Author: Andy Meisler

From her office in the leafy suburb of Plymouth Meeting, Pennsylvania, northwest of Philadelphia, Pernille Spiers-Lopez laughs pleasantly but briefly. The president of Ikea North America, the fast-growing arm of the Swedish global retailing giant, confirms that like many of her 7,000-plus employees, she’s read a recent front-page story about her company in The Onion, the oh-so-hip national humor magazine. The article describes Ikea as an “epidemic of self-assembled, clean-lined modernist furniture” that “claimed another 10,000 American lifestyles in 2003.” Referring to the fictitious malady, she says, “Oh yes. That’s a very good condition to have, absolutely.” Spiers-Lopez adds that she hopes nobody ever stamps out Ikea’s particular strain of “infection.”

    Her lilting Danish accent makes it impossible to tell whether the expression is deadpan or earnest, delivering a punch line or a mission statement. Any student of the Ikea phenomenon, or even just a regular visitor to one of Ikea’s huge furniture and furnishings emporiums, inevitably notices a curious convergence of whimsy and hard sell, of a seemingly laid-back sales force and a mazelike floor plan that keeps shoppers captivated for hours, of $3.99 Grunka fish spatulas and $1.99 Vållö plastic watering cans displayed alongside motivational tableaux of moderately priced all-Ikea kitchens, bedrooms, living rooms and home offices. Hallowed company traditions and doctrine are coupled with constant reminders that everyone must continually embrace responsibility, risk and change. Most significant, perhaps, is the fact that the Ikea way of doing business combines a very Scandinavian embrace of paternalistic employment policies and a social safety net with a hard-core drive for profits and market share that bows to no competitor, anywhere, anytime.

    Pernille (pronounced “PEN-Nilla”) Spiers-Lopez, a former journalism student, traveling saleswoman and human resources executive, embodies both the rewards and dangers of this idiosyncratic mixture. She is in her mid-40s, married, with two children. After an “epiphany” at a women’s conference in 1997 and her appointment as Ikea’s head of North American human resources in 1998, Spiers-Lopez began radically changing the company’s approach to benefits, corporate culture, chain of command and work/life balance. On top of offering full benefits for domestic partners, in 2002 she initiated full medical and dental benefits for part-time employees working a minimum of 20 hours a week. Ikea only recently began deducting $5 to $10 a month from paychecks for individual coverage of full-time workers and $140 a month for their families. Part-time workers who work less than 20 hours a week pay $64 to $185.

    Staff turnover has decreased from 76 percent to 36 percent during Spiers-Lopez’s tenure as president. She has overseen an increase in the number of stores in the United States and Canada from 18 to 31. Ikea plans to add five new stores per year in North America over the next 10 years. Whether the effort will contribute substantially to its bottom line is uncertain. As a private company, Ikea releases no profit figures, but in her three years as president, while much of the retail industry has been in economic intensive care, Spiers-Lopez has raised total revenue in the United States from $1.2 billion to $1.4 billion.

    Observers like Kurt Barnard, president of a consultancy in Montclair, New Jersey, called Retail Forecasting, are impressed. “Ikea’s past has been brilliant,” he says. “Its future here will be the same.” David Sievers, a retail expert at Archstone Consulting in Stamford, Connecticut, is less sanguine. “Its [imported] merchandise isn’t as culturally sensitive to low-end or value-conscious shoppers as I’d expect it to be,” he says, adding that Target does a better job where the two chains’ product lines overlap. Sievers adds that the lines are long and the service “terrible” at the Ikea in New Jersey near his home, and he suspects that because nearly all of Ikea’s products are produced overseas, the weak U.S. dollar is cutting into Ikea North America’s profit margin.

    But for those who pay attention to human resources, Ikea’s programs are often cited as being well above average. A full-press diversity drive was instituted in 2000, with individual stores’ managers and human resources heads trained intensively in subjects like which organizations to contact to find qualified minority candidates and how to adjust standard interviewing techniques to put job applicants at ease. Managers are then evaluated yearly on how well they’ve met the goal of having their workforces mirror the racial and ethnic makeup of the communities they serve. “We’ve already done it for our hourly workforce,” says Sari Brody, Ikea’s manager of leadership and diversity. “In top management we’re about halfway there.” Spiers-Lopez credits flexibility and near-constant movement for keeping her “coworkers,” as they’re known at Ikea, engaged. Footloose 20-somethings are eagerly accommodated when, for instance, they’d like to spend a year or two working for Ikea in Malaysia or Manchester.

    The needs of older workers are also addressed. Spiers-Lopez has initiated flextime, job-sharing and telecommuting programs. When Lori Schilling, head of human resources at the Ikea store in Covina, California, adopted a 3-year-old girl with her husband early last year, she realized that her priorities were changing. She wanted to spend more time at home while keeping her job. She negotiated an arrangement with both her supervisors and direct reports to work seven days a week every two-week period. “Every member of my team has taken little bits and pieces of my job,” Schilling says. “They rarely call me at home. At what other company could you do that?”

    It’s become a well-publicized point of pride that each Ikea facility has a “quiet room” where nursing mothers can pump breast milk. New mothers receive six to eight weeks of disability leave plus an additional week of fully paid time off. New fathers and adoptive parents receive the same week of fully paid leave. “This is very progressive, especially for the retail industry,” says Ellen Galinsky of the Families and Work Institute in New York.

    Spiers-Lopez has substantially increased the number of women and minorities in management. Forty-seven percent of the company’s 75 top earners are female. The number of women on Ikea North America’s 14-member management board has increased from one–Spiers-Lopez–to five, including Brody, Ikea’s North America’s marketing manager, its head of new business development and the deputy CFO.

An emigrant’s tale
    Not surprisingly, Spiers-Lopez thinks Barnard’s sunnier assessment of Ikea is more accurate. She was born in a small town outside Arhus, Denmark’s second-largest city. “Out there in the country, very little happens,” she says. “When I was a kid, I thought of America as a big dream, where everything happens.” After college she earned her master’s degree in journalism. For her thesis, she spent six months on Long Island researching an article comparing the health-care systems in the United States and Denmark. “I found good and bad things about both of them,” she says diplomatically.

    At 23 she joined an older brother who was working in a furniture store in Florida. “And I remember when I lived in Florida, one night I had this dream that one day I would just drive across the country and live in California. And it happened.” She opened her own import business in 1980, driving 60,000 miles in her Toyota selling Danish postcards and decorative mobiles to gift shops in the Southeast. She settled in Coral Gables, got a $5-an-hour job with a furniture chain called The Door Store, and soon was supervising its 24 branches.

    She drove to West Hollywood in the mid-1980s to take a job with Stor, a now-defunct Ikea imitator. “I think I learned a lot there. But I think what I learned the most is that you can’t copy anyone else. Because then you really don’t know how to fix things if they don’t go exactly right.” She met her husband when he was earning his teaching degree and working part-time for Stor in Orange County, California. Shortly before Ikea purchased the struggling chain, she interviewed for a job at the company her employer was aping, which was just setting foot on the West Coast.

    She was promoted to manager of Ikea’s Pittsburgh store in 1993. Her husband took a job in that city as a high school principal. Her career continued successfully but uneventfully until 1997, when Ikea’s then North American president, a man named Jan Kjellman, asked Spiers-Lopez to attend a businesswomen’s leadership conference in New York City. Inspired by their success stories and encouragement, she then returned to Plymouth Meeting to attend a management board meeting attended by herself and 13 white, mostly Scandinavian men. She said to Kjellman, “We’ve got to do something,” and one month later he promoted her to head of human resources.

Mid-career correction
    Ulf Caap, a three-decade Ikea veteran who has lived in Canada since 1979, considers Spiers-Lopez one of the finest executives he’s ever met. “One of the interesting things about Pernille is that she has the guts and fire to go where few people ever go,” he says. The Swedish-born Caap, who is Spiers-Lopez’s informal mentor within Ikea, says he’s noticed that she sometimes takes on a heavier load than she can safely carry. It was Caap, then Ikea’s head of global training and development, whom Spiers-Lopez called for help five years ago.

Most significant, perhaps, is the fact that the Ikea way of doing business combines a very Scandinavian embrace of paternalistic employment policies and a social safety net with a hard-core drive for profits and market share that bows to no competitor, anywhere, anytime.

    Ironically, Spiers-Lopez’s new assignment to make major changes to the company’s work/life-balance guidelines pushed her to the brink of disaster. When she was promoted, her daughter was starting grade school and her son was starting pre-school. She and her husband decided not to uproot the family. Instead, she either flew or made the six-hour drive between Pittsburgh and Philadelphia several times each week. In 1999, after struggling through a period of increasing fatigue and decreasing job satisfaction, she cracked. One evening she discovered that one of her arms was numb. At the local hospital’s emergency room a doctor told her that her condition was a reaction to stress.

    Ulf Caap says he gave Spiers-Lopez no specific advice but simply guided her toward listening to what her body was saying and asking the right questions. The most basic one was whether she should continue working. She decided she would, reasoning that if she stayed at home, her basic nature would drive her toward becoming something like a golf fanatic or giving so many elaborate dinner parties that her friends would stop coming to them out of sheer exhaustion. Instead, she made a strict rule that her evenings and weekends were reserved for her husband and children. On weekends she enjoys bicycle riding with her family.

    For the most part, she has managed to make this schedule work. She says that her “naturally relaxed” husband and deputized coworkers help her out. “I mean, they make fun of me. We have meetings, and they know that if they don’t say, ‘Let’s take a break,’ they won’t get a break. So they say, ‘Pernille, in order to help you we’re going to all take a break.’ And that way I’m much more conscious about it, but I also realize a part of it is that this is just who I am.”

Design for working
    Ingvar Kamprad, the workaholic founder of Ikea, undoubtedly applauded her decision. Now 78, the press-shy and legendarily frugal mogul still immerses himself deeply in the smallest details of running the $12.2-billion-a-year company, which has more than 76,000 employees and 200 outlets from Oslo to Moscow, Shanghai to Burbank. Kamprad has famously proclaimed that by growing as quickly as possible to sell stylish products at the lowest prices possible, Ikea has created “a better everyday life for the many.” Spiers-Lopez has conferred with him many times. “He is a wonderful man,” she says.

