Author: Alison Wellner

In December, a four-year-long court battle came to an end when a U.S. Court of Appeals dismissed a $2 million religious discrimination lawsuit brought against Costco, the nation’s largest wholesale retailer, which logged some $47 billion in sales last year.

    The case, brought by West Springfield, Massachusetts, employee Kimberly Cloutier, was certainly not your average religious discrimination matter. Provoked by a change in the wholesaler’s dress code policy, it pitted facial piercings against professional appearance, and involved, among other things, an eyebrow ring and a small church that few people have ever heard of.

    Beneath this quirky legal matter is an underlying issue of growing concern to all employers: balancing an employee’s religious beliefs against the business interests of a company.

Piercings as religion
    The story began in 2001, when Costco revised its dress code to prohibit all facial jewelry, aside from earrings. Costco made this change in order to promote what the company considered a professional appearance, court records indicate. (Judy Vadney, Costco’s personnel director, declined to comment, citing the recent end of “very expensive litigation.”)

    Kimberly Cloutier, a cashier and an employee since 1997, had numerous body piercings and tattoos on her upper arms. Soon after the new policy was disseminated, Cloutier’s supervisor informed her that she had to remove her facial piercings–in particular, her eyebrow ring, which she refused to do.

    At that point, Cloutier indicated that she was a member of the Church of Body Modification, and said that her eyebrow piercing was part of her religion.

    The Church of Body Modification, established in 1999, has about 1,000 members and encourages its adherents to “grow as individuals through body modification and its teachings” to “promote growth in mind, body and spirit.” It uses a Round Rock, Texas, post office box as its mailing address; several founding members are in Phoenix.

    The church urges its members to be “confident role models in learning, teaching and displaying body modification,” which includes piercing, tattooing, branding, cutting and body manipulation. Court records indicate that Cloutier interpreted this to mean that her piercings should be visible at all times, and believed that she was prohibited from removing or covering her facial jewelry. The conflict with Costco’s dress code was clear.

Religious diversity growing
    An employee’s religious beliefs often enter into the workplace, creating a sometimes awkward–if not potentially litigious–situation for employers, who are required by federal law not to discriminate on the basis of religion.

    While many employers are more familiar with employees’ requests for work-schedule changes to accommodate religious practice and beliefs, a growing number are becoming acquainted with complaints about dress codes on the basis of religion, says Patrick Kilker, an attorney at Eckert Seamans Cherin & Mellott LLC in Pittsburgh. More dress-code requests will come. “With growing religious diversity in this country, you can bet on these cases becoming more common,” he says.

    Many religions impose some sort of requirement upon their adherents in terms of appearance: Some require the growing of facial hair, for example, or the wearing of certain accoutrement, such as a Sikh turban, a Jewish yarmulke or a Muslim hijab, or head scarf. Other religions require certain markings, tattoos or, in the case of the Church of Body Modification, a whole host of practices that might interfere with a company’s dress code.

    These religiously motivated practices leave some companies with a dilemma as to how to accommodate an employee’s religious beliefs if they conflict with standards of grooming or appearance on the job.

Is it a hardship?
    The resolution of this dilemma is not entirely up to a company’s discretion. The law guides a company’s hand, says Patrick H. Hicks, managing partner at the Las Vegas office of the employment law firm Littler Mendelson LLP.

    According to the Civil Rights Act of 1964, “the employer has an obligation to reasonably accommodate an employee’s religious beliefs,” he says, which includes making allowances for an employee’s garb or appearance when it is influenced by religion. “But it’s not an absolute,” he adds. If an accommodation would create an “undue hardship” on the employer, the employer is not obliged to accommodate an employee’s religious beliefs.

    “Undue hardship” and “reasonable accommodation” are terms often sorted out in court, Hicks says. “These cases typically resolve themselves on a case-by-case, fact-by-fact basis. What might be an undue hardship for one company might not be an undue hardship for another. The exact same accommodation might be reasonable for one company and unreasonable for another,” he says.

Negotiations break down
    An employer’s first goal is to stay out of an expensive and uncertain court battle. The first step toward that goal is to strive for a reasonable accommodation that works for the individual employee. “Engage in an interactive process with the employee, ask what it is that the religion requires, and what the company can do to reasonably accommodate,” says Hicks.

