Workforce - February 2016 by Workforce

workforce.com

February 2016

A HAWKEYEâ&#x20AC;&#x2122;S TERRITORY How Joni Troester tackled wellness at Iowa.

PAINFUL REMINDER

Prescription drug abuse at work is a perplexing problem for companies.

EQUAL SIGNS

Three companies took different approaches to ensure women were paid the same as men.

RETURNING IN 2016

Local experts, practitioners and scholars return to the stage this spring to continue the discussion on the latest trending HR topics for our annual fast-moving, TED Talk-style speaker series.

6 CITIES. 50+ SPEAKERS. UNLIMITED IDEAS. APRIL Boston | April 14 Westin Copley Place New York | April 19 Westin New York at Times Square Washington, D.C. | April 28 InterContinental The Willard

SEPT. Chicago | Sept. 1 Four Seasons Hotel Chicago

• Thought-leadership • Practical tips • Inspiring stories • Industry-specific research

Dallas | Sept. 7 Four Seasons Dallas at Las Colinas San Francisco | Sept. 22 The Ritz-Carlton, San Francisco

events.workforce.com/live

Keynote

Speakers Paul Begala POLITICAL ANALYST AND COMMENTATOR, CNN

SHRM 2 16 JUNE 19-22

ANNUAL CONFERENCE & EXPOSITION

D.C. Sal Khan FOUNDER OF THE KHAN ACADEMY

Tucker Carlson CO-HOST, FOX AND FRIENDS WEEKEND AND EDITOR-INCHIEF, THE DAILY CALLER

The SHRM Annual Conference & Exposition is the largest — and

Find your

best — HR event in the world, providing you with the tools and resources you need to create and

BREAKTHROUGH BREAKTHR HROUGH

implement successful HR practices.

Your perspective will be transformed.

annual.shrm.org/workforce #SHRM16

GET THE TARGETED STRATEGIES AND PRACTICAL TAKEAWAYS THAT YOU NEED TO ACHIEVE YOUR GOALS.

From Our Editors Benefits administration technology company Businessolver Inc. decided to do things a little differently at the HR Tech Conference & Exposition in October. Instead of spending money on giveaways, it

I like that HR is full of contradictions.The work can be frivolous and serious. Even though what you do is mission-critical, you remain game for almost anything. Being party-planner in chief is more fun than party-pooper in chief. I like that HR is a big softy.The best human resources leaders are sharp, data-driven and willing to make tough decisions. But they do it with compassion and understanding. I like that business leaders are first to gripe about HR but also first to knock when they have a problem. Somehow, HR manages to be both underappreciated and vital. I like that HR proudly owns its stereotypes but isn’t confined by them.As business moves faster, so does HR, making and enforcing rules but also breaking them when it’s needed. HR, will you be myValentine? — Mike Prokopeak, Editor in Chief 4

Workƒorce | w o r k f o r c e . c o m

took a charitable approach, donating $5 on behalf of each attendee that helped complete the life-size Lite-Brite wall. As a result, the company raised $2,000 for Habitat for Humanity and re-created a Vincent van Gogh masterpiece.

READER FEEDBACK Regarding columnist Jon Hyman’s blog post “Wage-and-Hour Issues Continue to Confound Employers, With More Looming,” reader Sue Dickerson commented: If employers don’t know what they are doing when it comes to paying employees correctly, then they have hired the wrong individuals who oversee this process for them! I have been in HR for over 20 years, and the laws are not too complex for an HR professional to understand. However, many employers voluntarily choose to ignore them, and pay a penalty if they get caught rather than pay the employee. If that’s not stealing, then I don’t know what is. Workforce.com/WageHourIssues

The online story “Time-Off Policies: Leave Well Enough Alone or Go PTO?” elicited this comment from reader Philip Hamm: PTO encourages employees to come to work sick and spread the flu or whatever they have to the other employees in the office. Workforce.com/TimeOff

Several readers discussed Jon Hyman’s post “More on Marijuana and Off-Duty Conduct Laws.” Hawk_82nd Abn said: Jon Hyman writes,“It appears that Ohio’s proposed off-duty conduct law is a whole lot worse for employers.” I’m sorry, but why is it worse for employers? If I follow your reasoning, you’re saying it’s worse because it prohibits them from taking adverse action against a person who “exercised a constitutional or statutory right.” Drats. Foiled by that pesky Constitution and those darn laws!

While Mark added: Would you want

someone who exercised their “constitutional rights” to get high to come to work the next day to drive a school bus, operate dangerous equipment or do your Lasik surgery? You put his “right” to get high over your and society’s safety? Let alone the employer’s liability (and all the affected former employees he lays off when he gets sued and goes bankrupt). All so Johnny can have a doobie with no accountability? Wake up, Amurica.

And Donjo concluded: How is an employer to tell if the positive test was from off-duty or on-duty anyway? Is testing that specific? Not that I’m aware of, so they would not even be able to differentiate when the use occurred which makes this O-HI-O bill even worse. Workforce.com/OffDutyConduct The online story titled “Social Employees: An Untapped Recruiting Engine,” drew this comment from Vinay Johar: HR personnel? Celebrity endorsers? No. Employees are the ones most qualified and trusted by outsiders to give information about their company’s culture. Add the all-encompassing power of social media, and you have a foolproof recruitment machine! This strategy has to work; as long as companies take care of their current employees, they can keep attracting talent fairly easily. Workforce.com/RecruitingEngine We welcome your comments on these stories and others on our website. Be sure to follow us and give us a shout on Twitter at @Workforcenews, too. Hope to hear from you! f e b ru a ry

2016

+SHRM CERTIFICATION SHRM-CP® SHRM-SCP®

è + THE FUTURE OF HR IS HERE.

➜

We live and work in a global economy where geographic borders are virtually nonexistent and innovation, agility and strategy are critical success factors. The HR profession operates at the core of this global economy.

Are you ready?

Join the 75,000+ SHRM-certified HR professionals ready to drive business results through practice and experience. Demonstrate application of the universal behavioral competencies and technical knowledge essential for effective HR job performance. Prove not only what you know but also how you can apply that knowledge on the job.

SPRING EXAM WINDOW: MAY 1 – JULY 15, 2016

Exam applications accepted starting January 4!

APPLICATION DEADLINE: MARCH 25

è+

➜

LATE APPLICATION DEADLINE:* APRIL 15 SHRM MEMBER EXAM FEE: $300 USD

NONMEMBER EXAM FEE: $400 USD

*A nonrefundable late application fee of $75 USD will apply.

15-0756

è+

➜

APPLY TODAY! shrmcertification.org/apply/workforce

2016 Chief Learning Officer

Breakfast Clubs

Learning Redefined What’s brewing for enterprise education? Join the magazine’s editors, industry experts and local colleagues in a stimulating conversation about the critical ways learning and leadership are being redefined for the new workplace.

CHICAGO March 24 ATLANTA March 29 DALLAS May 5 PHILADELPHIA May 11

SPONSORS

For more info and to register today, visit

events.clomedia.com/breakfast-club

WEBINARS Workforce

February 2016 | Volume 95, Issue 2 PRESIDENT John R. Taggart jrtag@workforce.com

COPY EDITOR Frannie Sprouls fsprouls@workforce.com

EXECUTIVE VICE PRESIDENT, CREATIVE SERVICES Gwen Connelly gwen@workforce.com

EDITORIAL INTERNS Andie Burjek aburjek@workforce.com Joe Dixon jdixon@workforce.com

VICE PRESIDENT, CFO, COO VICE PRESIDENT, Kevin A. Simpson RESEARCH AND ksimpson@workforce.com ADVISORY SERVICES VICE PRESIDENT, Sarah Kimmel GROUP PUBLISHER skimmel@workforce.com Clifford Capone RESEARCH MANAGER ccapone@workforce.com Tim Harnett VICE PRESIDENT, tharnett@workforce.com EDITOR IN CHIEF RESEARCH ANALYST Mike Prokopeak Grey Litaker mikep@workforce.com clitaker@workforce.com EDITORIAL DIRECTOR TECHNOLOGY & Rick Bell DESIGN MANAGER rbell@workforce.com Cheryl Myers GROUP EDITOR/ cmyers@workforce.com ASSOCIATE EDITORIAL EDITORIAL DESIGNER DIRECTOR Anna Jo Beck Kellye Whitney abeck@workforce.com kwhitney@workforce.com MANAGING EDITOR James Tehrani jtehrani@workforce.com

WEB COORDINATOR Sam Dietzmann sdietzmann@workforce.com

CONTRIBUTING EDITOR Frank Kalman fkalman@workforce.com

MEDIA MANAGER Ashley Flora aflora@workforce.com

ASSOCIATE EDITORS Lauren Dixon ldixon@workforce.com

VICE PRESIDENT, EVENTS Trey Smith tsmith@workforce.com

Bravetta Hassell bhassell@workforce.com Sarah Sipek ssipek@workforce.com

EVENT CONTENT MANAGER Ashley (Wynne) Collins awynne@workforce.com

John R. Taggart PRESIDENT

EVENT CONTENT COORDINATOR Brittany Brady bbrady@workforce.com

LIST MANAGER Mike Rovello hcmlistrentals@infogroup.com

BUSINESS WEBCAST COORDINATOR ADMINISTRATIVE MANAGER Alec O’Dell Melanie Lee aodell@workforce.com mlee@workforce.com BUSINESS MANAGER LEAD GENERATION Vince Czarnowski ADMINISTRATOR vince@workforce.com Nick Safir REGIONAL SALES MANAGERS Derek Graham dgraham@workforce.com Marc Katz mkatz@workforce.com Daniella Weinberg dweinberg@workforce.com ACCOUNT EXECUTIVE Brian Lorenz blorenz@workforce.com DIRECTOR OF BUSINESS DEVELOPMENT, EVENTS Kevin Fields kfields@workforce.com

FREE LIVE

ONLINE EVENTS

nsafir@workforce.com CONTRIBUTING WRITERS Donna M. Autuori Marty Denis Kris Dunn Sarah Fister Gale Jon Hyman Heather A. Jackson Mark T. Kobata Patty Kujawa Gary B. Kushner Rita Pyrillis Michelle V. Rafter Daniel R. Saeedi Dave Ulrich

AUDIENCE DEVELOPMENT DIRECTOR Cindy Cardinal ccardinal@workforce.com DIGITAL SPECIALIST Lauren Lynch llynch@workforce.com MARKETING MANAGER Taylar Ramsey tramsey@workforce.com MARKETING ASSOCIATE Max Mihelich mmihelich@workforce.com

Gwen Connelly EXECUTIVE VICE PRESIDENT

is pleased to offer live and on-demand webinars!

Kevin A. Simpson CHIEF FINANCIAL OFFICER CHIEF OPERATING OFFICER

Norman B. Kamikow CO-FOUNDER (1943 - 2014)

WORKFORCE EDITORIAL ADVISORY BOARD

AVAILABLE ON-DEMAND

Practical Building Blocks for Strategic Workforce Planning Aired Dec. 9

The Future of Employee Engagement: HR’s Critical Role in Driving Business Outcomes Through an InDepth Understanding of Employee Sentiment Aired Dec. 2

Arie Ball, Vice President, Sourcing and Talent Acquisition, Sodexo Angela Bailey, Associate Director and Chief Human Capital Officer, U.S. Office of Personnel Management Kris Dunn, Chief Human Resources Officer, Kinetix, and Founder, Fistful of Talent and HR Capitalist Curtis Gray, Senior Vice President, Human Resources and Administration, BAE Systems Jil Greene, Vice President, Human Resources and Community Relations, Harrah’s New Orleans Ted Hoff, Human Resources Vice President, Global Sales and Sales Incentives, IBM Tracy Kofski, Vice President, Compensation and Benefits, General Mills Jon Hyman, Partner, Meyers, Roman, Friedberg & Lewis Jim McDermid, Vice President, Human Resources, Cardiac and Vascular Group, Medtronic Randall Moon, Vice President, International HR, Benefits and HRIS, Lowe’s Cos. Dan Satterthwaite, Head of Human Resources, DreamWorks Dave Ulrich, Professor, Ross School of Business, University of Michigan Workforce, ISSN 2331-2793, is published monthly by MediaTec Publishing Inc., 318 Harrison Street, Suite 301, Oakland, CA 94607. Periodicals Class Postage paid at Oakland, CA and additional mailing offices. POSTMASTER: Please send address changes to: Workforce magazine, P.O. Box 8712, Lowell, MA 01853. Subscriptions are free to qualified professionals within the U.S. and Canada. Nonqualified paid subscriptions are available at the subscription price of $199 for 12 issues. All countries outside the U.S. and Canada must be prepaid in U.S. funds with an additional $33 postage surcharge. Single copy price is $29.99. Workforce and Workforce.com are the trademarks of MediaTec Publishing Inc. Copyright © 2016, MediaTec Publishing Inc. ALL RIGHTS RESERVED. Reproduction of material published in Workforce is forbidden without permission. Printed by: Quad/Graphics, Sussex, WI

Available live on airdate and on-demand for one year after unless otherwise specified. Check them out today and keep the education going!

workforce.com/ webinars

CONTENTS

ON THE COVER A HAWKEYE AT HEART FOR HEALTH

The University of Iowa’s Joni Troester didn’t limit herself to the university gates when developing a wellness initiative that has positively affected both employees and the surrounding community. COVER PHOTO BY MARK TADE

36 FEATURES 28 PAIN POINTS

SPECIAL REPORT 44 RPO WORLD KEEPS ON TURNING

Companies are finding it tougher to find top candidates, so many are turning to RPOs — on a global basis.

Workƒorce | w o r k f o r c e . c o m

Prescription painkiller abuse has long been a growing problem in the U.S., but now it’s overtaken the workforce.

32 WAGERING ON EQUAL WAGES

Three companies took different approaches to ensure female employees’ salaries matched their male workers’.

36 TAKING STOCK OF YOUR TALENT

Examining the war for talent with an investor’s focus on success.

CORRECTION The January 2016 feature story “Recruiting Down to a Science,” p. 36, misstated what ZipRecruiter Inc.’s business model is.The company aggregates job postings to 100 different job boards. f e b ru a ry

2016

28 ON THE WEB SPEAK UP!

The Workforce online community provides you with virtual meeting places to chat about issues and trends affecting you and your workplace.

TRENDING

LIKE US: facebook.com/workforce.magazine

10 SAP SOFTWARE INTEGRATION

BRINGS IN THE CONTINGENTS

twitter.com/workforcenews

JOIN THE GROUP: workforce.com/LinkedIn

WATCH US: workforce.com/youtube

FOR YOUR BENEFIT COLUMNS 4

YOUR FORCE

HR, will you be my Valentine?

14 WORK IN PROGRESS

Please kill the fourth round of interviews.

22 ACING THE ACA

Some real-world fixes.

26 THE PRACTICAL EMPLOYER Be smart about off-theclock emails.

50 THE LAST WORD

‘Big Aristotle’ analysis on leadership.

f e b ru a ry

2016

16 MORE COST-SHIFTING COMING

Employees are starting to get sticker shock as additional health care costs are being passed on to them.

17 QUALITY QUANDARY

U.S. expats say they’re concerned about access to quality health care, survey shows.

18 CONGRESS DEFERS ‘CADILLAC’ TAX Postponing the excise tax gives Congress more time to assess its potential impact on employers.

