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Author: Carroll Lachnit

Posted on August 12, 2001July 10, 2018

Low-Cost Tips for Successful Inpatriation

Companies that send their employees to work in foreign countries typically helpthem get oriented to a new culture, customs, and language. But when U.S. companiesrelocate employees here from other countries, it’s often a different story.


    Although 78 percent of the companies surveyed by Relocation Resources International(RRI) transferred employees to the United States, only 50 percent of them offeredunique relocation policies for these “inpatriates” or “inpats,”as they’re called. They’re often plunked into a strange land without even thesupport of an expatriate community that Americans often have to soften the cross-culturallanding.


    “There’s an American on practically every corner in Paris,” saysLaura Herring, president and CEO of The IMPACT Group. “There is not someonefrom Dusseldorf on every corner in Clayton, Missouri.”


    The companies in the survey acknowledged that inpats needed assistance withsuch issues as child care and schooling, but they didn’t offer the services,typically citing the need to save money, according to RRI.


    It may be that companies also are suffering from a touch of ethnocentrism,says Michael S. Schell, CEO of ExpatSpouse.com, a global online community forfamilies transferred abroad by their employers. “America perceives itselfas the best place to be, and we think everyone wants to be here,” Schellsays. “There’s the idea that you’re lucky to have this assignment.”


    But global relocation experts say that adjusting to life in the United Statesis not a snap. For the first time since 1995, the United States was listed asone of the most challenging foreign assignments in the Global Relocation Trends2000 Survey Report, sponsored by GMAC Global Relocation Services/Windham International,the National Foreign Trade Council, and SHRM Global Forum.


    Fortunately, there are a number of things that HR people in charge of inboundrelocations can do to ease the transition for inpatriated employees and theirfamilies. Many of the strategies are not expensive, and they can make all thedifference between a productive work assignment and a costly failure.


Conduct a Needs Assessment
    As soon as HR knows there is going to be a relocationfrom a foreign country, a representative should contact the family and conducta needs assessment, says Diane McIntire, director of career and family servicesfor Cornerstone Relocation Group, a relocation company based in Warren, NewJersey. Cornerstone’s four-page form covers basic contact information, movedates, descriptions of the family’s needs, and housing preferences. Once theform has been completed, a counselor calls to discuss the
assessment with the family.


    The process gives HR a picture of the family and any special needs it mighthave. It’s good to know at the outset about a family’s plans to bring a 150-pounddog to a Manhattan apartment, or that a spouse has a chronic medical problemthat will make establishing health-care contacts a top priority for HR.


    A commercial marketing specialist for a pharmaceutical company had a particularlychallenging family situation. The woman was relocating to the East Coast fromSwitzerland and needed help finding the right day care for her four-year-olddaughter. The little girl speaks Chinese and German, but no English. The employer’srelocation consultants helped the employee, a single mom, find a family day-caresetting that would be a good fit for her daughter. The company also arrangedfor English instruction for mother and daughter. Finding such resources by herselfwould have been very, very difficult, the mother notes.


    Since arriving in the United States at the end of March, the little girl hasbecome more comfortable with day care and is quickly picking up English phrases,including “OK” and “I love you.” “She sings a lot oflove songs,” her mother says.


Do Your Homework
    While the inpat family is compiling its list of needsand wishes, it’s time for you to anticipate the difficulties your inpatriatedemployee and family will face, says Tara Brabazon, director of interculturalservices for GMAC Global Relocation Services. A quick Internet search to gatherinformation on the home country’s culture can be a useful starting point, shesays.


    The Internet can also help you research good neighborhoods or areas for thetransplanted family, she says. “If you’re involved in making a housingrecommendation, it’s good to know where the ethnic communities are. If you’rein Kansas City, Kansas, and you have an Indian family inbound, it’s good toknow where the Indian community is — and there’s a huge one in Kansas City,for instance. But if you’re putting them way across town from it, you’re nothelping. You’re separating them from stores, schools,” and other culturalanchors that would help them feel at home.


