them. There was a panel discussion with women from a variety of companies. I was a participant in that. We talked about stories of leadership and how women have accelerated their careers, how they balance work and family, how they’ve learned to be mothers or care providers for elderly parents and balanced all of that while still achieving success in the workplace. If you look at a lot of these examples they speak to our commitment to continue to develop women not just at the high levels but also the pipeline at the midlevel and the lower level so that over the next five to 10 years we really do have a steady pipeline of women who are ready and capable to take on those leadership opportunities as the business demands it. I’m pretty proud of it. We still have work to do, but I think that our focus and our Chairman’s commitment to the advancement of women is unparalleled.

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“As we build culture, I think one of the ways that we’re learning is to take advantage of the things that we’re doing around the world. Knowledge management or knowledge sharing, if you will, is helping to build that culture because we’ve got great things going on in our local markets, but if you don’t share that and you don’t share the learning, it’s very hard to actually be successful in the marketplace.” But it is the subject of diversity that provokes perhaps the biggest reaction from Eberly. It is a term that has become increasingly ubiquitous in the corporate lexicon, so much so that there is sometimes the temptation to dismiss it as little more than a checklist item, a piece of business world window dressing. Unsurprisingly, this is not a view supported by Coke’s Chief People Officer. “Oh, my goodness,” she exclaims. “Diversity is at the center of everything we do. And it’s one of our seven core values and basically it’s a very simple defi nition, it’s to be as inclusive as our brand. If you look at that, the defi nition goes across gender, race, it’s how do we actually have inclusion in the workplace and inclusion in our outlets and in our markets that we serve? So by focusing on diversity as a bus iness advantage, I actually think that we are benefiting everyone. It’s really just a core theme of how we do business. If you look at our suppliers and partners, they reflect our diversity initiatives as well. How you see this in the marketplace is really relevant to me – I’m a mom – and 70 percent of the shoppers out there who go into a grocery store or a retail store are women. “They’re the ones that make the purchasing decisions, so if we don’t have women considered in our marketing, considered in the way that we advertise and the way that we go to market we’re going to miss a key opportunity and being a mom, I want someone to talk to me about what’s important to me. So if I just make it very simple in those kind of terms, diversity is reflected in every aspect of what we do.”

Troubled times Though the situation is slowly improving, the last few years have been particularly tricky for businesses everywhere. For many organizations, the hostile conditions have had major implications on the way staffi ng was approached, implications that were not always welcome. Though Coke hasn’t been completely immune to the effects of the downturn, Eberly insists the impact on hiring policies haven’t necessarily been negative. “We’ve been thoughtful in terms of our hiring,” she says. “Where we need to build capability we’ve used it actually as an opportunity to step back and look at the next five to 10 years of growth. If there are capabilities and skills we need, different than what we have today, now is the time to step back and say, ‘Okay, now what

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COVER STORY | HRM

70 percent of shoppers who go into grocery stores are women

An employee boxes botttles at the Coca-Cola plant in Atlanta, Georgia

Coke LEAD.indd 33

are we going to do about that and how do we go about fi nding those?’” One thing is for certain though; when it comes to a company’s people, even the most difficult conditions are no excuse for retrenchment. “In times of economic turmoil you can’t stop focusing on your talent,” states Eberly. “You still have to continue to build your talent, you also have to continue to look at what is happening in the marketplace and it’s changing faster than most of us can keep up with. We’ve actually used it quite strategically to look at really focusing on development of talent and skills that over the next five to 10 years are going to be really important for our business.” For someone who has only been in position for six months, Eberly seems to have an excellent handle on the challenges she faces. In truth though, the role of Chief People Officer is one she has been building towards for quite some time. “It’s interesting because the person who left the role actually was my mentor,” she explains. “She’s been training me for many, many years, and she actually gave me my fi rst international trip overseas and to Europe. I’ve been preparing myself through a variety of experiences, and the European experience has probably been the best experience for me to prepare me for this role.” It all keeps coming back to that global perspective. An organization like Coca-Cola could very easily becomes some modern Tower of Babel, a clamor of noise

and confusion as disparate elements struggled to communicate. Ensuring this doesn’t happen requires keeping a fi nger on the pulse of all the company’s people and acting quickly to head off any potential problems. As part of Coke’s vision for the year 2020, the company is pursuing what Eberly describes as a ‘best place to work’ strategy, building an engaged and happy workforce in its operations all over the globe. “We’ve been embarking on a journey,” she says. “We measure this through our annual employee insights score, it’s a survey we do globally that we basically use that as a temperature gauge to measure the health of the organization.” So what are Eberly’s key priorities as she moves forward in her new role? “We’ve put in a number of initiatives, workplace policies around flexibility for women so that we provide flexible benefits for our associates, that we engage our associates in the workplace,” she replies. “We’ve been enhancing things in the areas of career development, tools and processes. We’ve been continuing to focus on training, more learning and those opportunities to continue to accelerate people’s growth and learning in the workplace.” What’s good for Coca-Cola’s global workforce is also good for the company itself. Employees get opportunities to develop their careers and the Coke benefits from more capable and more engaged people. “We’re fi nding that that’s probably the best talent retention tool that you can use,” concludes Eberly. ■

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HRM | FEATURE

On the up As a follow up to the cover story in the last issue of HRM examining whether women make better business leaders, Stacey Sheppard now takes a look at some of the companies who are taking a leading role in the advancement of women and asks what HR professionals should be doing to ensure that this seemingly untapped talent pool can achieve its full potential.

ADVANCING WOMEN ED P36-39.indd 36

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FEATURE | HRM

he advantages of having more women in senior executive positions became apparent in the first of this two-part series on women and leadership. The benefits that female leaders can bring to the table are certainly hard to ignore and include increased profitability, a greater sense of purpose for the company, the recognition of positive emotions in the workplace, building and nurturing a closer sense of community within the company, and a more collaborative leadership style. Increased profitability alone should be reason enough for companies to sit up and take notice of the potential held by this particular segment of the workforce. For some organizations, this is something that they were lucky enough to recognize quite some time ago and because of this they have been able to reap the benefits and are now industry leaders in the advancement and retention of women in the workplace. There is a lot to be learned by looking at these companies and some of the strategies that they employ to ensure a more diversified workforce when it comes to gender. Especially as many of those companies trying to jump on

you’re going to develop that talent, and retain it you need to make sure that you’re looking at all the aspects that relate to making that talent work for you,” she says, highlighting General Mills and IBM as having the best initiatives in the country. “What General Mills does is look at everything from soup to nuts. It looks at the hiring of women to make sure that they’re bringing in women that they know are going to stay and succeed. And, interestingly, the turnover rate is very low at General Mills. They think longterm. They hire someone to stay and not just to fi ll a gap,” explains Spence. Hiring, mentoring, making sure women have the necessary contacts, exposure, sponsorship and support are all part of the initiative at General Mills. “They have various training programs onsite and offsite that women can participate in to make sure that they’ve got the necessary training in all of the aspects of running a business. They also make sure that there’s the flexible climate that allows for what women need in order to be able to have a work life balance, which is really critical,” she says. Th is is something that Spence believes all companies should be striving to achieve. But, as she points out, these things are all good and

“If you’re going to develop that talent, and retain it you need to make sure that you’re looking at all the aspects that relate to making that talent work for you” the bandwagon aren’t necessarily approaching it in the best way. “Most companies have attacked this piecemeal,” says Betty Spence, President of the National Association for Female Executives (NAFE). “They’ve said, ‘Okay, let’s see what we have to do to make sure that our talent is being tapped. Let’s do some mentoring, let’s get a network together.’” All that helps, asserts Spence, but at the same time she points out that the best thing to do is to develop an overarching initiative to advance women in your organization. “If

ADVANCING WOMEN ED P36-39.indd 37

well but companies who are implementing such initiatives also need to have some way of determining if their efforts are paying off. “At IBM, every couple of years they go back and survey their women to find out if the things that they’ve done are working, and then they implement new things according to what the women tell them,” Spence explains. They must have been doing something right at IBM; since 1995 when the company instated its women’s initiative there’s been a 592 percent increase in women executives, accord-

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HRM | FEATURE

ing to Spence, which is certainly an achievement. The task forces that IBM established really got the ball rolling and now there are 40 women’s councils around the world and 42 women’s forums to help support the advancement of women. Dr Sam Collins, founder of Aspire, an executive coaching and development organization for women, agrees that conducting some form of internal research is the best way to fi nd out what will and won’t work for your employees. Focusing purely on external research, she says, means that any business cases will inevitable fail. “You really need to look at what’s going on in your own company and to do some surveys or some research, or use staff surveys to get some data as to what the pinch points are for people leaving and staying, and do gender splits on those,” says Collins. And depending on the results of this research, there are many things that companies can do ranging from looking at their recruitment policies, to looking at training and coaching. Even things like quotas and targets and looking at their flexible working initiatives, says Collins. Joanna Barsch, is a Director at McKinsey & Company, a global management consulting firm, and she believes that there are also certain things that women could do to help themselves advance. “The most important thing for anybody to become a better leader is to have opportunities for growth,” she says. “Women on average have a tendency to hold back from opportunity. So if women were to do one thing differently it should be to pursue opportunity and to grow from it, even when it’s a mistake or a failure. That will help them accelerate both their capability to lead as well as their path to advancement.” Another method that women should be using to foster their careers is networking, but Spence points out that women are more often than not excluded from many of the informal networks. “Women aren’t in the bars after work and they’re not on the golf course with the men on the weekends where a lot of those things take place. So if you can figure out a way to make sure that women get into those networks, things might change.” But things will only change, according to Barsch, if women are able to learn a different approach to networking. Evolutionary biolo-

ADVANCING WOMEN ED P36-39.indd 38

A healthy strategy

“

Healthcare company WellPoint Inc. consistently ranks in NAFE’s list of the top 50 companies for executive women. CEO Angela Braly is also the only woman to serve as CEO of a Fortune 50 company. Randy Brown, Executive Vice President and Chief Human Resources Officer tells HRM about WellPoint’s approach to women in the workplace. “I think one of the things that we do that’s important, and our current CEO will tell you that she benefited from this, is a succession planning process that does not pigeonhole people. It’s a succession process that looks at skills required and the talent that people have regardless of a strict set of jobs you must progress through. “One of the things we say out loud to our associates is that if you work at WellPoint you don’t have to check who you are at the front door. Bring your whole self to work. You’re not just an executive, but you’re an executive and a mom or a dad, if you have kids, and it’s important that you be able to spend time on both. “For example, we have a benefit we call new parent transition week so that moms and dads can work part time on their first week back from leave, but we pay them full time pay. The reason for that is we know that for the first week back it’s hard to have your full head in the game, but we want to say thanks for coming back and we recognize that there’s a transition that has to occur. “We also have a lot of work-at-home programs. The work-at-home benefit is largely job dependent. Not every job can be done at home, but there’s a lot of times when people can work at home. So we’re flexible on where work gets done. Half of Angela’s staff do not work in our corporate headquarter city. They work somewhere else. Where work gets done, when it gets done, how ow it gets done, flexibility on all those se things thing is very important.”

“

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FEATURE | HRM

A long legacy

“

IBM has long heritage of supporting women in the workplace and is frequently rewarded for doing so. With regular appearances on NAFE’s list top companies for female executives and recognition from the likes of Diversity Inc., Forbes and The Great Place to Work Institute. Patricia Lewis, Vice President of Human Resources at IBM tells us how they manage it. “At IBM we have a long heritage in supporting and addressing the needs of women and helping them to achieve that all important work/life balance. More than anything, for IBM it’s all about attracting top talent and women play a significant role in the ongoing success of the IBM company. “Our heritage actually goes back a good 120 years. We have been employing women since the 1890s and we had our first female VP in 1949. Between 1940 and 1943 alone one third of our manufacturing hires were women. “Women generally tend to have a more collaborative approach to leadership, which suits IBM’s culture of collaboration and often leads to innovation, a key value for us. Having women in senior leadership positions reflects the demographic mix of our workplace and of our client base. “Work/life integration is extremely important and luckily IBM is a leader in this field. For example, we offer flexible work options and job sharing, and in 2000 IBM created a $50 million global work/life fund to support our employee’s child and elderly care needs around the world. “For women in particular we run a variety of great programs from extensive development programs to technical programs, formal and informal mentoring programs, and career counselling. We currently have 40 women’s councils around the world and 42 women’s forums. Our Taking the Stage program also helps women to improve their communication skills and leadership presence.”

ADVANCING WOMEN ED P36-39.indd 39

“

gists, she says, believe that men have broader, more shallow networks in general than women do, and women think of relationships as friendships. Therefore women need to be able to see their network development in a more strategic way. But the responsibility for this networking does not lie solely with women themselves, and companies should be taking more of an active role in helping women gain access to these networks. At McKinsey, Barsch says they talk about sponsorship. “Companies who really want to do this have to do one thing and do it well, which is to ask their leaders for their conviction and commitment to helping women. Once a leader, man or woman, can do that, he or she can become a sponsor.” A sponsor is more effective than a mentor, according to Barsch, as it is somebody who believes in you, who creates opportunity for your growth, and who helps you when you fall and when you make a mistake. However, one of the most harmful aspects

that is creating a barrier to female advancement is in fact the mindset of HR professionals with regards to the age at which you must be to have already reached VP level. “I hear a lot of companies say that if you haven’t made it by the time you’re 35 or 40 you’re not going to make it,” says Barsch. “But that’s ridiculous because that's when women are having their children and their children are young. Women need a longer rise to that pivotal level in the company and they should not be age constrained. So I think that is an area where HR professionals can make a huge difference. It’s embedded culturally because nothing is stopping a man from getting to the top by the time he’s 40.” For this mindset to change, companies, and HR professionals in particular, need to start recognizing the benefits of helping to advance women up the corporate ladder. Rather than merely seeing it as something that has to be done because quotas dictate it or because of a desire to be seen to be doing the right thing.

25/06/2010 14:50

HRM | RETIREMENT

The blueprint Deﬁned contribution retirement plan design is an opportunity too good to miss, says David Wray.

n our rapidly changing world a defi ned contribution (DC) plan can be more than just another employee benefit. It can be the cornerstone of a progressive personnel policy. Companies that have successful DC plans report they have improved profits, increased efficiency, lower turnover and an overall climate of better employee relations. Just as when employees lose the benefit of employer money when they choose not to participate in a 401(k) plan, companies not taking advantage of DC plan design opportunities leave significant benefits on the table as well. Have you evaluated your plan design lately? DC plans are not just a form of bonus or a retirement plan, though they can contain these features. They are part of a progressive management personal program designed by management to increase productivity, improve efficiency, reduce turnover and increase profits. It is important to identify and prioritize management’s objectives before the company considers its DC plan design. What are the objectives? – incentivizing the workforce, reduction of turnover or absentees, improved product quality, increased cooperation, retirement security? By listing the objectives you will be better able to determine the plan features that will help achieve them. The first step in DC plan design evaluation is to understand the organization’s culture and its policies about its workforce. For example, does the organization want to hire the very best employees available and is it willing to provide above market-average compensation and benefit packages to get them? It is critical to have an employee census. Ideally, the census will include the age, compensation, marital status and tenure of each employee. Some companies also survey their employees for input as well.

Aims and objectives Does the company want to improve retention, motivate its workforce or both? The DC plan promotes retention but only among those who participate. Matching contributions promote participation. According to PSCA’s 52nd Annual Survey of Profit Sharing and 401(k) plans, 80 percent of DC plans include matching contributions. As the eight-year National Bureau for Economic Research study published this year in Shared Capitalism At Work reports, company contributions tied to profit-

David Wray.indd 40

ability can increase productivity and a firm’s financial performance. PSCA’s Annual Survey found that 33 percent of defined contribution plans included profit-sharing based contributions for all eligible employees companies. Twenty percent of plans with matching contributions condition some, or all, of the match on profitability. Various methods can be used in determining how company money is divided among its employees. While federal law prohibits discrimination as defined by the government in favor of higher paid employees, there is still significant plan design flexibility. The most common method of allocation is to utilize the same percentage of pay for all employees. This is true for both matching and non-matching contributions. However, the law permits other approaches. Plans can use what is called Social Security Integration, which allows a company contribution of one percentage of pay up to the Social Security taxable wage limit and another higher percentage based on amounts of compensation over that limit. Plans can also weight the company contribution for service and age. The employer has significant flexibility in designing the plan’s matching formula. With some workforces, a modest match can lever significant employee savings. In others, the employer needs to incentivize employee savings with a dollar for dollar matching contribution. A few go as high as providing two dollars or more of company contribution for every dollar of employee contribution. As an example of this flexibility, one company matches 25 percent of an employees’ voluntary contribution, up to eight percent of pay for those with five years of service or less. It escalates the matching percentage as a participant’s tenure increases, culminating with a 100 percent match on eight percent of pay for participants with 15 or more years of service. The percentage of companies permitting participation by all employees over the age of 21 with one year of service has been increasing and is now over 50 percent. However, some companies have decided to exclude certain categories of workers, such as commissioned sales staff or those working less than a thousand hours a year. Also, to aid in recruiting, companies are increasingly permitting employees to participate in their 401(k) plans when they join the company. In 2005 approximately 65

“One company matches 25 percent of an employees’ voluntary contributions up to eight percent of pay for those with five years of service or less”

25/06/2010 15:14

RETIREMENT | HRM

percent of sponsors permitted participants to begin making voluntary contributions to their plans within three months or less of when they started work. That percentage had increased to 76 percent in 2009 according to PSCA’s Annual Eligibility Survey released in the fall of 2009. Furthermore, 44 percent of plans no longer have a minimum age requirement.

Vested interest The employee’s vested right to employer contributions to a DC plan varies. A participant can acquire a fully vested interest in his or her account from the time the company contribution is deposited, or the ownership of company money can increase gradually over a period of years. If a primary purpose of the plan is retention then requiring employees to work several years before they fully earn the company contribution can be a successful tactic. If the employer wants to use the company contribution to attract new employees, then giving them ownership of the company contribution immediately can make more sense. According to PSCA survey, 37 percent of companies provide immediate full vesting for matching contributions and 26 percent provide immediate full vesting for profit-sharing contributions. The law permits that when financial emergencies arise, an employee can be permitted to withdraw their DC account balance. It also permits participants to borrow up to $50,000 or half of their account balance, whichever is lower, from their plan. In-service access to account balances increases participation and savings rates. The PSCA survey found that 90 percent of plans permit hardship withdrawals and 86 percent permit plan loans. Plan sponsors need to evaluate whether these features make sense at their company.

Trends and conclusions There are well – established DC plan trends that will

David Wray.indd 41

continue without interruption for another year as plan sponsors build on 2008 and 2009 – even in these times. As a strategy to build DC plan participation, the use of automatic enrollment is growing. According to the PSCA survey, 56.3 percent of large companies have automatic enrollment. That percentage will increase in 2010. The complexity of the investment choice can lead to inappropriate allocation and even suppress plan participation. As a reaction, the long-established trend to more and more investment options in DC plans has ceased. According to the PSCA survey, the number of funds available for participant contributions in 2008 remained the same as the previous two years – 18 funds. It is expected that the average number of funds in plans will show a decrease in 2010. Sponsors are also moving to provide automatic investment solutions and advice to participants. The availability of target-date funds increased to 57.7 percent of plans with 73.2 percent offering some type of managed investment option in 2008. In 2008 51.8 percent of companies offered investment advice to participants. To assist with recruiting and retention, more companies are introducing a Roth feature into their plans. According to the PSCA survey among plans that permitted participant contributions, 36.7 percent allowed participants to make Roth after-tax contributions, up from 18.4 percent in 2006. Plan sponsors reported that 15.6 percent of participants made Roth contributions when offered the opportunity, up from 12.6 percent in 2007. How will healthcare reform affect employer-provided benefit programs? Some predict that many employers, especially smaller employers, will terminate their healthcare programs. If there is no healthcare benefit, as an HR tool DC plans will be considerably more important. But why wait? Design your plan to attract, retain and motivate a high-quality workforce and take advantage of a DC program that is all that it can be. ■

David Wray is President of the Proﬁt Sharing/401(k) Council of America (PSCA).

25/06/2010 15:14

HRM | ROUNDTABLE

With 43 percent of US workers having less than $10,000 saved for life after work, America is facing a retirement crisis. HRM asks a panel of experts for their thoughts on planning for the golden years.

Retirement RT2.indd 42

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HRM | ROUNDTABLE

The demographics of the workforce are changing signiﬁcantly as younger people enter the workforce. Does this new workforce require a different approach to retirement planning? Dale Magner. As younger workers enter the workforce, they will have to deal with many of the same issues that their parents and older colleagues had to contend with such as paying bills, reducing debt, saving for a house, planning for retirement. Th is generation has seen what their parents have gone through when years of careful fi nancial planning have been wiped out in a matter of weeks or days from the fi nancial crisis of 2008 or the dot.com bubble in 2000. They have lived through the mortgage crisis and their own families may have been affected by it. Th is generation of workers will be more careful not to repeat the mistakes of the past and will plan early and be more diligent about overseeing their retirement plans. They are also a generation that has grown up with technology and will be more likely to depend on online tools and resources for information and services. Tom Kmak. Indeed it does. Over the next 20 years, 70 million workers will reach retirement. Many of these workers will choose to retire in a traditional way that has them sitting on the beach playing with their grandkids. Others, however, will fi nd such a concept of retirement unappealing. In fact, a recent AARP study shows that 70 percent of retirees want to continue working to some degree. While the primary reason they will continue working is additional income, it is also clear they want to work because they fi nd it stimulating. Thus employers will realize they have a younger workforce that is arriving and an older workforce that is semi-retiring. As such, these employers will structure attractive part-time programs with benefits to make sure they retain these older workers, which in many cases represent extremely valuable assets. In summary, while we currently have a problem with too many workers and too few jobs, that situation is likely to reverse itself as the baby boomers reach retirement age. John J. Kalamarides. We’re seeing an increasingly diverse workforce, with established employees working longer and younger workers entering the workforce. What this means is that a ‘one size fits all’ approach no longer works. For younger workers, automatic features are the key to getting them on the path to a secure retirement. Auto enrollment, contribution escalation and defaulting into a qualified investment are all important elements in jump-starting the right behaviors. Younger generations also tend to be more ‘plugged in’, so we’re exploring innovative ways of delivering education and

Retirement RT2.indd Sec1:44

communication through the web, mobile devices and in social media settings. Looking forward, the next big question will be whether to default these workers into guaranteed retirement income solutions. Jon Prescott. The basic premise of retirement planning that all young people entering the workforce should follow hasn’t changed since the dawn of retirement planning. Th at message is this: ‘Start early. The best thing you can invest in your retirement account is time.’ And automatic enrollment is great for getting new employees into the plan and keeping them there. Having said that, though, employees of all ages need to understand how much money they will need in retirement, and then choose a game plan they can live with and stick to it. Many service providers offer valuable internet-based tools that help participants determine not only what they need, but their investment style and asset allocation as well.

Jon Prescott, Chief Marketing Ofﬁcer for CPI Qualiﬁed Plan Consultants, Inc., is a Fort Hays State University graduate with Bachelor of Science degrees in Marketing and Finance. For the past 32 years, Prescott has held personnel management, sales management, general management and executive positions for service, wholesale and retail corporations.

There has been a huge amount of economic uncertainty over the past few years. Is this making a difference in the way individuals and organizations plan for retirement? TK. Indeed. Numerous surveys have shown that employees are less confident about retirement than ever before. These same surveys show, however, that as many as seven out of 10 Americans have no idea how much money they will need for retirement. Th ink about that for a moment. ERISA was passed over 35 years ago and 70 percent of all employees still have no idea how much they need for retirement – quite likely the most expensive thing they will ever purchase. And, the longer they wait to answer that question, the less time they will have to make any necessary course corrections. The good news, however, is the industry is starting to realize that while retirement confidence is nice, retirement competence is better. In fact many companies are starting to focus on the key question of ‘what is winning’ for our industry by examining the concept of retirement readiness. Whether it is the ING commercial with a person walking around with a big orange number under their arms, or a Fidelity commercial encouraging a person to follow their green arrow path to retirement, the industry is fi nally realizing that retirement readiness is the key metric that should be benchmarked for success in our industry. JK. The financial crisis has demonstrated that sequenceof-return risk grows exponentially with age. In other words, it’s much harder to recover fi nancially if the market drops right before you’re poised to retire. We believe that guaranteed retirement income is the right

08/07/2010 08:58

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HRM | ROUNDTABLE

should contact their service providers to fi nd out what 404(c) means in their specific situation.

Tom Kmak is CEO/co-founder of Fiduciary Benchmarks (FBi), which provides benchmarking of fees and services for deﬁned contribution plans through advisors/consultants, recordkeepers and other service providers. Prior to founding FBi in October 2007, Kmak served as CEO of JPMorgan Retirement Plan Services.

Kurt Shallow. The world’s fi nancial markets have been beset by turbulence. Even after a strong rally last year, the average annual returns of stocks are still below water for the past three to five years. And almost daily, economic news seems to send skittish fi nancial markets on a rollercoaster ride. In an ever-changing regulatory and tax landscape, new plans and options crop up endlessly. Many tried and true approaches to investment savings have been turned upside down or replaced by new alternatives. It’s clear that now more than ever, both the design and management of qualified and nonqualified retirement plans depend more on strategies than individual products. The advantages of a holistic approach to retirement planning are clear. The comprehensive approach Guardian has developed blends best practices and new innovations in funding vehicles for retirement plans that can help employees attain their retirement goals. What kinds of options are available to employees and organizations when it comes to choosing retirement plans? Do different solutions offer particular upsides and downsides? JK. Since the advent of the Pension Protection Act, we’ve seen a dramatic increase in the use of target date funds.

solution. For example, our guaranteed income product protects investors in the critical years before retirement, while still allowing them to capture market upswings. We fi nd that the peace of mind of knowing you won’t outlive your income is very valuable to individuals, especially with the average retirement lasting longer than ever. JP. It couldn’t help but make a difference. Many employees who have been laid off over the past few years have been left with no alternative but to live on what they were saving for retirement. As they go back to work or fi nd new employment, they are starting over at ground zero when it comes to retirement savings. Employers want education programs that address these issues and provide meaningful, realistic solutions. They also want investment options that cover the style boxes, including income and stable value options. More employers are also aware of the value of the fiduciary protection afforded them by operating their plan to comply with 404(c). Employers who are not,

Retirement RT2.indd Sec2:46

Kurt Shallow has more than 26 years of industry experience in underwriting, product development and marketing. As Vice President of Risk Products Distribution at Guardian Life Insurance Company of America, Shallow is responsible for all wholesaling of risk products (Life, LTC, IDI and Executive Beneﬁts).

