COVER HRM 12 :may09
www.hrmreport.com • Q3 2009
It hasn’t always been fun and games at Mattel. Alan Kaye explains why people are at the heart of the company’s latest chapter
PLUS: DREAMWORKS ANIMATION • RECREATIONAL EQUIPMENT • DEVON ENERGY • NETAPP • DOW CHEMICAL • WACHOVIA
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ED NOTE HRM12:jun09
Editor’s note 3
Give it to me straight Even now, honesty is the best policy.
ost people remember the point in Disney’s Bambi where the lovable fawn’s mother is killed by hunters. For my own mother it was a childhood experience so harrowing that when we first sat down to watch the movie together, she did her best to distract me as the shocking event approached. On the face of it, it was an entirely admirable thing to do. We all want to protect those we care about. Unvarnished reality can often be upsetting, even in children’s movies. No one needs to be told that times are tough right now. We’re experiencing record levels of unemployment and even previously bulletproof industries are slashing headcounts with little warning. Employees everywhere are justifiably concerned about what the future holds and it falls to HR to reassure them. But the temptation to gloss over difficult truths must be resisted at all costs. Most
“There’s a lot of passion in our organization, which is a big part of how we built this culture.” Alan Kaye, SVP of HR Mattel (page 26)
HR professionals presumably try to hire bright and competent people. If you attempt to sell these people the line that everything is fine when it isn’t, your credibility could quickly go the way of the economy. Trust remains one of the most valuable commodities leaders possess. Once it is eroded, it is very difficult to rebuild. Additionally, if HR leaders fail to step in and tell people what is really going on, the rumor mill will take up the slack. News that travels over this unofficial network has the uncomfortable tendency to mutate and multiply, branching out into a huge range of potential scenarios that often have little connection with reality. This wild speculation further unsettles a workforce that is already racked with uncertainty. In our current situation, organizations need to be getting the best out of their people in order to stay competitive. Employees who live in constant fear that the Sword of
Damocles is hanging over their heads are unlikely to be giving 100 percent. I recently watched Steven Spielberg’s ET with my young niece. Like my mother’s memories of Bambi, I recalled the scene where the titular alien seemingly died as being almost impossibly upsetting. But rather than attempt to distract my niece, I just let her take it in. While I’d be lying if I said she wasn’t a little taken aback by what she saw, any long-term impact was imperceptible. If anything, the temporary discomfort only made the film’s conclusion that much more uplifting. The lesson is clear. It is far better to confront unpleasant realities head on than attempt to brush them under the carpet.
“What’s been created since DreamWorks Animation was founded is an environment where people can come and really be inspired to do their best work.” Dan Satterthwaite, Head of HR DreamWorks Animation (page 36)
“As a leader, one of the roles that I have to demonstrate is balancing the responsibilities of my position with personal growth and fun.” Michelle Clements, SVP HR Recreational Equipment (page 90)
Huw Thomas Editor
CONTENTS HRM12:july09 02/07/2009 09:07 Page 4
44 Life at the top NetApp’s Gwen McDonald on what its like to be the best in the business
Playing for keeps Mattel’s Alan Kaye describes the serious business of HR at the world’s biggest toy company
90 Perfect balance Michelle Clements tells HRM’s Matt Buttell about the balancing act of human resources
State of the art Dan Satterthwaite on how DreamWorks Animation became the movie industry’s happiest workplace
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CONTENTS HRM12:july09 02/07/2009 09:07 Page 6
86 Going the distance
58 EXECUTIVE INTERVIEWS 54 David Nosal, Nosal Partners 112 Thomas Mahoney, ITA Group Inc. 130 Lane Nelson, Harris Data
PROJECT FOCUS 110 Deborah Hernandez, Univers
56 Face Off
96 Check the oil
Differing opinions on the future of healthcare
How HR practices in the oil and gas industry can remain successful
72 Hidden talent Peter Cheese explains why HR’s role in talent management operations has never been so important
HRM speaks to Norma Jean Knollenberg about what the IMA is doing to increase Corporate America’s use of incentives
80 Going the distance USDLA President John Flores tells us about the current trends in distance learning
48 Healthy returns
84 Teaching 2.0
Dow Chemical’s Dr Cathy Baase tells HRM about the company’s industry-leading wellness provision
The US Department of Education’s latest report, marked as a milestone in the search to validate the online learning environment, provides some interesting findings
52 State of emergency Bob Smith on the staffing crisis in the emergency response industry and how recognition could help to turn the tide
100 Just a little something
86 New valuation How is the business of recognition evolving? HRM sat down with Recognition Professionals International President Lisa Massiello to find out
104 Feel the benefit HRM takes a look at some of the best – and most unique – perks being offered across the nation
ASK THE EXPERT 70 Wendell Laidley, New Media Learning 128 Christopher Novak, netMEDIA
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CONTENTS HRM12:july09 02/07/2009 09:07 Page 8
108 Honest motives?
102 Matt Davies, Nike
Who really benefits from incentives in a tough business environment?
IN THE BACK
ROUNDTABLE DISCUSSIONS 58 Wellness 120 Time & Attendance
According to a recent IRF report, budget constraints mean that incentive travel programs are likely to be altered.
116 Coming attractions Forresterâ€™s Paul Hamerman takes a look at the key tech trends impacting HR today
124 Search and rescue Peter Felix tells us how the executive search industry has been impacted by the recession and looks at how the markets are now shaping up
136 Working life 138 Holding out for hero 140 The optimist 141 The shock of the new 143 In review 144 Final Word: John Buckley, Health Fairs Direct
132 The power of equality Tackling discrimination is a round the clock job and has major implications for the health an entire organization, says Tim Mazur
State of emergency
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UPFRONT HRM 6:nov08
SICK OF IT With the H1N1 virus now a global pandemic, companies and employees are beginning to take some commonsense precautions.
ON JUNE 11, 2009, in response to the ongoing global spread of the novel influenza A (H1N1) virus, the World Health Organization (WHO) raised the worldwide pandemic alert level to Phase 6, designating that a global pandemic is underway. With more than 70 countries now reporting cases of human infection with H1N1 (commonly referred to as swine flu), the WHO des-
ignation reflects the fact that cases, more hospitalizations there are now ongoing commuand more deaths associated nity level outbreaks in with this pandemic in multiple parts of the coming weeks More than world. and months. In the US Furthermore, specifically, most there is a risk are reporting people who have that the virus cases of human infection with become ill with the could cause sigH1N1 virus have recovered nificant illness in without requiring medical the fall and winter treatment. However, the CDC anmonths, which is characterized ticipates that there will be more as the US influenza season.
UPFRONT HRM 6:nov08
Upfront 13 well be too late to work out Every manager who has what to do. been watching the news reTo address this risk, comcently is probably already panies need to monitor the doing the same exercise in situation very closely, paying his or her head: ‘What parts particular attention to govof the business must we ernment and WHO advice, as keep running no matter well as examining and what? Do we need to set amending their existing panlimits on travel? Is it practidemic, business continuity cal to have people working and crisis management plans from home?’ Many compaaccordingly. nies already have continAnd according to the CDC, gency plans hanging at this point, employers around from the SARS and should be urging workavian flu outbreaks of ers to wash their 2003 and 2006, so hands often and are now busily At the peak of a severe keep their workdusting them pandemic, up to spaces as germoff and bringfree as ing them up to possible. And, if date so they are may be absent from work they feel sick, applicable to the stay at home. This latest pandemic. isn’t the time for that There are lots of mentality of coming in to work parallels between avian flu ‘no matter what’. and this current outbreak, However, therein lies a fursuch as the fact that they ther challenge. In this econoboth started in a foreign my, many people are fearful of country where many losing their jobs if they stay at Americans travel to, both home. The tight economy also are highly contagious, and means that if employers don’t both carry symptoms that offer to pay workers on sick are hard to distinguish (at days they will feel forced to least initially) from those of come into work instead of a homegrown virus. staying home to get better or Pandemics can escalate to take care of a sick child. quickly (in just five weeks But no matter how careful the number of cases by the the preparation, some comCDC had risen from 109 to panies could lose business as over 21,000 confirmed or a result of a pandemic, and suspected cases), and many this may force employers to organizations believe that, consider making employees at the peak of a severe panredundant. Employers should demic, up to 75 percent of ensure that they consider potheir workforce may be abtential redundancies very sent from work. What’s carefully, and tryng to avoid more, those employers relyany claims for unfair dising on their existing disaster missal. In the meantime, howrecovery plans could be in a ever, the advice is simple: for a nasty shock, as once stay calm, don’t panic – and employees are diagnosed plan ahead. with pandemic flu it may
For HR professionals, this threat poses a number of issues. However, forward planning can help, no matter how unpredictable a pandemic might be. But, unlike other disaster recovery programs that focus on dealing with a short, sharp shock, such as a terrorist attack, flu planning needs to take account of the changed ways of working that may last for months.
US HUMAN (confirmed and probable) cases of H1N1 infection Source: CDC CASES STATE (DEATHS)
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7 8 9 10
1300 Massachusetts (24)
UPFRONT HRM 6:nov08
LIGHTS, CAMERA, ACTION! IN 2009, the economy is on well above the North American everyone’s mind. With retail motion picture exhibition indussales down and unemployment try 2007 average of 6.5 per lorising, this year is proving to cation. The company also offers be a challenge for everyone. many gift-giving options that fit However, Regal Entertainment every budget: no matter the ocGroup (REG) is proud to procasion, Regal gift cards are the vide Americans an escape to perfect gift every time; they are the movies. With a summer full good for admissions and conof blockbuster films such as cessions; there are no hidden Transformers: fees and they never Revenge of the expire. Regal gift REG Fallen, Harry cards are availboasts and average of Potter and the able at any REG
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FROM THE VAULT Back in issue 10 of HRM, we spoke exclusively to FedEx’s JUDY EDGE, who told us how – despite the company being a global entity – it still manages to excel on people and performance. “AT FedEx, our people are our greatest asset. We truly believe that,” she told us. “Our founder and CEO rooted the company in this philosophy and we continue to stand by it. To read the article in full, access an entire archive of past issues and subscribe to the magazine, please visit www.hrmreport.com
RECOGNITION FOR HR AT THE ANNUAL American Business Awards, HR professionals at three organizations have received awards that honor great performances in business. The awards, which include three HR categories (Human Resources Team of the Year, Human Resources Executive of the Year, and Human Resources Department of the Year), made worthy winners out of the Air National Guard Recruiting and Retention Program (Arlington, VA), Russell J. Campanello of Phase Forward, Inc. (Waltham,
MA), and King’s Daughters Medical Center (Ashland, KY), respectively. Overall, more than 2600 entries were submitted for this year's American Business Awards and more than 200 executives nationwide participated in judging to determine this year’s finalists and winners. Other finalists included resepected companies such as Accenture and Legacy Health Systems, and noted individuals such as Eleni Antoniou, Director of Human Resources at High Performance Technologies, Inc based in Reston, VA.
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UPFRONT HRM 6:nov08
Upfront 16 CONTROL FREAK OR BOUNDARY SETTER? The HR representative is often confronted with the issues created by ‘control freaks’in the course of their work.Those who have experienced seriously controlling behavior from others often feel trapped. Frequently, companies will lose potentially valuable employees because they see no other option to escaping the demeaning and disrespectful behavior of the ‘control freak’. In order not to lose credibility, it is important that the ‘coach’do his or her homework. Examine the complaints carefully to determine whether this is a poor performer attempting to shift blame to his or her boss by making it about bad leadership. Real control freaks rarely explain themselves, often escalate their behavior over time, have no concern for others, and are brutal and disrespectful of the other person in their need to get their way. If, under careful examination, the complaints about controlling behavior are determined to be valid and excessive, the next step is to understand the mindset of the control freak. Controlling behavior is usually inspired by fear. The controlling person has learned through experience not to trust others. They may come off like a bully who does not care about the impact of their behavior, but they usually care more than you might suspect about opinions of others. There are two thrusts to successfully helping the control freak. The first is to help them to ‘feel’what others feel about them. Remember that they are so consumed with their own need for control that they rarely empathize with the effect on others. Part of their behavior is driven by a need to ‘look good’as it affects their numbers and their own performance. Demeaning others is often a means of making him or her self look good, powerful, in control. Reminding them that their behavior is making them look out of control, petty, and mean-spirited will often get their attention. The second focal point for helping the control freak is to help them identify healthy boundary settings in order to control their fear. This is where your skill in listening and responding is key. You must identify what the person fears, and then help to minimize that fear. If the fear is that others do not treat their contribution with respect, for example, help the person to identify what he or she can do that would be more productive to gaining respect. Other fears often include: others are getting more attention, more perks, more freedom, more recognition, bigger budgets, or anything that is symbolic of status. Again, help the person identify what he or she wants, and then discuss healthy (vs destructive) ways to achieve their goals. Toni Lynn Chinoy coaches senior executives in Fortune 500. Her company, Harlan-Evans, Inc., also does leadership training as well as large, cost effective leadership initiatives throughout the organization to help leaders learn the difference between accommodating unnecessary weaknesses, versus strong, effective responses www.harlanevans.com
TONI LYNN CHINOY
UPFRONT HRM 6:nov08
ON JUNE 10 of this year, Treasury Secretary Timothy Geithner proposed a series of changes to how companies determine executive compensation. Among them was allowing shareholders to have a nonbinding vote on executive compensation and an effort to reduce incentives that result in executives taking excessive risks. Specifically, the administration wants companies to replace short-term bonus plans with more long-term incentive plans, such as granting restricted stock. If passed into law, these proposals could mark a massive change for financial services firms in particular, which largely rely on mammoth annual bonuses to recruit and retain talent.
FAST FACT Since December 2007, payroll employment has fallen by
THE DEEP FREEZE A JUNE SURVEY conducted by Watson Wyatt, a worldwide consulting firm, which questioned HR professionals from 179 employers across America, has found that 62 percent of organizations that have inplemented hiring freezes and 69 percent of those that have made salary freezes plan to eliminate them within the next 12 months. In addition, according to the report, 48 percent of respondents that have reduced their employer 401(k)/403(b) matches, plan to reinstate them in the same timeframe. Still, it’s not all
good news, as some other critical changes made during of the economic downturn will continue: 20 percent will keep freezes in place, and another 20 percent are unsure of their future. And nearly 46 percent of respondents said they have no plans to reverse the increases in the percentage that employees now pay for healthcare premiums. Other findings included 82 percent of respondents saying they will only reverse hiring freezes on a partial basis, and retain them for some locations or positions. Meanwhile, 78 percent of those who expect to reverse a salary freeze said they will do so for all employees, and 78 percent of those who expect to reverse a salary reduction will restore salaries to original levels.
SPEND, SPEND, SPEND
But Thomas Keebler, leader of Towers Perrin’s global HR Function Effectiveness Practice in Philadelphia, said he was pleasantly TOWERS PERRIN, a global firm specializing in surprised by the study’s findings. In fact, he arhuman capital and risk management, recently gues that many of his clients view HR technoloreleased a report suggesting that, despite the gy as a way to drive efficiencies they need to global recession, HR technology spending meet other, broader cost-reduction tarcontinues to be holding up surprisinggets. It is a sentiment mirrored by ly well. In the report, nearly twoNearly the report’s findings, which sugthirds of surveyed companies gest that only 11 percent of the were going to increase their incompanies polled reported a vestment in HR technology in of companies plan cut in their 2009 HR technology 2009 or keep their spending at to increase investbudget by more than 20 percent, ment in HR similar levels as the year before. while 25 percent said they expect Roughly one in three of the comto cut 20 percent or less. panies surveyed expect to decrease Still, while the cutbacks aren’t as severe as spending, however. And, while experts agree this is encourag- some had feared, this doesn’t mean cost isn’t on the minds of business leaders. Compared to a ing news for HR software suppliers and their clients, they also note that certain segments of year earlier, cost jumped three-fold as an HRthe market, especially those that don’t require service-delivery concern – from nine to 24 percent, with talent and performance management a significant capital investment, are clearly systems topping the list of concerns. doing better than others.
UPFRONT HRM 6:nov08
SPRING FORWARDS, FALL BACKWARDS – LITERALLY NEW RESEARCH has found that workplace accidents spike after clocks ‘spring forward’ in March. It is suspected that the lack of sleep is manifested in negative ways on the Monday following the time change and that educating employees about the risk – and considering the possibility of staggering atarting hours – could help. According the to report by two researchers at Michigan State University, the impact on workers is much greater than just being groggy from losing sleep, and the change can cause a significant increase in workplace accidents. Using 24 years of data from the US Department of Labor’s Mine Safety and Health Administration, the researchers found that workplace accidents spike on the Monday after daylight-saving time changes in the spring.
When compared to every other day of the year, the first workday after daylight-saving time resulted in 40 minutes less sleep for American workers, leading to a 5.7 percent increase in workplace accidents and nearly 68 percent more work days lost to injuries, the study shows. In fact, the data found no ill effects of daylight-saving time in November, when Americans move their clocks back an hour, and typically gain about an hour of sleep. The report also recommends that employers keep in mind that sleep deprivation can affect company drivers, causing road accidents, according to two studies. The US National Highway Traffic Safety Administration reported a 17 percent increase in accidents on the Monday following daylight-saving time, while the Canadian Ministry of Transport reported an eight percent increase in the risk of accidents.
THE NEW RECRUIT netMEDIA, A LEADING PROVIDER of e-recruitpanies to invest in our technology.” ment solutions to global companies, has comThe netMEDIA eRecruitment Solution is pleted it’s most successful Sales Quarter ever, designed to manage the entire recruiting and with a total software revenue of $16.8 million. hiring process for large, multinational orga“Despite what has been an exnizations, the solution streamlining tremely difficult selling environevery recruiting process, resulting netMEDIA has completed it’s ment, we have continued to in lower overall recruiting costs most successful increase our customer base and and a much more productive reSales Quarter ever, revenues by over 25 percent,” cruiting organization. Designed with a total of commented Chris Novak, by HR executives from the netMEDIA’s VP of Sales. "We help world's leading companies, the global organizations recruit, hire and netMEDIA eRecruitment Solution is a retain their number 1 asset: their workfully integrated, self-configurable talent force. Ensuring that they can efficiently source management system that bridges the gap beand hire qualified candidates, at a time when tween sourcing new talent and retaining your their recruiters are receiving a high-volume of re- top performers. sumes for each job opening, has compelled com- For more information, please visit www.netmedia1.com
AS THE RECESSION rolls on, and Obama invests to create more jobs, we take a look at current unemployment rates across America, state-by-state.
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Puerto Rico 9.2% Mississippi 7.9% Alaska 7% Michigan 6.8% South Carolina 6.5% Kentucky 5.5%
7 8 9= 9=
District of Columbia 5.3% Illinois 5.1% Rhode Island 5.1%
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UPFRONT HRM 6:nov08
In Australia, at leading telecommunications companyTelstra, after the departure of belligerent chief executive SolTrujillo, new CEO David Thodey has apparently signalled a more conciliatory approach to employee relations in an email sent to members of staff. According to the Communications, Electrical, Plumbing Union,Thodey wrote that the company would commence ‘good-faith bargaining’and begin to negotiate new enterprise agreements from July 1. “Our aim is to reach a new enterprise agreement that is equitable for bothTelstra and our employees.We are committed to treating you and your bargaining representatives with respect, and we will be consulting withTelstra unions ahead of the formal bargaining process,” the promise read.
Policies similar to those proposed for the US to create more green jobs are already underway in Spain. However, according to new governmental reports they are not providing the positive results the had initially been hoped for. In fact, in Spain, the unemployment rate is now at 18 percent and for every green job created, 2.2 jobs are lost. In addition, evidence shows the cost of creating the green jobs is no bargain either, a mere $774,000 per green job ‘created’.
A clothes shop in Lodz, central Poland, is especially looking for Jehovah’s Witnesses to be shop assistants. While HR consultants at the store, insist the decision is based on the fact it is because Jehovah’s Witnesses are notoriously honest, reliable and hardworking, Izabela Pilzys from HR Partners has said the move is nothing short of discrimination. Meanwhile others are saying that seeking and judging employees by their religious orientation is a breach of the Labor Code and other articles in the Polish Constitution.
Australian Council of Trade Unions Secretary Jeff Lawrence said that the statement showed that workers must always be treated with respect and that the decision by Telstra management was long overdue and an admission that the aggressive and confrontational strategy of the previous management had been a dismal failure.
Gabriel Calzada, an economics professor at King Juan Carlos University, who authored a report on Spain’s green jobs initiatives added that “the loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices”.
However, in retaliation, the head of the store denies this saying, “we used to have an employee who was a Jehovah’s Witness who proved to be an excellent worker. He could manage to convince anyone to buy something in our shop.” He even goes as far as to call the move ‘selection, not discrimination’.
UPFRONT HRM 6:nov08
Upfront INTERNATIONAL NEWS
MAKING THE CUT According to a recent survey from the British Safety Council (BSC), in the UK, over half of those businesses making cutbacks this year say that bosses’ bonuses will be the first to go before health and safety management. However, the results of the survey are not all good news as the recession is having a significant effect on health and safety in the workplace, which could put lives at risk. According to reports, one in 10 workers are now fearful of raising concerns about Health and Safety issues in the current economic climate. And one in 12 workers feels under pressure from their boss to take risks with people’s safety in order to save money. With one person a day in the UK dying in the workplace this is a real cause for concern.
O CANADA May saw unemployment in Canada rise by 0.4 percent to 8.4 percent, the highest in 11 years, according to reports from Statistics Canada. This reflected an increase in unemployment of 42,000 – with manufacturing in Ontario hardest hit. 363,000 jobs have been lost since the peak in the job market last October. However, Manitoba, Nova Scotia and Saskatchewan had job increases over the month. Seasonally adjusted, unemployment rates for each province vary from 15.1 percent in Newfoundland and Labrador to 4.6 percent in Manitoba. Other findings include Ontario 9.4 percent, Saskatchewan 4.9 percent and British Columbia 7.6 percent. Ken Georgetti, president of the Canadian Labour Congress said: “We have now lost 406,000 fulltime jobs since October 2008, and 1.55 million Canadians are unemployed. Forecasts are that the unemployment rate will continue to increase over the next 12 months and a lot of Canadians without work will be left to fend for themselves.
PERFECT PARTNERS The Chinese government issued a circular earlier this year urging universities to strengthen their efforts in preparing students for the workplace, while in Britain, the government has set up its own internship scheme to help graduates find work during the recession. Now a series of partnerships have been set up between institutions in the two nations to determine exactly what employers want. In the scheme, universities are encouraged to exchange ideas and develop programs aimed at improving the entrepreneurship and employability of graduates. And, among other points, the findings suggest that employers in both countries put a great emphasis on leadership qualities and initiative – things that are learned through the activities students engage in and the responsibilities they take on during their time at university.
UPFRONT HRM 6:nov08
Upfront 22 BEST FOOT FORWARD In contrast to major rivals like Nike and Reebok, New Balance still makes approximately 25 percent of its shoes domestically, an approach the firm’s forthright CEO ROB DEMARTINI feels has contributed significantly to its success over the last decade. But while New Balance faces unique challenges in domestic manufacturing, it remains undaunted. Here, DeMartini explains the secrets behind the firm’s trendbucking success. Maintainingadomesticmanufacturingbaseissoimportanttousbecause therearereallythreemainthingsthatwegetoutofit.Thefirstisitbuildsour knowledgeofthemanufacturingprocess,andinanindustrythatisprimarily drivenbysharedmanufacturingwefeelitgivesusabetterunderstanding andenablesustoworkwithourpartnersbetter.Thesecondisthatit’sanimportantaspectofthecompanyculture,andgivesusasignificantsenseof pride.Intheearly1980swhenmanufacturersstartedtoleavetheUSmarketplace,wemaintainedapresencehereandIthinkit’sbecomeanimportant definitionofwhoweareasacompany.Andthenthethirdareaisthatthere aresomeconsumersforwhomthe‘MadeintheUSA’labelmakesadifference.It’sauniquebranddifferentiator,andwetakeadvantageofthat. Theaveragetenureinourfactoriesisupwardsof20yearsofexperience, andwehavesomuchstabilitythatwehaven’thadtoreplacethatworkforceinsometime.Butwedothinkthatwe’refairlywellknownintheareas wherethefactoriesare,andwheneverwedohaveopeningswe’reableto attracttalentedpeoplequickly.Andgiventheexperiencealreadythere, we’reabletotrainthosenewhireswithpeoplewhohavebeendoingitfora longtime.Itallowsustopassontheexperienceandtheknowledgethat they’vegained. NewBalancehasbeenusing‘lean’forabout10years,andwecontinueto investinit.Whatwefindmostproductiveaboutitisthatitputsproblem solvingdirectlyontothemanufacturingfloorinthehandsoftheassociates thatdothework.Theyworkinteams,they’recross-trainedtobeabletosupporteachother,andasaresultwe’vebeenabletodriveproductivityupdramatically.Wealsothinkthat’sabigreasonwhyourstaffretentionissogood: becauseinsteadofsupervisorstellingthemhowtofixproblems,we’veused theleansystemtoteachworkershowtosolvetheproblemsthemselvesand howtoworkinteamstoproducebetterresults. We’vealreadygotaverytenuredandexperiencedorganizationthat’smakingshoesandusingleanmanufacturing.Whatwe’redoingnowistryingto findotherpartsoftheoperationtoimporttheleansysteminto,becauseit’s beensuchaneye-openerandabetterwaytosolveproblems.Historically,it’s beenthoughtofasamanufacturingfloorprogram,andwe’renowbringing itintotheoffice.Forinstance,wehaveaprograminplacethat’sgoingto takeaboutfourweeksofleadtimeoutofthesupplychainfrominsidetheoffice,notonthemanufacturingfloor.Wealsohaveapilotlookingattheproduction-planningportion,andwe’veseenasgoodaresultthereaswedid onthemanufacturingfloor.Sowe’regettingmoreandmoreexcitedabout exportingthatleantechnologyintoallaspectsofthebusiness. For more on New Balance you can read the full version of this interview via HRM’s sister publication Business Management, which can be viewed at www.busmanagement.com
IN MY VIEW
UPFRONT HRM 6:nov08
Upfront WHAT’S NEW
It’s really a win-win for NBC, experts say. If O’Brien is a hit, they win; MAY 29 2009 MARKED Jay Leno’s if he fails, he’s tainted and is less last time hosting NBC’s flagship valuable to the competition. But program The Tonight Show. On while this succession plan is a bit Monday, June 1, Conan O’Brien re- different than replacing a CEO or placed Leno. While this story may other high-ranking official at a corseem like something out of the poration, there are similarities. pages of US Weekly, experts are Succession plans in any company saying that the late-night comedy can be difficult business. Only about transition can teach HR executives 20 percent of succession plans go a lot about succession planning. smoothly, another 20 percent fail From a talent-retention permiserably and the remaining 60 perspective, the succession plan cent are somewhere in the middle. looks great. In 2004, O’Brien was Experts note that sometimes, sought after by other networks leaders don’t like to let go, somelooking to lure the increasingly times they can’t transfer that relapopular late-night star away, and tionship equity and they feel so put him on at 11:30 pm against good about what they’ve done Leno; in the end, however, the now they don’t want the next person to 46-year-old signed a deal with be better – and sometimes, the NBC because the television comnext person in can’t really find pany promised him that, in 2009, their footing. The Tonight Show would be his. With regard to Leno, this is The network even kept Leno, even more critical given the evi59, out of the competition’s dence of his last succession plan hands by offering him a show at in the early 1990s. Back then, 10 pm every weeknight. NBC Leno engaged with rival host seemed to get the best of both David Letterman in a well-docuworlds in the succession, an area mented battle that included backmany companies struggle in, esroom deals and Leno even hiding pecially with older employees in a closet during a meeting of now delaying retirement. NBC executives.
A SIMPLE PREDICTION AS REPORTED in a recent WSJ article, Google has developed an algorithm designed to identify which of its 20,000 employees are most likely to quit. According to the article, Google recently developed the algorithm, which uses data from employee pay and promotion histories as well as performance reviews, to
help get inside people’s heads even before they know they might leave. Google’s algorithm works by looking at factors like promotion and pay histories, performance appraisals and other kinds of HR and non-HR elements that haven’t traditionally been used in these sorts of programs.
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UPFRONT HRM 6:nov08
THE TOOLS TO REWARD THESE DAYS practicality is always appreciated, and with thousands of home improvement items and tons of know-how, The Home Depot, the world’s largest home improvement specialty retailer, is helping customers do more; and by leveraging the power of The Home Depot brand employers can now create a successful rewards, motivation or incentive program for their organization. The Home Depot Corporate Gift card is now available, enabling organization with a powerful tool to motivate the salesforce to achieve weekly, monthly or annual goals; reward factory production workforces for achievements in productivity, safety or performance; send a meaningful ‘thank you’ to customers to show appreciation for their business; use as a prize for fundraising or charity efforts; or offer as a gift for anniversaries, birthdays and as bonuses throughout the year. The Home Depot is also offering customers assistance in putting together a strong program, as a dedicated sales representative will you with everything, including access to The Home Depot logo for all of your advertising communications. In addition, The Home Depot promises to work with organizations to get fast approvals for all materials. Other benefits include, multiple payment options, volume discounts for large orders, flexible credit amounts ranging from five dollars to $5000 per card, no fees and no expiration dates, free UPS shipping and the ability to redeem the card at more than 2100 locations in the US and Canada. For more information please visit www.homedepotgiftcard.com
array of information and resources to help employers plan, build, promote and assess interTHE CDC has unveiled a new website deventions to combat obesity and information on signed to help employers address obesity. how employers can estimate ROI, a measure of The website, entitled LEANWorks! (LEAN the cost of an intervention compared to the exmeaning Leading Employees to Activity and pected financial return of the intervention. Nutrition) has been identified as a scienceTo road test the site, CDC visited select embased intervention that works to prevent and ployers to identify promising worksite obesity control obesity. prevention and control practices, and subAccording to William Dietz, sequently the website now offers case Identified director of CDC’s Division of studies from some of those busias a science-based Nutrition, Physical Activity, nesses to provide examples of sucand Obesity, “CDC cessful worksite obesity LEANWorks! provides the prevention programs. that works to prevent and control tools that employers need to “Workplace obesity prevenobesity take action.” In additon, the tion programs can be an effective website provides a variety of reway for employers to reduce obesity sources to employers including an obesity and lower their health care costs, lower absencost-calculator where employers can input teeism and increase employee productivity,” employee demographic data to estimate the says Dietz. “Employers may also see other intotal costs associated with obesity and deterdirect benefits when they implement these mine annual obesity-related medical costs for programs such as improved employee morale, their organizations. increased worker retention and improved reAs well as this, the website includes an cruitment of new employees.”