    Employers can’t always get the reasonable accommodation they want. The court record shows that early conversations between Cloutier and Costco could not be considered productive.

    A supervisor instructed Cloutier to remove her facial jewelry. Cloutier refused, and the next day filed a religiousdiscrimination case with the Equal Employment Opportunity Commission. When she returned to work for her next shift, she met with the store manager. During that meeting, she suggested covering her eyebrow piercing with a flesh-colored bandage. The store manager rejected this suggestion, and told her to either remove the piercing or go home. She left.

    Several weeks passed, and while Cloutier awaited resolution of her EEOC claim, she was terminated via a letter, which cited her unexcused absences resulting from noncompliance with the dress code. The EEOC mediation process kept the parties in contact, however, and in August, Costco offered to let Cloutier return to work, wearing either a plastic retainer in her piercings to keep the holes from healing and closing, or a bandage over her jewelry.

    Although this was an accommodation that she had suggested earlier, Cloutier now refused. The court records show that Cloutier’s position was that “the proffered accommodations would be inadequate, because the (Church of Body Modification’s) tenets, as she interprets them, require her to display her facial piercings at all times. Replacing her eyebrow piercing with a plastic retainer, or covering it with a Band-Aid would thus contradict her religious convictions.” (By not accepting Cloutier’s initial offer of accommodation, Costco missed “a golden opportunity to avoid four years of litigation,” points out law firm Nixon Peabody in its analysis of the case.)

    Cloutier now maintained that the only reasonable accommodation would be to excuse her from Costco’s dress code, allowing her to wear her facial jewelry to work. Costco’s response: This would interfere with the company’s ability to maintain a professional image. Negotiations broke down.

Victory for employers
    If an accommodation can’t be reached with an employee, the next step is to clearly identify “the legitimate business interests the company is trying to preserve and protect,” says Hicks. The courts often give employers wide latitude in what is considered an undue hardship.

    Several cases, for example, have found that employers are not discriminating when they require an employee or job applicant to be clean-shaven, in order to maintain an image of cleanliness, or for safety matters. For instance, in a 1984 case against Chevron, a court decided that the company did not have to exempt a Sikh employee from a rule requiring that all machinists be clean-shaven, because the policy was based on the necessity of wearing a respirator with a gas-tight face seal.

    In Costco’s case, the business interest was in presenting a neat, clean professional appearance. The court decided that if it forced Costco to create an exception for Cloutier’s eyebrow ring and other piercings, it would create an undue hardship on the company.

    The court held the following: “It is axiomatic that, for better or for worse, employees reflect on employers. This is particularly true of employees who regularly interact with customers. … Even if Cloutier did not regularly receive any complaints about her appearance, her facial jewelry influenced Costco’s public image and, in Costco’s calculation, detracted from its professionalism. … Costco has made a determination that facial piercings, aside from earrings, detract from the ‘neat, clean, and professional image’ that it aims to cultivate. Such a business determination is within its discretion.”

    With that, Cloutier’s discrimination case ended.

    While this was a victory for Costco, and the case was hailed as a victory for employers seeking to balancedress codes against various religious claims, there are a couple of points to keep in mind, says Hicks. If Cloutier did not work as a cashier, but in a position where she did not interact with customers, Costco might have found it difficult to make the same argument against her facial jewelry.

    Second, Cloutier’s hard-line, no-compromise approach worked against her in court, says Kilker. The court cited several cases involving jewelry where employees have insisted that the only accommodation is exemption from a dress code policy. In one case, an employee wore a gold cross pin; in another, an employee took a vow to wear a graphic anti-abortion button for religious reasons.

    Courts take a dim view of the inflexibility of the employee’s stance. “We are faced with the … situation of an employee who will accept no accommodation short of an outright exemption from a neutral dress code. Granting such an exemption would be an undue hardship because it would adversely affect the employer’s public image,” the appeals court held. An employee that offers several accommodations, even if he or she is later rejected by the employer, might fare better in court, says Hicks.

    Finally, it’s important to note the grounds that the court did not decide on: whether Cloutier’s religious convictions were legitimate. First, courts are loath to determine the sincerity of an individual’s religious beliefs, Hicks says. Second, in the eyes of the EEOC, “it doesn’t take much to become a religion,” Kilker says.