20 QUICKER TO THE (K) ZONE

With more data available, companies are making 401(k) changes faster, survey finds.

The systems are now integrated.

10 DEAR WORKFORCE

Career paths for women; job profiles.

11 FROM THE WEB, PEOPLE MOVES AND BY THE NUMBERS

J.R. Martinez interview; Elkeles to Quixey; Presidents Day.

12 A CRAFT BREW CULTURE

Talking tapping talent with Sierra Nevada’s Deborah Gutman.

12 IN TELECOMMUTING, WOMEN

FIND FEWER OPPORTUNITIES

Just 4 out of 10 telecommuters are female, survey finds.

LEGAL 24 TIBBLE TROUBLE

Examining the Tibble v. Edison International decision.

25 LEGAL BRIEFINGS

Retreat on noncompete?; best practices on prison breaks.

w o r k f o r c e . c o m | Workƒorce

TRENDING

SAP Software Integration Brings in the Contingents By Sarah Fister Gale

anaging contingent labor should be a whole lot easier now that SAP has integrated SuccessFactors and Fieldglass. “When SAP acquired Fieldglass last year, it was a big deal,” said Chris Dwyer, vice president of operations for Ardent Partners, an advisory firm in Boston. “It made it possible for total talent management to become a reality.” It took 18 months, but last November, SAP announced the two systems had been officially integrated, which means users can now upload all of their contingent labor data from Fieldglass into profiles in SAP SuccessFactors Employee Central. This enables HR leaders and management to get a single view of the workforce.“This integration will bridge the gap between full-time and external employees,” said David Ludlow, group vice president of SAP Labs. “From a human capital perspective, these two worlds are finally coming together.” This is a huge step for contingent labor management, Dwyer said. In most companies, contingent labor is managed by the procurement team, separate from the human resources team and human capital management systems. That leaves HR leaders in the dark about who’s doing the work, what they are being paid, and what talent and expertise they have in their network. These challenges are compounded by contingent labor compliance laws that bar things like performance reviews or creating contractor databases to track the work that these nonemployee workers do. HR needs “to be able to blend it to make better talent decisions,” Dwyer said. It is especially important considering the rapid growth of contingent labor in the workforce. Ardent’s research shows that the percentage of the workforce that is contingent has grown to 35 percent in 2015 from 15 percent in 2009; and Dwyer predicts that number could hit 50 percent by 2019. That’s exactly what SAP is promising with the integration. It will allow companies to manage their total workforce under a single, centralized capability, while still keeping contract and employee labor distinct. “Every one of our customers is concerned about bringing these two worlds too close together,” Ludlow said. “So we purposely kept some separation between the two groups.” For example, establishing contracts and making payments are still the responsibility of procurement. Contractor data are also tagged so there is a clear distinction between the two groups, however that data can now be viewed side-by-side with full-time labor so companies will be able to see where their talent lies, and to analyze talent data more holistically. “It eliminated the gray area.” This holistic view will allows companies to do things like determine the best experts for projects, analyze annual spending on contract vs. salaried employees, and to search for knowledge experts across the entire talent network. “Now HR doesn’t need to call procurement every time they have a question about a contractor,” Dwyer said. 10

Workƒorce | w o r k f o r c e . c o m

Dear Q: How Do We Carve Out Career Paths for Women? How can we carve out internal career paths for developing women in leadership? —No Glass Ceiling Here, finance/insurance/real estate, New York A: Dear No Glass: Internal career paths help create clarity for employees about how to get from here to there — and creating career paths for female leaders is not necessarily any different than creating career paths for male leaders. But there are certain behaviors that can make it more difficult for women to get on the right path. For women: 1. Be clear about what you want. Know what you’re passionate about and understand your capabilities and articulate the value you bring. 2. Raise your hand. Being ready for that big role is, in part, the result of an accumulation of the right experiences. Sitting back and hoping others will recognize your potential is not a winning strategy. 3. Cultivate sponsors and a strong network. Let others help you. For organizations: 1. Provide differentiated development opportunities for women. Women benefit from a safe environment, especially early in their career, where they are supported when they declare their aspirations. 2. Uncover organizational blind spots. Be transparent about the skills, abilities and experiences required for key roles. Uncover hidden biases that may prevent women from acquiring what they need. 3. Hit the pause button. Make it easy for women (and men) to temporarily step back or step off a career path as life circumstances dictate. Source: Debbie Rocco, senior consultant, Interaction Associates

Q: How Do We Create ‘Ideal’ Employee Job Profiles? How do we develop precise profiles of “ideal” employees for each job? —Only the Best Please, manufacturing, Buffalo, New York A: Dear Best: Your question shows that you believe there is a return on investment for digging deeper to select someone with a close match to the “ideal” job requirements. In fact, the more closely the person you hire matches the “ideal” profile, the more confident you can be that the employee will learn quickly, enjoy the work and adapt readily. Understanding the job is the first step in a successful hire, and creating a position benchmark is the easiest way to gain that understanding. While some employers will opt for the quick route, using gut instinct, by taking the time to develop a solid job benchmark, and matching candidates to the benchmark, the trade-off will be lower turnover, higher performance and happier customers. Source: Patsy Svare, The Chatfield Group

Have a pressing HR-related question? Go to Workforce.com/DearWorkforce and ask now.

f e b ru a ry

2016

TRENDING

FROM THE WEB

VETERAN, ACTOR Workforce Assistant Managing Editor James Tehrani caught up with former “Dancing With the Stars” winner J.R. Martinez at a recent veterans hiring conference. They discussed Martinez’s career and what companies can do to ease the transition for veterans. Workforce.com/ JRMartinez PARTY PLANNERS The holidays are over, so how did your office parties go? Did you witness any unprofessionalism? In this edition of “5 Minutes of Management,” Workforce editors Rick Bell and Frank Kalman discuss how companies took steps this past holiday season to manage professionalism at their office parties. Workforce.com/ PartyPlanners NO KARDASHIANS HERE Blogger Rick Bell discusses a top 10 list for 2016, but be forewarned: There are no Kardashians, Jenners or cute kittens in it. Instead, he offers his thoughts on a recently released legal top 10 list of EEOC trends for 2016.We’ll give you No. 10: harassment in the workplace. What are the other nine? You’ll have to check it out. Workforce.com/ LegalTrends2016 f e b ru a ry

2016

PEOPLE

moves

TAMAR ELKELES Silicon Valley-based mobile technology company Quixey named Tamar Elkeles as chief people officer. She will lead all human resources globally and be based out of Quixey’s headquarters in Mountain View, California. She joins Quixey from Qualcomm Inc., where she was chief learning officer. Elkeles co-authored the first book on the CLO’s role, and was named CLO of the Year by Chief Learning Officer in 2010. ROBERTA BIXHORN Global technology distributor Avnet Inc. named Roberta Bixhorn vice president of compensation and benefits. Bixhorn will lead Avnet’s compensation and benefits Center of Excellence and define its compensation and benefits strategy. JEANEEN ANDREWSFELDMAN The Society for Human Resource Management named Jeaneen Andrews-Feldman as chief marketing officer. Andrews-Feldman is a marketing executive with 30 years of experience. Most recently, she was senior vice president of marketing at Merkle Inc. She previously served as head of global product and channel marketing at the CEB. To be considered for People Moves, email a brief announcement and a high-resolution color photo to editors@workforce.com. Include People Moves in the subject line.

By the Numbers compiled by Rick Bell

Presidents at Work Presidents Day — also known as the Uniform Monday Holiday Act — is Feb. 15. Let’s celebrate!

Presidential Pay Raise The president’s pay has been raised only five times — ever. Amount Current equivalent* $673,451 $25,000 1789

$50,000

1873

$75,000

1909

$100,000

1949

$200,000

$992,777 $1,954,850 $967,315 $1,254,610

1969 2001

$400,000

$519,979

Source: Snagajob.com

*2014 dollars

Comparing Barack Obama’s Salary with Other World Leaders (Calculated in U.S. dollars) Barack Obama President, United States $400,000 Angela Merkel Chancellor, Germany Justin Trudeau Prime minister, Canada David Cameron Prime minister, United Kingdom

$327,700 $270,231 $214,700

Vladimir Putin President, Russia

$147,267

Xi Jinping President, China

$21,898

Pope Francis Pope, Catholic Church

Source: Paywizard

About Those Presidential Perks … $19,000 for entertainment $50,000 annual expense account $100,000 nontaxable travel account At the Office The White House staff includes physician, social secretary, chief calligrapher, chief floral designer, pastry chef and 24-hour cooking staff.

When the Job is Over Current annual pension of about $200,000; health care; paid official travel

Source: Wikipedia

workforce.com | w Workƒorce orkforce.com 10| Workƒorce

TRENDING

In Telecommuting, Women Find Fewer Opportunities

CRAFTING A CRAFT BREW CULTURE By James Tehrani

By Andie Burjek Deborah Gutman, Sierra Nevada’s HR manager

While Homer Simpson might be satisfied guzzling his beloved Duff Beer, many connoisseurs of the beverage are much happier sipping the subtle, smooth or robust flavors of a pint of their favorite craft ale, lager, stout, porter or malt. One of the largest craft brewers is Sierra Nevada Brewing Co., which is famous for its Pale Ale. Based in Chico, California, Sierra Nevada was founded in 1979 by Ken Grossman, and it recently opened a second brewery in Mills River, North Carolina. But unlike many companies that don’t like to help the competition, Sierra Nevada and the industry in general looks to help its competitors whenever it can, said Deborah Gutman, Sierra Nevada’s human resources manager. Assistant Managing Editor James Tehrani recently caught up with Gutman. Workforce: Can you tell me a little about the culture at Sierra Nevada and what you look for when you’re recruiting? Deborah Gutman: I think we have a really unique culture at Sierra Nevada, and definitely when we’re recruiting, we are looking for folks who line up with our core values … quality, integrity, sustainability and people.

WF: Tell me about the competitive nature of brewing. What does Sierra Nevada do to recruit? Gutman: The wonderful thing is Ken has kind of created a legacy. We have a wonderful reputation in the craft brewing community. That in itself does some of our recruiting for us. And Ken has always been collaborative with other craft brewers and even startup breweries. We kind of not necessarily partner with them, but we’re happy to give our knowledge and know-how to other breweries in the industry. I feel like the craft brewing industry is very unique in that way. We’re really collaborative and friendly — for the most part [laughs] — because we want the craft brew industry to do well.

WF: Do you actually share leads? If you find a good candidate you’re not planning to hire, would you ask if anyone else is interested? Gutman: We may not be that [laughs] open with our craft brew counterparts, but we are open with job descriptions. A lot of us participate in a craft brew salary survey that we do every other year.

WF: Do you have any partnerships with universities to tap into that pipeline for brewing talent? Gutman: We do a little bit. We are really good in a few of our departments about offering internships, so we definitely have worked with Oregon State University, who has a great brewing and fermentation science program, and also [the University of California at] Davis, which is very close to us. Their brewing program has been around for a while, and we are working in North Carolina with a couple of colleges over there. To read the full interview, go to Workforce.com/SierraNevada.

Workƒorce | w o r k f o r c e . c o m

ven though it is more common for women than men to raise families, more than half (60 percent) of telecommuters are men, according to a recent survey from Flex Strategy Group/Work Life Fit Inc. Employees choose to telecommute for work-related and personal reasons, according to Cali Williams Yost, the company’s CEO. Work reasons cited include the ability to be more productive and focused at home. Personal reasons listed include saving time from not having to commute and being able to participate in other activities such as going to the gym, sleeping later and taking the kids to school. “The default assumption for women is that they’re doing it [telecommuting] for personal reasons, and therefore it’s made it harder for women to comfortably make that choice and still feel that their careers will stay on track,”Yost said. The assumption for men, though, she said, is often that they’re still being productive working remotely, which may make justifying not coming into the workplace easier for them. Companies can encourage women to telecommute by not making assumptions about their motives,Yost said. Bryan Miles, CEO and co-founder of the virtual assistant company eaHELP, said he believes attitudes toward telecommuting have changed in the past few years. The company provides virtual assistants to its clients, and all of its 389 employees work virtually. The vast majority are women. Improving training and infrastructure would help promote the telecommuting option for women,Yost said. “To see these numbers becoming more equal shows me that we are removing the ‘Why?’ assumptions from the decision to telework, and as a result it’s freed women up to make that decision as validly as a man does, ” Yost said. f e b ru a ry

2016

#LearningElite

Monday, April 4, 2016 6-10 p.m.

Workforce magazineâ&#x20AC;&#x2122;s sister publication, Chief Learning Officer, would like to invite you and your colleagues to the 2016 LearningElite Gala on Monday, April 4, at The Ritz-Carlton, Amelia Island, Florida. During this celebration, we will unveil the best companies in learning and development, and enjoy an evening of entertainment. f e b ru a ry

For more information and to purchase tickets, visit 2016 w o r k f o r c e . c o m | WorkĆ&#x2019;orce events.CLOmedia.com/gala

TRENDING

Wo r k i n P r o g r e s s

PLEASE KILL THE FOURTH ROUND OF INTERVIEWS By Kris Dunn

f you’re like most companies that interview and hire professional-grade talent, you’ve lost control.Your interview process has morphed from the reasonable to the absurd. Why? Because more and more companies are conducting interview processes that resemble a game of survival. Candidates are asked to return four and five times for subsequent stages of interviewing. Is that fourth round of interviews necessary? Hell, no. If you’ve had the feeling that your hiring process is slower than ever, some new research actually quantifies that your gut feeling was right. Data from CEB recently showed that the average time to fill positions in the U.S. is at 63 business days — 21 more days than it was five years ago. Part of that number might be the improved economy, but I’ll guarantee you the majority of it is the inefficiency of the recruiting process. We’ve tricked ourselves into believing that taking longer and involving more “stakeholder” or “hiring decision influencer” types is the path to better selection. We believe that, by having four or more interviews, we can better determine things like cultural fit. Simply put, it’s not true. Using a longer process and more stages/interviews implies that some key selection competencies — namely interviewing skill and feedback assimilation across multiple interviewers — are healthy enough to contribute to better selection. Unfortunately, fourth rounds of interviews aren’t used to flex incredible organizational skill at interviewing or breaking down the merits of candidates.They exist to give more people “veto” power. Let’s say you’re like most companies and your hiring managers are mediocre at best when it comes to interviewing and selection.You don’t have the time, budget or organizational discipline to do an intervention and significantly improve interviewing skills, right? If that’s the case, your best path is not to let a four-round interview process muddy up the already chum-infested waters; it’s to allow that hiring manager’s next-level boss to contribute to the process and grow the hiring manager over time. Inexperienced hiring managers interview multiple candidates. They bring back two or three candidates for final interviews with the boss, and that person breaks it down and decides whom to hire. It’s called mentoring. If you don’t trust the hiring manager’s boss, you should insert yourself into that process, interviewing finalists as

well. But you don’t need additional rounds of interviews with others in the organization that cost time. Of course, many companies circulate those candidates for additional interviews outside the department in question to gauge “cultural fit.” The problem with that is most of the companies taking this course lose out on diversity of talent by allowing people to decline candidates who aren’t “like us.” If cultural fit hasn’t been defined from a selection perspective, you’re just letting people veto candidates based on nontangible items.That’s going to kill you over time. Finally, conducting three to five rounds of interviews to get to the offer stage on any candidate implies you unlock the selection horsepower of all those interviews by having a disciplined candidate breakdown process. If you don’t demand that all interviewers spend at least 15 minutes together being led through a feedback process designed to compare and contrast views on candidate strengths and weaknesses, you’re wasting your time. Conducting more than two rounds of interviews is killing your recruiting operation. You can make those two rounds as in-depth as you would like and get multiple people involved, but additional rounds are fool’s gold. What’s that? You need stats? OK, nerds. CEB further outlines in its report on recruiting efficiency that for every week you shave off your time-to-fill by eliminating additional rounds of interviews, you save $2,000. You think that fat recruiting process is free? Turns out, it’s not. The time spent in interviews combined with the opportunity cost of having a job open for longer than it needs to be has real costs for your organization. You can unlock those savings by approaching your recruiting process with common sense. If your company has a cumbersome process, take the offensive and tell them your time-to-fill problem isn’t about HR or recruiting; it’s about the number of interview rounds. Stop the five-round interview madness. Do an initial round of interviews and involve as many people as you’d like. Bring back two candidates, have them work through final inbox exercises, interview with the skip-level manager, etc. … and MAKE A DECISION! You’ll be glad you did.