We believe they are a great asset allocation solution. But we also believe that the ultimate objective of retirement planning is to get participants through retirement, not just to it. So Prudential has begun offering the next generation target date fund, which includes an optional guaranteed income component. In addition to ensuring adequate diversification through one’s investing years, this solution also delivers a retirement ‘paycheck’ for life. JP. Many of the options for the type of retirement plan have not changed in quite some time. Profit sharing, 401(k), 403(b), 457(b), and nonqualified deferred compensation plans all have unique features that allow employers to create the retirement plan that works best for their organization. Some of these plans are for certain types of entities, of course, but within each, there are options available for refi ning the plan even further. For example, employers have always loved the way a 401(k) plan allows employees to participate in the process of saving for retirement, which is a defi nite upside. However, the owners and officers of the company may fi nd that they are limited in what they can contribute because of 401(k)’s nondiscrimination testing – a defi nite downside. Safe harbor provisions may be an appropriate option, or maybe an integrated plan design, or perhaps

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HRM | ROUNDTABLE

safe harbor with an integrated plan design. There are numerous options for each. The employer’s service provider should be able to help determine the best alternatives to achieve the employer’s goals for the plan. DM. There is no one-size-fits-all retirement plan. Different individuals have different needs and expectations. Guardian has developed a suite of retirement products to address the many and varied needs of our clients. Our team of retirement experts can evaluate your needs and provide a range of ideas appropriate for your situation. We are also at the forefront of new product development. Cash balance plans are defi ned benefit retirement plans that offer sizeable tax deductions to small and medium-sized businesses and can help clients rebuild retirement savings after the turbulence of 2008. For the appropriate situations, cash balance plans can make sense since they’re easy to understand and can furnish participants with a guaranteed accumulation. They’re also flexible and can help control costs. Two Guardian group retirement products, The Guardian Choice and The Guardian Advantage, offer clients a variety of options to help fund cash balance plans. KS. Guardian also offers more specialized plan funding components designed to complement the retirement needs of your company’s most important executives and managers and reduce taxes at the same time. One option, Guardian’s corporate-owned variable life insurance (COLI) policy can, serve several functions. Before retirement, with your company named as primary beneficiary, COLI offers protection on the lives of key employees. Using life insurance to fund the plan offers additional tax advantages to the company, as policy cash values accumulate income tax-free. It can also help offset the plan’s costs and help your company recover the costs spent on employee benefits. What role does education play in helping people make preparations for life after work? JP. Education is key to the success of any retirement plan. Not only does it help employees use the plan to their best advantage, it also increases the employees’ appreciation for the employer and the retirement benefit provided to them. Education and outside guidance give employees the knowledge and the tools they need to make informed decisions so they can look forward to retirement with confidence. DM. Guardian Life. The better informed an individual, the more likely he or she will select the appropriate solution for his or her retirement needs. Guardian’s team can provide education to our clients so they make the right decision for

Retirement RT2.indd Sec3:48

their situation. Of course, Guardian is there to do more than evaluate. We’re well equipped to make a difference even after our evaluation is complete and our suggestions have been made. We have a nationwide network of representatives to help you with your decisions in addition to trained professionals who can answer questions and provide information to enrollees. TK. Having been in this industry for 25 years, it is apparent that education alone will not suffice. We have had prospectuses, enrollment kits, videos and colorful brochures for decades. We have had more participant meetings than you can imagine. Yet we still have 70 percent of the employee population with no idea how much they need to retire, 30 percent don’t even contribute to these programs, and in some cases over 50 percent of employees spend their preretirement distributions when they change jobs. So, obviously, it is time to change the beat. In that regard, instead of trying to change the behavior of one participant at a time through education, we should use plan design to influence tens or hundreds or thousands of participants. This means we should take advantage of lessons we have learned from the field of behavioral finance to smartly install features like auto enrollment and auto increase to improve contributions. We should also default people into managed investment programs that make sure employees have the appropriate mix of cash/bonds/stocks. These programs also include proven useful features like automatic diversification and automatic rebalancing. Or put another way, some people say the definition of insanity is doing the same thing over and over again and expecting a different result. While there is no doubt we can continue to innovate on the margin with education, the real progress will be made by using plan design to simply ‘do it for them’. After all, we increasingly live in a fast food society where you barely have time to attend your child’s baseball game. Thus, we should not expect employees to pore over a myriad of information to become experts in investments, finance or retirement.

Dale Magner has been in the retirement plan industry for over 25 years. He joined Guardian in 2008 to develop and manage the company’s external retirement plan wholesaling operations and expand the distribution strategy of Group Retirement Solutions to all distribution partners. In this capacity, Magner is responsible for the strategic direction and growth of Guardian’s retirement initiatives.

John J. Kalamarides is Senior Vice President of Retirement Strategies & Solutions for Prudential Retirement. In this role, he has overall management responsibility for the organization’s FullService Defined Contribution, Full-Service Defined Benefit, Institutional Income, Stable Value, Retirement Plan Strategies, and Capital Markets businesses.

JK. We believe that retirement education must be a lifelong commitment. The process of saving for retirement spans many years, and requires different information and guidance at different stages. Regardless of the stage, however, participant education needs to be simple, relevant and actionable. For example, we include retirement income projections on all of our participant statements, along with access to our retirement income calculator (RIC). Experience has proven that this is the most effective method of driving participants to take action. In fact, 21 percent of participants who utilize the RIC take action – with 16.7 percent increasing their deferral rate an average of 4.7 percent ($2800 annually).

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HRM | ASK THE EXPERT

A higher standard of care HR Management hears how Dr. Gregory Kasten uses his medical background to improve retirement plan outcomes.

he purchase of lifetime retirement income is the largest fi nancial transaction most people will ever make. Yet the vast majority of retirement plans fail for one simple reason: they put too much responsibility on the employees. Most employees have never been trained or prepared to assume the important role of building an adequate retirement benefit. As a practicing physician, Dr. Gregory Kasten entered the money management business in the mid-1980s out of sheer frustration. “Most of the advice I received from local stockbrokers was sales-oriented, slick, nontransparent and generally not good advice,” he says. “Coming from a medical background, I was very interested in a high standard of care, best practices with an outcomes-driven process.” Before long, Kasten found himself helping his colleagues manage their portfolios. His innovative ideas and analysis proved so successful that in 1985 he launched his own advisory business. Today, Unified Trust Company helps investors manage over $2 billion in total assets. The cornerstone of Unified Trust’s track record of building successful financial outcomes is their charter as a national fiduciary. One of only a handful of national trust companies in the US today, Unified puts its clients first and must always use a ‘prudent expert’ standard of care. Why is being a national trust company so important? The short answer: fiduciary discretion. Unlike a directed trustee, Unified Trust is a discretionary trustee. Th is means that they take responsibility for the selection, monitoring and retention of plan investments. They are bound by ERISA prudent expert rules and maintain well-documented records on behalf of all plans and participants. Because discretionary trustees control investment choices, they are held to a higher standard of fee disclosure and good faith action. But their role goes well beyond merely providing liability protection. Unified Trust can take a handson approach to managing investors’ portfolios to help guide them down the right path. In keeping with that philosophy, the company has created a suite of innovative offerings unlike any in the industry – services

Unified Trust.indd 50

designed to substantially and reliably improve the financial outcomes of their clients. “A 25-year-old under-funded participant who is at least 40 years from retirement has much different liquidity, return, and cash flow requirements than a 64-yearold participant who is over-funded and just one year from a comfortable retirement,” says Kasten. For this reason, Unified Trust’s Success Pathway combines ‘intelligent defaults’ such as automatic enrollment and savings increases with fiduciary oversight and targeted, intensive education and advice to improve participant success. The latest innovation at Unified Trust is the UnifiedPlan. The UnifiedPlan is a new personalized fi nancial solution designed to more reliably provide each individual with a dependable stream of income at retirement. Unlike any other 401(k) plan being offered today, UnifiedPlan starts by defi ning a retirement goal for each individual in a plan – 70 percent of preretirement income – on which to base a personalized approach. “The overall impact of the defi ned goal plan,” says Kasten, “is to create a near ‘pension-like’ lifetime experience for each participant, with much greater retirement income security.” The UnifiedPlan offers greater protection to the plan sponsor since it operates as a Qualified Default Investment Alternative (QDIA), but is more effective than a target date fund. “Ordinary consumers must make extraordinarily complex fi nancial decisions on a daily basis,” notes Kasten. “Yet there is now growing evidence that consumers are overwhelmed when they make many consequential economic choices.” For this reason, Unified Trust’s proprietary Unified Fiduciary Monitoring Index provides an effective ‘bright line test’ to help determine the quality of a fund or investment manager, giving a balanced, long-term evaluation of each investment relative to its peers, not on short-term investment results. “The retirement of the Baby Boom generation, some 75 million people, is now at hand,” says Kasten. “Having a reliable process to deliver lifetime income that protects their lifestyle will be the delivery of the ‘promise’ that started some 25 years ago.”

“Ordinary consumers must make extraordinarily complex financial decisions on a daily basis”

Dr. Gregory Kasten is founder and CEO of Uniﬁed Trust Company, based in Lexington, Kentucky, which helps investors manage over $2 billion in total assets.

25/6/10 15:25:18

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23/6/10 14:10:30

HRM | INDUSTRY INSIGHT

Fiduciary friendly tune-up Kent Peterson outlines the six best practices for retirement plan investment ﬁduciaries.

lan sponsors have significant fiduciary duties once they decide to offer a retirement plan. Th is means plan sponsors must manage their plans with the best interests of the plan participants in mind. Section 404(a)(1)(b) of the Employment Retirement Income Security Act (ERISA) also requires that the employer manage the plan with “care, skill, prudence and diligence”. Th is “Prudent Person Standard of Care” can be daunting, but is achievable when plan sponsors have a well thought out process. Very often employers hire or partner with experts who can help them meet the prudent person requirements. However, this does not relieve them of their fiduciary responsibilities. Implementing some fundamental best practices can help them stay on track. Securian, which has been in the retirement plan business for nearly 80 years, has identified six core “best practices” for retirement plan investment fiduciaries:

“Managing a retirement plan for the exclusive benefit of employees is complicated, even for those with expertise” First, maintain an Investment Policy Statement (IPS) with clear goals and objectives for the plan. ERISA Section 402(b)(1) states that, “Every employee benefit plan shall provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan and the requirements of this title (‘named fiduciary’).” A well-drafted IPS provides the building blocks for a successful fiduciary process because it outlines clear goals and objectives, defi nes

SECURAIN INDUSTRY ED P52.indd 52

a prudent process, sets documentation standards, outlines a consistent and repeatable approach for the selection criteria and review of investments, and defi nes how investments should be evaluated and records the results of these evaluations. Second, meet the Section 404(c) ERISA requirements when constructing an investment array so employees can create diversified portfolios with varying degrees of risk that meet their investment needs. Plan sponsors should understand that many employees probably fall into a group that Securian describes as “do-it-for-me”. These employees do not have the skill, inclination or time to make well-informed investment decisions. Pre-packaged solutions are now popular because they provide “do-it-for-me” employees with well-diversified portfolios with little effort. Th ird, prudently select and monitor a default investment that qualifies as a Qualified Default Investment Alternative (QDIA) to achieve relief from the fiduciary liability of investment outcomes for participants that do not make an investment election. Since the plan sponsor must prudently select and monitor its QDIA, it should be transparent, allow for plan sponsor action, and have a reasonable cost. If all three are not met, the plan sponsor should consider other alternatives. Fourth, avoid proprietary fund requirements to maintain prudent investment selection. Some retirement service providers force plan sponsors to use their proprietary investment options. If there is no freedom to choose, there can be no prudence. Each investment

option must be evaluated and included in the plan on its own merits. Fift h, demand fee transparency and revenue neutrality to ensure that expenses are reasonable and that they are fairly allocated to participants. Fee transparency allows the plan sponsor to understand all of the expenses that participants are paying. The plan sponsor should demand complete and full disclosure. It is essential that all investment options generate the same revenue to cover plan expenses. Th is is revenue neutrality. Without revenue neutrality, some participants are paying more than their fair share. And six, construct an investment array appropriate to the skill level of plan participants. Investments with significant volatility or the potential to become illiquid should not be offered in a participant-directed plan unless the participants are highly-skilled investors. If participants do not adequately understand the risks, plan sponsors are exposed to fiduciary liability. In conclusion, managing a retirement plan for the exclusive benefit of employees is complicated, even for those with expertise. Plan sponsors should try to use best practices and align themselves with partners that look out for the best interests of the employer and its employees.

Kent Peterson, Director of Investment Services for Securian Financial Group, has worked in the retirement industry since 1990. He is a fellow of the Society of Actuaries and holds the Chartered Financial Analyst and Accredited Investment Fiduciary designations. He is also a member of the Advisory Board for the Investment Fiduciary Leadership Council.

25/06/2010 14:54

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HRM | RETIREMENT

Wake up call Is time running out to tackle the looming retirement crisis?

t the end of a long working life, most of us hope our twilight years will be something we can enjoy. A comfortable retirement is seen as a just reward for decades spent at the coalface, a chance to live out dreams held on to for years. It could mean being able to travel, buying a boat or simply the opportunity to spend more quality time with family. However the traditional view of retirement is changing, bent out of shape by a range of external pressures, meaning that the post-work reality for many retirees will be a far cry from what they might have imagined. A key factor in this shift is that we are living longer lives. Despite the much-vaunted threats of obesityrelated illnesses and global pollution, the fact is that American life expectancy continues to creep steadily higher. The average person born today can expect to live a full 10 years longer than someone born in 1960. While longevity is generally a cause for celebration, it does raise some big implications for retirees, the most pressing being how this extra decade of life is going to funded. The problem of a growing number of retirees is compounded by a downward trend in the birth rate. Smaller amounts of people in work mean less taxes flowing into the government’s coffers, which means less money to support the burgeoning retired population “The fact is that as we move through the 21st century, the burden of paying for an ever greater amount of retired people is going to fall on a shrinking number of younger workers,” says independent pension adviser Henry Rice. “If things continue the way they are going, state-backed pension schemes are going to struggle to cope.”

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RETIREMENT | HRM

â&#x20AC;&#x153;The fact is that as we move through the 21st century, the burden of paying for an ever greater amount of retired people is going to fall on a shrinking number of younger workers. If things continue the way they are going, statebacked pension schemes are going to struggle to copeâ&#x20AC;?

RETIREMENT.indd 55

Demographic shift

Year

Birthrate (Children per woman)

Life expectancy at birth

1960

3.65

69.77

1965

2.91

70.21

1970

2.48

70.81

1975

1.77

72.6

1980

1.84

73.66

1985

1.84

74.56

1990

2.08

75.21

1995

1.98

75.62

2000

2.06

77.03

2005

2.05

77.74

2008

2.1

78.44

25/06/2010 15:15

HRM | RETIREMENT

To a greater or lesser extent, developed countries across the world are having to face up to the pensions time bomb. Take Greece for example. According to research carried out at the Cato Institute by economist Jagadeesh Gokhale, even before its current and future pension obligations are taken into account, the country’s debts total up to 113.2 percent of its gross domestic product. Add in the burden of supporting the retired and that figure jumps to an astonishing 875.2 percent of GDP. While that is an extreme example in a country where fi nancial mismanagement has been the norm, even better run nations are facing a seemingly insurmountable pension bill. Germany, widely regarded as one of the most economically sound European countries, faces obligations of 418.2 percent of GDP. But before we start to dismiss this as a problem for the EU, it is worth noting that the US is in exactly the same boat, it’s national debt jumping from 83.6 percent of GDP to 500 percent when retiree benefits are included. With 78 million baby boomers heading toward retirement, it’s not as if we have any right to be surprised by these developments. The growing demographic disparity between the old and the young has been gathering momentum for decades, but governments seem to be at a loss about how to tackle it. The main issue is that the solutions to the problem, while potentially simple, are unlikely to be popular. Few in government seem keen to commit political suicide by advocating higher taxes, reduced benefits and an increase in the age of retirement. Asking the younger generation to start paying now for bills that won’t be due for decades, complete with the knowledge that they are going to have to work longer anyway, is a pretty tough sell. Th is is compounded by the fact that those politicians pushing such changes through are likely to continue to benefit from the current system. In truth, state-backed pensions are only part of the problem. In 2004, the average social security payout for a retired man was $1076.10 a month or $12,913.20 per year. Considering that the average annual wage at the same time was $35,648.55, retirees relying on nothing but social security are going to have to face a significant drop in income once they say farewell to work. As a result, many make alternative arrangements, such as 401(k)s or employer sponsored pension plans. In the past such investments were seen as virtually risk-free. Make your payments as planned and your golden years would be a breeze. Unfortunately, just like virtually every other fi nancial product, pension funds have been hit hard by the recent economic meltdown. Retirement accounts have reduced in value from $4 trillion to $2 trillion since 2007, leaving many retirees facing significantly lower post-work payouts. According to the Employee Benefit Research Institute, it could take

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between two and a half and nine years for 401(k) values to return to pre-2008 levels, news that should strike fear into the hearts of anyone planning to retire within the next decade. General Motors offers a particularly striking example of the downturn’s impact. “Our US hourly and salaried pension plans were overfunded by more than 20 percent at year-end 2007 and we do not expect to be required to make any cash contributions to these plans for the foreseeable future,” said then CEO Rick Wagoner, in the soon-to-be-bankrupt auto giant’s 2007 annual report. The lesson of GM is one with worrying implications for millions of defi ned-benefit plans, many of which are held by public-sector employees. General Motors conceded increasingly generous retirement benefits to its people on the mistaken assumption that the good times were going to last forever. When the crisis bit, it was revealed just how mistaken these assumptions were. Cash reserves decimated by the collapse in sales, GM suddenly found itself struggling to keep its head above water. A particularly striking statistic is that, following round after round of cost-cutting layoffs, the company found itself supporting 10 retirees for every salaried employee. Some have drawn parallels between GM and the state of California, itself facing a massive pensions black hole in trying to fund the defi ned-benefit plans of millions of state employees. Though defi ned contribution plans are now more common than defi ned benefit among private-sector workers, all this does is shift the responsibility onto individuals rather than organizations. Many choose not to pay into such plans, but even those that do face the prospect of shrinking payouts as the companies such funds invest in struggle to rebuild values in the wake of the fi nancial crisis. So how are today’s workers going to pay for tomorrow if many of the traditional routes seem so unreliable? Those wishing for some kind of magic bullet solution are likely to be disappointed. For many, a comfortable retirement is going to rely on delaying the end of work, or even taking on a part time job once their career fi nishes. Th is trend is on the up, with 18 percent of employees now saying they expect to work after retirement, compared to 10 percent in 2001. We are also seeing some governments starting to grasp the nettle of lift ing the retirement age. At time of writing the new coalition government in the UK is proposing a one-year raise, with more to follow, in the hope of closing the funding gap. It’s too early to say exactly how things are going to pan out, but a concerted effort needs to be made to tackle the problem sooner rather than later. One thing is for sure, it looks as though the future of retirement is going to be a lot less relaxing. ■

“The growing demographic disparity between the old and the young has been gathering momentum for decades, but governments seem to be at a loss about how to tackle it”

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23/6/10 14:09:35

HRM | WORKFORCE DEVELOPMENT

Tomorrow people Ellyn Shook, Global Managing Director, Rewards, Performance and Career Management at Accenture explains how technology is accelerating the HR function and bringing coherence to the consulting ďŹ rmâ&#x20AC;&#x2122;s international workforce.

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WORKFORCE DEVELOPMENT | HRM

What role does technology play in building culture and managing the workforce on a global scale? ES. Technology is a really important component of managing a global, virtual workforce, and we’re pretty good at it. We have a lot of tools that help our people collaborate. For example, we have real-time video conferencing available to us so we can to meet on a real-time basis, even for very small meetings, so that we can work on any issues. We also have desk-to-desk video. Instead of picking up the phone and calling somebody, I can literally video into you and we can see each other. When your team is global and you’re dealing with clients that are truly global, you may have never met each other in person. Being able to see your face and see your reactions to the discussion is important. We also have technologies that allow us to share our desktop. If we’re in a meeting, a virtual meeting with five people, 10 people or 20 people, we can all see the same document and work on it dynamically at the same time. By having those technology tools available to us, it really creates a sense of team in a very virtual network. Exactly how do you employ technology to reinforce culture among your globally dispersed workforce? ES. At the heart of our culture are our core values. We’ve defi ned behaviors and actions that we believe will demonstrate core values and we have some really simple but powerful tools to help us reinforce that. For example, we have a recognition program called Thank a Colleague and literally instantaneously, if you see someone demonstrating one of the core values or the behaviors that we expect of our leaders at all levels, you can immediately send a thank you card letting them know you’ve seen them demonstrate that behavior on a very real-time basis

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Beam me up

“

We’re always innovating around technology that can help us collaborate. A new and interesting thing that we’re working on in the Accenture technology labs is something we’re calling Team Beam. And that really is stitching together all of those technology and collaboration tools that we have to create one integrated set of tools where we can combine the virtual desktop, the video, the voice together so that we can create truly a team room without people being anywhere physically near each other. The Team Beam is just going to bring all of our tools to the next level so that anywhere you are, whether you’re home or in an ofﬁce environment or at your client’s site or sitting in an airport lounge, you can really literally connect and feel like you’re sitting in that conference room when you’re really not.

“We work across virtual environments to serve our clients successfully and having teaming and collaboration at our heart has really helped us be successful and really been an important part of our culture”

“

From a HR perspective, what are the most important components of the culture at Accenture? Ellyn Shook. The most important components of the culture at Accenture are really several fold. First, our relentless focus on client service. We are about our clients and serving our clients and being client-centric. Having everyone focused on helping our clients become high-performance businesses is a real central theme about our culture. Second, I think that one thing that differentiates us is really having teaming and collaboration at the heart of who we are. Teaming and collaborative behaviors really evidence themselves very clearly as we serve our clients through a global footprint and a global delivery network. We work across virtual environments to serve our clients successfully and having teaming and collaboration at our heart has really helped us be successful and really been an important part of our culture.

doing the work that they do every day. Having simple but powerful tools like that, that reinforce what we want to see in our culture, really helps us bring that culture to life all around the world. The beauty of that kind of recognition program really is its simplicity. People get very excited when they get a Thank a Colleague card from somebody that maybe they haven’t even met, but who really helped them deliver value to the client or demonstrated integrity in some way. All of a sudden they get this thank you card at their desktop from someone that said, “Hey, I saw you,” or “I knew you did this.” It really makes people feel good and connected. Training is one of the areas where technology is having the largest impact. How is Accenture using technology to help its people develop and grow within the organization? ES. We’ve certainly adapted our training and we make a huge investment in capability development and training for our people. In fact, last year we spent $800 million on training our people and we really push it on multiple levels. All of our professionals get what we call core training, which is the basics for doing their job, and then we move on to very individualized training depending on the needs or the aspirations of the person. We deliver training in a variety of different ways. We have three physical training locations, one in the US, one in the UK and one in Malaysia. We can physically go and meet as a team and be trained, but we also deliver training through our Accenture training portal called My Learning. We now have our training available to us on our mobile devices. Because we are a culture on the move, I think it’s one of the best things that we’ve done.

25/06/2010 15:20

HRM | WORKFORCE DEVELOPMENT

The other day, I was headed to the airport to fly to New York and I wanted to take some of my core training. So I pulled out my BlackBerry, accessed and did my training, took my proficiency test and sent it back to central training. I enjoyed doing it and I got it done in a very efficient way. Having the ﬂexibility to train that way must be really useful, is it something that permeates throughout the organization, not just at executive or management levels? ES. It really does because at the core of our employee value proposition are opportunities to learn and grow, so we believe ourselves to be a very strong learning culture and as a result, people want to do their training. They want to have access to it. In addition to the classroom learning and the portal and being able to access your training on your mobile device, we deliver it in many other ways, as well. If you’re someone who likes to listen to your iPod, you can download your training on a podcast. You can read your training if you don’t want to listen to it. What we’ve done is not build a one-size-fits-all approach. We’ve really tried to connect with people and fi nd out the way they learn best or the way that they need to access our training and capability development. As a result we get very high grades from our people through our employee survey on our training and development. Speaking of development, do you believe that it’s possible to teach leadership or is it something innate? ES. I think that you can teach leadership as a science but I don’t think you can teach someone to be a leader. There are things that all of us can learn to be better lead-

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Accenture by numbers

More than 181,000 employees

Ofﬁces in 200 cities in 52 different countries

Revenues of $21.58 billion in 2009

ers but I don’t think that all of us can be great leaders. Really I anchor back to three things that our CEO says all the time, competence, confidence, and caring, and it’s really all about that. It’s really building deep competence in your area of expertise; having the confidence to go out and serve your clients and your people; and really caring, caring about your people, helping them learn and grow, and caring about your shareholders. So if you really can master the three C’s, I think you can be a great leader. Finally, what advice would you give to other HR professionals reading if they want to move their careers forward? ES. If you aspire to be a more senior HR leader in your organization or elsewhere, really going back to those three C’s can help you. So first, of course you have to be a competent HR person. That’s the basic, but to be a really great HR leader, you have to be as competent in understanding the business of HR. Because without that, you really aren’t valuable to your CEO and to the most senior leaders in your organization sitting at the table helping to drive business strategy. You need to understand your business in order to do that. So that’s the first thing. Know your business, not just HR. Then you need to have the energy and the courage to really state what you believe, to have a point of view about your work and your world and your business and express it clearly. And fi nally, really keep the interests of your people on the table and at the forefront. Especially in a business like Accenture, where our business is our people, our people’s interests really need to be at the top of our mind in order for us to be able to serve our clients.