Address Expectations
    When you have the completed needs assessment, you canuse it to help the family get an accurate picture of life in the United Statesand understand the differences they’re going to encounter, global relocationexperts say.


    “So many people inbound to the U.S. think they know it through moviesand TV,” Brabazon says. “But they’re not a good representation ofwhat life is like here.”


    Crime, for instance, is a big issue with relocating employees, she says. “Inthe past year, the majority of inbound families have been concerned that theirchildren are going to get shot at,” she says. Having crime statistics athand for the city of relocation can help counter the impression that life inthe U.S. is just like a Schwarzenegger movie.


    Some inpat spouses might hope to continue their careers in the United States.The assessment process gives HR an opportunity to explain that the U.S. is verystrict about its work permits and that most spouses probably will not be allowedto work at a paying job, Schell says. At the same time, the U.S. has ample volunteeropportunities that HR can scout for a spouse who wants to find meaningful workand a way to hone her skills for work when she returns home.


    It’s a good idea to prepare families for some rental price shock. In many countries,housing isn’t nearly as expensive as it is here. In addition to giving familiesan idea of what to expect, it’s wise to guide their rental shopping wheneverpossible. Some inpats, in an effort to keep costs down, rent in unsafe neighborhoods,or in suburbs that are too far from the office for a reasonable commute. Thatkind of housing also might isolate a non-driving spouse.


    Now also is the time to talk about lifestyle in the United States. In manyforeign countries, families have access to low-cost domestic help, and lotsof it. McIntire says that one client, a Brazilian chemist, was used to havingthree domestic workers. In the United States, she discovered that the threedomestics she could afford were “me, myself, and I.”


Gather Resources for the Family
    Because there might be pressure on the employee andhis family not to ask for help, it’s important to give them resources they canuse on their own, global relocation experts say. That might include providinghelpful Web sites and building a list of contacts with social, professional,or recreation groups with shared interests. It could mean that you’ve scoutedout services — everything from medical professionals to plumbers to dry cleaners– that can work with them in their own language, or at least are willing totry.


    Another resource you can provide is to identify someone in the inpat’s homecountry who has worked here and returned home, Brabazon says. “You canask that person to be a mentor, someone that’s a safe person to ask questionsof. That person can also help in the readjustment when the employee is repatriated.”

Tipsfor Coping
HRcan help inpats manage their culture shock with some basic strategies. Youcan suggest they:

  • Talk about theirfeelings.
  • Avoid constantcomparisons with home.
  • Search for remediesto problems.
  • Gain a basic knowledgeof the language so they can speak and read comfortably.
  • Identify and adopta local community.
  • Use local products.
  • Attend local festivalsand concerts.
  • Subscribe to thelocal paper.
  • Associate withpositive minded people.
  • Make friends withthose expatriates who are enjoying the new environment.
  • Spend leisuretime together; travel.
  • Maintain familyvalues and adhere to established rules.
  • Develop a newinterest or hobby that would not be possible at home.
  • Keep in touchwith home and friends.
  • Share their ownculture with friends and locals.

Set Up an In-Depth Briefing
    A thoroughly researched inpat briefing session thatcovers key issues is critical for a family’s relocation success, Schell says.Ideally, the briefing would be done before the family leaves its home country.But realistically, he says, “that’s not going to happen.” So it shouldtake place as soon after the family’s arrival as possible.


    Who should be there? Not just the employee, but the employee and the spouse.You can’t assume that the employee will convey all the information presentedin the briefing to his spouse. Furthermore, Schell says, “It is not reasonableto assume that you can tell an employee’s spouse, ‘Call me if you have problems,’and they will. Their husbands will tell them: ‘Don’t you pick up that phoneand embarrass me.’ That’s why self-help tools are so important.”


    Schell describes the outcome of one such husband edict: a Spanish woman, relocatedto England with her husband, wound up doing laundry and dishes by hand becauseshe didn’t know how to use the washing machine, and the dishwasher wasn’t functioning.Her husband forbade her to call his company for help. She didn’t know whom tocall, and her husband’s promises that he would take care of it went unmet. Thatcould just as easily happen here, Schell says.


