Author: Douglas Shuit

Health-care reform is one of those perennial issues that inspires passionate debate but resists an easy solution. In this presidential election year, the problems–historically high numbers of the uninsured; double-digit, budget-busting increases in costs to employers; rising copayments and deductibles for the insured workers–clearly outweigh the solutions being proposed by President Bush and John Kerry.

    Experts sorting through the respective health-care proposals being put up by Bush and Kerry say both plans would put a dent in the number of uninsured. That would be accomplished through a variety of incremental fixes and one big idea from Kerry–creating an entirely new plan to relieve employers of catastrophic health-care costs. But neither candidate is offering a comprehensive solution to the problems facing the health-care system, particularly costs that are shouldered by employers. “I don’t think there are any silver bullets out there,” says Neil Trautwein, vice president for human resources policy at the National Association of Manufacturers. Both candidates place emphasis on extending health-care coverage to the 45 million Americans now living without insurance.

    The two programs take decidedly different approaches. Bush’s plan places more responsibility on individuals, providing tax breaks that would enable them to take care of their own insurance needs. Kerry wants to dramatically expand government’s role in providing insurance to the uninsured, primarily by expansion of the Medicaid program. The latter plan is more encompassing and more expensive; low estimates of the Kerry plan begin at $650 billion over 10 years. The conservative American Enterprise Institute, in estimates being used by Bush, places the cost of Kerry’s plan at $1.5 trillion. The think tank estimates that Bush’s plan would cost $129 billion over 10 years. Bush’s plan would place more emphasis on individual decision-making, using tax credits and programs like health savings accounts to extend coverage to 2 million to 6 million Americans. Government-backed insurance plays a much bigger role in Kerry’s package of benefits. Central to the plan is a proposal that would provide health coverage to an estimated additional 27 million of the uninsured, nearly all of that by expanding eligibility for Medicaid, the federal-state program for the poor.

    Findley Davies Inc., a human resources consulting firm in Toledo, Ohio, predicts that health-care costs will increase 14 percent in 2005, slightly less than the 15 percent the firm is projecting for 2004, but four times greater than projected salary increases and the rate of inflation. Bruce Davis, a principal practice leader at the firm, says two factors are largely responsible: the aging of the working population and the availability of expensive new medical technologies. The pain of those costs is being felt throughout the system. Employers have coped with three straight years of double-digit increases in medical plans by shifting costs to workers. Retirement health benefits have been eliminated at many companies, and workers have been asked to contribute more in the form of copayments and deductibles. Even so, employers still pay roughly three-quarters of the $10,000 it costs to provide family coverage for each employee.

    Last year, the ranks of the medically uninsured grew by 1.4 million, the third straight year of increase. The 45 million uninsured Americans in 2003 represent 15.6 percent of the population, up from the 12.9 percent that did not have health insurance in 1987. Although Kerry is hammering away at Bush for the growing number of uninsured Americans–4 million more than when Bush took office in 2001–the problem began long before Bush was sworn in. While the number of uninsured Americans is at a historic high, as a percentage of population the numbers are about where they were under President Clinton. Clinton’s own national health-insurance plan, far more sweeping than Kerry’s because it would have provided insurance to all Americans, survived only as long as the election. It died a quick death once Clinton took office.

    A key component of Kerry’s plan is a stop-loss reinsurance plan for employers that calls for the federal government to step in and absorb most of the expenses of high-cost medical cases once they reach certain thresholds, rising from $30,000 in 2006 to $50,000 in 2013.

    Kenneth Thorpe, chair of the Department of Health Policy and Management at Atlanta’s Emory University, estimates that even though employers would have to agree to provide insurance to all their employees, companies would see a net benefit. When fully implemented, the Kerry plan would provide $35 billion a year in premium rebates to employers, while providing additional coverage would cost employers about $8.2 billion, producing an estimated net benefit of $26.6 billion, Thorpe says. Overall, the net cost to taxpayers of Kerry’s plan would be $653 billion over 10 years.