IF YOU DON’T TRUST THE HIRING MANAGER’S BOSS, YOU SHOULD INSERT YOURSELF INTO THAT PROCESS, INTERVIEWING FINALISTS AS WELL.

Workƒorce | w o r k f o r c e . c o m

Kris Dunn, the chief human resources officer at Kinetix, is a Workforce contributing editor. To comment, email editors@workforce.com.

f e b ru a ry

2016

Presenting

SPRING 2016 SPEAKER SERIES Boston

Westin Copley Place

April 14 7 a.m. – Noon ET

New York

April 19 Westin New York at Times Square 7 a.m. – Noon ET

Washington, D.C.

The Willard InterContinental

April 28 7 a.m. – Noon ET

• 3 Cities featuring unique, topical agendas expertly curated by Workforce editors • 24 Speakers sharing rapid-fire, real-world insights from the HR trenches • 5 Hours to network, interact face to face and make valuable professional connections

2016

See a complete list of 2016 Workforce Live destinations, w o r k f o r c e . c o m | Workƒorce 15 com/live get all the details and register at events.workforce.

FOR YOUR BENEFIT

More Cost-Shifting Coming From Companies Employees are starting to get sticker shock as additional health care costs are being passed on to them. By Rita Pyrillis

he steady erosion of health care benefits comes as no surprise to employers and industry experts who have watched health care costs spiral upward for years, but the news may still be sinking in for workers as they take on a greater share of those costs. “Employees have been hearing that health care costs are unsustainable for many years, but it’s a message that gets tuned out if it doesn’t impact them directly,” said Joann Hall Swenson, a communications consultant at Aon Hewitt. “When it starts to

could see their cost-containment strategies backfire down the road, said Cheryl Fish-Parcham, private insurance program director for Families USA, a nonprofit consumer health organization based in Washington, D.C. “Studies have shown that many working families don’t have enough savings to meet their health care needs until their health plan starts kicking in,” Fish-Parcham said. “We’ve seen a number of surveys that as many as 50 percent of low to midrange income don’t have the assets they need to meet a deductible. We’re really concerned about ‘ how the workforce is faring, and employers should be too because healthy employees means a productive workforce.” She pointed to a recent survey by the Commonwealth Fund, a private, nonpartisan research foundation based in Washington, D.C., that shows that 25 percent of privately insured adults had premiums, deductibles or out-ofpocket costs that are unaffordable. Workers —JOANN HALL SWENSON, AON HEWITT struggled most with paying their deductibles, with 43 percent of those surveyed saying that impact them personally, then they start to pay attention and their deductible was “difficult” or “impossible” to afford, includthey expect their employer to have an answer.” ing a large share of workers with higher incomes, according to As companies continue to push high-deductible health plans, the survey. which offer lower premiums but higher deductibles than tradiThat has led to a growing number of employees who are tional plans, employees are finally feeling the pinch in avoiding or delaying needed medical care. About 40 percent of their pocketbooks. workers with deductibles higher than 5 percent of their income “It’s one thing to hear about unsustainable health care reported that they had not gone to the doctor when sick, costs, which sounds like rhetoric, but when people try to skipped a preventive-care test or a follow-up test, or didn’t go manage their HDHPs, that’s where rubber meets the road,” to a specialist, according to the Commonwealth Fund report. Swenson said. Adding to the problem is confusion about which services And as the cost-shifting trend continues, employees will be count toward deductibles and which are provided at no cost. faced with some tough realities as their health care spend- Many employees are avoiding free preventive care because of ing skyrockets. their deductible, the report said. The average amount that workers need to contribute toward But there are several things that employers can do to help their health care costs has increased more than 134 percent in workers navigate the changing and often confusing health care the past decade, according to a recent report by Aon. At the system, like explaining the reasons for any changes, Swenson said. same time, large employers have seen record low increases in “It’s a very complex topic, and it’s not just about cutting health their health care costs. In 2015, the average rate increase was 3.2 care costs,” she said. “When people get the broader business percent, according the report. reasons for why their deductibles are going up or why costs are “We’ve seen this trend for a very long time, and we will con- going up and understand that the employer is trying to do right tinue to see benefits decrease especially with the excise tax by the employee, it’s easier to digest.” looming in 2018,” said Mike Morrow, a senior vice president at How much you tell employees depends on the company’s Aon Hewitt, referring to the so-called “Cadillac” tax. “We will culture, according to Swenson. increasingly see those benefit levels decline at the same time; we “We have clients who are very forthright and frame it within don’t expect inflation or wages to kick up.” the business context, and others are careful to steer away from One reason for this slowdown in rate increases is that some that discussion,” she said. “If you have a culture where employemployees are forgoing medical treatment because of a sluggish ees are used to leadership giving them straight talk, then use economy, Morrow said. that cultural framework to talk about health care costs. If the And that is a problem not only for employees who can’t af- message is not in line with how you usually talk, then it won’t ford to get the treatment they need, but also for employers who sound authentic to employees.”

EMPLOYEES HAVE BEEN HEARING THAT HEALTH CARE COSTS ARE UNSUSTAINABLE FOR MANY YEARS, BUT IT’S A MESSAGE THAT GETS TUNED OUT.’

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

FOR YOUR BENEFIT

Quality Quandary

Congress Hits Brakes on ‘Cadillac’

U.S. expats say they’re concerned about access to quality health care, survey shows.

Postponing the tax until 2020 gives Congress more time to assess its potential effect on employers and employees.

By Rita Pyrillis

hile affordability tops the list of health care concerns among U.S. employers and employees, access to quality medical care is a leading worry for Americans living and working abroad, according to a recent survey by Cigna Global Health Benefits. “Typically, the biggest concern is around quality, particularly for U.S. nationals where their home level of health care is of a very high standard, and that’s followed by where to go to get access to health care,” said Leah Cotterill, vice president for client management at Cigna Global Health Benefits, North America. “In European countries they may have a socialized health care system, and the concern may be: where to go, ‘Will they speak my language?’ ‘Where can I go to build trust with a doctor?’ ” More than three-fourths of expatriates and their families access medical care while on overseas assignments, according to the report, which surveyed 2,700 people working in 156 countries. Overseas employees were almost equally concerned with having access to emergency medical evacuation and seeing a quick turnaround on reimbursements for out-of-pocket expenses, according to the survey. “Emergency evacuation is an indicator of confidence in accessing health care locally,” said Cotterill, a former expatriate who completed a six-year stint in the Middle East in 2013. “Employees want to know, ‘If we can’t access quality care locally, we want you to help us evacuate to the nearest center of excellence.’ It’s a fail-safe.” During her time in the Middle East, she noted that employees had to be sent to Austria or Germany for certain scans that weren’t available in their host countries. Offering expatriates competitive and comprehensive benefits packages is critical in keeping turnover rates low, according to Cotterill. “Medical costs represent on average 4 percent of a total assignment cost over a threeyear period, so providing competitive health benefits that eradicate concerns around access and quality is much less costly than having to reassign someone,” she said. f e b ru a ry

2016

By Sarah Sipek

ust as employers were gearing up to address the looming “Cadillac” tax, Congress has pumped the brakes on it. In a rare bipartisan effort in this Congress, the legislators in December deferred the 40 percent excise tax until 2020. And it has many employers taking their collective foot off the gas and breathing a sigh of relief, at least for now. “A delay will give Congress and the administration more time to evaluate the impact of the tax and address the potentially negative consequences in terms of reduced benefits, job losses and declines in personal income,” said Steve Wojcik, vice president of public policy at the National Business Group on Health, in a written statement. Originally set to take effect in 2018, the so-called Cadillac tax imposes a 40 percent tax on single coverage valued at more than $10,200 and family coverage valued at more than $27,500. Employer-sponsored insurance is currently excluded from income and payroll taxes. The tax, which is part of the Affordable Care Act, was envisioned as a way to discourage employers from offering overly expensive health care plans that depress wages and increase overall health care spending, according to Brian Blase, a senior research fellow at George Mason University. According to a recent Kaiser Family Foundation analysis, about 1 in 4 employers are expected to offer health plans in 2018 that are Tick Tock to Tax expensive enough to trigger More than one-fourth of employers were expected the tax. After that, the tax’s to hit the excise tax threshold in 2018 if there reach is expected to expand were no changes in their current plans. quickly because it is tied to the ■ All employers rate of inflation, and insurance % ■ Large employers 43% 45 premiums have been growing % 39 38% more rapidly than that rate. 34% 33% % 31 29% This means more and more 26% 23% health plans will be ensnared as time goes on,Wojcik said. A recent NBGH survey of 140 large corporations found 2018 2019 2020 2021 2022 that almost 48 percent of reSource: Mercer spondents expect at least one of their benefit plans will hit the excise tax threshold in 2018 if they don’t take measures to control rising health care costs. By 2020, 72 percent expect one of their plans will trigger the tax. As a result, many employers are offering lower-priced health plans that shift more of the rising cost of health care onto employees. Congress’ action to delay the tax calls into question whether taxing employers is the best way to control health care spending,Wojcik said. Unions in particular have strenuously opposed the tax; they say it could lead to reductions in health benefits prized by their members. “Increasing the worker’s pain through skimpier health plans is not the best way to target that problems,” said Tom Leibfried, a health care lobbyist for the AFL-CIO, in a written statement. While the delay does give employers more time to adjust plans and stay under the tax, the NBGH and other organizations hope that Congress addresses the root problem of health care inflation and finds a more effective solution. “This is really a demand-side tool to control health care spending,”Wojcik said. w o r k f o r c e . c o m | Workƒorce

SPRING PROGRAM The Ritz-Carlton, Amelia Island, Florida

April 4- 6, 2016

MEET OUR KEYNOTE SPEAKERS

Jeffrey Pfeffer, author, “Leadership BS”

Michelle Gielan, author, “Broadcasting Happiness”

Brian J. Robertson, author, “Holacracy”

Gretchen Rubin, author, “Better Than Before”

LEARNING REDEFINED Learning is no longer defined by traditional bounds. Join us — miles from distractions and outside influence — in the beautiful backdrop of boundless Amelia Island, Florida, April 4-6, for fresh air and fresh perspectives!

CLOsymposium.com/spring PLATINUM SPONSORS:

EXECUTIVE SPONSORS:

TODAY!

FOR YOUR BENEFIT

Quicker to the (K) Zone With more data available, companies are making 401(k) changes faster, survey finds. By Patty Kujawa

rmed with new data, plan sponsors are taking significant steps with 401(k) designs to improve plan costs and participant savings rates, an Aon Hewitt survey found. Plan sponsors have historically been conservative and slow to alter 401(k) strategies, but now that results can be seen rapidly, plan sponsors have the confidence to make changes, said Rob Austin, Aon Hewitt’s director of retirement research and author of the biennial survey. “Data can trump a lot of opinions,” Austin said.“A lot of plan sponsors don’t want to be doing things on their own. As we see data from early adopters, it’s easy for others to follow suit.” This year, the survey found that nearly 40 percent of plan sponsors use a flat dollar fee to pay for administrative services compared with 14 percent in 2011. Four years ago, it was more common for fees to get buried in overall investment costs. In 2015, that strategy dropped to 40 percent from 83 percent in 2011. Several drivers account for the flat, more transparent fee, Austin said. Employers want an easy-to-understand fee structure thanks to a 2012 U.S. Labor Department rule requiring companies to show workers their 401(k) operating costs. Also, several lawsuits and settlements exposing inflated fees have opened employers’ eyes to the issue. “There is a growing mentality that it should be flatter and more transparent,” Austin said. But unlike many of the large companies in the Aon Hewitt survey, small companies don’t have a large workforce to scale down costs or in-house experts who can help drive fees lower, said Tom Zgainer, CEO of America’s Best 401K, also known as ABk. Companies like ABk and FeeX offer services showing employers and workers how much they are paying for their 401(k). “For the first 30 years of the 401(k), no fee disclosure was required,” Zgainer said. “Our Fee Checker is designed to raise questions and to proactively encourage you to find out more.” ABk and FeeX offer an online service that taps

Workƒorce | w o r k f o r c e . c o m

into the 401(k) data companies need to report to the Labor Department each year. Workers and employers can type in simple information and get a general idea on costs. The more workers pay for 401(k) plans means less money in retirement, Zgainer said. ABk data show that three people all 35-years-old with $100,000 to invest can have radically different outcomes as a result of fees. If all three get the same 8 percent annual rate of return on their investments but pay 1 percent, 2 percent or 3 percent in fees, the lowest fee would result in $761,225 at retirement, while the highest fee would produce only $432,194. “That’s a major difference in retirement savings over a 30-year working period,” Zgainer said. Savings Rates Aon Hewitt’s survey showed employers making significant increases to employees’ automatic contribution rates as well as boosting company matching dollars to lift savings rates. For years, employers had been automatically enrolling workers into 401(k) plans using 3 percent of pay, Austin said. This year, 52 percent of employers using auto enrollment used 4 percent or more, up from 39 percent in 2013. “This was a prime example of data telling the story,” Austin said. “Companies realized that putting people in [the plan using] 3 percent wasn’t enough.” Another feature dogging savings rates was employer matching contributions. Four years ago, the most popular employer match rate was an employer contribution of 50 cents for every dollar an employee contributed, up to 6 percent of pay. Now, 42 percent of employers match dollar for dollar, up from 25 percent in 2011. Companies wanted to make sure workers who missed out on participating in defined contribution plans were given another chance in 2015.The term is called “back-sweeping” and 16 percent of employers pulled veteran nonparticipant workers into plans compared with 8 percent in 2013. “This is really where employers wanted to focus their attention because these are the most career-oriented, long-term employees,” Austin said. All these small changes can bring powerful results for workers, Austin said. Aon Hewitt data show that a 25-yearold worker would only save $482,000 at retirement using the older formulas. With a dollar-for-dollar matching rate, a higher employee contribution and a lower fee structure, retirement savings can more than double to nearly $1.3 million over time. “Over time these changes can make a substantial impact on an individual,” Austin said. “It literally translates into tens of thousands of dollars.” f e b ru a ry

2016

#WFFOCUS15 @WORKFORCENEWS

REJOIN US

VIRTUALLY

for the Fall 2015 Workforce Focus Online Edition! No cost, no travel. Available on demand through March 15.