    The influence of Kamprad and Spiers-Lopez can be readily felt throughout Ikea North America. On a recent weekday afternoon at its 13-month-old, 308,000-square-foot store in Costa Mesa, California, the middle-class shoppers are locked in self-service mode, popping small items into bright yellow store-provided carryalls. The bigger items, like Flärke bookcases and Leksvik computer desks, are picked up by the customers themselves downstairs near the loading dock, disassembled inside cardboard “flat packs.” A few sales associates stand on the periphery but do not give assistance or advice unless asked. This ensures lower shipping and storage costs for Ikea and adventures in DIY re-assembly for customers. The whole process, invented by Kamprad, is called “automatic selling.”

    The store’s manager, Don Collins, is taking his turn flipping burgers at a store-sponsored employee barbecue outside. Asked if automatic selling means less work for his staffers, he glares angrily. “Our people aren’t just standing around,” Collins says. “They’re restocking and rearranging their areas, looking for people who need help, thinking about better ways to display the products.”

    Like many in Ikea management, Collins, who is African-American, is a veteran of another retail chain. He worked for 20 years as a manager at J.C. Penney and recalls that he spent most of the time carrying out directives from the central office. At Ikea, he says, he has much more leeway to meet his sales targets however he sees fit. “At Penney’s they told you, ‘Here’s what you need to do.’ At Ikea they say, ‘You need to be the best home-service store in your market segment.’ ” Another big part of his job is to train, develop and ultimately lose his best managers, who are needed to seed new stores opening elsewhere. Each existing store is required to contribute 15 percent of its managers per year to staff new stores. “This year we hit 18 percent,” Collins says proudly.

    He readily admits that there is a trade-off. Non-management employees at the company start at $8.25 an hour at the Costa Mesa store, and only a very few skilled technicians make much more than that. Salespeople do not receive commissions. There are no stock options, of course. Lori Schilling, the Covina human resources chief says, “When I worked for Circuit City there were sales associates who made more money in a year than store managers earn at Ikea today.”

    Still, Collins notes happily that he receives from 15 to 20 applications for every managerial opening. The ratio for hourly jobs is about five applicants to one hire. He does very little advertising for new workers, except for signs posted prominently in the store. “We find that people who shop here are the kind of people who want to work here.”

    That rule certainly applies to Pernille Spiers-Lopez, with two surprising and perhaps hard-won exceptions. When asked whether she envisions ever working for any other company, she responds, “I never make plans too far into the future.” When asked how her home is furnished, she admits that it’s an Ikea showcase–except for her dining room table, a round, thoroughly Danish blond-wood future heirloom. Don’t look for it in her company’s catalog. “I ordered it specially made,” she says, a touch of defiant pride in her voice.

Workforce Management, August 2004, pp. 26-32 — Subscribe Now!

The old baggage car, improbably filled with heavy-duty exercise equipment, spends most of its time in the Union Pacific Railroad Museum in Council Bluffs, Iowa. It’s the last of its kind, used only for excursions of the railroad’s steam-locomotive-drawn “heritage” rolling stock. But from 1990 to 1998, it was part of a fleet of 17 such cars that were attached to special work trains. The trains housed and fed 150-member “system gangs,” which roamed the railroad’s immense track system for weeks at a time. After a day of laying or repairing rails, roadbeds and signals, the overwhelmingly male laborers, welders, machinists and foremen had the option of throwing in a brisk workout on a treadmill or at a weight machine or free-weight bench.

    Or, of course, they could kick back with a dinner of fat-filled fried foods followed by beer and cigarettes. Nevertheless, the exercise cars reflected a genuine concern about employees’ long-term health before it was fashionable. But that was a different century, a different economy. In 2004, 15 years into a national health-care crisis, the costs and risks for UP are almost incalculably higher. With its aging, predominantly male and largely unionized blue-collar workforce, the 142-year-old company would seem to be a logical candidate for the kind of soul-sapping battle over health coverage experienced by so many old-line American corporations and smaller “old-economy” organizations. Which makes it all the more surprising to learn that Union Pacific is one of the best examples of a large American company that has successfully balanced the health of its employees with the need to boost its bottom line.

    Union Pacific estimates that during 2001, the last year for which a figure was calculated, its wellness program saved the company $53 million. That’s because more than 34,000 of the company’s 47,000 employees have voluntarily availed themselves of a free health-risk-assessment survey offered by the company. In 2003, 10,416 employees took the HRA and 6,642, prompted by health risks thus uncovered, enrolled in preventive health-education or disease-management programs. From 1990 to 2001, costs attributed to “lifestyle” factors such as smoking and alcoholism have dropped from 29 percent to 18.8 percent of the company’s total health-care bill. Among the employees who have taken advantage of the project, rates of high blood pressure, high cholesterol, smoking and excessive alcohol consumption have been significantly reduced.

    In 1997, the railroad commissioned a $75,000 study by Medstat, a company in Ann Arbor, Michigan, that provides research services for managing the cost and quality of health care. Medstat analyzed the company’s present and future workforce and predicted how its health-care costs would be affected by health and wellness efforts through 2008. Using a technique known as economic forecast modeling, it looked at four possible scenarios: What if the program disappeared? What if it stayed the same? What if UP realized a 1 percent reduction in risk? What if it achieved a 10 percent reduction over 10 years?

    Medstat’s rosiest scenario predicted savings per year of $77 million, but UP dialed back its expectations to come up with a figure $24 million lower because it didn’t think all the theoretical savings were realistic. It similarly scaled back its projected cost-benefit ratio to $4.53 saved for every dollar invested.

    In 1998, around the time the exercise cars were retired, the company contracted with 500 health clubs and gyms around its route system so that its employees could use the facilities free of charge. Recently, it instituted a pilot program providing a weight-loss medication, Meridia, to overweight employees to be used in combination with behavior modification, daily use of a pedometer and telephone counseling. And last year the company, which already provides the smoking-cessation drug Zyban, instituted the controversial policy of not hiring smokers. It does so on the honor system only and doesn’t include states where it operates and where it is illegal to prohibit employees’ off-duty use of legal substances. These states are: Oregon, Nevada, Arizona, New Mexico, Louisiana, Oklahoma, Wyoming, Nebraska, Oklahoma, Minnesota, Missouri, Tennessee and Wisconsin.

    Barbara Schaefer, a 26-year company veteran who is senior vice president for human resources, says Union Pacific does some cost calculations but that the numbers aren’t conclusive enough to release as proof of ROI. It declines to disclose either its health costs or the amount it spends each year–projected to average $1.9 million annually in the Medstat study–on its health and wellness programs. Arguably, UP’s strongest ROI data was collected at an early stage. In 1989, before the program was instituted, its employees had 17,954 encounters with health-care providers, at an average cost of $136.20 per encounter. In 1991, the number of encounters dropped to 17,291, at an average cost of $123.80. The company saved approximately $300,000. The program’s total cost was $110,000, yielding a benefit-to-cost ratio of 2.78:1.

    Although the company could commission a $250,000 statistical study putting a dollar value to each increment of employee health improvement since then, Schaefer has declined to do so. “I’ve got a few numbers,” she says a bit sheepishly, adding that her figures are nowhere near conclusive enough to release as proof of ROI. What is more important, Schaefer says, is that health and wellness is a significant part of the corporate culture. “Our chairman is the inspiration,” Schaefer says, referring to Richard Davidson, chairman and CEO since 1997. “He’s fired up about this initiative personally. He’s a former smoker who’s now a serious Atkins diet-ite. That’s because he’s a former cattle rancher who loves to eat as much beef as he wants.”

    As the railroad chugs along making solid if not spectacular progress in employee health, it also has consciously pulled back from some of the more draconian methods many companies are trying, such as requiring employees to take a health-risk assessment as a prerequisite for health coverage and making smoking or excessive drinking off duty a firing offense. While the company maintains its relatively low-key internal concern about employee health, there is a firestorm raging outside. The shrinking umbrella provided by company-funded health plans has become a national obsession. Fueled by dire declarations of an “obesity epidemic” and a demographic time bomb consisting of middle-aged baby boomers nearing retirement, many companies are using employee health costs as a club during contract negotiations, or as a blame-the-victim tactic to rock employees back on their heels and force them to “take ownership” of rising rates.

    The computer company Cognex, near Boston, and the Kissimmee, Florida, Sheriff’s Department are organizations that have not only banned smoking on the job but also instituted a policy of not hiring smokers and firing anyone who is discovered doing so. Others, like the Bluefield Regional Medical Center in West Virginia and the Washoe County, Nevada, School District, have tweaked their consumer-driven health-care policies, “withdrawing” anywhere from $25 to $600 per year from each employee’s health savings account. The money is then paid back in installments if employees undergo voluntary health-risk assessments and address whatever risks are found by enrolling in company-sponsored disease- and risk-management programs.

“You can’t do this stuff overnight, just like you can’t ban smoking in the building and expect that everybody will immediately quit.”

    The beauty of this, health and wellness practitioners argue, is that their programs can be funded with the cash that stubbornly unhealthy employees leave on the table. The risk is that overweight or otherwise apparently unhealthy employees will be demonized by their coworkers for alleged lack of team spirit and/or driving up the cost of health care for everybody. “It’s the worst in small companies, where a few people can drive up the rates for everyone,” says Donald Walizer, an organizational psychologist in Conway, Arkansas, who formerly worked as a benefits manager for a Fortune 500 company. “I’ve seen people get very, very angry” at coworkers who are perceived to be unhealthy.