    The EEOC, Kilker says, defines religion broadly to include moral or ethical beliefs as to what is right or wrong. “In order to constitute a religion, the employee’s belief must be sincere, and it must occupy a place in the employee’s life that is parallel to the place filled by God, in traditional religions,” he says. “That makes it a low threshold to establish that you are a member of a religion and that you need an accommodation so you can practice or observe that religion.”

    This means that employers shouldn’t get caught in the “is this really a religion game,” says Kilker, when confronted with an employee who is citing religious grounds for noncompliance with a dress code. “Generally, I would err on the side of attempting to accommodate someone’s religion, even if you have doubts that it would constitute a religion, in view of the EEOC’s broad interpretation of what a religion is,” he says.

    An attempt to accommodate won’t guarantee that employers stay out of court, but it’s a start.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

In 1962, a disgruntled IBM salesman named H. Ross Perot founded Electronic Data Services in Plano, Texas–a step that history records as the advent of the data outsourcing industry.

    Today, more than 40 years later, EDS Corp., a company with $21 billion in 2003 revenues and 119,000 employees worldwide, faces what may prove to be an even more formidable challenge: reinventing itself.

Keep the “airplane in the air”
    This year, EDS announced plans to transform itself into a leaner, stronger and smarter organization, paving a path back from a series of business blows, including the bankruptcy of key clients, a downgraded credit rating and an SEC investigation.

    At the heart of a multipronged turnaround strategy is a plan to better manage the company’s core: its workforce. “If you back up a minute and ask, ‘What is our differentiator as a company?’ clearly our differentiator is the people we’ve got, and the skills that they’ve got,” says Tina M. Sivinski, executive vice president of human resources.

    The company faced many challenges, however, in making the most of that human resource, she says. Far from operating as a single unit, the company’s tens of thousands of employees, scattered around the globe, had little cohesion. The organization had devolved into client-account silos, with individual teams, structured around vertical lines of business, operating almost in a vacuum from one another–to the point where teams were using their own computer software and billing systems.

    EDS had to get its human resources in step with supporting the company’s larger business plan and unify its workforce, Sivinski says. Her task: to redesign the company’s internal processes to make that happen. And, she says, “to keep the airplane in the air while you’re changing the wing.”

Creating a data warehouse
    The first step was to get a handle on the company’s workforce as a whole. EDS maintained five separate databases cataloging information on its employees’ work histories, training, skills, abilities andcompetencies.

    Starting in July 2003, and over the course of six months, EDS employed its internal programming talent to merge those databases into one data warehouse. (The company would not reveal how much this effort cost.) The team also plugged in any holes in information. “The CVs weren’t as updated on the professional side as on the technical side,” explains Sivinski.

    In addition to recording raw skills–the ability to program in a certain language, for example, for its 150 executives worldwide–the database also records ratings on 200 “competencies.” These are attributes such as leadership, integrity and Sivinski’s favorite, sense of humor. This information comes courtesy of 360-degree performance reviews for the top 150 execs–assessments where everyone who works with an exec gives feedback on his or her performance. “They’re graded on hard and soft skills, strengths and weakness,” Sivinski says. “We’ve now mapped this to the entire top leadership of the company. We can tell you on one page using a bar graph how we rate on every category,” she says.

    To date, 82,000 employees are in the database, company spokeswoman Liz Bonet says.

Employees are “thirsty”
    It’s not just for the data-geek glory of it all that EDS went through that exercise, however. Armed with the information stored in the data warehouse, next up was a careful assessment of the current skills of the current EDS workforce, against the multiyear plan for the organization that EDS execs had developed.

    Starting with the company’s technical workforce, which numbers 85,000, the company was able to analyze gaps and surpluses in its talent base–not just for today, but for 18, 24 and 36 months down the line, says David C. Arcemont, vice president of global learning and development.

    For example, EDS learned that it had 22,000 programmers trained in COBOL and other so-called legacy languages–far more than the company was going to need for the foreseeable future, Arcemont says.

    On the other hand, the company was certainly going to need more programmers trained in Microsoft’s .NET program. “In another key area, we learned that we have an extreme deficiency in our project program management,” he says. After all the gaps and surpluses were analyzed, Sivinski says, the company sent out an e-mail to its employees discussing each employee’s current portfolio of skills–and the skills the company was going to be in short supply of now and down the road.