WEB 2.UH-0H ACCORDING TO A NEW SURVEY from the Conference Board, social networking continues to explode in popularity, with 43 percent of the online community using such sites, up from 27 percent one year ago. However, the report also found that, with about one-quarter of social networkers logging on at work, the workplace has become something of a dividing line with respect to social networking. The survey, which found that 60 percent of business executives believe they have a right to know how employees portray themselves and their organizations in online social networks, also found that the workers disagree – with 53 percent saying their social-networking pages are
not an employer’s concern. This mind-set is especially prevalent among younger workers, with 63 percent of 18 to 34 year olds stating employers have no business monitoring their online activity. That said, employees appear to have a clear understanding of the risks involved in using online social networks, as nearly three-quarters believe such activities make it easier to damage a company’s reputation. Even so, only 17 percent of executives surveyed say they have programs in place to monitor and mitigate the possible reputational risks related to the use of social networks, while less than one-quarter have formal policies on the medium’s use among their own employees. Interestingly, nearly half (49 percent) of employees said defined guidelines will not change their behavior online.
UPFRONT HRM 6:nov08
Upfront COMPANY INDEX
JUST A PHASE A RECENT SURVEY by a leading, global HR consulting and outsourcing company has shown that an increasing number of US employers are considering implementing phased retirement programs to address an impending talent shortage as a quarter of the workforce nears retirement age. The survey, which asked over 140 medium-size and large employers, found that 55 percent of respondents had already evaluated the impact of potential retirements on their organization; while 61 percent had or would develop special programs aimed at retaining targeted, near-retirement employees. The survey also found that only 21 percent
considered that phased retirement was critical to their company's HR strategy given the current state of the talent pool. However, this concern tripled to 61 percent when they looked ahead five years. Further, as more boomes retire, employers will be losing key talent at a time when attracting and retaining skilled workers will be more important than ever; at the same time, rising medical costs, lengthening life spans and the declining prevalence of traditional pension and retiree medical benefits mean that employees will either have to work longer, save more or live with significantly less than they are accustomed to. As these trends converge, as the study predicts, phased retirement programs will continue to become more attractive options for both employers and employees, by providing employers with new ways to retain critical talent and, at the same time, help employees meet their needs.
44 LIFE AT THE TOP Gwen McDonald on what its like to be the best in the business
COMPANY INDEX Q3 2009 Companies in this issue are indexed to the first page of the article in which each is mentioned. Accenture 12, 72 AESC 124 Arizona State University 85 Associate of Executive Search Consultants 104 Association of Public Safety Communications Officials 52 Athabasca University 79 Bass Pro Shops 7 Best Buy 109 BMC Software Inc. 04 BSC 12 Careington 43 CDC 12 Ceridian 58, 60, 138 Chesapeake Energy Corporation 104 Conference Board 12 CoreHealth Technologies 58, 64 CSU Global Campus 84 David Weekley Homes 104 Devon Energy 96 Disney Institute 95 DOOR USA 11 Dow Chemical 48 DreamWorks Animation 36 Drexel University 76 eBay 136 EBSCO 74 Eli Lilly 104 eni 57, 58 Ethics and Compliance Association 132 Everest University 89 Facebook 12, 108 Fairmont Hotels & Resorts 23, 115 FedEx 12 Ford Motor Co 104
Forrester Research 116 Fort Dearborn 30 Fortune 12, 44, 90 Frost & Sullivan 142 Genentech 104 Google 12, 136 Harlan Evans, Inc. 12 Harris Data 130, 131 Health Fairs Direct 47, 144, IBC Herman Miller 136 Home Depot 19, 24 HR Partners 12 IBM 26 IMA 100 Infor 120, 123 Inlumen Inc. 104 IRF 114 ITA Group Inc. 112, 113 JM Smucker 104 King Juan Carlos University 12 Kohl’s 107 Legacy Health Systems 12 Mattel 26 MHS Inc 9 Microsoft 136 National Association for Ambulatory Care 56 NBC 12 NetApp 44 netMEDIA 18, 128, 129 NetXert Inc 119 New Balance 12 New Media Learning 70, 71 Nike 102, 103 Northwestern University 140 Nosal Partners 54, 55
NOVAtime Solutions 5, 120, 121 Online Rewards 99 PeopleSoft 116 Performance Management Company 83 Principle Wellness Company 58, 62 PricewaterhouseCoopers 104 Quicken Loans 104 Raffles Hotels & Resorts 23, 115 Reebok 12 Regal Entertainment Group 14, 15 Regonition Professionals International 86 REI 90 Right Management Inc. 104 SAP 116 SC Johnson & Son 104, 136 Sisterson & Co. LLP 104 Successories 2 Sun Microsystems 104 Super Human Resources Comics 138 Swissôtel Hotels & Resorts 23, 115 Telstra 12 The Colorado Promise 84 Timberland 104 Top Brands 100 Towers Perrin 12 Twitter 108 UMR 35 UnitedHealthcare IFC, 58, 68, OBC Univers 110, 111 USDLA 80 USDOE 84 Wall Street Journal 12 Watson Wyatt Worldwide 12 Worthington Industries 104 Zappos.com 136
72 HIDDEN TALENT Peter Cheese on why HR’s role in talent management has never been so important
THE POWER OF EQUALITY Tim Mazur on tackling discrimination for the greater good of the entire organization
Playing for keeps Mattel’s Alan Kaye tells Huw Thomas that managing HR at the world’s biggest toy company isn’t all fun and games.
“Let me tell you a story.”
If you speak with Mattel’s SVP of HR Alan Kaye for any length of time, it’s a phrase you’re going to hear quite often. After decades in the business, with a 12-year stint at IBM preceding his time at Mattel, Kaye is a true HR veteran. He’s picked up a few things over the course of his working life and he sets them out in stories and anecdotes. He jokingly apologizes as he launches into his third or fourth tale over the course of our interview, but there really is no need for any excuses. What these stories reveal is a passionate and committed HR man, someone whose professional experiences are seamlessly intertwined with the narrative of his life. Our interview takes place in Kaye’s office, a place with ample reminders of what makes Mattel tick. Dominating the wall is a series of pictures of happy, smiling children.This, argues Kaye, sums up the culture that the company aims to promote. “When I recruit at a very senior level there are a lot of skill sets we’re looking for,” he says. “But if we can get people into our company who have in their heart the desire to put smiles on kids’faces, we’re starting with the right stuff.”
a lot of passion in our organization, which is a big part of how we built this culture” “There’s
INTERNAL AFFAIRS How Mattel’s people defined the company’s values Mattel operates by what we call our Play Values. These are “Play with passion, play fair, play together, and play to grow.” How we got those really illustrates the way we work. At one of our leadership development classes in Arizona we had about 30 middle management people for three-and-a-half days. On the last day, Bob Eckert and the senior team traditionally show up to ask the class various questions and have a discussion. It’s usually a good end for the program, which is almost like a three-and-a-half-day MBA. This is maybe the second year of us doing this and it’s a very good class. On the final day we walk in and all 30 are sitting there in matching t-shirts that they had designed and printed. Remember they’ve only been together for a few days and they’re in a place where none of them work. For them to be able to do that in a different location and to get that together to be united after such a short time was pretty striking. So as Bob Eckert stood in the front of the room and began, one of the participants stood up and said, “Mr. Eckert, we’ve loved this class. We’ve really bonded as a group, and we know you’re trying to improve the organization. We have some suggestions for you.” They went through a number of things, but one of them was, “You know, we don’t know if our values really tell the story of our company.” So Bob asks the group, “Okay, tell me what are our values?” We had some very nice values, which I had personally written and were very well thought out, but no one in the room could repeat them. That wasn’t good. So the group said, “We would like the senior team to try to get together and come up with some values that really epitomize who Mattel is.” But Bob turned and looked at them, and he said, “No, you’re going to do it. It’s got to come from you.” And he said, “This class isn’t over. Four months from now is our officer’s meeting, and I want a new set of values by then, and you guys are doing it. I give you permission to get together and meet. Here’s your executive contact, and I want it presented to me a month before the meeting.” This team went out, 30 executives from all over the world and they did surveys and interviews throughout the corporation. A few months later they came back with these Play Values, and we were so impressed that we got them out to the entire corporation. This was seven or eight years ago, and to this day people talk in these values. We all know them. We have shirts, the bracelets, everything. From an HR standpoint it’s one of the things I am most proud of. This didn’t come from HR. This didn’t come from senior management. This came from the organization.
But smiles haven’t always been in such ready supply at Mattel. Around the turn of the millennium, the organization hit a thoroughly rocky patch with its acquisition of The Learning Company. Made at the height of the dotcom bubble, the $3.8 billion takeover has gone down in infamy. Rather than delivering the expected big profits, The Learning Company quickly became a millstone around the neck of its parent company, knocking about 75 percent off its stock price. The fallout led to turmoil in the boardroom with the CEO and much of the executive management being forced to resign. But as difficult as these times were, it is also possible to perceive the moment when Mattel truly began to change as a company. The arrival of current CEO Bob Eckert in 2000 had a galvanising effect across the entire organization, and HR was no exception. For Kaye, it was clear from the first meeting that Eckert was going to make a big difference. “When we hired Bob Eckert from Kraft, the board brought him in and asked him, ‘Who do you want to see inside the company?’” Kaye recounts. “His answer was, ‘I only want to see the head of HR. I want to understand the culture.’” Eckert had been at Kraft for 23 years of his career and had gone all the way up to President. Kaye was fascinated by Eckert’s interest in HR and the way his career had progressed. He wanted to get a handle on the man. “So I went to visit the head of HR from Kraft,” Kaye continues. “I flew out to Chicago to sit down to understand what culture Bob was coming from, to understand what his transition was going to be like. I was kept waiting for about five or 10 minutes, and the HR guy came out and apologized for the delay. Now, in Mattel, in those days, somebody might wait until 10:45 for an interview that was scheduled at 10:00 so it wasn’t a big issue to me. It was to him. He told me he was talking to a new Vice President and I said, ‘Oh, that’s great.’And he said, ‘No, you don’t understand. This is one of the first Vice Presidents we’ve brought in from the outside since I’ve been here.’He had been at Kraft for 33 years. Immediately, I understood where Bob was coming from. At Mattel maybe 60 percent of our placements were from the outside, and we needed to turn it around to be a shop that developed people from the inside. This leadership development has been a big key.” Since Eckert’s arrival, the way Mattel approaches employee development has changed beyond all recognition. “We do very active, ro-
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bust succession planning,” says Kaye. “We do it right up to the board level. The board gets very much involved with our succession planning, and it has become a case of only bringing people in from outside once in a while. We have really become that kind of development house. We have a solid group of executives and a solid group of executives underneath that, and so on right down the line.”
Significant developments Key to Mattel’s efforts to promote from within has been its Leadership Development Center. “It’s actually a global program,” explains Kaye. We have a center here in El Segundo in Southern California, but we also roll these classes out throughout the world, and we bring in management, we bring in cross-functional management and cross-silo management from all over. Some of these classes are truly global classes.” Once again, CEO Bob Eckert has been a key player in this initiative. “He actually sponsors one class a year where he’s in the class with 20 to 30 exec-
utives going through whatever the mission of the class might be,” says Kaye. “We also do a global leadership class, where we bring in people from all over the world. We ran that for a few years at Thunderbird University, which is probably the best-known international management school in the US.” Kaye tells us that these programs have proved extremely popular with Mattel’s people, as evidenced by the responses to the organization’s regular employee surveys. “By the time the next survey came along, the writein comments were, ‘How do I get in?’ and that’s what we wanted to create. We’ve now been doing this for nine years, and people have really gotten to know each other through these programs.” Culture is a term that Kaye keeps returning to. For a company like Mattel, which markets its products to children and families, the concept of living your values is particularly important. Because of the global reach of toys like Barbie, Hot Wheels and the Fisher Price range, Mattel’s people often end up acting as ambassadors for the brand even outside of working hours. Tell somebody you work for a big bank, an auto manu-
DRESS TO IMPRESS
Mattel’s party atmosphere I happen to be a big LA Lakers fan. I was going to go to the game one night, and I had to bring my Laker clothes to change into, and I said, “You know, I shouldn’t be changing into my Laker team shirt. We’re in LA. I should be able to wear it if I want. And why just me?” So I just took the initiative, wrote a little letter to all employees and said, “Tomorrow is Laker Day!” This was about 3:00PM in the afternoon on Thursday when we put it out. We have 2500 people just in this campus. By Friday, a majority of them were either wearing Laker gear, their own team colors or purple and gold. We had a costume contest in the cafeteria where people were just amazing, especially in our design center. One woman showed up with 10-foot wings that said “Kobe Bryant” on each wing and purple hair down to her back. Also, Halloween is big for us. The building is just decked out. Families take their kids out of school, and the kids all come in, and every floor has trick-or-treat. In my office, we used to set up some coffins outside, a real scary environment, and it’s just a wonderful place to be with the kids running around for trick-or-treat and costume contests. It’s a huge event for us here as well as at our other locations, so that’s a fun time. So we do those kind of things and in our culture that’s what we need to do.
facturer or an oil company and that will often be the end of the conversation. Tell somebody that you work for the company that made their favorite childhood playthings and, chances are, the reaction will be quite different. “It becomes a discussion point,” says Kaye. “It’s usually met with a smile.The fact that you work for a toy company that’s been around for a long time and is so well known usually engenders some positive feelings and a discussion. That is what our employees face, and I or management or the company really want that discussion to be something that our employees can be proud of, and I think they are at this point.” While Kaye admits that a large part of the company’s family friendly culture flows naturally from the fact that Mattel makes toys rather than weapons or medical devices, a great deal of effort needs to go
into maintaining and promoting it, particularly in a globally dispersed workforce. One thing is key: any cultural efforts need to be fully backed by senior management. “You can’t just do it from the senior HR job,” says Kaye. “You have to do it with the entire senior team because if line management is not in this with you, it will be very visible to employees, and what you’re trying to do will just be a ‘flavor of the month.’ I think I’ve been very lucky, especially over the last nine years with our current senior team.”
What’s the incentive? Recognizing and incentivizing employees has become an increasingly important part of business in recent times. At Mattel, one of the main spokes is
DECADES AT PLAY Highlights from the Mattel history book 1959
The first Barbie doll is released
The Hot Wheels toy car range is launched and Barbie gets her first African-American friend, Christie
1945 Set up by Ruth and Elliot Handler, initially in a Southern California garage workshop
1978 Mattel Children’s Foundation is established to provide support for children’s charities
1986 Acquisition of Hong-Kong based ARCO Industries and beginning of joint venture with Japanese toy company Bandai
an annual bonus system based on company performance. “We have driven this annual bonus system pretty much through the organization,” says Kaye. “For the most part all of our professionals around the world are involved in a bonus system that says you get paid on how the overall company does.” Tying the awards to the organization’s performance brings a number of benefits. “There is this forced interest in how Mattel is doing as a company,” Kaye continues. “We try to communicate that whether you’re in India or China or here at headquarters. The second piece is about how your unit does and then the third piece of our annual bonus arrangement is how you individually do, and we drive that low into the organization.” Aside from straight monetary motivation, Mattel also rewards it people in more unorthodox ways, such as the concept of ‘Rave Reviews.’ “Say
someone invites my assistant to participate in a charitable campaign that Mattel is running, and he or she really helps put this thing together, then they can give my assistant something we call ‘Kudos,’” Kaye explains. “It’s a recognition that goes to my assistant and automatically to her manager. It gives her a free Coke in the commissary or a cookie or something like that. It’s just a little thing, but it’s recognition that can be given throughout the company from anyone to anyone else. It has really caught on and each organization will give out various Kudos Awards. Once a quarter we would pull people’s names from various jars, and they might get a designer Barbie, a hotel trip or something like that. Anybody who has gotten a Rave Review in that quarter is eligible to win a prize at our quarterly update.”
2003 Receives Corporate Responsibility Award from US Fund for unicef
1998 Announces $25 million gift to UCLA Children’s Hospital
1993 Merger with Fisher-Price
2000 Comes under new leadership and sells The Learning Company
2002 Celebrates 50th Anniversary
Richard Dickson from Mattel, Fashion Designer Karl Lagerfeld and Sarah Colette attend the Barbie 50th Anniversary in Paris, France
Donates $4 million in toys, clothes and books to victims of Hurricane Katrina
Unfortunately, HR can’t all be about prizes and presents, particularly at a point in history when every day brings news of fresh corporate layoffs. “These are difficult times and all organizations are looking within themselves to see how they can streamline, and where their economies of scale are,” Kaye concedes. “Bonuses aren’t the biggest these years, so how do you survive in these economic times? “Unfortunately, in all organizations you have to look at reduction in force. You have to look at people maybe working less hours than they’d want to work. You have to look at our factories not being on three shifts, but two shifts. Things like that are all difficult decisions to make. We’re fortunate that we have a strong enough culture to be able to say, ‘Yes, we’re in difficult times. We need to get through this together, and there need to be some sacrifices for the good of the whole.’ I think that it’s gotten us through some very tough times in the last two years. As long as we communicate well in the purpose and reason for these things, that positions us well this year and as we look to the future. I think our people are behind us.” In many cases it’s easy to take pronouncements like ‘our people are behind us’ with a pinch of salt, but in Mattel’s case, there is strong evidence that it’s not just talk. Kaye tells of how, after the installation of Bob Eckert and the new management team, one of their first actions was to undertake Mattel Inc. offices in El Segundo, California
Photo by David McNew/Getty Images
a comprehensive employee survey. “One of the things that surprised both us and the survey company is we had something like plus-80 percent participation rate in this survey,” he says. “People had a lot to say. People wanted to express their opinions. They wanted to be involved. We’ve done a number of surveys since then, and that participation rate has only gone up. So that’s been really good. We really think we have a handle on what our employees are feeling, what the issues are, and we try to deal with those issues. We try to put in action plans, and as a senior team we follow up on those action plans to see what’s being done, and then we measure it the next time around.” After spending some time in his company, not even the most hardhearted cynic could doubt Kaye’s sincerity regarding the company and people he represents. He is justifiably proud of the way Mattel has reinvented itself as an organization since the turn of the century and seems intent on continuing the good work. He tells one last story about how those at the company identify with the products they create, but he could quite easily be talking about himself. “It’s not even a brand strategy. It’s a brand passion,” he says. “For the people who work for Barbie and on Barbie she’s not quite living, but she’s close to it. There’s a lot of passion in our organization, which is a big part of how we built this culture.”
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Dan Satterthwaite ed:feb08
of the art
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DreamWorks Animation’s Dan Satterthwaite tells HRM how the studio became the movie industry’s best workplace.
he relationship between the technical and the creative lies at the very heart of DreamWorks Animation’s success. The technology that brings life to Shrek and Kung Fu Panda wouldn’t look out of place in a NASA command center, yet it would be just so much machinery without the input of the writers, artists and designers who dream up characters and the worlds they inhabit. For Head of HR Dan Satterthwaite, maintaining the symbiotic relationship between art and science is a major spoke of his daily life at DreamWorks Animation. Happily, it is a task to which he is well suited. In his previous role, as global head of HR for movie rental company Blockbuster, Satterthwaite tackled challenges that ably prepared him for his current position. “In the last three years or so of my time at Blockbuster we began growing a very strong internet selling and renting videos online element to compete with Netflix,” he tells us when we speak with him from DreamWorks Animation’s Glendale, California HQ. “When we were building the online business we built it from scratch and we kept it away from the larger core business. What really got me excited about that was the magic that can be created when you bring very technical and very creative people together to build a business. “In that context, it was web developers and engineers and business people coming together in a very entrepreneurial way to create a new business and try to compete in the market. That marriage of very technical and very creative folks was really, really interesting to me. I was involved in developing that business for around two years. And then I got a phone call from a recruiter doing a search for the Head of Human Resources at DreamWorks Animation.” Seeing the potential for this new role to build on his work at Blockbuster and impressed by the working environment at the studio, Satterthwaite jumped at the chance.
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The DreamWorks camp
DAN SATTERTHWAITE 38
Since Satterthwaite came on board in 2007, DreamWorks Animation’s reputation as a good place to work has been steadily building. With its high pressure, 24/7 requirements and frequently hyper-competitive atmosphere, the movie industry rarely troubles the upper reaches of the job satisfaction charts. This makes the animator’s entry into the 2009 edition of Fortune’s Best Places to Work list, the only movie studio to crack the top 100, particularly impressive. Quizzed on the connection between DreamWorks Animation’s recent chart success and his involvement with the organization, Satterthwaite steadfastly refuses to take too much credit. “I think probably first and foremost it’s the work,” he says. “There are some incredibly exciting projects going on right now, and quite honestly whether people are working directly on one of our films or they are supporting people who work on those things, we share work in progress across the whole studio. There’s a chance
Dan Satterthwaite ed:feb08
for people to see what’s going on, and there’s a level of excitement associated with that. Plus, we stand for cool, fun, families entertainment. Lots of our employees have family of their own and friends who have kids, so there’s a certain pride that comes along with being a company that stands for family and family entertainment. The content that we put out there is unlike that of any other studio.” Satterthwaite also points to an extensive range of perks and benefits and the pleasure of working on the absurdly photogenic DreamWorks Animation campus. “Even Jeffrey (Katzenberg, CEO) still talks about the fact that he pinches himself when he drives in the gate,” he continues. “It’s just a truly amazing place to spend your time.” Satterthwaite is clear that collaboration right across the organization is one of the most important factors in the studio’s success. “It also goes
How food, fun and games keep DreamWorks Animation’s people productive “We have a commissary, both at this studio and the one up north, and we serve free breakfast and lunch to all employees every day, so there’s almost unlimited access to free food. We have a Starbucks on campus here in Glendale, which is very helpful, especially for people who are coming in early and working late, which many of our folks do to get our projects out on time. We have a game room set up where people can go in and play pool or video games. We’ve got table-tennis tables and foosball tables on campus where people who are on a break or waiting for their shots to render, can go out and play a round of table-tennis. We also do lunchtime screenings of current release films as well as a huge list of other weekly events just to get people re-energized for the afternoon. For example, today is Shrek: The Musical day. The show has been going strong for the last year plus, and recently won a Tony Award. Because it’s only playing in New York most of our employees haven’t had a chance to go and see it. We encourage them to, but that’s a long trip. So we’re bringing people into the theater and showing them some footage from the show. It’ll be the first time that most people have seen these performances, so it’ll be really exciting.”
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COMING SOON The next big priorities for HR at DreamWorks Animation “We’ve got a large HR systems implementation and we’re automating a lot of manual processes today and streamlining a bunch of things on the HR front. We’ve grown so rapidly in terms of the size of the workforce, over 60 percent in the last four years. The infrastructure side just hasn’t kept up with that growth, so a lot of processes remain somewhat manual in nature, and we’re auditing a lot of those. There’s a sizable project going on right now that’ll be finished up this year to automate a range of things that we do. We’re also building a new management development program to really grow the next phase of leadership here at the studio. Again, that’s the outgrowth of our rapid expansion, needing to make sure that we’ve got a solid foundation of leaders and managers in place, and we’re doing that both through a combination of hiring people from the outside as
Sutton Foster, Daniel Breaker and Brian d'Arcy James perform with the cast of Shrek the musical onstage during the 63rd Annual Tony Awards at Radio City Music Hall on June 7, 2009.
well as developing people internally. That’s a big emphasis for us right now. And strategically as a business we’re growing and building our franchises. In the past we would release two theatrical films a year along with the DVD releases that would follow. Now we’ve built capacity to be able to issue five theatrical releases every two years, in addition to doing television specials and things like the Broadway show. We need to help everybody think through and manage that change and understand that where previously they might have spent 18 months on one project and then spent the next 18 months on a second project, they might need to work on a number of projects simultaneously. From an HR standpoint that’s got a lot of challenges and it takes quite a bit of time to get through that kind of change. But it’s all change for the good; it’s about growth.”
Dan Satterthwaite ed:feb08
(Left to right) Jeffrey Katzenberg, Steven Spielberg, and David Geffen hold a press conference in Los Angeles to announce the formation of DreamWorks SKG studio. back to the creative work and the innovation that’s done here,” he says. “Filmmaking is a very, very collaborative process, and to collaborate effectively people need to be able to interact fluidly and visually with each other.” Providing employees with the opportunity to take meals and socialize together is a great help in building close relationships, but it doesn’t stop there. DreamWorks Animation has also partnered with HP to build a state-of-the-art telepresence system linking the campus in Glendale with its sister facility in Redwood City. These communication systems don’t come cheap, a fact that underlines the genuine value the organization places on collaboration. With a number of different projects under way at any given moment, there is a risk that DreamWorks Animation could break down into virtual silos, a series of teams that rarely interacts. Such a situation would not be good for the organization, so special care is taken to ensure that everybody knows what the entire company is doing. “It’s incredibly important for artists on a particular film to see what another project is working on,” Satterthwaite explains. “For example, an artist who is working on How to Train Your Dragon isn’t going have a whole lot of exposure to how the story is developing or how the visuals are developing on Shrek Forever After. Getting everybody together in a room and being able to show How to Train Your Dragon and Shrek Forever After and Oobermind is very inspirational for them in their own work. Unless you organize that kind of opportunity, it won’t necessarily just happen because everybody is so intensely focused on getting their own stuff done. That’s why we always set up opportunities for people to see others’ work.” Operating in such a specialized field presents DreamWorks Animation with some different staffing issues compared to other, more everyday com-
panies. “When you think specifically about people who are in CG animation, it’s not a huge community of people,” says Satterthwaite. “There are pockets in California, London, Vancouver, Australia, New Zealand – anywhere where you have large animation studios or digital effects houses. But if you compare us to more of a general industry there’s not a huge population of people with high-end CG animation skills. So it has been difficult to fill key roles at times because so many studios were ramping up their production slate. There are some really great schools out there that are graduating some exceptional talent, but prior to the recession it was very difficult to recruit.” Now however, the global economic situation has made the process of finding qualified people a little different. As credit lines have been squeezed, studios that previously had very robust production slates have been forced to scale back or in some cases close their doors altogether. Though Satterthwaite takes no pleasure in the woes of the studio’s peers, he does acknowledge the impact they have had on recruitment. “There are a lot of very, very strong artists and technical people who are available right now,” he says. “One of the things that the DreamWorks Animation management team really asked of our CEO was to take a long hard look at costs across the entire business, because what we wanted to do almost at all costs was to create and maintain a level of stability for the workforce here. We’ve been able to continue to hire while others unfortunately are having to let people go. We don’t think about that in an arrogant sort of way, but a very humbly. We’re blessed to be in a position where we have a very strong production schedule right now. In a number of departments we’re still staffing up, just to be able to handle our production schedule and our workflow.”
Dan Satterthwaite ed:feb08
But with more available candidates comes the increased challenge here. I don’t want this to come across as constantly comparing ourselves to of making the right hire. At DreamWorks Animation, the ability to cope other studios, but lots of them have more of a hire-and-drop approach to with a workplace that throws up surprises on a daily basis is absolutely managing things, and we have a retention and career growth way of doing key. “It’s a very creative environment,” says Satterthwaite. “It’s a place it, which has worked really well here. It doesn’t work well everywhere, but that has been created for artists and for filmmakers, and so what comes it’s certainly worked well for us.” with that is a level of excitement and enthusiasm, but what also comes Key to retaining people and developing them to their full potential is with it is, a tremendous amount of change and an incredibly fast pace. allowing flexibility throughout the organization. If someone wants to make You have to be sure that people can feel coma change and experience another part of the fortable in this culture and deal with a level of company, that option is open to them. “For exambiguity that’s always going to come with the ample if somebody who works in layout and DREAMWORKS ANIMATION: creative environment.” wants to get into animation, there are lots of NUMBER CRUNCHING With so much talk of creativity, you might be training opportunities, both artistic developforgiven for thinking that DreamWorks Animation ment training as well as technical training for Around is some kind of artists, commune, rather than a people who want to work in different areas of multi-billion dollar movie-making powerhouse. filmmaking,” Satterthwaite explains. “We also Obviously, when you’re dealing with the kind of have a management development program to money involved in a big Hollywood blockbuster, help people who want to get into a supervisory employees creativity has to be tempered with a good degree role and grow their career from a management of training and structure. “Between our two locastandpoint too.” tions in Glendale and Redwood City we have Slightly unusually for such a prominent HR Became an independent company in 1800 folks,” says Satterthwaite. “We focus quite man, Satterthwaite’s career actually began in a bit of attention on new people joining the commarketing. So does this early experience in the pany and making sure that they have all the rescience of consumer psychology come in usesources and training that they need to really ful in his role today? “Without a doubt,” he ramp up quickly on the production side. We’ve states. “I think constantly. I’m driving into work got a very robust training program that gets peoin the morning and at home at night thinking ple production-ready in about six weeks, keepabout how employees are feeling about being DreamWorks Animations films ing in mind that almost all of our production here, and what do they think about when have grossed more than tools are proprietary tools, and so even the most they’re driving to work and heading home for experienced artist or technician who joins the the day. Right now, people are worried. They’re company needs to be trained them. Most pick it worried about security. They’re worried about up pretty quickly, but it does require that kind of stability. They’re worried about their income. investment to get people up to speed.” Outside They’re worried about their livelihood. They’re of simply training new arrivals in the technology, worried about the viability of their company. a great deal of focus is placed on getting them There are a lot of things for people to worry worldwide settled into the culture, “We assign mentors to about these days.” new folks to make sure they have their own suSatterthwaite’s background in marketing pervisor as well as a mentor to help them get faactually ties in perfectly with whole Shrek 2 grossed miliar with the environment and meet the people DreamWorks Animation workplace ethos. It’s they need to meet with,” Satterthwaite continabout building something where people are ues. “There’s a lot organization and coordination freed from some of the distractions and petty around that kind of stuff.” annoyances that everyday life can throw up. in 2004 and remains the highestThe treatment that new studio employees “What we’ve been trying to create here, and earning animated movie of all time receive obviously stands them in very good what’s been created over the last dozen years stead to progress through the organization. A since DreamWorks Animation was founded, is disproportionately large number of current sean environment where people can come and be nior staff began their career at the studio in a range of virtually entry-level inspired to do their best work,” he says. “It doesn’t matter whether they’re jobs. Satterthwaite acknowledges both the possibilities for individuals at artists or engineers or programmers or human resources professionals or the company and the benefits that developing people from the inside accountants or attorneys. Whatever role they play here it runs right through brings. “The first word that comes to my mind is continuity,” he says. “That the organization, in terms of how the campus is designed, how benefits and type of stability and people who have grown their career here are certainmorale are thought about and how training and development is handled ly more likely to stay with us and contribute at a really, really high level. and allowing people to explore different career opportunities. All of those There are numerous benefits to people having a chance to grow their career things center around the psychology of someone’s career.”