Communicating Benefits to Employees Based Upon Generation and Life Cycle

Dan Schawbel,

New York Times best-selling author, founder of WorkplaceTrends.com and Millennial Branding

Digital Health Revolution — What It Means for Employee Engagement

Ayesha Khalid,

surgeon scientist and innovator, MIT Hacking Medicine

UNDERWRITERS:

Returning to Boston this fall. f e b ru a ry

Sept. 19, 2016

2016

events.workforce.com

SAVE THE DATE!

w o r k f o r c e . c o m | Workƒorce

FOR YOUR BENEFIT

Acing the ACA

SOME REAL-WORLD FIXES By Gary B. Kushner

ut aside the IRS’s misguided Notice 2013-54 and Notice 2015-17 (really at the behest of the U.S. Department of Health & Human Services, according to Washington insiders) prohibiting employers from reimbursing employees for individual health coverage purchased either at the exchange or in the open market. With the trend for the past 15 years or so of people living longer and continuing in the workplace, at least Notice 2015-17 provided employers with an older workforce the ability to offer reimbursements for the deemed “individual” coverage premiums from Medicare Parts B and D. But according to that notice, the employers’ ability to do so, through a Medicare Health Reimbursement Arrangement under IRC Section 105(h), was predicated on four conditions: 1. The employer offers a group health plan (other than the Medicare HRA) to the employee that does not consist solely of excepted benefits and offers coverage providing minimum value. 2. The employee participating in the Medicare HRA is actually enrolled in Medicare Parts A and B (author’s note: and/or presumably in a Medicare Advantage plan [Medicare Part C]). 3. The Medicare HRA is available only to employees who are enrolled in Medicare Part A and Part B or Part D (and/or presumably Part C). 4. The Medicare HRA is limited to reimbursement of Medicare Part B or Part D (and presumably Part C) premiums and excepted benefits, including Medigap premiums. Excepted benefits here refer to plans such as stand-alone dental and vision programs. Of course, in addition to these four requirements, the applicability of these carve-outs from the otherwise-prohibited HRAs is really limited to employers with fewer than 20 employees because of the Medicare Secondary Payer rules. But it should be noted that the majority of U.S. employees work for such smaller organizations. Some advocates of smaller businesses cheered this carve-out. Others cursed the notice’s overall rationale that reimbursement of individual coverage had to meet two of the Affordable Care Act’s requirements, 100 percent coverage of preventive benefits and no annual or lifetime limits (two items that almost never exist in small employer reimbursement programs). A hue and cry arose

over the first of the four requirements for a Medicare premium reimbursement HRA. Many insurers in the small employer marketplace choose not to offer coverage to active employees who are eligible for Medicare. Ignoring why this should even be allowed under the ACA, that meant that there was now a theoretical mechanism to reimburse active, older employees for their Medicare and Medigap premiums. However, in reality their plans would fail since those employees very often were not being offered the employer’s group health plan that it provided to all (except older, active) employees. The easy fix to the problem would require insurers to offer all active employees the same coverage within the ACA-mandated three-times age bands. At least the final regulations recognized this real-world problem of small employers not being unable to take advantage of the partial relief provided in Notice 2015-17. Those final regulations state that if the insurer of the group health plan did not offer coverage to Medicare-eligible active employees (the first condition of Notice 2015-17’s requirements), employers could still reimburse employees for the Medicare and Medigap premiums within a written Medicare HRA plan document and process. This is not inconsequential in the small employer world. Stymied by Notice 2013-54’s prohibition on reimbursement of individual coverage, which might have allowed an employer the ability to provide all eligible employees with a set reimbursement amount each month that the employee could use toward purchasing coverage on the open marketplace or at the exchange, at least the later notice and now the final regulations enable an employer with older, active employees the ability to reimburse premiums for Medicare and Medigap policies (and if so designed potentially other excepted benefits). It would be nice if Congress, now apparently more in the mood not just to offer yet-another repeal of the ACA but rather fixes for real-world issues in implementing the act, would pass an ACA amendment authorizing small employers to reimburse all employees for individual coverage, not just Medicare and Medigap premiums. But that fantasy will probably have to wait for another day.

THE EASY FIX WOULD REQUIRE INSURERS TO OFFER ACTIVE EMPLOYEES THE SAME COVERAGE WITHIN THE ACA-MANDATED THREE-TIMES AGE BANDS.

Workƒorce | w o r k f o r c e . c o m

Gary B. Kushner is the president and CEO of Kushner & Co., a benefits consulting firm. To comment, email editors@workforce.com.

f e b ru a ry

2016

Check out our digital edition platform! We are pleased to offer streamlined navigation and mobile capabilities. Get all your favorite HR content delivered whenever and wherever.

f e b ru a ry

2016

workforce-digital.com w o r k f o r c e . c o m | WorkĆ&#x2019;orce

Legal Tibble Trouble Supreme Court decision in Tibble v. Edison International should be a wake-up call for employers about monitoring their 401(k) plans. By Donna M. Autuori

n last year’s Tibble v. Edison International 401(k) case, the U.S. Supreme Court ruled that plan sponsors — the employers — have an ongoing duty to monitor the investments in their 401(k) plans and act prudently to eliminate investment options that are not in the best interests of the employees or plan participants. The court’s decision expands the rights of employees to sue their employers for failing to be diligent in the monitoring of their 401(k) plans. As more than one industry observer has said, the Supreme Court’s decision in Tibble v. Edison International should be a major wake-up call for all plan sponsors. A recent panel discussion on the ramifications of the decision included Charles Massimo, CEO of CJM Wealth Management; Nichelle Langone, supervisory investigator with the U.S. Labor Department’s Employee Benefits Security Administration; Donna Massanova, partner, employee benefit plans, at Certified Public Accountant firm Baker Tilly Virchow Krause; and Katherine Heptig, counsel in the corporate department of the law firm of Farrell Fritz. According to Massimo, “401(k)s are a huge profit center for Wall Street, which has never had to justify its fees. While, the Department of Labor’s fee disclosure rule of July 16, 2011, was an important first step in the right direction toward fee disclosure and transparency, the court’s decision now makes it very clear to plan sponsors that they have an ongoing duty of prudence to monitor these plans or else face the risk of liability that can stretch beyond the six-year statute of limitations.” Massanova, whose role as an auditor is to review the processes and internal controls in place for monitoring these plans as well as the selection of third-party service providers and the fee structure, said, “The monitoring of the investment in Tibble v. Edison was blatantly lacking.” Heptig added that, “In Tibble v. Edison, the ruling was that there is an ongoing duty to monitor. The attorneys for Edison argued that there has to be a major change to require the sponsor’s review and monitoring and, while the district court and appeals court had previously agreed with this argument, the Supreme Court sided with Tibble, the plaintiff.” 24

Workƒorce | w o r k f o r c e . c o m

Looking at Losses To illustrate the importance of plan sponsors’ ongoing monitoring became clear when Massimo demonstrated just how significant different decisions, from the investment share class to the associated expense ratios, can affect a retirement plan. His example showed how a difference between a 401(k) account earning 8 percent vs. 6 percent over 40 years for a plan participant who invested $5,000 per year would represent a loss of $578,667, or $28,933 per year, for the retiree. “In 90 percent of the cases, there is a complaint from an employee on which we at the DOL must act,” Langone said. “In other cases, our EFAST2 system pulls up red flags such as delinquent distributions, dishonest behavior or no bonding. We also have access to BrightScope (an independent provider of retirement plan ratings and analytics). “When we review plans, we want to make sure the compliance is there and that the people responsible are aware of their fiduciary responsibility and making decisions that are in the best interests of the plan participants.” In discussing who is a fiduciary, Langone said that, under the f e b ru a ry

2016

Employee Retirement Income Security Act of 1974, or ERISA, the named fiduciary is supposed to be noted in the plan documents, although sometimes they are not. She explained that ERISA defines fiduciaries as plan sponsors and decision-makers. Because many company owners don’t know enough about 401(k) plans, they delegate the responsibility to a service provider, but the primary fiduciary still has a responsibility and ongoing duty to monitor their plan’s service providers and investments. Massimo pointed out that a nonfiduciary involved in a plan is only required to make sure a plan’s investments are “suitable,” while a fiduciary has a responsibility to act in the best interest of the plan participants. He added that investment houses cannot be fiduciaries, but when you hire a third party, it’s contractual. Heptig added that, “Even the act of delegating is subject to a fiduciary responsibility. The selection of a fiduciary must also be prudent.” Massanova made an important point regarding fiduciaries. “If you are a fiduciary, your personal assets are at risk,” she said. “You must document everything you do, from your processes to how you pick your service providers. Even regulators will ask about internal processes. If they feel you do have good processes, they will not expand their investigation. For smaller companies, it’s always prudent to have an independent audit, ideally on a three-year cycle.” Massimo advised that everyone should have a fiduciary manual containing everything they do and all of a plan’s documentation. “Transparency is important,” he said.“You want to know who’s doing what, what fees are being paid and to whom.” Langone added that, “Under the 408(b)2 regulations, fiduciaries must disclose fees, and the fees must be reasonable. They also have a responsibility to disclose plan fees to participants as well as the investments and associated risks.” Massimo explained how BrightScope provides third-party scores for plans, benchmarking them against peer plans so sponsors can see how their plans compare. He said that fiduciaries should ask for their plans’ FI360 score. The panel concluded that there is a continuing interest in fallout from the court’s decision and the increase in employee lawsuits against employers for failing to meet their fiduciary responsibilities as in Tibble v. Edison International. Donna M. Autuori is president of Autuori Corporate Communications Inc. To comment, email editors@ workforce.com.

f e b ru a ry

2016

Legal Legal Briefings RETREAT ON NONCOMPETE? Employers often include noncompete clauses in their employment agreements. Enforcing noncompete agreements, however, can be anything but routine. The enforceability of noncompete agreements varies greatly from state to state. Some states, such as Texas, provide employers and employees with significant discretion to enter into noncompete agreements. Other states, like California, restrict the right to enter into noncompete agreements almost entirely. To navigate these issues, multistate employers often include “choice of law” provisions in their employment agreements. By specifying that the law of a state friendly to noncompete agreements will control, they hope to ensure the enforceability of their noncompete agreements. Unfortunately, it isn’t that simple. As the 5th Circuit recently found in Cardoni v. Prosperity Bank, choice of law provisions may have only limited utility. The employees in Cardoni worked in Oklahoma for a Texas-based employer. Their employment agreements included a three-year noncompete clause and a choice of law provision specifying that Texas law should control. The 5th Circuit, however, chose to apply Oklahoma law to the noncompete clause. It found that the “application of the law of the chosen state would be contrary to a fundamental policy of a state that has a materially greater interest than the chosen state in the determination of the particular issue.” The court found that Oklahoma’s law regarding noncompete agreements constituted a “fundamental policy” and that Oklahoma had a greater interest in the matter. Cardoni v. Prosperity Bank, case numbers 14-20682 and 15-20005 (Oct. 29, 2015). IMPACT: Employers must be judicious in their use of noncompete agreements. While a good choice of law provision can help secure enforcement, in some states noncompete agreements will likely be largely unenforceable.

LOCKING DOWN BEST PRACTICES ON PRISON BREAKS A collective bargaining agreement between Butler County, Pennsylvania, and correctional officers for the Butler County Prison provides that the employees receive a one-hour lunch break, of which 45 minutes are paid and 15 minutes are not. A collective action of correctional officers sued Butler County alleging that, under the Fair Labor Standards Act, they should be compensated for that 15 minutes because, during that time, they cannot leave the prison and must remain in uniform. After the U.S. District Court for the Western District of Pennsylvania dismissed the case, the 3rd Circuit Court of Appeals adopted the “predominant benefit test,” which has also been adopted by the 2nd, 4th, 5th, 6th, 7th, 8th, 10th and 11th circuits, and which weighs the benefits each side gets from the break to determine if the employee should be compensated. In upholding the decision, the court held that “although plaintiffs face a number of restrictions during their meal period … on balance, these restrictions did not predominantly benefit the employer.” Babcock v. Butler County, No. 14-1467 3rd Cir. (Nov. 24, 2015). IMPACT: In determining whether employees should be compensated during restricted meal breaks, employers should carefully weigh whether the employee is primarily engaged in work-related activities during the break. Mark T. Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago. To comment, email editors@workforce.com.

w o r k f o r c e . c o m | Workƒorce

Legal

About Those Off-the-Clock Emails Jon Hyman |

The Practical Employer

ow many times a day does the average American check his or her cellphone? A. 26 times; B. 36 times; C. 46 times; or D. I can’t answer now because I’m looking at my phone. If you answered “C,” give yourself a gold star. According to a recent study, we look at our phones an average of 46 times per day, which is up from 33 in 2014. Undoubtedly, many of those peeks are work-related, and some take place during the workday. But, many also take place outside the confines of 9 a.m. to 5 p.m. Courts are starting to take notice and ask what these off-duty emails mean under our wage-and-hour laws. In Allen v. City of Chicago, one federal court held that the Chicago Police Department did not violate the Fair Labor Standards Act by failing to pay police officers for off-duty time working on their employer-issued BlackBerrys. Yet, the case is not a clear win for employers. The court applied a twopronged test to determine whether the police officers were entitled to overtime for off-duty emailing. 1. Did officers perform compensable “work” for which they were not paid? 2. Did the employer have actual or constructive knowledge that the employees performed work without compensation? On the first question, the court determined that some of the off-duty activities the employees performed on their BlackBerrys constituted compensable work under the FLSA. The court drew a line between those tasks necessary to the employees’ jobs and those incidental and nonessential. “Some activities plaintiffs performed on their BlackBerrys had to be done immediately, even if they were off-duty. These activities include reaching out to CIs [confidential informants], gathering information on investigations that were heating up, and contacting and re-allocating teams of officers in response to a shooting. Such off-duty activities were at times pursued necessarily and primarily as part of plaintiffs’ jobs in BOC [the Bureau of Organized Crime], and constituted compensable work under the FLSA. “However, the evidence failed to show that all of the off-duty activities plaintiffs performed on their BlackBerrys were a necessary part of their jobs. For example, the mere act of plaintiffs ‘monitoring’ their BlackBerrys does not constitute an activity pursued necessarily and primarily for the benefit of the city under the FLSA, so long as the plaintiffs could still spend their off-duty time ‘primarily for [their] own benefit without persistent interruptions.’”