    Such an e-mail would seem fairly ominous to a worker who just found out that his or her skills were becoming obsolete–and it would be if the e-mail wasn’t paired with an opportunity for retraining in key areas. For example, EDS created a training program that will lead people from COBOL and other legacy languages to Microsoft .NET capability in 16 weeks, and instituted a buddy system to help people who are retooling connect with people who have the skills and knowledge that they need.

    To build employees’ skills in project management, EDS also created a distance learning MBA program in project management with Southern Methodist University in Dallas. More than 9,000 employees have registered for training in specific areas. “Our employees are very thirsty for self-development,” Sivinski says.

    Arcemont says the system isn’t a closed environment; the information isn’t available only to human resources. “Employees can go in (to the system) and say, ‘I know my assignment is ending in the next six months, so what will be the hot skills or capabilities in the next six months?’ ” Then, the employee can enroll in appropriate training to get there.

130,000 people in 45 days
    A workforce trained in the skills that EDS needs does no good if the skilled workers are all in one division, or in one country, and the need is in another sector or location, though. And it does no good if a network of personal connections keeps some workers bolted in one place, when it would be in the better interests of the company as a whole to have that person elsewhere.

    To address the issue of “factions” or division by team and department, the company underwent a large-scale analysis–were the right people with the right skills in the right jobs at the moment? The company was then completely reorganized, redesigned from scratch around the results of this analysis. The company went from an organization that was divided by lines of business into three divisions: service delivery, portfolio management and global sales and client solutions. Within 45 days of the original transformation in July and August 2003, the company reassigned its entire workforce of 130,000 employees, Sivinski says. In October, EDS laid off 5,200 workers, eliminating duplication of effort.

    As the teams were reconstituted, EDS took a different approach to staffing up again, Sivinski says. Rather than starting with a standard organizational chart, Sivinski says the process started with a blank slate–a room that she describes as “a floor-to-ceiling set of whiteboards, markers and no ego.” Existing organizational charts were set aside, she says. “We needed to regroup and understand the requirements of the business,” she says.

    It starts with deciding on the business tasks a team or department needs to tackle, and then isolating the skills and capabilities needed of the team members. From there, it’s back to the database. “We do a global search for competencies and come back with a group of CVs of those skilled people,” Sivinski says. “We find people that you didn’t know existed with the skills required, and you create very high-performance teams,” she says. It makes the process of staffing a team or department less personal. It also helps to uncover talented people who may be laboring in different areas of the organization, and allows a leaner, tighter organization, Sivinski says.

A living plan
    All of this is well and good, but won’t these changes become obsolete over time? It’s a common pitfall that companies can fall into with efforts like these, says Susan K. Wehrley, an independent consultant who specializes in workforce planning in Brookfield, Wisconsin. “Strategic planning doesn’t work when it’s done once a year and put into a drawer afterwards,” she says. It must be a “living plan” that is revisited on a regular basis, she says.

    To make sure that the database is updated, training is being administered properly and EDS is making the most of its workforce, the company opened a workforce management office September 1.

    Richard McSpadden Jr., director of leadership, coaching and development, is running the workforce management office with a staff of 12. “We have this real simple mission statement: the right person and the right place, at the right time, with the right leadership,” he says.

    The office has two major tasks, McSpadden says. “The first is responding to the business. For example, if someone needs a person with a .NET specialty and also needs a person who can travel, we have the enterprise view, so we can give them their options,” he says.

    The second step is anticipating those needs ahead of time, he says. In the end, McSpadden should be able to pinpoint entry-level employees who need to be noted as high performers, identify early trends in surpluses or deficits in workers with certain skill sets, and so on. “And then it gets to where we are predictive,” Sivinski says. “That’s the end state.”

Tough choices
    Of course, all of the technology, planning and training can’t make business realities disappear. In September, EDS announced that it would cut as many as 15,000 to 20,000 employees as part of an effort to trim $3 billion in costs over the next 24 to 30 months. In October, the process began when the company offered more than 9,200 employees voluntary early retirement. “We anticipate that 4,600 employees will take it,” company spokesperson Bonet says.