CAREINGTON AD.indd 1
Life at the top After sky-rocketing to first place in Fortune’s list of the 100 Best Companies to Work For this year, NetApp is living the high-life. We ask Gwen McDonald, the firm’s SVP of HR, what its like to be the best in the business.
n January of this year, after six years on Fortune’s 100 Best Companies to Work For list, NetApp was catapulted to the top spot. It is an acknowledgement that has reverberated ever since. In March, French publication Réussir/L’EXPRESS ranked NetApp as fourteenth on a list of the Best Workplaces in France; in May, NetApp Australia ranked second on a list of Best Companies compiled by the Great Place to Work Institute of Australia; and in June, Washington Business Journal (WBJ) ranked NetApp as the second Best Place to Work in the DC Area. Following the #1 Ranking in January – the second year the company has achieved a top 10 ranking on Fortune’s list – it was noted that an egalitarian culture, salary, unique benefits, and a down-to-earth management style were the reasons behind the company’s ﬂight to the top of the list, and chairman and CEO Dan Warmenhoven said that he believes this success is a result of the company’s continued commitment to embracing the values of what he calls a ‘model company.’
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Whatever the reason for the jump, company culture plays a central role in day-to-day management at NetApp and is defined by the organization’s core values of trust and integrity, leadership, simplicity, teamwork, synergy and going beyond, to get things done. It is these aspirations that are at the heart of the company, a key differentiator being that employees at NetApp look to live these values each and every day, marking them as the strength and foundation of the company’s culture. For Gwen McDonald, SVP of Human Resources at NetApp, culture is, quite literally, everything: “This is an organization that is well known for its phenomenal culture and it’s a culture that is very much anchored around our values,” she says. “Our values really are guideposts to the company and how we behave with our decision-making. So, as a result of that, we have a very clear trust environment.” And trust is something that is currently very important, not just for NetApp per se, but for companies generally as they continue to battle against the tide the economy. “Given the huge economic downturn,” says McDonald, “the HR organization has to continue to play a pivotal role in assuring that our employees, which are our assets, feel that they have the ability to continue to be motivated GWen McDonALD and productive during this period of time. “The area we have really focused on is our continual and effective communication on what’s going on with our business and what would we at Fairchild Semiconductor for 12 years in various Human Resources still need from our employees in terms of driving our business forward.” positions, including the Senior HR Manager for the Linear Division. Historically, NetApp is a company that experiences double-digit Because of her experience in the HR field, McDonald understands the growth, both in terms of its revenue and its people. This slowdown core importance that this function has and understands the kind of has allowed the company, at least from a HR perspective, to look at benefits that HR can bring to the management table. transformation and at ensuring that the HR organization plays a role in “HR has really stepped up in recent years in helping the organizahelping with some of the business readiness and tion,” she explains, “and I believe that the role change readiness aspects of the company. “We that I and the rest of my leadership team must are currently in the process of looking at business now play is really in partnering with executives “the hR organization transformation in terms of some of our critical key from a business and a human perspective. These has to continue to play a are tough times, and we have to balance the cost processes that will help us to continue to scale the pivotal role in assuring organization,” says McDonald. “We have created of our business model with continuing to have an organization called Business Transformation, employee retention. At NetApp, we have HR inthat our employees, which is looking at all those key critical processes. dividuals that are in line with each business unit, feel that they have the Within our sales organization, we’re looking at ensuring that those conversations are continually ability to continue to be transforming how we continue to leverage differgoing on. We’re looking at some of our changes motivated and productive to meet the cost structures, our customers and, ent pathways to get to our broad audience. Then, during this period of time” overall, our shareholders.” within the HR organization specifically, we are looking at different areas of what we consider to NetApp views its employees as its most critibe our absolute core and what we can outsource cal asset, and It is McDonald’s belief that if you to gain cost efficiency. We are currently increasing our technology have an employee who is motivated, then you have a direct correlation platform so that we can make sure we are scalable and that our proto productivity. “Not to state the obvious, but everyone wants to be cesses are not bottlenecking the company’s growth.” part of a winning company,” she jokes. “We are really clear about that Its quite an extensive list, but one that does not seem to phase and our people understand that their involvement makes a significant McDonald. Then again, why should it? She already has extensive exdifference not only to the immediate result of our success but that it perience in HR, having been at 3Com Corporation for 14 years before also continues to have residual, long-term effects too.” leaving to join NetApp several years ago. At 3Com she served in a variety of positions, including SVP of Corporate Services, Vice President Something extra of Worldwide Product and Supply Operations, and Director of Human Last year, NetApp introduced a program called Volunteer Time Resources for the Business Connectivity Company. She was also Off, which has proven to be one of the organizations most successthe HR Manager for LSI Logic’s Santa Clara operations, and served ful programs to date. In the program, employees across the globe are
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given the opportunity to have five days off [a working week], to volunteer at a non-profit organization. “It allows for a tremendous amount of work/life balance because each individual has his own personal choice around how they want to give back. Again, that also talks wonders for the motivation of our employees and their empowerment. It is great that we are able to do that,” says McDonald. The company is also looking at different methods to handle its employee training, given the fact that the way training is actually delivered is even more critical through the economic crisis. McDonald defines the new tactic as a sort of ‘blend’ process, which recognizes the business challenges in this climate by looking at processes such as e-learning and Webex as alternative training ideologies that can not only save on costs, but continue to provide development for employees. It is an interesting point, especially considering that reduction in training is among the seven most common actions that companies are taking in this recession. “We have not had a straight reduction in that area, but we are looking at how we can continue training both from a sales training and a professional training perspective. Ultimately though, we believe that it is absolutely critical that our employees continue to improve on their skills. There are some areas, such as leadership, which are even more critical, and we believe that we have to continue to sustain development in those areas.” But incentives and interesting perks at NetApp don’t stop at training and development. Employee enthusiasm for the company is extremely strong – another reason the firm jumped 13 places to Fortune’s top spot this year – and typical of its down-to-earth management ethos. The company early on ditched a travel policy a dozen pages long in favor of the preferred maxim: ‘We are a frugal company. But don’t show up dog-tired to save a few bucks. Use your common sense.’ What’s more, instead of business plans, many units write ‘future histories,’ conceptualisations of where the business will be in 12 or 24 months’ time.
Strengthening the cause “One of the things that being top of Fortune’s list this year does is reinforce the reputation of the company,” says McDonald. “We have launched a company rebranding that has really spoken to the company. What we have done is commit to achieving market leadership through our values, so the Fortune 100 was just a validation of what we believed we had created here at NetApp. “It’s another validation in terms of our employees because two-thirds of the overall process is based on anonymous questionnaires that Fortune sends to 400 employees. The questions ask whether employees believe this is a company where they trust their leadership – whether they believe that leadership is credible? Essentially it’s a trust index. ‘Do you believe that what you’re doing is making a difference? Is the work that you’re doing challenging? Do you believe that you have respect and are working with talented colleagues?’ That sort of thing. But the biggest piece is around this whole notion of trust. We believe that we have a company that is unique and our culture is our absolute differentiator, and being
A unique touch As well as the Volunteer Time Off Program there are several other exclusive programs at NetApp that not only provide employees with benefits but also build on the creative culture at the firm. We take a closer look. Leave of Absence (LOA) Policies NetApp’s LOA policies go above and beyond what is required by law and/or common practice by extending the same rights and protections to employees across the US that are required only in certain states, or in locations with specified numbers of employees. Disaster Relief Relocation Program NetApp cares deeply about its employees, and has developed a disaster relief relocation program in order to aid new employees in their time of need after facing a natural disaster. The program includes temporary housing, temporary transportation, and a cash lump sum to help victims buy the necessities to get back on their feet. Environmental Stewardship NetApp prides itself on having successfully implemented company-wide ‘green’ programs that reduce waste and conserve resources. Ranging from stocking its cafes and break-rooms with eco-friendly containers and biodegradable service ware, to conserving resources by over 50 percent within their data centers, the company is committed to practicing good environmental stewardship.
the Fortune number one is a validation and a confirmation that we believe what we created – for our employees – an experience that simply is a great place to work.” And, on a personal level, McDonald considers the new ranking a complete honor. “I’ve been here for five years and NetApp has been on the list for seven years in a row. So, it’s a phenomenal reinforcement, to continue to have a culture that’s been able to sustain such achievements.” n This article is based on an interview with Gwen McDonald for HRM’s sister publication Business Management. For more, please visit their website www.busmanagement.com
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HEALTHFAIRS AD.indd 1
Cathy Baase ED:feb08
Healthy returns Dow Chemical’s Dr Cathy Baase tells HRM about the company’s industry-leading wellness provision and the role that business has to play in population health. Dow has quite a reputation as a company with some very comprehensive health and wellness provisions. Could you give us a little background? Cathy Baase. Dow has a very long history of having a health program within the corporation. In fact, over 90 years ago we started our onsite occupational health program. And the current health and wellness programs are really incorporated with the full spectrum of our employee health and wellness program. So the formal motive for the health promotion programs have been in place for about 20 years. They’re all underneath a corporate health strategy. That formal corporate strategy was established in 2004 to bring strategic and tactical level into an integrated program, linking all the corporation’s activities related to health across any functional boundaries so that the strategies really make sense together.The elements of that strategy are prevention, quality and effectiveness with care, health system management and advocacy. And under those four elements of our strategy, we see that our health promotion and our health and wellness program fit in this prevention theme. That’s one of our four themes. We have what I would define as a comprehensive health promotion program, which includes all of the macro aspects of what’s defined as a comprehensive program. You have awareness activities, motivation programs and strategies to engage people, skill building programs and educational programs as well as a supportive environment. There are a great many programs out there. Over 90 percent of people in surveys will say that they have a corporate health promotion program, but less than seven percent actually could fulfill the requirements of a comprehensive health promotion. So what that looks like at the tactical level is that we do health screening, consultation, referral and follow-up for personal health risk health education through both internet/intranet channels, small group programs, health and disease risk topic campaigns, onsite health centers, healthcare on consumer education, the provision of many tools. We have corporate policies in place on things like tobacco, and we also have a very broad prevention coverage in our benefits plan. So if you ask, “How do we approach health and wellness?” it’s all of that. It’s fit within this strategy, and we have this comprehensive program which focuses at the individual level, at the site level, and at the corporate level in terms of environment and culture and policy activity.
Cathy Baase ED:feb08
â€œOne of the detriments of the current situation in the US is that we spend a lot of money and yet our health outcomes are not better than all other countries with the same proportion of increased spendingâ€?
Cathy Baase ED:feb08
So how do you promote these initiatives amongst your people? Do you use ple and the success of the organization is critical. We’ve mapped that out, the carrot or the stick to encourage interest in wellness and preventaso our health strategy that I mentioned at the beginning of our discussion tive care? really is built upon a strong business case that made this link. CB. We have really worked on making sure that this is a program that’s In addition to that, I would say that it’s important for people to put in highly valued by the employees, and it’s so highly valued that they parperspective the question of whether or not prevention saves money versus ticipate voluntarily and of their own accord. They seek it out because they how it’s a good investment that’s similar to other investments. For examhave experienced value from it, and so they keep coming back and parple, we don’t hear people say, “Well, is it a good investment to provide for ticipating. You mentioned the ‘carrot and stick,’ but we don’t really charhealthcare services in general,” and so what we’re trying to do is say, “Let’s acterize our efforts in those terms. We’re unique among many make sure that every dollar we spend related to health is delivering the corporations in that we use minimal to no financial incentive. most value possible.” We’re trying to improve the dollars we spend on our We don’t offer people cash payments for participating in programs or benefits as well as make sure that the dollars we’re spending on prevention filling out surveys or doing the things that are commonly used to stimulate are really delivering that value. In most organizations, prevention really acparticipation. And yet we have extremely high participation levels, and we counts for a very small fraction of the total dollars that they spend. also have very high satisfaction with our program. Our satisfaction ratings are consistently strong, depending on the particular program. I’ll give you You mentioned before the idea of seeing health spending as an investment just one example. We’ve got our employees on our health surveillance, rather than a cost. Do you think that’s something that’s kind of catching which is where we would incorporate something like our health risk assesson across the HR and wellness space? ment, in that our voluntary participation in that program is very high. CB. I’ve certainly seen a change in that and a growing trend in the last sevOur participation in that is over 75 percent of our US population, and over 85 percent of our global TOTAL VALUE OF HEALTH population voluntarily participate in that with no cash incentive. How we do that, is that we have embedded this Indirect Direct costs: programming right into the fabric of the organizacost: Medical & Pharmacy tion. We have strong communication strategies, but Presenteeism 24% 63% it’s not an appendage on the organization. It’s embedded into and aligned with the corporate priorities. So our health risk assessment is embedded Workers’ compensation within our broader occupational health programs. 6% We’re aligned to the 2015 goals of our corporate sustainability strategy. STD This is built into the leadership development cur6% riculum of the leaders of the company. We bring the LTD health topics into that, and we’ve worked very inten1% tionally on the development of a culture that really is supportive and encouraging of participation in health Absenteeism programs and in living a healthy lifestyle. People feel this from all parts of the organization. It’s not just from our department or some billboard; it’s built into the fabric of the company. eral years. But I think we need to take caution. One of the messages that I From a purely business perspective, it can be difficult to establish a hardshare with my colleagues frequently in the field that it’s an important dollar ROI on wellness programs. What do you think needs to be done to philosophical point, but you still must be very serious about your busidemonstrate how valuable these programs are? ness case and be accountable for results and have a sound measurement CB. I agree that that is certainly a broad challenge, and we hear about it and infrastructure to be able to deliver results. Just because something is a talk about it a lot. I’ll say upfront that one critical thing for us was the desound investment, that’s a useful starting point, but it doesn’t erase any velopment of the viewpoint that our health programs are really an imporobligations for accountability for delivering results. The pressure is still tant investment to be optimally managed rather than just a cost to be on to deliver results. minimized. We’ve used that because it is part of our strategy. But how do you approach this whole concept of ROI? What kind of metrics can you apply to show that you’ve spent X amount of I would say it’s critical to have your program developed and built upon dollars this year and these are the results? With wellness you’re essentiala strong business case. Establishing that upfront, renewing it regularly and ly spending to stop something happening, so are there ways you can break being able to understand the relationship between the health of your peothat down to show what it’s worth?
Cathy Baase ED:feb08
DOLLARS AND SENSE
I hope that we would have a focus on prevention included in the entire US policy and a stronger investment in that. There are some specifics that I’ve recommended such as addressing tax policy that really supports individuals and corporations in the provision of prevention programs. There’s such a strong rationale that to achieve population health outcomes from a public health standpoint, working through worksites is a very important and effective strategy. In addition, there are things that the government could do to bolster the effectiveness of worksite health programs. This could include better communication of results, increasing funding for research in this area, developing more tools and resources and disseminating them effectively to the employers and piloting innovative programs, particularly at the federal and state departments, so that those results can be shared as well. They should also bring more focus and visibility to the effectiveness of these types of programs, and have a resource center that can support businesses and employers in the provision of them. Perhaps another idea is the establishment of a public/private advisory council, which could bring the best of thinking together from the private sector to continue to inform these efforts from the policy perspective. They could also enable collective purchasing consortia for small employers because they can then have
CB. When we’re looking at our overall health strategy that I mentioned, we have a set of Baase outlines the importance of focusmetrics. We look at our direct medical beneing spending on health outcomes. fit plan costs. We look at our indirect costs We have in this country what has been like absenteeism and presenteeism. We look described as an “illness” care system and not at the satisfaction of the participants. We a healthcare system. We do not focus on look at our health culture, and we look at the health outcomes. The dialogue and debate health status of our population. That’s a critabout the many ills of our health care system ical leading indicator and we’ve set very aghas escalated in recent weeks because of the gressive targets. economic crisis and the substantial funding for For example, we have a target to imhealth included in the economic stimulus bill prove by ten percent the health risk profile of that was recently signed into law. As our population in 10 years. We know that implementation of the stimulus bill’s health there is a link between changes in our health provisions begins, it is vital that we keep sight of risk profile and our total economic impact to the fact that the “health” of our people is the the corporation. By discovering that and doccritical outcome and leading indicator of the umenting it, we know what the economic resuccess of our expenditures. The money we turn is for those sequential improvements in spend on health is an investment in our our health risk profile. And then we have sustainable future and intended to make people other programs that we do, too. healthier. How much we spend or who has Those are the macro metrics, but then access to our illness care system has limited we look at specific programs, and one is our meaning if we’re not focused on results and health advocacy case management where whether our health is sustained or improving. we take the people who are out ill and we Every dollar should seek maximum value. work to partner with them to improve their state of health as effectively and as quickly as possible. With that program, we look at the number of days saved in terms of absenteeism, and you can translate some of the advantages of scale. that into dollars. That’s an example on a specific activity that we have. One of the other things that is going on right now is to further support the establishment of workplace health program certification and accrediThe new administration is making some encouraging noises about the need tation efforts so that employers have some external validation of those profor prevention to be a part of US health policy. What do you think are the key grams which are meeting the best evidence standards. things government should be doing in this area and what do they need to address first? Cathy Baase MD is Global Director of Health Services for CB. I hope, first and foremost, that in our discussions on health reform that Dow Chemical. She has direct responsibility for we really remember the fact that we’re focused on health, not just healthcare. leadership and management of all occupational health, And I’d like to emphasize that point, which was in my testimony to the Senate epidemiology and health promotion staff and programs committee, that health has to be the outcome that we are aligned and seekaround the world. In addition to these roles, she is deeply ing and assuring that we’re achieving. One of the detriments of the current involved in the design and implementation of Dow’s situation in the US, is that we spend a lot of money and yet our health outHealth Strategy for employees, retiree and their families. comes are not better than all other countries with the same proportion of increased spending.
INDUSTRY FOCUS Bob Smith of the Association of Public Safety Communications Officials details the staffing crisis in the emergency response industry and how recognition could help turn the tide.
ome of the most significant challenges we’re currently facing in the public safety communication industry aren’t technological, but human. The biggest thing right now is bodies in seats. We have a tremendous staffing and retention crisis in public safety communications. In the United States, the shortage of nurses and teachers is fairly well known. That we don’t have enough nurses and teachers to go around is a national crisis that just about everyone’s familiar with. Ironically enough, this shortage is factoring in about 15 to 17 percent turnover rate. By contrast, the public safety communications industry is experiencing a 19 percent turnover rate. We are in an even greater crisis, but fewer people know about it. The problem with that is that there are Public Safety Answering Points (PSAP) across the country and around the world training people that may not stay with them more than a year or two. A tremendous amount of time and money can be invested in a person just to see them turn around and leave. But more importantly, the greater impact is you’ll have PSAP’s that have an entire staff with less than two to three years’ experience in their position.
There are many reasons why these staffing problems are happening. Obviously you have the typical shift work issues, working midnight shifts, weekends, holidays, being away from your family, and all of the things that come with shift work. But situation of understaffing makes these problems even worse. You have a tremendous amount of overtime because the fewer people on staff, the greater the need for overtime. You have people that are working a tremendous amount of overtime to compensate for the fact that they are so shorthanded, so it’s a pretty vicious cycle. Everyone is short staffed so the people they do have start to burn out faster. And then they leave. There’s also the inherent nature of the job, There is a huge amount of stress that comes with dealing with people for up to 12 hours a day, who are in life or death situations and knowing that a single number key pushed wrong or one simple word misstated on the radio could potentially be an error that could cost someone their life. There’s a high amount of stress involved in that, and there’s stress just from answering the phone. Nobody ever calls 911 because they’re having a good day. There are also issues with the industry overall. Public safety communications personnel are typically very low paid. The salaries are not
“The public safety communications industry is experiencing a 19 percent turnover rate”
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aPCo International is the world’s largest organization dedicated to public safety communications. founded in 1935 aPCo now has more than 15,000 members who rely on it for their professional needs - from examining standards and issues to providing education, products and services. aPCo is a member driven association of communications professionals that provides leadership; inﬂuences public safety communications decisions of government and industry; promotes professional development; and fosters the development and use of technology for the beneﬁt of the public.
commensurate with the workload. They are not very well respected in the public safety industry because for years the telecommunicators were simply secretaries, answering the phone, taking messages and passing it on. We’re starting to overcome that prejudice with certain levels of certifications, standards and professionalism within the industry, but there’s still a hint of that around. Beyond that, 911, 999, 112, wherever you are in the world, the problem behind it is that the public safety communications component of public safety is transparent to the end user. We don’t have the big red fire trucks and the ﬂashing blue lights. We don’t have the medical bags and the kits. You never see us. You talk
yOU JUST KeeP me HAngIng On In contrast to the public safety communication industry, some employers are managing to hold onto their staff. COMPANY S.C. Johnson & Son Herman Miller alcon Laboratories Cisco Systems Southern ohio Medical Center General Mills Devon energy SaS Institute W. L. Gore & associates astraZeneca
TURNOVER RATE (%) 2 3 3 4 4 4 4 5 5 5
to us, but the people that actually come out to help you are the people you identify with. We’re completely transparent, so there’s obviously a public education campaign there as well. All of that factors into a high turnover rate, the inability to get those highly effective people and to keep those people once you’ve got them. There are a few things that we can do to improve the situation. The easiest is just raising salary levels, but that’s not always feasible, especially in the current economic climate. There are a lot of things that are much simpler and some that are relatively cost effective and some that are even free. For example, little things like employee recognition. Every year in April, we run National Public Safety Telecommunications Week. This event is recognized by most states and has received presidential and congressional declarations. It’s just about taking time to appreciate public safety telecommunicators. As well as making people in the job feel respected, it publicizes that there is this entire industry of highly dedicated, professional public safety communications personnel who are there day in, day out, to protect you whether you’re calling them with an emergency or you’re a police officer making a traffic stop. Things like that cost next to nothing but they can have a big impact on morale. Beyond that, it’s reaching out and explaining to people exactly what the 911 telecommunicator does so that it becomes a more attractive career option. You would be hard pressed to find a kid anywhere in the country that says, “When I grow up I want to be a 911 dispatcher.” Educating them to what we do and how we do it is really important. Then we get more qualified candidates applying for these positions so that we can rely on them to make it through training, become an effective part of the staff and ultimately stay with us for a decent amount of time. Bob Smith is Director of Strategic Development for the association of Public Safety Communication ofﬁcials.
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What goes up… David Nosal explains how the current down market is affecting recruitment across all industries. What impact does a down market have on the war for talent? With so many layoffs leading to more and more people in the talent pool, is it actually easier for employers to find the right candidates? David Nosal. A large number of people are currently in transition at all organizational levels. While the job-seeking population has grown exponentially, the degree of difficulty in recruiting the right candidate still generally increases with position stature up the organizational ladder. Our firm operates at the C-suite and executive level, where the war for talent is as fierce as ever despite an abundance of executives on the job market. Boards and CEOs still seek best-in-class senior executives, who are difficult to recruit from an organization unless it is being acquired or merged. Regardless of economic conditions, great people generally have great opportunities in their current positions, and are constantly approached by companies looking for the top 15 percent of the gene pool for C-level talent. Does a down market actually create a ‘needle in a haystack’ situation where it is more difficult to find the best candidates? How can companies overcome this? DN. A down market makes it considerably more difficult to attract high calibre executives, who tend to develop an entrenchment mentality. They perceive a far greater degree of risk around new job opportunities than they would during healthier economic times, and are therefore more inclined to stay put. As a result, when evaluating a potential career move, they undertake extraordinary levels of due diligence to ascertain that an opportunity represents a significant improvement over the current position, even in the case of prospective employers with blue chip reputations. We have continued to see major brands—including some that were once category killers—surprise the world with catastrophic financial results. In such an environment, it is critical for hiring companies to invest significant amounts of timesharing information with finalists considering a move. No less important are
most likely thriving and successful where they are. How do we inspire a contented executive to take a look at something new? It is critical to understand who the individual is and why our opportunity represents an improvement over his or her current situation in terms of title, compensation, client growth strategy, etc., and to package all the variables up in a very compelling way.
“The war for talent is as fierce as ever despite an abundance of executives on the job market” David Nosal is Chairman and CEO of Nosal Partners LLC and an industry leader in conducting board, CEO and president searches for the world’s most-respected companies.
realistic performance targets as part of the compensation package. In what ways can companies look to attract passive candidates as well as those who are actively looking for a new job? What is the value of such an approach especially in relation to a down market? DN. High-end executive search firms tend to target passive candidates, because executives who are not proactively looking are typically doing well in their current situation. Companies want to hold onto them and send signals to that effect through equity grants, promotions, etc. Although there can be a number of valid reasons (e.g., pending merger, acquisition, etc) for an executive to proactively look to make a move, we focus on passive candidates because they are
What can companies do to ensure they are filling positions correctly and keeping hold of top talent, particularly when they are being forced to make cutbacks because of the ongoing economic woes? DN. Companies should conduct an annual assessment of their leadership team to truly understand who the top talent is. I recommend individually tailored strategies that continually challenge high-potential executives, as well as compensation-based retention programs. It is also important to proactively discuss career progression opportunities with high-potential executives. Even though senior leadership may view someone as high-potential, they risk losing that executive unless they are continually communicating opportunities for growth in terms of responsibility, challenge, performance-laden compensation plans, mentoring, and new realms of expertise. The annual leadership assessment is also invaluable for identifying gaps and planning for succession, because it enables one to go out and target very strategically any specific competencies the organization currently lacks and/or is projected to need to remain competitive in the future.
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Healthcare reform is undoubtedly one of the most contentious issues in the US today. Based on current predictions America will be spending $4.3 trillion on healthcare by 2017, but there is a great disagreement on what to do next. HRM hears two very different opinions. BARACK OBAMA, President, United States of America The cost of our healthcare is a threat to our economy. It’s an escalating burden on our families and businesses. It’s a ticking time bomb for the federal budget. And it is unsustainable for the United States of America. It’s a fact, and the truth is most people know that it's a fact. And yet, as clear as it is that our system badly needs reform, reform is not inevitable. There’s a sense out there among some that as bad as our current system may be – and it’s pretty bad – the devil we know is better than the devil we don’t. There’s a fear of change – a worry that we may lose what works about our healthcare system while trying to fix what doesn’t. Let me also address an illegitimate concern that’s being put forward by those who are claiming that a public option is somehow a Trojan horse for a single-payer system. I’ll be honest; there are countries where a single-payer system works pretty well. But I believe – and I’ve taken some flak from members of my own party for this belief – that it’s important for our reform efforts to build on our traditions here in the United States. So when you hear the naysayers claim that I’m trying to bring about government-run healthcare, know this: They’re not telling the truth. There are already voices saying the numbers don’t add up. They’re wrong. Here’s why. Making health care affordable for all Americans will cost somewhere on the order of $1 trillion over the next 10 years. That’s real money, even in Washington. But remember, that’s less than we are projected to have spent on the war in Iraq. And also remember, failing to reform our health care system in a way that genuinely reduces cost growth will cost us trillions of dollars more in lost economic growth and lower wages.
BILL WENMARK, President, National Association for Ambulatory Care It’sagreattragedythatthegreatesthealthcaresystem,thegoldstandard of the world in America is being taken by Obama more into what has already been experimented with in Great Britain, Canada and other places – socializing medicine. It’s an absolute tragedy, a travesty, and it’s really a big grab of government to go and do that. Having said that, I don’t know that he’s going to be successful. I was a tour guide for representatives of the UK National Health Service when they visited in 1990. They saw a lot of what America has done in looking at healthcare and medical care differently than Great Britain. Great Britain looks at it as an entitlement. We look at it as a responsibility. If you look at new technologies, a vast majority of the technologies and the advances in medicine and medical instrumentation, development and designs have really largely come out of the United States of America. Because there’s a marketplace for those kinds of things to be developed, that’s why it’s happened. If you look at a government run system that now sees itself as being obligated to provide these things to a massive population, they’re not likely to want to pay for the next big thing, because the next big thing to them is the next most expensive thing. When they look at a budget they say, “We’re not going to pay for that.” And so you get a lot of rationing of care. You get a lot of decisions based on return on investment in terms of elder care. It’s not a very good thing to do, but the UnitedStatesisinasituation where that mayhappen.
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The concept of wellness has fast become one of Corporate America’s most important assets. Here, we gather Ceridian LifeWorks’ Zachary Meyer, Anne Marie Kirby of CoreHealth Techonlogies, eni’s Gene Raymondi, Lee Dukes of the Principal Wellness Company and UnitedHealthcare’s David Ellis to get the lowdown.