On the second question, the court determined that, despite the compensable nature of the employees’ off-duty time, the employer nevertheless prevailed because it lacked any knowledge of the work being performed. “Plaintiffs fell far short of showing a uniform culture or well-grounded understanding that off-duty BlackBerry work would not be compensated in BOC. Plaintiffs have not proven that supervisors within BOC had specific knowledge of off-duty BlackBerry work being performed without compensation. And, in light of the evidence that BOC members turned in slips for off-duty BlackBerry work and were compensated, plaintiffs have not shown that there was a common understanding ... that such work would not be compensated.” What does all this mean? It means that in the opinion of this one court, some offthe-clock time spent checking email is compensable work, if 1. It’s essential, and not merely incidental, to the employees’ jobs, and 2. Regardless of whether the time is compensable, the employer still must know, or have reason to know, of the time worked. So how can employers minimize risk? 1. If possible, limit smartphone issuance or bring your own device connections to exempt employees. 2. For nonexempt employees, consider implementing an email curfew or other policy that prohibits or limits the use of email off-duty. 3. Prohibit your exempt employees from communicating with nonexempt employees while they are off the clock. 4. Implement a reasonable process for employees to report uncompensated off-the-clock work. 5. Monitor employees’ access of and use of your email and other electronic systems to ensure compliance with your policies on off-duty emailing. 6. If you know, or have reason to know, that your employees are breaching your rules on off-duty email, counsel or discipline the violation, terminate repeat offenders and, regardless, pay for the time worked. Allen is merely the first chapter; the next will likely come from the U.S. Labor Department, which is taking a long look at this issue and is expected to opine in 2016. Do you want to guess how that opinion will read?

For nonexempt employees, consider implementing an email curfew or other policy that prohibits or limits the use of email off-duty.

Workƒorce | w o r k f o r c e . c o m

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. To comment, email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

f e b ru a ry

2016

TALENT IS A TERRIBLE THING TO WASTE. ARE YOU DEVELOPING YOUR FUTURE LEADERS?

Now is the perfect time to foster the growth of those who aspire to the chief learning officer role and to support those newly appointed. The CLO Accelerator course from Chief Learning Officer magazine sets learning leaders on the fast track to succeed. This one of a kind learning experience will hone the critical skills and attributes future and recently appointed CLOs need to flourish in the role.

April 2 â&#x20AC;&#x201C; 3, 2016 The Ritz-Carlton, Amelia Island Learn more: CLOaccelerator.com #CLOaccelerator

Pain Points

WorkĆ&#x2019;orce | w o r k f o r c e . c o m

f e b ru a ry

2016

Prescription painkiller abuse has long been a growing problem in the U.S., but it’s overtaken the workforce and impedes both productivity and employee safety.

ndiana’s employers have a drug problem. The good thing is they’re coming clean about it following the release of a sobering study late last year. The survey of 200 Indiana-based companies conducted by the National Safety Council and the Indiana Attorney General’s Office revealed that a whopping 80 percent of the state’s employers have had problems with employees abusing prescription opioids such as Vicodin and OxyContin. “Beyond the loss of productivity, prescription abuse can cause impairment, injury and may lead employees to bad choices, such as theft and em-

BY SARAH SIPEK

f e b ru a ry

2016

w o r k f o r c e . c o m | Workƒorce

bezzlement from the employer,” said Indiana Attorney General Greg Zoeller in a news release about the December 2015 study. As Indiana stares down its once-dirty little secret, the bigger drug problem is that prescription painkiller abuse isn’t limited to the Hoosier state and has reached crisis levels across the United States. In addition to endangering the

OPIOIDS TEND TO INDUCE TOLERANCE, WHICH MEANS THAT OVER TIME A LARGER DOSE IS NEEDED TO ACHIEVE THE INITIAL EFFECT. health and well-being of millions of employees, growing mounds of data show it’s costing employers billions of dollars in absenteeism and lost productivity. Some in the medical community complain that formal training to prescribe the drugs is lacking while governmental guidance is vague. Others point to medical marijuana as a potential remedy.With firm solutions to the problem being elusive, the U.S. Centers for Disease Control and Prevention nonetheless sounded the alarm. “Opioid abuse, including prescription painkillers, is a growing epidemic that is gripping our country,” said Dr. Tom Frieden, the director of the CDC, in an email. According to the CDC’s most recent data, 2 million Americans aged 12 or older either abused or were dependent on opioid pain relievers in 2013. According to recent CDC analysis, 28,600 people died in 2014 because of overdoses from prescription painkillers, heroin and other opioids. “We would expect very similar results in many states,” said Deborah Hersman, president and CEO of the National Safety Council, during a news conference at the Indiana Statehouse.The Illinois-based nonprofit organization focuses on preventing injuries and deaths at work and in the community regarding the Indiana employer survey. “This is not a local problem.This is a national problem, and it’s very important for employers to understand that this is an issue that they need to pay attention to and not put their heads in the sand.” On average, opiate misuse costs the U.S. economy $55.7 billion a year, according to the American Society of Addiction Medicine. Employers shoulder nearly half of that cost and lose an average of $10 billion from lost work and productivity alone. While they bear the financial burden of their employees’ prescription drug abuse, employers are also in an ideal position to ease their own pain. “Opioid misuse costs employers in multiple ways,” said Jeff O’Mara, president and CEO of Healthentic, a Seat30

Workƒorce | w o r k f o r c e . c o m

tle-based health analytics company, in a news release. But “employers have a unique opportunity to help people get more productivity for less money by identifying and engaging the people at risk.”

Power of the Flower Opioids are a class of drugs derived from opium, a gummylike substance collected from the seed of the opium poppy. While the flower itself is beautiful, the chemical it produces is powerful and is most often prescribed for the treatment of chronic pain resulting from disease, surgery or injury and is also used to battle severe coughs or diarrhea, according to the Center for Addiction and Mental Health. “They act by attaching to specific proteins called opioid receptors, which are found on nerve cells in the brain, spinal cord, gastrointestinal tract and other organs in the body,” said Dr. Nora Volkow of the National Institute on Drug Abuse during congressional testimony last year. “When these drugs attach to their receptors, they reduce the perception of pain and can produce a sense of well-being. They can also produce drowsiness, mental confusion, nausea and constipation.” Drowsiness and confusion are employers’ top two concerns, especially in fields involving manual labor, Volkow said. Opioids impede an employee’s ability to operate heavy machinery and make logical decisions, especially if the drug is being abused. While highly effective, the drug is also highly addictive. Opioids can produce a sense of pleasure because these drugs affect brain regions involved in reward,Volkow said. Adding to their danger is the fact that opioids tend to induce tolerance, which means that over time a larger dose is needed to achieve the initial effect.

By the Numbers: Opioids 295 million: In 2012 health care providers wrote 295 million prescriptions for opioid pain relievers, which is enough for every U.S. adult to have a bottle of pills. 2 million: Almost 2 million Americans age 12 and older either abused or were dependent on opioid pain relievers in 2015. 300 percent: Prescribed opioid sales in the United States have increased 300 percent since 1999, but there has not been an overall change in the amount of pain Americans report. 16,000: In 2013, more than 16,000 people died in the United States from overdoses related to opioid pain relievers, four times the number in 1999. Source: U.S. Centers for Disease Control and Prevention

f e b ru a ry

2016

“This tolerance contributes to the high risk of overdose during a relapse to opioid use after a period in recovery,” Volkow said during her testimony.“Users who do not realize they may have lost their tolerance during a period of abstinence may initially take the high dosage that they previously had used before quitting, which produces an overdose in the person who no longer has tolerance.” According to the American Society of Addiction Medicine, opiate poisoning increased by 91 percent from 1999 to 2012. For comparison, heroin poisonings increased by just over 12 percent during that time period. Adding insult to injury is the fact that there are no federal guidelines regulating the prescription of opioid drugs for chronic pain. Primary-care physicians say they receive insufficient training in prescribing opioid pain relievers, which suggests that many prescriptions are being written unnecessarily.

Employers Feel the Pain The effect of prescription drug abuse on employers is twofold. First, employees who abuse opioid drugs use significantly more health care resources than nonopioid users. Costs for opioid painkillers rose 11.5 percent in 2014, according to pharmacy benefit manager Express Scripts Holding Co. As a result, workers’ compensation claim payers spent an average of $1,583 per injured worker for prescription drugs in 2014, which is up almost 2 percent from 2013. Furthermore, opioid abusers have significantly higher health care costs than nonabusers — $10,627 annually — according to a research article in The Journal of Managed Care & Specialty Pharmacy. Absenteeism and lost wages costs employers an estimated $10 billion nationwide each year, added J. Bradford Rice, analyst for Analysis Group in Boston. O’Mara said that while employers feel the financial pain of opioid abuse, there are steps they can take to alleviate its impact in the workplace. “And it starts with understanding the employee population,” O’Mara said. “Only 13 percent of an employee population with an opioid prescription is likely to abuse it, but employers can look for specific warning signs to sift out those individuals.” These warning signs include 10 or more opioid prescriptions a year and a prescribed supply of 120 days or more. Then there are steps employers can take to ensure the long-term health of employees while saving on productivity and employment costs, O’Mara said. The first is to understand and insist on conservative prescribing guidelines for pain treatments for all participating providers in their medical, workers’ compensation and occupational health programs. Employers should also invest in educating employees about the risks of opioid drug use to help preempt drug misuse, O’Mara added. “Whether it’s pamphlets or bringing in speakers, emf e b ru a ry

2016

CDC Takes a Stand on Opioid Addiction Among the contributing factors to the rise in opioid addiction and related deaths is the insufficient training of the primary-care physicians prescribing these powerful drugs to patients. To remedy the situation, the U.S. Centers for Disease Control and Prevention released an opioid prescription guideline this year. The guideline is voluntary — not a federal regulation — and its intention is threefold: reduce the risks associated with long-term opioid use; improve safety and effectiveness of treatment; and enhance communication between health care providers and patients. The recommendations include when to initiate or continue opioids for chronic pain, how to select the drugs, dosage and duration, and how to assess the risks of usage. In the proposed guideline, the CDC noted that longterm opioid abuse often begins with treatment of acute pain and suggested that three or fewer days of opioid treatment usually will be sufficient for most nontraumatic pain not related to major surgery. Most importantly, the guideline recommends establishing clear treatment goals with patients before drug therapy has begun in addition to discussing known risks and realistic benefits. —Sarah Sipek

ployers need to start a conversation about drug abuse and how to avoid it,” he said. Finally, employers should ensure confidential access to help treat employees who find themselves in a position of opioid dependency. “Help needs to be clear and accessible to any employee that finds they have a problem with opioid abuse,” O’Mara said. “Employee-sponsored treatment is often more effective than treatment recommended by family or friends. It’s good for morale, and retaining employees is beneficial to employers.”

Another Organic Option While there are steps employers can take to ensure employees are using opioids safely and effectively, experts are always on the lookout for safe alternatives. And recent research suggests that the best option is slightly nontraditional. Experts are touting medical marijuana as an effective substitute for addictive opioids. In July 2015, the Minnesota Department of Labor and PAIN continued on page 48 w o r k f o r c e . c o m | Workƒorce

WorkĆ&#x2019;orce | w o r k f o r c e . c o m

f e b ru a ry

2016

Wagering on Equal Wages

Three companies took different approaches to ensure female employees’ salaries matched that of their male counterparts. BY MICHELLE V. RAFTER

he Gap Inc. didn’t wait for California’s new law on fair pay to kick in to do something about it. Last year, the San Francisco-based retailer hired an outside firm to audit its pay practices to make sure women and men in the same jobs got the same wages.The consultants analyzed the company’s 129,992 employees and confirmed it — their salaries were on par. The California Fair Pay Act took effect on Jan. 1, and labor experts predict more companies in and outside the state will take similar steps to minimize the gender pay gap.

f e b ru a ry

2016

w o r k f o r c e . c o m | Workƒorce

That and other types of income inequality have contributed to a shrinking U.S. middle class and become an issue of the 2016 presidential election campaign. Democratic candidate Bernie Sanders has built his campaign around ending it. Through it all, one of the most entrenched inequities has been the difference in pay between the sexes. In 2014, the median full-time wage and salary for women was 81 percent of what it was for men, according to the latest data from the U.S. Bureau of Labor Statistics. The 19-cent difference is an improvement from 38 cents in 1979, the first year the agency measured the wage gap. But it’s remained between 17 cents and 20 cents for the past dozen years, according to a November 2015 BLS report. Like Gap, some companies have narrowed or closed the margin. They did it by creating hiring committees that represent a wide swath of the company’s employee population to curb recruiters’ and hiring managers’ potential biases. They use data-based performance metrics to award raises and promotions. They run mentor programs and sponsor opportunities that help women advance. Some work with nonprofit apprentice programs that help place women into traditionally male-dominated trades. Once companies start to see that with a few simple changes they could increase their percentage of women or bring more women into leadership positions, “They’re going to put some of those mechanisms in place,” said Connie Ashbrook, executive director for Oregon Tradeswomen

globally or in any of its five largest locations (the United States, Canada, Japan, the United Kingdom and China). Gap didn’t return a request for comment, and Exponential Talent executives declined to comment. With the California Fair Pay Act coming online, labor and employment lawyer Gary Gansle sees more companies following in the clothing retailer’s footsteps. “California is often a bellwether,” said Gansle, a partner with the law firm Squire Patton Boggs in Palo Alto, California. “More progressive states will look to California and likely adopt some or all of the new pay equity principles over time.” He recommends companies review existing hiring and performance review policies to see if they’re likely to produce gender pay gaps and formulate a compensation philosophy that focuses on gender equity. He also suggests training management to recognize and root out unconscious biases that could cause gender-related pay problems. Companies “are more likely to work toward gender pay equity if it is an established and articulated goal,” he said.

Apprentices and Mentors

Walsh Construction Co. has taken some of those suggestions to heart to move women closer to job and wage parity in the male-dominated commercial real estate construction industry. The 55-year-old general contractor’s workforce is still predominately male. Men represent 93 percent of its 249-person construction crew, and 69 percent of its 213-person project management and engineering staff, according to Patti Murphy, human resources director for the business, which is based in Portland, Oregon. Many of the women in Walsh’s construction crew came in through partnerships —PATTI MURPHY, WALSH CONSTRUCTION with n o n p ro f i t groups, such as OreInc., a nonprofit that helps place women into apprentice- gon Tradeswomen, that help them find apprenticeships in ships in union-heavy trades. carpenter, painter, machine operator and other trade jobs. Here’s a deeper look at three organizations that have taken Because construction jobs are covered by unions, there’s action to close the gender pay gap. no difference between hourly wages for men and women, Murphy said. Wage Audits and Compensation Policies While women might make the same hourly wage as Gap, which has a workforce that’s 73 percent female, men in construction apprenticeships and jobs, their annual hired diversity and inclusion consulting firm Exponential incomes are likely to be lower because they aren’t offered Talent to audit its own findings on gender pay. The firm the same hours, said Oregon Tradeswomen’s Ashbrook.The ran a series of assessments, including tests comparing aver- same holds true for men and women of color in the trades, age male and female salary by level, and tests to detect dif- she said. She sees that changing, though, as boomers age ferences in salary by gender based on factors such as full- out of the industry “because there won’t be enough of the time status and number of years on the job. traditional demographic of white males” to meet demand. The consultant found no significant gender wage differMurphy said she didn’t know whether annual inences between men and women within Gap job codes come for women on Walsh’s construction crew is less 34

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

PHOTOS COURTESY OF WALSH CONSTRUCTION CO.

‘BECAUSE WE HAVE SUCH A FREE-FLOWING CONVERSATION, IT HELPS WOMEN FEEL LIKE THEY’RE MORE EMPOWERED.’