Address These Three Briefing Basics: Credit, Housing, Schools
    Credit: Most inpatriates have no U.S.-based credit history.Without it, they’ll be hard-pressed to buy a car, get a credit card, or evenrent an apartment. They will need the help of the company and a cooperativebank in order to apply for, receive, use, and make payments on a credit cardimmediately, so they have a credit history. This is an issue that doesn’t requiremoney from the company, but it does require “focused attention to finda solution, because there isn’t a ready-made solution,” Schell says. “Thecompany has to grease the skids for the inpatriate at the bank and at the creditcard company.”


    Housing: HR also can help inpats with housing by making a connection for themwith a real estate broker who is willing (probably for a fee) to help them findappropriate housing. “Ideally, you could identify, do a little training,and sensitize the real estate brokers you would want to be using,” he says.That real estate professional also would be linked to you and your company,so that if the inpat was unsure about a decision, the broker would know thatyou could be contacted to help work it out. The company might also have to bewilling to stand behind the employee in order for him to secure a lease on ahome, Schell says. Many landlords are leery of renting to inpatriates. Knowingthat there’s recourse to the company if something goes wrong will make themmore comfortable.


    Schools: Making decisions about where the family’schildren will go to school might precede the housing relocation, according toa Prudential Relocation white paper, “The United States as a Foreign Destination.”It cites the example of a Swiss executive relocating to Manhattan. He examinedthe relocation consultant’s research on schools and opted for a German schoolin a commuter suburb, and then found housing in that area.
Here are some key questions to ask about schools in preparation for passingon the
information to the inpat, according to Prudential:

  • Is an international baccalaureate program available in the district inwhich the child might be located?

  • How much freedom do teachers have in planning curriculum? In countrieswith national standards, the government requires teachers to follow a prescribedcurriculum.

  • Is an English-as-a-second-language program available? Not every schooldistrict has ESL classes or even teachers who understand the needs of asecond-language learner. The company should not assume that the inpat’schildren will go to public school, Schell says.

     “If I’m being relocated to France, there’s noquestion that the company will let me send my kids to the American school there.If inpats are coming here, they have to negotiate a school allowance. It’s ahuge issue to drop a foreign child into a public school. There are issues ofdress, manner of addressing teachers…everything is different.”


Prepare Them for Culture Shock
    Inpats (and expats) go through a predictable cycle whenthey relocate, Brabazon says. There’s a honeymoon phase, when everything aboutthe new country is great, exciting, and wonderful.


    Pretty quickly, though, they hit “crisis mode,” a major dip downward,when everything about the new country is annoying and difficult. This is thepoint, Herring says, when relocation counselors often get teary phone callsfrom spouses, who in trying to do something that was so easy at home — cooka special dish, for instance — can’t find what they need, and decide they’vebeen relegated to a circle of hell. It’s not really about the lack of a certainmustard , Herring says. It’s culture shock.


    With help, things get easier as time passes, the experts say, until the familyis about to return home, when they realize that they like it here. Then it’stime for another adjustment. Once they return home, there’s the honeymoon, andthe cycle repeats. Then it’s time for repatriation counseling, Brabazon says.

Symptomsof Shock
Thereare certain symptoms HR might observe as inpatriates adjust to their livesin a new country. HR might also consider giving inpats this list, so they’llrecognize what’s happening.

  • Boredom
  • Withdrawal (avoidingcontact with the local nationals, spending much time at home readingor writing, speaking only to a few other expatriates)
  • Needing excessiveamounts of sleep
  • Eating or drinkingtoo much
  • Unexplainableemotional outbursts or crying jags
  • Excessive cleanliness
  • Physical distresssuch as recurrent stomach-aches, headaches, or other ailments
  • Blaming localnationals (repeated discussions that begin with, “The people areso …” or “This would never happen at home!”)
  • Blaming the company
  • Blaming one’sspouse
  • Family tensionand conflict
  • Excessive involvementin outside activities (overextending oneself)
  • Being extremelyimpatient and quick to criticize

Build a Case for Return on Investment
    If you think your budget is inadequate and you wantto secure funds for such services as cross-cultural classes or spousal languagetraining, you can try a technique that Herring developed as she worked to repaira relocation gone awry.