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What are the key factors that a wellness program should possess? What should companies look for when trying to implement a wellness strategy? Zachary Meyer. An effective wellness program starts with a culture of wellness. Our experience shows that the most successful programs have visible support from the top and by the entire management team. Every level needs the tools and commitment to promote a healthy workforce. Acting as role models reassures employees that they are supported and builds momentum for an enduring program. If you want to predict someone’s behavior, you need to understand what’s driving it. That’s why many of our customers add incentives to their wellness programs. The most effective incentives drive behaviors from program enrollment through completion. Recognition is an important motivator for many, and accumulating reward points towards items that promote healthy behaviors can be quite successful without breaking the bank. Finally, focus on key areas of need, and set realistic short and long-term goals. Organizations should analyze workforce assessments, healthcare and disability claim information to determine their biggest opportunities. Once specific goals are set and programs developed, you can monitor your success and adjust as necessary. Your wellness partner should help guide you through your initial implementation and beyond.
integrate and communicate effectively with other existing benefits for a total wellness approach. It is critical for organizations to first identify and understand their corporate culture, in order to determine the most appropriate and effective ways to engage, incentivize/disincentivize, and communicate with their employees. It is also essential to collect accurate data to identify current health risks that your program needs to address and reduce/prevent before they become chronic conditions that weigh heavily on your bottom line. Employers need to prepare for long-term efforts that will create a sustainable program. Employees will only engage when they understand goals and objectives, and are given consistent and reliable tools and resources, including your communication components, that they can identify with, interact, and trust. Lee Dukes. Three essential elements are a simple data-driven strategy, effective communications, and meaningful incentives (or disincentives). The strategy should include long-term goals, measurable objectives, and simple strategies to achieve the objectives. Avoid the temptation to piece to-
THE PANEL Anne Marie Kirby. In an ideal world, senior executives bring forth, by word and example, a corporate culture of wellness with a personalized program of support for each employee. In the real world, there is always a crisis to tend to such as the economy, where the best-laid plans cannot be easily executed. Our customers have found success using the grassroots approach delivering an affordable online health challenge. They start small, build enthusiasm while proving outcomes and ROI, and grow their strategy organically. Companies should look for wellness programs that improve health through sustained behavioral change, look for programs people will enjoy, find tools that will improve your workplace culture of wellness, and be sure that choices fit the lifestyles of their employees. If you do have the luxury, major wellness suppliers such as Ceridian, Principle Wellness, or United Healthcare can assist with a high level strategy. They can help establish realistic ROI targets and identify options to maximize and report achievement. Consider a combination of high tech and high touch programs to complement, as both are necessary for maximum results and return. Gene Raymondi. Above all else, a successful wellness program must have a consistent and relevant message that is demonstrated visibly by senior members of your organization. A sustainable program must integrate into your existing corporate culture, with a personalized approach for each individual participant to receive the appropriate interventions, education, motivation and encouragement needed to succeed. Ideally, your program will have an unbiased and trusted central point of contact for both the employer and employees. The most successful programs
Zachary Meyer is the Senior Vice President and General Manager of Ceridian LifeWorks. He has held management positions in various regional and national healthcare organizations and was involved in patient education and research at the Mayo Clinic early in his career. Anne Marie Kirby is a proven leader in the healthcare information sector, with over 20 years of combined software, HMO, and health systems experience. As CEO of CoreHealth, she directs development of a refreshingly affordable wellness platform used by mid to large organizations and EAPs throughout North America. Gene Raymondi is the Founder and Chief Executive Officer of eni. Over the past 25 years, Raymondi earned his reputation as an innovative leader and active pioneer in behavioral health delivery systems. He continues to create dynamic EAP, wellness and work/life solutions that maximize employee engagement, wellbeing and productivity within large organizations across the nation. As President of the Principal Wellness Company, a subsidiary of the Principal Financial Group, Lee Dukes provides a business perspective to the delivery of effective wellness solutions. He has consulted with more than 600 employers, health plans and federal and state agencies in the US, Canada, Great Britain, Mexico and Germany. Dr. David Ellis is National Medical Director for UnitedHealthcare’s Customer Analysis and Solutions. Prior to this, he was Senior Medical Director for North Texas and Oklahoma, and before that practiced Primary Care Medicine in Texas. He studied at the University of Toronto and completed residency at Queen’s University. Ellis has practiced in both the Canadian and American Healthcare systems.
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“Some wellness programs involve tangible rewards, and some discipline, while others focus on intrinsic motivation and make the experience the life-changing event” Anne Marie Kirby gether assorted activities and vendor solutions that are not focused on your strategy or that do not contribute to data integration. David Ellis. Wellness programs should be designed to meet the needs of the employee population. To that end, the employer should consider the health status of their employees, their work environment and the culture in which they live both at home and at work. To build a successful wellness program we recommend the company consider issues including the provision of executive level sponsorship; building a wellness oversight team and incorporating wellness champions into your worksite (they will build and drive your strategic wellness plan); measuring the health status of employees through health risk assessments and biometric screening; reaching out not only to employees but to their families (they provide the social support for employees to make healthy lifestyle changes); and providing employee incentives for participation. Why has it traditionally been so difficult to measure the ROI of wellness initiatives? Is it possible for companies that invest in corporate wellness programs to demonstrate real ROI? AMK. Historically, people managing wellness programs have not been specialized in health promotion. Without this education or training, they have been unable to effectively define objectives and evaluate programs to prove
ROI. The means to prove ROI are better understood today, though funding shortages are still common in many organizations. Wellness administrators can position themselves to show impressive ROI and thrive even in difficult environments. A small grassroots program has a greater chance of rapid measurable success; provides more control over the process, health and ROI outcomes; and can be a great springboard for wellness. Grassroots wellness begins with a low cost, proven program that serves a large population. Quality suppliers of this technology demonstrate high ROI and require minimal outlay. Reinvested, the returns help expand the program to address the highest risk individuals where significant expenses are incurred. ROI will decrease with program expansion, but total savings will still increase. GR. Demonstrating ROI is difficult, especially when employers don’t clearly identify their definition of what they believe ‘wellness’ really is, as well as defining what they consider as ‘participation’. Employers are challenged to hit many moving targets as healthcare dollars continue to rise, and human capital, productivity and retention remain difficult to measure. Preventative programs are focused on treating conditions that would eventually draw heavily from healthcare dollars – but when and how much
“Demonstrating ROI is difficult, especially when employers don’t clearly identify their definition of what they believe ‘wellness’ really is” Gene Raymondi
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is unpredictable. A simple example to consider for ROI is to realize the true impact of identifying and preventing just one employee from suffering a stroke. Once you consider the savings in not only healthcare dollars, but in disability, prescriptions, absenteeism and productivity, it becomes easier to identify the ROI. LD. If ROI is defined as a ratio of the dollars invested in a wellness program to the financial impact on health plan costs, there are several problems. Many factors have a significant impact on healthcare costs – changes in plan design, mergers, acquisitions, downsizing, demographics, labor relations, technologies, inflation, etc. To try to assign impact over time to any one factor is impossible. Numerous studies clearly indicate a correlation among health risk status of a population and costs related to healthcare, productivity, disability, and workers’ comp. These financial outcomes, along with improvements related to clinical indicators, recruitment and retention rates, morale and quality of life factors, combine to produce a comprehensive value of investment (VOI). A well-designed and implemented wellness program will have a positive impact on the health risk status of the eligible population, and an employer can model the estimated economic impact of its wellness program by evaluating changes in its collective health risk status over time. As risks of a population are improved, the overall value of its investment increases. DE. Wellness ROI has been difficult to measure in that some of that measure has been tied to the soft savings created through improved presenteeism or it is difficult to tell if the wellness interventions alone
have improved outcomes. Many studies have documented wellness initiative savings of at least a $3.48 for every dollar spent ROI in healthcare costs and a potential $5.80 for every dollar spent ROI in absenteeism reduction. ZM. Wellness programs are designed to prevent poor health and avert downstream costs — and it’s difficult to measure something that doesn’t happen. Having employees quit smoking can reduce the amount of break time taken, and hopefully, prevent cancer, but most employers don’t monitor break time that closely, nor can they connect the avoidance of a cancer diagnoses to workers who quit smoking. Another challenge is that we simply don’t build in enough time for the programs to achieve their desired outcomes, although we understand that behavior change takes time and effort. It wouldn’t be realistic to see a reduction in medical claims after the first year of implementing a tobacco cessation program. Realistic goals would be a certain program participation level in year one and quit rates in year two. Finally, while health claims, absenteeism, STD and LTD rates can be measured, they don’t get at productivity or presenteeism – estimated to cost employers 7.5 times more than absenteeism. With each of these variables, you’re often working with different systems and providers, so integrating the data can be tough. Despite these challenges, I do believe it’s possible to demonstrate true ROI with your wellness program. Partnering with a provider that can help you set realistic goals and pull together and analyze not only claims, but absences and productivity measures, will help you show tangible results.
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Do you think that a move from traditional reactive medicine to a more proactive focus on wellness can help address the rising costs of healthcare? GR. Absolutely. We also believe that employers will see the greatest results by implementing a fully-integrated wellness benefit offering that overlaps wellness with behavioral and occupational health. As an established provider of both Employee Assistance Programs and wellness services, we recognize that physical health problems are profoundly interconnected with an employee’s mental health issues. We see many cases where mental health concerns cause problematic behavior at work that leads to absenteeism or injuries, and higher usage of your healthcare plan and short-term or long-term disability. Rather than wasting valuable time and healthcare resources, these employees will often resolve their issues within our EAP.
Returns of this nature are split between healthcare and productivity costs, both demonstrating positive return. Some wellness programs involve tangible rewards, and some discipline, while others focus on intrinsic motivation and make the experience the life-changing event. We find intrinsic motivation crucial to developing long-term results and addressing the rising costs of healthcare. Where programs lean towards tangible rewards and prizes, investment must remain high for outcomes to be realized. Motivational wellness provides social benefits and cultural reinforcement as motivators, with prizes as tokens instead of focal points. This environment is conducive to long-term change and healthcare cost reduction.
LD. Absolutely. It has been estimated that as much as 70 percent of the financial burden of healthcare is driven by preventable chronic diseases such as high blood pressure, diabetes, coronary artery disease and certain forms of cancer. Healthy lifestyles that prevent or delay the onset of these diseases, along with early detection efforts, can reverse the rapid growth of many conditions that drive over-utilization. DE. Addressing the rising cost of healthcare will require attention to everything. There will still be a need to engage employees to make optimal healthcare service choices for their episodic or chronic conditions. A more proactive focus on wellness can help manage long-term healthcare costs for larger, less engaged populations making suboptimal health decisions around weight, tobacco and exercise. More time should be spent preventing illness than treating illness, and this investment can have a much broader impact on rising health costs.
“Wellness needs to be viewed as a core business strategy that creates a competitive advantage with a healthy, resilient workforce” Zachary Meyer
ZM. I absolutely believe that prevention and proactively focusing on wellness are the keys to putting the brakes on rising healthcare costs. Modifiable behaviors such as tobacco use, overeating and not exercising put an immense burden on our healthcare system. Some of the most costly conditions, such as diabetes, cancer, cardiovascular and asthma can be attributed to these few risky behaviors. Instead of waiting for an individual’s unhealthy habits to lead them into more serious and costly health concerns, we need to provide access and incentives for wellness programs. AMK. Since the landmark 1974 Lalonde report, research and applied programs have clearly demonstrated the benefits of wellness. A recent weight loss program in Lee County saw a return of $26 for every dollar spent.
Would you agree that making organizations see wellness as an investment rather than a cost is key? How can we go about effecting this attitude change? LD. Employers and those who provide benefits guidance must understand that costs follow risks. Recent efforts to control healthcare costs have targeted the costs themselves through aggressive changes to plan design — increased premiums, higher deductibles, higher co-pays, etc. Long-range sustainable management of healthcare costs will happen only when a large percentage of eligible employees and family members accept appropriate responsibility for their health, and take action to reduce their risks. Employer investments should focus on implementing and managing an effective wellness strategy, and encouraging engagement in the activities of the wellness program. Necessary steps include creating awareness about opportunities to improve health, educating and engaging the right people in the right action steps. It also includes creating a culture of wellness at the workplace – one that supports healthy behaviors, policies and environments.
DE. Companies have to view wellness as a financial investment as well as investment in their human capital. Data drives employers to make changes in their strategy. It is important that we have fact-based discussions to push the wellness agenda. Studying their claims experience and getting them behind measuring their employee’s health risk status can help them set the stage for any real change in focus.
ZM. One of the biggest mistakes organizations make is throwing money at a wellness program and then expecting a major ROI in the first year. We work with you to develop realistic goals and design a program that fits your company culture. Wellness needs to be viewed as a core business strategy that creates a competitive advantage with a healthy, resilient workforce.
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AMK. If you can provide the business case for wellness, no attitude change is necessary. Wellness has consistently provided returns in excess of 5:1, with online challenges and other grassroots wellness programs providing 10:1 or more. This is sufficient reason for managers and accountants to approve wellness from an investment perspective. However, wellness programs also increase productivity and help workers perform better at a lower overall cost. Just as a company would quickly spend $10 to maintain their $5000 piece of equipment, so too should it spend $10 to maintain the health of their $50,000 a year employee. A wellness program for the entire staff population can cost less than the coffee for the lunchroom. As such, a cost perspective also makes sense. GR. Of course. However, this is especially challenging with the current economic climate, and more CFO’s are getting involved in the wellness game. It will always be difficult to measure an accurate ROI, and many employers aren’t willing to wait to see the three to five year numbers. Therefore, we encourage employers to set smaller goals that lead to an ultimate achievement. Try looking at the increase in premium costs without a wellness program, review your high cost claims and determine if they are
preventable, and map out your strategy using the 18-month to three-year guideline for showing positive ROI. Wellness programs are very effective at improving and engaging corporate culture, and creating a team-centered environment where employees respond positively to your recognition and investment in their wellbeing. Do you anticipate the new administration having a significant impact on the popularity and scope of employee wellness programs? DE. President Obama’s reform ideas included promotion of public health, prevention and wellness. Proposals included mandates around preventive service coverage, expanding community based health initiatives and rewarding worksite wellness programs. While details are still forthcoming, everyone involved in the health reform dialogue agrees that strengthening preventive medicine and primary care programs is a wise and much needed investment.
“Benefits of wellness programs will be maximized if it is acknowledged that wellness involves both individual and organizational efforts” Lee Dukes
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“Companies have to view wellness as a financial investment as well as investment in their human capital” Dr. David Ellis ZM. The new administration recognizes that employee wellness programs are a key component to healthcare reform, and wellness programs have consistently drawn bipartisan support. An example is The Healthy Workforce Act (H.R. 1837), which would require wellness programs to include components such as health education, participation monitoring, behavioral change and a supportive environment for healthy lifestyles. Employers would receive an annual tax credit based on the number of employees participating in the program, encouraging employers to add or expand their wellness programs. I anticipate that any healthcare reform would include significant funding for wellness programs. AMK. The answer can be seen by looking at other nations such as Canada or the UK: Whether healthcare costs are paid by direct taxation (employer pays) or indirect taxation (government pays from tax proceeds) the benefits of wellness are strong. Employers realize the need to reduce losses such as presenteeism, absenteeism, depression, and to help the team operate efficiently. Where this benefit proves higher than the cost of wellness, preventative health products will be in demand.
GR. We expect to see a great increase in interest within the small business arena in response to the employee tax incentive proposed in the pending Healthy Workforce legislation. We’re especially encouraged to see the administration’s value towards a behavioral approach to wellness, and hope that approaching health and wellbeing on a national level will create a larger sense of engagement and consciousness among the American workforce as a whole. LD. Strong bipartisan support for wellness is gaining traction in both the House and Senate. What is yet to be seen is how wellness will be defined. Prevention seems to be interpreted as something that a healthcare professional does to someone (exams, vaccinations, immunizations, etc.) and wellness is something that a person does for himself. The benefits of wellness programs will be maximized if it is acknowledged that wellness involves both individual and organizational efforts, and that the goal is to involve 100 percent of the population, regardless of age, employment status, health plan choice or current health status. Much of the proposed legislation would support employers who are committed to investing in the wellbeing of their entire population. n
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ASK THE EXPERT
IN THE KNOW HR professionals who take responsibility for the development of their workforces should know about e-learning because it can be a fundamental career-building tool for the future, explains Wendell Laidley.
esearch by the US Department of Defense Institute for not contribute to increasing revenues or reducing costs were vulnerDefense Analysis reports that e-learning reduces learnable. That focus will continue to intensify. Successful employees will ing time by one-third, or conversely increases the amount need to know more and adapt faster. of learning in a given time by one-third. That assumes no What does that have to do with e-learning? As the pace of change prior learning on the topic, but when prior learning is concontinues to escalate, some organizations and people will keep up sidered e-learning can reduce the learning time and some will not. Employees who succeed in by up to 13 times. the career competition will be those who underKnowledge and knowledge-based skills will stand and adapt. How will they know? Through increasingly differentiate leaders from followers self-education via e-learning which will be widely as the workplace of the 21st century becomes available to those willing to learn. Employees ever more competitive. Economists increaswho fail to learn will be left with the commodity ingly accept that the world economy already has jobs for which there will be much competition. enough capacity to make all the products that Career development will increasingly become a people with the means to purchase ‘things’ can personal responsibility. HR will provide career absorb or consume. ‘Things’ are being commodguidance on where to ﬁnd needed education mateitized. Fifty years ago cars all looked different but rials, but learning will be the responsibility of the now they don’t, and many products are in worldmotivated individual. wide oversupply in the recession of 2009. Even On the job learning will be predominantly Apple iPhones and iPods have competitors and e-learning because of its availability on demand may be approaching saturation as incremental when needed. Speciﬁc job or professional infornew features offer less marginal beneﬁt. This is mation will be available on demand for the taking Wendell Laidley is Managing Director of certainly not to say that the Patent Ofﬁce can be by the motivated employee. With employees New Media Learning, LLC, a California closed, as its leader thought was imminent 100 changing jobs more frequently than in the 20th based e-learning developer. He holds years ago, but it may mean the future of produccentury, employers will place responsibility for degrees in Mechanical Engineering from ing ‘things’ will become more competitive and career development increasingly with the emMcGill University and MBA from the less proﬁtable, and employers will need fewer ployee, or will outsource the task rather than pay University of Western Ontario. He worked non-strategic workers. for expensive career development for employees with IBM and Booz Allen & Hamilton In that world, the demands on workers to who will frequently change employers. early in his career before founding New learn new skills and upgrade old ones will inSo, yes, future career development will depend Media Learning. crease dramatically. The Time magazine cover more on personal initiative and less on employer story of May 25, 2009, is titled ‘The Future of provided training and the resources will be availWork’. Three key sections discuss careers, the able online everywhere via e-learning. Employers workplace and manufacturing and all point to increasing pressure in may pay tuition costs for successful completion of independent study, the private sector to produce value and for employees to understand but will be less likely to pay for the time investment by the learner. their direct relationship and contribution to their employer’s organiFor more information and to access MIT’s entire engineering curriculum online, for free, please visit zational objectives. A decade ago it was said that employees who did http://ocw.mit.edu 70
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Peter Cheese has over 27 years’ experience in HR consultancy. Here, he tells Matt Buttell why HR’s role in talent management operations has never been so important.
n recent years the corporate environment has seen a coming together of a number of very significant trends, which have driven the focus around talent management and pushed HR to the top of the corporate agenda. Or so Peter Cheese, Managing Director of Accenture’s Global Talent and Organizational Performance practice, would argue. “You can see that the issues of attracting and retaining talent and building high-performance cultures have really have moved up amongst the top issues that CEOs have been worried about in recent years,” he says. “This is because it’s very hard to globalize your business and be competitive if you can’t attract and retain the right talent, and at the same time, because of the shortfall of skills and the rapid phases of growth that we’ve seen in the last five years, that applies a lot of pressure and perpetuates something of a buyer’s market for skilled people.” Cheese offers an interesting perspective into the area of talent management. Looking back, his academic background is in the human and organizational psychology area, an interest which he has maintained throughout his professional career. In addition to his current role at Accenture, he is also a well-known speaker and author. In 2007, in fact, he was the lead author of the critically-acclaimed book The Talent-Powered Organization, which explored the challenges around global talent management, and the strategies and responses to them. “My current role,” he explains, in reference to his position at Accenture, “which I have had for the last six years or so, allows me to work all over the world and across every industry sector. “It has been a really interesting time,” he continues. “We have seen a big growth in the appreciation and importance of thinking about talent in a very broad sense, not just for high performers but for all of the workforce skills and capabilities, as well as the improvement of the HR function and its ability to act in a more businesslike and strategic fashion.”
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A GLOBAL INITIATIVE
PETER CHEESE An interesting time indeed. In many ways, argues Cheese, the spotlight is really on the HR function and its ability to respond to the current market on a strategic business level. “HR really needs to engage with business leadership on understanding the business direction and linking that to these issues of human capital, strategies and putting in place the right sorts of HR capabilities – particularly around integrated talent management – to address these kinds of issues.”
Problem solving Another huge issue for the whole talent management space is related to the recession and the way the war for talent is operating in today’s markets. “The context hasn’t changed as such,” says Cheese. “It’s not like we have suddenly solved the talent supply issue, but what has happened in this recession is that people have slowed down on their recruiting efforts and there is much less mobility of people in the workspace.” But what this actually means is that, although people may be staying put during the bad times, it is not necessarily because they feel more engaged or are feeling better about the way (or where) they are working. Instead, HR leaders need to realize that the tough times actually offer an opportunity to really think about the skills and capabilities that they already have at their organization: “It’s an opportunity to think about how you are organized, and think about corporate culture,” confirms Cheese. “People are really starting to think much more critically about their workforce, about what they need, what skill gaps they’ve got and what they are going to do to retain the right people going forward.” But where does the responsibility lie within an organization? Should HR departments be taking on a stronger sense of leadership? “My answer to that is absolutely they can and they should,” says Cheese. “It’s always been interesting to me, if you go back five, six or seven years, that so many of the conversations amongst HR people tended to be, ‘We want
Peter Cheese offers more insight on the global trends in talent management These trends that we are seeing in talent management have been going increasingly global. In my role I am able to travel a lot of the world – just recently I have been to Asia, Africa, and South America – and I can see these same trends in the emerging markets as an issue that they face as well. And then of course, in many countries like India and Southeast Asia, where there’s been a lot of influx of clever multinationals coming up and hoovering up local talent, it’s created real issues for more local companies, which often do not have the good HR practices in place, nor systems to run them on. Suddenly these companies are finding themselves competing in a market with sophisticated global companies and that is creating other very specific local market dynamics. What’s really interesting is to observe what is happening in places like China, which is a place where every company is trying to grow. The economies in these sorts of countries are growing fast, and there’s been immense competition for talent because there’s a general shortfall of the kind of employable skills that large companies need. Just like in other parts of the world this has created immense pressure, both for the global multinationals to be relevant in those markets through career people, but also for local companies to up their game in terms of the sophistication of their HR and talent management practices.
to be more strategic. We want a seat at the table’ – and my message in the more recent years has been, quite frankly, that the seat is there.” The only question HR professionals need to ask themselves, Cheese believes, is whether they are capable of filling that seat. Business leadership is increasingly recognizing that having the right people and the right corporate culture is not just an HR issue, but is a strategic business issue from the CEO down. “And if the CEO is asking those questions and is turning to HR leadership for the answer, the only question you have to ask is are you in a position to respond?” Because of this Cheese says there’s never been a more exciting time to be in HR. “I know in the current recession that can sound like a somewhat contrary statement because there’s a lot of HR people under immense pressure as organizations try to right size and so on. But more broadly, thinking through the recession and what’s been going on in recent years, HR genuinely has go
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to take its seat at the table, be strategic, be a credible business function alongside any other, and play its part in the strategy and execution of the business.” Cheese goes on to say that he can think of many good examples of HR leaders and HR functions stepping up to the plate, and top HR professionals getting, not just a seat at the table, but becomming part of the ‘inner sanctum’of the organization, though he declines to give us any specific names. “There’s no doubt that there is a cohort of senior HR people in that sort of space,” explains Cheese. “Interestingly some of those HR people – not just the head of HR but at other levels, in particular in business partner roles – have come from inside the business.” In the past, there has often been a problem with HR where there were not enough people with real business appreciation and basic business skills, such as good finance skills, the ability to understand and articulate business strategy and what that means in terms of the organization and the people, but Cheese says this is all changing. “If you look at two of the most important skills in HR today, one of them is financial skills, because the cost of labor in most organizations is one of their single largest costs. It is also the source of greatest value, and if you look at market value companies the largest part of market value is intangible value, and the largest part of that is people. So having that insight and ability to understand the financial levers that are very much in the hands of HR is a critical skill set, and is something that has not been a strong skill set of HR in the past. The other skill is marketing, and that’s important because when we think about talent management and where that’s going, it really is embracing marketing ideas and marketing skills so that you can really understand the workforce.”
LEADING BY EXAMPLE A look into Accenture’s award cabinet reveals that the global management consulting company already knows a thing or two about talent management. In DiversityInc’s Top 50 Companies for Diversity, Accenture ranked No. 23 in 2009, up from No. 38 last year. Accenture was also named on two of DiversityInc’s Top 10 specialty lists: Recruitment & Retention and Global Diversity. The company was also named among Fortune’s Top 50 World's Most Admired Companies this year, along side its inclusion in Fortune’s Most Admired Companies list. Fortune magazine also included Accenture in its 2009 100 Best Companies to Work For List. Also this year, Accenture ranked No. 18 among the Best Employers in India by Hewitt and Outlook Business magazine; ranked No. 1 among the Best Workplaces in Sweden by the Great Place to Work Institute; and ranked No. 11 among the Best Workplaces in Portugal, again compiled by the Great Place to Work Institute. Lastly, DiversityMBA ranked Accenture No. 4 on its 50 Out Front list, honoring the best companies for diverse managers, both for diversity representation, retention and accountability, as well as programs that benefit female and diverse employees .
The crazy thing is, that many organizations across America actually understand their customers far better than they understand their workforces. “Isn’t it ironic that we have all these marketing tools and analytics that enable us to understand every marketing segment and what each different segment buys and what motivates them and so on, yet we can’t say the same thing about our workforce?” He argues that that is exactly what we need to be able to do: “We need to be able to understand the skills and capabilities of the workforce, understand the motivations of the workforce and recognize the diversity of the workforce. We are experiencing more and more diverse workforces and we need to be able to direct employee value propositions and talent management practices in a much more targeted way to those different workforce segments. That’s classic marketing stuff. “It also speaks to, of course, the maturity of the HR function in that it is able to deliver consistent HR practice and services by tailoring them to different segments of the workforce based on good information and good analytics,” adds Cheese. “So advances in how we are viewing talent management are truly professionalizing the HR function so that it’s not just a transactional or administrative function but is a truly value-adding function in the ways that it absolutely can be. In today’s world and going forward, it needs to be.”
“We haven’t suddenly solved all of the skill shortfalls or reversed globalization or whatever, but the issues around talent today are a little more focused around other things”
Working across the globe, Cheese has been provided with the opportunity to meet organizations in literally every market and talk to business leaders and heads of HR about all these issues. He was also able to work with other business schools and organizations to get a clearer view of the incredible growing pressures around talent and skills that Cheese has previously mentioned. “I wasn’t alone in describing this perfect storm of a shift in the demographics, new generational values, shortfalls of skills, globalization, rapid change, rapid need for up-skilling and re-skilling and all those things coming together,” he explains. “This proved that true business understanding, finance understanding and being able to add the value that was needed in helping organizations understand the impact of these bigger trends, were critical global issues.” The result of these findings became the basis for Cheese’s 2007 book. In it, he explains how we have now shifted from the old idea of the war for talent, which was fundamentally about how you attract and retain the very best, to a world where it’s about every kind of talent that you need in the organization – every skill at every level that you needed for the organization to be successful. “The old paradigm of talent management being about high potentials and recruiting the best has changed,” Cheese explains. “The war for talent has gone global, and it is now about every kind of skill and really making organizations think strategically about what the options are to source the talent that could be very different from the places they have recruited from before. “So I’d seen all of that going on, and in essence what the book was about was trying to draw some of those experiences together, talk about the context, about the practices and the responses. It wasn’t good enough to just say, ‘Aren’t there a lot of issues?’ we had to ask, ‘What can we do about it? What is good practice?’” The book also attempts to look all the way from the most strategic positioning and understanding of human capital to the need for better
measurement and analytics across all industries, so that HR professionals can have a better insight into the art of human resources. “By building the capability around talent management to what truly integrated talent management looks like, we are able to understand what that means for an HR function,” notes Cheese. “It’s about taking that very broad context and trying to pull it in and asking, ‘How do I respond as an organization all the way from strategy down to the execution of elements of operational HR?’ “I mean, we haven’t suddenly solved all of the skill shortfalls or reversed globalization or whatever,” he continues, “but the issues around talent today are a little more focused around other things. What I have observed is all of the things that we talk about in terms of the response – having a clear strategic context, building the right talent management capabilities, and so on – are absolutely relevant today.” Cheese adds that sometimes these issues need to become even more urgent, because, as he says, if we don’t force some of these things
out and we’re not clear about what we’ve got in terms of our workforces, then we’re going to suffer even harder when the upturn comes. “People will leave,” he offers. “The availability of skilled people will be no better than it was when we went into the recession, and that will prove to be very challenging.” In closing, Cheese talks about the current acceleration among our workforces to think about how companies can get more out of what they’ve got, create more synergy across their businesses, manage their people better, get them to connect better, to innovate more, and, fundamentally, to get more out of their talent. He puts this acceleration down to impact of the recessionary climate we are currently experiencing. “I think many people point to the recession of the early 1990s as having accelerated workforce mobility, and we’re certainly going to see that again,” he comments. “I also think we are going to see an acceleration in how we create more adaptive and more agile workforces and organizations, because we’re seeing a lot of radical change.” And as certain industry trends are suggesting that the way in which people will use their talent and the way in which organizations can access talent will change. Cheese believes that organizations are starting to more openly use Web 2.0 technologies and the phenomenon of the internet to really collaborate, share and get involved. “That creates a very exciting opportunity for organizations to find new ways in which they think about not only connecting and accessing talent in their own organization, but reaching way beyond organizational boundaries and moving into a more collaborative world, both with their own customers and suppliers, and also with different organizations. And I for one think that’s very exciting.”