25/06/2010 15:20

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23/6/10 14:09:02

HRM | LEADERSHIP

Making your move John Baldoni explains why presence matters so much in the leadership game.

he question; “Will anyone follow my lead?” is one that that many managers ask themselves from time to time, but it holds particular resonance with those being considered for the most senior positions in their company. Such executives know they are competent otherwise they never would have been promoted. They have a track record that demonstrates their capabilities. But they wonder: do I have what it takes to inspire followership? And it is not only senior executives who ask themselves such questions; succession planners do the very same thing. Be it boards of directors, or human resource managers, these folks are looking for leaders who can address the issues of the day but also do more. They want leaders who can touch the minds as well as the hearts of employees. A common term used to sum up what a leader needs, especially one aiming for the very top, is leadership presence. Often you hear the term, ‘executive presence’. It is an apt term for the radiance certain executives project, but leadership require more than sheen. It demands interior conviction, the willingness to lead others, not simply in good times but when the heat is on and the future of organization is at stake. That requires leadership presence that I defi ne as ‘earned authority’. It is earned by example and by experience. A good leader who leads from the front, is one who asks nothing of his team that he would not do himself. In a corporate context that means a leader is willing to sacrifice part of themselves for the greater good. Sacrifice in tough times may require a cut in pay or an investment in more time on the job. Experience is example over time. It is a sense of accumulated wisdom gained through managing through tough situations. We learned sadly as the recession was unfolding that many senior leaders were in over their heads because they have never experienced such accumulation of challenging circumstances. For some leaders, this was not an issue; they reverted to form, marshalling knowledge and resources to right their sinking ships. But some corporate leaders were overwhelmed and lost their jobs, not because of hard times but because they proved unworthy to the crisis.

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Authority is the second word in leadership presence.

“A leader is only as good as his followers will allow him to be”

While authority is granted by the institution, it must be authorized by followers. Yes, people will go along with their boss for one reason – because it is easier to go along than fight. But if the boss’s authority is imposed in ways that are arbitrary and unconvincing, followers simply go along to get along. Compliance ensues but never commitment. In today’s challenging times, or frankly any time, commitment is essential to leadership. And so when we think about leadership presence we must accept the notion of reciprocity. That is, a leader is only as good as his followers will allow him to be. Genuine followership is gained by connecting with another person in ways that answer the question of why they should follow you. Leadership presence plays a critical role in gaining followership and for that reason it is worthy of exploration.

Instill purpose The ability to instill purpose is essential when considering those eligible for promotion to senior ranks. To illustrate let me share something that happened to

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The power of three The key aspects of leadership presence Using authority Authority is what holds leadership promise together. With it, you can lead; without it, you might as well do something else. Many leaders come to authority naturally; they embrace it totally and wield it like a sword to demonstrate their power. Others adopt it reluctantly, seeming shirking from the responsibility. In truth, neither approach is wholly right or wholly wrong. Leaders must embrace command, but they must do so cognizant that their power stems from the people they lead. One attribute of authority that holds particular importance is persuasiveness. Operating in vacuum – or in a closed office – does not a leader make. No leader of an enterprise larger than a three person operation can do much by himself. Sometimes autocratic executives will get into trouble because their heavy-handed management style turns people off. So when the heat is on and they need the support of others they will often find no one standing behind them. All leaders, need the cooperation and collaboration of others. Therefore, leaders must bring others to the cause; that’s a key measure of leadership. Essential to that mantra is an ability to communicate the objectives in ways that encourage people to buy into the process. You need to make the objective not only tangible but possible as well as good for the enterprise. Fulfilling some objectives is onerous – layoffs, closures, and terminations – but if they are done for the good of the organization, and ultimately the people in it, then they must be done. It is up to the leader to make the case.

Leveraging power Power is intrinsic to leadership presence and so it is important to discover

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ways to use it positively. You must learn to apply it in the workplace in order to create allies, lead others, and achieve results that are sustainable. When you have power you must demonstrate it. In the heyday of the Roman Empire, its disciplined legions were the manifestation of Roman power. Military prowess alone, however, did not hold the empire together. It ensured the peace so that the Roman system that fostered commerce, trade, building and education could proliferate. The lesson is that power is more than force of might. It is the authority to make good things happen. When you have power use it to further the aims of the organization not simply your own agenda. For managers, it means using power to achieve results. Marshall resources to develop a new project and bring it home on time and on budget. Those who are comfortable with power, share it. All good managers know that power without the support of others is useless. The irony of power is that it can never be wholly centralized. Certainly in dictatorships, power emanates from the person at the top, but he is supported by legions of minions who are only too happy to carry out his whims. Why? Because they receive some kind of beneﬁt either personally or for their families. Within the corporate sector, the CEO is the person in charge, but successful business leaders delegate, delegate, delegate. And with authority, too.

Decide and stick with it Authority and power are essential to the leadership equation but unless it is leveraged with good decision-making a leader will not succeed. The criteria for making decision within a business environment should be the effect the decision has the company’s value equation as it relates to customers, employees and shareholders. The value equation includes more than good financials, although good returns are essential. Value encompasses more of what many refer to as the “triple bottom line,” which defines how well a company delivers on its economic, social, and environmental commitments. The decisions a leader makes today will define her legacy for tomorrow. But if such a leader is taught to make good decisions in a way that facilitates two-way communication, she will have a proper framework for making good decisions. She will have the communication skills necessary to ask for input and assistance as well as the confidence to know that she can make the right decision. After all, as Winston Churchill put it, “The price of greatness is responsibility”. Authority, power, and decisiveness ground the concept of leadership presence with an internal reality that goes beyond the externals. These are the drivers that allow a leader to use authority and power for good in ways that are essential to encouraging followership. These attributes describe what followers expect their leaders to do.

25/06/2010 15:21

HRM | LEADERSHIP

me. My mobile is an iPhone and one day while in the Apple store I asked one of the clerks in the store when Apple might be coming out with a wireless keyboard. The young man eyed me and said, “We are committed to the onscreen keyboard.” He then explained the reason why. While some might have taken the explanation as arrogance, I took it at face value. The young man said, “we,” not Apple, not the company, and best of all, not “they”. He took ownership. He resonated with pride as he touted the Apple philosophy. That in a nutshell is pride in purpose. Every leader needs to ensure that every employee feels a similar pride in purpose. That is a huge challenge and so it falls to leaders to leverage their ability to connect authentically with others so that they feel the pride and purpose the leader has for the organization. Th is is where presence helps. Leaders use it to communicate with more than words but through their personal example. When considering an executive for senior leadership the ability to instill pride in the job so that others believe it, too, is critical.

Looks matter Those who aspire to lead must look the part. You have to dress the part of a leader. For some that is a suit, for others that is casual smart. Good appearance leads to command presence. From the cop on the beat to the CEO on the top floor, command presence is essential to delivering on your authority, wielding power appropriately and acting as a leader should with character and conviction. Command presence is the ability to demand attention through a look or glance. Those with command presence are those who are seldom seen to exert force but you know they have it and can use. Again, the good cop on the beat is a classic example. They can use force appropriately but seldom have to because they exert presence their command of the situation. That does not mean stern looks that scare people way. Approachability is essential to building followership. After all you want people to come to you because they believe in you and want to follow your lead. A wise leader knows this and so carries themself with a manner that invites dialogue. Such leaders also know, most importantly, that their leadership is not about them. It is about what they do. As historian and leadership philosopher James McGregor Burns has written: followers follow the leader because they feel the leader represents their values, their beliefs. Leadership then becomes a shared experience. Related to appearance is charisma. Do you need it to lead? No, but it helps. Th ink of charisma as a leadership veneer. And like veneer it casts a reflection. Those who are handsome or beautiful as well as self-confident may project some form of charisma, that ability to draw people

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“Those who aspire to lead must look the part. You have to dress the part of a leader”

to them. But it is important to realize that charisma is ephemeral. That is, people read into it what they want to, we project our aspirations onto leaders and if we catch a reflection of that aspiration it adds to the leader’s appeal. Keep in mind that charisma does not depend upon movie star looks. While Ronald Reagan projected charisma so too did Mother Theresa. One was a movie star; the other was very plain. Yet both radiated a degree of confidence about themselves that was rooted in their ability to bring people together for common cause. Charisma adds to presence but leadership presence is authentic, that is, it emanates from the heart of a leader. Leadership presence therefore is more than a nice to have. More than an exterior sheen, presence is a reflection of deeply held values and a belief in one’s ability to do the job well enough so that people will want to follow. John Baldoni is an internationally-recognized thought leader in leadership and communications as well as a popular leadership speaker, executive coach and executive educator.

25/06/2010 15:21

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23/6/10 14:01:40

HRM | PROJECT FOCUS

Coaching success

Karen Tweedie outlines the beneﬁts professional coaching is having on business development processes.

s professional coaching right for your company? Perhaps you’ve read something about it in a newspaper. Maybe you even know someone who has hired a coach. Coaching is getting a lot of attention these days, but does it really work? If you ask organizations like IBM, NASA, the BBC, Deloitte and Touche, or LogicaCMG, they’ll say yes it works – these groups have used coaching to meet a number of different goals, including improving work performance, increasing employee productivity, team building, raising product quality and increasing employee retention.

Global research Progress being made by companies such as the above supports results of the 2009 ICF Global Coaching Client Study. The study, which collected input from over 2100 coaching clients located throughout 64 countries, demonstrates that professional coaching is having a remarkable impact on businesses and individuals around the world. Global results from the study show the median company return was 700 percent, or seven times the initial investment. In fact, these results show that, where ROI could be calculated, a significant majority (68 percent for personal and 86 percent for company) reported that their return was at least 100 percent of their initial investment in coaching.

Logica case study Now let’s take a look at just one case study – LogicaCMG. Logica, a leading European IT and business services company with more than 40,000 employees, has been using coaching for several years now, developing new coaching-based initiatives as part of their overarching business development programs. The company fi rst started pursuing a strategic coaching agenda in 2003 when it launched a leadership development program for high potential executives. Since then, the company has continued to use coaching with business performance improvement projects. The overall coaching strategy in Logica has impacted the organization at many levels and in many ways. Success has been

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shown through various means including organizational staff surveys and staff retention measures. Logica CEO Andy Green says, “We aim to inspire our people to achieve more than they ever felt possible. By opening eyes and minds and building skills we can help people improve performance and put our clients at the center of everything they do. Our innovative approach to coaching plays an important part in delivering these ambitions.” In its business development program, the company is piloting the new Logica coaching framework and supervision process. Forty account directors are participating with 16 coaches and five coach supervisors. An important component of this initiative is to implement a supervisory framework for the internal coaches in Logica that aligns the objectives of the coach, coachee and the organization; promotes and maintains a comprehensive ‘contracting’ process throughout the coaching cycle; continues the development of coaching skills in line with the International Coach Federation’s Core Competencies and Code of Ethics; supports the coaches through specific coaching challenges on a ‘case by case’ basis; and facilitates the development and inclusion of internal coach supervisors over time. The business impact of this service will be feedback from line managers and HR sponsors that coaching in Logica is being delivered in a clear professional framework and generating measurable business benefits. For the business development program in which this new framework will be piloted, “the aim of the coaching is to support the vision to create world class account directors that are able to operate effectively at a senior level”. The envisioned results are: Logica’s Account Managers to proactively interact with the business leaders of their target accounts and create projects around their customer’s big strategic needs, before they are fully formed and gone out to tender; to use knowledge management and relationship based activities, to create sufficient demand for Logica solutions so that it becomes a single source tender situation; and that the customer sees Logica as a ‘trusted advisor’ at boardroom level.

Karen Tweedie, ICF Professional Certiﬁed Coach, served as President of the International Coach Federation in 2009 and has 16 years of successful experience in coaching, training, facilitating and consulting. She is Director of Coaching for Coachbroker Pty Ltd, a company that matches quality coaches with the corporate world.

25/06/2010 15:20

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23/6/10 14:00:00

HRM | LEADERSHIP DEVELOPMENT

GROUND

FORCE Stan Litow explains how corporate social responsibility efforts rooted in communities across the world are growing a new generation of global leaders.

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BM has been going through some changes of late. No longer is International Business Machines simply a manufacturer of computer products, now it wants to change the world. With the launch of its Smarter Planet initiative in late 2008, IBM signalled a dramatic shift towards becoming a provider of solutions, creating interconnected technology to make roads, cities, healthcare and communications more intelligent. Not only was this a major change in business priorities, it was also a clear signal that Big Blue wanted to be seen as a force for social good rather than just as a corporation. This is reflected in the growing focus on corporate responsibility and philanthropy efforts that have gained significant momentum in recent years. Such a dramatic shift clearly has big implications for IBM’s people. Stan Litow is President of the IBM International Foundation and Vice President of Corporate Citizenship & Corporate Affairs. He oversees a range of initiatives that more closely resemble those of a charitable NGO than a Fortune 500 company. Perhaps the most significant is the Corporate Service Corps, which tasks high performing employees with fi nding solutions to real-world problems all over the globe. “They spend about two and a half months working online as a team, building their work and learning about the project,” Litow explains. “They spend one month together on the ground working on the problem, delivering results on the ground. Then they spend the next two and a half months working together in their post-work phase, fi nishing off the project, and then mentoring the next team that goes in. In a geography like Nigeria for example, you could have two or three corporate service corps teams coming every three or four months, maintaining the continuity of the project. So for example a team could set up the equivalent of an entrepreneurship program for women in Ghana or they could help develop a plan for a tax-exempt zone to grow the tourist industry in Tanzania.” While work on a project might not be completed by a single team, over the course of a few years the application of IBM’s expertise leaves capabilities on the ground where perhaps none existed before. Naturally, this all sounds fantastic for the communities and individuals that benefit. However, it’s hard not to wonder exactly what is in it for IBM? “Not only have we seen improvement in the skills of the people who work for us, but we’ve also been able to document a significant amount of improvement in the skills of the people in the community with whom they work,” Litow explains. “We like to describe the program as having a triple benefit. There’s the individual benefit of the most extraordinary leadership development program, which many describe as the experience of a life-

25/06/2010 14:54

LEADERSHIP DEVELOPMENT | HRM

It’s not where you’re at, it’s where you’re from Litow explains how his background offered the ideal preparation for life at IBM.

“

I spent time in all sectors of the economy. I worked in government for the Mayor and the Governor. I ran a think tank in the voluntary sector and did a lot of community organizing and social enterprise activities from the voluntary sector. I’ve taught at a university level, so I’ve had a lot of different kinds of experiences that help me. I was Deputy Chancellor of schools in New York City, which is the largest school system in the United States, so I had a lot of understanding about how the public and the voluntary sector approaches a lot of problems. What was clear to me at IBM is that we had some unique capabilities, such as our innovation and our technology, but then what became clearer to me was that it’s our people, the talent within our company, those with a signiﬁcant amount of engineering talent, business consulting talent, the software developers and researchers. This is a unique capability that could be coupled with innovation and technology to bring about substantive change. I like to think that my background helped prepare me for this work. People who perhaps had spent their entire career in the private sector might not have been as connected to the people at the grassroots level who you’re really looking to serve.

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“

time. There’s a benefit in the community, the equivalent of hundreds of thousands of dollars worth of business consulting services and each engagement really helping people solve problems, grow jobs, and improve their economy. Finally, there’s a benefit to the company in growing a generation of leaders who have a much more grounded understanding about growth markets and culture in the communities where we see our future.” Viewed as a leadership development tool, the CSC makes a great deal more business sense. Litow is in no doubt that the participants’ experiences are invaluable in making them more capable businesspeople. “First of all the skills they acquire, develop or enhance match up to the critical skills that are required within the company,” he says. “But increasingly we see that people who participated in this program are more flexible, more culturally adaptable, they’re better at teaming projects, they’ve improved their personal networks of people on a global basis within the company. They’re not only uniquely valuable for their Corporate Service Corps assignment, but they improve their capability in their day job on a regular basis.” So the CSC is a vital spoke in IBM’s strategy to build a workforce ready for the challenges the 21st century is bringing. As business gets ever more global and new markets open up, companies like IBM are going to re-

quire a whole new breed of leader, one who is comfortable operating in ways executives of yesteryear simply wouldn’t recognize. “It’s vitally important because it’s connected to how you grow your next generation of leaders in the company,” Litow confi rms. “A Corporate Service Corps – and yes we do characterize it as a corporate version of the Peace Corps – is fundamentally about leadership and leadership development. We have

“Not only have we seen improvement in the skills of the people who work for us, but we’ve also been able to document a significant amount of improvement in the skills of the people in the community with whom they work” seen a shift in our business model to become a fully globally integrated enterprise, and what that means is there’s a greater premium for people operating on a global stage. You’re doing business with people in cultures and communities different from your own, so where you are physically located doesn’t mean where you spend your business day interacting with people, clients, government leaders, community leaders. To do that you need a much more sophisticated understanding of the relationship between the public sector, the private sector, and the voluntary sector.”

Retention Aside from developing the leaders of tomorrow, programs like the Corporate Service Corps also help IBM hang on to these high performers. Litow tells us of an independent evaluation carried out by the Harvard Business School, in which 100 percent of CSC participants stated that their involvement had increased the likelihood that they would complete their careers at IBM. In an age where the concept of a job

25/06/2010 14:54

HRM | LEADERSHIP DEVELOPMENT

International rescue A few examples of the Corporate Service Corps’s global activities Romania Collaborating with the Romanian Center for Entrepreneurship and Executive Development to help develop employment opportunities in a global marketplace

Brazil

Tanzania

Working with six different NGOs addressing community involved education in under served areas, diversity in entrepreneurship, violence prevention, promoting scientiﬁc education, digital inclusion, and digital entrepreneurship

Formulating growth strategies and management plans for the Africa Wildlife Foundation, Tanzania Association of Tour Operators and KickStart, a nonproﬁt that develops and markets new technologies in Africa

for life seems like a quaint anachronism, such loyalty is extremely eye-catching. “If you talk within HR departments, not just at IBM, but in most companies, your top performers who have been with a company for seven or 10 years are those that you’re most at risk of losing if somehow they don’t feel excited and motivated about their work,” says Litow. “Nothing could be more exciting or motivating to a young emerging IBM leader than participation in the Corporate Service Corps. So it’s not only been a way of training your best leaders but retaining your best leaders.” In addition to motivating and engaging the people that IBM already has, potential involvement in the CSC is also a potent recruiting tool for high performers yet to enter the workforce. “I talk to business schools and computer science departments and universities all the time and I explain that if you came to work at IBM you could conceivably apply for and gain acceptance into this

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program,” Litow continues. “I think it motivates people to want to choose IBM as a place where you could combine an exciting business career and not have to put your social values aside, where most people think you have a choice to make. You could decide to work in a community or a not-for-profit organization and then you could get the joy of contributing to making your community stronger and more effective, or you can make an economic choice to pursue a business career, but I think what we’re saying is that you can combine both. You can be more effective at your job, more effective in the community, and you can help build a smarter planet.” There can be little doubt that social responsibility is becoming a bigger issue in a wider cultural sense. As consumers increasingly consider an organization’s CSR bona fides when choosing where to spend their money, it is little surprise that the same is true of potential employees when evaluating their career prospects. “They’re interested in a company that has a strong citizenship profi le,” Litow confi rms. “They’re interested in sound environmental practices. They’re supportive of efforts around business ethics and other sustainability questions. They’re very engaged in their communities. To give you some evidence, we have a little over 400,000 employees worldwide and about 140,000 of them regularly do community service, so if you’re looking for evidence of interest by our employees and their communities, that’s a good example.”

25/06/2010 14:54

LEADERSHIP DEVELOPMENT | HRM

India Working with government agencies, local NGOs and institutes of higher education addressing various business and technical constraints

China Assisting governmental agencies, chambers of commerce and small business owners on topics ranging from logistics infrastructure to workforce development

Vietnam Producing a program plan for small and medium enterprises in order to strengthen community and economic ties to enable global growth

Th is statement is backed up by the numbers of IBM staffers who try to get involved in the CSC. To be accepted, potential candidates need to have been identified as a top performer, have prior experience of community service and receive strong recommendations from local management. Despite these exacting criteria, the response has been striking. “In the fi rst year, almost 25,000 people applied for the fi rst 100 or 200 places that were available,” Litow explains. “It continues to be a very competitive process. So we look for the best of the best.” Th is includes business consultants, researchers, soft ware developers, marketing officers, communications specialists and fi nance people, a cross section of high-level employees with critical skills that cut across the whole organization. “A recent team that just came back from Ghana, were able not only to address the problems that were presented to them, but they had so many nuanced skills that they were able to solve problems that people didn’t even know could be solved,” says Litow. Clearly, this blend of capabilities brings big operational dividends. For a company of IBM’s size, using corporate responsibility initiatives on a global scale to build and maintain talent pipelines is an achievable challenge. However, for smaller organizations could such efforts be realistically accomplished? “Obviously 500 people a year covering 14 different countries with economic value of the teams in

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the neighborhood of $14 to $15 million a year, is something on a size and scale that a small or medium sized enterprise might not be able to do,” concedes Litow. Nonetheless, he believes that similar efforts engaging smaller numbers of people for shorter amounts of time are within the reach of companies further down the corporate food chain. “Small and medium enterprises are already engaged in one-year or two-year assignments, which is the more common model for replacing a skill that you think that you don’t have in a geography,” says Litow. “The Corporate Service Corps compared to that is a much more economical and lower cost model.”

“Leadership involves not just identifying something that is an example of excellence but being able to roll up your sleeves and work with people on their own terms” That reference to cost raises an interesting question. How exactly can ROI be measured on initiatives like the CSC? “There are some basic business metrics and measurements to determine the value of corporate citizenship,” Litow says. “First and foremost there is talent. You use these programs and use this capability to recruit and retain the best top talent that you can, because that’s a differentiator in the marketplace. We develop pretty good return on investment measurements that demonstrate that the scope of all the programs that we’re doing helps us to recruit and retain the best talent.” In addition, much of the Corps’ work centers around technological innovation, ensuring that IBM’s social responsibility and business goals can effectively intertwine. Litow gives examples such as using the company’s automatic language technology to create bilingual email technologies which bridge cultural divides as well as employing business analytics technology to help clean up polluted river systems. It seems the benefits of IBM’s social responsibility efforts flow in a wide range of directions, making big impacts both inside and outside the organization. For Litow though, it all comes back to leadership. “Leadership is not just about doingit’s about collaborating and listening,” he says. “It involves not just identifying something that is an example of excellence but being able to roll up your sleeves and work with people on their own terms to be able to spread that example into other cases and other communities. That’s what real leadership is all about.”

25/06/2010 14:54

HRM | EXECUTIVE INTERVIEW

Utilizing e-learning experiences Mobile and online learning is on the up. Josh Baron outlines the key beneﬁts and explains the importance of high quality education.

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The business climate has obviously been extremely hostile over the past few years. Can utilizing online learning play a role in keeping training costs down without negatively impacting the development of an organization’s people? Josh Baron. Online learning has some obvious cost savings, such as reduced travel costs, that can be significant in today’s business climate. The danger that businesses need to be aware of is the assumption that all online learning is the same and will result in the same outcomes. For example, there is growing evidence that web-based or computer-based training, which typically involves an individual working in a self-paced mode without an instructor/facilitator, often does not result in the same level of knowledge attainment as online training that involves interactions with an instructor and among students themselves. Although self-paced training may initially appear to result in the most cost savings, you end up paying more in the long run because of the need to re-train employees who did not gain the necessary knowledge the first time around.

What key beneﬁts does an online learning program offer over traditional class-based solutions? JB. The benefits are many but do depend in part on the format of the online course and the delivery model. Th is said, some of the more commonly noted benefits are: the ability for the student to engage in the learning process, whether that is at 8am or 8pm, when it works best for them; the ability for the student to think through and respond to discussion questions online rather than having to give a quick response when called on in a class environment; the breaking down of stereotypes, as you often do not know the race, age or even gender of the other students with whom you are working; peer-to-peer learning which is often an integral part of the online learning experience because of the ability for students to interact outside of a defi ned class period. It is important though to evaluate each online program on its own merits. For example, at Marist College, peer-to-peer learning is a cornerstone of many of our online courses but that may not be the case at all institutions.

There are more and more ways for people to connect and communicate becoming available all the time. Is the development of mobile technology having an impact on the way training and education is being delivered? JB. Mobile learning is certainly a hot topic in the distance education sector right now, driven in part by new mobile devices such as the iPhone and iPad. These devices are not only expanding our defi nition of learning ‘anytime, anywhere’ but are also facilitating new forms of learning, such as through ‘augment reality’ (i.e., the ability to superimpose information from the web, such as Google Maps, on to the real world). As exciting as these developments are, they are primarily still in an early experimental phase and thus their impact on training and education in general remains fairly limited. It is an area to be watching over the next few years as its potential is huge.

A major concern with regard to e-learning is the lack of human interactivity. How do modern online courses get around this problem? JB. First, I would say that this is more of a myth than reality, at least when it comes to high quality online learning experiences. As the last decade of research has shown, quality online courses require a great deal of instructorto-student and student-to-student interactions each week. These interactions generally take place in online ‘asynchronous’ discussion forums and can range from formal graded discussions to group projects to informal exchanges. In some cases, as we do at Marist College, discussion may also take place with outside experts who are invited in as ‘guest speakers’ in our online course. In fact, there are many cases in which students will report more interactivity in their online courses than those they’ve taken face-to-face.

As Director of Academic Technology and eLearning at Marist College, Josh Baron is responsible for supporting instructional technology initiatives, including distance learning, faculty training and student support. He plays a leadership role on-campus in the area of strategic planning and is currently serving as Chair of the Sakai Foundation Board of Directors.