Walsh Construction has been proactive in recruiting female talent in a male-dominated industry, including Elizabeth Rinehart, left, a project manager who’s been with the company 10 years, and Erika O’Callaghan, a project engineer who has been there four years.

than their male counterparts. The fact that the tenure for Walsh’s tradeswomen employees is seven years, longer than the company’s 6.3-year average, indicates that they feel well-treated, she said. “I think that’s unique for the industry.” On the professional side of the business, Walsh actively promotes women into positions where they might oversee part or all of constructing at an apartment complex or mixed-use building, and manage budgets of $1 million or more. Today, 29 women hold some type of management role, representing about 14 percent of the total, up from 11 percent a decade ago. “We still have work to do at the executive level,” Murphy said, “but in middle-management roles is where we’ve seen an increase.” To help more women get there, Walsh created a peer group for women project managers that meets once a month. Junior- and senior-level female employees mentor each other and use the group to share information.“I think it has really helped them feel like they have more support and resources,” Murphy said. “Periodically the general manager attends their meetings to gain a better understanding of issues and concerns they face as women in the industry. This has been particularly helpful in getting new women project managers to feel integrated.” Walsh’s approach to the performance review process is more informal than companies that use software-based rating or ranking systems, which Murphy said helps female employees feel comfortable talking about their jobs and pay. After project managers finish a job — which could take anywhere from six to 18 months — f e b ru a ry

2016

they discuss with their bosses and other executives how it went, what they could have done better and what they’d like to do next. “Depending on where someone is in their career, they might have owned a piece of the budget, but not all,” Murphy said. “For the next one, we’d ask them what other pieces they’d want to take on. We don’t use reviews as a way to take corrective action, it’s all about development. “Because we have such a free-flowing conversation, it helps women feel like they’re more empowered,” she said. Walsh also levels the playing field by having women coming into entry-level positions work on site for their first few years. Many have no experience on a jobsite, so giving them an idea of what it’s like helps them understand how a building is put together. It’s also generates goodwill for Walsh. “Many of the women we have hired from other companies have said they were typically stuck in the office and came to Walsh because they heard they could get field experience and training,” Murphy said.

Metrics-Based Pay and Promotions Financial planning adviser Sullivan, Bruyette, Speros & Blayney relies on results, a gender-neutral interview process and the goodwill of its founders to remove biases from hiring, compensation and promotions and maintain income parity. The McLean, Virginia-based firm, a division of BMO Financial Corp., has 45 employees, including 24 certified financial planners plus staff. EQUAL WAGES continued on page 48 w o r k f o r c e . c o m | Workƒorce

Examining the war for talent with an investor’s focus on success. BY DAVE ULRICH

inning the war for talent requires recognizing that the value of talent is defined by the receiver more than the giver. Without defining what it means to win, the war for talent is aimless. Hiring or training someone who fails to deliver value to stakeholders is like preparing a meal without knowing what the patron wants to eat (fast food or gourmet) or playing a sport without keeping score. When I get my close friends a gift, I start by defining what would be meaningful to them more than what I can easily give since they ultimately define the value of my gift. Likewise, talent wars need clear outcomes to deliver real value. It is not enough to build on strengths but to use strengths to strengthen others. It is not enough to measure the amount of training or staffing but the effect of training or staffing on key organization outcomes. It is not enough for leaders to focus on their personal successes (e.g.,“I am worth $1 billion.”), but on the ways that they have helped others succeed (e.g.,“I have helped create 1,000 millionaires.”). Authentic leaders who do not create value for others are narcissists, not true leaders.

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

f e b ru a ry

2016

w o r k f o r c e . c o m | WorkĆ&#x2019;orce

Too often talent decisions in hiring, training and leadership are based on internal not external criteria. For example, when the standard for talent is cost per hire per employee, it underrepresents the value that the talent can create for others. When training is measured by the skills attendees acquire or even the effect of those skills on the business, the focus is primarily inside the company. When leaders are measured by how much they inspire employees as measured by engagement or productivity, the internal focus limits the full effect of leadership. The full value of talent ultimately comes from how talent choices affect those outside the organization, not just inside. In the past few years, we have argued that leaders are effective when their behaviors reflect customer promises. When a firm brand translates to a leadership brand, leaders create more value for targeted customers. We have focused on shaping talent choices (in staffing, training, rewards, communication, organization and culture) by customer expectations. Customer promises set staffing criteria, training options, compensation standards, communication protocols, organization governance and cultural definitions. It is now time to shift talent value from internal (employee inspiration and organization strategy) to customer expectations to investor promises.

Why Investors Care About Talent Investors have a seemingly simple goal of making money on their investment, but this goal is not easy to achieve. Increasingly, investors realize that two firms in the same industry with the same earnings may have different market valuations. This difference comes when investors see beyond financials like cash flow to the intangibles that produce sustained earnings. These intangibles include strategy, brand, research and development, distribution and other business processes. Talent is one of the most critical and underlying intangibles. If and when investors have more confidence in talent (from the senior leaders to employees throughout the organization) they reduce the risk of their investment and increase their confidence in future earnings. Investors who pay attention to talent go beyond fi-

nancial results and strategic intangibles to the talent choices that drive long-term success. Talent proponents who link talent choices to value created for investors work toward talent choices that build investor confidence and market valuation. We have found that investors often recognize the value of leadership as a subset of talent, but are not sure how to track it. So, how do investors determine if a firm has better or worse talent? How can talent managers link their work to market valuation?

Increasing Investor Confidence in Talent First, investors and business leaders need to recognize that market value comes from intangibles such as talent. In our research we found that about 30 percent of intangibles is related to quality of leadership. Talent managers can prepare a graph of how their firm’s price-earnings (or price-to-book) ratio compares to their top competitors over a significant period of time.Talent managers can prepare this chart (often with help from colleagues in finance) to show the overall intangible value of their firm vs. competitors. Focusing on market value of talent offers a dramatically different perspective of the importance of talent. For example, in Table 1, we show that Apple Inc.’s P/E ratio over a decade was 22 vs. an industry average of 14.6. This shows that about 50 percent (Subtract 14.6, the industry average, from 22, Apple’s average P/E ratio, and get 7.4, or 22-14.6 = 7.4. Then divide that figure 7.4 into 14.6 and get a total of 50 percent, or 7.4/14.6=50 percent) of Apple’s $750 billion market cap is based on the intangibles. If leadership, or talent, is about 30 percent of this intangible value, then the value of talent to Apple is about $110 billion, which is 30 percent of $375 billion. Talent managers who prepare these charts communicate the value of the intangibles and talent to the business. Second, investors need to have a way to framework to understand the quality of talent. Even when investors recognize the variance in market valuation because of talent, they often lack a rigorous way to understand and track it. Talent managers need to prepare a simple but robust way to discuss talent with investors. Assessing talent manage-

Table 1: Apple’s Intangible Value 2005 through 2014 2005

2006

20 07

2008

2009

APPLE

38.8

30.8

43.5

15.8

IBM

16.8

16.0

15.1

9.4

SAMSUNG

10. 2

12.3

13.1

21.1

34.7

18.9

11. 2

LENOVO

22.8

—*

26.9

4.7

—*

2 012

2 014

10 -Ye a r A v e r a g e of these companies

13.9

14.9

22.0

749.7

12.5

10.3

13. 3

16 0.5

7. 3

7. 5

10.9

15 7. 2

10.7

15.3

16 .1

70.0

15.5

18 .1

13.9

14.6

10 0. 4

2 010

2 0 11

2 013

20.5

11. 5

12.1

13.1

12.7

14.1

13.3

—*

7. 1

10.9

8.3

16.4

11. 4

7. 8

—*

22.4

16.9

18.3

1 7. 2

IN D U ST RY AV E R AG E ( AV E R AG E O F T H E S E C O M PA NIE S E XC LUD IN G A PPL E )

Source: “The Leadership Capital Index: Realizing the Market Value of Leadership” by Dave Ulrich

Workƒorce | w o r k f o r c e . c o m

Current Market Cap (in billions)

*Unreported negative number

f e b ru a ry

2016

ment processes is difficult because a multitude of programs and investments have been made to attract, upgrade and retain talent. Investors need to avoid the pitfall and allure of looking at one talent process (e.g., hiring or engaging or training or succession planning) and missing the importance of the overall talent management system. When we

quality of leadership within the organization. For example, restaurant chain Buffalo Wild Wings Inc. intentionally gives investors exposure to its broader leadership team as opposed to companies more traditionally limiting exposure to the CEO, chief financial officer and investor relations professionals. It hosts an

INVESTORS NEED TO AVOID THE PITFALL AND ALLURE OF LOOKING AT ONE TALENT PROCESS (E.G., HIRING OR ENGAGING OR TRAINING OR SUCCESSION PLANNING) AND MISSING THE IMPORTANCE OF THE OVERALL TALENT MANAGEMENT SYSTEM. interviewed investors, they almost uniformly agreed that people matter and that talent management processes should affect their valuation of the firm. We have found that talent processes can be synthesized into choices about the flow of talent into the organization (sourcing new talent into the organization), through the organization (developing current talent, building commitment and preparing future successors), and out of the organization (managing retention of key performers and removing poor performers). Third, investors need to have indicators to assess talent. These indicators might reflect overall commitment to talent such as: • Revenue per full-time employee. • Total labor cost (payroll, contingent and contract worker pay, and benefits) as a percentage of revenue. • Correlations of the service profit chain (employee sentiment correlated to customer affect to financial performance. • Firm reputation in social media. Or the talent managers may share specific talent indicators such as: Bringing talent in: • How many qualified applicants per advertised position? • How long before new employees are fully productive? Managing talent through the organization: • What is training and development budget per employee? As a ratio of sales? • Track backup ratios for key leadership positions? • Monitor employee engagement vs. competitors. Attending to employees who leave: • Review retention of pivotal employees. • Examine how the firm deals with poor performers. Finally, investors need to be informed of the organization’s talent management processes. Talent managers might prepare presentations on talent for investors which might be 10 to 15 percent of investor calls or roadshows. This might be talent managers preparing talent metrics as part of the investor calls. Or, it might be working to help investors recognize the f e b ru a ry

2016

investors day where the entire leadership team plays a role in sharing direction and strategy, adds the chief operating officer to the Q-and-A portion of quarterly earnings calls, and have other C-level leaders (including the chief human resources officer) join the CFO on investor visits to show leadership depth. Alere Inc., a global health care diagnostics company, recently worked with investors to show the quality of leadership. In its recent “buy” recommendation, investors looked at the quality of leadership. Here are some quotes from their recommendation: • “We recently met with Alere’s management and came away with a greater sense of appreciation for the company’s deep commitment to quality, beginning with its people.” • The company “invests in world-class people. … Alere has made a large number of important hires over the past 12 months to ensure the best possible people are managing various divisions. … Management team is ‘full, at the top of the house,’ still filling out the team at the VP level. We came out of our recent meeting encouraged with the company’s commitment to quality, particularly to people.” • “We continue to recommend investors accumulate shares of Alere given our expectations for multiple expansion as management executes on its core initiatives.” These cases illustrate that talent managers can actively participate in investor conversations to increase investor confidence in and awareness of talent. Investors who want asymmetrical data on a firm’s future performance will come to rely more on assessments of talent and leadership. Talent managers who want to win the war for talent will increasingly focus on how talent can be understood and tracked by investors. Dave Ulrich is the Rensis Likert professor at Ross School of Business at the University of Michigan and partner with the RBL Group. To comment, email editors@workforce.com.

w o r k f o r c e . c o m | Workƒorce

PROFILE

J o n i Tr o e s t e r

A Hawkeye at Heart for Health Joni Troester, a University of Iowa graduate and current interim assistant vice president of benefits, health and productivity, didn’t limit herself to the university gates when developing a wellness initiative that has positively affected employees and the surrounding community. BY SARAH SIPEK

t stands to reason that Iowa City, Iowa, is a healthy city. Troester holds three degrees from the university. She Small-town America supported by a major university, began pursuing a bachelor’s degree in exercise science fresh air, surrounded by endless miles of rolling farm in 1984 and left the university in 1989 with a master’s fields adds up to the ideal picture of clean living in degree in the same field. She returned in 2009 to pursue America’s heartland. an MBA at the Henry B. Tippie College of Business. In And that’s largely true. But as Joni Troester discovered all, those nine years spent learning in Iowa City transwhen she began working at the University of Iowa, build- formed her interest in health into an ability to develop ing a culture of health and corporate wellness programs wellness was anything but a that, unlike some plans being given at her alma mater in hawked these days, yield Hawkeye Nation. measurable results. Currently the interim assis“I knew going in that I tant vice president of benefits, wanted to work supporting health and productivity at the people’s health and well-beUniversity of Iowa, Troester is ing, especially from a corpoin charge of developing and rate aspect,” Troester said. “It —JONI TROESTER sustaining a culture of health was initially all about workand wellness at an institution ing with people and trying to with more than 23,000 employees. Creating a wellness help them improve in terms of their own health and program that provides measurable value for both the indi- wellness, but as I learned more, it turned into: How do vidual and the organization is no small task, and her com- we develop systems and cultures within organizations to mitment to creating that value at a minimal cost makes it support people?” even more difficult.Thankfully,Troester is well-trained. After completing her master’s degree, Troester took a

‘I KNEW GOING IN THAT I WANTED TO WORK SUPPORTING PEOPLE’S HEALTH AND WELL-BEING, ESPECIALLY FROM A CORPORATE ASPECT.’

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

J o n i Tr o e s t e r

PHOTOS BY MARK TADE

PROFILE

f e b ru a ry

2016

w o r k f o r c e . c o m | WorkÆ&#x2019;orce

PROFILE

J o n i Tr o e s t e r

position at St. Luke’s Hospital in nearby Cedar Rapids. Her initial role combined health promotion — an early iteration of wellness that was new at the time — and some cardiac rehabilitation. The experience she gained there led to an opportunity to return to her alma mater at the College of Medicine in 1997 to work within the department of family medicine providing health education and health promotion to its primary-care patients. “What I noticed when I began working there was that a lot of our primary-care patients were also employees of the university,” Troester said. “So I began to have conversations with our central human resources department about launching an initiative for employees around health and wellness.” Those conversations eventually grew into a wellness pilot program that launched in 1999. Troester’s partnership with HR grew closer, eventually leading to her jumping from a health role to an HR role in 2003. In 2005 she became the director of organizational effectiveness, health and productivity. “Initially I was responsible for wellness and then I took over some of the preventive-type services that they wanted to implement around workers’ compensation,” Troester said.“Gradually, as people transitioned, I fell into the role of

JONI TROESTER AND HER TEAM HAVE GIVEN THE UNIVERSITY A COMBINED COST SAVINGS AND COST AVOIDANCE OF UP TO $3 MILLION ANNUALLY. growing the scope of the program and trying to align it around benefits and health management services. It’s about looking at it as a strategic initiative for HR.” Her efforts grew into the liveWELL brand that launched in 2007. By leveraging both internal and external partnerships, Troester and her team have provided the university with a combined cost savings and cost avoidance of up to $3 million annually. Based on a Truven Health Analytics study, the program yields an annual return on investment of 2.37. This number represents the total financial gains of the wellness program divided by the total cost to deliver the program. It’s clear her efforts have been successful. LiveWELL has been recognized for its positive influence with the Healthy Iowa Award and by being named a Fit-Friendly Worksite by the American Heart Association. Troester herself was the recipient of the 2015 Heart of HERO Award.The Health Enhancement Research Organization — a nonprofit dedicated to employee health management — assigns the award to an individual who has made an impact on multiple aspects of that person’s organization’s 42

Workƒorce | w o r k f o r c e . c o m

employee health management program as well as the surrounding community. She says the secret to her success is being proactive. “Oftentimes institutions spend a significant amount of time on managing chronic conditions when they really need to concentrate on the big picture of lowering risk in their at-risk population,”Troester said.