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GOING THE DISTANCE John Flores explains the current state of distance learning and highlights what the future holds.
t is Boston, Massachusetts 1987, and the United States Distance Learning Association (USDLA) has just been formed as the first nonprofit association in the US to support distance learning research, development and praxis across the complete arena of education, training and communications. Founded based on the need to meet the burgeoning education and training requirements of learning communities via new concepts of communication technologies, today the USDLA is supporting the development and application of distance learning by focusing on all legislation impacting the distance learning community and its varied constituencies. Given the recent rise in popularity of the concept of distance learning, it is hard to imagine a time when this was not part of how educators work. To find out more about this growing learning space, HRM spoke exclusively with current USDLA President, John Flores.
foremost you have to have goals and objectives that fit within the mission of whatever the school district or the corporate entity might be, and from that you build upon very high level standards, making sure that you have built integrity into the program. Users want to be sure that any kind of learning environment that you design is one that really provides an infrastructure in terms of support. When you’re thinking of the teaching and learning process you have to be sure that the professor or the teacher who is conducting the class is comfortable with and understands technology. You have to be sure that, whether it’s a help desk or whether it’s reference and research resources, that’s all built into it. You have to think in the same terms that you think of the best classes that you had as a student, where the professor knew his or her material, presented it in an exciting way and gave the same support services. The same holds true for online; it has to be as good as if not better than the face-to-face experience. And that’s easy to determine through an evaluation process.
What are the current trends you’re seeing in distance and online learning? John Flores. Specifically the current trends are a dramatic increase in the number of students that are becoming engaged in online programs. Through the USDLA we represent a number of different constituencies, K through 12, higher educa“You have to be sure that the tion, corporate, government, military, telehealth and home corporation is embracing solid schooling, and within each of those particular constituencies standards of learning, so they are sure there has been a marked increase of the availability of prothat they know what their employees grams, as well as the number of students who are taking adneed to learn and know how this is vantage of that fact. actually going to take place” What we’ve begun to see is that, provided the program is designed to be as good as a face-to-face experiJOHN FLORES ence, and one that meets the standards that have been established by the USDLA to reflect excellence, high demand in terms of course quality, as well as content and overall rigor, you And in what ways do you think businesses are using these distance learnhave a usually successful program for students to participate in. Overall, ing programs? Are they utilizing them across the board or are there elethe major trend is a dramatic increase in students taking classes and coursments to it that they need to improve on? es, and that’s not only in the online environment but it’s also through video JF. In terms of most companies that are using it for professional development, conferencing as well as through satellite-based delivery systems. So across distance learning is usually the way in which major corporations tend to go. the board, each technology, and really each constituency, is currently in verAnd that's because it makes the any where, any time, any place philosophy, tical climb mode. which most companies have to deal with when it comes to producing and providing products and making sure that their employees are receiving the most And how is technology impacting the online learning space? up-to-date, accurate information, a very tangible possibility. JF. In terms of technology in general, when you think about the traditional However, you have to be sure that the corporation is embracing solid digital immigrants and the digital natives (those students who have really standards of learning, so they are sure that they know what their employbeen born into the digital age) their expectations are very different than ees need to learn and know how this is actually going to take place. perhaps what mine were when I was in public education: they expect technology to become an integral part of their daily life. And given that distance learning can sometimes be quite a solitary expeIt wasn’t that long ago that you were asking ‘who offers a distance rience, how is it possible to ensure that teamwork skills are not overlooked learning program in the States?’Whereas today the question really is, ‘who when using these programs? doesn’t?’ Most colleges or most corporations rely on online instruction as JF. Actually I think that’s something of a misnomer. If you look at quality disan integral part of their HR services not only for professional development tance learning programs you’ll discover that the professor or the teacher but just for day-to-day communication. really engages the students many times more than what happens in a classroom situation. You can hide in a traditional face-to-face classroom; you So do you believe that distance learning courses can really provide as rich can’t hide in an online class. And that’s done through chat, that’s done an experience as those of a traditional classroom? through threaded discussions and that’s done through the professor enJF. Oh, positively. I think based on standards that have been established in gaging those students as part of the delivery of the lessons and as part of terms of when you design a class, a course or a program, I think first and delivery of a lecture. So, while in terms of isolation you may have to have a
“Whether you’re in business or industry or the educational world, we are truly lifelong learners and if we don’t accept that, then we’re going to fall behind the curve”
certain level of ability to be able to work alone on occasion, an online program where there is no interaction with a professor, in my opinion, is not as good as a blended approach, which is a combination of online elements as well as solid communication with whomever is teaching that program. What you’re saying links into how businesses can be sure their people are engaged with an online program. After all, in the absence of a physical teacher, surely it is more important that corporations can be sure that their people are giving 100 percent? JF. When you look at the absence of a physical teacher then you have to build a system that, in essence, is creating an environment where the student wants to succeed and the student wants to achieve, and there are new technologies that are coming on board that deal with different learning styles. In the past, for instance, most distance learning programs were designed by a teacher, professor or an instructor that were pretty much one size fits all. The professor would design a class or course based on their learning style – what was most comfortable for them – and then they would deliver that to their particular students. But today, there are new technologies that allow you to recreate digital coding as the course is being delivered so that, based on the learning style of the student, he or she can be engaged in lessons that meet their particular needs in a much more specific way. As a result, the whole concept of online completion increases dramatically, by up to 90-95 percent, and subsequently there is a level of satisfaction that keeps that student engaged. So how can encouraging employees’ education help companies achieve their own goals? And does an investment in your workforce’s education always equate to business success? JF. Any company that invests in their employees through education, whether it be face-to-face or whether it be online, is obviously going in the
right direction. Professionals or paraprofessionals need to be challenged on a regular basis to increase their skill level and their knowledge base, and it’s really about lifelong learning. Not to use that as a cliché, but whether you’re in business or industry or the educational world, we are truly lifelong learners. If we don’t accept that, then we’re going to fall behind the curve. You constantly have to be prepared to learn about new opportunities within your company, whether it’s new products, new services or whatever. The bottom line is not only incumbent upon companies to provide that level of service but, in my opinion, it’s morally required as well. And bearing in mind that concept of lifelong learners, what do you think the future is for the distance learning space? Do you see any major trends on the horizon? JF. As an industry we’re definitely on a vertical climb, with the digital natives of the world really expecting distance learning to be part of their educational process throughout their lives. Meanwhile, we are seeing that older generations are beginning to see very sharp increases in terms of utilization. In the US at least some of the retired associations of our professionals now have strong distance learning departments that provide all kinds of learning. So in the future we’re going to see an increase in utilization that is not necessarily just for when you are in a corporation or a company. And again that goes back to being able to learn those kinds of things that give you a sense of satisfaction. As you look at distance learning and where it’s going in the future, there are just myriad opportunities for folks across the board from all of those constituencies that I mentioned earlier, the K-12, the higher ed, the government, military, and we’re just going to see that continue to grow. John Flores is President of USDLA, a role he has been in for the last 10 years.
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TEACHING 2.0 The US Department of Education’s latest report, marked as a milestone in the quest to validate the online learning environment, provides some interesting findings. HRM investigates.
ccording to the US Department of Education’s (DoE) most recent report, Evaluation of Evidence-Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning Studies, online students, on average, are outperforming those who receive face-to-face instruction. In addition, the report identified that online learners spend more time performing a task than those students learning in a traditional, classroom setting.While the research was really focused on the K-12 environment, the findings are interesting for the online education environment as a whole, particularly in the corporate setting. Take Colorado State University Global Campus (CSU Global Campus), for example, where students are saying that they prefer the online classroom, not just because they save time by not driving to a campus, but because they can spend more time on the course work as it can be completed at any time of the day that is convenient to them. What’s more, they are particularly impressed at how quickly their communication skills have improved. Communication is a skill set that can be readily applied when they enter the corporate world. And, in reference to the study, The Colorado Promise reports that Governor Ritter now says he is determined to reduce the high school dropout rate and increase college enrolment. He believes that education is the foundation of any strong economy and any competitive workforce and is a ‘top priority’ of his administration. However, some critics are arguing that despite the growing interest in online learning, the availability of online classes has not kept pace with demand. According to one survey, while more than 40 percent of respondents have researched or demonstrated interest in taking a course online, only 10 percent had actually completed one. In contrast, the DoE report shows there is a steady stream of studies, though many focus on limited issues or lack control groups. The report also said that it had identified more than 1000 empirical studies of online learning that were published from 1996 through to July 2008, but for its own conclusions had only considered a small number (51) of independent studies that met strict criteria. These studies had to compare an online teaching experience to a face-to-face situation, measure studentlearning outcomes, use a ‘rigorous research design’ and provide adequate information to calculate the differences. The DoE also noted that this new meta-analysis – a type of study that takes all of the existing studies and looks at them for patterns and conclusions – differs from previous studies by finding that online education and face-to-face instruction were similarly effective on issues of learning, but didn’t give an edge to the online learning that may exist today.
The study also highlighted findings about the relative success (or lack thereof ) of various teaching techniques used in the online environment. The use of video or online quizzes, for example, which is frequently encouraged for online education, does not appear to enhance learning, according to the report. Most importantly though, the report sets the tone for how effective online learning truly is, not just what it can be. And in a time when society is embracing technology for their children and for themselves, the report helps to erase the stigma of the ‘diploma mill’ from learners’ minds. The migration from a little schoolhouse, to elite colleges and universities nationwide, to the infinite classrooms within the online learning environment, seems mind boggling, but we are there. Now, experts are asking us to imagine what the classroom will be like for those born in 2009 when they enter pre-school in 2013. We’ve come a long way and, if evidence from this report is anything to go on, things are only going to get better.
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New valuation Lisa Massiello, RPI President and Employee Engagement Leader at Wachovia, tells us how the business of recognition is evolving.
You’ve been in the recognition business for quite a while. Have the changing demographics of the workforce made a big difference to the way programs are structured and the types of rewards they offer? Lisa Massiello. The demographics of the workforce are definitely changing. What we’re finding is besides the generational changes, it’s more of the virtual employee changes or the realities of having leaders in different states from their employees and teams that are scattered across the country. If we go into the generational stuff, I think that even though there is the thinking that and says, ‘Oh, Gen Y wants this, Gen X wants that, and the boomers want this,’ I don’t believe recognition programs should be developed specifically to one of the generations. I think the program should be ﬂexible and be attractive to all employees. If we started doing recognition, JUST focusing on just the Gen Y’s, how would that make the boomers feel?
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I’m actually more interested in coaching and consulting with leaders. It’s about knowing your employees. Knowing what makes employee X feel valued and knowing what motivates employee Y and know how to recognize employee Z who’s sitting over in California. One thing that is spiking in popularity across not just our organization but everywhere is peer to peer, instant recognition. It is just skyrocketing, and that is the online methods that make it very easy to recognize someone. E-cards have become very popular as a way for employees to touch another employee that they don’t see often but they talk to regularly. They want to be able to say thank you quickly and promptly. We’re seeing these changes because our employees are sitting all over the place. If you want to send a thank you note to someone who is sitting in Minneapolis, that’s the way to do it. I’m seeing those changes more than people getting the gift card type of recognition. Historically Wachovia’s had a huge peer-to-peer program that’s very well received. On average of 35,000 free e-cards are sent peer-topeer each month. We’re emphasizing a culture of recognition, starting with the employees rather than from the top down. We campaign hard to encourage our people to remember to say thank you to everybody that they work with and who helps them. It doesn’t have to go through an approval process. It’s just a way of keeping people feeling more and more appreciated. Whether you’re getting recognition from the person that sits in the cube next to you or from someone based in a different office, you’re going to perform better, the company’s going to perform better, and the customer’s going be happier. It’s a win-win for everybody.
Lisa Massiello is President of Recognition Professionals International and Employee Engagement Leader for Wachovia’s Operations, Technology and eCommerce (OTE) division. This department has over 19,000 employees and the leadership team is based in Charlotte, NC. She is responsible for developing and promoting employee recognition programs for the department’s 19,000 employees, consulting and educating various levels of management on the best practices for employee recognition and motivation, and working with key leaders on their role in employee engagement within their own departments.
Does recognition take on a new significance in the current climate where bonuses and wage increases might be a little thin on the ground? Can recognition take up some of the slack? LM. I would say yes, of course. What we’re currently seeing is more team recognition as opposed to individual recognition. Recognizing teams who have worked really well on a project can have a huge impact. It’s invigorating to have these individuals being recognized for a job well done and bringing a project in on time or under budget, and then they pass that recognition on to of thanking the people that helped them. I think that once you stir up the people and offer other ways of engaging them, be it some time away or a better project to work on, I think that type of recognition can really work. It doesn’t have to necessarily be a rewards and recognition program. It’s a chance to be heard, to have lunch with their boss or have a team lunch with the boss’ boss. These special options are ways of recognizing employees, and I think that helps people, especially during these challenging times. I often tell leaders, ‘Just take an hour every couple of weeks and sit with your team and just say what’s on your mind. Have a cup of coffee and even do a bridge line with those that are not in the office, and share some thoughts.’ That makes them feel engaged. That makes employees feel recognized and part of an organization, so they’re going to pay it back. It seems that a lot of your work is really about bringing people together and getting conversations started. Does building these human relationships really pay off? LM. Very much so. We recently did a survey and a lot of the feedback was from managers. We asked them to share some of their little secrets, and
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You better recognize Massiello discusses the risk of seeing recognition as a target for cost-cutting.
There have been some examples of organizations that have cut back, and I think those are the organizations that don’t quite get it, that don’t see the correlation between the engaged and happy employees or the motivated employees and different ways that it equates to a better bottom line. Some of the larger organizations most definitely get it. I happen to work for one that does. At the RPI we have seen a trend of a lot of certain organizations cutting back in that field. I think there will be some long term effects because these companies are going to have problems retaining employees and some potentially serious trust issues with leadership. If recognition is getting cut, what’s going to get cut next; benefits, health coverage? Employees could just start jumping to conclusions. They’re going to make their own assumptions and possibly start shopping around for other places to work that make them feel more valued and connected to the organization.
I can tell you a huge percentage put in, ‘I love the coffee chats.’ ‘I like to take a different teammate to lunch once a week.’ They don’t charge it to the company, but it’s their way of connecting with individuals. I ask a lot of managers – you know you have a new hire. I always tell managers that, if they have a new hire, make sure to check in with them. Don’t just put them in a desk and say, ‘This is your job, now go and do it.’ Check in with them once a month for three months just to see how they’re doing. Take them to lunch and talk with them. That makes an employee feel more like they’re a part of this organization. Communication is key. It’s also about sharing information down. It’s not just giving the employees the opportunity to share up but to share down, to ensure that all communication has a way of getting to all types of employees whether they’re sat in front of computer or not. What do you see as the key trends currently impacting on the recognition space? Do you envisage any big changes in the coming years? LM. Even though we’ve had a really bad year across the whole economy and we have seen some companies scaling back, I actually think recognition is becoming a high priority for a lot of organizations. Over time, to me, that’s actually the most significant change I’ve seen. I would say more and more people are realizing that it’s a huge, powerful thing to do, and so more and more people are looking for education and training and everything else they can do to learn about the best practices and the right ways to do things. They want to under-
stand how they can bring value to their company for the small amount of budget they have by doing the right things and making the most impact with it. I would think that to me is the most significant. The companies that are standing behind recognition are standing behind it strongly. Another negative significance of some of the trends of some companies letting recognition go is that it is also going to have an impact on so many other industries, the incentive industry, the travel industry and the meetings and events industry. If you cut back too much, it’s all going to roll downhill. But I’m most impressed by the companies that are standing strong and saying, ‘This is extremely important. Making this a great place to work is one of our organization’s goals.’ That is phenomenal. The idea of company culture is also one that is increasingly prominent, and recognition has a big role to play in that. When you see the growth in surveys and the growth in studying of diversity and the increase of onsite training provided to employees, all of that contributes. I’m talking about some of benefits that they’re starting to give employees which are much more focused on lifestyle. It could be time away for an adoption, or community service time off or charity donations in your name. Those are all other things that fall into that recognition and engagement category that sometimes employees forget is part of the whole package. It’s not always about giving money or gifts. If you gave someone two hours to go see their daughter’s dance recital, you’ve given them the world. Sometimes that’s all they want; just a little bit of time. n
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Perfect BALANCE 90
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Michelle Clements is SVP of Human Resources at Recreational Equipment, Inc., an outdoor gear and apparel retailer. Better known as REI, the company prides itself on unique employee benefits, unique corporate culture and unique core values. Here she tells HRM’s Matt Buttell about the balancing act of HR.
ichelle Clements has been in the retail industry for 30 years, and she is hesitant to recognize her tenure out loud. Not because she isn't an aficionado of the industry (quite the opposite, as we’ll learn), but because she is a woman and I was raised to believe that it’s rude to ask a woman’s age. She started in the operations end of retail and, quite literally, grew up running stores. She was a store manager, a district manager and a regional manager; she then oversaw a chain of about 300 stores across the United States; and, then, at one point, she was asked to lead Human Resources. So, in the early 1980s, between being a regional manager and the director of stores, Clements stepped-in and ran the HR department for her employer at the time. It was at this point that she recognized HR was maybe the only division in an organization that lacked long-term strategies. And this wasn’t just the case of the specific company she was working for, but was reflective of companies everywhere. Of course, all that has changed today, but in the early 1980s, while companies had financial strategies, marketing strategies and product strategies, no one had ‘people’ strategies. “The longer I spent running stores, the more I recognized that people are the greatest asset to any company,” she explains when we speak with her in Washington State. “People are the competitive advantage and that particular organization, at least back then, lacked a long-term strategic view about how to nurture, grow and retain great talent.” In early 1991 Clements crossed the line, so to speak, and entered her new career path of Human Resources, to build HR into an organization and drive that value proposition for employees. “I’ve stayed on that side of the line ever since,” she says. Today she is the SVP of Human Resources at REI, which was this year ranked as 12th in Fortune’s “100 Best Companies To Work For” list. It is quite an achievement, given that this ranking places REI as one of only five companies to have been included on the list every year since its inception. And, as if in keeping with her promise to ensure employees are in a position to really drive value proposition, Clements finds her role encompassing everything from recruiting to training and development to employee relations to compensation and benefits to employee recognition programs and REI’s employee service center. It’s a heavy workload, but one she embraces.
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“You have to climb the mountains in the hills you love,” she tells me. “I love the retail industry. REI is an amazing organization that recognizes that employees are the competitive advantage, and we have amazing people that work here. Because of that, there’s such a fulfillment in terms of the work that I get to do, and how I’m valued in this organization, that really fuels me.” Of course Clements admits there are days when the hills are a little steeper or a little higher in terms of workload or what you need to deliver, but the journey is always well worth it. “At REI we have a unique core value, and that core value is ‘balance’. In fact, I don’t know any organization anywhere in the United States that has that as a core value,” she explains. “As an employee, and as a leader, one of the roles that I have to demonstrate is balancing the responsibilities of my position with personal growth and fun. Our mission is to get people in the outdoors, to put people in touch with their communities, and that’s just as true for me as a leader as it is for any employee at REI.” In line with her responsibilities as SVP of HR, Clements is also the executive sponsor of REI’s Strategic Diversity and Inclusion Initiative. The initiative includes three strategic imperatives that are fundamentally important to REI’s business strategy and the way in which the company does business. “The first is around employee diversity, and ensuring that we attract, engage, retain and promote diversity in our workforce, and that our workforce represents the communities in which we do business,” says Clements. To date, REI has 107 stores across the United States, two distribution centers and a headquarters campus, and it is part of its promise to ensure that diversity is represented across all of these functions. The second strategic imperative is related to diversity in the outdoors, which Clements highlights as a broader concept than just customer diversity. “Our goal is to get people of all walks of life, backgrounds, ages and genders out into the outdoors and enjoying the activities we promote, protecting the environment, and getting children to experience, for the first time, nature and the joy that nature can bring to their lives. “And the third one,” she continues, “is around inclusion. It is the idea that if you’re out casting the net to get a broader base of people in the outdoors, a broader base of people working for you, then we can create an environment in which they feel valued, in which their differences are celebrated and in which there is a tremendous, engaged workforce or consumer-base or community group that we’re working with. “I am the executive sponsor for the initiative, and we have formed teams of leaders across the co-op, who represent different parts of our business, who have developed long and short-term strategies and goals around these three imperatives.” Essentially, the strategy is about ensuring that, while there are annual goals that are targeted, REI also knows the work around diversity and inclusion is a journey. “There’s no stated finish line,” says Clements. “How can there be? It requires focus, resources and a commitment throughout the organization: it’s just another part of my role to help bring the talent together and deploy this across the co-op in a very natural and fluid way.” Among the myriad reasons for REI’s inclusion on Fortune’s list, one of those cited was the fact that the employer is well known for subsidizing healthcare coverage for all of its employees. It’s a commendable scheme, given the rising cost of healthcare and the current economic situation. But
REI is one of just a handful of companies to have appeared on Fortune’s 100 Best Companies to Work For list every year since the magazine began compiling it in 1998. At the time of this year’s ranking, REI President and CEO, Sally Jewell, said: “It’s a great honor to be recognized as one of the country's best places to work. The biggest reason for our continued success is our passionate employees who not only inspire and educate our co-op members and customers about outdoor adventures, but enthusiastically volunteer in their communities.”
So what puts REI among the best in America? • A retirement plan that doesn't require individual contributions • Healthcare benefits for all, including parttime employees • Gear discounts and free gear rentals • Encouragement of work/life balance • Outdoor-focused culture that encourages outdoor activity • Camaraderie, open communication and opportunity for advancement • Gear grants to take on a personal outdoor challenges • Community involvement and support for non-profit organizations • Incentive pay programs
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what is it about this particular concept that sticks so steadfast to REI’s principles? For Clements, the answer is simple: “We truly believe that our employees are our greatest asset. Whether they work five hours a week, or they work 40 hours a weeks, they create the customer experience and they create success for the organization. “We don’t delineate that a part-time employee versus a full-time employee adds less value, we believe that every employee brings value. As we have a large part-time workforce, we had to search the nation to find a provider that had an offer around part-time healthcare. That was back in 2004 and it wasn’t something that you saw many organizations offer. In fact, I still don’t know of another retailer in the US that offers the part-time healthcare plan that we offer our employees.” Ultimately REI felt very strongly that this was an important thing to do, to cover the lives of their employees, and in many cases, explains Clements, before this their lives were either uncovered or they were paying six to eight times the amount REI could offer them. “We just found something that was affordable,” she explains. The commendations for such a well-respected healthcare plan don’t just stop at Fortune, however. In fact, on Mother’s Day of this year, REI’s CEO Sally Jewell, together with six other business leaders, joined President Obama for dinner at the White House. They were brought together as thought leaders who could educate his staff on how the coun-
try might go forward in terms of healthcare coverage. For Jewell and REI this was a true reflection of the unique offer that the company provides around healthcare.
Incentivized And incentives go far beyond just healthcare options at REI. Take recognition, for example. “Our ‘Anderson Awards’ program is very unique because peers nominate peers, and then peers vote in terms of who is the Anderson Award winner for their division or store,” explains Clements. “Then we fly all the winners to our headquarters, where they spend three days celebrating their contributions to the organization. Then, and of course this only happens at REI, they get a ‘rock of fame’. We are known for historically being rock climbers, after all,” she laughs. “One of the programs that we instituted about three years ago was around workplace flexibility, and recognizing that employees’ lives are very complex,” notes Clements. “What we’ve encouraged our employees to do is to get the work done in a way that works well for the company, and for them. We have promoted teleworking and customized work schedules, and if somebody can work 7:00 am to 4:00 pm, versus 9:00 am to 6:00 pm, or a compressed work week of four days, or a job share with someone else, then that’s fine by us.”
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REI is also very committed to getting people off the road, if people can work from home and therefore not use a vehicle, the company encourages that. That also aligns around enabling the company to reduce its impact on the planet. Four or five years ago, REI deployed five van pools at its Sumner, Washington headquarters to minimize the number of workers travelling individually to and from work. Today, the van pool figure is closer to 20. “These are van pools where the employees become trained, licensed drivers and we fill these vans every day with their co-workers, people coming from all over the greater Seattle area,” explains Clements. “As a leader, I ride the van one or two days a week, and I view that as setting the example. I think it’s noteworthy to employees when I’m catching a van at 5:00 p.m. and my peers in the senior leadership team also actively van pool each week.”
“At REI we have a unique core value, and that core value is ‘balance’” In addition to all of the programs that are currently in place at REI, the company also completes a formal employee engagement survey every year. “We have tremendous participation in the survey, and we have tremendous engagement scores across the co-op, that Michelle are consistent, division by division,” says Clements. “We are very committed to conducting this formal survey every year, and we publish the results transparently across the co-op. One of the things that we advocate is that everyone participates if they’re interested in doing so. “We don’t just measure to measure,” she continues. “We measure, and then we form action teams in every store, and in every division. And those action teams are based around what strengths we want to make sure we protect and foster, and what the areas of opportunity are.” So, if REI has a team in the finance division, for example, that gets a low score in recognizing employees, then a leader in the finance division will form a team of different employees to put together a strategy around how they could do a better job in recognizing employees on a daily, weekly and monthly basis. Then, the leader would measure that within their team throughout the year, looking for incremental improvement. “We’re very committed to asking our employees for their feedback,” says Clements. “And we aim to do that in more ways than just the employee engagement survey. “For example, we don’t call our executive officers ‘executives’. They’re called the Leadership Team. And there are 15 Leadership Team members for the co-op. One of the unique programs that we offer is, as a leadership team member, I am assigned to a group of stores every
year, and every year that group of stores changes. This year I have Michigan, Minnesota, part of Washington, and part of Oregon, and my job is to go out, contact the store managers, contact the retail director and go to those stores and hold a session with all the employees in the store, share the mission and the vision of the co-op, talk about strategic imperatives for the year and then just open a Q-and-A time.”
Commitments Alongside all the efforts of employee engagement, recognition and wellness, there is also a great deal going on at REI to promote environmental stewardship. After all, it might be a little backward if an outdoors company were not showing a responsibility to the environment. In fact, today the company has a 2020 goal to be carbon-neutral in its business operations. “During the last decade, we have become a lot more formal and organized in our efforts to address our impact on the planet,” explains Clements. “We now have a corporate social responsibility division that helps us evaluate and measure what we’re doing across our best practices and insure that we get a return that will be strong.” For example, REI is now retrofitting its stores with solar panels where it can and where it makes sense, and looking at the energy Clements savings for that. “Our social commitment and involvement in our communities have always been a way of life, but we’ve recently become more focused on where we can make the greatest impact.” In addition to that, as REI opens new stores, teams closely examine the materials with which those stores are built, Clements explains how new locations use the US Green Building Council’s LEED certification during their construction; this includes REI’s new distribution center in Bedford, Pennsylvania. “It’s about looking at building design, sustainable fixtures and technology such as solar panels, and as we add to our locations, ensuring that we’re doing that with a green footprint.” Clements counts herself lucky. She explains, however, that her leadership footprint is also how she is measured, and how the ability to achieve the kind of balance that she demonstrates in her role comes from having a great feeling of teamwork. “I have an amazing team in HR,” she professes. “There’s a focus to empower people to help deliver the great work that we’re doing. Being a privately held co-op, the roots of REI are all about being a team. It’s never about an individual. The work we do together is very fulfilling, and I feel like I learn as much from the people around me as, hopefully, they will learn from me. It allows us to be, well, balanced.” n
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Check the oil How can HR practices in the oil and gas industry remain successful? For Frank Rudolph itâ€™s about focusing on new talent and skills development
his year was the second consecutive that Fortune magazine ranked Devon Energy among its 100 Best Companies to Work For, distinguishing the Oklahoma-based independent oil and gas producer as one of the nation’s most desirable employers. “While making the Fortune list is wonderful recognition for the company, it says even more about our employees,” said Devon’s chairman and chief executive officer, Larry Nichols, when the announcement was made at the start of the year. “Our employees’ values and their commitment are what make Devon a great place to work. We have an outstanding company with many wonderful assets, but we believe our people are at the foundation of our strength.” But further to this is the strong correlation between a highquality work environment and business success. According to the Great Place to Work Institute, those companies included on the Fortune list characteristically attract a higher number of qualified job applicants, experience lower turnover rates, and are among Wall Street’s top performers. This is great news for a oil and gas company given the current state of the economy and the pressures being put on industry as they struggle to find skilled and knowledgeable workers who can replace the baby boomers who are now reaching retirement. And for Frank Rudolph, who has been Devon Energy’s SVP of HR since 2007, this remains one of his toughest challenges, as we found out: What do you define as the main challenges in recruiting and retaining talent in the oil and gas industry? Frank Rudolph. If you actually look at it from a macro standpoint, the main challenge that remains despite the current economy is that in seven years from now, between 2016 and 2018, there will be a whole host of people in this industry who will be in the retirement bucket. The economic downturn may have pushed the severity of that out a couple years, but the reality in this industry is that there is a very large segment of the entire workforce that will so all be able to retire all at once. Of course, that means the challenge to grow new talent continues, so we are currently looking at college campuses and making sure that the industry is still meeting all of its technical and talent requirements when people are ready to leave. Just because the economy’s so bad right now, the demographics haven’t changed. There is still going to be a time when a lot of people leave the industry, and we have to be ready for that. Devon’s Bridgeport natural gas processing plant is one of the largest in the country, serving hundreds of gas wells in the rapidly expanding Barnett Shale field in north Texas. www.hrmreport.com
You mentioned growing talent through college campuses. What are you doing in this area at Devon? FR. Well firstly we take the opportunity to develop them as interns. Then, once they are hired, we put them into our postgraduate development program. We have very defined programs for our geoscientists, petrochemical engineers, accountants, IT, even for human resources, and, depending on the discipline, these new hires could be in that program for four or five years. The program allows them to improve from a technical understanding of their discipline to learning about the business and the industry and improving the application of their skills to the business, and also, more specifically, in working in the particular area and the assets they’re dealing with. And all this stems from an intership? FR. Absolutely. Once you’re in Devon for a year, you then feed into, from a development standpoint, our succession planning process, which is a very, very robust process. From there we’re continuing to look at, by division, and by function, our bench strength, and from there we are able to drive individual developmental plans. We actually have the technology that, whenever we have an opening or a need, we’re able to look at internal candidates well before we need to go outside and see where they’re at from a developmental standpoint and what additional development they need and what their career goals have. We can then balance their goals with our developmental needs, and, because we’re able to make internal selections, there’s a lot going on with respect to that.