    At least one company has pressed even harder. In 2002, Monongalia Health System Inc., a 1,400-employee health-care provider in Morgantown, West Virginia, announced the institution of what it calls its “tough love” policy. Any employee or spouse wishing to remain on the company health plan would be required to complete a 50-question health-risk assessment. Then he would have to attend free medical self-care training designed to “engage employees in taking more responsibility for their health-care status” and educate them “on health-care costs and the tools needed to make more prudent decisions when accessing health care.” About 40 percent of the workforce complained that this was an invasion of privacy, an effort by the company to wriggle out of its obligation, an attempt to gather data that could be used against them at promotion or layoff time, or all of the above, the company reports. But after being reminded that the company health plan was a benefit, not an entitlement, the employees all complied.

    But tough love, as practiced by Monongalia and any employers that choose to emulate it, will not be an option at Union Pacific. “The risk of taking benefits away is that something catastrophic could happen, and that would break my heart,” Schaefer says, adding that she can’t envision a situation at her company or any other where one part of the workforce is offered health coverage and another part is not. “I don’t want to be critical of someone else’s design, but I’m not going that way.”

The road to wellness
    Union Pacific is unique,” reads a 2003 corporate achievement award citation from the American College of Occupational and Environmental Medicine. “It is strongly committed to research to understand not only the effectiveness of intervention strategies in reducing health-risk factors, but also employees’ acceptance of various interventions. This focus on research is rare in corporate America, but one that makes sense for a mature workforce.”

    In 2001, Union Pacific won a C. Everett Koop National Health Award from The Health Project, a private/public consortium chaired by the former surgeon general. In 2003, the U.S. Department of Health and Human Services gave UP its Innovation in Prevention Award for large companies. In both 1997 and 2002, the Wellness Councils of America, a nonprofit organization that has its headquarters near UP’s in Omaha, named the railroad a Platinum Well Workplace, its highest classification.

“We found that the most influential person in a person’s life is her spouse or significant other. So it’s best to get the information in their hands.”

    The main initiative that has kept the railroad out of the public health-care debate and off the picket lines is called Health Track. All of Union Pacific’s employees are given both the motive and the opportunity to improve their vital statistics in 10 distinct categories: obesity, fatigue, inactivity, diabetes, smoking, stress, high blood pressure, high cholesterol, asthma and depression.

    Health Track is promoted during shift changes, at safety meetings, at company-wide functions and in newsletters. Corps of employees who volunteer to be health mentors are trained to help their less-enthusiastic colleagues through the programs. For example, UP safety captains frequently coach and encourage their co-workers through the smoking cessation process, emphasizing that slips and backslides are an expected part of the process. Twenty-six occupational health nurses at 20 of the railroad’s far-flung work sites from New Orleans to Pocatello to Portland are also responsible for spreading the message.

    CEO Davidson got caught up in one such wellness dragnet while visiting with maintenance-of-way employees near Houston last year. “Our nurse came around to measure blood pressure and body fat, and I got in line,” he says. “She had this electronic device that measures fat somehow, and when she tried it on me she said ‘You exceed the upper limits.’ That put me over the edge.” Since then, Davidson says, he’s cut back on carbohydrates and sugars and lost 25 pounds.

In transit
    The railroad got into the health and wellness business in 1987 at the behest of the late Michael Walsh, then UP’s CEO and an avid runner and outdoorsman. A first-floor mailroom at headquarters was cleared out and a small exercise facility, available to all UP employees, was installed. The company contracted with private fitness centers along the UP system to admit its employees for free. To service roving track workers, the exercise cars were built and rolled out.

Change for the better
In 1990 Union Pacific calculated the percentage of its employee health-care costs that were due to chronic conditions and poor habits. Since the institution of Health Track, the percentage has gradually dropped.
Source: Union Pacific

    A 1990 evaluation produced the news that nearly a third of UP’s health costs were sparked by lifestyle factors that were at least theoretically subject to change. As health-care costs continued to zigzag upward, the railroad launched its first attempt at lifestyle modification. In Health Track’s first iteration, third-party providers were hired and pilot programs were launched to administer health-risk assessments. UP used the information gathered to alert employees who were deemed to be endangering their health by neglecting four risk factors.

    Over the next few years, as health costs continued to soar, the programs were expanded to address seven other health-risk factors. The programs were extended to all UP workers and their covered spouses, promoted heavily during work hours and integrated into the railroad’s safety-promotion program. It was also integrated into the company’s disability-procedures program in an effort to incorporate health and fitness into its aggressive return-to work-program.

    Adjustments were made and failures acknowledged. It was discovered, for instance, that promotional literature worked better if mailed to workers’ homes rather than distributed at work. “We found that the most influential person in a person’s life is her spouse or significant other,” says Jackie Austad, UP’s director of health and wellness. “So it’s best to get the information in their hands.” UP has also found that weight-reduction programs, including subsidized Weight Watchers meetings, are as effective for its employees as for the population as a whole. Still, 54 percent of its employees are overweight, an increase from 40 percent since 1990. (In 2000, The Centers for Disease Control and Prevention classified 64 percent of American adults as overweight.)

    Although far from ready to surrender, company officials figure that “awareness” is still no match for an aging, mainly male workforce relying increasingly on high-tech devices rather than brawn. Since the mid-1990s, smoking has been prohibited in progressively larger swaths of company property. It has long been forbidden in locomotives, shops and offices, and next year will be against the rules in outdoor switching yards and on rights-of-way as well. UP’s new Omaha headquarters building, due to open this summer, will have a large, well-equipped exercise center and a cafeteria with a section devoted to healthier foods.

    Next year, Schaefer says, the railroad will try nudging its non-union workers toward health by using the health savings account financial-incentive method. But the fine line between information and coercion, company officials say, will never intentionally be crossed. Marcy Zauha, UP’s director of health and safety, says it takes time. “You can’t do this stuff overnight, just like you can’t ban smoking in the building and expect that everybody will immediately quit.” What she tries to do is to give employees information and then ascertain their level of health awareness. “Are they someone who’s not yet ready to change?” Zauha asks. “Or are they somebody who’s ready to make a change right now?”

Workforce Management, July 2004, pp. 30-34 — Subscribe Now!

File this report under “Inalienable Rights” or “No Good Deed Goes Unpunished.” Wherever it goes, the fact remains that when a company becomes involved with an employee’s health risks, size and/or personal habits, the employer runs the risk of getting entangled in a web of vague, often conflicting state and federal statutes. “We’re very, very careful about getting involved in this,” says Barbara Schaefer, Union Pacific’s senior vice president for human resources.

    When UP recently instituted a policy of not hiring smokers, it had to carve out exceptions in the 13 states across its route system that have “smokers’ rights” statutes on the books. These laws prohibit discrimination against employees and applicants on the basis of off-duty smoking. Thirty states in all, says an American Lung Association survey, currently have similar laws. Two states, Wyoming and Montana, say that off-duty smoking cannot be a disqualifying factor for employment, but allow employers to charge smokers extra for including them in their health coverage. The Commonwealth of Virginia’s smokers’ rights statute applies only to public employees.

    While the issue of the right to refuse to hire or fire smokers hasn’t moved into the federal courts, the Department of Labor offers some guidelines on the question of whether a smoking habit is considered an addiction to nicotine. If it is, it might someday be considered a drug addiction under the Americans with Disabilities Act. “It’s very unclear. They [the bureaucrats] tend to flip-flop on the issue,” says Lori Shapiro, general counsel with Employee Learning and Innovations Inc. in Atlanta.

    In many states it is within the law to fire or refuse to hire people who indulge in off-duty consumption of another legal product, alcohol. This is illegal, however, in Colorado, Illinois, Minnesota, Montana, Nevada, New York, North Carolina, North Dakota and Wisconsin.

    Another major issue is the right of employers to fire or refuse to hire, for reasons of cost or safety, people whom they deem to be unhealthily or dangerously overweight. Union Pacific had a serious encounter with the court system on this topic 20 years ago. In Greene v. Union Pacific Railroad, a U.S. District Court found that the state of Washington didn’t intend to include obesity in its statute prohibiting discrimination against disabled individuals. However, similar suits brought in other states, including New Jersey and California, have produced the opposite result.

    To add to the confusion, only one state, Michigan, and three cities, Washington, D.C., Santa Cruz, California, and San Francisco, specifically prohibit job discrimination based on weight. But a number of lawyers and advocacy organizations feel that all overweight and obese American adults should be covered by either the Civil Rights Act of 1964 or the Americans with Disabilities Act of 1990. “These are emerging issues,” says Sondra Solovay, an Oakland lawyer and the author of Tipping the Scales of Justice: Fighting Weight-Based Discrimination. So far, however, while she contends that obesity is a chronic health problem rather than a lack of self-control and that women, African-Americans and Latinos, who tend to be overweight in greater numbers than the population as a whole, are being unduly penalized, no case brought by an overweight employee has held up in federal court.

    John Pearce thinks that trouble for employers might arrive from the opposite direction. A professor of strategic management and entrepreneurship at Villanova University, Pearce recently studied an initiative by the California Department of Health Services to encourage programs promoting better health and nutrition in the state’s workplaces. Pearce was impressed enough to comment, “Maybe employees of companies who aren’t offered these types of programs will begin suing.”

Workforce Management, July 2004, p. 33 —Subscribe Now!

Laurie Siegel, senior vice president of human resources for the beleaguered conglomerate Tyco International, isn’t one to brood, hesitate or theorize. When she was offered the job, she knew she had to take it. When she showed up for work, she knew exactly what she had to do. “When you’re in a hole, you don’t need a PowerPoint presentation to tell you which way is up,” Siegel says. “You just head up. And you know you’re doing the right thing.”

    Siegel has been making the long climb toward the surface for 14 months. Difficult, high-pressure jobs are her specialty, and she’s obviously enjoying this one, but even she isn’t certain that the company will make it out of the pit dug by previous management. Tyco, which employs approximately 260,000 innocent bystanders, manufactures and sells everything from suture needles to circuit breakers, burglar alarms to duct tape. But to most of the world, its name is a synonym for corporate corruption. Its former chairman and chief financial officer face the possibility of significant jail time, and the company itself is involved in multiple shareholder lawsuits and an ongoing SEC investigation for malfeasance.