Collaboration Is Key To exert change in an organization as large as the University of Iowa, with just over 31,000 students, different departments had to work together on wellness. There was just no other way. Sibson Consulting, a benefits and HR consulting firm, conducted a study in 2011 into the value of a healthy campus, and the University of Iowa was one of 71 institutions of higher learning to participate. The firm’s research showed that there are three practices that lead to a successful wellness program, the first of which is strategic support. Having strong leadership from a program leader or committee helps increase the odds that a shared wellness vision can be achieved, the study found. And strong leadership is just what the liveWELL program had from the start. “I think it’s really important for us to look at it from a systems view,” Troester said. “How do we engage our partners and look for opportunities where all of us can benefit?” At the University of Iowa, engagement began from within. From its inception in 1999, the pilot program that would become liveWELL was based on an integrated model driven by HR that encompasses health services; disability assistance; long-term disability; organizational effectiveness; workers’ compensation; insurance provider relationships; safety; recreational services; environmental health; and risk management. Representatives from these departments formed a management advisory board tasked with developing goals and initiatives in the areas of behavioral health, healthy campus nutrition, physical activity and data management,Troester said. For example, as a result of the discussions, the Healthy Campus Nutrition Advisory Group was formed by the vice president of student services and the vice president of human resources in 2011. Together they developed an educational campaign focused on identifying foods that are low in fat and sodium and made with whole grains and fruit juice. Foods that meet these criteria are labeled with a UChoose label for easy identification. But having representatives from these different areas of HR make universitywide decisions was not enough. Employees needed a voice. “The other piece that we feel very strongly about is: How do we collaborate with our faculty and staff more directly?”Troester said. The first step was to create a wellness ambassador group composed of 130 volunteers who would serve as local champions for health and wellness within their department, Troester said. This grassroots effort allowed HR to f e b ru a ry

2016

PROFILE

Joni Troester says that when she returned to the University of Iowa in the late ’90s, she noticed many of the primary-care patients at the College of Medicine were employees of the university, so she decided to talk to human resources about launching a wellness initiative.

work collaboratively with employees on campus. In addition, the board created a 15-minute online personal health survey for employees to assess their current health status and develop goals going forward. In order to further engage with the employee population, three questions were added to the end of the survey so the board could collect information for planning purposes on an annual basis. These personal health assessments are the foundation of the liveWELL program and have been well-received by faculty and staff. According to the 2014 liveWELL yearend report, 73 percent of employees completed a personal health assessment that year, up from 61 percent in 2009. “It’s important for us to understand what our employees’ wants and interests are, not just where their health risks lie,” Troester said. “Our model is about using partnerships to gain leverage to really develop a culture of wellness at the University of Iowa.”

Value Vision Over Data As wonderful as a culture of wellness is, the same question looms large over any organization’s efforts to keep employees healthy:What’s the bottom-line value? Employers want to know that they are gaining something for their efforts and investments, and it typically comes down to money. Fortunately for Troester and her liveWELL program, she has a solid answer. A 2014 study of employee members in the University’s UIChoice health plan showed positive financial returns for those engaged in health and well-being services that year. Participants had lower adjusted average annual claim costs of $307.50.They also experienced a 7 percent lower health care cost trend overall from 2010 to 2013. For comparison, f e b ru a ry

2016

the U.S. Centers for Medicare and Medicaid Services anticipates out-of-pocket spending to increase to 5.7 percent by 2021. “I am very proud of the health and wellness services offered through human resources,” said Susan Buckley, vice president for human resources at the University of Iowa. “These programs have had a significant impact related to improved health and quality of life for our faculty and staff. Services have also contributed substantially to our health care cost containment efforts as demonstrated by a third consecutive year of zero percent health insurance premium increases.” As important as health cost reduction is to an organization, Troester is equally if not more proud of her efforts to keep her eye on the big picture. And in this case the big picture is the community beyond the university’s campus. The University of Iowa is pursuing a Blue Zones Worksite designation. The Blue Zones Project is an initiative by Healthways — a well-being improvement company — to turn communities into hotbeds of healthy choices. By hosting health fairs and generating awareness of the cause, the University of Iowa is building momentum for the cause in the Iowa City community as well as sharing practices that have worked to keep their employees happy. “I think that it’s all about looking at the big picture for important things that I can do to keep my focus on where we’re going in terms of our growth and development and how we can continue to innovate and achieve the kinds of results we have thus far,”Troester said. Sarah Sipek is a Workforce associate editor. To comment, email editors@workforce.com.

w o r k f o r c e . c o m | Workƒorce

SPECIAL REPORT

Recruitment Process Outsourcing

RPO World Keeps on Turning Companies are finding it tougher to lure top candidates, so many are turning to RPOs — on a global basis. By Sarah Fister Gale

he tight labor market may be a pain for companies strug- these vendors, including reductions in the time and cost of gling to hire hard-to-find talent, but it has been a boon recruiting and increased retention. “That has led to more strafor RPOs. tegic relationships,” she said. For years recruitment process outsourcing was viewed as a Companies are also beginning to understand the value of transactional service to help companies quickly attract and the more proactive hiring services, including social, mobile screen lots of recruits to fill low-level positions. But when and analytics tools that bolster their long-term recruiting the recession ended, and talent goals. LinkedIn Corp.’s “Global became harder to find, compaRecruiting Trends 2016” report nies started rethinking the role shows 59 percent of companies RPOs can play in the overall are investing more in their emrecruiting process. According to ployer brand compared with last research firm Aberdeen Group, year. “With the job market so fully 41 percent of companies tight, many companies are looksay they are using their RPOs ing for ways to get a leg up on to fill specific roles and job identifying talent and creating a families that are closely tied to differentiated candidate experiorganizational performance and ence,” said Stacey Cadigan, diproductivity, compared with rector at Information Services just 11 percent in 2011. Group, also known as ISG, a —STACEY CADIGAN, This shift in the talent marmarket intelligence firm in ketplace is changing the way cliScottsdale, Arizona. In response, INFORMATION SERVICES GROUP ents and RPO vendors work RPOs are expanding the sertogether, said Christine Nichlos, vices they offer to provide a CEO of People Science Inc., an RPO provider.“In the begin- more robust proactive recruiting deliverable. ning of the RPO industry, there wasn’t a lot of ‘talent’ in talent “We are seeing a lot more focus on front-end processes, acquisition,” she said.“It was more about taking work off their like attracting candidates, sourcing and building pipelines,” hands.” But companies are getting more educated about the Cadigan said. Her team has also seen increasing interest in services RPOs provide and the benefits they derive from proactive talent management services, like brand develop-

‘WITH THE JOB MARKET SO TIGHT, MANY COMPANIES ARE LOOKING FOR WAYS TO GET A LEG UP ON IDENTIFYING TALENT.’

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

HOT LIST Recruitment Process Outsourcing Providers Listed alphabetically; compiled by Joe Dixon; editors@workforce.com

Positions filled annually

Number of clients outsourcing end-to-end recruitment process to company

Number of clients outsourcing recruitment of all job classes to company

Able to blend recruiting of temporary staff and permanent staff on a single platform

Number of recruitment professionals on staff

ADP RPO rpo.adp.com

181,000

Yes

1,300

ALEXANDER MANN SOLUTIONS alexandermannsolutions. com

75,000

Would not disclose

Yes

3,000

CIELO cielotalent.com

130,000

130

Would not disclose

Yes

1,600

DECISION TOOLBOX dtoolbox.com

3,000

400

150

FUTURESTEP, A KORN FERRY CO. futurestep.com

35,000

Would not disclose

Yes

1,200*

HUDSON RPO hudsonrpo.com

14,000

Would not disclose

Yes

KELLY OUTSOURCING AND CONSULTING GROUP (KELLYOCG) kellyocg.com

49,946

Yes

668

PEOPLESCOUT peoplescout.com

250,000

Would not disclose

Yes

1,500

RANDSTAD SOURCERIGHT randstadsourceright.com

140,000

220

Yes

2,500

RESOURCE SOLUTIONS resourcesolutions.com

25,000

Yes

1,000

SEVEN STEP RPO sevensteprpo.com

30,000

Would not disclose

Yes

300

Would not disclose

Yes

450

Company name & Web address

WILSONHCG wilsonhcg.com

Source: Companies *Futurestep has 950 RPO workers Note: Accolo; Allegis Group; Aon Hewitt; IBM; ManpowerGroup Solutions; People Science; and Pontoon either did not respond or provide information by deadline.

f e b ru a ry

2016

w o r k f o r c e . c o m | WorkÆ&#x2019;orce

SPECIAL REPORT

Recruitment Process Outsourcing

DATA BANK More Investment Almost 6 out of 10 companies invested in RPO in 2014 compared with 4 out of 10 in 2012.

2012

2014

57%

Source: Aberdeen Group

Bigger Role Fewer companies are taking a selective approach to RPO strategy, and more are investing for a specific job role in mind.

60%

■ 2011 ■ 2012 ■ 2013

41%

38%

33% 27

23% 11% 12

Selective

Project-based

M&A CREATES GLOBAL GIANTS 11%

Role-based

Source: Aberdeen Group

Half-satisfied? Only about half of Co. said they were satisfied with the data they get from their RPO.

Source: Futurestep, a Korn Ferry company

Workƒorce | w o r k f o r c e . c o m

ment and building talent communities to build a pipeline of talent for future openings. “Companies are looking to RPOs to help them align recruiting with the company brand in an effort to attract higher-quality candidates with the right culture fit,” she said. That’s driving RPOs to roll out a host of new technologies and services to entice these clients, particularly around predictive analytics, branding and social recruiting tools. Such services are transforming the RPO model, but they are also giving companies a more holistic view of their recruiting needs and challenges, especially when it comes to branding, and helping companies understand what they can do to be more attractive to passive candidates. Many of the RPOs today, including Cielo, Futurestep, People Science and Randstad Sourceright have all made significant investments in analytics capabilities in recent years, along with social recruiting, branding and other technology tools to hasten the recruiting process. “Reporting and analytics is where we are seeing a lot of interest right now,” said Bob Lopes, president, RPO Americas, at Randstad Sourceright, a global RPO, which has invested heavily in its data analytics solution in recent years. “It’s not just transactional data, it’s what the data tells us that they value.” For example, if an open requisition to recruit is going to be difficult to fill, the analytics will tell them that on Day One rather than Day 90. “As our analytics capabilities mature, it is creating incredible transparency,” said Angela Hills, executive vice president and managing director of the RPO Cielo. “It’s allowing us to deepen our partnerships and focus more strategically on the future.”

All of these trends have driven steady growth in the RPO industry in recent years. In 2014, the industry grew 13 percent, pushing it over the $2 billion mark, and indicators suggest it will continue to expand at a projected rate of nearly 9 percent through 2018. But that isn’t all good news for RPO leaders. The steady growth rate has also spurred increased competition, with new players entering the market while existing RPOs are merging with or acquiring companies to rapidly expand their global footprint in areas such as Asia, Europe and Latin America to meet their clients’ global hiring needs. Indeed, the largest growth in the industry is now coming from Europe, the Middle East and Africa, and Asia-Pacific countries, which grew at 21 percent and 31 percent, respectively, in 2014 compared with just 6 percent growth in North America, according to research from Everest Group. That led to several acquisition deals in the past few years, including Seven Step RPOs’ 2014 acquisition of U.K.-based RPO BlueGlue; Wilson HCG’s 2015 acquisition of Head2Head, a Canadian recruitment services firm; and staffing solution provider, CDI Corp’s August 2015 announcement that it would acquire ScaleneWorks People Solutions, an RPO in India. And industry analysts expect 2016 to bring in a host of new global acquisition deals in this space. f e b ru a ry

2016

“Having a global reach is very important for RPOs right now,” Lopes said. “You need centers of excellence in all of these regions to prove to clients that you have global expertise and that you can integrate their global needs into your business model.” Cielo’s Hills agreed. “You have to understand the local market, the culture and the legal environment to do well in these markets,” she said. “You can’t achieve that through offshoring.” The industry has also seen acquisitions to expand its service offerings and technology capabilities, most notably Monster Worldwide’s 2014 acquisition of RPO TalentFusion, which brought together TalentFusion’s RPO expertise with Monster’s extensive infrastructure and social recruiting technology, to create a powerful position in the RPO space. Cadigan expects the acquisition trend to heat up in 2016, as RPOs rush to deliver a more robust portfolio of services. “RPOs are struggling with the need to be constantly innovative,” she said. These acquisitions will allow them to add new services to their lineups more quickly. Creating a rich service offering will be vital going forward, as these vendors are feeling pressure to differentiate themselves, particularly as 70 percent of total active RPO deals are expected to end in the next three years, according the Everest data. “Fierce competition is compelling market evolution: advanced pricing constructs and value-added services, including analytics, are coming into play, and service providers are expanding their capabilities across all types of hires to increase their market share,” the report said.