    The Democratic candidate is proposing to pay for the program by repealing tax breaks now enjoyed by those with incomes of more than $200,000. But there are enough strings attached–Kerry’s plan would be contingent on employers’ agreeing to provide health insurance to all their employees, including part-timers and seasonal workers–to make the package a tough sell in Congress.

“In the end it comes back to employees’ taking charge of their health and becoming engaged in how they access the health-care system. Clearly it is not going to be easy. It will take time.”

    Kerry’s plan to expand Medicaid is designed primarily for three groups. Uninsured children in families that are under 300 percent of the federal poverty line ($55,200 for a family of four) would go into Medicaid and the State Children’s Health Insurance Program. Uninsured parents in families of four making under $36,800 would become eligible for state Medicaid programs as well as the children’s programs. And starting in 2008, states would enroll in Medicaid uninsured single adults and childless couples in poverty ($12,120 per couple or less). Small businesses and persons between 55 and 64 who are between jobs would be able to enroll in new health pools with the same plans offered to members of Congress and federal workers. Getting anything done will require maneuvering through the minefield of the nation’s health-care debate. An opinion piece written for the Wall Street Journal by John Goodman, president of the conservative National Center for Policy Analysis, attacks what he calls “Kerrycare” as potentially far more costly than advertised. Goodman predicts that millions of middle-income families will be enrolled in Medicaid and that many more would be pushed out of their private health plans once employers realize that the government medical insurance program is an option.

    Bush’s plan is no less controversial. Consider the fate this year of three of the president’s bedrock Republican issues. He is proposing reform of the medical-malpractice system, with caps on pain-and-suffering injuries. He would like to create a new insurance vehicle association health plans, that would allow small businesses and associations to form purchasing pools to buy insurance free of traditional state regulatory oversight. Also featured in the plan is a relatively benign change in rules governing flexible spending accounts, one that would allow employees to carry forward $500 in unused health benefits from one year to the next. Votes on the legislation were along strict party lines, with Republicans overwhelmingly in favor and Democrats just as strongly opposed. There are predictions that the proposals, with the possible exception of changing flexible spending accounts, will die in the Senate, which is more evenly divided along party lines.

    The National Association of Manufacturers, which represents scores of large and small manufacturers, favored all three Republican bills. “Rising health-care costs are a constant threat to business survival and a drain on our nation’s ability to compete in the global economy,” the association wrote in a statement supporting the measures. The proposals are also being strongly supported by the Retail Industry Leaders Association, which includes some of the largest employers in the nation. But the employer groups face powerful opponents like the 1.4 million-member American Federation of State, County and Municipal Employees Union. Charles Loveless, the union’s director of legislation, said in letters mailed to elected leaders that the bills would drive up the cost of coverage for businesses and workers alike. Loveless says the union also strongly objects to any watering down of malpractice law because it offers protection to workers. He describes FSAs as tax shelters for high-income wage earners.

Where the candidates agree
    Neither side is likely to back down. Kate Sullivan Hare, executive director of health-care policy for the U.S. Chamber of Commerce, says malpractice reform is key. “That is incredibly important. It’s a contributor to health-care inflation.” As for Kerry’s plan for the government to step in and take over most of the cost of catastrophic health care, Hare says business leaders she has talked to find it interesting, but worry about government’s expanded role and the tax increases. “Kerry gets points for addressing a real problem,” she says. “But he does it in a way that has government stepping in.”

    Linda Bergthold, a senior consultant on health-care policy with Watson Wyatt Worldwide, says she wants to see the catastrophic-health-care plan fleshed out. “Our clients are intrigued by it, but they just don’t know enough about it. The idea of pooling catastrophic claims makes a lot of economic sense.”

    Despite the sharp differences, there are some similarities that could indicate the shape of post-election health-care reform. Both Bush and Kerry include such things as wellness programs, disease-prevention campaigns and tax credits to serve as inducements to both employers and workers to make smarter health-care choices. Both also believe that significant economies could be realized through technology. Much of the health-care system still clings to paper records and has been notoriously slow in developing technology to help with patient care.