    Less widely publicized is the company’s tentative comeback under new CEO Edward Breen. Unlike most of its fellow corporate black sheep, Tyco has not yet been charged with accounting fraud, although various irregularities have prompted it to write down nearly $700 million. It has not declared bankruptcy, although it barely survived a liquidity crisis early last year. In the fiscal year that ended September 2003, Tyco earned $979 million, or 49 cents a share, rebounding from massive one-time charges and a horrific loss of $9.2 billion, or around $4.50 per share, for fiscal year 2002. Tyco’s stock, which traded at around $60 at its bubbly high in January 2002, plunged to $10 at its low point seven months later. In early February, it had climbed to $28.

    “I think Tyco is in good shape. It’s got good businesses and good margins and good new people,” says Eric Landry, an analyst for Morningstar Inc. Detractors, however, say that Tyco is just a loose collection of mundane businesses assembled to produce the illusion of real growth and might as well be dismantled.

    Whatever the ultimate outcome, Siegel, a 48-year-old straight arrow, will play an integral role. So will the galvanizing effect of her long-held belief in the power of tough but ethical competition. The Tyco scandal was a failure of corporate governance and of the strategic role of human resources, two of Siegel’s passions. Recalling a conversation she had with Breen about what her responsibilities would be, she says that her new boss put it something like this: “You have a mess to clean up. Clean it up. Build a system with an independent board, with a real compensation committee, so that what we know happened before will never happen again. Help us be an operationally excellent company. And make us a company that attracts and develops excellent talent.”

    Seated at a small conference table in a partially decorated office in Tyco’s nondescript new headquarters in Princeton, New Jersey, Siegel says with only a touch of irony, “It’s definitely a career-defining opportunity.”

    That’s the press-release version of what she told her friend and former colleague Robin Ferracone when they talked in late 2002. “Laurie said to me that she really liked Ed Breen,” says Ferracone, now a partner at Mercer Consulting in Los Angeles. “That it [Tyco] was the top human resources job anywhere. That this was what she’d been aspiring to her whole career. To take a new situation and make improvements to it, chart a new course. Set her own agenda. Connect with the people in the company and give them hope and security and confidence that they’ll have a place to work tomorrow.”

    When Jane Kennedy, vice president of staffing and one of Siegel’s first hires, arrived for work last March, Tyco had no corporate intranet, or even a company-wide e-mail system or phone book. There was no department of intellectual property, environmental safety or college recruiting. No labor attorneys. No CIO. “Of course, I didn’t have an assistant,” Kennedy says. “I had to grab Laurie’s assistant when she had a minute or two to spare.”

    Upon taking office, Breen, a no-nonsense former CEO of Motorola, fired the entire board of directors. He then dismissed the entire headquarters staff of 125 people. He recruited a new, completely independent board of directors and hired a CFO, an ombudsman and a vice president of corporate governance who reports directly to the board.

    While Breen has been dealing with investors, analysts and the media, hacking away at expenses and closing 200 of Tyco’s 2,000 facilities, Siegel has been working 12-hour days. Breen told her that her first priority was to set up corporate-governance and compensation systems and controls, then to transition “to really driving the talent machine.” For much of her tenure, she has handled both tasks simultaneously.

    During her first days, Siegel worked closely with the board and head of corporate governance to draft a strict company code of ethics. She then arranged to have it taught simultaneously at a special ethics training day in May to every Tyco employee. In the first few months, she also advised the compensation committee on how to replace Tyco’s old salary and bonus policy, which rewarded acquisition-based company growth. The new system is based on measurable company performance. Bonuses and restricted-stock grants are linked to objective measurements, including each business unit’s earnings before interest and taxes, and Tyco International’s overall performance.

    Top officers are required to hold company stock worth 3 to 10 times their yearly base salary. They must hold 75 percent of their restricted stock and stock options until a minimum level has been reached. Above that level, they must hold 25 percent for at least three years. Severance pay is limited to two times an individual’s yearly salary plus bonus. Post-handshake perks like consulting contracts and free transportation in company aircraft have been abolished.

    In the bad old days, Siegel says, Tyco hadn’t really been run as a corporation. Its growth was driven by acquisitions rather than increased sales or cost-cutting. “It was really organized as an M&A house, an investment firm that did deals,” she says. Another peculiarity was that Tyco management considered itself so special that it never bothered to compare its practices to those of other companies deemed successful by the outside world. “There was an arrogance,” she says. “And because of that, they never looked around and asked, ‘Well, what do great companies do for talent development?’ But now the tables have turned.”

    Siegel says that she makes a point of recruiting and hiring executives of “successful multi-industry companies.” Despite the stain on Tyco’s name and the new compensation policy, she’s had no problem attracting good people. A knowledge of or willingness to learn Six Sigma is mandatory. So is honesty, competitive fire and an attribute she calls “managerial courage.” “We need people who will say, ‘The Emperor has no clothes.’ “

    Recent hires have included alumni of GE, Dell, Siemens, Raytheon and Merck. Siegel also has reached down into the ranks of the “old” Tyco for talent. For several years Hal Johnson was in charge of leadership development at ADT, Tyco’s Florida-based security systems company. He was never able to convince anyone that similar programs should be implemented Tyco-wide. Two weeks after meeting Siegel, he was appointed Tyco’s vice president for leadership development.

    Since her arrival, Siegel has made more than 65 “mission critical” hires, not including the 100 auditors she recruited to conduct a crash company-wide audit. She still interviews three or four people a day, and confers with Breen and CFO David FitzPatrick at least once daily. “I would say that we have conversations about the business, we have conversations about people, we have conversations about how we think about life, how we think about how the company is doing. We’re a very action-oriented group. We use each other to help reflect. And to make sure we’re on the right track.”

Tyco management considered itself so special that it never bothered to compare its practices to those of other companies deemed successful by the outside world. “There was an arrogance. And because of that, they never looked around and asked, ‘Well, what do great companies do for talent development?’ But now the tables have turned.”

    Breen credits Siegel with playing a pivotal role in keeping Tyco alive. “I think she’s fantastic,” Breen says. “If she hadn’t been here, we couldn’t have made nearly the progress that we have made.

    “Her office is next to mine,” he adds. “Doesn’t that tell you something?”

Missing Mr. Kozlowski
    Long before it became known for corporate larceny, Siegel had Tyco International on her mind. In 1998, when she was head of executive compensation at the aerospace firm AlliedSignal, she worked closely with its CEO on a takeover of electrical manufacturer AMP Inc. As the deal was closing, Tyco’s CEO, Dennis Kozlowski, acting as a “white knight,” gobbled up AMP. The failure of its acquisition led directly to AlliedSignal’s 1999 merger with Honeywell, with control going to Honeywell’s CEO. In 2001, GE made its hostile takeover bid for Honeywell.

    Feeling restless, Siegel explored her options. “My husband said, ‘Why don’t you send your résumé to Tyco?’ And I thought, Hmm, that might be fun. But to just send a résumé, then show up at their door and say, ‘I want to head up your HR organization’? I finally told him, ‘That’s not how you get a job, honey.’ ”

    Siegel’s adherence to executive protocol served her well. With the help of a somnolent board of directors and compliant underlings, Kozlowski and his CFO, Mark Swartz, allegedly turned Tyco into their own private ATM. In 1999, Kozlowski’s official yearly compensation was $170 million, but in mid-2002, New York State authorities accused the pair of supplementing their paychecks with $600 million in self-awarded bonuses, misappropriated funds and tainted stock sales. A suddenly energized Tyco board demanded and got Kozlowski’s resignation. Several months later, Siegel got an unsolicited call from a headhunter who was recruiting for Tyco.

    For much of her time at Tyco, Siegel has had the unusual experience of working in near anonymity to save a company whose ex-managers are involved in a high-profile trial. Last year her predecessor, former human resources chief Patricia Prue, testified for the prosecution that she was (1) a recipient of Kozlowski’s largess, (2) clueless as to the legality or illegality of his actions, and (3) powerless to stop them. Siegel won’t comment directly on Prue, whom she’s never met, but will say, “If you look at the people who work in corporate human resources today and the people that worked there in years before, the profile has changed completely.”

Action figure
    Born in Chicago, Laurie Siegel is the daughter of a physician who “was absolutely passionate about his work” and often got up in the middle of the night to handle emergencies. Her mother was a homemaker. “Interestingly, she was a very talented musician, but her family was poor and all the money went for lessons for her brother because he was the boy,” Siegel says. “So she always instilled in me the message, ‘You have every opportunity to fly. Make sure you don’t miss your chance.’ ”

    After graduating from the University of Michigan with a bachelor’s degree in general studies, she entered the Harvard Design School to study architecture and city planning. But halfway through the graduate program, she dropped out. Architecture wasn’t for her. “There’s a lot of dealing with bureaucracy, massaging things politically. It takes 10 years to get permission to build things and another 10 years to get them built. I thought, ‘This will drive me nuts. Absolutely crazy.’ ”

    She entered Harvard Business School in the mid-1980s. “I was entirely stimulated by the environment,” she says. She also remembers that at her graduation many classmates pasted dollar signs on their mortarboards. “A lot of otherwise great people got caught up in that. I bet a lot of them now think, ‘That was pretty tacky.’”

    After graduation, Siegel joined Strategic Compensation Associates, a Los Angeles consulting firm where she worked with Ferracone. “We were part of a movement toward value-based measures of performance,” Siegel says. “Figuring out the real drivers of value, then rewarding people for creating, not destroying it. Sounds familiar, doesn’t it?” Ferracone remembers Siegel completing projects for clients under extremely tight deadlines. In 1993 Siegel joined Avon, where she was in charge of executive compensation. There she worked with Alan Hait, now vice president for compensation and benefits at InterActiveCorp in New York. “When we got there, the attitude was, ‘The company will be nice to you no matter what you do,’ ” Hait says. “Laurie was part of the team that changed the company. She installed long-term incentives that rewarded executives for sticking their necks out.”