    If all goes right, the new system at EDS should mean that a few years down the line, the company will not find itself in the position of needing the workers that it has shed. “This is a … very, very methodological process,” Sivinski says. It’s a process that should free up EDS to shift its creative energies away from its “transformation” and toward its future.

One morning this past August, 30 of Jenny Craig’s newest manager trainees gathered around the conference table at a hotel in Livonia, Michigan. These new managers at the privately held weight-loss company, based in Carlsbad, California, came from across the country to learn from four company trainers, watch PowerPoint presentations, and otherwise prepare for managing one of the company’s 449 centers in North America.

    As the four trainers kicked off the morning and introductions went around the room, a curious pattern emerged. After the obligatory “Hi, I’m so-and-so,” more often than not there was supplementary biographical information: “and I lost 80 pounds!” Or 35 pounds, or 20 pounds, or whatever excess girth the new employees had managed to whittle off their waists.

    These weren’t disillusioned defectors from Jenny Craig’s competitors. In fact, more than half of the new managers–16 out of the 30–plus three of the four trainers had started out as successful Jenny Craig clients, says Corrine D. Perritano, vice president of field operations, who was also in the room that morning.

    At Jenny Craig, seeing such a high percentage of former customers among its employee base doesn’t raise eyebrows. “We’ve had great success hiring from our client base,” Perritano says. She estimates that over half of the company’s 2,350 field employees started their association with Jenny Craig as one of the company’s approximately 53,880 clients it sees each week. “Typically, we don’t even have to do a whole lot of recruiting.” People who are successful on the program, she says, often get the urge to make a career of it and ask for an application.

    That’s a good piece of financial news for the company. “It’s a great savings, hiring a client,” Perritano says. “I don’t have to place the local newspaper ads, and I don’t have all the man-hours of going through all those résumés if I place an ad on CareerBuilder or Monster, setting up the pre-screening interviews, etc. If you look at all of that, we’re saving about $1,500 per hire.”

Good financial sense
    Indeed, for many companies, hiring customers makes good financial sense, says David Scarborough, chief scientist at Unicru Inc., a workforce-technology company based in Beaverton, Oregon. “You should be sensitive to your customer base because your customer base also has the potential to be your employee base,” he says. The company has computerized and studied more than 25 million employee applications since 1995, and tracked their progress as employees. Unicru found that customers indeed make superior employees. Customers-turned-employees have slightly longer tenures, and they’re also less likely to get fired, says Scarborough. What’s more, Unicru’s research also revealed that employees who frequently shop the stores that they work in–at least four times a year–outsell employees who were never store customers.

    Why such great outcomes? Customers-turned-employees have a built-in advantage over non-customers because they already understand the store, and can easily identify with other customers, Scarborough says. Plus, he adds, “they’ve already expressed a preference for the inventory, the style and the image of that employer.”

“You should work here”
    The hiring process starts in a department that usually has nothing to do with recruiting strategy: marketing. To hire effectively from the customer base, a company must have acompelling brand that can bring the right people through the door, says Micah Moore, group manager of talent acquisition at Sports Authority. The chain does about $2.4 billion in sales and has about 17,000 employees. “Our brand tends to attract a large applicant pool,” he says. (Customers are simply directed to in-store kiosks when they inquire about openings, says Moore.) Indeed, many retailers simply rely on the strength of their marketing to drive people to the store, and then recruit with the venerable “Help Wanted” sign in the window, point-of-purchase signage or a table stocked with brochures and applications near the front register.

    But other companies that recruit heavily from their customer base will often go beyond such tried-and-true measures, by training their store managers to keep an eye out for customers who could become “team members.”

    At Jo-Ann Stores Inc., the nation’s largest specialty-fabrics retailer, which logs $1.73 billion in annual sales, a recent study revealed that 87 percent of its 22,000 employees shopped in one of Jo-Ann’s 860 stores at least four times a year. Another 35 percent did so once a month, and 20 percent once a week, according to Rosalind Thompson, executive vice president of human resources. These high percentages mean that managers are trained to be on the lookout for customers who seem to have what it takes–good communication skills and a friendly attitude. “It’s really up to the management team in the store to get to know their customers,” says Thompson. When such customers are identified, they’re quickly buttonholed by a manager, she says. “They say, ‘Hey, you’re in here every week; you should work here.’ ”

    Jo-Ann Stores doesn’t just rely on chance to find the right customers. The retailer also uses in-store classes as a way to build relationships with customers. While a customer is learning how to make a Halloween costume for her kid or getting tips on scrapbooking, store employees use the opportunity to get to know customers who have high potential to become employees.