    An inpatriated Chinese employee and his wife were relocated from Los Angeles,which has a huge Chinese population, to corporate headquarters in Dallas. Itmade little difference to the employee, who spent 75 percent of his time travelingto China on sales calls.


    But his wife, who spoke no English, found herself stranded in suburban Plano,without other Chinese-speakers, markets, or friends. She was miserable, andafter several months, the executive pleaded for a return to Los Angeles. Management’sfirst answer was no, Herring says, because the L.A.-to-Dallas move had cost$57,000. The company wasn’t willing to spend that amount again.

The HR person who received the case sought Herring’s help because she had heardher talk about return on investment in a relocation. Together the two gatheredinformation, and learned that the executive produced sales of $2 million a monthduring his overseas trips. Given his sales abilities, his facility in five Chinesedialects, and his willingness to spend 75 percent of his time traveling, itwas estimated that it would take 18 months to replace him.


    “If they had to replace him, they would have a loss of $36 million inrevenue,” Herring says. For $57,000, they could move him back and keephim. The HR person took Herring’s one sheet of data to the company’s management.The return to L.A. was promptly approved.


    “It’s become a model that I use for inpats all the time,” Herringsays. “What is the value this individual is bringing to you? Does the companythink it can’t afford to spend money for a good relocation? It’s really, ‘Canyou afford not to?’ The cost needs to be measured in terms of return on investmentfor the growth of the entire company, not just this solitary relocation.”


Workforce, August 2001, pp. 42-47— SubscribeNow!

Posted on July 25, 2001July 10, 2018

International Needs Assessment

D

ear Transferee:


Thank you so much for taking the time to fill out this Needs Assessment form. The information you share with us will help us to better assist you. Your relocation counselor will phone you for further discussion after reading your responses.


CompanyName:   ______________________
   
CompanyAddress: ______________________
______________________
______________________
______________________
______________________
   
OfficePhone: ______________________
   
MobilePhone: ______________________
   
HomePhone: ______________________
   
NewCompany Address: ______________________
______________________
______________________
______________________
______________________
 
  1. Please list any pertinent travel information:

  2. Do you have a passport: ______

  3. Do all accompanying family members have passports: ______

  4. If yes, please provide expiration dates:

  5. Do you have a driving license from any of the following (please circleall that apply):

    • United States
    • International
    • Home Country
  6. Are you planning to rent, lease, or buy a vehicle during your stay:______

  7. Are you bringing any family pets with you: ______

  8. What is your anticipated move date: ______

OrientationTrip
Dates:   _____________
 
FlightNumber:   _____________
 
DepartureCity:   _____________
 
DepartureTime:   _____________
 
ArrivalCity:   _____________
 
ArrivalTime:   _____________
 
ArrivalAirport:   _____________
 

Where will you bestaying during your trip (name/address of hotel):


 


 

Housing

  1. What type of permanenthousing are you interested in finding (circle all that apply):

    • House
    • Apartment
    • Duplex/Townhouse
  2. How many bedrooms/bathroomswill you need: bedrooms ___ bathrooms ___

  3. Will you be bringingfurniture, or will you be renting: ______

  4. Do you preferto live in a city, or suburban environment: ______

  5. How far are youwilling to commute: ______

  6. How far are youwilling to travel for shopping, sporting/cultural events, etc: ______

Transferee

  1. Would you like us to research any activities for you?

  2. Are any of your family members having difficulty adjusting to relocation?If so, bringing this to our attention will make it possible for usto make suggestions that might help: ______

  3. Do you or any of your family members have special medical circumstances:

  4. If so, are there facilities and/or services you would like us toresearch for you: ______

Spouse/Partner

  1. Will you be seeking employment: ______

  2. If so, what is your occupation: ______

  3. Do you have a work visa, or will you need to be sponsored: ______

  4. Are you interested in volunteer or continuing studies programs: ______

  5. Would you be interested in joining expatriate groups or other typesof organizations: ______

  6. Would you like us to research any sports or activities:

Children

Child’sName:
 