    Jim Taiclet, her former boss at Honeywell’s aerospace division and now CEO of American Tower Corp., marvels at how Siegel assembled a talented crew for a dot.com subsidiary without offering them inflated salaries or stock options. She did it by finding talent in her own organization rather than bidding for Silicon Valley superstars. She also kept everyone calm through a nerve-racking period of takeovers and mergers. “I was thrilled with how she managed people,” Taiclet says. “I can’t remember anyone leaving us at that time.”

    Siegel is married to Joseph Nosofsky, a financial services executive who now runs a DVD production and marketing company out of their home. They have two teenage daughters, for whom Siegel zealously guards her weekends.

    If, as she predicts, Tyco becomes a company with the same boring crises as any other non-scandal-ridden corporation, she says that she might consider leaving. Perhaps for another corporate basket case, perhaps one where it’s her job to fire the bad guys. “Let’s put it this way,” Siegel says. “I’ve been married to the same man for 14 years. So there are areas where I need stability. But in my career life, if I do anything for more than two years, I get bored.”

Workforce Management, March 2004, pp. 26-33 — Subscribe Now!

In 2001, a man named Ron Covais, a vice president for business development at aerospace giant Lockheed Martin, received an “inappropriate request for payment” during the bidding process for a contract with a foreign customer. Covais not only turned down the bribe request flat but also immediately removed his company from the bidding process. He reported the incident to his bosses and met with top-level U.S. and foreign officials to discuss the matter. His action cost his employer a multimillion-dollar business opportunity.     But in March 2002, Covais was presented with the first annual Chairman’s Award, a crystal bowl symbolizing “the highest standards for integrity and business conduct.” Lockheed Martin’s chairman and CEO, Vance Coffman, presented the award in a special ceremony. “Ron’s action in resolving this complex ethical issue followed our ethical guidelines to the letter,” Coffman declared. In March 2003, the second annual Chairman’s Award was presented to Vic LaRosa, a software engineer who inadvertently received two e-mails containing proprietary information belonging to a competitor. LaRosa immediately deleted the messages and reported the incidents to his manager.     These aren’t the kinds of stories that get much ink these days. There’s much more interest in plumbing the murkier depths of the military-industrial relationship. But perhaps the primary reason why Lockheed Martin, unlike Boeing and Halliburton, has been out of the headlines lately is that the formulation, dissemination and enforcement of ethical standards is one of the company’s strategic priorities. It is this company-wide commitment that singled out Lockheed Martin as the 2004 Optimas Award winner for Ethics.     “Our belief is that good ethics is good business,” says Maryanne Lavan, Lockheed Martin’s vice president for ethics and business conduct. “The competition in this business is fierce, but if our company wins through underhanded means, we don’t consider it a win. Because eventually there’ll be someone uncomfortable enough to report it.” Lavan emphasizes that her company’s ethics policy, in effect since the 1995 merger of Lockheed and Martin Marietta, works from the top down. To illustrate, she points out that each year, every senior leader in the company is asked to find an example of exemplary ethical behavior in his business unit and recommend the responsible employee for the Chairman’s Award. If he fails to do this, he receives a negative evaluation.     No one, from the CEO down, is exempt from inquiries and complaints phoned in to an anonymous ethics hotline. Every one of Lockheed Martin’s 130,000 employees–again from the CEO down–receives a mandatory hour of ethics training each year. To carry out such ambitious tasks, Lockheed Martin employs 65 ethics officers, divided among its Bethesda, Maryland, headquarters and its five business units. The ethics department produces training materials that stress guided role-playing exercises simulating “gray area” ethical quandaries. For instance, what do you do if you accidentally receive information from a U.S. government employee about a rival company’s bid? If a manager asks you to fudge financial information on an internal report? If a vendor’s representative offers to pay for TGIF drinks for your entire work team? Many of the scenarios are based on actual experiences of workers at Lockheed Martin and other corporations.     To keep its messages fresh, the Lockheed Martin ethics department turns out a newspaper and calendar and an “Ethics Zone” site on the company intranet. There is even an annual Lockheed Martin Ethics Film Festival. Prizes are awarded to the best tongue-in-cheek amateur ethics “infomercials” submitted by auteurs from throughout the company. Some of the entries are surprisingly well produced and powerful. Some are not, but the ethical messages still get through. In 1997 the company contracted with Dilbert creator Scott Adams to spice up the training materials with pertinent examples of his satirical comic strip. Then-CEO Norman Augustine, a particularly vocal advocate of ethical conduct and education, appeared with Dilbert in an introductory video.     The roots of Lockheed Martin’s ethics program go back to the 1970s, when Lockheed was caught in a messy scandal involving kickbacks to foreign customers, which resulted in a major congressional investigation and the passage of the Foreign Corrupt Practices Act. In the intervening years, there has been much heated discussion about the cozy relationship between the defense industry and the U.S. government as well as some of its more byzantine contracting and pricing methods. It’s a measure of the company’s progress that when the Sarbanes-Oxley Act was passed in 2002, Lockheed Martin was already in compliance with most of its provisions and proscriptions.     Calculating the ethics program’s return on investment is difficult, especially since its budget, about which Lavan will say only that it’s “millions of dollars,” is secret. But another way to look at it is that in an era when Enron, WorldCom, Parmalat and Tyco have become household names, public scrutiny is closer and illegal corporate conduct costlier. Last year’s ethical lapse by Boeing–to be precise, an ex-employee’s pilfering of proprietary information connected to an Air Force missile contract–cost the Chicago-based company an estimated $1 billion. Says Brian Sears, Lockheed Martin’s director of ethics services, “You lose a billion dollars in business, it gets people’s attention in a hurry.” Posted on January 30, 2004July 10, 2018 Companies Weigh the Cost of Prepping Expats A valued executive is posted overseas. He moves to his new assignment with his family. He settles into his office and reports back to headquarters that he’s enjoying the challenge of his career. But behind his façade, everything is crumbling. The employees reporting to him speak English, but he can’t motivate them or even make them understand their duties. His wife, isolated and unemployable, is miserable. His kids are falling behind at school. Finally, word gets back that he’s floundering. His superiors pull the proper levers, and he and his family are provided with training and counseling in the necessary coping skills. The executive pulls out of his tailspin, his family starts to enjoy the expatriate lifestyle, and his company saves the hundreds of thousands of dollars it would have cost to replace him.     If this sounds familiar, it’s because it’s a rough composite of thousands of sales pitches delivered by a bewildering array of companies in the employee-relocation business. These organizations specialize in preparing and/or rescuing transplanted employees. But as corporate budgets tighten, the emphasis has subtly shifted from carefully preparing executives and their families before they go abroad to providing on-site remedies, if needed, after they’ve set up residence. The average cost for this service is $3,000 per employee per year. Amidst the cacophony of companies competing for this business, however, it’s difficult to decide what specific on-site services, if any, international employees actually need.     Objective advice is hard to come by. Deniz Ones, a professor at the University of Minnesota who specializes in international cross-cultural industrial and organizational psychology, says there has been no research on the effect of on-site training on either job performance or personal satisfaction. “The only research that I’m aware of was done on pre-departure cross-cultural training. It shows that the people being transferred adjust better and feel more personally satisfied, but the weakest effect is on job performance.”     Companies in the global relocation business have a tough time negotiating the tricky intersection of bottom-line business and “soft” services, too. The number of international employee relocations per year, which includes American expatriates going abroad and non-American “inpats” relocating to the United States, is 394,000 and rising, the Employee Relocation Council reports. The average cost of transporting one family to an overseas assignment is $300,000, says Laura Herring, CEO of The Impact Group, a St. Louis firm that specializes in employee relocation. Approximately one in 20 transferees utilizes on-site services, notes her client Greg Kirkwood, corporate relocation and expatriation manager for the French conglomerate Saint-Gobain. Even though the cost of a failed relocation might be more than a million dollars, Herring says, many other client companies are reluctant to increase their up-front costs with add-on options that anyone in the front office might think frivolous.     “Our ideal is to counsel employees before they leave, so they’ll have some expectation of what’s going to happen to them,” Herring says. “And some of the time that happens.” But often her first contact with her global clients comes when there’s a problem. “It’s when their executive is faltering. We call these jobs ‘Employee on Fire.’” No time for preparation     International flame-outs do not surprise David Martin, professor of management and human resources management at the Kogod School of Business at American University in Washington, D.C. Martin says that the trend in these frenetic times is toward one-year assignments rather than the more typical two- or three-year assignments that executives were given 10 years ago. “They’re too busy training their replacement before they leave to get ready for their own assignment,” Martin says. “When they go abroad, they get their orientation from the person they’re replacing.”     With all this frenetic movement, there are bound to be profit-threatening problems, and relocation companies are glad to talk about them. On the inpat side, they cite instances of foreign nationals being overwhelmed by the necessity of doing business in their second or third language and the cultural hurdles they encounter in the United States. Steve Conway, senior vice president for global mobility services at     Executive Relocation Corp. in St. Louis, describes a client that moved a Mexican employee several hundred miles to its Texas headquarters, reasoning that he needed no special preparation “because everyone in Texas speaks Spanish.” But the employee’s pregnant wife could not communicate with her American pediatrician, Conway says, and the employee was on the verge of resigning. His relocation company stepped in and connected her with a Spanish-speaking doctor.     The Impact Group salvaged an assignment when the children of a Canadian Muslim employee, transferred to a small Southern city soon after 9/11, were subjected to bigoted remarks at their local public school. Impact’s counselors found a private school where tolerance was enforced and introduced the family to members of the local Muslim community.     Americans abroad have their own set of problems. Stéphane Brahy, director of intercultural management training for Cendant Mobility in Danbury, Connecticut, says that they often find their managerial techniques ineffective in an international setting. “It’s as if a door you’ve always used just isn’t there anymore,” Brahy says. An example he gives is the man whose European aides remained silent during a presentation as he used erroneous information, then notified him of his mistake after the meeting. He thought his people had let him down, but business in Europe is much more hierarchical, and no one points out a boss’s mistake in public. Cendant arranged for private coaching in local business etiquette.     