    Although Thompson says she hasn’t calculated return-on-investment stats, she’s convinced that recruiting from the customer base is “absolutely cost-effective. Our store managers don’t have the time to cold call, or to sweep the mall [for recruits] and that sort of thing. This is an efficient and effective way to do in-store recruiting–when employees are talking to customers, they can also be assessing the customers,” she says.

    Indeed, other than an occasional “we’re hiring” box on the regular direct-mail pieces that the marketing department sends out to customers or in the company’s weekly newspaper inserts, having managers looking out for high-potential customers is the major recruitment strategy that the company depends on to staff its stores. “The only time we ever do any type of mass hiring”–placing ads in the paper, going through employment agencies and so forth–“is when we’re opening a new store. We don’t have any recruiters in the field who recruit at a team-member level. So we’re saving a lot,” Thompson says.

Vacations for referrals
    At Jenny Craig, the very nature of the relationship between customer and employee aids in recruiting, as the service that the company provides depends on intimate discussions with customers about weight and health and diet. This means it’s natural for employees to get to know clients–and at the same time to scout them as potential employees. To make sure that employees know how important recruiting from the customer base is to the company, Jenny Craig has created an incentive program, says Perritano.

    The company uses a “points” system toreward employees; employees save up points to purchase items from a catalog. For each customer that is successfully hired as an employee, the employee who “scouted” the customer gets 100 points to use in a catalog, where everything from vacations to children’s toys can be purchased. (By way of comparison, an employee who is rated highly by mystery shoppers gets 50 points.) “Our people are anxious to get the points,” says Perritano.

Risky business
    Hiring from your customer base isn’t without its perils, however. “Since you’re not going to hire everyone who walks into the store, you have to be careful not to alienate,” warns Scarborough. Companies that plan to recruit heavily from their customer base must devise a system that gets feedback to would-be employees quickly–and sensitively, he says.

    It’s something that weighs heavily on Mike Stine’s mind. Stine is vice president of field human resources for Kmart, the nation’s third-largest discount retailer. The company emerged from bankruptcy protection last year, and now logs $23 billion in sales. Kmart has an average of 2 million customer visits a day, and from that pool, the company draws the majority of its new hires–some 75 percent to 80 percent of its 147,000 employees. “It’s very effective for us to recruit from our customer base, as opposed to blanketing a geographic area with ads in the paper and so on,” he says. But he’s mindful of the risk of turning a would-be employee into an ex-customer. “The experience [of applying for a job at Kmart] has to be a very pleasant experience because if there is a bad experience, it might turn them off from shopping with us,” he says.

    To that end, three years ago Kmart partnered with Kenexa, a Wayne, Pennsylvania-based company, to pilot a Web-enabled in-store application kiosk. The goal: to move the screening process along quickly so that managers could get back to would-be employees quickly. Four hundred of Kmart’s 1,500 stores participated in the pilot. At the kiosk, a candidate’s information is immediately run up against a “dirty number bounce,” which checks for invalid social security numbers, as well as another negative database that checks for theft-related convictions. “On average, 2 percent of applicants hit that negative,” says Stine, meaning that the process goes no further, and the customer can be politely–and rapidly–informed of the negative decision.

    Kmart’s kiosks include a behavioral assessment that scores a candidate on various retail-related skills and attitudes. Stine says that after the behavioral-assessment portion of the screening was completed during the pilot, the applicant pool was cut down by 40 percent. “We found people who were truly interested in working for us, and who also enjoyed retail.” Among the people that Kmart hired during the pilot, voluntary turnover was much reduced in comparison to that of stores that weren’t part of the pilot. Stine declined to provide exact ROI figures but says that “we have proved the return on investment to warrant the rollout to all of our stores.”