    Among employers, there also seems to be a growing belief that they will have to make their employees a lot smarter about health choices. Davis, the Ohio-based consultant, believes that human resources executives should lead the way. “In the end it comes back to employees’ taking charge of their health and becoming engaged in how they access the health-care system,” he says. “Clearly it is not going to be easy. It will take time.”

Workforce Management, October 2004, pp. 46-48 — Subscribe Now!

As one of the original designers of what would become the world’s largest virtual doorway, Michael Marfise, vice president of product and program management for Workscape Inc., says he faced a daunting task at General Motors Corp. The software communication system had expanded with widely differing and independent pieces. Divisions like manufacturing and marketing had their own Web sites, intranets and internal portals. “They must have had a couple of hundred different, independent sites,” he says. “The result was that the No. 1 place employees went for company information was the public media. They would read about it in the newspaper.”

    Workscape and its partner in the GM project, Sun Microsystems Inc., set out to change that by building a centralized electronic single point-of-entry, a virtual front door, or portal, for all of the company’s 275,000 employees in the United States. These days–three years after the launch of GM’s portal, called MySocrates–as many as 120,000 GM workers a day enter through the portal and onto its Web pages, with human resources getting much of the traffic. Along the way, the technology has saved GM millions of dollars, the company says, and won awards for cutting-edge technology for itself, Workscape and Sun.

    Given all that success, it’s natural to think the rest of the world would be quick to follow. That didn’t happen. Web portals designed specifically for internal corporate communications, particularly in finance and human resources, have been growing in fits and starts over the last few years as major components of workforce-management strategies. Portal development experienced a surge in 2000 and 2001, with the GM project being one of the largest. Then the economy cooled, and along with it investment in technology.

    But that is changing. Watson Wyatt reports that there is a surge in corporate spending on employee portals and intranet systems, driven by the growing economy. A META Group trend report shows that 46 percent of the companies it surveyed spent more on portals in 2003 than they had in the previous year, with strong spending predicted for the next three years. Those findings were borne out in interviews with some of the leading players in the field–PeopleSoft, Authoria, SAP, Softscape and Workscape.

    “Investments in these products were definitely put on the back burner for a while,” says Christopher Faust, vice president of global strategy for Softscape. “Human resources executives are now seeing that portals are a strategic piece of their human capital management systems.”

    Tod Loofbourrow, president and chief executive officer at Authoria Inc., a fast-growing technology company with a human resources focus, says the company had a “huge second quarter.” Interest in the firm’s employee adviser and manager adviser products, which can be accessed through portals, is particularly strong, he says. The employee adviser answers workers’ questions about a variety of issues such as health benefits. A pregnant employee might message the system that she is having a baby and ask for advice. She will get back a list of steps to take to access available services and benefits.

    Defining a portal can be difficult. The term is often used interchangeably with corporate intranet. The most highly evolved portals, like the one at GM, represent a significant upgrade over intranets, which often have an impersonal bulletin-board or storage-room feel to them. Intranets dispense the same general information to all employees, from senior managers down to entry-level clerical workers, a one-size-fits-all approach. They are places where someone can order up an expense form or check out health-care providers but may not be able to get the kind of personalized information available through a portal.

    With a single sign-on, advanced portals know who you are and often what you want or need to know before you know it. The new systems are about ease and speed and in certain ways mimic commercial portals like Yahoo. They are tailored to individual employees. Among the bells and whistles are real-time information flow that goes in both directions and a screen full of helpful services, including internal company communications, employees’ personnel records, access to training programs, job-performance rankings, benefits updates and personalized plug-ins to search engines.