25/06/2010 15:22

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23/6/10 14:01:10

HRM | ASK THE EXPERT

A balancing act

David Leasure looks at how to balance the business needs of today’s employer and the careerminded professional.

nline learning is among the most explosive growth areas in higher education today, with almost 11 percent of college students in 2008 enrolled online – a number expected to rise to 18 percent by 2013, according to the Eduventures Online Higher Education Learning Collaborative. But not all online education experiences are created equal, especially when it comes to balancing the changing marketplace demands of today’s employers with the professional needs of today’s career-oriented students, many of whom are juggling work and family. At Colorado Technical University, we recognized this higher education balancing act in 2004 when we created our online campus. We kept hearing from employers, including HR executives, that they wanted professionals who could immediately come into their organization and write a computer program, develop a marketing plan, conduct a competitive analysis, prepare a fi nancial spreadsheet, or manage other job-specific duties quickly and effectively. At the same time, our students demanded to learn concrete skills to help them advance in their careers or change professions. They wanted to know how to apply what they have learnt today to their career tomorrow and they wanted to feel motivated to learn in meaningful ways that fit their busy lives. The solution: we developed a proprietary Professional Learning Model that’s all about learning how you work and working how you learn. Th is model was founded on the belief that students achieve more by working on realworld projects, and thereby gain practical knowledge that employers desire. Here’s how it works. Each of our online classes at CTU starts with a real-world scenario – much like supervisors might come to their employees with an actual assignment. They expect their employees to research the situation, figure out a solution, and/or seek input from others. For example, our master of science in management

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David Leasure, PhD, is Chief Academic Ofﬁcer of Colorado Technical University and Chancellor of the CTU Institute for Advanced Studies, an innovative graduate school that provides achievable and effective graduate degrees for career-motivated professionals. He is a recognized expert in applying online learning best practices and emerging media technologies in the world of higher education.

degree with a concentration in homeland security includes an online course on terrorism that goes beyond theories and history. Coursework includes virtual simulations such as assessing a bomb threat in a foreign country. Students review a multi-media street scene with parked cars, street vendors, people looking out windows, and mothers pushing baby carriages on sidewalks. The students must identify and prioritize the threats they see to develop a risk mitigation plan. It’s a very real threat assessment – something they would need to do in a homeland security career. In fact, our advanced homeland security degrees were created in consultation with a national advisory board of experienced military, federal and local homeland security professionals, including a Coast Guard admiral and led by a former advisor to the Israeli cabinet. The coursework is also based on the homeland security curriculum developed by the US Naval Postgraduate School. Th is hands-on involvement and endorsement from professionals in the field ensure our courses are relevant to what’s happening in today’s careers. Th rough the Professional Learning Model, each CTU program has an advisory board comprised of carefully selected professionals in that industry area – whether it’s chief information officers for our IT degrees or business executives for our MBA degrees. Advisory boards meet at least once a year to review curricula and suggest updates based on what they’re seeing or predicting for their industries. In addition, many instructors who teach our courses are working professionals. The Professional Learning Model can give employers confidence that our online education and traditional campus courses address their ever-changing business environment and their people’s professional development goals. For students, the model gives them practical knowledge in an online virtual campus environment, where course material is supplemented with learning tools from the ‘MUSE’ or ‘My Unique Student Experience’. The MUSE allows students to interact with coursework in the way they learn best, offering a personalized learning approach that provides content in 11 different formats, including components that challenge them to try it, solve it, answer it or create it. It’s an online learning approach that balances the best of all worlds – addressing what businesses want and what career-focused students need to succeed.

25/06/2010 15:19

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23/6/10 13:45:40

HRM | FLEXIBLE WORKING

A better way to work HRM investigates the business case for wider adoption of ﬂexible workplace practices and policies.

here is no doubt about it: flexible workplaces benefit both workers and employers. And in a rapidly changing society flexible working arrangements mean that workers no longer have to choose between work and their personal lives. Flexible workplace arrangements can include where, when and how much an employee works, and include job sharing, phased retirements and telecommuting. Christina Romer, Chairwoman of the Council of Economic Advisors, told Market Watch that there is a lot of anecdotal evidence proving that flexible working conditions increase reliability: “The reason that flexibility tends to lower turnover is that people love it and it makes them not want to leave.” And not only is company loyalty improved but a recent report from the Council of Economic Advisors, Work-Life Balance and the Economics of Workplace Flexibility, proves that flexible working arrangements can save US businesses billions of dollars a year. The report states that, as you would expect, workers clearly gain from workplace flexibility – they are happier, healthier and more likely to remain with a firm that grants such flexibility. Regarding an increase in firm profits, there are three possibilities. First is that the costs of the arrangements outweigh the benefits of a flexible workplace. In this case, firms are not expected to embrace such arrangements. The second possibility is that the benefits and costs are such that fi rms’ profits are unchanged by a move to flexibility. In this case fi rms are more likely to be indifferent about the adoption of flexible workplace policies. The third possibility is that the

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net benefits are such that firms would gain from workplace flexibility. In this case, simple economics suggests that these policies and practices should be adopted. The Work-Life Balance report highlights a study conducted to measure the impact on firm profits, which tracked the announcements of new work-life balance policies by Fortune 500 companies in The Wall Street Journal. The study found that on average, fi rms’ stock prices rose 0.36 percent on the days following announcements of work-life balance initiatives. While, evidence suggests that flexible practices boost investors perceptions, many firms have yet to adopt any. Why? Well, one possible explanation suggested by the Council of Economic Advisors is that the relative cost/ benefit equation differs across industries and companies. And with firms that have the most to gain featuring in existing studies on the impact of flexible working on operations, the evidence suggesting economic benefits may overstate the benefits for companies that have yet to adopt these practices. These companies would see no economic benefits in adopting flexible working policies. That said, there is growing research to suggest that not all firms adopt the most efficient practices regarding flexibility, particularly in less competitive industries. “For example,” cites the Council of Economic Advisors report, “in the manufacturing sector where productivity is more easily quantified, managers of firms sometimes appear to fail to make the best choices. Economists argue that one factor that may contribute to the incomplete adoption of the best management practices is lack of information. Due to the changing nature of the labor force, it is likely that

“Flexible working arrangements can save US businesses billions of dollars a year”

25/06/2010 14:24

FLEXIBLE WORKING | HRM

*Percentage of full-time wage and salary workers with ﬂexible hours

39.6 39.2

Source: Current Population Survey, May 2004

36.3

31.5

30.5 29.0

24.8

24.4

24.1 23.9 22.0

20 15 10

Construction

Leisure and hospitality

Transportation and utilities

Mining

Manufacturing

Public administration

Agriculture and forestry

Wholesale and retail trade

Media and communication

Professional and business

Financial activities

the best practices from years ago do not provide enough flexibility for today’s workforce.” The report goes on to suggest that a re-evaluation of management practices in light of the evolving demands from workers is needed in order to make both the fi rm and workers better off. One way that companies could help in this case is to establish ‘right to request’ policies, which lay out the circumstances and procedures by which workers can ask their supervisors to consider altering their work arrangement to meet their needs for flexibility. A second justification for adopting flexible working practices – beyond fi nancial reasons – are the so-called social benefits. While some firms may be reluctant to offer attractive benefits packages that are costly to provide, flexible workplace arrangements see a lower input from the company, while workers benefits from increased flexibility in their working schedule. There are also likely to be more people entering the workforce if flexible practices are in place – those that would otherwise find it too costly to work in order to provide childcare for example, will be able to work around these arrangements. The Work-Life Balance report states that society as a whole will benefit from having productive individuals in the workforce because they will be less likely to use the social safety net and more able to pay taxes. Given the changing nature of the US workforce over the past 50 years, it seems that workforce practices and policies need to be updated for the 21st century workforce who are looking for more work-life balance, in order to boost productivity, improve morale and boost the economy. So, why not start implementing these flexible workplace benefits today?

Case study One of the case studies that the Council of Economic Advisors highlights in its report is Cisco Systems. In 1993, Cisco Systems, a large multinational internet network provider, began a formal telecommuting program for managers and employees. Cisco’s telecommuting program was one of the ﬁrst among Silicon Valley companies. It began out of the need to better organize the company’s global workforce. Since many workers travel, it became necessary to enable them to work remotely. The program allows employees to work from home or keep ﬂexible hours by using broadband technology to work in remote locations. The company does not necessarily require a set schedule as long as employees accomplish work objectives within appropriate time frames. More than 90 percent of employees currently telecommute at

Workplace flex.indd 77

least some of the time using residential broadband services. Cisco’s ﬂexible work arrangement has resulted in cost savings for the company. In 2003, it saved $195 million due to increased worker productivity. The company believes that telecommuting allows workers to be more focused and dedicated to their jobs. In addition, the telecommuting system allows the company uninterrupted access to missioncritical resources in the event of severe inclement weather. The company also hopes to save on rental costs, given its locations in many high-rent business districts. Workers appreciate the ﬂexibility the company offers. Anecdotal evidence suggests it helps in recruiting employees, since the company is seen as a good place to work. In 2010, Cisco ranked number 16 on Fortune’s 100 Best Companies to Work For list.

Source: Council of Economic Advisors Work-Life Balance and the Economics of Workplace Flexibility report

25/06/2010 14:24

HRM | EXECUTIVE INTERVIEW

Inclusion and diversity best practices

identified and benchmarked, and a scorecard is developed to report organizational progress as the program unfolds. Fourth, inclusion programs are crafted and implemented with regard to employees at all levels of the organization. Finally, any training that is undertaken incorporates proven adult learning techniques to affect the behavioral changes required to truly progress the organization toward its goals. What information is typically uncovered during an assessment, that isn’t already available to the organization? SE. Companies may be tempted to skip a formal assessment process due to the re-

Shirley Engelmeier explains some of the best practices top companies employ for successful and sustainable inclusion and diversity programs.

Having worked in the inclusion industry for nearly 20 years, what are some of the best practices top companies use to develop successful and sustainable inclusion and diversity programs in the workplace? Shirley Engelmeier. In my experience, successful inclusion and diversity programs have five main characteristics that ensure their effectiveness and sustainability in the workplace. First, an inclusion program is identified as a mission-critical need to support the organization’s stated business objectives. Second, a comprehensive formal assessment is conducted to analyze the current state of the organization and inform the strategic development of an inclusion program. Th ird, relevant metrics beyond representation are

Inclusion.indd 78

sources required. Because they typically include a representative sample of employees, assessments have proven decidedly worth the time, expense and managerial requirements for companies that use them. By helping executives uncover and prioritize highly specific areas of organizational need, assessments allow the organization to conserve resources. And because we believe the assessment phase is so critical to inclusion program development, our company offers a whitepaper on the topic on our website. You spoke about establishing “metrics beyond representation” for inclusion programs. What metrics do you recommend? SE. Typically, the metrics used in I&D programs are the basic diversity metrics such as race and gender. But what’s the impact of those metrics on the bottom line of the business? Through strategic consulting, the relevant metrics needed to measure support of the company’s stated business objectives are identified; then the assessment process establishes a benchmark for those metrics. We take it a step further for clients, by developing a scorecard to help report progress over time to stakeholders throughout the organization. In recessionary times, even the best inclusion programs may be deemed a “nice to have” if unable to demon-

strate measurable improvements to organizational challenges, ultimately running the risk of losing funding, or elimination. You referenced inclusion at “every level of the organization” as another best practice. How does that differ from mainstream inclusion programs? SE. Shouldn’t inclusion be for everyone? It just makes sense, yet many programs are designed to meet the needs of executives and key managers, with little or no involvement of front-line employees. Yet, employees interact with other employees and even customers, who may have different styles of communication, language proficiencies or cultural influences. With the appropriate engagement strategies for each level of the organization, sustainable cultural change can occur. What types of “engagement strategies” are appropriate for line-level employees, and is it cost effective to train every employee in the company? SE. A common approach to training is what I call the ‘dip’ method, where employees are involved in a half-day workshop and then sent back to their jobs, expected to have absorbed the information and changed their behaviors accordingly. Adults learn best with multiple, brief exposures to information, alternated with opportunities to apply what they’re learning. Our organization promotes a Learning Over Time approach to training, using multiple forms of media to increase the number of exposures to training content, along with application modules to practice the new behaviors. Because of the technologies used, it is highly cost effective for our clients to provide multiple learning opportunities for employees at all levels of the organization.

Shirley Engelmeier is CEO and Chief Inclusion Strategist at InclusionINC, and specializes in helping Fortune 1000 companies and emerging organizations develop and implement inclusion initiatives that positively impact the client’s bottom line.

25/6/10 15:21:03

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23/6/10 13:59:50

HRM | INDUSTRY INSIGHT

The paradox of global leadership Mike Thompson explains the importance of rethinking leadership development.

lobal leadership represents so much more than the location of your leaders. Your brand manager in Seattle might just be as much of a global leader as your operations manager in Rio de Janeiro. Sure, there can be a geographical meaning, but it goes much further. Global leadership includes leading diverse groups, leadership across the supply chain and throughout the enterprise. Simply stated, global leaders, different than everyday leaders, are adaptable people who are capable of leading effectively anywhere they are placed. They are the people who help your organization succeed in today’s constantly evolving and rapidly changing dynamic business environment because they are capable of evolving and changing as well, without losing their identity. The questions is – how do you create more of them? It is unsettling to me how companies are still looking to capture the perfect leadership

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competency model. The expectation is that the right skills are developed for the right situation. The belief is that the right skills help leaders execute the plan. But, there are contradictions for every situation. If yesterday’s move was logical, rapid change might make it illogical today. Consistent business practices are only valuable in a consistent business climate. The science of leadership and leadership development has failed to keep pace with the enormous changes in the global marketplace. Our leaders do not know how to manage the paradox between the need to be strong-willed and sensitive to the needs of the team. They struggle balancing command and control and remaining collaborative. They struggle balancing between having the right answers and forming the right questions. Today’s leaders do not know how to manage the paradox that exists in protecting organizational heritage and tenets while driving change, or from making the tough call while trying to create an inclusive working environment. Leadership development must look beyond simple skill-set development and focus more on helping leaders navigate the paradoxes by helping them form the proper leadership mindset. To create global leaders, mindset development must come before skill-set development. For instance, it is hard to become a better listener, without developing curiosity fi rst. Learning to look people in the eye, fight distractions, and ask appropriate questions are important, but they are simply mechanical skills. Being open to new ideas and processes, and remain-

ing inclusive of others, lets you really hear what’s being said – and put it to good use. Th is is what I mean by mindset. Mechanics can be applied and developed universally; mindset is individual. Mindset is the true separator of talent, not technique. Mindset helps today’s global leaders navigate disruption and change. The right mindset allows the global leader to operate under the right guiding principles. The right mindset allows these global leaders to manage the paradoxes effectively in order to achieve the right outcomes. For the global leader, managing the paradoxes and navigating through change and disruption is everything. Our companies miss the mark if they focus fi rst on developing the right skill-sets because the skills can become irrelevant in such a short period of time. However, I want to be clear. Completely discounting the need to develop the leadership skills of our talent would be wrong. The charge is that skill-set development alone does not equip our leaders for today’s inconsistencies and contradictions. Start by developing the right mindset first and then work to develop the broadest base of transportable skills for your leaders. Th is ensures your leaders are adaptable and your organization is agile and frees you up to release your leaders to perform rather than managing the skills they apply from situation to situation. If your organization is fi nding it hard to adjust effectively to the vast changes in today’s global business environment, consider developing the mindset of global leaders – leaders who are capable of navigating through change and disruption.

Mike Thompson is the CEO of SVI, a leading organizational development company whose mission is to create irresistible companies and extraordinary people. Thompson coaches current and next generation executives at many of the world’s largest companies to support them in developing sustainable and scalable organizational development solutions.

25/6/10 15:24:49

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23/6/10 14:09:15

HRM | DIVERSITY

Microsoft

Mixing g up p

Kelly Chapman tells HR Management about the tech giant’s program to build a more diverse workforce.

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Think of someone who works for Microsoft, the company that successfully brought the personal computer into every aspect of modern life, and your mind will often conjure up a version of the company’s founder and visionary Bill Gates. Gates represents perhaps the archetypal IT geek, albeit one who has achieved far more than the average tech-head. As a result, the image of the IT industry as populated almost exclusively by white men has been very hard to shake off. Perhaps fittingly, it is Microsoft itself that is now out in front in the battle to bring a wider demographic mix to the technology business. Kelly Chapman is the IT giant’s Director of Diversity Recruiting. When we speak to her from her Cleveland office, she acknowledges the size of the task she faced on taking up the position three years ago. “It is a challenge,” she says. “There is a lack of representation of women and minorities in technology. It makes it difficult when we go out to recruit because we are drawing from the same small talent pool that all of our competitors are recruiting from.” Even places where you would expect to find a higher concentration of diverse, technologically minded candidates often provide slim pickings for companies like Microsoft. “We might go to a National Society of Black Engineers conference,” Chapman continues. “There are thousands of engineers there but how many are actually soft ware developers or soft ware engineers?” The answer: not many. While you might fi nd a decent number of mechanical engineers, chemical engineers and electrical engineers, soft ware specialists are frustratingly thin on the ground.

25/6/10 15:06:26

“We wouldn’t be good corporate citizens if we didn’t focus on diversity and inclusion”

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25/6/10 15:06:26

HRM | DIVERSITY

“The word hasn’t gotten out about the exciting things that you can do with soft ware and with technology,” Chapman says. “So one of the things that Microsoft is doing is trying to get the word out and make young people more aware, number one, about technology and number two, that there are actually people like them who are doing well in the technology field.” Microsoft is lucky to have someone like Chapman leading this fight. Even a cursory glance at her personal biography marks her out as something quite different from the average corporate operator. That she is a single mother who has successfully raised a daughter now attending Ohio University, as well as the founder of a fund at the Cleveland Foundation to reward scholarships to individuals with mental health challenges, is unusual enough. That she balances the demands of her day job with a singing career which has seen her release two albums, while also fi nding time to write a book about Carl Mack (far left), Executive Director of the National Society of Black Engineers (NSBE), talks about the shortage of minority talent currently available in the IT industry during a web conference hosted by Microsoft. Mack and (from left to right) Ali Curi, President of the Hispanic Professionals Networking Group (HPNG); Michelle Tortolani, President of the Society of Women Engineers (SWE); and Kelly Chapman, Director of Diversity Recruiting at Microsoft. Kim Bondy (far right), founder and President of the Bondy Group, served as moderator.

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her life experiences, indicate we are dealing with someone pretty special. Despite Chapman’s eminent suitability for a role supporting diversity, it was actually something she slipped into almost by accident. Starting out in sales, she transitioned into recruitment before striking out to set up Lightworld Enterprises LLC, her own search fi rm. “As my clients started to realize that I was diverse, they realized that they had a need for diversity,” she explains. “And so people started to ask me, if I could help them fi nd diverse candidates. From there I started sourcing diverse candidates for a lot of the roles and I ended up transitioning my fi rm from just a standard search fi rm to a diversity focused search fi rm because I was getting so many requests.” In 2006 Chapman was hired by Eaton Corporation, one of her clients, to set up its internal search practice. “I built their entire internal search practice. Because I had a passion for diversity and actually knew how to get that work done we had a very significant diversity fi ll rate at the Director level and above. I was always insuring that we were providing diverse candidates,” she continues. Ultimately, Chapman’s work caught the eye of her current employers. “Somehow or other Microsoft found me and they recruited me away,” she recounts. “We were able to take some of the principles that I’ve used all of my career – executive search, research, sales and marketing, public speaking. All of those things have kind of helped to take the brand from where it was, which was already strong, but really deepen the relationships in diverse communities.”

Building momentum Since Chapman’s arrival at Microsoft , the organization’s existing diversity efforts have moved into a higher gear. She describes the process as centered around three key pillars: “The fi rst pillar is representation, and that’s about increasing the diverse pipeline,” she explains. “Then inclusion is all about really supporting the cultivation of an inclusive workforce, ensuring that everyone’s ideas are valued and included, and really just being a role model for inclusion. The last piece is market innovation, understanding that the marketplace is changing and we have to be prepared as a company to sell

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DIVERSITY | HRM

“There is a lack of representation of women and minorities in technology. It makes it difficult when we go out to recruit because we are drawing from the same small talent pool that all of our competitors are recruiting from”

to and represent the global communities that we serve. By focusing on innovation and having diversity, we’re able to build diverse products that meet the needs of very diverse customers that help us grow our business. Ultimately, it’s going to spur creativity.” In practice this means a great deal of work installing training classes and management excellence curriculums for hiring managers and so that people can both understand the business case for diversity, and how these principles can be instilled into teams throughout the organization. On the market innovation side, Chapman provides the example of Zune, Microsoft’s response to the all-conquering iPod, as one of the ways the organization’s product activities are influenced by the principle of diversity. “We had a diverse team of people who are going out to some of our diverse communities. It was critical that we ensured that their music was included as a part of that device,” she says. “It isn’t only representing one community but it’s a device that all communities can enjoy.” Th is concept illustrates the way that Chapman and Microsoft view diversity; not just through a social lens but also as a key factor in business competitiveness. “If we don’t have multi-cultural perspectives and we’re using a very unilateral or homogenous approach to how we build products, how we market products, we’re not going to be able to reach the broadest audience,” she says. “We’re a global company and we want to attract and sell to customers all over the world and that would include companies. We have to make sure that we have a very varied talent pool of employees who can bring different insight and perspective to everything that we do.” Innovation and customer relationships are also seen as benefiting from greater diversity. By defi nition, a more diverse workforce will possess a wider range of experiences, skills and ideas, a situation which should lead to the more effective generation of new concepts. On the customer side, a global organization has to demonstrate that it is representing the varied communities it seeks to serve if it is to provide products and services that these communities are actually going to want. Ultimately though, Chapman insists that Microsoft places such a priority on diversity largely because it is the right thing to do. “We wouldn’t be good corporate citizens if we didn’t focus on diversity and inclusion,” she says. “It’s one of the principles that the senior leadership team has put in place that we value diversity and inclusion and not only from an employment standpoint but even the dollars that we give out to the community all over the world. Whether it’s in Africa or in the United States, the money that we sow into communities and the programs that we have in place to help people realize their potential through technology is probably unsurpassed.”

Getting real Of course it is very easy to talk up the importance of a diverse workforce. It is quite another thing to make this talk into a reality, particularly in an industry as traditionally monochrome as technology. For Chapman and her team, this means pursuing every opportunity to engage with potential minority candidates, even before they enter the job market. “We have a program called DigiGirlz and that’s where we bring young girls in and they get an opportunity to meet women who are doing great things in technology,” Chapman explains. “We give them an opportunity to really understand what it’s like to consider that as a field, to have a day in the life, and get them excited about wanting to pursue that course of study.”

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The rules of attraction Chapman explains why Microsoft is such a hit with the ladies. Within Microsoft we have one of our largest employee resource groups which is Women at Microsoft. It’s a huge organization internally and we have an annual conference. Sometimes it’s outside of the United States where we’ll have thousands of women who will come together and talk about the issues that are of importance to women in the workplace. In some instances there are challenges in being a female in what is a male dominated culture. It’s important to make sure that we are offering women support. One of the things that I believe has evolved from not only the external focus with the organizations but also having that internal focus is that we have probably one of the most female friendly cultures. For example, we’ve got flextime and we’ve got Mother’s Rooms where you can have some privacy if you are a new mother. We’ve got really good benefits for individuals who have children and maybe have special needs. So we’ve done a lot as a company to provide a lot of support for women. Since I’ve been here I’ve talked to many women who were attracted to the company because of the benefits and it’s one of the reasons that – among many – makes them to want to stay.

In addition, Microsoft also supports schools that focus on science, technology, engineering and mathematics in minority populations, providing the technology and soft ware that teachers need to create the tech professionals of tomorrow. “We also give a lot of grants to organizations like the Urban League and a number of other organizations, such as Thurgood Marshall scholarship funds, so that we can help to build the pipeline for the future,” continues Chapman. But ensuring this supply of potential Microsoft employees will not be accomplished overnight, however much we might wish. “We know that it’s going to take some time,” Chapman concedes, “but we are starting to realize – just like many other companies – that you’ve got to start early. We want to focus on who’s available now, and that pool is limited, but we also know that we have to look long-term as well and think about who’s going to be available in the next 10 to 15 years.” To this end, Microsoft is engaged in a huge range of outreach programs designed to capture the imagina-

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HRM | DIVERSITY

“It is so critical that we spend time out in the field at these colleges and universities speaking to young people about preparing themselves”

tion of a new generation of workers. These range from support to the Boys and Girls Club to staging regular technology days at traditionally diverse university campuses explaining the value of IT skills. While Microsoft is obviously looking for diverse candidates to fi ll roles throughout the company, from fi nance to marketing to HR, the starting point will always be an interest in the technology that underpins the whole organization. In fact, Chapman argues that these skills are going to be essential even if the potential candidates she deals with end up taking very different career paths. “It is so critical that we spend time out in the field at these colleges and universities speaking to young people about preparing themselves,” she says. “Whether it’s for Microsoft or whether it’s for another company, technology is the wave of the future, it’s not going away. Everything is going to lean towards the technologies. Therefore it is so important that we help prepare young people, college students, and our current workforce to be prepared for careers in technology.” It is clear that Chapman and Microsoft are in this for the long haul. Both inside and outside the organization, the focus on diversity remains a key priority. Asked about future plans to continue the work done so far, Chapman has plenty to talk about. “We’ve just put together a wonderful suite of tools for our hiring managers, for our leaders, on how to embrace diversity inclusion principles,” she says. We’ve put together a list of behaviors that would be demonstrated by managers and leaders who are practicing good diversity and inclusion.” There’s also a ‘micro inequalities’ course about subtle things that people might do that can make people feel excluded, which has recently been launched. Both of these educational pieces are part of a number of initiatives centered on preparing the entire corporate to embrace the different kinds of people who will continue to enter the workforce as the organization moves through the 21st century. In the end, Chapman is adamant that the work she and her team are doing to make Microsoft a more diverse place to work will be worth it. “We’ll start to see new products and new technologies coming out in the future and they will be developed by many different people from all over the world and they will reach people all over the world,” she says. “We’re excited about these new directions and the other new ideas that will come in the future.”