YOU GET WHAT YOU PAY FOR There is still a gap between what customers want and what they will pay for. Even with all the new technology and strategic service offerings, the transition of the industry from recruiter to partner is far from complete, Cadigan said. “Clients are still looking for scale, speed and low-cost solutions from their RPO providers,” she said. “That trend will continue for a while.” They also still rely on more traditional RPO metrics, such as time to hire, source of hire and the quality of the candidate pool, to judge the success of their RPO relationships even as they transition to more strategic forward-looking services. While these are all rel-

RPO continued on page 49 f e b ru a ry

2016

RPO: Help or Hindrance? By Heather A. Jackson and Daniel R. Saeedi Do your managers or human resources professionals have the time and expertise to identify and recruit needed talent for your organization? Would a professional recruiter be able to streamline the recruitment process to allow managers to focus on your company’s core business? If you answered “yes” to either of these questions, you might want to consider looking outside your organization for help on the recruiting front. Specifically, you might consider outsourcing all or part of your hiring to a recruitment process outsourcing provider. But, before you try to identify or contract with an appropriate RPO provider, here are some factors that you might want to consider. Cost savings. Employers look to RPO providers for meeting recruiting needs primarily to reduce costs. Employers that have expended large amounts of money on temporary employee leasing, headhunters or job boards may want to consider an RPO provider as an alternative. In addition, RPO providers use a streamlined process, and allow candidates to be identified and screened in a more consistent, cost-effective and timely manner. Fewer administrative tasks. Does recruiting and interviewing take time away from your company’s core business? Are employees with important skills spending time reviewing résumés or interviewing candidates? Use of an RPO provider for search and recruitment processes allows HR professionals to focus on current employees rather than searching for potential future employees. And it allows managers to focus their time and resources on the core of your business. Finding candidates. Internal hiring managers may be under pressure to get a new hire into a position while at the same time balancing both their own and the vacant position’s workload. In light of this pressure, internal hiring managers might not take adequate time to assess large volumes of résumés or to consider whether the new hire will be a proper and long-term fit for the position. Because RPO providers possess recruiting expertise, they generally increase candidate quality for employers. Ramping up quickly. Does your company need to hire 1,000 new employees within the next week because of a holiday shopping rush? Does your company need to quickly identify a team of new employees with a certain skill set? Use of an RPO provider may allow an employer to meet those needs in a targeted and cost-effective manner. If you don’t have all or most of the needs identified above, perhaps an RPO provider is not for you. But even if an RPO provider initially appears to present an appropriate solution for your hiring needs, you should still consider and anticipate possible negative effects on your organization as well as how to best coordinate internal and external hiring functions. Some other food for thought: Ramifications of outsourcing recruitment on managers and employees. Even if you determine that an RPO provider is right for you, you should consider how it will affect your managers and employees. How will they react? Will they be open to new hires selected outside the organization? Consider the pitfalls in advance, and make sure to include and coordinate internal managers and employees into the process. Contractual disputes with an RPO provider. Key to a functioning relationship between an employer and an RPO provider is a clearly defined set of contractual rights and expectations, known in the industry as a service-level agreement, or SLA. Because an RPO provider is being used, SLAs need to clearly define agreed-upon expectations, goals and roles to avoid less-than-optimal results. SLAs also can be the source of legal disputes. These issues should be considered by an employer before using an RPO provider. Heather A. Jackson and Daniel R. Saeedi are lawyers in the employment group in the Chicago office of Taft, Stettinius & Hollister. To comment, email editors@workforce.com.

w o r k f o r c e . c o m | Workƒorce

PAIN continued from page 31 Industry adopted a rule establishing criteria for long-term opioid treatment that also said medical marijuana is not an illegal substance for injured workers under state law. The U.S. Food and Drug Administration has not yet approved marijuana for any medical condition, so it’s difficult to compare its effects with other drugs used in workers’ compensation. However, physicians specializing in the treatment of addiction, such as Dr. Damon Raskin, a Los Angeles-based internist, realize marijuana carries a somewhat lowered health risk to users than opioids. “Although marijuana can be helpful for pain in some cases, there is no good scientific evidence backing this up, and more research needs to be done,” Raskin said. “Of course marijuana is safer than opiates in that there is no risk of respiratory suppression and death, but still has addiction potential.” And in an article in the Journal of the American Medical Association in June 2015, Dr. Amy Thompson states that, “so far, evidence suggests that marijuana may be an effective treatment for chronic pain, neuropathic pain and muscle spasms due to multiple sclerosis or paraplegia.” The issue has even made its way to the New Mexico state court of appeals. An appellate court judge sided with physicians who supported the use of medical marijuana when opioids failed to relieve the chronic pain of an injured worker. Until marijuana receives legal status in the United States, it will be difficult to make a case that its use is reasonable and necessary for workplace pains. Until that time, physicians such as Raskin and Volkow urge colleagues and employers alike to remember that there are pain-fighting options with little addiction potential. “Much better alternatives for pain include nonsteroidal anti-inflammatory drugs, nerve blockers, and other medicines including anti-seizure drugs and antidepressants which have pain-relieving properties,” Raskin said. “Physical therapy, massage and acupuncture all have roles to reduce pain in work-related injuries. Marijuana may have a role in the future for chronic pain, but a lot more research needs to be done.” A 2015 Healthentic study on the cost of painkiller abuse on U.S. companies found that for pain related to common workplace injuries such as soft-tissue injuries such as bruises and musculoskeletal problems that affect muscles, bones and joints, opioids are no more effective at reducing pain than over-the-counter alternatives such as Tylenol, Advil or generic ibuprofen. “At the end of the day, we believe zero workplace incidents is the only ethically responsible target,” said the National Safety Council’s Hersman during a news conference.“We have a duty to protect employees from harming themselves and harming others.”

EQUAL WAGES continued from page 35 Sullivan’s advisers’ livelihood depends on how much new business they bring in and how successful they are at managing existing clients’ investments.The firm bases pay and promotions on those financial metrics, which are relatively easy to track. “If women are performing equally well as men, they’ll be compensated equally well,” said Martine Lellis, the firm’s chief operating officer. Lellis credits Sullivan’s top management for creating a culture that recognizes and rewards people based on merit. The three founders still active at the 25-year-old firm — the fourth, a woman, has retired — are committed to fairness in everything from hiring practices and promotions to compensation and annual reviews. “That takes us away from the culture of hoarding clients and creates more of a collaborative, collegial environment,” she said. As the firm’s COO, Lellis manages hiring, a process that includes putting a prospect in front of an interview committee composed of male and female employees at all levels. Candidates must analyze and write about an investment case study, work that Lellis and several other advisers review, though she declined to say whether job applicants’ names were redacted to avoid any bias. “The point is, I’m getting input from people who haven’t met the interviewee in person, so they look at it from a different angle,” she said. Everyone who interviews a candidate or reads their work is part of a debriefing session, and gives input on whether the person should be hired. Lellis said the system works, and as proof points to employees’ tenure: an overall average of 9.35 years for women and 9.94 years for men, and for financial advisers, 16 years for women and 17 years for men. Sullivan isn’t an anomaly. In general, the pay gap between the sexes is relatively smaller in financial advisory firms than the national average. Female advisers who are not firm owners earn 86 cents for every $1 male advisers earn compared with the national average of 81 cents, according to a November 2015 report from Investment News. The pay gap varies by job type, with women in lower-level service adviser and support adviser jobs equaling or surpassing their male counterparts after three to 10 years of experience, according to the report.Women in higher-level financial adviser jobs were worse off, with median earnings lagging their male counterparts by 5 percent after eight to 10 years, and 6 percent after 20 to 30 years, according to the report. Lellis agrees that the numbers, though promising, could be better. If there’s still a gap, “There’s still a problem we need to work on,” she said.

Sarah Sipek is Workforce associate editor. To comment, email editors@workforce.com.

Michelle V. Rafter is a Workforce contributing editor. To comment, email editors@workforce.com.

Workƒorce | w o r k f o r c e . c o m

f e b ru a ry

2016

RPO continued from page 47 evant statistics, they don’t factor in long-term planning and more qualitative measures such as brand perception. And while companies are drawn to the idea of talent communities, branding and predictive analytics, they still expect a transactional payment model. “They like the idea of investing in the future, but they want to pay per hire,” Hills said. “It is a disconnect that requires more education.” Though these old perceptions are changing. Lopes noted that he has seen more clients purchasing end-to-end RPO services, in which the entire recruitment process is outsourced to the RPO than they have in the past, and he expects the trend to continue as these clients get more comfortable with RPO as a full recruiting service provider, and not just a stopgap measure. “It is part of the maturity curve,” he said. “Buyers become more familiar with RPOs, and they like having the abil-

ity to scale recruiting up and down to meet their needs.” When companies and RPOs can get past the transactional relationship to develop deep strategic partnerships, they can generate real business benefits, but it will only happen if RPOs can quantify that value. That means that, along with rolling out new services, they have to define clear measures of success, Cadigan said. “The better you can quantify business impact, the easier it will be for clients to prove the benefit of these relationships to the organization.” People Science’s Nichlos agreed. “To affect change, we have to be able to tie recruiting to productivity,” she said. “And metrics are the only way to do it.” Sarah Fister Gale is a writer based in the Chicago area. To comment, email editors@ workforce.com.

ADVERTISING SALES Clifford Capone Vice President, Group Publisher

312-676-9900 ext. 201 ccapone@workforce.com

Derek Graham

Regional Sales Manager 312-676-9900 ext. 240

dgraham@workforce.com

AL, AR, DE, FL, GA, IA, IL, IN, KS, KY, LA, MD, MI, MN, MO, MS, NC, ND, NE, OH, OK, SC, SD, TN, TX, VA, WI, WV, District of Columbia, Ontario, Manitoba, Saskatchewan

Marc Katz

Regional Sales Manager

415-722-4673 mkatz@workforce.com

AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY, British Columbia and Albertaa

Daniella Weinberg Regional Sales Manager

917-627-1125 dweinberg@workforce.com CT, MA, MD, ME, NH, NJ, NY, PA, RI, VT, Quebec, New Brunswick, Newfoundland, Europe

ADVERTISERS’ INDEX Advertisers/URLs Page

Advertisers/URLs Page

CLO Accelerator 27 CLOaccelerator.com CLO Breakfast Club 6 events.clomedia.com/breakfast-club CLO Learning Elite 13 events.CLOmedia.com/gala CLO Spring Symposium 18, 19 CLOsymposium.com/spring Human Capital Media 3rd Cover humancapitalmedia.com/speakers Saba Back Cover www.saba.com/Workforce-eBook SHRM 3 annual.shrm.org/workforce

SHRM 5 shrmcertification.org/apply/workforce Workforce Digital Edition 23 workforce-digital.com Workforce Focus 21 workforce.com/focus-oe Workforce Live 2nd Cover events.workforce.com/live Workforce Live Spring Speakers 15 events.workforce.com/live Workforce Webinars 7 workforce.com/webinars

Advertising: For advertising information, write to sales@workforce.com. Back Issues: For all requests, including bulk issue orders, please visit our website at Workforce.com/products or email hcmalerts@e-circ.net. Editorial: To submit an article for publication, go to Workforce.com/contribute/ submission-guidelines. Letters to the editor may be sent to editors@workforce.com.

f e b ru a ry

2016

List Rental: Contact Mike Rovello at (402) 836-5639 or hcmlistrentalsinfogroup.com. Permissions and Article Reprints: No part of Workforce can be reproduced without written permission. All permissions to republish or distribute content from Workforce can be obtained through PARS International. For single article reprints in quantities of 250 and above and e-prints for Web posting, please contact PARS International at MediaTecReprints@parsintl.com.

Subscription Services: All orders, inquiries and address changes should be addressed to Workforce P.O. Box 8712 Lowell, MA 01853 or call customer service at (800) 422-2681, email us at hcmalerts@e-circ.net or visit Workforce.com/subscribe.

Melanie Lee Business Administraion Manager 510-834-0100, ext. 231 mlee@workforce.com

Nick Safir Lead Generation Adminstrator 510-834-0100, ext. 227 nsafir@workforce.com

Please provide both the old and new address as printed on the last label at least six weeks before the change. The first copy of a new subscription will be mailed within eight weeks of receipt of order. Missing issues must be claimed within six months after publication. Subscriptions are free to qualified individuals within the U.S. and Canada. Nonqualified paid subscriptions are available for $199 annually for 12 issues. All countries outside the U.S. and Canada must be prepaid in U.S. funds with an additional $33 postage surcharge. Single copy price is $29.99.

w o r k f o r c e . c o m | Workƒorce

LAST WORD

Rick Bell

‘BIG ARISTOTLE’ ANALYSIS ON LEADERSHIP

can’t explain it. I have no idea why one relatively innocuous quote on leadership from someone decidedly not from the pantheon of history’s deepest thinkers has stuck with me for the past half-decade. The quote bubbles up from time to time, like when a new book on the next great leadership trend crosses my desk, or I ponder how on earth people could consider Donald Trump as their next president. And while there’s nothing wrong with this quote that runs on my continuous mental loop, I feel like it’s time to fish out a fresh pearl of wisdom, find that inspired rallying cry urging others to achieve the unachievable, ooze with greatness, push beyond their potential. There are thousands of deep, insightful quotes on leadership from the most brilliant thinkers in history. Jefferson (Thomas, not George), Gandhi, MLK Jr., Patton, Carnegie. I’ve also seen some powerful speakers in person. Ronald Reagan on a presidential campaign stop; and leadership gurus Jack Welch, Carly Fiorina and Colin Powell at various conferences. You’d think there would be some takeaway to be taken away. Instead I’m left with my lone leadership nugget, which wasn’t exhorted in the heat of battle by a bloodied warrior or thoughtfully penned into the memoirs of a wizened captain of industry. Whom do I turn to when I need to re-up my leadership game? I draw my inspiration from … Shaquille O’Neal. Yep, the “Big Aristotle” himself. A 7-foot-1, 325-pound former pro basketball player, current TV purveyor of Gold Bond medicated body powder and Icy Hot patches, uttered the most memorable quote on leadership I have ever heard: “When the general is calm, the troops are calm.” Shaq made that nine-word pronouncement in his role as a TV analyst during the halftime show of a forgettable NBA game several years back. I don’t even remember the context of the conversation. But he said it. And it was important enough for me to remember. Not surprisingly, after checking several top 100 lists of the greatest leadership quotes of all time, Shaq’s didn’t make it. Hard to believe, I know. Yet it holds steady at Numero Uno on Rick Bell’s Leadership Hit List.Why? Again, I have no clue. Call it the “It’s a Small World” ear candy of pithy leadership quotes. And let’s quickly analyze Shaq Daddy’s take on leadership. Like music, an air of calm can soothe the savage beast — or in our case a roomful of employees — and bring a sense of order when chaos has the potential to break out around us. Whether it’s a basketball arena with 20,000 amped-up fans, a hospital emergency room, a frenetic call center or even a quiet cube farm, we look to our leaders for guid-

Workƒorce | w o r k f o r c e . c o m

ance on how to feel and act in any given situation. I have a wall of business books in my office; among them are probably a dozen that directly tackle leadership, and plenty of others that touch on it. Leafing through several books, I find that experience is the thread that ties them together. Legendary football coach Vince Lombardi once said that leaders aren’t born, they’re made. Then again, how often have you heard that so-and-so is a born leader? You can argue both sides of this debate, but just like a book can only offer insight and perspective on leadership, you aren’t born with experience, and experience isn’t taught in a classroom. I mean, think about your maiden voyage as a leader.There was no single moment that defined my style of management. I just knew I didn’t want to be like one boss early in my career who had a mean streak and a reputation for tossing

THERE ARE THOUSANDS OF DEEP, INSIGHTFUL QUOTES ON LEADERSHIP FROM THE MOST BRILLIANT THINKERS IN HISTORY — BUT NONE STICKS IN MY MIND LIKE SHAQ’S. typewriters when he was angry. Still, I was bad at being a boss my first time out and improved — I hope — as I gained experience. The point is, just like there are thousands of quotes and entire books from brilliant minds regarding leadership, there is no single way to lead people. A calming presence may work for some employees, while others thrive by working under a 24/7 cheerleader, and still others find inspiration in an intellectual. As much as leaders need to know what pushes their people’s buttons, they also must carry it through with conviction. I’m sure the fact that Shaq’s leadership quote is the one that I remember most speaks volumes about me. After thinking it over, I don’t need a new mantra. If a hoops philosopher like the Big Aristotle gets the job done by calming the troops, then I’ll leave that quote looping in my brain. It has yet to lead me astray. Rick Bell is Workforce’s editorial director. To comment, email editors@workforce.com.

f e b ru a ry

2016

of U.S. adults are looking to

leave their jobs.

What are YOU going to do about it? The No. 1 reason for leaving is seeking more growth and development opportunities. Give employees a reason to stay … introducing the newest eBook from Saba:

More Impact in Less Time: The Essential Guide to Career Development and Coaching Discover how and why it’s time to update your employee development programs and learn 5 strategies for success.

Download your free eBook

www.saba.com/Workforce-eBook Source: Saba Retention and Leadership Survey Conducted by Harris Poll, Harris Interactive/Nielson Study, Dec. 2014.

www.saba.com

© 2016 Saba Software, Inc. All rights reserved. Saba, the Saba logo, and the marks relating to Saba products and services referenced herein are either trademarks or registered trademarks of Saba Software, Inc. or its affiliates. All other trademarks are the property of their respective owners.