    Some of the push for portal development is coming from a much savvier generation of employees, many of whom grew up with the Web and sign on to commercial portals like Yahoo and Amazon as easily as their parents open a newspaper. “Companies are realizing that in order to retain and attract the younger generation, they have got to provide an online environment that is not in the dark ages,” says analyst Michael Rudnick, national intranet and portal practice leader at Watson Wyatt. He says that widely used portals like Yahoo and Amazon have spoiled people. “People complain that when they go on their corporate intranet, it doesn’t work like Yahoo. They get frustrated.”

“Human resources executives are now seeing that portals are a strategic piece of their human capital management systems.”

    Despite the upsurge in interest, many companies are sitting on portal software–often purchased as part of a much bigger technology package–but haven’t been willing to spend the money to develop the employee gateways.

    A white paper released last year by Plumtree Software, one of the big players in Web-based communication products, estimates that 40 percent of portals are empty. The costs of launching a portal often come in high multiples of the investment in the actual software because of the hours charged by the programmers and technicians required to develop and maintain it. For that reason, reliable numbers on the cost of the systems are hard to come by. List prices, themselves often subject to deep discounts, tell only part of the story.

    Wellpoint Health Networks Inc., which has added employees in big gulps as it grew through acquisitions, is one of the companies that decided to take on the added investment of developing a portal as part of their employee self-service software. Wellpoint is in the process of going live with a company-wide portal that could provide the same point of access to its 20,000 employees.

    Wellpoint estimates that it has spent about $8.5 million with its chief software vendor, PeopleSoft, over a period of years, constantly updating its employee self-service and intranet system. As the company grew from 6,000 employees to 12,000 to 20,000 by buying Blue Cross systems across the United States, the process of accessing important information became cumbersome, even comical, says Chuck Moore, staff vice president of human resources at Wellpoint. Information was available, but often confusingly so.

   Moore sees portals as a natural part of the evolution of employee self-service technology. The track record established by Wellpoint’s technology improvements forms a sound basis for continued investment. By going to an essentially paperless pay system based on self-service, the company saves $1.17 per employee per paycheck, or more than $600,000 a year, Moore says. Wellpoint used to pay outside vendors $20 a head for handling open enrollment on its health insurance. With the PeopleSoft system, it went in-house and also will save an estimated $600,000 this year alone. The biggest savings may have come in the area of retention. The company used to have embarrassingly high turnover rates. These days, the software system enables the company to stay on top of employee problems and needs so effectively that the turnover rate has fallen by half. Moore estimates the savings, based on recruitment, training and other hiring costs, to be around $65 million.

    As the employee self-service and intranet systems developed, the volume of information became so great that it could be hard for employees to find what they were looking for, Moore says. “With a portal, we can tell if the person accessing the information is a supervisor or not, union or not, exempt or not,” he says. “It knows who you are and what you can or can’t do.” Information, or access to information, can be dispensed in a much more focused way.

    Consider GM’s portal. Once connected to MySocrates, GM employees and managers can use simple point-and-click keyboard commands to link up to a vast array of information. Relatively simple things such as keeping up with pay records, merit awards and the latest statement from the CEO are available, as well as far more sophisticated tasks like using a pension calculator to work through various retirement scenarios. When the company changed its retirement formula not too long ago in an effort to reduce its workforce, its pension calculator enabled eligible employees to model various scenarios online rather than have to call GM’s benefits-processing center. Employees performed more than 90,000 calculations online. It saved processing costs and sped up decision-making, allowing GM to hit its goals sooner.

    Coming up with hard numbers to produce a return on investment high enough to satisfy CEOs remains a problem for portal developers. Executives sigh when the issue arises. Once a portal is plugged in, advocates say, it’s hard to go back. “It’s like the phone system,” Moore says. “Does a phone system pay for itself? Take it away and see what happens.”

Workforce Management, September 2004, p. 57-58 — Subscribe Now!

Like other companies that had gone global through acquisitions and internal growth, the Walt Disney Co. found itself facing the new millennium trying to tie together widely different business groups. The problem of linking its movie division, television networks, theme parks and resorts was particularly acute in managing a workforce spread out over 42 countries, using 10 languages. At one point, 15 major human resources systems were being used by various parts of the company, generating 400,000 expense reports annually, according to company data.