On the family side, relocation specialists cope constantly with the “trailing spouse” problem, helping American wives and husbands who have put their careers on hold find productive activity, perhaps volunteer work, to keep their frustrations at bay. Pre-existing health matters present other problems. For instance, German medical professionals do not recognize the existence of attention deficit disorder and will not prescribe drugs for American children previously diagnosed with it. Rensia Melles, director of clinical products, global services, for the Toronto company FGI, says, “In cases like these we will work with the family and see if they want to address the problem in the German system or have us locate a provider in Europe who’ll continue the previous therapy.” No guidebook     On-site international counseling certainly has its corporate proponents. “I’m a strong believer in the [on-site counseling] package,” Kirkwood says. He adds that he feels constant pressure to cut the service, but he has resisted successfully. “For a couple thousand dollars per family, I see it as a very good insurance policy.”     Others disagree. Imran Qureshi, office practice leader for the international consulting practice of Watson Wyatt in Chicago, is a Briton who worked here as an inpat before settling in the United States seven years ago. He says that the best resource for newly arrived transferees is the community of fellow expatriate countrymen. Visiting the local embassy or consulate can be valuable, too. “You’re much more likely to express your problems and fears to someone with the same culture and background, rather than a stranger,” Qureshi says.     To make matters more confusing, some on-site international training is conducted by large relocation companies that offer services such as house hunting, visa application and international tax preparation. There are also single-purpose companies that specialize only in counseling. Sometimes the larger relocation companies that offer this service are actually subcontracting it to the specialists. Some companies offer their counseling services through consultants located in the destination countries. Others conduct counseling with full-time employees who contact clients by phone from headquarters. Some large corporations like AT&T and Shell handle their transplants’ problems in-house. Others, such as General Motors, provide no such services.     David Martin of American University says, a bit wistfully, that companies should just send their employees to their new countries 30 days before their assignments start. “That will give them all the time they need to get acclimated,” Martin says. Lowell Williams, a former director of international relocation for Gulf Aquitaine who is now a vice president and leader of the human resources practice at the consulting firm EquaTerra, advocates a harder-edged approach. “I know those big relocation companies make their money on real estate commissions,” he says. His recommendation: get the counseling package thrown in for free, or go elsewhere. Workforce Management, February 2004, pp. 60-63 — Subscribe Now! Posted on January 5, 2004June 29, 2023 A High-Stakes Union Fight Who Will Fold First Before January 13, 2003, Cintas Corp., whose primary business is designing, renting and laundering uniforms, was known mainly for its ubiquitous red, white and blue delivery trucks. Businesspeople and investors noted its unsurpassed size and strength in the “corporate identity” industry, its 34 consecutive years of profitability, and its appearance on Forbes’ “The World’s Best Companies” and Fortune’s “America’s Most Admired Companies” lists.     On that fateful day, however, it became best known as one of the primary targets of American organized labor. Since then, two of labor’s most powerful entities, the AFL-CIO and the Teamsters, have committed big money, political muscle and personal reputations to the fight against Cintas. The battle is a high-stakes test of strength for the beleaguered union movement. It’s also a reality check for militantly anti-union businesses like Wal-Mart, FedEx and McDonald’s. And it’s a mandatory object lesson for any organization dealing with labor-management issues and deciding which tactics, old and new, will be effective in the 21st century. The protracted Cintas dispute serves as a wake-up call for companies that may wrongly assume that unless their workforce is already unionized, they have nothing to worry about.     Though organized labor has been on a long downward slide for the past 20 years, making assumptions about unions today is potentially dangerous. It’s true that in 2002 only 13.2 percent of American workers were unionized, down from nearly 36 percent in the early 1950s. In recent years, massive job losses in the manufacturing sector have hit unions hard. The combination of highly publicized cases of union corruption, 9/11 and the recent recession has been devastating to unions. But the unions’ long membership decline statistically leveled off in 2000, says Michael Sculnick, a labor lawyer who is a director at PricewaterhouseCoopers. “Right now we’re at an inflection point,” he says. “It could go either way.”     Recently, unions have won significant victories or at least held the line at Yale University, Verizon, Goodyear, Boeing and the Big Three automakers. In the mushrooming health-care sector, unionized nurses have made big gains. Median weekly earnings for full-time salaried union workers were $740 in 2002, compared with $587 for their nonunion counterparts. According to a 2002 poll of nonunion workers commissioned by the AFL-CIO, 50 percent said they would vote for union representation if offered the chance. And last year, endorsements by two major unions established Howard Dean as the clear front-runner for the Democratic presidential nomination. The combination of highly publicized cases of union corruption, 9/11 and the recent recession has been devastating to unions. “Right now we’re at an inflection point. It could go either way.”     For the past year Cintas has been the target of a corporate campaign spearheaded by the Union of Needletrades, Industrial and Textile Employees, which is affiliated with the AFL-CIO. How much this has affected the company financially is unclear. Cintas’ vice chairman and former CEO Bob Kohlhepp says that there have been “minor” client losses and that the company has had to increase spending in “a measurable, not significant” way for services from outside contractors like labor lawyers, labor-management consultants and public relations firms. From January to March, Cintas stock dropped nearly 40 percent, but most of the loss had been recovered by mid-November. In September, the Value Line research firm named Cintas as one of only 14 companies it predicts will grow at a minimum 12 percent annual rate over the next three to five years. At about the same time, J.P. Morgan Securities issued a report on Cintas that bore the headline “Weak Topline Results, Near Term Outlook Uncertain” and said that “union issues continue to raise ugly questions.” An analyst at R.W. Baird & Co. estimates that the UNITE organizing campaign will cost Cintas as much as $4 million in 2003 and predicts that there will be “significantly greater indirect costs caused by management disruptions and employee distractions.” An analyst at Lehman Brothers says that if the organizing drive is successful, it will cost Cintas $21 to $33 million in earnings before interest, taxes, depreciation and amortization for fiscal year 2004.     But simply probing for the bottom line is an incomplete method of handicapping this fight. When asked why they need to defeat Cintas, union officials mention concepts like justice, empowerment and dignity as often as wages. When asked what he would do if UNITE agreed to organize by NLRB ballot, Kohlhepp says that he would do everything it took to win, including spending the additional millions of dollars necessary for campaign materials, employee polling and proselytizing, and expensive lawyers and consultants. When asked whether unions are obsolete in today’s economy, he shakes his head emphatically. Unions are still useful, he says, but only at companies run by unfair and non-communicative managers.     This view is anathema to a new generation of union leaders who are concentrating more on gaining new members than on investing existing members’ pension funds. One of them is Bruce Raynor. At age 53, the aggressive Raynor is considered a possible future head of the AFL-CIO. The union he leads has a long and colorful history, so it’s not surprising that the Cintas-UNITE struggle has been covered extensively in national publications and followed closely by academics. Ruth Milkman, a professor of sociology at UCLA and director of its Institute of Industrial Relations, believes that the Cintas outcome may provide an indication about the balance of power between unions and management for the foreseeable future. “There are a lot of workers involved, and it looks like the unions are making a very strong effort,” she says. “If they win, it means a big breakthrough. If they fail, it means a big setback.” Facing off     In the past few years, the 250,000-member UNITE has organized more than 40,000 laundry workers at companies smaller than Cintas. Cintas is based in Cincinnati and has more than 27,000 employees at its 365 sites in the United States and Canada. Only 700 employees are union members, so the 74-year-old company wasn’t expecting a union fight. “There was no real warning,” says Larry Fultz, Cintas’ vice president of human resources, who in his two-and-a-half-year tenure at the company had concentrated on non-explosive matters like implementing e-learning, applicant-tracking and succession-planning systems.     During the week of January 6, Fultz says, he and his front-office colleagues heard scattered rumors that UNITE was set to announce an organizing drive for 17,000 of the company’s employees. Over the weekend, then-CEO Bob Kohlhepp presided over an urgent strategy session to prepare Cintas for a union petition to hold a National Labor Relations Board-organized secret ballot. The employees would listen to arguments from both labor and management and would either vote the union in or reject it.     On the following Monday morning, thousands of UNITE members arrived at 150 Cintas locations from Seattle to Miami. The activists distributed leaflets accusing Cintas of underpaying and mistreating their $7.50- to $9-per-hour production workers and forcing their $35,000- to $50,000-a-year driver-deliverymen, called service sales representatives, to work unpaid overtime.     Most surprising to Cintas management, though, was the announcement a few days later that UNITE would not be petitioning for an NLRB election. Instead it intended to organize it under an alternative process called “card-check neutrality.” UNITE would press Cintas management to agree to remain neutral on the matter of union representation, at which point the company would stop lobbying, “educating” or even expressing an opinion on the matter. Meanwhile, the union would try to obtain signatures from Cintas employees expressing their desire to join the union. If and when UNITE got signed cards from a majority of eligible workers, it would be authorized to negotiate a contract with Cintas.     Bruce Raynor revved up the rhetoric. “This is a company that generated $234 million in profit off $2.27 billion in sales last year and then turned around and increased the cost of its pathetic health insurance for its underpaid, overworked and abused workforce,” he declared. Since January, UNITE has assigned dozens of organizers to meet with Cintas employees in their homes. It has spent more than $3 million on its corporate campaign, which included a much-publicized day of picketing outside a downtown Chicago Starbucks, a Cintas client. “I knew little or nothing about card-check neutrality. In fact, I’ll tell you what. When I first heard about it, my initial reaction was, ‘How can the law allow a union to do this?’ I mean, it seems so un-American, so unfair.”     