FRANK RUDOLPH There’s been much talk about the skill shortage in the oil and gas industry. Why do you think attracting new blood is beginning to become harder? FR. Actually I think it’s becoming a bit easier. In the mid 1980s there was hardly anybody that went into the petro science area, for example, but now, if you look at the numbers, colleges in the technical areas are getting more and more students enrolled than ever before. I think that’s partly because of the salaries offered are significantly higher in for a petro engineers than in other engineering disciplines, so what we have seen is a gravitation of the schools both convincing people that this is a very good industry to go into as well as some big dramatic growth. Having said that, when you’re looking for people that are between the ages of 40 and 50 with high technical skills, that is a very big issue for the industry. It is very hard to search for people that bring 20 years of experience to the role, and that has to do with the issues the oil and gas industry had in the 1980s. They couldn’t get anybody to go into those disciplines, and so there was very few graduates entering the field, now there’s a big hole between what’s happening in the colleges and those in the industry who are now approaching their mid-50s and getting near the retirement bubble.
And how are you looking to attract those people at Devon? FR. Well we do a number of things. From a total compensation standpoint, we pay out more than a competitive level. We also made a decision a couple years ago to look at our retirement program, and we went from a defined benefit to a defined contribution. Our defined contribution amounts, which when somebody gets to around 10 years’ experience you can get 22 percent of your pay matched into that defined benefit program. That’s a program that has been described by some people as a 401(k) on steroids, and so what we’re able to do is convince people to make a mid-term career decision based upon what they can see in front of them from a retirement perspective, and that has helped a lot. As well as that, being in the Fortune 100 Best Companies, and going from 48th to number 13 has significantly added to our employment brand and has built upon the reputation that Devon Energy has already had in the industry as being a top employer with respect to all of our people practices and the way people feel about management and where the company is going, so that is another big add. And how important is the development of top talent at the firm? FR. It’s absolutely critical, but it’s about more than just talking about it – it has to be about having world class and creative approaches to it, that drive quantitative results around people development. You have to physically be able to look, year-over-year and ask, ‘Are we moving the needle with respect to developing our talent?’ And then, no matter what you are doing on in short-term, you have to have a great succession planning process that’s accomplish those things, and feed into the longer-term. How does being considered one of the best companies to work for in America impact your role at Devon Energy? FR. In the beginning, we never really established that we wanted to get recognized as one of the best companies to work for, but we now see it as a great recognition of all the things that we try to do to differentiate ourselves as really a top employer in our industry. This recognition is a very powerful employment brand, and it is provides us with great recognition internally as well, proving that we’re doing the right things, that our employees recognize that we’re doing the right things, and it becomes a feedback loop that we use. Mostly I would say that, once in a while, it’s just nice to get recognized for doing the right things, especially in a climate that we’re working in today. It’s great that we can say, ‘Look, we’re sticking to our values. We’e sticking to our people practices, we’re getting the recognition for that, and by the way, that recognition makes a difference’.
This article is based on an interview with Frank Rudolph for HRM’s sister publication Business Management. For more, please visit their website www.busmanagement.com
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N JUST A LITTLE $OMETHING In an exclusive interview, HRM speaks to Incentive Marketing Association President Norma Jean Knollenberg about what the organization is doing to increase corporate America’s use of incentives. 100
orma Jean Knollenberg began her career as a supplier to the incentive marketplace with Omaha Steaks International, a manufacturer and distributor of a wide variety of premium steaks, red meats and other gourmet foods. In 1982 she joined Top Brands – a now 48-year-old company supplying lifestyle products to be given as awards and incentives. She bought the company in 1993. In addition to this, Knollenberg is also the President of the Incentive Marketing Association (IMA), which leads incentive professionals and the corporate community as the premier educator and information source in the incentive marketplace. By promoting the utilization of performance management and measurement tools, results-oriented solutions, the exchange of information and ideas, and high standards of professionalism, IMA looks to advance the effective use of incentives and recognition in employee and customer programs. It’s a notable cause, especially considering that incentives are such a big business in today’s market place. In fact, corporate America spends nearly $46 billion on incentives each year, and, even in tighter economies like those we are experiencing today, the area of incentives continues to get much attention in company budgets. For Knollenberg, the reason for this is a simple one: “Incentives work!” she exclaims. But to what signiﬁcance, and what does the future for the incentives market hold? “An incentive program that is designed with measurable results, can help a company’s business grow and increase the bottom line,” Knollenberg explains. Incentives, she says, work for companies that want to acquire new business; businesses that want to increase sales or productivity; ﬁrms that want to improve the safety record in the workplace; organizations that want to attract and retain good employees; and businesses that want engaged employees and customers. In short, incentives work for any organization that wants to change the behaviour or focus of their audience. In fact, according to research by the IMA, there is a direct connection between engaged, productive employees and proﬁtability. This research, conducted by the partner organizations of IMA – the Incentive Federation and the Forum for People Performance Management and Measurement – also uncovered that companies that continue to invest in perks, rewards and recognition program regardless of economic conditions tend to outperform their competitors. The study sought to understand the organizational drivers of employee satisfaction and employee engagement, as well as the downstream effects of these attitudes on customers and ﬁnancial performance. By obtaining data from a random sample of 100 organizations in the US media industry, the study speciﬁcally investigating the following organizational characteristics: organizational culture; organizational climate; HR systems; and market characteristics. Further, in reference to the relationship between incentive programs and current economic conditions, the study produced some interesting results. “While there may be an overriding temptation among businesses to target employee motivation and incentive programs as a way to trim costs during lean times, our research has in fact shown a negative impact in lost talent, productivity and, consequently, future sales and proﬁts once an economic turnaround begins,” details Knol-
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lenberg. For many businesses, she explains, these are generally unseen but large and unrecoverable costs. She believes that instead of cutting long-term employee incentive programs in favor of short-term gains, companies should be looking at ways to protect the 85 percent of their assets that are tied up in the human knowledge and talent of their employees.
A direct connection
Today’s employees are working longer A closer look at IMA’s partner organization hours, taking fewer vacation days, and are The Forum for People Performance being asked to be more productive. They Management and Measurement are often moved to better performance by The Forum for People Performance Management and special incentives, such as merchandise Measurement is a research center within the Medill and travel, pointing to yet another signiﬁIntegrated Marketing Communications (IMC) graduate cant link between engaged employees and program at Northwestern University. It is funded by the proﬁtability. environment, are all factors that Incentive Performance Center, which is made up of a The research also found that organizacan potentially impact these number of top incentive companies and industry leaders tional culture was another signiﬁcant driver issues, as Knollenberg details: dedicated to research and educational programs that of employee engagement, where employ“Higher levels of customer improve human performance in business. A central ees must be expected to co-operate and satisfaction have been found to objective of the Forum is to develop and disseminate work together, but also to take charge and lead to higher levels of customer knowledge about communications, engagement and provide a voice for the customer within the retention and loyalty, and prodmanagement such that businesses can better design, organization. According to the study, a fully ucts and services that provide implement and manage people-based initiatives both cooperative culture feels the need to reach high satisfaction have a higher inside and outside an organization. consensus on a single option, where a culproportion of repeat business ture promoting healthy competition provides and higher gross margins.” multiple choices, which are then balanced Efforts to improve the organiagainst one another in an attempt to develop an optimal solution. zation and its products or services entail costs that are not reﬂected in Then, when individuals and teams are competing to implement revenue improvements or increases in customer retention. Therefore, to the optimal behaviors oriented to the market and its customers, such truly understand the ﬁnancial ramiﬁcations of an organization’s marketcompetition can work to the advantage of both the organization and its based efforts, these costs must be accounted for. “Such costs can be customers. “I think one of the key issues to consider when establishing accounted for directly or by utilizing a ﬁnancial measure that accounts for or re-evaluating an employee incentive program is to include the comboth revenue and cost, such as proﬁtability,” comments Knollenberg. pany’s goals, and choosing the appropriate incentives – be it gift cards, In the ﬁrst quarter of this year, IMA launched the ﬁrst issue of ROP merchandise or travel – that reﬂect the company’s business values. (Return on Performance) magazine. This ﬁrst issue was distributed Most importantly, I think the incentive program must have potential for throughout the US and Canada to more than 50,000 C-suite executives short-term and long-term results, and those results must be measur(including CEOs, CFOs and COOs) as well as senior managers, the goal able,” says Knollenberg. being to increase the visibility of incentive marketing throughout the “Our research shows that organizations with engaged employees entire business community. “There’s a tremendous opportunity out have customers who use their products more, and increased customer there for corporations to use incentive programs to build on proﬁtability,” usage leads to higher levels of customer satisfaction. It is an organizaKnollenberg explains. “And there are other organizations like us, within tion’s employees who inﬂuence the behavior and attitudes of customour marketplace, that also look to increase corporate America’s use of ers, and it is customers who drive an organization’s proﬁtability through incentives. However, in many cases, companies don’t realize our industry the purchase and use of its products.” exists, so and one of our goals with ROP was to reach those higher level In the end, customers who are more satisﬁed with an organizaexecutives to let them know that there is a huge industry out there that tion’s products are less expensive to serve, use the product more, and, can help them meet their objectives more proﬁtably.” hence, are more proﬁtable. It’s an ongoing battle, but one that continued research proves is necessary. “We’ve been trying to build visibility for many, many In the market place years,” concludes Knollenberg. “I myself have been in this business It stands to reason that certain market characteristics may inﬂuence employee attitudes, as well as customer and ﬁnancial outcomes. In particular, an organization’s size (in terms of number of employees), the size of the market in which the organization operates, and the competitive
over 30 years and we’ve been trying to position ourselves in the corporate market as a very important contributor that can help organizations with their marketing and bottom line objectives. We must continue to do that.”
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A war on two fronts Matt Davies kee pin g Controlling healthcare cost s and ed are two employees engaged and motivat busine ss of the biggest challen ges facing ctively leaders today. Is it possible to effe same time? tackle both of these issues at the
oday’s HR manager is walking slowly, looking right and left, stepping through smoky battlefields. Constant battles rage around him between employees complaining about what insurance does not cover and executives’ responsibility to manage cost. The sales team, their plate-mail bashed and bloodied, trying to help each other up to rally in front of the frowning executive department riding high on elephant backs. The executives cringe when they see the healthcare militia taking a bigger bite in stockholder’s profits. With arrows whizzing by, HR managers need to find ways to help negotiate a cease-fire and leave war behind, so they can concentrate on the important work of raising morale and forming a society that thrives on positive influences. The same forces that guide community cultures drive company cultures. Go to a little-league event, a marathon or a ballgame to see sport’s influence on culture. Competition and sport are key cultural choices that bind us together. As a consequence for the HR manager, sport increases opportunities for employees to exercise, which increases the average health of employees. This drives down insurance costs and brings people together, driving positive cultural change. Promote employee interest, mood and health by incorporating friendly competition and healthy activities. Start a running club, or get the CEO behind an all-company Olympics by department. Start company baseball teams, kickball teams or yoga classes. Celebrate employees that attend or excel in order to drive further participation. Involve your executive and marketing teams in making the programs relevant and fun for employees. Drive involvement through prizing, public celebrations and incorporating company gifts or reward programs into the initiative. Our clients at Nike find that giving gift cards for athletic footwear, equipment and apparel, in combination with a wellness program that promotes running, group sports or organized tournaments can help a company make their program exciting to employees so that they are more likely to engage in the activity. Nike has two unique programs that help companies do this, made convenient through the Nike Gift Card Program. Nike+ is a system that links your Nike+ shoes
and iPod together to track your runs, enable your ‘Power Song’, and even encourage runners with voiceovers from famous athletes. There is nothing like Lance Armstrong confirming you’ve just run your fastest mile. Runners can challenge their friends or co-workers to compete in virtual competitions, all conveniently tracked online. Companies can even organize their own challenges or encourage employees to join Nike organized virtual competitions, through our famous annual Human Race or races pitting city against city. Nike even has a way to make equipment and footwear personal. NIKEiD is an innovative online customizable solution that allows employees to customize their own shoe colors, materials and even emblaze their own name or phrase on the product. This incredibly personal and emotional gift is a great way to inspire athletes within your workforce. The innovative online site uses advanced interactive technology to make the experience fun for the recipient. Nike has had clients whose CEOs have introduced their exercise program in a live web-conference with their entire staff watching, wearing funky NIKEiD shoes, and given NIKEiD gift cards to every employee to get their own size and style of shoe in the company’s colors. The employee feels appreciated, is able to show their company spirit and is inspired to start the exercise program. By giving a Nike Gift Card for Nike products to your employees, you’ll help inspire them to a better, healthier lifestyle. Employees will be more likely to participate in company-sponsored events, and will be inspired to build valuable relationships with their co-workers that will boost productivity. All of this will help lower average healthcare costs, reducing those smoky battles that HR managers have to walk slowly through. n Matt Davies is the Gift Card Manager for Nike Retail Services. The Nike Gift Card Team supports online, 170 Nike owned stores, corporate sales, and thousands of third party retail locations nation-wide. Previously, he ran the national gift card and national promotions program for Hollywood Video for 2500 stores.
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In a past feature for HRM, we looked at some of the more quirky perks being offered across Corporate America. Here â€“ as the recession leads more and more companies to turn to inventive incentives to keep workers happy â€“ we revisit some of the best.
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elcome to Oklahoma City, headquarters of Chesapeake Energy Corporation. As the number one independent producer of natural gas in the nation and the most active driller of new wells in the US, Chesapeake is focused on discovering, acquiring and developing conventional and unconventional natural gas reserves onshore in the US. And while you might think that the company, which celebrated its 20th anniversary of operations in May, is more likely to announce news pertaining to lab studies in petrophysics than it is to be recognized for talent management, 2009 marked the second consecutive year that Chesapeake was included on Fortune’s Best Companies to Work For list. Driving factors for Chesapeake’s inclusion on the list included the fact that, despite the recession, the firm was still hiring, and the company was also commended on the credibility of its leaders, the respect that workers feel they experience, and the fairness of policies and practices in the workplace. But in addition to this, Chesapeake also featured on a different list, focusing on some of the unusual perks being offered by a plethora of US companies. So while on the surface Chesapeake doesn’t sound like the sort of place where you’d hear the motto ‘Bring your flippers’, the company actually boasts an on-site Olympic-size swimming pool, where employees can take a plunge and earn a scuba-diving certification. The perk is made even sweeter given that the company hires the instructor and picks up the bill for all the associated instruction materials. Chesapeake isn’t alone. In the economic crisis of today, companies who are looking to cut costs, especially on things like employee benefits, are learning to think outside the box. And, as research has shown that a lack of good benefits can lead to a severe drop in employee morale and productivity, organizations are looking at ways to maintain motivation by rewarding employees with benefits and perks that are both unique and cost-effective. In fact, on-site medical services, ping-pong tournaments, and free gym memberships are today among the most popular (if slightly unorthodox) perks that many companies are beginning to offering to their employees. At Genentech, for example, employees are encouraged to come to work by bicycle, on foot, via public transportation, or in a carpool with a $4 a day subsidy. Meanwhile, at PricewaterhouseCoopers, all 5000 employees of the firm's consulting arm were flown to Orlando last summer for a weeklong training session, where, among other goodies, they received free iPod shuffles. Michigan-based workers at Quicken Loans can simply hop on company-sponsored buses to see the Cavaliers play ball (CEO Dan Gilbert owns the team) or attend a concert at the Quicken Loans Arena. Other companies pushing uniqueness include retailer Timberland, who offer employees a $3000 subsidy to buy a hybrid
automobile; SC Johnson & Son who offers retirees a lifetime membership at the company fitness center; and homebuilder David Weekley Homes who gives employees a 10 percent discount on a new DW home. Not enough? At drugmaker Eli Lilly, pregnant employees can take a paid month off before their due date; steel processor Worthington Industries offer on-site salon treatments, including a $4 haircut. Employees at leading biotech firm Amgen receive 16 paid holidays a year, nearly double the national average; and JM Smucker reimburses employees tuitions by 100 percent, the bonus being that there is no limit to how much they will pay. But even though benefits, ranging from flexible work schedules to stress-reducing walking trails on company grounds, are helping to draw in employees, executives aren’t always taking part. In fact, according to a recent survey conducted by the Association of Executive Search Consultants, while 87 percent of senior executives felt work/life balance considerations were a key factor in determining whether to join or remain with an employer, 46 percent said their work/life balance had worsened over the last five years. And David Clark, Vice President and a Senior Career Management Consultant at Right Management Inc., a career transition and management firm based in Pittsburgh, believes that executives are getting fewer benefits than in the past, including quality-of-life perks, relocation packages and hire-on bonuses. Clark attributes the downturn in perk offers – a trend he says is most prevalent in larger companies – to the fact that there are more executives seeking companies than companies seeking executives. However, despite the downturn, evidence shows that some smaller (and oftentimes more locally-based) companies are reaching out to employees across all levels to encourage work/life balance through a variety of perks. For example, accounting firm
“In today’s markets, as companies learn that they might not have the ability to spend on certain employee benefits, they are still concerning themselves with employee morale”
Sisterson & Co. LLP, also based in Pittsburgh, now offers a variety of flexible work schedules to its employees, who can decide to come in early or stay late depending on their out-of-work needs. And in today’s markets, as companies learn that they might not have the ability to spend on certain employee benefits, they are still concerning themselves with employee morale. In fact, many companies are now implementing schemes like laundry services, massages, car washes, on-site dental visits, day-care facilities, health club memberships, beer and pizza parties and office meal deliveries for employees working late into the night.
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Such perks enhance productivity and morale while providing convenience and accessibility to the employee, and employers are learning that the monetary costs of such perks may be worth the benefits gained from improved work conditions for employees. What’s more, the concept of unique incentive schemes seems to be going global. In the Czech Republic, for example, where the healthcare system is facing a dire nursing shortage, clinics and hospitals are resorting to unusual incentives to retain talent – namely, offering free or reduced-priced plastic surgery to employees. While such perks do not appear to have been embraced by other countries with nursing shortages, they seem to have found a happy home among the Czech people, as healthcare managers look at free tummy tucks or re-modeled breasts as no different from a free trip to the Bahamas. In other words: one-shot bonuses that cost less than salary increases.
“Companies who are looking to cut costs, especially on things like employee benefits, are learning to think outside the box”
To the limit Need ideas on how to keep your employees happy? Take a look at these more extreme employee benefits. Ford Motor Co.
And it seems to be working. At Iscare, a clinic headquartered in Prague, where nurses can choose from an assortment of procedures including a $2013 tummy tuck or a $1836 facelift if they sign a threeyear contract, the plastic surgery offer has helped increase nursing applications by 10 percent in the past three months. But critics, including Czech sociologist and gender studies expert Jirinia Siklova, say the offers of cosmetic enhancement demean what remains a largely female occupation. “If any institution offers this incentive, then it has lost all credibility,” he argues. “I would expect such behavior from an erotic salon, not from an institution devoted to healthcare." In contrast, doctors and nurses say the shortage is hurting patient care and potentially risking lives, and with healthcare analysts estimating that the Czech Republic has a shortage of 5000 nurses in the public sector alone, its not surprising that managers are trying every tool at their disposal to find more hires. Regardless of such extreme cases, recruiters are starting to learn that add-ons – such as those mentioned before – which were once never part of the deal when signing someone on, are fast becoming essential. Perks don’t have to be all-expenses paid dream holidays, and they don’t have to be the sort of thing that requires management to take out a bank loan just to see them through, but the people who work long hours for the company’s benefit deserve appreciation. Sometimes nothing says thank you like reimbursing an employee’s tuition, or taking care of their children while they are at the office. Put simply, take care of your employees and they will take care of you. n
Dearborn, Michigan Interns rarely get great perks, but in Ford's PR department they get to take a spin around the company's figure-eight test track. The interns are not allowed to exceed 60 MPH, but they might get to rev up the newest Mustang before it hits the market.
BMC Software Inc. Houston, Texas BMC software provides on-site car washes and oil changes. Employees can park their cars in the company's lot in the morning, and for a fee, BMC will make sure the car has been washed and its oil changed by the end of the day.
Inlumen Inc. New York, New York The “I Love You – I Love Me” program gives employees $50 to spend on someone they love – including themselves. But the money must contribute to a cultural, intellectual, or health-related interest.
Sun Microsystems Palo Alto, California Instead of wasting time in traffic, employees can work from one of five drop-in centers that are scattered throughout the Bay Area. Open 24 hours a day, 7 days a week, each center accommodates about 50 workers.
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Honest motives? Who really benefits from incentives in a tough business environment?
o one needs to be told anymore that times are tough. It’s got to the point where news of a global pandemic of swine flu or a shocking celebrity death serves as a welcome respite from wall to wall coverage of the economic downturn. Businesses are going under, profits are down and making it to the end of the day without receiving a pink slip is a major cause for celebration. In such a climate, employees can be forgiven for feeling a little downhearted. It can be hard enough tackling Monday morning at the best of times. When you’re living in a state of mildly suppressed panic about the future of your job, work can become downright unbearable. It’s an oft-quoted maxim that happy workers are productive workers. A tense and uneasy workforce only risks compounding the difficulties that many businesses already face. What makes the situation worse is that the time preceding the crash was one of such bounty. In the heady days of the nineties and early noughties, things could only get better. Wages were rising, bonuses were big and that was the way it was going to stay. Transitioning to today’s leaner times has been something of a culture shock. Dealing with employees concerns as well as managing expectations built up in the boom years can be a headache for organizations. They want their people to feel valued so that they will give their all for the good of the company. And they want to do it without spending too much money. Incentives have traditionally been utilized to engage employees and reward them for good performance, and the prevalence of
such programs suggests that they are generally deemed effective. But when margins are as stretched as today, they potentially take on a far greater significance. In a year when pay rises are likely to be paltry, if they materialize at all, these little extras can make a big difference. One common reward incentive is the gift card. These can be redeemed against a variety of consumer goods, from home improvement supplies, to sporting goods, to electronics. When household budgets are tight, such rewards can be a real boon for individuals. They provide the rush of endorphins you only get from buying new toys, but without the added feeling of guilt that you’re making frivolous purchases in a recession. But recognition and incentives are changing. A growing number of companies are using the concepts suggested by social networks to provide instant recognition to their people. By setting up internal peer-to-peer networks, organizations give their people the ability to send a colleague an e-card congratulating them on a job well done. Alternatively, you can nominate a colleague for
a free cake or coffee in the company cafeteria. From a purely business perspective, such recognition programs have much to recommend them. They’re instant, personalized and, most important, virtually free. I don’t wish to come across as a cynic, but I don’t believe that a free drink or a virtual pat on the back really fills the gap left by regular pay rises or genuine job security. I’m a regular user of Facebook and Twitter, so it isn’t that I don’t understand the power of social networks. Even though reports indicate that these peer-to-peer programs are popular among workers, I question who really wins in this equation. My concern is that they can provide a smokescreen for companies who want to keep their costs low, not just now but in the future as well. If we all get used to these self-sustaining forms of recognition, it will be that much easier for business to keep the purse strings tight once the economic situation improves. Maybe I am a cynic. Maybe this kind of recognition is good for everyone. I just have a hard time believing anything truly valuable comes for free. n
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Strategic thinking Deborah Hernandez explains the surprisingly effective cost containment strategy that many companies are yet to try
mployers today are fighting a war on two fronts – they’re battling rising insurance premiums while facing mandates to cut costs. With nearly every employer under this kind of pressure, it is hard to believe that there’s a cost containment strategy most haven’t tried. In 2008, a leading provider of cable, entertainment and communications services received an unexpected saving of $456,000 on their benefit premiums at two locations by embarking on a process they had never tried before: The DELVE Audit. The DELVE Audit was conducted by Univers Workplace Solutions, the leader in strategic benefit communications and enrollment services. “The DELVE Audit is a dependent eligibility verification process that is turn-key, non-invasive and delivers proven cost savings,” says Danielle McCauley, Senior Vice President of Marketing for Univers. “Most companies find that between five and 15 percent of enrolled dependents are not actually eligible for coverage,
including grown children, ex-spouses and even fraudulent claimants.” With a staff of about 100,000 nationwide, the cable services company took a cautious approach to implementing the Univers DELVE process, first testing it with two distinct, regional employee populations. The company did not want the audit to be perceived negatively by employees. Carefully planned advance communications, a non-threatening method of requesting eligibility documentation, and an amnesty period ensured that employees did not feel undue pressure as a result of the DELVE process. The communications campaign and one-on-one interaction with employees were handled by highly trained Univers staff, who collaborated closely with the employer’s HR team to ensure minimal workplace disruption. The DELVE Audit resulted in the identification and removal of seven percent of the plan’s 2824 dependent participants who did not meet eligibility requirements for medical, dental or vision coverage. At an average annual cost of $2400 per dependent, the company saved $456,000 for the year within those two regional employee populations alone. This figure did not include the savings on claims that would not be paid for ineligible participants. Since Univers has the ability to expedite carrier deletion of ineligible dependents, companies who go through the DELVE process can start realizing savings immediately, according to John Carletti, Senior Vice President of Operations at Univers. “The DELVE Audit is a great way to save money in year one,” says Carletti. “But the effect is multiplied when you consider that companies save not only on this year’s premiums, but potentially on several years’ worth of premiums that would have been paid had those ineligible dependents never been identified.” Even more potential savings can result from the DELVE audit in ways that are not immediately obvious, explains Carletti. “Consider the issue of claims experience and the fact that
Deborah Hernandez is a freelance writer in Orange County, California. She has 15 years of communications experience and has written about such topics as employee benefits, entrepreneurship and consumer electronics.
every individual in your group has the potential to negatively impact future premiums based on prior claims. It just makes sense to mitigate that risk by removing participants who simply are not eligible for your company plan.” Another benefit to companies who implement a process like DELVE is increased compliance with regulations like Sarbanes-Oxley and ERISA, which mandate that employers manage group plans for the “exclusive benefit” of eligible participants. Maintaining accurate eligibility documentation is key to meeting these requirements. What is the most far-reaching effect of a dependent eligibility audit like DELVE? “The savings resulting from DELVE can be significant enough to help an employer avoid cutting benefit plans or raising employee contributions,” says McCauley. “This is a true win-win situation for both employers and employees.” More than 1700 mid-sized and large employers have turned to Univers to elevate employee benefit knowledge, improve the enrollment process, and increase the return on their benefits investment. Univers core services include strategic benefit communications and enrollment solutions, LifeFlex services for non-traditional workforces, and the DELVE Audit that has saved Univers clients millions annually. n For more reasons to choose Univers, visit www.univers.biz
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A royal engagement Thomas Mahoney of ITA Group explains the importance behind employee engagement and tells us how it plays a critical role in company success. What impact can an insufficiently engaged workforce have on an organization’s success? Is it possible to accurately measure the costs of insufficient engagement? Thomas Mahoney. Whether you are a service or manufacturing organization, retaining and growing your business comes down to two things: reinforces the proper behaviors in our employee owners and helps drive quality and service. Employees and channel partners ultimately define organizational performance. Many tools can be used to establish a strong the customer experience and an engaged and motivated workforce will link between the employee and company: salary, benefits, leadership, lead to higher levels of quality and customer service and, ultimately, recognition and rewards, incentives, self-accomplishment and developgreater levels of customer satisfaction. The lack of workforce engagement. The key to success is in understanding the best practices for use, ment is not a sustainable business model. Revenues and profits will and developing a customized solution for specific needs. suffer without a highly engaged workforce. In our company, we tie workforce productivity Can engagement be a ‘one-size-fits-all’ apto overall customer satisfaction. It helps us underproach or is it necessary to tailor your efstand the important balance between productivity, forts to specific workforce demographics to engagement and overall customer satisfaction. ensure success? It is possible to accurately measure the costs TM. The methodology and best practices to of insufficient engagement. One such benchmark achieve engagement can benefit many orgais employee turnover. Insufficient engagement nizations. Large complex organizations, with on behalf of your workforce will lead to increased multi-generational workforces, and several difturnover and organizations should measure and ferent lines of businesses require a customized understand the costs associated with employee approach to maximize the ROI relating to human retention. We also measure customer satisfaccapital. It is critical to understand the diversity tion utilizing the “net promoter score”. We utilize within your employee base and develop and all PPM initiatives within the company, to demonimplement the appropriate communication and strate our belief in best practices. recognition strategies to engage and motivate Thomas Mahoney is President & CEO them on an individual level. of ITAGroup, Inc. He joined ITAGroup as What methods can be employed to build ema National Account Manager. In 1989 he ployee engagement? Is it purely a question What role does company culture play in buildbecame Director of Marketing, and was of providing material incentives or are there ing engagement? What are the key features of a promoted to Vice President the following other approaches? strong corporate culture? year. In 1992, he expanded his role as Vice TM. People want to understand the mission and TM. The company culture is mission critical to President-Sales and Marketing. In 1998, he vision of their company. They need to believe the building engagement. To create rational and emowas named Executive Vice President – Sales desired goals are rational, and that they are skilled tional engagement, the vision must be sincere and Marketing. In 2006, he was promoted to and empowered to support the success of the and accurately communicated at all levels of an President and Chief Operating Officer, and in company and customer. Team members also want organization. Senior management must believe 2009 was made President and CEO. to feel emotional connections to their positions that the people of the organization are it’s greatand organizations. Appreciation for exemplarily est asset, and their performance and level of enperformance with the appropriate level of recognigagement will define the company’s competitive tion and reward will drive rationale and emotional engagement. advantage. Building a strong corporate culture requires the following Building employee engagement through material incentives is highly sequential steps: 1) clearly define your company’s mission or vision; 2) effective and a great motivator for employees. Companies can choose to openly communicate that brand message; 3) effectively engage your use a mix of recognition strategies to motivate their staff. At ITAGroup, employees by showing them how their individual performance will help we use a mix of material incentives and public recognition to ensure our drive the overall corporate brand; 4) recognize and reward those efforts employees are recognized, motivated and engaged. This mixed strategy that positively promote the goals and objectives of your mission. n
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Travelogue A recent Incentive Research Foundation (IRF) report found that, while incentive travel programs remain a preferred business strategy, budget constraints mean they are likely to be altered. HRM’s Katie Pollack investigates how the market is changing.
n May of this year, the IRF held its 16th Annual Incentive Invitational in Palm Springs, California. Utilizing all the elements that make incentive travel an effective motivation tool, the Annual Incentive Invitational which brings together end-users and partner suppliers for a three-day weekend of business networking and education sessions, addresses current economics and industry trends, as well as destination lifestyle experiences. Now a new study from the 2009 Invitational has revealed that, despite the condition of the economy, a majority of incentive practitioners are unlikely to switch from travel incentives to another initiative. The study, entitled The Incentive Industry Trends Outlook 2009 Pulse Survey, indicates that while incentive travel programs will indeed be altered due to budget constraints, their utility as a strategic business tool still persists. Answers from the participants in the survey – which included incentive travel providers, corporate incentive travel buyers, and suppliers revealed a shift in award selection decisions and budgets for incentive travel programs, as well as the political landscape’s impact on the industry. Chief Research Ofﬁcer at the IRF, Rodger Stotz, explains further: “Amid the economic downturn and intense public scrutiny of motivation and awards programs, savvy business professionals continue to realize the power of incentives to help achieve business goals, even when they may need to alter programs due to cutbacks.” Such understanding supports the beliefs of those who work within the incentive industry who believe that incentive programs are resultsoriented, cost-effective, are useful for multiple applications and are highly measurable. But the study also questioned respondents about speciﬁc actions that could help properly communicate the value of industry offerings, with the three most suggested ideas being the need to educate the ROI of incentive programs; the need to lobby government; and the need to educate the press and media about the beneﬁts of incentive programs.