How sausages are made
    Another important part of hiring from your customer base is making sure that your customers know what they’re getting into, says Rosalind Thompson of Jo-Ann Stores. If a store is doing it right, a customer doesn’t see all the tiny little tasks that employees must perform. “It’s important to disclose to our customers what is involved in the job and not lead them to believe that they can just stand there and handle fabric all day. As customers, they don’t see the 2,000 boxes of freight that come into the back room.” Without being aware of that, she says, “they can’t make a learned decision to come to work for us.” And by the same token, she says, it’s important to train frontline managers to tell the difference between an eager customer and an eager customer who has what it takes to become a great employee. “It’s tempting to think, oh they’re enthusiastic, they’ll be fine,” she says. “Even if they’re our customers, we have to make sure they’re a good fit for our business.”

    Still, says Perritano of Jenny Craig, it’s hard to overestimate the value of hiring employees who have a history of excitement about the company long before they start to draw a paycheck. Such employees may require additional training, she says, “but you can’t train passion and you can’t train belief. Nor can you find someone who is such a good role model for our clients. Those things are priceless.”

Every single day, Booz Allen Hamilton, based in McLean, Virginia, finds itself in the alarming position of losing money. The strategy and technology consultancy logged $2.2 billion in sales in fiscal 2003 and employs 13,000 worldwide. It’s watching the dollars slip away because one group of must-have employees is excruciatingly difficult to find: workers with a security clearance issued by the Defense Department.

    Debra Loreilhe serves as recruiting manager in the company’s national security business segment. She says that Booz needs these so-called “cleared” workers for projects that it’s handling for the federal government. The positions range from engineering to clerical. “Demand for these workers far exceeds supply,” she says. In fact, of the 500 to 700 positions that the company currently has open for employees with security clearance, some 400 are considered “sold and funded.” In other words, Booz needs these employees for projects already under way. The company has boosted its recruiting team for cleared employees by 25 percent simply to try to get those positions filled, Loreilhe says.

Big spending means more demand
    Booz isn’t the only company relentlessly stalking security-cleared employees. As the Defense Department’s budget climbs–President Bush has requested $401.7 billion in discretionary budget authority for fiscal 2005, a 7 percent increase from 2004–Uncle Sam is doling out private-sector contracts like candy on Halloween. With many of these contracts, the work is sensitive, involving homeland security or national defense. When the federal government needs someone to work on the Pentagon computer system, it wants assurance that it’s not letting any bad guys in, explains Bradford Rand, president and CEO of TECHEXPO Top Secret, a division of TECHEXPO USA. The New York City-based firm stages large job fairs for applicants with security clearance.

    It’s no simple matter for a private company to get staff cleared. The process can take years. It also costs contractors anywhere from a couple thousand dollars to more than $20,000, depending on the complexity of the process, such as the number of places the candidate has lived, and the level of clearance. Employees who already have an active clearance are highly valuable to companies like Booz, and also to the IBMs, Ciscos, AT&Ts and Lockheed Martins of the corporate world, which do a lot of business with the federal government.

    Jason Medick, marketing director for online tech recruiter Dice, fields requests from job-seekers and employers alike. Both parties often wonder why it’s so hard to get clearance. “Job-seekers think it’s just another credential they can add to their résumé,” he says. Recruiters who are not in the know often think that adding the clearance is a matter of a simple background check.

    In fact, the process is intimate, to say the least. First, the only people who are eligible to apply for security clearance are those who are working in or with the military, with a federal agency, or with a private-sector contractor that requires access to sensitive information. The Defense Security Service (DSS), an agency of the Department of Defense, conducts the investigation, which involves a check into all of a person’s files held by the federal government, including criminal history in every place that a person has ever worked, lived or gone to school. It also includes comprehensive financial checks; interviews with coworkers, employers, personal friends, teachers and neighbors; and a personal interview, which includes questions about family background, past experiences, health, alcohol or drug use, foreign travel and even sexual behavior. (Red flags include bestiality, “swinging” and obscene phone calls. Celibacy, on the other hand, is not considered a threat.)