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Shut up and DRIVE How Chapman and her team keep diversity moving forward. One of the things we did a few years ago when I ﬁrst joined the company is built a team that’s totally focused on diversity recruiting and we call ourselves the DRIVE Team. That’s an acronym that stands for Diversity Recruiting Initiatives Via Excellence. And the unique thing about this team is we, number one, ensure that the capability of all of our recruiters for diversity recruiting is there. So we help build the capability and we provide training and education and diversity tool kit. We also do direct prospecting against open jobs within the organization. So we’re almost like an internal search ﬁrm in that when the organization has strategic positions that they’d like to focus on, in particular we try to focus on our more senior level positions, Director level and above. We try and just ensure that there’s a diverse slate, and so we’ve been doing that now for three years. We also support the marketing and outreach efforts, which includes attending events such as National Black MBA, Society of Women Engineers, National Society of Hispanic MBAs. We lead Microsoft’s presence at those events. And we also build and implement branding campaigns. And as a part of that campaign we launched an external diversity recruiting website that provides very honest and real dialogue about diversity at Microsoft. The name of the website is youatmicrosoft.com,and that website received a number of accolades, including the Webby Award for Best Employment Website in 2008.

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HRM | WORKSHOP

Reassessing recruitment HRM readers submit their recruitment questions to our panel of experts.

Lily Flores, Human Resource Director, Nautilus asks: Picking the right person for the job is a clear priority. What are the potential business implications of poor hiring choices? Patrick Beharelle. For customer facing positions, making the right hire is often the difference between earning a new customer or not, receiving repeat business from a customer or not, expanding the breadth and depth of the relationship or not, or creating positive referrals or not. Of course, the top line and bottom line implications of making great hires versus an average hires can be significant for the reasons just mentioned. Working in conjunction with clients, RPO providers have conducted several head to head comparisons to measure the impact of making a hire via an RPO engagement versus a client’s traditional hiring process. Recently, one such example involved a six month head to head pilot whereby a portion of the client’s position’s were recruited via the client’s traditional process and the remainder were recruited by PeopleScout via an RPO engagement. The pilot was carefully constructed to allow for an true head to head comparison. Key metrics such as 180-day attrition, sales quota attainment and hiring manager satisfaction were measured. The results were decisive. Attrition was cut by 10 percent and sales were 14

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percent higher for candidates recruited by PeopleScout than via the traditional process. Hiring manager satisfaction was also favorably tilted toward the RPO hires. Following the conclusion of the pilot and based on the decisive results, the RPO engagement was expanded enterprise-wide. Historically, the business case for RPO has been predicated on cost containment. More and more, we are seeing companies choose RPO due to the revenue implications of hiring higher quality customer facing employees. Manoj Tiwari. Making a poor hiring decision can cost you time and money. Studies have shown that a bad hiring decision can cost as much as three times an employee’s annual compensation…not to mention any expenses associated with unemployment and exit activities. There are also less tangible items affected such as lost productivity, performance management, and even low morale. BALANCEtrak, an applicant tracking application, has been effective at helping companies identify quality talent and monitor the performance of their hiring practices. Th is allows them to uncover what works in selecting a good hire and eliminate what does not. Craig Pintoff, VP, Human Resources, United Rentals, Inc asks: Social networking technologies have become ubiquitous in recent years. Do you think that social techniques have a place in recruitment and applicant tracking or does it present more problems than solutions? Manoj Tiwari. Since the technology is fairly new, we have yet to see the full impact social media may have on recruiting. However, there is a place for social media technology. Employers just have to be cautious and methodical in identifying the right sites to source for potential candidates. Recruiters also have to decide if they want to use sites like

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HRM | WORKSHOP

Facebook or MySpace as part of the screening process for evaluating applicants. They have to decide whether the content on these sites are really an indication of future job performance. Terry Buzonik, HR Manager, ACE Controls, Inc asks: Many organizations might feel uneasy about outsourcing their recruitment processes. What clear beneﬁts can an external provider bring that an in-house solution might be unable to? Patrick Beharelle. It is important to note that most RPO engagements are not full end-to-end, enterprise-wide solutions encompassing all skills/locations. Many RPO clients choose to outsource part of their recruitment process or a subset of their positions. There are several benefits that an organization can realize when it outsources part or all of its recruiting process. Rather than cover the gamut of possibilities, I’ll focus on two of the most common benefits: more scalability and a variable cost structure; and improved candidate quality. More scalability/variable cost structure: An RPO engagement typically allows a client the flexibility to have resources scaled up/ down in a more cost-effective manner. RPO pricing is typically on a per hire basis, hence hiring costs are more variable and more closely match fluctuations in hiring volume than an in-house solution affords (where costs tend to be more fi xed). Moreover, given the RPO providers inherent advantage of having multiple clients to ebb/flow resources across, overall costs are driven down and true scalability is more easily achieved. Given today’s hiring volume uncertainties, a more scalable/more variable cost structure can add significant value and flexibility. Improved candidate quality: RPO engagements often include a front-end review and redesign of the recruitment process, which can result in more structure, more consistency and higher quality candidates. At PeopleScout, we typically triangulate candidate quality by tracking multiple quality metrics such as: submittal/interview ratios, interview/hire ratios, hiring manager satisfaction, early stage attrition and post-hire performance metrics such a sales quota attainment. Although results certainly vary from situation to situation, most RPO engagements we have seen tend to show meaningful improvements, particularly for the more easily tracked metrics such as attrition and interview/hire ratios. No doubt improved candidate quality and reduced attrition can have significant top line and bottom line benefits. Manoj Tiwari. Outsourcing allows companies to free up their resources to focus on more pressing tasks. External providers offer the advantage of concentrating their efforts on their client’s objectives. Outsourcing may also be costeffective for some companies. For many of our clients, outsourcing is less expensive than the cost of internal resources, purchasing technology and the time it takes to fi nd the right candidate. An external provider also brings expertise in researching, sourcing and tracking down candidates that meet their client’s talent needs. Cheryl Musgrove, HR Director, Goodwill Industries asks: The economic situation of the last few years has resulted in a wider pool of potential candidates in the job market? Does this make the job of a recruiter easier or does the larger choice

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As the Vice President of Business & Product Development, Manoj Tiwari oversees Business Development, Marketing, Product Development, Technical Support and enterprise accounts for Berkshire Associates. He has been instrumental in constructing welldeﬁned processes and automating functions to manage HR compliance and day-to-day activities for Fortune 500 companies.

Patrick Beharelle is the Chief Executive Ofﬁcer of SeatonCorp, a best-in-class stafﬁng and recruiting company that operates under the PeopleScout, Staff Management, and StudentScout brands. Beharelle has been a featured speaker at several key RPO industry events, a regular contributor to industry publications, and is a recognized thought leader in the RPO space.

make it more challenging to separate the wheat from the chaff? Manoj Tiwari. The surge in job seekers resulting from the economy has been bittersweet. It has created more work for recruiters insofar as sift ing through mounds of resumes to find qualified talent. That is why it is so important to have an applicant tracking system in place that can automate the pre-screening process and eliminate unqualified job seekers. What’s the sweet side? Companies have more quality candidates to choose from that can be acquired at a lower cost than in previous years.

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HRM | RECRUITMENT

ocial media culture and social media networking platforms have had a major impact on business communication, practices and processes, increasing profitability, sustaining reputation and empowering employees. Social media is also being used in human resources for internal communication and in learning as well as for recruitment purposes. In fact, according to a 2009 Jobvite Survey, a growing number of companies are using social media to recruit talent, forgoing traditional job posting sites and printed publications: 95 percent are using LinkedIn, 50 percent are using Facebook and 42 percent are using Twitter. Last year, Microsoft saved $88,000 in recruitment fees by using LinkedIn, while brewer SAB Miller saved $1.7 million employing 120 people directly from the site. KPMG found recruits through Second Life by holding a 48-hour virtual world jobs fair in September 2008, with more than 10,000 applicants registering for the event through KPMGâ&#x20AC;&#x2122;s global website. So what are the advantages of utilizing social media in terms of recruitment? Firstly, it is more efficient. Organizations can use social media to tap potential recruits

much more easily by advertising vacancies and searching for recruits on LinkedIn, for example. However, LinkedIn and other social media applications can be used for much more than simply a job post site. Indeed, social recruiting can be used to increase effectiveness and forge new and deeper relationships between employees and employers. Rather than simply recruiting the person with the best-looking CV, social media can ensure that that person is also the best fit for the company. Technology is essentially being used to provide better quality links to potential employees, developing and maintaining a relationship over a number of years, which can be tapped in to at a later date. There are a number of ways in which this can be done; for example, LinkedIn, Facebook and other social networks offer the chance to form a community based on a topic determined by the organization. However, while an organization like Goldman Sachs globally invests over 100,000 hours each year in conversations with prospective employees, it is not always practical for organizations to put this much effort into their recruitment. That said, social media does make it simple for any organization to proactively

On the up A growing number of companies are using social media:

95% are using LinkedIn

50% are using Facebook

42% are using Twitter

A recruitment revolution

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RECRUITMENT | HRM

develop a relationship with potential employees to the best of its ability. Social media applications are also being used to rate and compare employees, determine cultural fit and extend internal initiatives, like the referral scheme, to an external audience and using social media to complement their hiring process: 75 percent are using LinkedIn for background checks and 48 percent are using Facebook for background checks. In fact, more than two-thirds of all HR professionals now run internet searches on job applicants. According to Microsoft, one in four HR employees has rejected a candidate’s application based on their social networking profi le, while only 37 percent of people see it as their responsibility to protect their online reputation. It is interesting that despite a full 35 percent of employers who screen job candidates’ online presence choosing not to hire an applicant, so many job seekers continue to make mistakes or fail to clean up their profi les, particularly at a time in the market that is so competitive.

Social media in business With more people utilizing social media technology such as Twitter and Facebook, companies are coming to realize it is another resource to reach their clients. As such, many ﬁrms can now be found on a variety of social media networks. Here we take a look at the Fortune Global 100 Companies.

3 Companies Latin America

20 Companies Asia Pacific

29 Companies United States

FORTUNE GLOBAL 100 COMPANIES How are the top 100 companies in the world embracing and utilising social media?

A difﬁcult dilemma While social networks are undoubtedly here to stay, whether they become a more central part to the hiring process or not is yet to be proved. Either way they are a resource that needs to be handled with care, using common sense and appropriate practices to avoid legal entanglements. A recent report from Taleo, Social Network Recruiting: Managing Compliance Issues, outlines some of the key points to consider when using social media as a recruitment resource. Firstly, the report cites the potentially discriminating impact of using social networks in the hiring process because the labor pool does not fully represent the demographics of the general public. According to media analytics fi rm, Quantcast, only five percent of LinkedIn’s members are African Americans and only two percent are Hispanic, versus 12.8 percent and 15.4 percent of the US population total respectively. Taleo’s report quotes Jessica Roe, Managing Partner at the Minneapolis law fi rm Bernick, Lifson, Greenstein, Greenze & Liszt, who says, “I anticipate more race and age claims over the next two years, and a significant proportion will be from sourcing through social networking sites… We’ll see lawsuits.” While the practice of using social networking sites to help screen candidates is littered with legal dangers, there is nothing wrong with rejecting a candidate due to personal characteristics. However, if this information is obtained through a social network it is impossible to ensure all the information uncovered will be job-relevant. While some information will undoubtedly be found on an application form or through an interview (such as gender and race) other information that is related to a country

48 Companies Europe

65% have a Twitter Account

33% have a Corporate Blog

54% have a Facebook Fan Page

50% have a YouTube Channel

40% in Asia Pacific 67% in Latin America 71% in Europe 72% in the United States

25% in Europe 33% in Latin America 34% in the United States 50% in Asia Pacific

TWITTER ACCOUNTS Percentage of companies with Twitter accounts by region

33% in Latin America 40% in Asia Pacific 52% in Europe 69% in the United States

FACEBOOK FAN PAGES Percentage of companies with Facebook Fan pages by region

CORPORATE BLOGS Percentage of companies with corporate blogs by region

33% in Latin America 40% in Asia Pacific 52% in Europe 69% in the United States

FACEBOOK FAN PAGES Percentage of companies with Facebook Fan pages by region

www.ngpharma.com 93

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HRM | RECRUITMENT

of origin, religious preference, disability, age or sexual orientation might not be. And the mere appearance of discrimination can cause potential problems. If a business can prove that a hiring process was based on a test then a candidate won’t have a case, but if it’s based on softer criteria, then it is difficult to prove that discrimination wasn’t involved, particularly if a candidate is a fan of the Facebook page of Gay Rights or belongs to groups for expectant mothers, for example. If this is the case, then some are bound to conclude that they weren’t hired because they were gay, pregnant, disabled and so on. The report concludes that due to the associated legal issues, social networks pose a difficult dilemma for HR departments. However, they are the best way to headhunt potential candidates, as well as verify resume claims and gain insight into a character. Currently there are no Office of Federal Contract Compliance Programs (OFCCP) or Equal Employment Opportunity Commission (EEOC) regulations regarding the use of social media or networks in recruitment. It is also important – from a screening perspective – to ensure that social networks are not used as a sole means for advertising, as this is perceived as discriminatory. A federal court opinion that appears to be the fi rst published decision that deals with social networking was reached in the US District Court for the Eastern District of Pennsylvania in December 2008, in which a would-be teacher named Stacy Synder was unable to receive an educational degree required for a teaching certificate in the state. When Snyder was engaged in a required teaching program she was assigned a high school teacher to supervise her, who was critical of her abilities, noting an ignorance of basic grammar, as well as inadequate classroom management and inappropriate manner with students. Another teacher discovered Snyder’s MySpace page with photo’s of her wearing a pirate’s hat, holding a plastic cup that said “drunken pirate” and had a “stupid expression” on her face, according to Snyder’s own testimony. Also on the page was information that suggested her supervisor was the reason that Snyder would not be applying for a job at that high school. Synder was suspended from the student teaching program and in the ruling against her it was decided that the school had no legal authority to award her a degree in eduction where she did not complete the required teaching program. While the decision does not deal with private employers, the case does contain important lessons for employers and recruiters. The Taleo report suggests that HR departments can minimize risk by truly evaluating the use of social networking in certain situations and whether an alternate approach will work in its place. For example, if qualification verification is required, there are well-

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Top 10 tips for social media recruitment

1 2 3 4 5 6 7 8 9 10

Rip up the old organizational chart: the corporate social media function crosses disciplines. Customer service, public relations, marketing and sales teams, they all have a stake in how the social media function impacts daily operations. Don’t give the job to the junior staffer: British furniture retailer Habitat learned a hard lesson in 2009: don’t entrust the brand’s Twitter feed to an impudent intern. Don’t outsource: this is a job that’s far too vital to be placed in the hands of an outside agency. The insights that come with speaking directly to customers are crucial feedback that can better inform a company’s sales, PR and marketing functions, plus product development and innovation. Give the social media team the power to report to the board, the social media outreach team has a ﬁnger on the pulse of customers, prospective customers and critics. This is vital detail that needs to be communicated as far up the management chain as possible. Be prepared: a lone gripe posted to Facebook, Twitter or on a blog can quickly become a PR nightmare. Have a response strategy drafted up and be ready to use it. Find your voice: veteran journalists speak of the need to develop a resonant voice, one that puts the reader at ease, entertains and informs. It’s no different with your social media communications strategy. Be courteous, professional and respectful: this is a medium that gives some companies ﬁts because they do not know how to respond to customers venting their frustration. Take the high road. Treat each gripe as an opportunity to learn: in the old days you had to organize focus groups, promising them tea and biscuits, to learn what the public thought of you and your products and how you conduct business. Now, that detail is available without strings. Monitor, monitor, monitor: what is the public saying about you? About your competitors? You need to listen intently before you can begin to engage, and ultimately, transform your brand into a more transparent and socially adept organization. Have fun: yes, there will people out there who will say nasty things about your company. Or the next tweet may make you laugh or inspire you. Don’t forget: social media provides an opportunity to have a oneon-one conversation.

established approaches to screening that pose no legal risk whatsoever. There is no right or wrong way to use social media in recruitment – the best employers and employees will stay on top of the evolving trends, by keeping an open mind and logging in these tools will inevitably bring benefits of their own, but only time will tell just how important social media becomes to the recruitment world. ■

Source: wallblog.co.uk

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HRM | ASK THE EXPERT

The shared Rolodex

Alex Douzet looks at who owns the intellectual property of social recruitment.

n the old days, the company owned the Rolodex. It was a pretty simple concept, really. If a sales person or business development executive left their company, their soon-to-be-former boss would keep their Rolodex of contacts. And it’s not an unreasonable request. Aft er all, the company paid the former employee good money to build and nurture those contacts. Of course, these elements of intellectual property (IP) were always challenged, as an employee could simply copy their list of connections, but nonetheless, the former employer had the Rolodex as a starting point to manage existing contacts. Today, the Rolodex now exists online and has been replaced by Facebook, LinkedIn and Twitter. We’ve moved into an era of the ‘shared Rolodex’ where connections with customers, clients and, in the case of talent acquisition, candidates, are fair game, as everyone is sharing from the same source. So, one would think that ownership of the coveted Rolodex is no longer an issue, right?

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In HR, the goal of CRM (candidate relationship management) is to build a pipeline of pre-screened candidates. There are various technologies and websites that will help recruiters and hiring managers build and nurture their talent pipelines. But technology is simply the tool by which those pipelines are formed. At the end of the day, people build relationships with people. And that brings us to the key dilemma facing hiring managers and recruiters today when it comes to social recruiting: who owns the intellectual property? When you get down to it, these connections with potential job candidates are human relationships that exist with the individual. Can these relationships be monetized like so many other forms of intellectual property? How do you put a price tag on such a valuable commodity when it’s not even clear who the true owner of these relationships is? The good news for companies is social networking and recruiting does have its advantages. The instant connectivity of the world we live in has been beneficial to the process in general. Social recruiting has made a profound impact on employment branding. Prospective job candidates can fi nd out what a company’s corporate culture is all about simply by reading about it on Facebook. Social networking tells candidates what it’s like to work at your company and as a result makes the recruiting process much more efficient. Companies are also using social networking tools to research the backgrounds and qualifications of candidates. Today, most companies do not own the ‘connections’ or ‘followers’ that could lead to that next great hire – they lease those connections. Should an employer part ways with an internal or external recruiter or hiring manager, those ‘connections’ and ‘followers’ leave with them. It’s a tough pill to swallow for companies because they have not only paid a recruiter or hiring manager to build those connections, but now those valuable candidate relationships that have been built over time may be on their way to a competitor. Social networking isn’t going away any time soon. As we move forward, one thing is for sure – companies must have a thorough understanding of how fragile their talent pools and pipelines really are and keep a watchful eye on how they are managing their candidate relationships. They’re not as secure as you might think, and there’s a lot riding on them.

“Social networking tells candidates what it’s like to work at your company and as a result makes the recruiting process much more efficient”

Alexandre Douzet is co-founder and President of TheLadders. com. In this role, Douzet is responsible for global business operations, product development, and helping to lead the company’s ongoing global expansion. Over the past six years, Douzet grew TheLadders.com subscription base from zero to over four million members.

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HRM | CORPORATE CITIZENSHIP

You get what you give Traditionally corporate social responsibility has been seen as a luxury, but no more. In today’s climate, focusing on being good has become more important than ever.

oined in 1953 by Howard R Bowen, corporate social responsibility has evolved considerably over the past 50 years. Initially perceived as the moral responsibility of corporate managers, in the 21st century it is increasingly defi ned by innovative approaches that integrate both sustainability and profitability in the long-term interest of a corporation. In fact there is so much pressure to ensure that businesses are socially conscious that the market – pushed from employees, consumers and stakeholders – is said to be worth $31.7 billion. The 2009 IBM Institute for Business Value survey of 224 business leaders worldwide shows that 60 percent believe corporate social responsibility has increased in importance over the past year, while only six percent say it is a lower priority. These responses prove that organizations are sharpening their focus on sustainability and facing an entirely new set of decisions based on embracing a new objective, optimizing their operations to minimize environmental impact and improve social outcome. At AMD, Allyson Peerman, Vice President of Public Affairs, explains that corporate citizenship has long been a part of the company and that it goes back to its early history. “Our founder, Jerry Sanders, made the statement that if you put people fi rst, profits and products will follow, which really set the stage for our culture,” she explains. “The whole arena of social responsibility is very much in line with AMD’s culture, and has been from the early days.” Peerman goes on to reveal that the company continues to try and fi nd ways to ensure corporate responsibility programs are tied as closely to business strategy as possible and that it has seen good success, particularly in the climate protection sector. “For the last 15 years, we’ve reported on our metrics in terms of climate protection – and that was long before it was fashionable to do so – and with those metrics we look at improvement and set goals for the coming decade. I’m happy to say that in many cases we have far exceeded

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and accomplished some of those goals well ahead of schedule, which is a really positive thing for us.” Explaining that AMD’s corporate citizenship function uses every communications vehicle within the company, Peerman states that from a community affairs point of view the fi rm has a very tight network around the world at all its major sites, that she remains in close contact with. While there is an over-arching corporate strategy in place, Peerman ensures that programs are run locally because each office knows their community individually. “The strongest way to get the message out is through our liaisons and whether it’s in the government relations or community affairs arena, we rely heavily on those people to tell us what the issues are and what challenges they’re experiencing. Then we work together to try to solve those challenges.” Looking at the social side, Peerman points to the fact that AMD’s global volunteerism has increased as much as 30 percent in just the last couple of years. She explains that by simply allowing staff the means to get involved in volunteering has increased the amount of employees willing to get involved. Earlier this year AMD rolled out a new initia“We have a tive called Community particular goal in Corps, a skills-based our sustainability volunteerism initiative, strategy called which requires each Contributing to AMD employee to exCommunity Success amine their skill sets, and behind that is whether that be public a whole framework speaking, budgeting or regarding how we go team working, for exabout listening to ample. “Employees are placed in a non-profit our communities” organization so that Bo Miller, Dow Chemical their skills are shared and they do something good in the process – and then whatever they learn is brought right back to the company, so it’s a benefit for AMD as well.” Over at the Dow Chemical Company, the Global Director for Corporate Citizenship, Bo Miller, explains that the fi nancial crisis has deeply impacted corporate social responsibility at the fi rm and at the same time has prompted an increase in volunteerism, much like AMD. “Over the past five or six years we’re really seen corporate citizenship driving further into the business and seen it become more aligned with our business strategy at Dow. So when businesses like ours found ourselves in pretty challenging times and budget cuts were required, we felt that same pressure equal to any other function or group within the company, wherein the past it would

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The top 10 The Boston College Center for Corporate Citizenship has analyzed data in coordination the Reputation Institute’s 2009 Global Pulse Study to create a CSR Index. The data captures public perception about the corporate citizenship, governance and workplace practices of more than 200 companies. Companies in the ﬁnancial sector tumbled to the bottom while strong consumer brands held the top spots.

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have been disproportionate – and not in our favor. It’s been a test environment really, and proves the function is understood by senior management.” That said, he continues, it is still important to be creative and fi nd other ways to sustain corporate citizenship activity. Dow has seen more employee engagement and improved volunteerism rates, particularly after launching a new employee engagement program, Dow Sustainability Corps, which is skills-based. Much like the program at AMD, a Dow employee is deployed with an non-governmental organization, and rather than volunteering in a more traditional sense – cleanups and painting projects – these are business engagements that require the employee to use their skill set to the advantage of the non-governmental organization. “In one case we had a woman who was an expert in biopharmaceutical proteins from plants, and we had a non-profit organization in Kenya that was looking at a route to an anti-malarial drug that required the extraction of a protein from a locally grown plant. And so through a series of relationships, we were able to deploy her to Nairobi and help them through some processing engineering on plant-based pharmaceutical for malaria. That’s an engagement that has addressed a significant social need,” says Miller. Indeed, Michael Dupee, Vice President of Corporate Social Responsibility at Green Mountain Coffee Roasters, reveals that he has seen employee engagement soar at the fi rm in regard to volunteering. While society appreciates employees out in the community, the business value is that employees, when they get away from their job and out into the community, come back to work much more engaged, he explains, and they have a much more positive impression of the company. “We did a research study with the University of Vermont a few years ago that tested out the intuition that when people come back they are more motivated. We tested it with a research initiative that was focused on two particular organizational development behaviors called reciprocity behavior and organizational ID. The short version of that is when people come back to work they really identify with the company. The theory was that a volunteerism program will strengthen those behaviors in your employees and the research came back very strongly in that favor. Dr David Jones at UVM who did the research said that even if he was going to fake the data set he wouldn’t have made the results so good because no-one would have believed it. “So what do you get? A workplace where people are more committed. They’re better ambassadors and they have a higher intent to stay employed, which reduces recruiting costs. So that stuff – that flows directly to an organizations bottom line – is good for the business.”

“So what do you get? A workplace where people are more committed. They’re better ambassadors and they have a higher intent to stay employed, which reduces recruiting costs” Dr. David Jones, University of Vermont

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“The whole arena of social responsibility is very much in line with AMD’s culture, and has been from the early days” Allyson Peerman, AMD

Metrics Looking at the metric side of corporate social responsibility, Dow’s Miller explains that is often difficult to measure some of the work done in the space – while it is possible to measure the activities, there is much more interest in the impact and outcomes. “You can potentially weigh down the success of a project simply by putting too much overhead on it in terms of measurement,” he says, going on to reveal that there are two areas that Dow look at as measures of success. Firstly, what is seen in employee surveys. Miller reveals that several of the questions speak to the company as a good place to work and from those responses, along with a variety of other activities, how corporate citizenship helps make Dow a great place to work. Secondly, Miller looks at the community. “We have a particular goal in our sustainability strategy called Contributing to Community Success and behind that is a whole framework regarding how we go about listening to our communities, having the opinion leaders of those communities identify with their vision of success, and then try to identify what Dow’s role is in contributing

CSR strategy Organizations that seek to adopt a sustainable approach to business face a new set of decisions imposed by the constraints of ﬁnite resources. At the same time, there is a growing body of information ready to be turned into new intelligence and new advantage. To succeed, an organization should consider the following actions:

1 2 3 4

Identify information gaps and analysis needs. Is the CSR information you collect relevant and timely enough to make strategic decisions? Are you getting the information you need from your business partners and suppliers? Do you understand your customers’ CSR concerns as well as those of other key stakeholders in your ecosystem? Align objectives with those of stakeholders; then prioritize. Stakeholders require a lot of information, but their information demands can’t be your only focus. Are you collecting information that helps you meet your business objectives, and are you communicating those objectives to stakeholders? Assess leading practices and benchmarks. Have you identiﬁed sustainability leading practices and benchmarks for your key CSR activities? Are you participating in industry or activity-focused coalitions that are developing leading practices and benchmarks? Are there frameworks or scorecards to weigh the impact of activities against overall objectives?