In May, UNITE filed a $100 million class-action lawsuit against Cintas in behalf of its service sales representatives. In June, two Cintas production workers in San Leandro, California, filed a lawsuit claiming that by supplying the nearby city of Hayward with laundry, the company had violated that municipality’s “living wage” law. That same month, UNITE took the unprecedented step of joining forces with the Teamsters, which are historically independent of the AFL-CIO. The Teamsters’ target would be the Cintas driver-deliverymen.     In July, 90 Democratic congressmen signed a letter supporting the Teamsters-UNITE effort. In September, Democratic senator Charles Schumer introduced a bill abolishing NLRB elections and mandating card-check neutrality for all union organizing efforts. On Labor Day, several thousand union members held a picnic and rally at a Cincinnati park and heard speeches by AFL-CIO president John Sweeney and Raynor. “We’re bigger than they are,” Raynor said. “Stronger than they are. And have more guts than they do.”     UNITE’s next thrust came from a different direction. At Cintas’ annual shareholder meeting on October 14, the company faced four dissident shareholders’ resolutions, three more than in its entire history. The AFL-CIO openly backed only one, a corporate-governance proposal that would reconfigure the board of directors’ nominating committee to include only independent directors. This would exclude company chairman Richard Farmer, the father of CEO Scott Farmer and the company’s largest individual stockholder. The resolution failed, 62.7 percent to 37.3 percent, with the losing side representing half of the stock not controlled by management. Afterward, the five other members of the nominating committee voted Farmer off the panel.     Cintas’ reaction to all this has been, quite literally, by the book. In The Spirit Is the Difference, an 86-page hardcover book given to each new employee, the company’s “principal objective” is explained. That objective: “To maximize the long-term value of Cintas for its shareholders and working partners by exceeding our customers’ expectations.” One consequence of a company’s management not having that objective, it says, is that “they may sign a union contract that will make them less competitive instead of taking a strike to avoid the work and grief of battling the union. They don’t want to rock the boat.”     In addition to flatly rejecting all charges of intentional wrongdoing, Cintas has responded to UNITE with a mixture of disbelief, defiance and scorn. UNITE’s organizing strategy is the prime target. “I knew little or nothing about card-check neutrality,” says Kohlhepp, who since July has been Cintas’ vice chairman under fourth-generation CEO Scott Farmer. “In fact, I’ll tell you what. When I first heard about it, my initial reaction was, ‘How can the law allow a union to do this?’ I mean, it seems so un-American, so unfair.” He adds that acceding to card-check neutrality would be akin to betraying his company’s traditions and culture. “We’re bigger than they are. Stronger than they are. And have more guts than they do.”     Kohlhepp, who has worked at Cintas since 1967 but wears a name tag on the lapel of his business suit and occupies a small, spartan office in the antiseptically clean headquarters facility, is largely responsible for the company’s anti-UNITE strategy. Scott Farmer says that corporate structure allows him to delegate the union problem to Kohlhepp while he concentrates on day-to-day operations. From the beginning, Cintas executives have insisted that UNITE is attempting to pressure their employees, called “partners” by management, “into surrendering their rights to a government-supervised election and unilaterally accepting union representation.” Cintas, they add, “will continue to vigorously oppose this campaign to defend our employees’ rights.” The company has redoubled its efforts to communicate with employees and to address their concerns. Cintas’ 2003 annual report, not coincidentally, contains dozens of admiring short biographies of partners from all backgrounds and job classifications. Taking issues     Whether Cintas’ intransigence reflects steely business sense or arrogance is yet to be determined. Just as uncertain is the ultimate outcome of the Cintas-UNITE struggle. In the meantime, business and labor experts are busy identifying the major issues. There is hardly a company in America that doesn’t face one of the following issues, if not urgently so. They include: Globalization. Nelson Lichtenstein, a professor at the University of California at Santa Barbara and a noted labor historian, knows exactly why UNITE targeted Cintas. “Because you can’t make money sending clothing to China to be laundered,” he says. Cintas, which assembles most of its uniforms overseas, still needs to keep its laundries near its customers. This eliminates the option of exporting laundry jobs and nullifies a potent anti-union weapon. Wages and Benefits. During the summer of 2002, UNITE renegotiated a contract at a unionized laundry in Detroit that Cintas had recently purchased. It won a 22 percent pay raise and held off the company’s demands to shift health-care costs to the workers. It’s a potent argument in its favor, but Cintas has one, too. It offers everybody from top to bottom the same fairly competitive health-care, profit-sharing and 401(k) plans. The union counters that workers earning $17,000 a year are unable to afford the health-care plan’s premiums, co-payments and deductibles. Probably true, says Peter Capelli, a professor of management at the Wharton School, “but not very compelling when lots of people are losing their jobs.” Competition. Unlike Wal-Mart, a company much admired at Cintas headquarters, Cintas hasn’t translated its nonunion status into a significant price advantage. Neither has it stampeded its competitors into anti-unionism. “We’re proponents of unions,” says a spokesman for Aramark Corp., which is second only to Cintas in the U.S. uniform-rental business. “They’re good for the American people,” the spokesman adds, “and that’s the way we’ve done business since our inception.” Although he denies that Aramark has tried to take advantage of the UNITE campaign, he says that some customers have switched to them “because they’re not happy with the situation at Cintas.” One such customer is the city of Hayward. The Spirit Is the Difference. UNITE’s corporate campaign depicts Cintas managers as greedy, uncaring sweatshop operators. This pre-World War II template is an awkward fit. While laundry work is repetitive, even mind-numbing, most of Cintas’ plants, particularly the 65 built during the last few years, are clean and air-conditioned. Cintas promotes from within, and its workers frequently climb into the middle class. CEO Scott Farmer’s annual salary is $450,000, well below modern robber baron levels. He has an open-door policy and meets regularly with workers at every level. Each year Cintas holds a Spirit Day, when everyone from the CEO down pledges to uphold the company’s “mission.” UNITE categorizes all this as propaganda and subtle coercion, but Leo Troy, a professor of economics at Rutgers University, says it does so at its peril. “To the unions, a worker who votes for a union is intelligent,” Troy says. “A worker who votes against it is a tool of management. But it’s absurd to say that employers oppose unions only because of ideology. Corporate culture goes beyond saying ‘we don’t want a union.’ These plans are focused on productivity, not just governance of the workplace. The reason that employers are successful in a nonunion company is that the company treats its human capital as a valuable asset.” Union Grievances vs. Human Rights. In this hyper-competitive era, the concept of workplace “unfairness” has little traction. To compensate, Nelson Lichtenstein says, some unions are experimenting with borrowing arguments and techniques from the civil rights and human rights movements. Hence UNITE’s picketing of Starbucks, which has been accused of exploiting coffee workers in Central and South America. Hence too UNITE’s emphasis on the fact that most of Cintas’ lowest-paid workers are Spanish-speaking immigrants, and an EEOC complaint alleging racism and sexism in the workplace filed by UNITE and the Teamsters in November. Card-Check Neutrality. Regardless of Cintas’ contention that it is undemocratic and an insult to management and workers, this organizing method, though relatively unfamiliar to the public, is in fact used frequently. In recent years corporations have become adept at turning NLRB elections into grinding endurance contests by hiring battalions of lawyers and consultants who specialize in regulatory hairsplitting and lengthy court challenges. “I think companies have decided that breaking the rules and paying a fine down the line is a legitimate delaying tactic,” says a prominent labor scholar who requested anonymity. Instead of entering such a contest, unions try to negotiate neutrality agreements. Adrienne Eaton, a professor in the School of Management and Labor Relations at Rutgers University, says that union leverage in these cases comes from the desire of companies to avoid the costs of a strike or corporate campaign, to operate in cities run by pro-union politicians, to avoid alienating union workers employed at other branches of their company and to prevent the dampening effect on business of picketers at the front gates. Companies organized via card check in the last few years, she says, include Marriott, Freightliner, Cingular and Rite-Aid. UNITE won the right via card check to represent 800 workers at Brylane, a catalog-clothing distribution center in Indianapolis, last January. “Brylane should be congratulated for agreeing to the card-check-neutrality process and should be seen as a positive example for other employers,” Bruce Raynor said. Politics. Richard Farmer is a major campaign donor to President Bush, and it’s safe to say that Senator Schumer’s card-check bill will go nowhere as long as the Republicans control Congress and the White House. If political control shifts, it’s likely that the bill will pass. But at least for now, neither Cintas nor the union likes to talk about forces beyond its control affecting the outcome of the fight.     In one stratagem that has survived the entire 20th century and into the 21st, neither will concede that the other side’s position is more than a dubious mishmash of greed, deception, desperation and self-delusion. Nor will they look at the bigger picture and speculate on how the eventual outcome of their grudge match will clarify the current state of labor/management relations.     Both sides, however, will gladly talk about how they think the conflict will end. Bruce Raynor thinks that bottom-line realities, as well as the rights of workers, will prevail. “I think Cintas has a decision to make. Are they in the business of serving shareholders and owners or fighting the union? You can’t do both. We will set the stage so the company will not do both. In the end Cintas ownership will make the logical decision.”     Bob Kohlhepp has his own confident prediction. “I think at some point UNITE and the Teamsters will recognize that they are spending a lot of money and they are not going to get anywhere,” he says. “I don’t think they will ever admit defeat. But I think at some point they’ll realize they’ve got easier fish to fry.” Workforce Management, January 2004, pp. 28-38 — Subscribe Now! Posted on January 5, 2004July 10, 2018 Where in the World is Offshoring Going If you can read this, you’re probably at one end or the other of the offshoring revolution. It’s not much of a generalization to say that the common denominator of the countries either sending or receiving work is a large population that speaks and understands English.     English became the lingua franca of world trade after World War II. For the next 30 years, however, Cold War politics kept most countries’ back-office work firmly within their own borders. What offshoring activity there was went from the United States and England to Ireland and Israel, two English-speaking countries considered well within the Western bloc. Today, both countries do significant offshoring work, but their limited populations and rising standards of living have begun to price them out of the market. As of 2001, Ireland led the world in offshoring revenue with $8.3 billion; India’s share was $7.7 billion. Since then Ireland’s income has been flat. India’s is soaring.     