Gender:
 
Age/Dateof Birth:
 
Levelof Education:
 

  1. Do your children speak English:______

  2. Please describe any language needs your children might have:

  3. What type of schooling situations can we research for you:

  4. Please describe any special educational needs your children mighthave:

  5. Will you need information regarding day care and/or in-home childcareoptions: ______

  6. What sports or activities can we research for your children? Pleaseinclude skill level where necessary:

Please discuss anyadditional matters you would like to make us aware of:


 


 


 

Soruce:Cornerstone Relocation Group

Posted on May 31, 2001June 29, 2023

Employee Referrals Save Time, Save Money, Deliver Quality

When employee-referral programs make the news, it’s usually because thecompanies involved have paid a big bounty for a hire. Earlier this year, SRAInternational, a Fairfax, Virginia, systems integrator, awarded an employee a$50,000 grand prize in its annual employee-referral lottery. And in 2000,Blackstone Technology Group, a San Francisco-based IT company, picked up the tabfor a referring employee’s BMW, the prize in a company raffle.


    For any HR person who has concluded that it takes big bucks to create asuccessful referral program, here’s the real news: the programs’ value lies intheir economy and ability to not only attract good job candidates but also showgoodwill and commitment to the employee making the referral.


Why institute a referral program?
    The programs are valuable for four reasons, according to “EmployeeReferral Programs: Optimizing Your Most Effective Recruiting Tool,” a June2000 white paper by Angami Systems, a referral-technology company that has beenacquired by Hire.com.

  • Low cost per hire. Referral programs cost $500 for exempt employees and$70 for non-exempt, versus $2,884 and $726 for print advertising, and evenmore for agencies and executive recruiting firms, according to the 2000Employment Management Association’s cost-per-hire survey.

  • High-quality hires. Employees are unlikely to recommend people who theythink are unqualified or unreliable.

  • Decreased time in hiring. Employees are selling the company to the peoplethey refer. Interviewers, including people in HR, can spend their timeevaluating a candidate’s background and qualifications. Employees also tendto recommend people who they know are ready to make a job change, which alsospeeds the hiring process.

  • An opportunity to strengthen the bond with existing employees. Referralprograms acknowledge and reinforce the company’s commitment to rewarding theindividual for helping the company.

    Additionally, an Ohio State University study shows that employees hiredthrough referrals have a retention rate that’s 25 percent higher than that ofemployees hired through other methods.


What motivates employee referrals?
    A recent survey of employees in a dozen industries by Referral Networks, aNew York City-based company that markets a Web-based application to helpcompanies create and manage employee-referral programs, gives some insight intowhat it costs to get employees interested in making referrals.


    The news is good: five-figure bounties are not what drives the process.


    Forty-two percent of the 2,300 employees surveyed by Referral Networks saidthey referred because they want to help a friend find a good job. Twenty-fourpercent said they wanted to help the company. Another 24 percent said they weremotivated by a reward, according to the survey.


    More good news: employees don’t even expect a lot of money for makingreferrals. In the Referral Networks survey, 85 percent of the respondents saidthey’d be motivated by a reward of $1,000 or less. Thirty-two percent of thosesaid they’d be happy with a sum between $100 and $400. Interestingly, 24 percentof the companies in the survey were apparently overpaying, offering $1,500 ormore as a reward.


    Meanwhile, two-thirds of the respondents told Referral Networks that they’dbe happy to receive such non-cash awards as airline tickets to U.S.destinations, weekend getaways, two extra vacation days, or a piece ofelectronic equipment.


    Computer hardware giant Intel Corp. uses a combination of monetary andnon-monetary incentives, says Erin Gorsline, program manager, Intel e-Staffing.In addition to a cash reward for referrals, the company also offers a raffle forthose employees who’ve made referrals. Last year, the prize was a choice betweena $1,000 travel voucher or a home entertainment system.