Source: IBM Institute for Business Value survey

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to that success. We also then have a very specific way to measure out acceptance in that community, and then we set about developing a community success plan. While this does include philanthropy it also includes volunteerism, our engagement of senior leadership in that community, our local purchasing practices and all those other kinds of elements that really make up what the local citizens see of Dow in their community. We measure against the limitation of those success plans, and then, on a three-year cycle, we’ll come back and re-measure the community acceptance scores. So we’re fairly thoughtful regarding how we look at our engagement in local communities. The results of all that activity are really key measure of success for us.” As well as his role at Dow, Miller is on the board for the Boston College Center for Corporate Citizenship, a non-profit research center that is affi liated with the Carroll School of Management, that offers research, tools, conferences, networking and executive education programs pertaining to the issues of corporate citizenship to over 300 corporate members worldwide. Miller explains that the center has been instrumental in the realm of corporate social responsibility. “It’s the go-to place for competency training and development of professionals in this field – they have a curriculum of probably a dozen or so courses that individuals in my workgroup can go through in a programmed manner, and this is the only entity I know that offers that kind of real practice learning and knowledge. “Another key area is the foundational research that they do in this space, which has been going on for 25 years. Th irdly, for me as a professional in this field, it is a real convener of my peers in the greater corporate citizenship community, and the conference being a cornerstone of that. I get, in a very short space of time, to see 400 of my professional peers, who are facing the very same problems as I am within my company. Collectively, I think the overall value of the center is the breadth and depth of knowledge that’s houses at the center and it is so accessible on a one-to-one basis with key staff members.” Like Miller, Dave Stangis, Vice President of Corporate Social Responsibility at Campbells Soup Company, is on the board for the Boston College Center. He agrees that the strengths of the center are all about competency building and convening. “The center is uniquely positioned to build competencies of professionals. Whether you’re entry or senior level, you can come to the center and always learn something, always move ahead in terms of your professionalism.” Going on to explain about his role at Campbell Soup, Stangis reveals that the company is focused on wellness and nutrition in the marketplace and in terms

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of environment concentrates on stewardship. “While we’re not going to be able to compete with the biggest, largest companies in the world, we think we can be the best steward in terms of taking care of the resources. Our goal is to try to cut our greenhouse gas emissions and water use in half, all the way across our product portfolio and that gives people a good focus point – they need to have a focus over the next 10 years.” On the workforce side, Stangis is focused on employee engagement. He hopes to be able to achieve 100 percent employee engagement with the corporate social responsibility strategies, whether that be through performance appraisals or incentives. In the community however, being socially responsible – and measuring it – is a bit more challenging, explains Stangis. Here, the company is trying to identify a social impact measure that can be viewed from an external perspective over the course of a decade. “We’ve got about 10 or 11 communities in North America where we want to reduce hunger and childhood obesity by 50 percent. It’s not simply about how much food we can donate or how many people we have volunteering, but can we measure a social impact? The thing about metrics is that everyone, from HR, to supply chain, to communications, understands it – I don’t want everyone in the company to be a sustainability expert, I just want them to be good business people.” Having been in his role for around 18 months, Stangis explains that when he fi rst arrived he created a four-point strategy – looking at the environment, community, workplace and marketplace – with the CEO that works with his mission statement. “It fits,” he says, “and it’s very nice in this business, when you’re trying to provide nourishing food to the public from a product portfolio that we have a corporate social responsibility policy that aligns perfectly. If you align the core values of the company and set a specific strategy, it not only gives you permission to focus your philanthropic dollars and volunteer efforts, it also gives you the ability to say no to the people that are outside your focus area, so it’s a way to ensure you’re spending wisely. Having it strategically focused stops you from getting distracted.” Indeed, over the past decade there has been a huge rise in organizations focused on environmental and social responsibility as a strategic objective. Even in the face of economic uncertainty this sector continues to grow, as proved by the IBM survey. Indeed, a more interconnected world makes a strong case for sustainable business that recognizes the long-term health of a business is inextricably tied to the well-being of society and the planet as a whole. Looking forward it is clear that corporate social responsibility is here to stay.

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The Figures Proactive engagement with stakeholder groups

Employees

63%

Investors

55%

Business partners

55%

Government

54%

Consumers

51%

Community

50%

NGOs

44%

Change in importance of CSR to strategic objectives over the past year

More important

60%

Remained about the same Business partners

34%

Source: IBM Institute for Business Value 2009 CSR study

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The Generation Game

As a new type of worker enters the US workforce, Stacey Sheppard explores what makes the Millennials tick, how to attract, manage and retain them and how to overcome the differences in attitude between them and their predecessors.

irst came the Traditionalists, then the Baby Boomers, followed by Generation X and now itâ&#x20AC;&#x2122;s the turn of the Millennials. Currently, for the fi rst time in American history, four different generations are working alongside one another, but not for long. The vast majority of Traditionalists are now retired and with large cohorts of Baby Boomers preparing to step off the corporate ladder in the coming years it is unlikely that Generation X will be large enough to bear the responsibility alone. The makeup of the workforce is therefore set to undergo a seismic shift . In the US, Millennials vastly outnumber Generation X. By 2014 the Millennial generation will account for almost half the employees in the world and for many companies they already make up a large proportion of the workforce. The rise of the Millennials is undoubtedly

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creating an unprecedented challenge for managers as they struggle to learn how to best tap the potential of this powerful new generation that is replacing the Baby Boomers as the nationâ&#x20AC;&#x2122;s next leaders and executives. As with preceding generations, the Millennials are markedly different to that which came before them. Due in part to their childcentric upbringing, Millennials are confident, self-assured, ambitious, liberal, up-beat and open to change. They have been weaned on cooperation at home and teamwork at school so they work well in groups. It has been said that whilst Traditionalists were seen as contributors, Baby Boomers as competitors and Generation X as controllers, Millennials will be a generation of great collaborators. Th is collaborator drive will allow the organizations employing Millennials to benefit from these cooperation skills, particularly when it comes to knowledge transfer

and creativity. By working together in teams Millennials are particularly good at raising the bar and churning out ingenious solutions to problems in a highly efficient manner. Moreover, Millennials are the most techsavvy, mobile generation to have ever emerged and it is because of this affi nity with technology that economists are predicting them to be the most productive generation in the history of the world. The insatiable appetite for high tech gadgetry also means that Millennials are great at multi-tasking. Managers will need to work out how to respond as Millennials increasingly challenge assumptions about everything we do in the workplace â&#x20AC;&#x201C; from how we use technology to how the work is carried out. Furthermore, Millennials have realized that they are now an indispensable asset and they are therefore entering the workforce with much higher expectations than the generation before. In particular they demand

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HUMAN CAPITAL | HRM

that the work they do is personally fulfi lling as they do not necessarily view work as a key part of life. They also have a strong desire to achieve a good work/life balance and are not prepared to sacrifice their personal lives for their careers. Work is more about having the opportunity to make new friends and contacts, develop new skills and achieve a sense of purpose in what they are doing. Millennials are said to be the most socially conscious generation since the 1960s. They need to know that what they’re doing matters and is appreciated by their employers. For this reason feedback is ranked as highly important for Millennials, in some cases more important than cash rewards. The same can be said for training and development as today’s younger workers are aiming to build their skills in order to allow them to progress. Organizations must therefore recognize that Millennials expect coaching but on the other hand they will also step up to offer it.

Managing Millennials With so many expectations of their work and their employers, it is easy to see why today’s managers are struggling to attract and retain this demanding generation of workers. When Millennials don’t get what they had hoped for from a job – usually a collaborative environment and upward mobility in a short period of time – they tend to jump ship and surveys have shown that most tend to be looking to move on within two years of being in a job. There is, however, plenty of advice out there for employers on how to make their particular organizations more attractive to Millennials. For a start, flexible schedules are highly coveted by young workers and they really appreciate the ability to set their own hours so they can better achieve that allimportant work/life balance. Given that they are very civic-minded and have been exposed to the idea of community service from a young age, Millennials expect companies to care about the environment and contribute to their community. It is also extremely important when looking to attract top talent from the Millennial generation, to look for them in the right place – more often than not this is the virtual

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world. Recruitment strategies therefore need to be adapted.

Cultural clash There are many strategies that organizations can use to attract and retain Millennials but the key to continued success is really to be found in understanding their attitudes and expectations and being sensitive to their needs. However, this is often not the case and a large generational gap exists when it comes to attitudes and this has leaded to many a cultural clash between Generation X and Generation Y. Millennials are perceived by many, outside of their own generation, to be the weakest of the four generations that make up the current US workforce. There are many negative perceptions currently circulating including the idea that as Millennials have placed an increased value on work/life balance and value the opportunity to have flexible schedules they are less committed and not as hard working. Also the fact that they value their free time more than money in some cases has propagated the idea that Millennials have a lax work ethic. Another argument is that the so-called Trophy Generation are characterized by a heightened sense of entitlement, comfort, rights and privileges. It is important to understand that Millennials are different to the generations that came before them. They have new defi nitions of work environment, success, training, leadership, and company culture, which don’t necessarily match those defi nitions of Generation X. In a time when practically everything can be customized and personalized – from music playlists on iTunes, to on-demand TV services from the likes of TiVo, and custom designed sneakers from NikeID – companies need to understand that today’s young workers are now looking for careers that provide options beyond the one-size-fits-all approach of the corporate ladder. Therefore, the companies that are most likely to succeed over the next two decades will be those that make an attempt to understand Generation Y, their aspirations, expectations and motivations. For those who can successfully inspire the Millennials, the future looks bright indeed.

Generation who? A demographic field guide Traditionalists (AKA the Silent Generation) Born between 1927 and 1945 they are currently the oldest generation in the workforce although 95 percent of Traditionalists are now retired. The minority that are still working are nearing retirement age or working reduced hours. Baby Boomers (AKA Golden Boomers, Generation Jones) Born between 1946 and 1964 in the post World War II period, this generation comprises most of today’s world leaders and executives. The oldest Baby Boomers will soon be reaching retirement age although the vast majority believe that they will still be working during their retirement years. Generation X (AKA Baby Busters, the 13th Generation, the MTV Generation) Commonly abbreviated to GenX, this is the generation born after the baby boom ended, ranging from 1961 to 1981. Millennials (AKA Generation Y, Generation Next, Net Generation, Echo Boomers, the Boomerang Generation, the Peter Pan Generation, the Trophy Generation) The earliest suggested birth dates ranging from mid to late 1970s to the latest in the early 2000s. This generation is generally marked by an increased use and familiarity with communications, media, and digital technologies, which gives Millennials a reputation for being somewhat peer oriented. This is the generation now currently ﬂooding into the workplace.

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Meet the Millennials Members of the new generation making waves in business 01

Mark Zuckerburg, founder of Facebook

Mark Zuckerberg is an American industrialist best known for co-founding the popular social networking site Facebook. Zuckerberg co-founded Facebook with fellow classmates Dustin Moskovitz, Eduardo Saverin, and Chris Hughes while attending Harvard. He is currently one of the youngest billionaires in the world with personal wealth of $4 billion in 2010.

Daniel Ek, founder of Spotify Daniel Ek is a European serial entrepreneur and a technologist who started his ﬁrst company 1997 at the age of 14. EK’s most recent creation is the legal music streaming service Spotify, which he co-founded with Martin Lorentzon. EK’s has also founded Advertigo, the advertising company acquired by TradeDoubler and has been a part of the Nordic auction company Tradera (acquired by Ebay) and Evertigo. EK’s previous jobs include CTO at Jajja Communications, CTO at Stardoll and CEO of μTorrent, the worlds most popular BitTorrent client with more than 100 million downloads.

developing Napster, one of the first popular peer-to-peer filesharing platforms, in 1998. At the age of just 19, Fanning had upended the established music market, much to the dismay of the industry who filed multiple lawsuits against Fanning for copyright violation. Although the original service was shut down by court order, it paved the way for decentralized peer-to-peer file distribution programs, which have been much harder to control. In 2003, Fanning co-founded a new company, Snocap, in an attempt to provide a legitimate marketplace for digital media.

Andrew Mason, founder of Groupon Andrew Mason is the founder of Groupon, a website that was launched in Chicago in 2008 and features daily deals on the best stuff to do, see, eat, and buy in a variety of cities across the US, Canada, and Europe. Groupon currently boasts 10 million subscribers worldwide from 150 cities in 19 countries. Groupon grew out of a website called The Point, launched in November 2007, that allows people start a campaign asking others to give money or do something as part of a group. 03

Kevin Rose, founder of Digg Kevin Rose is an American internet entrepreneur and technology angel investor who ﬁrst became an on-air talent producing and hosting hundreds of segments on TechTV – a cable television network available in over 45 million homes in the United States and distributing content to more than 70 countries. Rose is known for his internet start-ups and is the co-founder of Revision3, Pownce, WeFollow and the social-bookmarking website Digg, which has become a focal point of the tech community and boasts over 35 million visitors a month. As of April 5, 2010, Rose replaced Jay Adelson as CEO of Digg. He also co-hosts weekly podcast Diggnation with Alex Albrecht where they discuss the top stories from Digg.com. Rose recently announced he will be leaving the show at the end of the year to host a new weekly live streaming tech/geek culture show called fforward. At only 33 years old Rose was recently ranked ﬁfth in Forbes’ annual ranking of the internet’s most famous celebrities. 05

Gary Vaynerchuk, founder of Wine Library Gary Vaynerchuk, host of Wine Library TV, has turned the American wine industry on its head. The entrepreneur started his 06

Shawn Fanning, founder of Napster Shawn Fanning is an American computer programmer. He is famous for 04

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ﬁrst business as a child before joining the family business, which was a local liquor store. Vaynerchuk transformed himself into a wine expert, rebranded the store as Wine Library, launched a retail website in 1997, and by 2008 he had raised annual revenue from $4 million to $60 million.

Adriaan Pienaar, founder of Woothemes Adriaan Pienaar (AKA Adii Rockstar) is an entrepreneur, blogger and Web 2.0 strategist from South Africa. He is a co-founder of Woothemes, a theme club and store for niche-based WordPress blogging and CMS templates. Pienaar has built the company up from the ground and Woothemes recently reported revenues of over $2 million. Pienaar is also founder of The Rockstar Foundation, a non-proﬁt organization aiming to empower disadvantaged girls through educational grants. 07

Pete Cashmore, founder of Mashable Pete Cashmore is the 24 year-old CEO and founder of Mashable.com, a Technorati Top 10 blog worldwide. He founded Mashable in a small Scottish town in 2005 at the age of 19. In 2009, he was chosen as one of Inc Magazine’s 30 Under 30, Forbes’ Top 25 Web Celebs and the Hufﬁngton Posts’ Top 10 Game Changers 2009. He writes a weekly column on technology and social media at CNN. Pete Cashmore’s Twitter page, @ mashable, is one of Twitter’s 40 mostfollowed pages, with two million followers. Mashable itself has been chosen as a must-read by Fast Company and PC Magazine, and BusinessWeek has featured the site as one of the world’s most proﬁtable blogs. The site serves over 10 million monthly unique readers and employs 15 full time staff. It has more than 50 regular guest contributors and reports millions of dollars in revenue through its advertising and events businesses. 08

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HRM | INDUSTRY INSIGHT

A natural ﬁt

Denine Woodrow reveals why uniformed employees create a positive experience for customers and enhance the image of their companies.

id you ever stop to think how many people we see each day that dress in uniforms? In the US alone, it is estimated that 32 million employees wear uniforms. On a daily basis, we encounter a wide range of people wearing uniforms, including school children, police officers, security guards, airline stewards, hotel staff, athletes and office professionals. Uniforms offer benefits for both employers as well as employees. Employees that wear uniforms are often more recognizable and trustworthy. Uniforms present a unified, professional appearance. They create teamminded equality and sameness. For many employees, wearing a uniform creates a sense of pride in the company for which they work. The corporate wear industry is becoming increasingly fashion forward. For many years, the typical uniform has been predominately a 65 percent poly/35 percent cotton blend. Although these fabrics sometimes perform well in colorfastness and durability, many employees often fi nd these garments uncomfortable and outdated. The traditional solid top and coordinating bottom are a thing of the past. Recently, corporations have enlisted famous

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fashion designers to help design new uniform lines. More and more companies are looking for fashionable, coordinating dress shirts and trousers to introduce ‘executive wear’. The athletic and outdoor markets, which tend to quickly adopt and market new technologies, are also impacting developments in uniforms. Consumers are seeking the same performance-based technologies and comfort in their work and uniform apparel as they do in their everyday athletic and ready-to-wear garments. New technologies such as wrinkle-resist, stretch, moisture management and nano-technology are commonly requested in uniforms. For Brooks Brothers, expansion into the corporate uniform market is a natural fit. Many retail products within the Brooks Brothers collection translate seamlessly to the corporate apparel customer. The uniform product assortment includes the same quality

dress shirts, polo shirts and sweaters that have made the Brooks Brothers’ brand so popular. “Consumers know and trust the Brooks Brothers’ brand and respect the quality products and image we create,” says Laura Rowen, Brooks Brothers’ Director of Corporate Collections. “We see time and again that offering employees uniforms that carry the Brooks Brothers’ name boosts employee morale and yields better on-the-job performance.” Brooks Brothers is able to leverage global resources to develop customized yet cost effective apparel tailored to fit the needs of the client with the same superior quality as items sold in a Brooks Brothers store. Leslie Cowell of Exclusive Resorts uses Brooks Brothers for her uniform needs and notes, “I am very pleased with the uniforms program that Brooks Brothers has helped us create in many of our destinations. Our Onsite Concierges are thrilled with the quality and professional appearance of the clothing, and are proud to wear them. Our club members have also complimented us on how the quality and reputation of Brooks Brothers helps reflect the excellence we offer as the world’s leading luxury destination club.” Uniforms have a real purpose in business: uniformed employees create a positive experience for customers and enhance the image of their companies.

Denine Woodrow is the Owner and Manager of dp woodrow & company, llc., a full service business development ﬁrm that works in collaboration with clients, their associates, and industry experts to provide practical and proﬁtable solutions.

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Bears for business

Marilyn Freundlich reveals why more companies are recognizing and rewarding their employees with a bear hug.

hen I started working at Build-A-Bear Workshop 13 years ago, I never dreamed that one day I would be leading a CorBEARate sales team creating customized stuffed animals for grown ups. It almost seems silly to think about a serious businessman cracking a smile (or even gushing) over a teddy bear. I can tell you, it happens very frequently. Like you, I assumed teddy bears were made for kids. But it didn’t take long for me to realize that the hug of a teddy bear and the warm feelings they represent truly resonate with people of all ages. Now, with over 400 stores worldwide and over 82 million furry friends made, Build-A-Bear Workshop is living proof that the power of a teddy bear hug can reach young and old alike. From the day we opened the doors to our first store in St. Louis, Missouri, companies and organizations have been asking us to create branded bears for their business. Initially companies asked for holiday gifts, but as more people became familiar with our brand and we expanded around the world, so did their requests. More and more companies saw the value in recognizing and rewarding their employees with hugs…teddy bear hugs that is. I truly believe that the heart of any company is centered around employee spirit and their ability to connect with the community, customers, and partners. We’ve

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found that furry friends can make a world of difference. Recently, I had the incredible opportunity to work with a company that purchased bears and clothing to take to local hospitals. Their staff helped young patients choose and dress a bear. While the bears were a hit with the kids, it was the employees who left with the biggest smiles knowing they helped create a better world, one bear hug at a time. Making your employees feel good about the company they work for instills a sense of empowerment and investment, especially when participating in an activity that extends the good will of their organization. Extending your company’s good will can go beyond charitable activities. It’s important for your business associates to take time to taste the honey. I’ve had the privilege of helping countless organizations recognize and reward their employees and partners for their sweet successes, such as an east coast public works department that completed a new bridge in their city. Construction-themed bears were sent as a thank you to all of the people involved in completing the project. Needless to say, this gift was well received and unFURgettable. Many companies are looking for ways to leave a lasting impression on their clients and potential clients, so requests for customized plush for trade shows have significantly increased. Recently, we worked with a Convention and Visitors Commission who was showing at a national trade show. Bears with their logo were given out to attendees who visited their booth. The excitement became viral as the words on everyone’s lips were “where did you get that bear?” Not only did the bears keep this CVC top of mind, they also contributed to a ‘Best in Show’ distinction. Another company, striving to make their medical trade show a success, featured personalized medical bears in a direct mail piece sent prior to the show. All who signed up for their program at the show received the bear. I could tell you countless success stories that I’ve heard over the years. While they’re all unique in their own way, the result is always the same – companies tell me time and time again that they’ve never had so much fun purchasing gifts or products for their company program or event. And coupled with the fun is the lasting and personal impression the bear makes on the recipient. Build-A-Bear Workshop could be a part of your success story. Whether it’s for corporate gift giving, promotional or incentive marketing, I can prove to you that a bear hug is worth a thousand words.

“Many companies are looking for ways to leave a lasting impression on their clients and potential clients”

Marilyn Freundlich has been with Build-A-Bear Workshop since the company’s inception 13 years ago. For the past nine years, Freundlich has lead the corporate sales team, creating plush bears tailored to the unique aspects of hundreds of companies nationwide.

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HRM | EMPLOYEE ENGAGEMENT

Credit where creditâ&#x20AC;&#x2122;s due Recognition remains an essential tool in motivating employees through the downturn, and into the recovery.

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n August of 2009, the US jobless rate climbed to the highest level since 1983, signaling that, for the first time since the Great Depression, there was almost no increase in private sector jobs. Firms have cut wages, benefits and work hours. The words ‘employee performance review’ are more ominous than ever, as skeptical employees view such sessions as gateways to more work, less pay and an even greater chance of losing their jobs. Against this unsettling backdrop, the importance of employee engagement has become critical. Smart business leaders know that the skills and attitudes of their employees can be the very things that set them apart from the competition. So is it any wonder that today’s executives and HR professionals are seriously examining what they can do to better motivate employees through the recovery? The strength of a recognition and rewards program is that it can directly address an urgent need to drive performance and to ensure that everyone is working to meet the right goals. Some budgets have been cut and activities curtailed, but many programs have survived, as increasing evidence demonstrates the direct correlation between employee engagement and employee performance. Studies by the Incentive Federation have shown that individual employee incentives can improve performance by as much as 27 percent and that team incentives can lead to as much as a 45 percent improvement in performance. Without question, incentive programs can and should survive hard economic times because they work. They have low initial costs, can be targeted to specific audiences, have flexibility, inspire employee performance, and can be measured for results. In a recent global study, Hay Group Insight collected data from 41 organizations and over one million employees worldwide. These companies used employee engagement strategies, including recognition and rewards. After comparing the results of employee opinion surveys conducted in late 2008 or early 2009 with survey results from the same clients taken prior to the downturn, Hay Group found that more than 75 percent of these organizations realized improvements in their survey scores regardless of the economic downturn. Companies who value their human capital and actively engage their employees in the business can get results – even in a negative

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economic climate. What business leaders and HR professionals must do now is to look beyond the economic realities of the last two years and aggressively create recovery plans and budgets for 2010 that underscore the value of employee contributions by leveraging the power of recognition and rewards programs to help drive the performance readiness that emerging opportunities require. Despite the downturn in the economy, most companies still spend about $40 per recognition award. They realize that by keeping their focus on employee engagement, especially during a recession, they can help maintain employee motivation. Studies show that employee engagement scores account for up to 50 percent of the variance in customer service scores and that disengaged employees are over 85 percent more likely to leave. Writing in Incentive magazine in July 2009, Peter Hart, CEO of Rideau Recognition Solutions said: “The economy is starting to show signs of recovery, and the downturn will eventually end. But one thing will not: the global talent crisis. A surprising number of companies... are taking advantage of the current recession to prepare for the day when the labor market starts to tighten up. Forwardlooking companies are using this time to review their recognition strategies and policies. They might not have the money to implement their ideas today, but they are laying the groundwork for the day when their budgets do loosen up.”

What to do now? Some companies are currently questioning whether or not they should reduce or suspend their recognition and rewards programs until after the economy completely turns around. At the same time, leaders and HR professionals struggle with the issue of what exactly is appropriate under the current circumstances. The reality is that employers should be planning right now for the recovery rather than waiting for it to be fully in place before they take action. By planning for the appropriate recognition and rewards programs, companies will be better positioned to achieve success when the right opportunity appears and they must count on a well-established standard of the very best performance by every member of their team. In the current business climate, anything less than best performance will not be enough to beat the competition and

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R&R Harsh realities In light of the beneﬁts, many wise leaders and their Human Resource advisors have made R&R programs an integral part of their organization’s strategic business plan but, in some cases, the recent economic reality has driven changes in approach. In some industries, budgets have been reduced: • International travel has often been reduced or shifted to domestic destinations • Merchandise award values have decreased • The number of participants and/or frequency is smaller Strategies have changed: • Awards must not appear to be extravagant • ROI measurements have been redesigned • More attention is being paid to program design and goals • Reduced sales bonuses are awarded more often to more adequately forecast sales • There is a growing desire to reach more employees for bigger performance impact Employee retention and compensation are being re-examined: • Relocation expenses are no longer guaranteed • Attracting and retaining high performers is becoming an increasing concern • Employees often need more motivation to perform in the face of layoffs and salary freezes

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HRM | EMPLOYEE ENGAGEMENT

to increase revenue. Recognition and rewards programs are powerful tools to help ensure an environment that fosters achievement. Our current economic environment also means that many employees feel they are holding on to their jobs any way they can. If they are dissatisfied and feel they have been mistreated, they may bolt at the first sign of improvement. A recent Saratoga Institute study showed that poor communication and a lack of recognition were the top reasons why good people left their organizations. And, of course, once the economy picks up, so will the opportunities for good people to move. Talented employees aren’t waiting for things to improve to look elsewhere. The poor economy is not keeping dissatisfied employees from looking for new jobs, according to the Labor Day edition of recruiting and staffing firm Adecco Group North America’s American Workplace Insights Survey. Because as much as 85 percent of a company’s total assets are created by its investment in human capital it is even more critical in a post-recessionary economy to engage every employee in the long-term success of the company. Smart business leaders and their advisors would be wise to focus on two goals: getting the best out of their people and retaining top talent as the job market defrosts.