The new colossus of the offshoring industry is India. Its more than one billion citizens speak 26 different native languages, but India’s legacy as a British colony left it with one unifying tongue, English. “We are very happy that we were colonized by the English, not the French,” jokes Indian businessman Som Mittal. For 34 years after its independence in 1947, however, trade barriers, political turmoil and socialist governments kept India from taking advantage of this in any significant way. In 1991, however, a serious currency crisis prompted the country to open its doors to free trade. The next significant date is 1999, when the dot-com boom and the looming Y2K “crisis” meant that the only sources of low-cost computer coders and testers were in places like Bangalore and Hyderabad. When the boom ended, American companies in desperate need of cost savings looked to India more than ever.     In a poll taken by the consulting firm A.T. Kearney, India has the best reputation as an outsourcing destination among top U.S. companies. A potential challenger is the Philippines, which has a large pool of English speakers thanks to its American occupation in the 20th century. Despite the language handicap, Eastern European countries such as Hungary and the Czech Republic and Russia also have potential, particularly for outsourcing from Western European countries like Germany and France.     The country to watch, however, is China. With a population of 1.3 billion and an exploding industrial base and educational system, all it lacks is English speakers. Even that is changing. Puneet Shivam, an associate principal at the consulting firm Inductis, says that two years ago, the premier of China visited India, then returned home and ordered that English be taught as a required subject to every schoolchild. “Ten or 12 years from now, the picture will be very different.” Workforce Management, January 2004, p. 45 — Subscribe Now! Posted on November 6, 2003July 10, 2018 Little White Lies Yield Red Ink for Corporate Recruiters The boss is an over-caffeinated tyrant. The hours are brutal. That bit in the job description about “unlimited possibilities for a creative team player”? A classic bait-and-switch tactic, perfect for luring executive hires cross-country to dead-end jobs working for the CEO’s golf buddies and brothers-in-law.     This is the kind of negative information that a corporate recruiter or interviewer might feel the urge to suppress. But to stifle workplace realities is a major mistake. Practicing strict truth in hiring can guard against a multitude of unpleasant consequences. These problems include excessive turnover, bloated recruiting costs and, worst of all, a lack of loyalty and commitment from the very employees deemed to have the highest potential value to the company. Crossing the fuzzy line between aggressive marketing and downright lying can bring them on very quickly.     “When you aren’t honest with new hires up front, they never trust you again,” says Ann Rhoades, former chief people officer for Southwest Airlines and executive vice president for JetBlue, who left that airline’s staff in 2001 and now runs People Ink, her consulting firm in Scottsdale, Arizona.     To illustrate, Rhoades recounts how several years ago she recruited a new chairman and CEO for a 40,000-employee company called the Promus Hotel Corporation. The Promus board of directors promised her, and she in turn promised the executives she interviewed, that whoever was hired would have the opportunity and all the time necessary to turn around and build the company. One year later the board voted to sell the company to Hilton. Almost immediately after the merger was announced, the CEO and his entire top management team, whom he had recruited from his former company, resigned. Their mass departure cost the company “millions and millions of dollars,” Rhoades says, partly because of the execs’ golden parachutes and partly because it was so difficult to refill the jobs that had been vacated so abruptly. Board members later told Rhoades that they hadn’t been secretly trying to sell the company the entire year, but she remains skeptical.     Deceptive hiring tactics practiced in the middle levels of a company can also drain profits. Ronald Katz, president of Penguin Human Resource Consulting in New Rochelle, New York, says he’s a “huge advocate of the truth. You’ve got to be completely open and honest, even if you think it’s going to hurt you.” He notes that many of the worst hiring nightmares emanate from intentional or “accidental” miscommunication between job-seeker and employer. There are no surveys measuring the number of potential recruits discouraged by ex-employees’ diatribes, but there’s no doubt  that these anger-fueled anecdotes have impact.     Fifteen years ago, when Katz was working as a recruiter for a large New York bank, he supplied job candidates to the nearly identical departments that drew up letters of credit for importers and letters of credit for exporters. In the import-letter office, staff members were honest and up-front, Katz says. The job was not very complex and the pay was low. High-school and community-college graduates were invited to apply and told that they’d be taught quickly how to do their job. They were offered tuition reimbursement so that they could go to night school and get higher degrees in the three to five years it customarily took to get their first promotion. In the export-letter department, however, ambitious young college graduates were invited to apply with the promise that they’d be promoted in 12 to 18 months. “They got bored quickly, and after 12 months, when they realized they weren’t getting their promotion, they’d get discouraged and quit,” Katz says. “There was a turnover problem and a productivity problem, which cost us much more money in the long run, but the manager thought he was doing the company a favor. He said, ‘Who cares if they leave? That way we never have to give raises.’ “     In fact, it’s an ironclad rule in the recruiting business that replacing a lost hire costs at least one and a half times an employee’s annual salary, whether it is $30,000 or $750,000 or $2.5 million, in lost productivity, overtime, severance and fresh recruiting costs. These costs do not include the incalculable effect of disgruntled ex-employees bad-mouthing their former employers at “every cocktail party they ever go to,” as Dave Opton, founder and CEO of executive-level online job board Execunet, puts it.     There are no surveys measuring the number of potential recruits discouraged by ex-employees’ diatribes, but there’s no doubt that these anger-fueled anecdotes have an impact. Opton himself relates the sad saga of a man hired as Asia-Pacific regional manager for a major beverage company. The job was based in Manila, so the man rented out his family’s house, sold the car, shipped the furniture, moved his wife and kids temporarily into a hotel and flew to Manila to search for a place to live. When he walked into his supposed new office, he was told that the company had “rethought” the position of Asia-Pacific manager, eliminating it. The man asked what was going on and was told, “We knew a major change was coming, but we couldn’t tell you because it was proprietary.” After telling the story, Opton adds that the debacle was probably caused by miscommunication or office politics, not pure malice. “There’s a good chance that what really happened was the hiring manager was blindsided by someone higher up. I don’t honestly believe that most companies would do that purposely.”     Neither would most companies expose themselves to a lawsuit for fraud or misrepresentation, but court records are peppered with disappointed and allegedly deceived ex-employees suing for fraud and/or misrepresentation. Most employment contracts defend adequately against these suits, says Lori Shapiro, general counsel for Employment Learning Innovations, an Atlanta employment law consultant, but they are not bulletproof. Shapiro cites a recent South Carolina case brought by the former CEO of a pharmaceutical research lab who claims he was hired to lead a “state of the art” facility and bring it “to the next business level.” Instead he was handed the reins of what he claims was a substandard lab in serious financial difficulty. The judge refused to grant a summary judgment to the defendants, and the plaintiff’s suit for negligent misrepresentation continues.     To prevent such toxic misunderstandings, some of the most savvy workforce managers strongly recommend the counterintuitive technique of advertising a job’s “challenges” as well as its opportunities. As a bonus, they say, it’s a good way to find out just how much enthusiasm the applicant really has for the position.     Rhoades is on the board of a regional retail chain for which she recently recruited a new CEO. She took a prime candidate out to dinner and bought her a glass of wine. Rhoades says she then told the candidate about the business styles and personalities of everyone on the board. “I said that the biggest positive about the job was that we’d support her 100 percent. The biggest negative was that we’d give her a lot more input than we should.” She also frankly told the executive that she would be inheriting a below-average staff, “not A players. So she knew what she was getting into, and she hit the ground running,” Rhoades says. “Since she took over, she’s replaced 75 percent of her staff. The other day she called me and said, ‘You know, at first I thought you were joking. But now I know you weren’t. Thank God you told me what to expect.’ ” Workforce Management, November 2003, pp. 89-90 — Subscribe Now! Posted on October 3, 2003July 10, 2018 It’s Alcohol That Should Be Tested The drug of choice for the majority of American workers isn’t marijuana, cocaine or amphetamines, all of which must be obtained illegally. The winner is alcohol, which can, of course, be purchased legally at a large number of stores, bars and restaurants in virtually every community in America.     The National Household Survey on Drug Abuse, released by the U.S. Department of Health and Human Services last year, reports that 7.8 percent of the full-time workers queried said they had used illicit drugs during the previous month. A slightly higher 8.1 percent reported heavy alcohol use. Illicit drug use was defined as any use in the previous 30 days. Heavy alcohol use was defined as five or more drinks on the same occasion on at least five different days in a month’s time.     Some employers are required by federal law to conduct random and post-accident alcohol tests on safety-sensitive workers such as nuclear power plant operators or locomotive engineers. Yet few other companies incorporate alcohol testing in even the most stringent drug-testing programs. Alcohol testing detects current use, whereas drug tests detect only past use, and it’s a rare occasion when a job applicant or cubicle dweller is given a Breathalyzer or blood-alcohol test.     “We’ve declared a war on drugs but not on alcohol. It’s part of our culture and a great source of tax revenue, too,” says Noel Ragsdale, a specialist in employment law at the University of Southern California Law School. She adds that alcohol-testing technology, whether it’s used to test breath or blood, is more labor-intensive and expensive than tests for most other drugs. Also, alcohol testing opens up companies to the same kinds of legal challenges and obfuscation used by defense attorneys in drunk-driving cases.     Not that many companies have gone so far as to worry. Most people don’t even realize that alcohol is a drug, says Bruce Cotter, author ofWhen They Won’t Quit and an an expert on workplace addiction and recovery. “When people go drinking, they don’t say, ‘Let’s go out and do some drugs after work.’ Or ‘Let’s go to the Plaza. We’ll do some drugs before we go home.’ “     Another obstacle is that in many cases the person responsible for implementing alcohol testing has a strong reason to avoid it, says Don Rothschild, a self-described recovering alcoholic and the head of Peak Paths, a Denver firm that provides consulting services to companies on drug and alcohol matters. “If the head man has a problem with alcohol, he always says, ‘We don’t have a problem,’ ” Rothschild relates. He says that all companies should draft and enforce unambiguous policies that treat at-work alcohol and drug use identically. More important, supervisors, and not lab technicians, should be the first line of defense against substance abuse. “To have a viable drug-free workplace, they must be trained to detect the signs of employee abuse,” Rothschild says. “They must confront these employees. And if they’re drinking or drugging on the job, they should be offered help.” . Workforce Management, October 2003, p. 38 — Subscribe Now!