    So when Disney corporate decided to pull together all of its legacy systems and organize under a project called Operation Tomorrowland, human resources, along with finance, got top priority. Since its launch in 2001, the 31-month project, built by software giant SAP, has generated savings for Disney of $100 million and counting.

    One of the ripest areas for savings proved to be expense reporting, which involved roughly 50,000 of the company’s 112,000-member workforce. The company found itself with 23 different travel policies tailored to individual companies and operating units. Under the new system, everything is consolidated and put online. So far, the company has cut expense-reporting costs by $16 million a year. The new setup allows everyone at Disney to use the same credit-card system. By paying for hotels, car rentals, meals and other expenses–about $290 million a year–through one credit-card company, the entertainment giant can hold up payment until just before the due date, thus creating huge cash-flow benefits.

   The new system is Web-based. Travel authorization is done online, and there is a 24-hour turnaround time so that airline tickets can be purchased immediately upon authorization to take advantage of the best possible fares. If the traveler submits an expense for something that isn’t authorized, such as use of a telephone during a flight, the offender gets a message.

    “We have tolerances built into the system,” Keith Brisack, Disney’s worldwide manager for travel management, told a SAP convention audience of software vendors and clients. “If they go over that tolerance, the employee does get a message saying: ‘You have exceeded a reasonable amount for this expense item.’ “

    Some paper receipts, such as hotel bills, are still required. But they go through an imaging system and are bar-coded, with the bar coding attached to the digitized expense report. The paper is then thrown away, saving storage space. “As an employee submitting an expense report, there are all these receipts I don’t have to submit–it’s a dream,” Brisack told the group of about 75 technology wonks.

Workforce Management, September 2004, p. 38 — Subscribe Now!

C all it subtraction by addition. Leo J. Taylor, executive vice president for human resources at Pulte Homes, says that when the leading home-building firm reaches $20 billion in annual revenues–still some years away–he hopes to have pared his workforce-management staff from 30 down to 20. “I want one HR professional for every $1 billion in revenue,” Taylor declares. And if that sounds brash, well, brash pays.

    Taylor has used his aggressive, in-your-face style of management to become one of the 10 highest-paid human resources executives in the United States in an analysis of just-released 2003 proxy statements compiled for Workforce Management by Aon Consulting’s eComp Database. He ranks third and earned nearly $4.2 million in cash, bonus, stock and other compensation. While personal style is key to Taylor’s success, it also helps that he works for a hot company. Pulte Homes, like some other companies on the list, had a banner year in 2003, pushing up the value of Taylor’s stock. Shares of Pulte Homes jumped from $50 at the beginning of 2003 to $93 by the end of the year and then split 2 for 1 in January. Pulte’s earnings before interest, taxes and amortization were nearly $1 billion during that period.

    Paul McBride, senior vice president for human resources and corporate initiatives at Black & Decker Corp., is No. 1 on Aon’s list of the highest-paid workforce managers in a computer analysis of 5,097 proxy statements filed by publicly traded companies between January 1 and April 30. He earned $6.2 million in total compensation, which included salary, bonus, stock options and long-term incentive payments. McBride took over his new post in a reorganization completed this year. He replaced Leonard Strom, who retired as the senior vice president of human resources after a long career.

    Dennis Donovan, a much-honored human resources chief at The Home Depot Inc., was No. 2, pulling in more than $5.4 million in total compensation. Donovan, a fellow in the National Academy of Human Resources, joined The Home Depot in 2001. Others in the top 10, in descending order, are Taylor; William Roskin, senior vice president of human resources and administration for Viacom Inc., just over $3.9 million; Brent Stanley, the now-former senior vice president, human resources, for PG&E Corp., $3.4 million; Bruce Johnson, senior vice president, human resources, for The Timberland Co., $3 million;Robert Foreman, vice president, human resources, at SPX Corp., more than $2.9 million; Brian Brooks, executive vice president and chief human resources officer, Interpublic Group of Companies Inc., $2.6 million; Jeffrey Smith, now-retired chief human resources officer, general counsel and secretary, Cincinnati Bell Inc., $2.2 million; andJohn W. Holleran, senior vice president of human resources and general counsel, Boise Cascade Corp., $2.19 million.