The best things in life are free

Sound strategy

to defend and keep, as well as deliver a better overall result. Senior management will always try to cut expenses, but they will also defend investments they believe will help grow the business and deliver profits to shareholders. Having a well-defined recognition strategy makes it much more likely that someone in the C-suite will act as your recognition champion. It’s important to build the foundation of a recognition and reward program on the right set of goals for the company and for those you’re attempting to motivate and reward.

Recognition and rewards programs that do not align with overall corporate strategies are usually looked at as an expense rather than as an investment. These programs often can’t be justified because they lack an underlying recognition strategy. Without a business-focused strategy there is very little to defend, and so

“Talented employees aren’t waiting for things to improve to look elsewhere” these programs are often the first thing to be eliminated in tough times. A well-devised recognition strategy will ensure the program ties directly into the corporation’s business objectives, mission, vision and values. When your recognition strategy is linked to corporate objectives, it is much easier

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Recognition programs don’t have to costs the earth. There are a number of simple ways to recognize employees without putting your hand in your pocket:

Appreciating people for their individual talents, skills and diversity of thought

Creating an atmosphere that fosters good relationships at all levels

Really listening to what employees have to say

Recognizing accomplishments with timely recognition – even if it’s only a “thank you” Outlining clear performance expectations Celebrating successes as they occur

Sharing ownership for goals and achievements

What to spend? Begin by determining exactly what it is you wish to accomplish. Do your challenges involve the entire workforce or just certain departments or geographical locations? Can the root causes of these issues be traced to attracting and retaining the right talent or is it the result of a lack of alignment between what employees should be doing and what’s actually occurring?

This is the point where incentive and recognition professionals can help you establish a program that will achieve your goals. They have the training and experience to offer the assistance you need to design, or modify, a program to meet your goals and budget. They can help you look closely at your business objectives and how they relate to the group that you are trying to motivate. Next, they can help you analyze what you have done in the past and assess its value in the current business context. Just as many different factors drive your employee performance (or lack of performance), there are many ways to build an effective recognition program to drive results. A recognition professional can help to create a program to maximize the effect of the initiative by targeting the communications and investment directly at the audience you need to reach. In the best of all worlds, organizations need to apply a multi-pronged approach that leverages the benefits of employee engagement built on a sound system of easily understood goals, structured talent development, and appropriate rewards and recognition. But, regardless of having the perfect human capital development structure, the power of using rewards and recognition prevails. The reality is that, as you recognize and reward your employees, they will reward the company by positioning it for long-term success. Begin today by committing to a strong employee performance management program that values all contributions, big and small, to the company’s success and rewards excellence. If you need assistance, you need only look to your HR professionals and their recognition and incentive industry partners for help in designing the program that will bring you returns as you move forward in a post-recession economy. Employee performance motivation programs, when used as a component of an overall approach that values employees, can dramatically improve employee engagement and job performance and, in the end, will positively impact business results. They should be a part of every sound business strategy for 2010 — and in the years ahead. This article is based on the white paper 2010 Recognition RX: Engaging Employees For Economic Recovery, produced by the Recognition Council. For more information go to www.recognitioncouncil.org

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HRM | ASK THE EXPERT

Sweet incentives Cassie Alvey looks at workplace morale and how current trends in this sector are ﬁtting into the marketplace.

s the weakened economy took its toll on the bottom line of companies, it managed to do as much or more damage to employee morale within businesses across the nation. And because morale is often hard to calculate and measure on a spreadsheet, it can be a forgotten part of a company’s economic recovery. Many companies are utilizing incentive programs to show appreciation and loyalty to the employees that have been working hard to help them succeed, especially through such difficult times. Incentive programs can create and maintain a personal connection between employer and employee. When employees feel that their hard work is recognized and appreciated, they approach their jobs with more enthusiasm, dedication and innovation. We’ve found that incentives can be a great way to celebrate the small victories on the road back to stability and success, and provide a lot of “bang for your buck”. Whether it’s celebrating teamwork or an individual achievement, it’s important for an employer to acknowledge it in a tangible way, particu-

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larly if bonus programs have been eliminated or reduced. Incentive programs can help turn distrust into trust, a sour attitude into a smile, and exhaustion into energy. An effective incentive is also a powerful catalyst. One company, a large customer service call center, surprised employees during an especially stressful rollout by placing a fresh cookie with a note of appreciation on each employee’s desk. The usual, harried tension on the calling floor quickly gave way to smiles, the stress subsiding with each bite. It was a small price to pay for such an impactful result. Incentive programs are also a means to attract and retain talent. One employee recounted the day he returned home from an extended business trip to fi nd his family excited over a package delivered in his name with the Mrs. Fields logo on it. They were all

“There are other personal occasions such as surgery, illness, or death of a family member, when employers need to reach out in support” anxious for him to open it, and it became a memorable experience for the whole family. In this case, the employer was able to communicate appreciation to the entire family for the hard work and sacrifice of this employee. Part of the draw of such gift s is that they are meant to be shared – employer with employee, and employee with family and friends. Put simply, incentive programs are the physical representation of the employer/employee relationship. Whether it’s welcoming a new hire, congratulating a long-term employ-

ment anniversary, or thanking the team for exceeding expectations, a physical gift is the way to express such sentiments as an organization and thereby strengthen the relationship. There are other personal occasions such as surgery, illness, or death of a family member, when employers need to reach out in support. It’s important for people to know that their employer’s care and concern is not limited to job performance. For example, a fresh delivery of cookies during such a time is a way of reaching out in a warm way. As HR directors know, it’s no small task to fi nd a one-size-fits-all incentive – gender neutral, politically correct, easy to serve, easy to share, and something that will evoke a positive, enthusiastic response. We’ve created gourmet gift s that do just that, and we revel in opportunities to help companies share them with their valued organization, to buoy morale and maintain personal connections. We understand the need in the current marketplace to instill confidence and enthusiasm. A successful incentive program, such as ours, can be an invaluable tool in changing negative employee perceptions and affect into positive action. We understand that an incentive is capable of inspiring a smile, and that a smile is capable of inspiring infinitely more. It’s always been the little things that make a difference. It’s true in life, and it’s true in business.

Cassie Alvey is the Director of Sales at Mrs. Fields Gifts, a graduate of the University of Utah, and part of the Mrs. Fields team since 1999. Specializing in corporate client accounts, Alvey works with HR professionals nationwide to create successful gifting and incentive programs.

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HRM | INDUSTRY INSIGHT

Be the ofﬁce hero

A thrilling approach to retain and reward employees, by Debbi Stuart.

n today’s culture, companies are searching for employee retention activities that are memorable, fun, value-packed and that fit within their budgets. Strong retention plans are the glue that hold successful companies together. These programs serve as a way to thank and reward employees; by creating bonding opportunities, fostering friendships and celebrating company milestones, all of which can help create a spirited and productive work environment. While many companies recognize the importance of such gatherings, the challenges and expense associated with coordinating and executing these events can present an obstacle. Additionally, many venues only offer a limited amount of time per event and may require businesses to provide their own food and entertainment. What if a turnkey value-packed venue was just a phone call away? What if for an average of $35 per person (prices vary by region), your company could host a day-long event, complete with private meeting space, all-you-can eat catering, and a wide variety of entertainment options for employees and their families. Th is very special outing would appeal to all ages and demographics; a place that would serve as a business

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meeting facility while at the same time offer help to create wonderful memories to last a lifetime. Six Flags theme parks offer a new twist on the traditional company outing. The world’s largest regional theme park company is on the eve of its 50th anniversary and has built a solid reputation creating turnkey events for over 5000 companies every year. Six Flags can customize an unforgettable event for companies with 100 employees or 20,000. Starting with outreach, Six Flags’ event planners provide all of the collateral needed to publicize the event including email news updates, posters, brochures and maps. Companies receive personalized discounted admission tickets with their company name imprinted and their own private pavilion, complete with sound system (restrictions apply). Companies benefit from having their employees spend time together for traditional catered picnic meals which can also serve as a backdrop for service award presentations. Six Flags theme parks combine friendly, fast, clean, safe service with affordable fun featuring record shattering roller coasters and special events like the Summer Concert Series, Fright Fest and Holiday in the Park. The theme parks’ wide array of entertainment reaches all demographics – families, teens, tweens and thrill seekers resulting in a lot of happy customers. Mary Kay Inc. has enjoyed a wonderful partnership with Six Flags for over 20 years. Melinda Foster Sellers, Chief People Officer of Mary Kay Inc. says: “I am constantly amazed by how excited our employees get about going to Six Flags. They love Six Flags so much that once, when we hosted a more traditional picnic on our property, our employees let us know it was nice, but it wasn’t Six Flags.”

“Companies that play together, stay together”

Six Flags theme parks are a great alternative to the age-old question, “what can we do this year for our employees?” The answer is companies that play together at Six Flags, stay together!

Debbi Stuart, Director of Sales for Six Flags Corporate is a well-known leader with over 23 years of experience in the leisure industry. Stuart is well known for her hands-on experience in aggressive strategic planning, coaching, leadership, negotiating, training and motivating of Group Sales Teams throughout the US, Mexico and Europe.

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HRM | ANALYST PERSPECTIVE

With the call for effective people management getting louder, Rebecca Goozee looks at what to expect from the HR function in the coming decade.

he downturn has certainly brought the HR function into the spotlight, raising critical questions about business operations and highlighting the importance of a high performing department and the perils of one that is not up to scratch. Looking forward, it is clear that the role of HR is evolving and needs to be redefi ned for a new generation. Indeed, there are several factors that will influence the way HR will function in the future: the millennial generation have different expectations of work and career; corporate responsibility and climate change issues are gathering momentum; the measurement of people is becoming vital and can no longer be regarded as a ‘soft’ discipline; and, health and wellbeing are playing a key role in tomorrow’s metrics-orientated world. The latest PricewaterhouseCoopers report from the Managing People series has recently been published and one report entitled Managing Tomorrow’s People: The Future of Work to 2020, has identified three possible work worlds for the future by identifying macro factors: scenario planning and using survey data. The study looks at how these three worlds function and the impact on business and how HR specifically could be transformed. According to the report, the downturn has irreversibly affected the world of work for some businesses, with pay and promotion freezes, changes to pension schemes and cuts in recruitment budgets eroding the bonds of trust between some employers and employees. On the other hand, some organizations have excelled at doing more with less to engage and develop their employees, despite an unstable employment landscape. In early 2007, a team from PwC started exploring the future of people management,

sparked by the rising profi le of people issues on the business agenda, such as the talent crisis, an aging workforce and an increase in mobility. Exploring the work aspirations and expectations of over 5000 professionals worldwide in the millennial generation, PwC identified three possible ‘worlds’ or plausible futures, looking at the way organizations could operate over the next decade. Th ree strong themes also emerged from PwC’s research. First was the dramatic change expected in the way business models operate as the pace of change becomes even more fundamental to the way people work. It is here that PwC identified three future scenarios or worlds: large corporate businesses turning into mini-states and taking on a prominent role in society; specialization creating the rise of collaborative networks; and the environmental agenda forcing fundamental changes to business strategy. PwC has illustrated these scenarios with three fictitious companies and assigns them colors that work with their outlook. In the imagined Green world scenario, demands for greater transparency and social responsibility in business will be magnified by the economic crisis and will resonate with the desire for environmental responsibility already present in the green agenda. In the Blue world scenario, there is an increased focus on hard people metrics to measure performance and productivity as companies look at the long-term reality of having to do more with less. And in the Orange world scenario, the

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opportunity for radical new ways of working will emerge through innovation. Will the future prove to be Blue, Green, Orange, a mix of all three or something else entirely? PwC believes that it is highly plausible that all three organizational models will feature in the future model and that some companies are already heading in the direction of certain business models. The research highlights multinationals as the Blue world model and the energy industry demonstrating elements of the Green world, while the Orange world represents the most radical departure from today’s world. The second theme identified in the report is that people management will present one of the greatest business challenges as orgnizations grapple with the realities of skills shortages, managing through change and creating an effective workforce. PwC predicts that by 2020 companies will be faced with three main issues: the boundary between work and home life, which will disappear as companies assume greater responsibility for the social welfare of employees; measurement techniques that will need to be in place to control and monitor productivity; and the rise in importance of social capital and relationships as the drivers of business success. The third theme that emerged from the research was the transFragmentation formation of the role of HR. PwC believes that this will go one of three ways. HR will become Small is beautiful: the heart of the organizaThe Orange World tion and take on a new wider people remit Companies begin to break influencing many other down into collaborative networks of smaller aspects of the business. organizations; specialization Or it will become the dominates the world driver of the corporate economy social responsibility

Collectivism

Companies care: The Green World Social responsibility dominates the corporate agenda with concerns about demographic changes, climate and sustainability becoming the key drivers of business

Integration

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The Future of Work, by Richard Donkin “The world has already changed for our children, but it is changing for all of us just as quickly. Unless my generation – and I belong to the boomer age group (those aged between 1945 and 1960) – learns to understand and take advantage of these changes, we are going to create a damaging economic and organizational vacuum for future generations. “It is already happening. The reasons for the credit crunch and its near-catastrophic undermining of the global banking industry were multifaceted and complex. Intrinsically, however, they reﬂected a society chained to production-led economic growth. There is apparently virtuous circularity to this society. We are paid to make things that are bought with the money we earn. It is a very simple kind of economic roundabout, oiled by debt, supported by earnings. If one part of this mechanism fails or becomes distorted, the whole machine is placed jeopardy. “This is what happened when banks and other lending institutions overstretched themselves extending and trading in high-risk mortgage debt, insured, as it was, by rising property prices. As soon as property prices began falling, as people began defaulting on their debts, these policies rebounded, squeezing ﬁnancial liquidity to such an extent that banks and building societies, relying on an ease of sourcing credit for their daily transactions, became forced increasingly to look to their own resources. Those with few cash reserves were in trouble.” Excerpted from Richard Donkin’s The Future of Work.

agenda within the organization. Alternatively, it will be seen as a transaction and will be almost entirely outsourced, so that HR exists in a new form outside the organization, while in-house HR will be predominantly focused on people sourcing. There is no way of knowing exactly how the HR function will change over the next 10 years, but there is certainly a need for all companies to start examining how their own organization fits into PwC’s predicted scenarios and look at how the macro trends will impact their business or industry. For employees, there are likely to be many different ways of working in the future, which will fit in with various industries, allowing employees to Individualism align themselves with organizations that fit their priorities, whether that be fi nancially, environmentally or the ability to work in a flexible way or overseas, for example. Corporate is king: The Blue World There is no doubt that there is a significant potential for the HR function to own the people Big company capitalism management agenda within organizations, drive rules as organizations continue to grow bigger and individual strategy and have the tools to become the most preferences trump beliefs about powerful part of a business operation. It is impersocail responsibility ative that HR managers take advantage of this opportunity if HR wants to stay influential and avoid becoming almost entirely outsourced. The fate of HR currently hangs in the balance, and with 2020 just a decade away, the clock is ticking.

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HRM | PROJECT FOCUS

The beneﬁts of customization How a tailored benefit plan and network solution helped Trussway increase efficiencies and decrease health care costs, by Lisa Kime.

russway is one of the nation’s largest manufacturers of structural building products. Its projects range from single or multi-family family homes to large commercial buildings. Trussway’s ability to mass produce quantities quickly and on time helps its customers be more profitable. Trussway had a one-size-fits-all benefits plan that didn’t meet its needs. The company also experienced issues with claim lag time, customer service and payment accuracy. It was searching for a third-party administrator (TPA) that could create a customized self-funded benefits plan, alleviate the administrative burden on its human resources staff and provide attentive customer service. Trussway selected UMR, which worked with the customer and its broker to determine the best benefit plan and network solution for Trussway’s demographics. Because it had multiple facilities throughout the US, Trussway needed a plan that would provide adequate coverage as well as accommodate its Spanishspeaking members. UMR secured both national and regional networks that reached across the country and filled the gaps for Trussway’s multi-location membership base. UMR also provided Spanish-speaking representatives

and assisted with document translation. Upon signing with UMR in July 2002, Trussway implemented medical and dental administration. Over the years, it added additional products, such as flexible spending accounts and UMR’s integrated utilization management and case management programs. UMR also provided student verification and multivendor payment services, which freed up Trussway’s human resources staff. After a short period of time, Trussway began to see savings and a dramatic improvement in customer service. “We were looking for a larger operation with a small-size mentality ... a TPA that really knew Trussway inside and out,” Vice President of Human Resources Dorice Aytes says, adding that UMR gave Trussway the service and accuracy it expected and was quick to respond to inquiries or issues. Human Resources Manager Melinda Harris believes customer service is what sets UMR apart.

Customer: Trussway, Ltd. Industry: Structural Building Product Manufacturing Challenge: Reduce claim lag time, improve customer service and payment accuracy while alleviating the administrative burden on human resources. Solution: A customized, flexible benefit plan that included a provider network solution consisting of national and regional networks to accommodate the customer’s multi-location membership base. Implementation of a customer service program, complete with Spanish-speaking representatives and Spanish member materials. Benefits: A continuously evolving benefit structure that includes the addition of several new products and services, dramatically improved customer service, reduced human resources administrative responsibilities and significant year-over-year plan cost reductions and savings.

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“I have three or four different contacts at UMR that I work with on a frequent basis that provide great service,” Harris says. “If they don’t have the answer immediately, they seek it out and keep me abreast of the progress. They contact the provider, member, vendor and me, providing end-to-end customer service.” One example of that service is when Trussway eliminated online enrollment because of budgetary constraints. “UMR went above and beyond the call of duty and worked with us to tailor reports to make sure we captured all eligible participants,” Harris says. “They accommodated our situation and helped us find a solution to make it as efficient as possible without the online tool.” UMR’s strategic account executive (SAE) has been instrumental in making sure the account runs smoothly. The SAE has helped Trussway create custom notices to employees, interpret plan performance reports and explain new regulations and services. “UMR customizes things with our input to fit our needs,” Harris said. “That flexibility is very important as every company is uniquely different.” To make sure the client’s plan is on track, UMR provides Trussway with monthly and annual reporting metrics. “The savings with UMR are amazing… it blows me away,” Aytes says. “Their reports allow us to project claims funding and keep me abreast of our fi nances. When I get asked questions, I have the information available to answer them.”

Lisa Kime is Vice President of Account Management for UMR, the third-party administrator (TPA) unit of UnitedHealthcare. Kime has over 20 years of healthcare industry experience, including the last 15 with UMR. Prior to joining UMR, she held various positions at Kaiser Permanente, including patient advocate and account executive.

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HRM | RECOGNITION

Engagement party

Keeping employees involved and focused in a post-recession world requires some new tactics, says Lisa Tesvich.

ayoffs, hiring freezes, increased responsibilities, reduced or flat pay, lack of bonuses, reduction in learning and development opportunities and fewer perks. Ah, the joys of being a survivor in an organization. But hey, they’re just happy to have a job, right? Well, yes, temporarily. But what happens when the economy improves? A November 2009 study by Right Management found that 60 percent of employees intend to leave their current positions when the economy improves and an additional one-quarter are networking and updating their resumes. Their collective feet stomping out the door will serve as a sounding alarm of pent up frustration. And guess

who will likely be fi rst out the door. Yep you guessed it; that would be your high performers. The 2009/2010 US Strategic Rewards Survey by Towers Watson and WorldatWork found that employee-engagement levels for all workers at the surveyed companies dropped nine percent since last year – but the number was nearly 25 percent for top performers. It seems that all the psychological turmoil experienced by employees during the economic downturn has caused a collective decrease in faith in the company, especially for high performers. But what do you do, especially when we’re still in a time of economic uncertainty? You start re-engaging them, now. And here’s how.

“Overall, employees that feel respected and taken care of are much more likely to want to go the extra mile for the good of the company”

Re-energize your leaders Many organizations forget that leaders are people too. Most leaders in organizations have also gone through psychological trauma and suffered a decrease in their own morale. Making and executing difﬁcult layoff decisions, doing more with less, increased pressures and demands and higher expectations will affect even the most seasoned of leaders. Many of them are uncertain and anxious about the organization, its direction and its market viability. They may have differing opinions on how the organization should proceed. Their behavior may become self-serving and destructive to their team and employees. Spending time working with this group to ensure shared vision and commitment is an absolute imperative. The rest of the organization is watching this group carefully for signals as to what the company’s future will be like and whether or not they want to be a part of it.

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RECOGNITION | HRM

Share a clear and compelling vision If you don’t have one that meets the above criteria, get one. And I don’t mean one that sounds like the Gettysburg address and takes a half-day to explain to people. Every leader in the organization should be able to share this vision without accompanying slides. If your leaders don’t truly get the vision and can’t state it simply and conﬁdently, there will almost certainly be confusion amongst everyone else. Confusion breeds anxiety and uncertainty. Employees, especially high performers, need to see exactly where the leadership is going. Provide them with information on plans to reposition the company in the next 18-24 months. Help them believe that the company that they are a part of is a winner or a potential winner in the marketplace. At a minimum people will be well informed. At an ultimate, they will be energized, excited and mobilized to positive action for the company.

Clearly define roles and responsibilities A Gallup Q12 survey of employee engagement from July 2008 to March 2009 found that the question with the most significant drop was “I know what is expected of me at work.” With layoffs, restructuring and changes in direction, many employees have experienced significant role shifts with little clarity about their new role. These employees need to be given specific information regarding what is expected. In addition, leadership must delineate the linkage between the goals of the organization and how the work of the individual helps the organization achieve those goals. Every individual, from the engineer, the salesperson, the executive assistant, needs to know why and how what they do leads to the success or failure of the company. They want to know they make a difference.

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Openly, honestly and frequently communicate This is always a necessity but in times of uncertainty it becomes even more important. Employers often delay in communicating because they don’t know everything or because they don’t want to communicate what may be unwelcome news. But this is always a problem. In the absence of honest communication, employees feel anxious, gossip with others, “make up” what they believe will happen and pass it through the rumor mill. Not much productive work gets done. Employers need to communicate what is known at any given time and what is not known. This is particularly true for high performers. They need to know where the company is going and how they ﬁt into those plans. Be truthful but remain positive in your communications. Fear is not a good long-term motivator. And just because you told them once doesn’t mean they got it. Communication must be ongoing.

Educate and involve employees in solutions If you’ve been to Costco, a wholesale retailer, you may have noticed a sign in the parking lot that says, “Help us keep your costs down by returning carts here.” This is their way of educating consumers on how they contribute to keeping their own costs down. So guess what? Most people return their carts. This is a very simple illustration of how powerful it is to let people know how small, everyday activities contribute to a company’s bottom line. Yet, most employees have no idea how their company makes money. Educating employees on how the company makes and loses money and its products and strategies for competing in the market place will help employees understand their own effect. Collaborate with them on ways to help the company. They will not only have numerous ideas on how to make things run more efﬁciently but they will also feel greater ownership in the solutions.

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HRM | RECOGNITION

Align your HR systems with the organization All too often, critical talent management systems are producing sub-par results. These tools used throughout the life cycle of the employee are so powerful and yet so often not achieving near their potential. Even talent management systems that at first glance appear to be in alignment with the company’s goals and objectives may be flawed. Consider a company whose objective is to enter new markets through offering different products. They will need to innovate, and innovation requires risk taking. Their talent management system aligns with the company’s objective because they recruit and select employees who demonstrate this competency, provide learning and development opportunities that foster innovation, provide feedback related to innovation and reward people who successfully innovate. A closer look, however, reveals that people are punished in their performance reviews and pocketbooks for taking risks that don’t end well. Lesson learned by employees: play it safe, don’t take risks. Now, how innovative do you think an organization will be when employees won’t risk doing anything different? A CEO can talk to employees all day about the importance of innovation for the future but, at the end of the day, behavior that gets rewarded gets repeated. This misalignment will significantly hinder the organization of reaching its goal of increasing market share.

Treat employees well According to the Russell Investment Group, using stock market performance data, companies that make the Fortune “100 Best Places to Work” list over various periods of time, consistently outperform major stock indices. Demonstrating integrity, being fair and showing respect for employees while fostering a sense of camaraderie is indicative of the companies that would make this list. In addition, especially in today’s times, it’s important to recognize that employees don’t leave their lives at the door when they show up for work. Some may be struggling with a spouse that is recently unemployed or underemployed, some may have childcare or parent-care issues, some may have health issues, ﬁnancial issues or relationship issues. If we really want employees to be engaged and passionately contribute to the organization then we need to be passionate about positively contributing to their lives. Employees that are better able to cope with the demands of their life are much more able to bring mental energy, creativity and productivity to the workplace. Obviously, an organization can’t be expected to solve all employees’ problems but it can provide low cost opportunities to make life easier for them. Facilitating drop off/pick up dry cleaning service, chair massages and lunch delivery are old standbys but you can add to these by asking employees for suggestions on other lowcost conveniences that you can provide. Overall, employees that feel respected and taken care of are much more likely to want to go the extra mile for the good of the company.

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Lighten up Employees in organizations that have been heavily negatively impacted by the economy seem to be having about as much fun as players and fans of the losing team in a sporting event. The mood can be downright depressing. Lifting their spirits through fun can pay off. Each year, the Great Place to Work Institute asks tens of thousands of employees to rate their experience of workplace factors, including, “This is a fun place to work.” On Fortune’s “100 Best Companies to Work For” list, employees in companies that are denoted as “great” responded overwhelmingly – an average of 81 percent – that they are working in a “fun” environment. In other words, employees at the best companies are also having the best time. So, hold an employee talent show, sponsor video game playoffs, have a miniature golf challenge in the hallway or invite the local jugglers and acrobats to perform. Just generate some excitement and go have some fun.