    “We like to give folks choices,” Gorsline says, “and we’vedefinitely seen increases in the number of quality résumés submitted sincewe’ve begun the process.” Gorsline said 50 percent of the company’s newhires have come from referrals.


    John Sullivan, head of the Human Management Program at San Francisco StateUniversity and an expert in referral programs, agrees that “mix andmatch” programs like this are effective because the enthusiasm for aprogram dies down after a year or so. Giving away something big every six monthsgoes a long way toward revitalizing interest, he says.


    Unifi Network, a division of PricewaterhouseCoopers, uses non-monetaryincentives in its referral program. But “money gets people’s attentionfaster,” says Tom Casey, a partner in charge of the talent managementpractice.


    From its research, Referral Networks concludes that the programs are not”a game of dollars,” says Catherine Drogin, the company’s vicepresident of marketing. “You don’t have to offer more than $1,000. We don’trecommend taking it away if you’re offering more than that, but if you’rethinking that a higher reward is better, it’s not. We recommend that you takethe money and put it into promoting your program. Spend it on driving awareness,so that the employees don’t have the excuse of ‘Oh, I didn’t know we had aprogram.’” Typically, Drogin says, only about 5 percent of a company’semployees participate in the referral program. With best practices, she says,the number can be raised to 25 or 30 percent.


Why employees don’t refer, and how to get them involved
    The top three responses for not referring, according to the survey byReferral Networks:

78 percent: Don’t know anyone suitable for the positions


42 percent: Afraid the referral will reflect badly on them if the candidate doesn’t work out


21 percent: Process is too much of a hassle

    On the surface, the first reason seems to have nothing to do with referralprograms or their incentives. But this response actually gets at what Sullivansees as a flaw in many referral programs: they assume that employees know how tofind job candidates. Some employees are “meeters,” and have bigpersonal networks. For other employees, Sullivan recommends that HR provideinformation (via meetings, or the company’s intranet) on how to:

  • Find referrals through e-mails and listservers

  • Work a convention to identify and build relationships with potential referrals

  • Find names first, and then build relationships

  • Assess the potential of a contact

    The next reason, fear of bad fallout if a candidate doesn’t work out, mightsound like a drawback, but it isn’t, Drogin says.


    “This is a big positive for companies. It says that the employees aredoing the first level of screening. Unlike job boards and classified ads, wherethere’s a huge influx of résumés and HR managers have to weed out the 85 or 90percent that aren’t appropriate, this 42 percent says that while employees mighttalk to 10 people, they’ll only recommend one. That’s why these programswork.”


    That’s been the experience at Unifi, where the reward for referrals isparceled out in two installments: one-third immediately and two-thirds when thenew recruit has finished one year. The result has been that employees don’trefer someone who is not capable of lasting out the year, or would likely leavein six months. The employee who made the referral also sticks around for a year– a great side-benefit when retention rates are low nationwide.


    For those who think the program is a hassle, there are easy fixes, accordingto those who run referral programs. The most popular is automating the programby putting it on the corporate intranet, as Intel has done. The referral site isaccessible to all employees and has the guidelines and eligibility requirementsfor the employee-referral program, along with listings of prize winners. Jobcandidates can submit their résumés electronically to the site, and recruitersand hiring managers have instant access.


    Intranets don’t necessarily solve every issue, Drogin says. In some cases, acompany’s intranet merely holds a referral form that the employee downloads andfills out. Some companies ask that the referring employee fill out half the formand pass it on to the applicant. She fills out the other half and attaches arésumé. Then the material comes back through an external scanning source andinto the company’s applicant-tracking system — a tedious route, to be sure.


    A smoother approach (and one that Referral Networks provides) is to allowemployees to see the jobs that are available and, with one click, send theinformation to several friends who might be potential candidates. The candidatescan respond to the job site directly.


    The benefit, Drogin says, is that the employee spends a minimal amount oftime in the process, and lets the friend decide, by reading about the job andits criteria for hiring, if it’s right for him. “It takes a huge burden offthe HR managers.”