Beauty contests
    Compensation-based proxy-season beauty contests are usually reserved for CEOs. But focusing the same spotlight on human resources executives provides an interesting view of a profession in flux. As workforce leaders push their way from backroom administration to the boardroom, one obvious impact on the profession is the creation of more millionaires. But the proxy results–which list only the five highest-paid corporate officers in each public company–also show that human resources executives still have a long way to go before they share top billing with COOs, CFOs and chief legal officers.

    In its analysis of 5,097 proxy statements, Aon found that only 172 human resources executives were listed as one of the top five officers in their companies, a rate of 3.3 percent. A separate study recently released by Towers Perrin surveyed a narrower base of 519 publicly traded companies. It put the low percentage in context by comparing human resources leaders to other senior corporate officers. When it did that, Towers found that human resources executives showed up on the short list in only 5 percent of the firms. In contrast, chief financial officers were listed among the top five in 76 percent of the companies and chief legal officers in 38 percent. Other studies show increasing numbers of workforce executives penetrating the top levels of management. As low as those percentages are, a few years ago only 2 percent of human resources executives were being listed in proxy statements, so some observers, like consultant Joe Vocino of Mercer Human Resource Consulting, see improvement.

    In yet another study of this year’s proxy statements, Mercer counted only 24 human resources executives among the five highest-paid corporate executives at 350 of the largest public companies it surveyed. Still, that is nearly twice as many as the 13 who showed up in a similar survey in 1999. The median salary for these 24 executives was just under $1.1 million. Compensation came in much higher for human resources executives among the group in the 75th percentile–nearly $2 million.

    Vocino, a senior compensation consultant, thinks there has been a dramatic change in the past 5 or 10 years. “You are seeing HR being valued much, much more in organizations,” he says. “More and more, we are seeing HR right at the CEO’s side at the time of strategic decisions, acquisitions and divestitures.”

    Outside issues will continue to push human resources executives into the top rank, Vocino says. That’s because they are in the thick of matters such as increased shareholder scrutiny of top compensation levels, class-action lawsuits by unhappy employees and a growing appreciation of the competitive importance attached to attracting and retaining a highly productive workforce. These all can have a big impact on profits, and executives who can walk through those minefields are highly prized, Vocino says.

    All of that places senior workforce managers like Leo Taylor and others on the list in a very small fraternity, and underscores the value of human-capital management to a company such as Pulte. “The people who do make that list of five are obviously pretty special people in their organizations,” says Brian Dunn, head of Aon’s global compensation practice. “These are not people simply expressing the desires of the people really running the companies. These are people at the strategy table running the companies.”

    As increasing numbers of human resources executives push their way onto the top rung of corporate executives, it’s clear from the fate of two of those on the top-10 list that they face some of the perils usually reserved for CEOs. At PG&E, Stanley got caught up in a public fight over what were described as lavish compensation packages awarded to top executives of the utility while its main subsidiary was in bankruptcy.

“These executives are highly compensated, but they are also subject to a lot of the same things their bosses are subject to. The days of getting a job like this and having it for 20 years are over.”

    During Stanley’s tenure, PG&E won workforce honors, including being named among Fortune magazine’s 50 Best Companies for providing opportunities to minority employees. But the last stages of his career at PG&E coincided with a controversy over what critics called lavish golden parachutes granted to senior executives at a time when the company was losing money. A proxy proposal to require shareholder votes on pay packages that exceed 200 percent of the executive’s base salary plus bonus was offered up–and rejected–at the company’s annual meeting in March after receiving support from the California Public Employees Retirement System, among other organizations. Stanley, whose retirement became official on June 1, was replaced a month before the meeting by Russell Jackson, the previous human resources chief at the parent company’s Pacific Gas and Electric Co. subsidiary.