Lisa K. Tesvich, PhD, is President of LKT Consulting, Inc. and provides strategic consulting in the areas of employee engagement, organizational culture and talent management.

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HRM | CORPORATE HOUSING

From house to home

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According to American Express, spending on business travel has already shown a marked improvement in 2010 over 2009. And corporate housing is proving an attractive option for those on extended stays.

orporate housing is sprouting up across the US. While construction and engineering fi rms have long needed to provide temporary corporate housing for employees, it has only recently become widespread in other industries too, particularly as mergers and acquisitions become more commonplace. For the most part, corporate America is short on talent and moving that talent around has become an increasingly viable – and preferable – option. Intended as an alternative to cramped hotel rooms for employees relocating, on a temporary assignment or for general business travel, corporate housing consists of apartments leased to companies that furnish and equip them with linen and crockery. While apartments, townhouses and condominiums are the most popular varieties of corporate housing, single-family homes are on the rise too, as corporate housing providers are increasingly looking to please families by providing items such as cribs and highchairs – and some facilities even allow pets. Companies are increasingly fi nding that in many instances, placing their employees in corporate housing is a more cost-effective option than a hotel and that it is well received by employees looking for flexibility and more space as well as kitchens and laundry facilities, alongside the same service-orientated features as hotels, such as fitness and business centers. Corporate housing ensures an easier transition between the old location and the new one for those employees looking to make a more permanent move. In this particular situation, a corporate apartment is designed to assist a transferring employee and his or her family, allowing them to adjust to the new town or city and fi nd the right location for them. With businesses looking at what is truly valuable in this current economic climate analysts have found that one of the more interesting trends in the search for better return is on the business travel industry. And because employee work/life balance has a positive impact on productivity and efficiency, it makes sense that companies that require a certain amount of location flexibility would want to ensure that their employees are in the best environment possible. Indeed, for employees it can be a huge step to temporarily relocate in order to complete a current assignment – having to be away from family, friends and home

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can be difficult – which means it is vital that the stay away is as comfortable as possible. And while the employee is enjoying benefits such as more living space, an easier commute to job sites and more business amenities, the employer is also seeing increased benefits. A corporate housing solution provides savings to the bottom line – according to K&M Relocation network, the cost of a fully furnished apartment is typically 30 to 50 percent less than the cost of a hotel room. Many corporate housing companies take care of the whole package, offering streamlined billing and spend visibility through advanced reporting. Indeed, the Corporate Housing Providers Association (CHPA) released its annual statistical study earlier this year, revealing that corporate housing is a $2.36 billion industry and the market is set for growth in 2010, despite industry revenue peaking in 2007 and softening in 2008 and 2009. “Th is much anticipated 2010 report summarizes what really happened in the corporate housing industry in 2009. The report highlights key business indicators for 55 US and Canadian metropolitan areas and illustrates how our industry fared better than other segments of the lodging industry,” reports Adam Sherer, CCHP of Marriott ExecuStay and CHPA President. The Atlas World Group confi rms that overall businesses are significantly optimistic regarding relocation volumes and budgets – with more than one in fi ve fi rms expecting relocation to increase in 2010.

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HRM | PROJECT FOCUS

Staying competitive Jon Wohlfert details how a customized solution achieved results for a global relocation company.

ridgeStreet is a leading international provider of serviced apartments offering comprehensive program management. The flexible accommodations offered by serviced apartment providers such as BridgeStreet have evolved to deliver solutions that reflect the diverse types of assignment and/ or work needs including traditional global mobility, rotational, short-term/project assignments, intern groups, commuter assignments and more. One of the largest global relocation companies tasked BridgeStreet with creating a single source, global housing program with the goals of delivering multiple housing options for every request, reduce costs, and simplify billing and reporting. The client wanted to improve its strategic sourcing process by receiving a minimum of three unbiased housing options for each transferee reservation request. Using BridgeStreet’s proprietary supplier management tool, EasySource, an average of 3.45 options was received for every reservation request giving the client choice and negotiated rates to choose the right fit accommodation. EasySource also allowed the company to leverage its

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account volume, decreasing the average daily rate from $135 to $128, for an annual total program saving of over 10 percent. Experienced serviced apartment providers should offer technology that increases efficiencies. Organizations should look for fully integrated web-based applications that deliver on all aspects of the temporary housing process — from the initial reservation request to global tracking of travelers and reporting. Based on client needs tools such as online portals, booking engines, bid and supplier management systems and real-time reporting can all be integrated. A mature serviced apartment supplier should also offer a layered approach in which technology and processes are integrated with service programs that allow associates to deliver exceptional customer care. Through BridgeStreet’s guest-centric programs and commitment to service excellence, the company achieved an average guest satisfaction rating of 4.38, on a five-point scale, among the client’s transferees in 2009. The breadth of BridgeStreet’s experience allowed it to tackle other challenges including the need for invoicing and reporting in multiple currencies, client-direct billing and stringent data security. The client also received consolidated metrics on everything from reservations, guest satisfaction and service response time to average daily rate and length of stay. Increasing data transparency via aggressive metric monitoring was critical to the ongoing evaluation of the program. The client was able to not only measure its existing program but also improve forecasting of global housing demands. With the client’s business goals at the forefront, BridgeStreet created a custom program that achieved measurable results within the scope and geography of the client’s requirements. The client expected a knowledgeable partner who could help drive changes required to support procurement and service metrics while adjusting to new assignment types. BridgeStreet’s flexible accommodations model offers tools to streamline processes and strategic sourcing, consultation on program design and implementation, and complete management and optimization of a program – capabilities that deliver a custom solution to fit an organization’s unique goals.

Jon Wohlfert is Chief Marketing and Technology Ofﬁcer at BridgeStreet, the driving force behind the company’s international marketing efforts and the globalization of its IT systems and services. Since joining BridgeStreet in 2003 as Senior Vice President of Sales and Marketing, Wohlfert has been instrumental in repositioning the BridgeStreet brand as a global leader and creating a sales-oriented culture. He is also responsible for expanding the technology platforms utilized by BridgeStreet in the areas of customer relations and supplier management.

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HRM | DETAILS

Philanthopy How corporate giving is changing p134

Technology HR technology forecast p138

Wellness How to avoid burnout p140

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PLUS Books A look at the latest book releases p142

Details. 134

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DETAILS | PHILANTHROPY

Giving something back Corporate philanthropy is about more than signing a check â&#x20AC;&#x201C; but what exactly are the benefits and how are they being realized?

s corporate philanthropy a luxury that businesses can no longer afford? With the tail-end of the recession still slashing proďŹ ts, many would be forgiven for assuming this is the case. However, a report released last November from the Committee Encouraging Corporate Philanthropy reveals that corporate giving is actually on the rise. A majority of

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PHILANTHROPY | DETAILS

companies surveyed in the 2009 edition of Giving in Numbers increased giving from 2007 to 2008, despite 68 percent experiencing profit declines. And the downturn also saw another trend as companies have placed more importance on basic needs and local communities as opposed to the traditional days of charity dinners and new buildings. At Pfizer there has been a long history of supporting local communities, which started with the launch of the Pfizer Foundation in 1953. The two founders were immigrants who very much supported new arrivals success in the US and so dedicated a number of resources to the effort. Today, the program is global and there are a robust set of plans in place that remain active. In the US programs center around ensuring that patients have access to products. “Initially, the foundation was set up to help the less fortunate,” explains Caroline Roan, VP of Corporate Responsibility at Pfizer, “but it’s evolved as the theories behind philanthropy have evolved. We now view our social investments as part of our corporate responsibility strategy, and as a company we have moved away from what has been more the traditional local giving to broader partnerships that address global health issues that are currently very challenging for the world.” So why is corporate philanthropy becoming increasingly popular across the US? At Accenture, Chief Leadership Officer Adrian Lithja, reveals that while giving on an individual level has been around as long as he’s been at the company – coming up to 31 years – in the past year or so he saw an opportunity to raise the game and focus on what the company can achieve in the corporate citizen space. “We set ourselves thinking about a more singular theme and were looking for something that we felt would resonate with us as a company. We have 180,000 people worldwide and if we can harness that energy then we can make a difference that’s sustainable to the world. “We’ve focused on what we call ‘skills to succeed,’” continues Lithja. “We want to help people develop the skills to allow them to participate in the economies in which they work and live. When we began this journey we were convinced that skills were just going to be an unbelievably important basis for competition, for competitiveness, for differentiation, and actually as we’ve been through the more difficult economic times that skills theme resonates probably even more loudly. Whether it’s around helping people build new skills or re-skilling to change and adapt to a new working environment, we’re finding now that more and more of our efforts are being harnessed towards that goal and really

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being able to make a sustainable difference.” One of the big drivers behind corporate philanthropy is the huge issue of trust building in big businesses. According to a recent report only 42 percent of people trust industry to do the right thing – a drop of 16 percent in just 12 months. Can an executed corporate philanthropy program actually help in rebuilding that trust? Pfizer’s Roan believes that it can, explaining that it is important to recognize the sophistication of customers. “If we were to launch a campaign that was not authentic that did not address a real unmet need and that did not have credible partners as part of the solution, it would backfire. On the other hand if they’re executed to address real need, you do it with the right partners and you’re clear about your goals then it can absolutely help build trust and credibility with the public.” Over at Citi, Pam Flaherty, CEO of the Citi Foundation agrees: “I believe 100 percent. All of us at Citi agree that trust of our stakeholders and our customers is absolutely critical, and philanthropy can play a role. Philanthropy doesn’t exist in a vacuum and it cannot carry the whole load of trust, but it can certainly be an important element of creating trust.” The Citi Foundation was established in 1999, although there was a dedicated philanthropy operative since the mid-1960s. Flaherty explains that while, the Citi Foundation is global, at the same time it acts locally. “Philanthropy is a wonderful way to have global themes and global involvement, but make a real right in communities where we do business around the world. The most critical thing about the mission of the foundation and the areas in which it works has to be essentially grounded in what our company can bring, the resources we can bring to bear and what’s consistent with who we are and our skills and abilities.” Flaherty goes on to explain that Citi has longterm relationships in most of the areas that it does business, but that the foundation continues to look for new organizations that might help the company to reach out in different ways. Recently for example, the foundation was focused on helping children and young adults into university. “We have a long-term partnership with the United Negro College Fund (UNCF). Traditionally, UNCF has done scholarships and now we’re working through that partnership with Kip Academies, which is a charter school here in New York City, and CFED to create a program for financial education for kids and their families to create savings accounts so that they can go to college, and combine that with scholarships. This is an all-new way to leverage long-term partnerships.”

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Growth and giving $4.4 billion – estimated giving by corporate foundations in 2009 3.3 percent – estimates decrease in corporate foundation giving between 2008 and 2009 2745 – number of grant making corporate foundations in 2008 20 percent – share of corporate foundations reporting more than $1 million in giving in 2009 10 percent – corporate foundation giving as a share of all foundation giving in 2008 Source: 2010 edition of Foundation Growth and Giving Estimates

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DETAILS | TECH

HR technology forecast: cloudy with a chance of confusion

SaaS, xSP, On-Demand, BPO, cloud computing – the human resource lexicon continues to add acronyms at an alarming rate. If you’re like many in the space, the sheer amount of new terms can be overwhelming. Tom Malone presents an HR technology primer to define some of the more popular current terms and acronyms to help you sift through the jargon.

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Software-as-a-Service (SaaS) SaaS is simply an alternative model for licensing and deploying software. In the traditional model, vendors would sell a license to use a software application to a company. The vendor would then ship the software disks or other media to the company’s IT department for ‘on-premise’ deployment; IT would load the software onto servers located at a corporate facility – either headquarters or a private, corporate data center. Users would log onto the company server to access and use the software. With SaaS, applications are hosted by a vendor or service provider and made available, typically via a subscription, to customers over the internet (though solutions could be delivered over a virtual private network). The most important part of the SaaS equation is the second ‘S’ – the service. Since the vendor hosts the software, they provide application management services that would typically have to be provided by IT resources in a traditional onpremise model. Examples of the service in SaaS include daily backups, network and security monitoring, performance tuning and, perhaps most importantly, installing updates and software enhancements. One of the key customer beneﬁts of the SaaS model is knowing you are always on the latest release of the software. And, since the vendor provides these services, the customer’s IT resources are freed to work on other, more mission critical tasks.

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TECH | DETAILS

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On-Demand This popular enterprise model was originally deﬁned as a service to make computing (versus application) resources available as needed to a broad set of users. The computing resources were, and continue to be, delivered via the internet by a service provider. It’s a model that was developed to overcome ﬂuctuating demands on computing resources and manage peak requirements, while minimizing costs. Today, On-Demand is another term that has been hijacked to include delivery of applications via the SaaS model. So SaaS and On-Demand are nearly interchangeable – only the purists know or care about the difference.

Hosted Service Provider (xSP)

Cloud computing The term ‘cloud computing’ has been hijacked by anyone who wants to make a service sound hip, but it’s simply a form of outsourcing by which vendors supply massively scalable computing services to numerous customers over the internet. These services can include everything from applications such as recruiting and performance management, to infrastructure, such as storage, processing power and the provision of development platforms. Because these applications and services are multitenant in nature — multiple instances of the same package that can be executed on the same machine or virtual machines — system resources can be shared among a large pool of users, which reduces costs. Software-as-a-service (SaaS) is one of cloud’s most recognized manifestations, but strictly speaking it is a subset of the category. Not all SaaS offerings are really multi-tenant nor massively scalable. This means that, while most SaaS offerings are in the cloud, cloud is not SaaS – it’s much bigger. Google apps, online banking, and ESPN’s fantasy sports leagues, are all examples of scalable services we can access from anywhere we have an internet connection. These services, along with thousands of others, comprise the cloud.

In the Hosted Service Provider model (xSP), an external vendor provides the IT functions, infrastructure and applications necessary to effectively deliver a particular business application to the end user. xSPs are typically not developers or software vendors; instead they are service providers that host software solutions developed by one company and provision it to another company.

Business Process Outsourcing (BPO) / Managed Services Business Process Outsourcing is a business model where one organization essentially contracts to perform the day-to-day operation of business functions for another company; for example, payroll processing. BPO does not require SaaS as it is truly just a service. BPO providers typically leverage the applications that are already deployed by a company; either in-house or via SaaS. While all of the jargon can get confusing, at the end of the day it’s all about software and service – how it’s delivered and managed. And, it’s important to remember that the delivery model is secondary; your priority when evaluating software is simply whether it meets your requirements. Tom Malone is CEO of Accero, a HR and Payroll solutions provider serving mid-sized and large organizations in the United States, Canada, Australia and the United Kingdom.

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DETAILS | WELLNESS

A winning idea As the country emerges from recession, burnout again becomes a reality for many. However, the implementation of wellness programs is having a huge impact.

xecutives are facing the toughest economic situation since the Great Depression. The after-effects of the recession – growing demands on services, a staffi ng squeeze, salary freezes and shrinking budgets – are all adding up to a huge amount of stress, so is it any wonder that employees are feeling the burn? We all deal with stress in our lives, it is part of everyday life; however, working long hours for sustained periods of time under pressure leads to mental and physical exhaustion – a century ago Robert Yerkes and John Dodson defi nitively showed that there is a tipping point where stress detracts from performance. It is vital to recognize the symptoms before this exhaustion leads to breakdown or burnout, with early signs including insomnia and depression, extreme tiredness and fatigue, heart palpitations, inability to focus and migraines. Burnout takes a heft y toll on job satisfaction, performance and retention, as well as health and wellbeing. Indeed, stress has long been linked with many ailments,

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WELLNESS | DETAILS

including heart attacks, high blood pressure, hypertension, allergies and skin disorders. In fact, 75-90 percent of employee visits to hospitals are for stress-related symptoms. And as excessive workloads and unrealistic targets come off the back of the current working environment, it is par for course that the average employee is dealing with above-average stress.

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81% of American businesses with 50 or more employees have some form of health promotion program

Stress management By learning the skills you need to perform under pressure, you can help deal with stress and anxiety, as well as improve your employees’ wellbeing. Firstly, managing workload is key. Th is can be fought on three levels: over-commitment, resource issues and focus problems. Over-commitment often stems from an inability to draw boundaries and say no to unrealistic requests. By concentrating on resource issues you can delegate work to others and make sure you are effectively using the tools that are available. It is imperative to focus correctly. Perhaps you are simply responding to emails coming in rather than managing your time according to priorities, or procrastinating on things that are difficult. The second weapon against burnout centers around embracing renewal. There is no doubt that hard work is critical to success, but it is just as vital to renew, restore and rejuvenate your body and mind. Short-term, look at building quiet time into each day; just 15 minutes a day of meditation or listening to soft music will work wonders. Long-term, take vacation time and enjoy yourself; look at fi lling in time with adventure and rest. The key is to stay healthy – eat light, nutritious meals, exercise and make sure you are getting enough sleep. Th irdly, evaluate your work/life balance and ensure you are doing the right work for you. Bob Burford, business leader and best-selling author, talks about a “smoldering discontent” that many workers feel after realizing that they have spent decades building lives of success but not significance. Find ways to work everyday that serve your family, workplace community or cause, and choose a role within an organization that has a mission or culture that fits to you.

Bottom line benefits A healthy team is a happy team. Companies that invest in the psychological health and wellbeing of their staff will undoubtedly see the benefits of increased productivity and employee retention. It has been proved that stress-free staff will perform better, work harder and are generally happier in their working environment than those that feel undervalued and overworked. And this can all impact an organization’s bottom line – if employees are out sick for an extended period of time, productivity can suffer, particularly if other workers have

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Top 10 tips to beat burnout 1. Learn to delegate 2. Learn to say no 3. Work in a physically comfortable environment 4. Plan your day 5. Take a 15minute power break each day 6. Avoid caffeine 7. Take regular exercise 8. Keep your sense of humor 9. Introduce monthly stressbuster meetings 10. Remember your staff are your best asset

to pick up the slack – according to the Cornell University Institute for Health and Productivity Studies, employers can save between $300-$450 annually per employee as a result of reduced health expenditures due to annual wellness investment of $100-$150 per employee. Implementing wellness initiatives through a quality wellness program is key to encouraging stress-free work/life balance, which can make a huge difference to the business. Today, more than 81 percent of American businesses with 50 or more employees have some form of health promotion program. Simply including a nosmoking policy, an exercise program or an annual health checkup can help, with an increasing number of workplaces incorporating gyms and even personal trainers and fitness instructors. Incentivizing employees with an extra paid day off if they have no claims within 12 months is becoming a common trait in wellness programs, and likewise, tying in the notion of wellness in the community at large, many companies, such as KPMG, also offer employees paid time off when they do volunteer work in the community. There is no doubt that workplace wellness programs benefit both employees and employers and may be just the cure for companies struggling with rapidly rising healthcare costs. ■

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DETAILS | BOOK REVIEWS

Workforce of One: Revolutionizing Talent Management Through Customization By Susan M. Cantrell and David Smith

2 From Workspace to Playspace: Innovating, Learning, and Changing Through Dynamic Engagement By Pamela Meyer Each day organizations across industries and with wide-ranging missions are discovering that playspace is the space they can and must create at work if they are to think creatively, question old assumptions, respond effectively to the unexpected, and engage all to work at the top of their talent. Filled with case examples from such organizations as Learning Curve International, Google, Chicago Public Schools, Umpqua Bank, and Threadless, Meyer provides both the conceptual framework and the principles to guide practitioners to create playspace for innovating, learning and changing in their organizations. HRM says: Essential for managers, team leaders, entrepreneurs collaborators who are looking to transform teams and workspace, Meyer has a totally convincing argument for integrating play into the work space by using real-life examples.

Employees First, Customers Second: Turning Conventional Management Upside Down By Vineet Nayar In this book Nayar argues that the best way for companies to meet their customers’ needs is to stop making customers their top priority and instead shift focus to empowering employees to solve customer problems, by making management accountable to employees who are the real creators of value. Only by turning the organization upside down will companies be able to unleash their

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In Workforce of One Susan M. Cantrell and David Smith reveal how the customization revolution is now broadening out across the business landscape, recasting the employer-employee relationship and redefining how the best global companies excel and thrive. Cantrell and Smith argue that just as marketing has learned to meet the needs of segments as small as one customer, companies that want to hire and keep the best talent will need to treat the individual employee as a “workforce of one” and understand that organizations are designed to fit people, rather than demanding that their people fit them. HRM says: This book demonstrates – using extensive profiles of Best Buy, Google, Microsoft and others – that by creating customized career journeys organizations can help maximize performance.

12 Steps to Power Presence: How to Assert Your Authority to Lead By John Baldoni Philosophers and management theorists have endlessly debated the single most 4 important quality a real leader should posses. Enter John Baldoni’s 12 Steps. Over 68 pages, Baldoni claims that leadership presence is a form of communication that can be learned, and then provides the hows and whys of learning it. Along the way he adds some provocative comments on the importance of ethical actions in tough times, as well as good. HRM says: A succinct guide, punctuated with real-life examples, this book is a good and easy read for new leaders or managers who are looking to revisit the fundamentals of leadership.

Where in the World is My Team? Making a Success of Your Virtual Global Workplace By Terence Brake Collaboration can be difﬁcult enough when we are working face to face with others, but put us thousands of miles apart, in multiple time zones and in diverse culture groups, and it multiplies the challenges 10-fold. Brake provides the concepts and tools for making global collaboration a success for you and your business, every time. It doesn’t matter if you are new to working in the virtual global workplace, or very experienced, you will ﬁnd a wealth of practical know-how that can be used immediately to get great results. HRM says: Packed full of practical tips this book understands the mindsets that are required for working across distances, giving a glimpse into a further developed workspace that can cope with a myriad of time and space challenges.

employees’ creativity, energy and passion. HRM says: An honest and practical account, Employees First, Customers Second, offers valuable insights for managers seeking to realize their aspirations to grow faster and become self-propelled engines of change.

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Strategies for disruption An empty terminal at Charles de Gaulle Airport in Paris shows the disruption caused with the eruption of Iceland’s Eyjafjallajokull volcano in April 2010. While the impact of the volcano saw millions of passengers stranded, the longer-term impact on business operations is still being discussed: what can be done to mitigate both risk and economic disaster in the future? Ensuring business continuity is considered part of the human resources department helps prepare the organization to offer ‘business as usual’ as opposed to ‘ﬁght ﬁre’ in the event of a crisis. Having a tried and tested plan in place will help protect business against the impacts of a natural or man made disaster and hopefully ensure that critical services are maintained to a minimum acceptable level. In addition employees should be able to understand exactly what is expected of them.

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Winning with wellness Shannon Rickert offers a prescription for tackling the healthcare challenge.

hen the Patient Protection and Affordable Care Act (HR 3590) became law this past March, it didn’t neatly put a fix on all of the challenges we face with our healthcare system. What it did do was put the spotlight on a movement that has been building for the last several years – worksite wellness programs. In fact, throughout the healthcare reform debate, one area that was uniformly supported was wellness programs. With mounting statistics and studies demonstrating the impact of obesity, tobacco use and stress on our health, there is no denying that something needs to change. That something is our unhealthy, yet modifiable behaviors. But change isn’t easy, and most of us need some help to address our behavior to achieve sustainable health. This is where worksite wellness programs can make a difference. Partnering with a company like Ceridian can help organizations develop successful wellness programs or enrich existing wellness initiatives. The potential impact of worksite wellness programs offers benefits for organizations and employees alike. For businesses, illness prevention can be a significant cost-saving and productivity increasing strategy. For employees, wellness programs can improve overall care through their convenience and preventative focus. In fact, a recent survey found that almost 75 percent of employees said they would be more likely to adopt healthy lifestyle behaviors if their colleagues did as well, while 60 percent say they would adopt such behaviors if company executives were leading by example. Working in a culture of wellness has a positive impact on employees’ health because it raises awareness and visibility of the behaviors that keep people healthy, happy and working. The link between wellness programs and improved employee productivity seems logical, and it is when you talk to employees and look at the data. Employees that are addressing their health concerns are more focused at work. And a strong wellness program recognizes that simply addressing the unhealthy habit is only scratching the surface of helping employees

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“The potential impact of worksite wellness programs offers benefits for organizations and employees alike”

Shannon Rickert, MS, is a Product Manager at Ceridian Health & Productivity Solutions. She leads the development of wellness solutions, delivered to millions of Ceridian members. She also supports the development of services for Ceridian’s government operations, delivering wellness solutions to all military personnel and their families.

become healthy. Programs that address an individual’s physical, mental, financial and spiritual health are far more successful in building and sustaining productivity than programs that narrowly look at managing a chronic condition or changing an unhealthy habit. It’s been our experience that at least 60 percent of employees that engage in a wellness program that addresses the broad scope of their health needs report being more productive. When an employee recognizes the health benefits that are important and meaningful to them – being there for family, participating in fun activities, feeling less stress – the employer recognizes the benefits of increased productivity. The current economic environment certainly has the majority of employers trying to do more with less, so the importance of improved productivity shouldn’t be diminished. However, what has truly gotten organizations more excited about offering wellness programs is the opportunity to reduce health insurance and medical costs. Organizations of all sizes, industries and demographics have experienced the escalation of these health care costs. If an employer can save approximately $2500 in healthcare costs for each employee that stops using tobacco, it’s easy to see why an organization with a high incidence of smokers would want to invest in a tobacco cessation program. Similarly, the indirect and direct medical costs of overweight and obesity account for more than nine percent of total US medical expenditures. These staggering statistics need to be brought down to the individual level where they can truly be addressed. Wellness programs work at that individual level to help individuals find the motivation and resources to make changes. Since more than two-thirds of US employers provide health insurance for those under the age of 65, programs that help individuals stay out of the doctor’s office or hospital are worth the time, effort and money. No one is pretending that wellness programs are the panacea for all of the country’s healthcare challenges. But they just may be the catalyst for transforming the way we look at and manage the health of our entire country.

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