And, it seems, these types of efforts may be critical in the coming years, as 65 percent of respondents consider the incoming political climate to be ‘unfavorable’ for incentive programs.
Going deeper What’s more, many of the questions asked in the Industry Trends Outlook 2009 survey are the same as those asked in a previous Pulse Survey that was conducted in October last year. Subsequently, this provides additional insight into the variable nature of the industry, as well as a snapshot of change during the intervening time. For example, the use of experience-related awards and gift cards is on the rise. And, while 30 percent of respondents foresee no change in award selection, they are now more likely to include experience-related awards (24 percent in March versus 13 percent in October), add debit/gift cards (16 percent versus ﬁve percent), and increase merchandise award value (12 percent versus ﬁve percent) in incentive programs going forward. In the shadow of ongoing economic woes, all incentive providers are facing a number of challenges and opportunities. When comparing results from the October survey with this year’s, all incentive program elements measured, with the exception of ‘per diem cash allowances,’ were expected to face deep budget cuts, with the deepest expected in incentive company management. Other anticipated reductions include incentive company involvement, on-site gifts, and the number of total qualiﬁers, communications budgets and overall awards budgets. Finally, respondents in March 2009 were much less likely than those in October 2008 to agree that competitor reactions impact the products and services their company offers, and respondents were less likely to agree in March than in October that their companies are sensitive to perceptions of program extravagance to the extent that the type of awards and program inclusions would be changed.
of respondents foresee no change in award selection
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Forresterâ€™s Paul Hamerman takes a look at the key tech trends impacting HR today.
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RESPONDING TO THE CLIMATE Part of our current focus is what should HR do related to the economy. The vendors I deal with used to talk about the war for talent, and they’ve kept ON talking about it. I’ve said, “Wait a minute! You know, we’re in a recession here. There’s not a war for talent anymore.” But I think one of the challenges is that as companies have gone through this very difficult period they have to figure out which employees they really need to retain. The question is how to do that. What should that decision be based on? It should be based on a variety of factors including their performance and competencies and how difficult they are to replace and so forth. A lot of companies don’t have all the information. Sometimes they have to make decisions based on cost data, which is another factor. If you have to reduce headcount, you can’t just get rid of some of the lowest paid people because you have to take cost out of the business. This has been a difficult thing to deal with. But it seems to me that the worst of it is over and that companies are now into a stabilization period and maybe hopefully an expansion by the end of the year. Another interesting trend is related to recruitment. Many companies
may have hiring freezes on, but they haven’t totally shut down recruitment. They still have a limited number of open positions that they have to fill, and what’s happening is that there is a tremendous upswing in the number of applicants for those fewer positions. Organizations have to have some technology and some process to effectively sort through that avalanche of resumes that they’re receiving. Another key trend we’ve been tracking is that there’s a higher focus on variable pay and particularly pay for performance. A lot of companies have been just really focused on the salary component in the past. In other words, measure performance, and then make some kind of adjustment in salary, which tends to be very, very small even if you’ve got a top performer. But also companies want to move more pay into the variable bucket because it helps them manage their bottom line better. If the business is turning down, deploying more pay for performance can cushion the bottom line impact by varying bonuses based on company performance. We’ve seen an increase in those kind of variable types of activity and really trying to match performance against variable pay rather than focusing so heavily on base salary.
SOFTWARE AS A SERVICE
In some ways, technology in HR has been more advanced than other areas. We’ve seen that a lot over the years with web-based self-service, and now we’re seeing it with social technologies. In some ways HR has embraced newer technologies more quickly. This is despite the fact that the HR department tends not to get the most attention internally in terms of IT budgets and so forth, so they tend to be a bit constrained around their investments in core systems. One thing HR has been more proactive and really more ahead of the curve on is software as a service. We see that as a big trend that’s evolving in the way that software is delivered and consumed on a subscription, hosted basis and so on. The uptake in HR has been tremendous and really comparable only to CRM applications. HR and CRM lead in software as a service adoption by a significant margin. It’s not just recruitment systems, but rather in core HR. It’s talent management systems and so on. So, software as a service delivery is a significant trend, and HR has been right there as one of the key adopters. Adoption continues to evolve as a mainstream deployment method. So when HR shops for applications, they’re going be evaluating solutions that are delivered under this hosted subscription modeI. I think we’ll see that model continue to increase in terms of its adoption versus the traditional on-premises systems that have to be upgraded, sometimes at great cost.
For HR processes to work effectively, in a lot of cases they need to touch the individual employees. So an individual employee should have a connection to certain HR processes via web browser portal, self-service applications as well as some content and things like this. That’s been happening over the past decade, and we see that a lot of companies, particularly larger companies, have significant HR services that are delivered over the web, and employees can access them at work or at home. That’s been on the increase now for more than a decade, and I think it’s probably stabilized at a pretty substantial level of adoption. What’s growing even faster at this point is the adoption of self-service for managers because managers administer a number of HR processes related to hiring processes, to salary decisions, bonus performance appraisals and so on. There’s more and more acceptance and even more software capabilities that are being delivered to the manager as a key role. I’ve been following HR systems for a long time and I think one of the fundamental changes today is that the newer systems on the market are really designed not just for HR professionals, but really for the entire enterprise where key roles include employees and managers as well as HR leaders and executives. These roles are being designed into the software instead of cobbled together as an afterthought because all of the mainstream HR systems that we’re familiar with – you know, PeopleSoft and SAP and so forth – were originally designed to support the HR professional. So the role focus has changed.
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TIME MANAGEMENT There is definitely movement at the moment in the time and attendance, or to put it a little bit more broadly, workforce management. That includes time and attendance and scheduling applications so there are still some opportunities in those processes. One of the opportunities really has to do with the efficiency related to how do you record time, and how you calculate gross pay on that time data. There are some good systems that can automate that process and also save the company some money in terms of making sure that the time punches are accurate and there’s proper enforcement of policy and reduction in fraud and things like that. There’s a good value proposition there, and there is also quite a bit of compliance related to that process, related to wage laws and so forth. The other part of that is generating a great deal of interest, particularly among larger companies, concerns scheduling their workforce into facilities that have variable demand. So we see it a lot in the retail space, in hospitality industries like restaurants and hotels. It’s basically a system that can help calculate what schedules people need to work and how many people they need on the site and so forth. I think those are, very interesting applications. They can be quite challenging to implement, but if they’re implemented properly, they can produce a good payback in terms of labor cost by matching labor availability against demand.
I think there’s a lot of interest in social technologies and in terms of social networking as a tool to really revolutionize the recruiting process. It’s already happening informally, but I think what may happen is the commercialization of social technologies in terms of being able to support these kinds of processes. HR vendors in particular need to do a better job in helping companies manage information about people. It’s the concept of master data management, and right now I think one of the challenges that companies have is that the employee data is so pervasive and so complex. There just needs to be a good integration strategy so that this data can be used as a system of record and propagated for a variety of purposes, some HR related and some not HR related, such as in IT provisioning and things like IT security and building security. There’s a need for some movement in that area to really manage this data problem around people. It’s not just employees, really. It also includes a variety of contractors and people that aren’t on the payroll. There is an analytics component in terms of how does HR run the business of HR, and what types of analytical information do they need on trends. That’s a big requirement and one that’s evolving. Also just synchronizing data from an accuracy standpoint about who’s working for the company today, and what sort of processes need to occur in order to properly synchronize that data and propagate it to all the other systems that depend on it. But that’s more almost a plumbing kind of a problem.
HR traditionally relied on paper and a range of one-off systems and so forth. Technology has changed this so I think the efficiency has been playing out, and I think a lot of companies have gotten to be pretty efficient in the way that they administer their HR processes. Now they’re looking for higher level value propositions related to managing talent and getting employees to be more productive and perform better and, ultimately, to retain their top performers and also to match compensation against performance in a more effective way. There are still some opportunities there, but that’s sort of some low-hanging fruit that’s been addressed in many areas over the past decade.
Paul Hamerman is Vice President and Principal Analyst for Forrester Research. His coverage includes the ERP market, financial management and human resources management systems and business processes, and business performance solutions. Hammerman is a leading expert in the overall enterprise applications market, analyzing trends such as software vendor mergers and acquisitions, nextgeneration architectures, industry-specific strategies, market sizing and segmentation, and packaged application deployment models (including software as a service).
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NETXERT AD:june09 01/07/2009 09:51 Page 119
PeoplePlus handles every phase of the resource recruitment and management process!
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• Gives companies a critical competitive edge to manage and continuously search for new talent—all through powerful tools that are quick and easy to use. • Simplifies the task of finding the right candidate at the right time. Staffing managers reach candidates faster and can quickly develop a shortlist of quality candidates to give to hiring managers. • Offers a unique, custom blend of 100% web-based recruitment technology, talent consulting, talent acquisition products, and recruitment process management. • Streamlines the entire recruitment process, leaving you more time to focus on strategic business priorities. • Automates and enhances the recruiting and staffing process, enabling companies to make superior selection decisions. • Provides a database structured by candidate, employee skills, and career preferences; matched in real time against the needs of any organization. • Handles recruitment administration quickly and easily—from unsolicited applications to ongoing vacancies, internal restructuring and the high volumes typically associated with recruitment programs.
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Time after time Workforce management technologies are on the rise. We speak with Infor WFM Workbrain’s Owen Brangwyn and NOVAtime’s Brian Harris about the importance of keeping track of your employees. How can workforce management technology be of particular benefit in cutting costs and increasing productivity in a difficult business environment? Owen Brangwyn. It is important, regardless of the economy, to ensure your workforce is properly aligned to your business needs. During challenging economic times this becomes even more critical and we see the most profitable companies ensuring there is the right coverage at the right times to keep costs low and productivity high. The challenge for many companies is the ability to accurately see their entire workforce, identify areas for improvement and then implement necessary changes. Large workforces become very complex and can strain many workforce management systems. Infor WFM Workbrain thrives on complex labor challenges to help companies more accurately align their workforce. This alignment directly impacts our customer’s bottom line by removing unnecessary activities and administrative tasks. Additionally, proper planning and insight into a company’s workforce needs help reduce over-staffing and this leads to a reduction in total payroll expenses. This has been seen time and time again and recently highlighted in our customers’ quarterly earnings. Brian Harris. Understanding where your employees, or workforce, are at any given moment through real-time tools helps any company make better decisions and also ensure proper resource levels against productivity requirements. Workforce management solutions also ensure that employees are working as scheduled and not hitting company cost centers when not scheduled or maximum budget hours for any given job or department have been reached. Because payroll is typically the highest expense in most companies, the use of workforce management solutions to automate and enforce pay polices almost always contributes to significant cost sav-
ings. As adoption and workforce management usage increases in a company, so do productivity and savings. Another important factor in the productivity for companies is truly understanding what internal departments and jobs actually cost. Time and attendance, or workforce management, solutions give companies the information to understand where the true costs are in their products or service offerings. As workforces become more mobile and autonomous are systems that track time and attendance still relevant? BH. Absolutely. Workforces are becoming more mobile and as standard ‘brickand-mortar’ business models decrease, it is maybe more important to understand what your employees are doing at any given moment and be able to do labor and job costing real time. Workforce management solutions provide tools including mobile platforms, PDA integration, and interactive phone systems for management to gain visibility into these remote employees and effectively manage them. With today’s demanding business environments, it is important to create cultures of accountability and efficiency and that is what workforce management solutions provide. OB. The ability to work anytime, anywhere creates an even greater need to track and understand what your employees are working on. Mobile and autonomous workforces create a higher level of complexity in driving labor productivity. The most progressive companies are utilizing workforce management to track time via web-enabled capture devices regardless of where the employee is located. For example, Infor WFM Workbrain provides realtime compliance to help customers control working hours and stop poten-
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tial regulatory or operational breaches from occurring whether their employees are located on premise or not. The data captured by our system remotely aids scheduling and other operational decisions in real-time and for future planning processes.
the time and attendance market. Because these solutions are developing so rapidly and time and attendance functionality is becoming more and more integrated with payroll and HR functions, it makes sense for companies to leverage SaaS models so that these companies can stay current with functionality offerings without having to constantly upgrade applications (and Can time and attendance systems provide benefits for workers as well as possibly infrastructure). The use of SaaS models for time and attendance entheir employers? ables best practices in all HR/Payroll areas while letting companies focus on OB. As the functions of time and attendance have evolved there is evidence their core strategies. that employees actively seek employers who offer interaction with their sysThe continued development of employee self-services and platforms tems, underscoring the benefit that to enable self-service (clocks, web services, etc.) will also play an employees find in advanced software. important role in the increased adoption of time and attendance soBrian Harris serves as the Infor WFM Workbrain removes the lutions. As barriers and myths are broken surrounding ‘big brother’ Director of Professional Services headaches of paper-based processes (biometrics, tracking, etc.) and employees realize that workforce for NOVAtime, overseeing all such as personal leave requests. management solutions enable companies to control costs and ulticustomer-facing activity from preThese become a self-service function mately succeed, employees will embrace the technology and sales to support. Having served that expedites the approval process processes that come along with these solutions. nearly 20 years in the nation’s and updates the timesheet in adThe last area of significant growth will be the integration of time largest consulting firms, Brian vance. This also reduces queries as and attendance with external applications. Because of the need to focuses on the alignment of fewer exceptions occur at timesheet leverage real time data with secondary systems and Enterprise approcess and technology with sign-off time. Workers have access to plications suites, time and attendance providers will continue the today’s ever changing businessend of week time and pay data, which development of flexible middleware and communications strategies critical issues and demanding helps reduce payroll and other admin(web services) to provide the interface with these systems. workplace environments. istrative queries. Some employers Companies realize that the information gathered in time and attenuse Infor WFM Workbrain to allow dance systems often provides the missing piece to the puzzle in truly their employees to request training, apply for updated licences, or update understanding and controlling labor costs. basic HR data such as contact information or availability for overtime and additional shifts. OB. We have seen an increasing emphasis on delivering real-time informaSome can now bid for shifts or trade them amongst each other with tion to a diverse array of devices that need to interact with a centralized inno management intervention. It is the system that governs and validates stallation. Different metrics, KPI’s and analysis are required to inform users who can participate in any of these functions. Benefits such as these are a of changing operational circumstances as they happen. This tight integrasignificant factor in increasing employee satisfaction. Our customers find tion with business process also leads to requirements to be alerted to imthey can differentiate themselves from the competition to attract and, just pending events in real-time so that changes can be made or elements of as importantly, keep the best assets they have: employees. BH. When properly implemented, workforce management solutions often provide a wide variety of self-service tools for employees to become part of the overall solution and become more involved in their own daily management. From time off requests to viewing of benefit hours and pay, these self-service tools minimize the need for routine requests to management. Another component of workforce management solutions that people often don’t realize is the consistent enforcement of attendance and pay rules. Employees that consistently abuse the system are now highlighted and this will often increase morale of employees who focus on the health of their company. Morale and productivity are two great benefits for any workforce. When evaluating feasibility and ROI on these projects, companies need to understand the intangible benefits to employees as well as the ‘hard’ costs that can be saved through the implementation of time and attendance solutions. What do you predict are going to be the major growth areas in time and attendance technology over the coming months and years? BH. Software as a Service (SaaS) will continue to be an increasing trend in
During a decade spent analyzing and understanding complex optimized scheduling challenges, Owen Brangwyn has implemented workforce management solutions at some of EMEA’s biggest retailers. He spent three years with Workbrain in EMEA as a senior pre-sales consultant before moving to Toronto, Canada, in early 2008 to take up his current role as Product Manager for Infor WFM Workbrain.
the workforce redeployed to react to the situation before a problem occurs. We expect to see a continuation of this trend and an increasingly tight integration to POS machines, clocks, handheld and other devices. Similarly, a trend is growing to simpler out of the box integration to financial, front-of-house operational and back-office systems. Users want to leverage information seamlessly between diverse applications with reduced overall ownership costs. The key is the ability to deliver actionable information sourced from a variety of systems and deliver this in real time across roles and the organization. n
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Search and rescue Peter Felix tells HRMâ€™s Matt Buttell how the executive search industry has been impacted by the current recession and how the markets are now shaping up.
irst and foremost the impact of the economic downturn on the executive search business has been dramatic in recent months. As Peter Felix, President of the Association of Executive Search Consultants (AESC), explains: “We were doing very well indeed until the kind of second wave of the financial crisis, which we referred to as the ‘real tsunami’, hit in October of last year. Until that time, this end of the recruiting industry had been doing extraordinarily well, with the obvious exception of parts of the financial services sector.” In fact, during 2008, the worldwide industry of executive search reached an all-time high of about $11 billion in revenue across the globe, and had been growing very significantly over the past five years since the previous recession. But, as noted by Felix, in October 2008, the economy hit a wall and many organizations went into freeze, which badly affected the industry. So much so in fact, that, in the first quarter of 2009, compared with the first quarter of 2008, industry revenues were off by almost 40 percent. “We have experienced a very serious impact because top management in many, many organizations shut down because they didn’t know what was going to happen,” explains Felix. “Now, through April, May and June 2009 we have begun to see some slight improvement in one or two sectors, and there is significant improvement at the top end of organizations’ boards and CEO appointments, but its not a huge resurgence of activity. It’s very patchy.” There remains nothing like the volume in the market that there was 12 months ago, and, in essence, it is still a fairly grim time for the business. Felix, however, remains positive that as signs of improvement begin to show, organizations are realizing they can’t hold their breath any longer when it comes to making critical management decisions, either to upPETER FELIX grade, replace, or find new management, and they are realizing these are critical decisions that cannot be put off. “All of that is going to affect the search business very positively, and as the availability of executives increases, so the market will gradually return,” notes Felix.
ways whether the economy is good or bad. This sort of thing is something we have seen in a very down economy like this, where the very best candidates might not be willing to consider a move because they’re very concerned about stability, and so that reluctance can affect the ability to recruit. But apart from that, the abundance of people available in the market doesn’t change the basic nature of the task.” What’s more, according to findings in the 2009 BlueSteps Executive Mobility Survey – part of a career service provided by the AESC – despite the current economic climate, 75 percent of currently employed executives are still likely or very likely to consider a new job opportunity (see fig 1). This suggests that, as the global economy works toward recovery, executive level candidates are open to change and likely to consider new career development opportunities. “It is a surprisingly high number that are still showing interest in new appointments,” says Felix, before noting that one of the reasons these executives may have registered with BlueSteps in the first place is that they are possibly thinking
“75 percent of currently employed executives are still likely or very likely to consider a new job opportunity”
about moving anyway, so it may be a little bit biased. Nonetheless, he does assure us that the AESC are hearing from its members that not every candidate they approach is interested in moving at this time because there are certain inhibitions, particularly those associated with the housing market being very negative at the moment. “If you want someone to move from the east coast to the west coast of the United States, or from the UK to Spain, there are practical issues that have to be taken into account,” he explains, “a very adverse housing markets can be a real hindrance.”
Haystack syndrome There is a chance that with a record number of people in unemployment and an increased number of potential job seekers, the task of searching for executives could be made more difficult, creating a needle in the haystack situation. However, Felix believes this a common misconception of the industry. “This is essentially a proactive recruiting business,” he explains, “and to us it doesn’t really matter whether people are in or out of work because the important question is, ‘are they talented?’ “The whole point about executive search is that it’s proactive, based on extensive research and knowledge of sectors and knowing who the best people are. So because of that, it’s irrelevant in some
Upswing However, in addition to the positive findings of the BlueSteps report, the AESC Member Mid-Year Outlook, which was conducted between May and June of this year, revealed that 64 percent of executive search consultants held a neutral to positive outlook for the senior recruitment industry in general for the second half of 2009. Even more encouraging was the 73 percent neutral to positive outlook for individual search practices for the same period. Half the respondents reported having seen an improved demand for retained executive search during April and May against the first three months of the year.
THE ROAD TO RECOVERY Peter Felix offers insight into market recovery trends. I think one of the things we have to remember is the great surge and demand that we saw in the last five years was due to some very significant trends and underlying factors. The retirement of the baby boomers was one. In the United States, the baby boom generation is made up of about 77 million people and the succeeding generation is made up of about 44 million. Well that’s a huge difference, and so it would obviously have its impact, particularly, the supply of talented executives and critical parts of the career path, especially where organizations are looking for their future leadership. The other big impact came from the emerging markets was huge demand in the BRIC countries,
China, India, Russia and Brazil, and that demand, added to the demographic shifts, created a real talent shortage so that executive search had to help organizations look all over the world for talent that was prepared to fill available positions wherever they were. Of course, new positions were opening up all the time in Shanghai, Kazakhstan, goodness knows where, so it was a very, very active time and it’s my own belief that that demand will show itself again. I don’t believe those underlying trends have gone away, and so I think we will see a resumption of demand, but it will take time because this is a very serious economic setback that we are experiencing. We can’t expect to just change overnight. It’s simply not going to, but we are beginning to see some indications of improvement.
top of those countries with the highest potential demand. It seems then that if the global economy is about to go into a higher gear, the executive search market will be a very active part of it. Of course, not least because of the recession, our industries are likely to see some changes, and one question on everybody’s lips is whether executive compensation might take a hit in the wake of the downturn? Perhaps, say some, astronomical salaries a thing of the past. “It’s a tough one isn’t it?” says Felix. “Personally, I think the market is the market, and if the talent shortage reasserts itself as I believe it will, the market will dictate what kind of compensation is necessary to attract the very best. “Already we’re seeing in the financial services sector, for example, that base salaries are being increased because there is more pressure on bonuses,” conFIG 1: CANVASSING OPINION tinues Felix. “Bonuses are a bad word at the moment, but ultimately will be the Given the current economic climate, how likely are you to consider a new job market that will dictate and we’ll see opportunity right now? change as the market develops.” 45 In the long run, it is Felix’s belief that 40 while companies will be more conscious of not awarding outrageous packages, once 35 competition comes back into the market, 30 even in financial services we are likely to 25 see a resumption of competitive compensation. “I don’t think government will be 20 able to do much about that,” says Felix. 15 “It’s up to boards of directors to sense the atmosphere and to be politic about how 10 they compensate. Yes, there has been out5 rage about some of the packages, and 0 some of them have been badly constructNot likely Somewhat Very likely Likely ed and badly brought through, but if there at all likely is competition for top talent then compenSource: AESC 2009 Mid-Year Outlook Report sation will remain a determining factor in the long run.” Then there are the changes the exec“Meanwhile, there are those industries that have been less badly afutive search space can expect too. The reality is that the identification of fected, such as healthcare, pharmaceuticals, government and energy, and people is no longer quite the unique role of executive search that it used to of course all this depends on where you are in the world. Certain countries be. People can today identify candidates very easily through the internet have been less affected, for example Australia, Canada and Latin America. and so on, and so executive search has become much more of a consulting And they’ve been buffered for all kinds of reasons: government having role, an assessment role and an advisory function. “I think that there’s an been more effective in helping out, the economies being considerably emphasis on trying to bring that more and more to the clients,” says Felix. smaller and therefore being less subject to the huge waves of the eco“There’s an awareness that we’re not just in a body shopping business, nomic cycle. But it certainly has been irregular.” we’re much more in a consulting business – and I think there’s much more The strength of certain sectors is echoed throughout report, with focus on that now that the search profession needs to remind clients that high current stability ratings and growth expectations for the second half that is one of the main added values that they bring. of 2009. In addition, the General Management, Finance and Sales and “And, because of the commoditization of information, there’s been a Marketing functions were also highly rated in terms of improved demand certain amount of confusion in the market about that,” he continues, “but and future activity. I’m convinced that once the economy comes back and once some of What’s more, the results of the report indicate that the shortage of those trends reassert themselves, we’re going see a very healthy indusexecutive talent, which prevailed prior to the steep downturn, may be try again.” The simple truth is that 12 months ago the industry was flying about to re-assert itself. Industries such as Life Sciences, Energy and very high and that has proved unsustainable in the current environment. Consumer Goods are beginning to return to pre-recession levels while, “Will it get back to that level in the next few years?” asks Felix. “I believe as Felix notes, the emerging markets (China and India) again rank at the it just might.” %
The results suggest that, following an economic crisis of this severity, a neutral to positive outlook from AESC firms is most promising. With members that have been badly affected by the hiatus in hiring at the senior level now ready to help those clients re- entering the market to both upgrade their senior staff and to invest for the future, Felix is optimistic. “There’s even still some competition out there for the very best investment bankers,” he says encouragingly, “which has obviously been the most negatively impacted industry. Small organizations are looking to take advantage of the recession to recruit people that they wouldn’t normally be able to recruit, so there is some demand now beginning to be show in financial services.
ASK THE EXPERT
Stacking up Christopher Novak explains how the current economy has changed the way companies are purchasing talent management software.
irst off we can see that the overall vendor review and selection process has changed pretty dramatically: Before the economic downturn, for example, many companies simply pushed out an RFP to five or six vendors and selected the product the recruiting team liked the best. Now, we see the decision being made much higher up in the organization and with greater involvement from different departments. Many companies have been burned in the past by selecting a product that looked great in a demonstration, but which didnt have much behind the curtain. Therefore, we see IT departments taking a larger role in the selection process, digging deep into the infrastructure and core components of the
solution to make sure there will not be any surprises during implementation. Additionally, we have seen EVP’s of HR sitting in on the vendor demonstrations, which was not the case two years ago. These individuals do not want to take the chance of putting in a costly solution that does not meet the original requirements.
“Individuals do not want to take the chance of putting in a costly solution that does not meet the original requirements” Also, as you would expect, companies are struggling to get budgets approved for new recruiting solutions. The knee-jerk reaction for a request to fund a new recruiting software solution is, ‘Why invest in a new solution now? We are not really in hiring-mode. Let’s wait until things get a bit better’. However, insightful HR executives are able to argue that it is the exact opposite. As the economy worsens, more people are out looking for jobs. So when a company does have an opening they are getting inundated with resumes, many of which are from candidates who are clearly not qualified for
the position. This, coupled with the fact that many companies are now operating with a ‘bare bones’ recruiting team, makes it almost impossible to efficiently weed out the non-qualifieds without a solid recruiting software solution. Finally, we see much more due diligence being done by companies prior to executing a contract. Companies are taking the extra time and effort to thoroughly vet a solution provider. Before the downturn, reference checks were more of a formality for a company, but now, it is something they take very seriously and put a lot of time into – as they should. Additionally, they are looking much more closely to a vendor’s financials. The last thing an HR executive wants is to choose a vendor, only to find out three months later that they were acquired and the new company will no longer be supporting their solution. This has happened a few times in the past couple of years and has caused some severe headaches and additional costs to some unfortunate companies. n
Christopher Novak is currently netMEDIA’s VP of Sales for North America. netMEDIA has been providing talent management solutions to global organizations since 1998. In the 10 years since inception, netMEDIA has grown into the premier provider of talent software for companies in need of a very flexible, personalized global solution. With this solution currently implemented in over 85 countries and 25 languages, netMEDIA is able to offer a truly global solution to companies looking to consolidate their global technologies.
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Out for the count In an exclusive interview with HarrisData President, Lane Nelson, HRM learns how bringing payroll services in-house can save businesses both money and jobs.
n the current recession, businesses are forced to lay off employees at a record pace in an attempt to reduce expenses. Organizations are rapidly evaluating many types of proposals to reduce expenses and cash requirements across all aspects of business. For Human Resource Managers, expenses and cash flows are driven by regulatory requirements and employee head count. The big question business leaders must ask themselves is: What can you do to help your company during tough times? HR and Payroll Managers nationwide are re-evaluating their expenses to save money. How? By re-addressing one of the many major issues like the way they pay for payroll and human resources software. An organization of 2000 employees that outsources payroll at only one dollar per employee paycheck will spend over $100,000 each year to process their weekly payroll – and that estimate is assuming rates will never go up. If the same organization could invest in a solution that cost $100,000 over five years, and the solution included equivalent compliance updates, the Human Resources department could achieve real savings of a half million dollars.