The need for speed
    Whether a company uses an intranet, a Web service, or some other system,rapid response is vital. If candidates don’t hear from the company right away,they assume that nothing is happening, Sullivan says. The employees who make thereferrals may refrain from doing so in the future if they find their friendsgetting strung along or ignored. That undermines your entire program.


    At Agilent, the Hewlett-Packard spinoff company where Sullivan was arecruiting consultant, a referred candidate would receive a phone call from acompany representative within 24 hours of applying. In addition, the referringemployee would receive a personal e-mail and a phone call. Both persons would bekept abreast of where things stood in the hiring process.


    “You have to get the hiring managers to understand that, through thisprocess, you get A+ quality résumés that have to get acted on rapidly.”


Workforce, June 2001, pp. 67-72 —  SubscribeNow!


Posted on February 28, 2001July 10, 2018

World Class Results on a Mom-and-Pop Budget

On its 40th anniversary three years ago, Bal Seal Engineering and its employees could look back at its history with pride. Founder Pete Balsells had propelled the company from a one-man operation in his garage to a larger facility in a Quonset hut to a $17 million manufacturing company that employed just under 200 people.


    But Bal Seal’s past didn’t provide a blueprint for the future envisioned by Balsells’s son, Peter, who became the company’s president in 1998. His goal: to make Bal Seal a $500 million industry leader by 2020. The company researches and develops unique seals for customers whose products range from pacemakers and jet engines to cappuccino makers and hazardous-waste pipelines.


    It was clear to the younger Balsells that the company wasn’t going to get there by following its old business plan. Its Santa Ana, California, plant was old. Its employees, mostly minimum-wage workers who lived within walking distance of their jobs, didn’t have the technical sophistication that would be necessary for the Bal Seal of the future. The company needed a new culture to match the mission and the values that Peter Balsells had set for it.


    Bal Seal’s HR department was ill-equipped to build that culture. Well into the 1990s, it continued to be a department that carried out just the basic personnel-administration functions. “It was basically time and attendance, corrective actions, hiring and firing,” says Jacques Barralon, now director of HR, who began with Bal Seal in 1982. Barralon couldn’t even give HR his full attention-his other job was conducting inspections and quality assurance.


    Putting Bal Seal on the right course took the work of everyone, from the CEO and founder to the machinist on the shop floor. To accomplish that, HR was re-created as a full-fledged organizational development department in 1998.


    Its mission was particularly challenging, recalls Jeff Jernigan, hired that year as VP of human resources. HR was responsible for seeing to it that the company did not lose employees during the move to a new facility in Foothill Ranch, about 20 miles south of Santa Ana. It would be expensive to replace employees who had a wealth of knowledge and expertise.


    HR was charged with hiring and training new and old employees to be more versatile and more technically skilled. It set about creating a new compensation system. And with the rest of the management team, it had a mission to keep the best of the old Bal Seal Engineering while creating a new company culture.


    Now, nearly two years later, Jernigan says they’re meeting the challenge. Bal Seal is in its new plant. It is a $22 million company, realizing 25 percent annual growth, and is on track to meet its 2020 goal. Still, as Jernigan points out, “It’s a long way off, and we’re just getting started.”


    No one quit during the move, although the company dismissed 41 “never changers,” who couldn’t make the switch to the new way of doing things. As the workers made the transition to new jobs, the firm provided severance, retraining if needed, résumé assistance, and other support.


    HR overhauled compensation and benefits: beginning employees are no longer minimum wage workers. They start work at 50 to 75 cents above the California $6.25 per hour minimum, and it’s possible for lower-paid workers who hit their training and other goals, including team and individual bonuses, incentive program goals, and suggestion program awards, to earn double the hiring wage within a year. Training has become a cornerstone of the company.


    But even with all of those advances, HR is anything but a source of vast new spending. Jernigan says it actually has become a profit center (and not by outsourcing its services, either).


    At Bal Seal, human resources:

  • Created a 401(k) and a Section 125 plan (a “cafeteria” benefits program) simultaneously. The tax savings generated for Bal Seal by the 401(k) covered the cost of the Section 125 plan. The Section 125 plan’s tax savings meant that for most employees, the minimum contribution for the 401(k) was covered. Participation was at 61 percent after enrollment.