    At Cincinnati Bell, Smith, an attorney, received a golden parachute as a result of a merger agreement between the telephone company and Broadwing Inc., where he was chief legal and administrative officer. Smith agreed to serve as a consultant to the CEO after he left the company at the end of 2003. Brian G. Keating, a 25-year veteran of Cincinnati Bell, replaced him. “These executives are highly compensated, but they are also subject to a lot of the same things their bosses are subject to,” Aon’s Dunn says. “The days of getting a job like this and having it for 20 years are over.”

    Pulling names from proxy lists to judge a corporate executive’s worth has built-in flaws. Total compensation tends to push up executives at successful companies because stock values are a major part of compensation. Executives at companies that are restructuring or going through hard times may be left off top-earner lists even though their value may be highest as they guide their organizations through tough transitions. “Those privileged enough to be working for companies doing well show up well,” says Timberland’s Johnson, No. 6 on the list, who has spent his entire 25-year career in human resources. “It doesn’t mean that other human resources professionals aren’t making similar and more important contributions at companies going through restructuring and downsizing.”

    The database pulled out only executives who had human resources in their titles. So it’s possible that highly paid executives responsible for human resources in their companies were overlooked because they were listed by more generic titles. For example, Thomas Cody, vice chairman of Federated Department Stores, who earned $1.5 million in salary and bonus and cashed in nearly $1 million in stock options in 2003, is in charge of human resources at Federated but does not list that in his title.

Man’s world
    Looking at other common characteristics of this elite group of highly compensated human resources executives, it is clear that they move a lot, jumping from one senior management position to another. This is not a stay at home, put in 30 years and get a gold watch group. Several have had tenures of only a year or two. More than half have graduate or law degrees. Five of the 10 worked for either General Electric Co. or PepsiCo and its Frito-Lay division. The showing affirms the companies’ reputation for turning out top human resources stars. At these levels, it’s also a man’s world. Only one woman, LaNette S. Zimmerman, executive vice president for human resources and communications at NiSource Inc., was listed in Aon’s top 25 in total compensation. The Society for Human Resource Management says 70 percent of its 180,000 members are women.

    Among the newest faces in the group are Pulte Homes’ Taylor and Timberland’s Johnson. Both are in their 40s, and each made his company’s list of top-five earners for the first time. Both climbed the conventional workforce-management ladder, taking on new jobs and bigger responsibilities with different companies.

    Johnson, 47, went into human resources straight out of Middlebury College in Vermont, where he studied history. He has held senior corporate jobs where he has been responsible for labor relations, staffing, compensation and benefits, training, diversity, organizational development and security. Johnson represents what some see as a new breed of human resources leader, one who exemplifies many of the qualities that are found in top executives. He has a strong sense of the bottom line, and yet takes a fresh approach to his role.

    Timberland, he says, promotes community involvement for employees, who are given 40 hours of paid time off for community service in their first year, with paid sabbatical programs of up to six months after three years. “We believe the skills you develop in the community are the same types of skills that work in a corporate setting,” he says. He is a man who speaks with a sense of purpose that goes beyond the nuts-and-bolts functions of human resources, an executive who shows up for work in blue jeans, a button-down oxford shirt and boat shoes. All from Timberland, of course.

    As for his own success, he says that support from senior management is key. “The management team has a predisposition to say yes to HR initiatives,” he notes. “I am not in a culture designed to say no.”

    For Taylor, holding down a top human resources job requires moving into an action-oriented role. He is responsible for traditional human resources programs such as comp and benefits, but he doesn’t define his job narrowly. Neither does Richard Dugas Jr., Pulte’s chief executive officer and president. Dugas took over the company last year, and soon promoted Taylor to serve as a key strategic adviser with responsibilities in all areas of the company’s business.