Of course, every situation is different. However, you can quickly determine how much you spend on payroll and human resources software or outsourcing each year by checking the invoice from your vendor. With a few phone calls, you can easily determine whether you can save your company hundreds of thousands of dollars, and save
Lane Nelson. At a high level, the HarrisData solution requires the same kinds of work on the part of the Human Resources and Payroll staff as just about any other modern payroll solution. The staff member collects and inputs employee information and payroll hours into the system through their desktop computer. By pressing a ‘magic button’, they quickly pro-
“An in-house solution can be as much as 80 percent cheaper than an outsource solution on a cash basis, an attractive reduction in today’s world” your department from some layoffs. But are the alternatives really worth it? Lane Nelson, President of HarrisData, a software developer marketing Human Resources, Payroll and Time and Attendance software that is generating a lot of interest from companies that want to save money, certainly thinks so. How does HarrisData Payroll compare to a typical outsourced payroll solution?
cess the payroll so other staff members can check and double-check the results. Finally, they print and distribute the payroll stubs. The process should be so easy that the staff member doesn’t really know – and probably doesn’t care to know – where the actual data is stored or processed, as long as it is secure, reliable and correct. So what’s the difference? The difference is mostly cosmetic; different users like different systems.
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So are you saying that outsourced solutions are more expensive than in-house solutions? Don’t companies look to outsourcing to save money? LN. Companies should outsource non-core functions if they can make more productive use of the money they save. Unfortunately, the conventional wisdom regarding outsourcing is based on assumptions about pricing that are simply no longer valid in today’s marketplace. Software has dramatically reduced the labor involved in payroll processing. The total cost of server equipment has been declining rapidly for decades. The value proposition of outsourcing to avoid large capital expenses and take advantage of cheaper skilled labor simply doesn’t measure up to the prices being charged in the market. An in-house solution can be as much as 80 percent cheaper than an outsource solution on a cash basis, an attractive reduction in today’s world. The only way to know for certain is to compare your current bills to a firm proposal from an alternative vendor. What about compliance risk? How do companies using in-house solutions keep up with the rapidly changing rules of the new economy? LN. In-house software applications have a bad reputation in this area. Applications were traditionally designed to sell; keeping customers upgraded to current versions has not been important to these vendors. At HarrisData, one of our key targets is the percentage of our customers that have upgraded to one of the two latest versions. By providing significant value in upgrades (including regular compliance updates) with an easy upgrade process, HarrisData can regularly report over 80 percent of our total customer base has adopted current versions of the software. We also leverage partners to aid in more complex compliance issues, which allows us to offer full tax rate and calculation services across virtually the same spectrum of payroll taxes as the major outsourcers, where necessary. What about companies where the Human Resources and Payroll departments are last on the IT priority list? Why should they look at bringing the payroll in-house?
LN. Software has come a long way since HarrisData started back in 1972. Back then, when you bought a car, the first thing you looked for after you drove off the lot was a good mechanic because you knew you would be seeing them often. Today, there are cars that require virtually no scheduled maintenance, have substantially higher quality, and the corner gas station is equipped with a convenience store instead of a service bay. The industry simply made better cars and required fewer and fewer specialists to keep them running. In my view, a similar trend has happened in technology. The legions of specialists required to implement, customize, service and operate software applications like payroll have been replaced by software functions ordinary business people can use. At HarrisData, we engineer services out of our offering, consistently delivering more than 90 percent of our revenue from software licenses, not extra services. Consequently, bringing payroll back in-house has a much smaller impact on IT – in both labor and equipment – than most people expect. Are there any other reasons your customers have cited for bringing payroll back in-house? LN. Many of our customers are mid-sized businesses that like to control and manage their cash. When they outsourced payroll, they had to provide cash to the outsource vendor with each payroll cycle for all liabilities, even liabilities that might not be due for a quarter or so. With an in-house solution, these customers can put that cash to work for them and earn a decent rate of return. When you look at the amount of cash involved, the period of time it sits, and the rate you can earn, you realize that the ‘float’ you are giving the outsource vendor is worth a lot of money. If you’re comfortable managing your own cash, you can save a lot of money by bringing payroll back in house. What’s the key factor in deciding whether to outsource or bring a payroll solution inhouse today? LN. The biggest factor is the comparable expense. If you add up the expenses associated with each approach, and one is
dramatically less than the other, you should consider a switch. The next most significant factor is whether you prefer owning or renting. The outsource model is fundamentally a rental of the software, equipment and labor involved in making the payroll solution available to your staff. Like most rentals, you can usually depend on prices going up. The HarrisData model allows you to own your license, for a fixed price over five years,
Lane Nelson, as President of HarrisData, is responsible for serving the growing community of HarrisData customers. Prior to HarrisData, Lane held positions in executive management, sales, and marketing at Pilot Software, Pansophic Systems, and at Budget-Rent-A-Car. Lane holds a BS in Chemical Engineering from Yale University and an MBA in Finance from the Wharton School.
and get as much value out of it as you can. Just as there are circumstances where the choice between owning and renting a car might yield different answers for different customers, the choice between owning and renting payroll software will be different for different organizations. At HarrisData, we’ve chosen to serve those organizations that have an ownership mindset. n
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Ethics Ed 132-135.indd 132
THE POWER OF EQUALITY Tackling discrimination is a round the clock job and has major implications for the health of an entire organization, says Tim Mazur.
ailing to deal with sexual or racial harassment or discrimination can have a huge effect on organizations. Because these issues cut right to the heart of what’s important to people. Employees don’t even feel even the most minimum basic level of dignity if they’re discriminated against because of these issues. When it comes to the passion for their work and tapping into the potential of what they have to offer the organization, you can barely get started if they don’t even feel that they’re achieving the most minimal levels of basic respect. Management has evolved a great deal over the past 75 years. There are now a huge amount of books, courses and opportunities to teach business leaders to learn how to manage an organization well, and the result of that has been a lot of very constructive messages. There are now a lot of very well-trained individuals who talk about how our employees are important; let’s serve the customer, let’s accomplish our goals and so on. What’s interesting is that if they under-address these discrimination issues then everybody, not only the minority of those who are discriminated against but everybody else, will feel like these messages are all just lies. It is all very well to say, “We care about our people,” but if they don’t see that it is actually happening when it comes to these discrimination issues, it simply fuels cynicism. It’s such a big issue in business ethics. Is it possible for a big company to be anything close to being an ethical organization? If some CEO is saying, “We care about our customers and we care about our communities,” could that be true? There’s a lot of talk from upper leaders these days on that front, and many of them are very sincere, but they won’t be received as sincere if there’s an inconsistency in the message. You’ll ﬁnd instances when someone is saying all this stuff, but then they will discriminate against women or against persons of minority backgrounds on these issues. Then everybody gets the wrong message. They might have been ready to believe their organization was moving in a direction of actually living up to all of the CEO’s fancy words. But all of a sudden they realize that it’s not true and it is just words. Employees are expensive and so when you’ve got people on your payroll you absolutely want to get the most out of them. So much of the positive quality of life and the better standards of living that we have seen in the ﬁrst world over the past 30 or 40 years has happened because we have become more productive. We have increased productivity and it’s allowed us to make more and do better with the resources that we have. We need to do that with our people too. Folks that are discriminated against have so much to offer and it’s just such a waste if you under-appreciate or under-attend to these discrimination issues. These individuals just never have the inspiration to be the best that they can be because they will not want to support the organization unless they feel that the organization supports them. If the evidence is that the organization allows discrimination to occur and isn’t doing enough about it then people completely lose their motivation to give the organization that higher level of productivity. Those are just a few examples of why it really is a big issue. In business today, perhaps now more than ever, there is an ever greater focus on establishing hard dollar returns for every single program. Unfortunately, I can’t say that I’ve ever seen that we can quantify that in relation to discrimination. A topic which has been coming up more and more lately is that the business community is being attacked by the professions like medicine, law and even ac-
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countancy. These are professions where you have to earn a license successful in an organization will include a lot of quantified things but to practice, whereas of course in business there is no license. Anysome qualitative issues that can’t be measured so simply. The sooner body can be a business person, and certain professions are speaking they realize that, the better it will be for everybody. up to say that the problems the world is suffering right now are the A key factor in challenging some of the negative attitudes, is that clearest evidence of the difference between a profession and a nonthere simply are more women and minorities in positions of power profession. They claim that the people attracted to business just want than there were 20 years ago. Without a doubt, my experience has life to be nothing other than making the most money in the shortest been that the number one thing that actually will get people to change possible time, and that there’s no other criterion in judging good or is exposure to people. I think the number one thing that has made a bad or success or failure. huge difference is that the workplace is ﬁlling up with people of all difOne of the realities is that professionals learned hundreds of ferent backgrounds. If someone grew up in an environment where they years ago that life isn’t that simple. If you are an attorney or a physididn’t have a lot of exposure to minorities or interaction with women cian there isn’t just one criterion for success. This is why their entire as leaders, then certain attitudes are more likely to be deep-rooted. code of ethics lays out multiple standards that deﬁne what it means If that person is suddenly in an organization where the environment to be successful and we have to ﬁght for that in business. I’m not a is different and they are exposed to a woman leader who’s excellent professional, I’m just a business person. As a businessperson I have at what she does, that is the number one thing that can get someone to ﬁght this desire to oversimplify in making decisions and to over to change that ingrained perception that women are biologically less quantify. Don’t try to quantify things that can’t be quantiﬁed. capable to be leaders. Think about it like this: if someone asks you if you love them, can It’s not enough, but when it comes to what should we do and what you put a number on it? Do you say, “Gosh, I feel that I love you at 142 can we do, it’s one of the best options. Sometimes a company will today?” Probably not. We have to embrace the reality that we judge say, “Here’s some data from our company and here are our problems. things from a qualitative standpoint when they can’t be quantiﬁed. So What can we do?” Very often the biggest and best thing they can do is when I’ve seen attempts to quantify the cost of discrimination I think to ﬁgure out a way to ensure that the process by which they’re hiring or what we’re really doing is we’re playing down to the audience when promoting is not discriminating against certain people. If they ensure instead what we need to do is educate them and raise them up. We that those discriminations are taken away, the statistical reality of need to challenge the idea that everything has to come down to a dollar ﬁgure. People need to buy The race continues into the reality that deﬁning what it means to be
t’s increasingly common that we hear people talking about how the growing success of minorities in business and in everyday life means that we’re now living in a ‘post-racial’ society. I think that’s way off the mark. It’s convenient for those folks who want to continue to discriminate and who are upset. There are white males out there who are unhappy that their opportunities are dropping as we’re making things more fair and less discriminatory. Without a doubt people in some organizations, not all, are seeing a positive change, which is great. But just because they’re seeing a positive change doesn’t mean that we’re anywhere close to being done yet.
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everything will mean that more women and more minorities will ﬁnd their way into positions of leadership. Assuming such an individual is good at what they do, it’s amazing how it can change the opinion of someone who felt strongly about certain views for 50 years of their life. All of a sudden they can change in 12 months just by being exposed to a high quality leader. That exposure often will just happen at an organization, whether it was forced to by law or whether a good leader will bring someone in that will allow this interaction. The problem is that those opportunities are too few and it could take decades for parts of organizations or certain industries to change. What we need to do is make an effort so there are different types of leaders somewhere within an organization. You might work for a mining company in the production division. In that area you have to have a very solid background so it’s going take many, many years before minority candidates can come through the proper channels of being trained and educated. But what can happen is another part of the organization might be beneﬁting from really good leaders with a minority background. The question is how can the leader of the organization allow those in the production division to be exposed to the quality leadership in another division who they might otherwise never interact with? The ﬁrst answer to the question is to look for opportunities to expand beyond just the normal course of things, and really expose employees to great leaders. It’s one of these things where it has to be ingrained in the upper management. When it comes to affecting thousands and thousands of employees, if you have a racist leader you get rid of him or her. So many of these organizations are turning over new leadership more frequently than in the past, so the next time that a company is putting together the criteria for who they’re going to choose to bring in as a leader you make this issue a very important part of the analysis. You still want to take the best qualiﬁed person, but now the best qualiﬁed person is no longer the best qualiﬁed person unless they have a very positive attitude towards this issue. It’s the attitude, which just has to be ingrained in how they do things minute to minute. It’s just got to be absolutely natural to every leader that all human beings are equally capable of being excellent business leaders, that no one by their race or gender is prevented from being highly qualiﬁed. That really trickles down because then that executive has an inﬂuence on which of the middle executives get promoted and he or she won’t promote somebody that they think has a backwards attitude. When it comes to the issue of ingrained prejudice I think our organizations have done much better when it comes to communications, training, following the laws and helping human resources recruit more fairly. The challenge is now within the organization. I still see the old mentality where the CEO will say all of these positive things because he’s been told to and he believes that a smart CEO will do that, but often they don’t really believe it. A lot of these people grew up in the 1940’s and 1950’s. They grew up in an environment where they be-
A learning experience
raining around issues of discrimination and harassment has improved, but it’s still not sufficient. To say it is would be to suggest that everything’s fine, that we could just keep on training people and the problem would go away. Unfortunately, the problem is bigger than that and it’s very complex. These issues get to the heart of some of the biggest problems we have in society and so it’s encouraging that the training is genuinely better than it was before. I was involved in this business before the internet took off and it was all face-toface. There was a real fear that when the online training came in that it was going be a terrible because it clearly couldn’t be as good as face-to-face. I’m very pleased to see that the best organizations have realized that the best training is a combination of a lot of online training and some face-to-face. It’s a balance of the two, not just one or the other, but it gets better every year and it does some very good things. However, for some people these are very ingrained and deep-rooted opinions. You can’t get rid of that or make that go away by just having a very flashy one-hour training program.
lieved that the reason why the most powerful people in the world are white males wasn’t just because of a turn of history but that it was the natural order. They’re comfortable around other white males. They go golﬁng with other white males and they go to the gym with other white males and their wives are friends with other white males’ wives and that is their entire world. It’s hard for them to just pretend that away. What they’ve got to do is open their eyes up to making sure that everything they do from the jokes that they tell, to the events they choose to attend will help them learn. It’s not just the superﬁcial. It’s got to be in that person’s heart 24 hours a day. It’s really about the CEO asking himself or herself, “How can I spend my next 365 days expanding my own horizons and ensuring that there’s not a little side joke here to my chairman of the board or something there?” Business needs to go beyond the cleverly written speeches, the once-a-year emails and the picture on the front of the employee handbook. There’s so much more to do than that. n Tim Mazur is the Chief Operating Ofﬁcer of the Ethics and Compliance Ofﬁcers Association. For more information go to www.theecoa.org
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Location, location, location When you really enjoy the place where you work, it can make all the difference. From the aesthetics of the building, to the facilities it provides, a great site can equal great results. We take a look at HQs offering something extra.
SC Johnson & Son
SC Johnson & Son
While the mighty Googleplex is located in Mountain View, California, other Google offices share some essential elements: bicycles for efficient travel, dogs, lava lamps, massage chairs, meditation classes, film clubs, wine tasting groups, healthy lunches and dinners for all staff, outdoor seating for sunshine brainstorming and snack rooms.
With offices designed by Frank Lloyd Wright, these buildings are full of strange and wonderful things. Take for instance the 15 miles of glass tubing that is used instead of conventional windows or the so-called Great Workroom, where dendriform columns populate the space like gigantic lilies.
Microsoft is growing and as part of its billion-dollar campus expansion in Washington, employees are getting the chance to design their own work areas. The Zune team, for example, has a DJ booth in its meeting room. More fun stuff, like a new bocce court, is also in the works.
The San Jose headquarters not only provide staff with a fully functioning gym, but also maintains a full-time staff of certified personal trainers and nutritionists. And, to help unwind, eBay also boasts prayer and meditation rooms with plump pillows and tatami floor mats.
In Nevada, e-commerce company Zappos is well-known for its phenomenal customer service and sense of fun. In fact, it is part of the Zappos culture to ‘create fun with a little weirdness’. As a result, every single worker’s cubicle is decorated with personal touches, and in the VIP room there is even a throne and a crown.
It is no surprise that sleek furniture is par for the course for this international furnishing designer (the company has long used its offices to showcase its own designs), but a 2007 eco-makeover brought with it skylights with solar panels and C2, a hyper-efficient personal climatecontrol gadget.
Holding out for a hero While comic book adaptations might be Hollywood’s latest fad, HR professionals adopted ideas from the culture of the superhero long ago, as HRM’s Matt Buttell discovers.
kay, I admit it: I love comic books. And superheroes are big business right now. For me, and many other like-minded cinemagoers, every summer provides a fresh ﬂurry of blockbuster adaptations. Over the last ﬁve years alone we’ve seen movies based on the adventures of Batman, Blade, Elektra, Fantastic Four, Hellboy, the Incredible Hulk, Iron Man, Spider-Man, Superman and the X-Men; and over the next few years we can expect big-screen outings for Captain America, Thor, Nick Fury and Luke Cage, a second Iron Man movie, a reboot of both the X-Men and Superman franchises, and the all-encompassing Avengers movie, to name but a few. If all that wasn’t exhausting enough, in March of this year, the long-awaited adaptation of the most-celebrated graphic novel of all time, ﬁnally hit theaters across the globe: Watchmen. The story of Watchmen takes place in an alternate timeline, where masked, costumed vigilantes ﬁght crime in America, the interesting point being that – aside from one member of the team, and unlike the plethora of other heroes we have become accustomed to – none of them actually have real superpowers. They aren’t astronauts who have been bombarded by a storm of cosmic rays, they were not born with genetic mutations that grant them remarkable abilities, and they are not the result of some secret government experiment: they are simply ordinary
people, essentially looking to do some good in the world. But how does all this relate to the world of human resources? Well, while unlike the Watchmen HR professionals may not be donning spandex suits and ﬁghting crime, they do share similarities, especially given the current state of the economy. Over the last couple of years, HR professionals have been called on like never before to use all of the relevant skills at their disposal, all the advanced tools and techniques out there, so they can reassure their employees, defend productivity and keep talent strong, while at the same time taking the necessary steps to protect the safety of their business. Of course, HR is not immune to the challenges of this recession, and a slowdown on the recruitment process, along with the difﬁculties associated with handling layoffs and redundancies, has proven to be the Kryptonite to HR’s powers. The current economic crisis is not the only thing dictating the idea of Super HR, however. For a long time human resources has argued a feeling of being under-valued (a common characteristic for many a comic book hero), citing that they feel they deserve a seat at the table when it comes to big company decisions. After all, on a day-to-day basis, HR professionals are using their knowledge and skill to help businesses ﬁnd success. HR acts as a strategic business partner, learns the goals, objectives and business results that lead to success and makes each business unit focus on the department’s actions, rather than looking for ways to address its own processes and procedures. And while Peter Parker and Clark Kent might have to face the arduous task of balancing the responsibilities in their regular lives
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WORKING CLASS HEROES A look at other ways that the superhero is fi nding a home in the US workplace. • When Minneapolis-based payroll and HR services provider Ceridian needed a communication campaign to promote ﬂexible spending accounts (FSA) to the 30 to 50 year-old-agerange, a range that corresponds roughly to two demographics, older Gen-Xers and early baby boomers, it developed a series of cartoons based on a superhero known as Flexman. The idea that the boomers would feel nostalgic entertainment, having grown up with the Batman TV series, the Spider-man cartoon and classic comic books such as X-Men and Fantastic Four, while the Gen-Xers could relate through the revival of superheroes in recent movies.
• A tongue-in-cheek comic called Super Human Resources was launched in January this year, which follows the adventures of Tim, an accounts receivable temp, during his time at the corporate headquarters of ﬁctional company Super Crises International. His fellow employees include a zombie receptionist, an android, a swamp creature in the mailroom, a woman made entirely of ﬂames, and a dark and shadowy masked vigilante who hides in Tim’s cube. It’s an unusual concept, mixing superpowers with the corporate culture, buts it’s not unique: for further, more serious reading, try Marvel Comics’ Damage Control, about a ﬁctional construction company
with those responsibilities that come from being a costumed hero, HR has to face a balancing act of its own. Today, company-wide human resources means dealing with issues such as recruitment and retention, training, organizational development, professional development, associate information, employee relations, compensation and beneﬁts, and employee recognition programs – surely a balancing act worthy of heroic address? HR also takes the lead in organizational-change initiatives, including issues driven by technology, new products or service introductions, restructurings, regulations and market pressures. It also contributes to how a company handles the people aspect of change, which is often the most difﬁcult part; it can also provide direct, speciﬁc, take-charge approaches, including training in change management. What’s more, even if HR outsources the data-collection aspects of its role, its management of employees’ business life is a huge contribution to success, because both productivity and quality are affected by these efforts. HR also impacts business results by being a technical expert, and the tasks that HR departments oversee have grown over the years, both in number and complexity. Projects such as recruiting and hiring, compensation and beneﬁts, training, and the legal aspects of a
which specializes in repairing the property damage caused by conﬂicts between superheroes and supervillians.
business require great expertise, and the value HR adds to the efforts of managers and executives through performance management goes well beyond the normal performance-appraisal process of policies, forms and signatories. Today, HR has positioned itself as a performance management consultant throughout the organization. This includes training, advocating best practices and troubleshooting performance issues and problems. HR helps individuals and work groups identify gaps in performance requirements and offers solutions to overcome those gaps. As organizations strive to be more competitive, improving performance puts HR in the spotlight. HR has become pivotal in today’s organizations, regardless of size. Business’ intense desire to be more productive and efﬁcient has led them to shine a Bat Signal into the night sky, which HR has duly responded to. Every successful company out there considers its people to be at the center of the organization and HR is the catalyst for better business results. In other words, HR is the hero of today’s most successful organizations. And while many of us would still prefer to be the kind of hero with the power of teleportation, telekinesis, or the ability to manipulate the weather at will, it appears that being an everyday hero is just as rewarding.
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Little rays of sunshine in a world gone cloudy
So over it An acclaimed macroeconomist and professor at Northwestern University, Robert J. Gordon, has claimed that the recession is over. It’s an interesting prediction considering Gordon is one of seven members of the elite Business Cycle Dating Committee of the National Bureau of Economic Analysis, whose job it is to ofﬁcially decide when recessions begin and end.
Starbucking the trend More than 100 people in one Illinois town were the recipients of pay-it-forward acts of kindness at a coffee shop recently when a customer who paid for his drink, also paid for the order of the person in the car behind. That started a chain reaction of people paying for the next customer’s drinks. Before it was all over, 160 customers had taken part.
A good gossip A new study has found a quick gossip between with the girls at the ofﬁce may be just what the doctor ordered. According to the study, gossiping increases progesterone, a hormone that reduces anxiety and stress and makes women happier. It also stresses that progesterone is a essentially calming hormone that can increase a woman’s sense of wellbeing.
A foot in the door A new survey shows that jobseekers are using unusual gimmicks to grab the attention of potential employers. In one case, a man sent a shoe along with a resume to get a ‘foot in the door’. Nearly one in ﬁ ve HR managers report seeing more unconventional tactics this year, and faced with the highest unemployment in 25 years, candidates are trying a variety of tricks.
A teeny alternative Instead of competing in the toughest hiring pool out there, a growing number of teens are looking at alternative ways to make money over the summer vacation – including starting their own businesses. Teens seem to realize there is more to life than a minimum-wage, so are looking to make life more rewarding by applying their own entrepreneurial efforts or by volunteering at animal shelters and centers for disadvantaged kids.
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The shock of the new
Poorly handled alterations to the office routine can become big issues for your staff. By Marie Shields
once worked for a large ﬁnancial institution that seemed to delight in forcing constant change on its employees with very little notice. Often the ﬁrst clue we had that another ofﬁce move was imminent, for example, was the arrival of the red and yellow plastic boxes used by the moving company. In less than a year, we changed ofﬁces four times, and moved buildings twice. One of this company’s mottoes was ‘Change is good,’ but no one I knew there actually felt that way. Was this down to the changes themselves, or the way they were managed? Whether your organization is large or small, there are some important things you should keep in mind when thinking about making changes. The ﬁrst thing to remember is that you can’t sell change to people – they have to be involved in it from the beginning. Change can be upsetting, so those tasked with managing it need to do their best to counter this by exerting a stabilizing inﬂuence.
Involving your employees in the change process also creates opportunities for them to share the change management burden and gives them a sense of ownership
You can achieve change more successfully by looking at it the other way – how can the business align its aims to ﬁt in with the lives of its employees? Some things to keep in mind here are: people will see through greedy and exploitative aims and refuse to go along with them. Or will pretend to go along with them and then do nothing. If asked to make a change instantly and at the expense of everything else on their plates, people will rebel. They already have too much to do, which is your fault in the ﬁrst place. And don’t bother complaining that you don’t have time to consult with them because the business is on the verge of a crisis – that’s your fault as well, probably because you didn’t have the correct aims and consultation process arranged in the ﬁrst place. Successful change management boils down to a few simple rules: know what makes your people tick, talk to them and involve them in the initial stages, and don’t try to sell to them or force change on them, or you’re likely to end up back where you started, with a disgruntled workforce into the bargain. In the case of my former employer, a little consultation would have gone a long way. We still may not have been keen on the continual moves, but we would probably have grumbled a bit less every time we saw those red and yellow moving boxes being carried out of the lifts.
People also need to feel involved in the change – if they can’t be allowed to make the ﬁnal decision about, say, where their desks should go, they should at least feel that they’ve been consulted. Involving your employees in the change process also creates opportunities for them to share the change management burden and gives them a sense of ownership – whether real or imagined – over the process.
Back to school Training – or the lack of it – is another area in which improperly handled change can cause disruption. It’s a mistake to force training on people – even the word training itself implies that you are telling people what to do, rather than offering them choices. This old-fashioned view of training doesn’t work because it assumes that the goals and aims of employees are the same as those of the business, and that they will be happy and able to incorporate change into their already busy lives.
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On the shelf HRM takes a quick look at what some of the current books on leadership have to offer.
Creating Magic 10 Common Sense Leadership Strategies from a Life at Disney, by Lee Cockerell
In Creating Magic, Cockerell shares 10 common-sense strategies that guided his own journey from a poor farm boy in Oklahoma to the head of operations for a multibillion dollar enterprise, revealing powerful lessons that can be translated to any career or business culture. HRM SAYS: By combining enlightening business wisdom with insightful stories from front line experience at Disney, Cockerell shows us all how to become better leaders. Quite the fairytale.
The Introverted Leader Building On Your Quiet Strength, by Jennifer B. Kahnweiler
Kahnweiler explains how being an introvert doesnâ€™t mean you canâ€™t be a great leader. Citing examples of highly successful leaders like Bill Gates and Warren Buffett, she shows that introverts can build on their quiet strength and make it a source of great power. HRM SAYS: Providing numerous examples and leadership tips, as well as a revealing Introverted Leader Quiz, Kahnweiler teaches readers how to embrace their natural work style, and add value to their organization. A compelling read.
Leadership and Change Management By Annabel Beerel
In Leadership and Change Management, Beerel provides the reader with a practical, real-world understanding of several dimensions of leadership that are usually neglected in management textbooks, such as the nature of new realities, how managers can improve their insight, and how leaders can identify and overcome resistance to change. HRM SAYS: Drawing on a wide range of insightful, global, real-life case studies to capture the imagination, Beerel covers topics such as critical systems thinking, philosophies of leadership, ethics, personal character and the psychology of leadership. A real page-turner.
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Invest in the best John Buckley explains the necessity behind investing in the strength and security of your employees, despite tough times.
orporations need to re-invest in their employees’ health and wellbeing during these tough economic times. Many corporations have cut their employee health and wellness programs, believing they were slashing discretionary spending. Unfortunately for them, good employees are not discretionary and should not be treated that way. In reality, these corporations are cutting the actual programs that are needed the most to guide them through these uncertain times. Stress levels at corporations have hit historic levels. It does not matter if your company has directly experienced layoffs, pay freezes or spending cuts as many employees have family, friends or neighbors who have been negatively affected by the economy. One only needs to turn on the news to become uncertain about their economic future. The anxiety is real. We all feel it and our job performances are being negatively affected by it. Employees cannot focus on the tasks at hand if they are worrying about the stability of their jobs or the ﬁnancial difﬁculties that they have at home. Stress leads to poor job performance, which leads to backlogs, missed deadlines and even more stress. Stress also leads to more illnesses and accidents. The solution is to offer your employees more knowledge so they have the information they need to make smarter decisions. During economic downturns three industries historically do very well; alcohol, tobacco and cosmetic. This tells you that many of your employees will be turning to ways to avoid their stress by drinking, to escape their stress by taking more smoking ‘breaks’ or to cover up their stress with a more pleasant appearance. Other quick ﬁxes, such as pharmaceuticals, are equally as ineffective because they do not help your employees to develop new coping skills that help them rise to their current challenges. To help your company make it through, you need to give your employees the tools that they need to actually handle their stress. Encourage your employees to become part of the solution. To become part of a focused, dedicated and hard working team who is determined to make the most of the opportunities that recessions offer.
While other corporations are mired down in the doom and gloom of the recession, your company could be expanding, taking on a larger percentage of market and becoming stronger. The only guarantee of future success and stability during tough economic times is with a healthy and focused workforce that is working toward a brighter future. Stress, worry and anxiety are not part of a successful corporation. Healthy, motivated, dedicated and focused employees are. Health and wellness events, such as health fairs, stress down days and employee pampering days are the most economical ways to show your employees that, despite the tough times, their company is committed to their success. They offer a level of stability and peace of mind that cannot be created any other way. Some of the corporations that we have been working with have commented that they are hesitant to run health and wellness events because they do not want their employees to think that they are spending money on frivolous activities when they have just had layoffs. This consideration is quickly dismissed when you see that the majority of your employees will be appreciative that their employer still cares enough to invest in their health and wellbeing. After all, your employees are your most valuable asset and you should do everything you can to make them feel appreciated. Give your employees something positive to focus on. Give them potential solutions to their problems. Reduce their stress and encourage them to become proactive. Corporate Health Fairs have a 20-year track record of creating positive return on investment. It may seem counterintuitive, but spending more money on the health and wellbeing of your employees is the best investment you can make during tough economic times.
“Your employees are your most valuable asset and you should do everything you can to make them feel appreciated”
John Buckley is the CEO and co-owner of Health Fairs Direct (HFD), a division of OpenHouse Direct Inc. HFD is a Full Service National Corporate Health & Wellness Fair Coordination Company. Buckley has been working to educate corporations and bring much needed reforms to the health fair industry.
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Published on May 13, 2010