  • Developed “leading indicators” to monitor and forecast labor requirements, overtime, turnover, and the impact of training on the bottom line.

  • Instituted a cross-training program that makes the Bal Seal workforce adaptable for various tasks at very short notice.

  • Achieved a one-time $250,000 savings by reconfiguring working schedules, reviewing and revising exempt/non-exempt categories, and taking other steps as outlined in Eliyahu M. Goldratt’s “Theory of Constraints,” a philosophy and methodology used to improve the running of an organization. Bal Seal continues to achieve annual operational savings.

  • Implemented new HRIS, payroll, and timekeeping systems. The workforce has grown 40 percent since 1998. With the new technology systems, no new HR personnel have had to be added.

  • Annually renegotiates preferred provider agreements with major employment agencies. In the first year, the company saved $56,000 in recruiting costs. It has achieved smaller such savings every year.

  • Designed new vacation and paid sick-leave policies that increased employee benefits while reducing vacation payouts by up to $185,000 a year.

    In 1999, Bal Seal won the Best Practices award from the Employers Group for HR programs that contribute to business. It won the 1998 Arthur Andersen Vision award for financial reporting. The company also was featured on the MSNBC Champions of Industry program for its innovations. Jernigan is at work on two books about how Bal Seal has remade itself.


    Now at home in a sleek industrial building, Bal Seal might best be described as streamlined. There is no executive wing. No one has secretaries or assistants; everyone, including the management team, handles his or her own paperwork, Jernigan says.


    The management team also is cross-trained so that each one knows the others’ areas. If one member of the team is gone, the others have the authority to OK decisions. For efficiency and as an “ego check,” the management team also is cross-trained for various jobs. Jernigan can run the switchboard. Peter Balsells has worked as the janitor, and was doing that job one day when an employment recruiter came by to visit. She thought she was being unpleasantly tricked when the guy in jeans with a push broom was introduced as Bal Seal’s president.


    About 60 percent of the workers are primarily Spanish-speakers, so Bal Seal has instituted a company-wide language-training program. English speakers learn Spanish. Spanish speakers learn English – all paid for by the company, on company time. Because Bal Seal serves customers worldwide, managers like Jernigan are expected to be working on proficiency in three languages.


    “We want every supervisor to recognize that every employee has equal value, but [serve] different roles,” he says. “We’re in this thing together, and to do that, to have that kind of culture, you have to speak the same language.”


    In many ways, the other language of Bal Seal is numbers, as expressed in charts that show the rise and fall of the leading indicators that HR tracks with almost religious fervor. Jernigan speaks with ease of linear regression and correlation analysis. One wall of the HR office at Bal Seal is lined with the leading indicator charts that Barralon creates.


    “We monitor a combination of factors – sales, overtime, labor, bookings, and net profit – and we look for certain statistical relationships that indicate when it’s appropriate to add more labor in advance of the need,” Jernigan says.


    “It also tells us when labor is increasing unnecessarily, and we either need to slow down hiring or not work overtime. That has allowed us to avoid layoffs in the last three years. It has allowed us to anticipate unnecessary overtime to the point where we don’t find ourselves looking over the last quarter and saying, ‘We spent $93,000 in overtime we didn’t need to.’ We can identify that trend before it happens and avoid making that expenditure.”


    The same statistical rigor is applied to training programs, where, for instance, the effect of sales training is correlated to its impact in bookings. The company saw that instruction on initiating a client relationship was working well. The lessons on closing the deal weren’t as successful. “If the training is not adding money to the bottom line as revenue, we change it or drop it,” he says.


    While Bal Seal is proud of what it has done – Jernigan calls it “world-class results on a mom-and-pop budget” – he’s quick to dispel the idea that Bal Seal’s achievements can’t be accomplished by other HR departments, and hopes the books he’s working on can help. “It’s not rocket science,” he says.


Workforce, March 2001, pp. 42-43 Subscribe Now!

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