    There are several levels of security clearance, and that determines the scope and depth of the DSS investigation. Security-clearance categories are based on the damage that leaked information could cause to the nation. The categories range from “confidential,” which allows access to information that, if disclosed, would cause measurable damage to national security, through “secret,” which allows access to information that could cause serious damage. Secret clearances must be renewed every 10 years. People with access to “top secret” information can come in contact with materials that if leaked could cause “grave” danger, and such clearances must be renewed every five years. Clearance for “SCI” or sensitive compartmented information, allows access to information so sensitive that it is severely restricted. For some levels of security clearance, a polygraph test is required.

Finding the trustworthy
    The in-depth nature of the investigation process ensures that the supply of cleared employees isn’t going to increase anytime soon. And thanks to the high level of demand, most professionals with a clearance are employed, which means that they aren’t exactly eager job-seekers. At one popular site for cleared employees, Intelligencecareers.com, only 2 percent of job-seekers are unemployed. Companies that are pursuing these hot candidates therefore must get creative and cast a wide net, says Jason Averbook, director of global product marketing at PeopleSoft, which sells more human resources software to the government than any other vendor.

    Alex Baxter is managing partner at Transition Assistance Online, a division of Lucas Group. The first place to look, Baxter says, is the only truly deep source of potential employees with security clearance–individuals who are just about to finish their tours of duty with the military and are moving into the private sector. Many people in the military have at least a “confidential” clearance, the basic level, and many more are cleared for access to more sensitive information.

    To be sure, the number of people leaving the military each year is small. Only about 224,000 people left all branches of the military combined in 2000, the latest year for which statistics are available. But what this group lacks in size it makes up for in concentration. Until these future job candidates are discharged, they’re all living on or near military bases. Savvy recruiters are in touch with career offices on military bases, which accept job listings from corporations, and with “transition assistance training programs,” which help military personnel to blend back into the civilian world, Baxter says.

    Online job boards have a bad reputation when it comes to recruiting security-cleared candidates, says Baxter. In part this is because many job-seekers without security clearance mistakenly believe that if they at some point passed a background check, they have clearance. And in part it’s because many who do have security clearance are reluctant to post the fact on a job board that anyone can access, says Baxter.

    Averbook says that mainstream job boards such as Monster or HotJobs may represent too wide a net for such a rare credential. A better choice, he says, would be any of the specialty job boards that are directed specifically toward security-cleared individuals, such as Intelligencecareers.com or ClearanceJobs.com, or those that are targeted at former military personnel, like www.gijobs.net or www.stripes.com. Many of these Web sites take the extra step of getting in touch with employers to make sure that they are, in fact, looking to fill a position and are not terrorists trolling for the names of people with security clearance who are out of work. This piece of due diligence can help ease the mind of a jittery security-cleared and -conscious individual.

    In the Washington, D.C., area, which is rife with opportunities for security-cleared individuals, job fairs like TECHEXPO Top Secret that are restricted to potential candidates with an active security clearance are also a handy way to recruit. At the most recent Top Secret event, nearly a third of the candidates who attended received job offers, says Rand.

Paying your own employees
    By far the most effective way to recruit security-cleared employees is to tap that all-important internal employee network, says Loreilhe of Booz Allen Hamilton. About 50 to 60 of the 60 to 65 hires that the company does make each month in the security-cleared arena, she says, come from recommendations from security-cleared professionals on the payroll already. To encourage employees to participate, the company holds regular “cleared campaigns.” For example, in December, any employee who had brought in the résumé of a person with at least a “top secret” clearance received $100 per résumé. One go-getter brought in 45 résumés, Loreilhe says. Other promotions have offered heftier incentives for people who are actually hired.

    “Referral networks are the best way to get to the passive job-seeker,” Loreilhe explains. In fact, even if applicants’ credentials and experience aren’t quite right, but they have that clearance, Booz is willing to train. Building internal networks also helps with retention, particularly for cleared employees with a military background, who can act as mentors for new employees fresh from the military, she says.

    While Booz is aggressively seeking candidates from the outside, it’s also hedging its bets and getting employees started on the long process of clearance. For example, when it recruits college interns, it starts them in their sophomore year. The company will begin the security-clearance process as soon as it has a start date for the 20 to 25 that work on the national security team, says Loreilhe. “During the course of their academic period, we get them processed with their clearances.”

    Assuming that the interns come back to work for Booz after they graduate, the company has trained and security-cleared employees ready to hit the ground running–an asset that’s likely to be worth even more tomorrow than it is today.