    “In my opinion, the HR role has a connotation of key benefits manager. We view it differently at Pulte,” Dugas says. “We have 11,000 people working for us, and Leo has as good a knowledge of who they are as anyone in the company. He understands the company inside and out, how we make our money, what the pitfalls are. With him, it’s not about the x’s and o’s of pay programs and benefits.”

    Dugas then reels off programs that Taylor has developed at Pulte, such as a mentor program called Top Gun. Pulte hires about 3,000 people a year, and executives called Top Guns are assigned “to evaluate the rookies” so they hit the ground running. “When you have that many people coming into the company each year, there is an awful lot of integration work that has to happen,” Dugas says.

    Another of Taylor’s programs involves training emerging leaders. Pulte has more than 45 divisions, each headed by a president and a vice president. Top performers below the rank of president are identified, then are thrust into a job with a president’s responsibilities. They receive 6 to 12 months’ training in the line of fire. “In the past we would promote our best vice president and say good luck at being a president,” Dugas says. That approach had about a 50 percent success rate, Dugas says, a figure he hopes to greatly improve with the new program.

    Taylor relishes these high-profile responsibilities. He breaks down human resources executives into three groups: the cop, who focuses on policies and procedures; the caretaker, who maintains the status quo; and the catalyst, who challenges the status quo. He identifies with the third type, and insists that his staff of 30 human resources professionals also constantly challenge conventional wisdom. “I don’t want myself or my folks to be a traditionalist, a cop,” he says. Taylor’s plan to reduce the number of people on his staff from 30 to 20 does not mean he is less committed to traditional management responsibilities. What he wants is to transfer training and development programs to line managers, who he believes are best placed to do it. That would leave the human resources staff to “provide guidance and counseling throughout the organization,” he says.

    Taylor says that too many in the field of human resources migrate to the cop role. But with CEOs demanding more and more contributions to profits from their workforce leaders, Taylor says, “the profession is going to be forced to change.” When that day comes, expect an increasing number of human resources professionals to join Taylor’s elite group of handsomely paid top executives.

Workforce Management, June 2004, pp. 43-50 — Subscribe Now!

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Short bios of the highest-paid human resources leaders

Career History/Education

Paul McBride joined Black & Decker in 1999 and has held current office since March 2004. His past portfolios include executive vice president and president of the power tools and accessories group. McBride has prior experience with General Electric Co., where he was employed in 1978 as vice president and general manager of the global silicones business. He is based at the corporate headquarters in Towson, Maryland. And has a bachelor’s degree in economics from Trinity College.

Dennis Donovan joined Home Depot in April 2001, and is responsible for human resources, learning, corporate communication and diversity. His resume includes stint as senior vice president of human resources at Raytheon Co., and chief of human resources for the power systems business at General Electric Co. Donovan is a Fellow of the National Academy of Human Resources. He earned his bachelors degree in industrial relations and an MBA from the University of Massachusetts, and a law degree from Western New England College School of Law.

Leo J. Taylor joined Pulte in 1994 as vice president of human resources for one of their divisions. Taylor is responsible for long-term strategic objectives as well as compensation, training and development and staffing associated with the day-to-day operations. Previously served as vice president of employee relations for Aetna Life and Casualty, was group manager of corporate human resources for Frito-Lay and has held other offices within Frito-Lay. Based at headquarters in Bloomfield Hills, Michigan. Taylor has a master’s in industrial and labor relations from West Virginia University.

William Roskin’s responsibilities include Viacom’s worldwide human resources policies and programs, the development and management of the company’s labor policies and overall administration. He is also responsible for managing Viacom’s facilities and real estate throughout the world. Before joining Viacom in 1988, Roskin held senior executive positions at Coleco Industries, Inc. and Warner Communications. He has a business administration degree from City College of New York and law degrees from St. John’s University and New York University.

Brent Stanley served as senior vice president of human resource until his retirement in April shortly before the company’s annual meeting. Appointed in 1997, Stanley was responsible for the corporation’s human resources strategic direction in the areas of compensation, benefits, and management development. He has worked for nearly 30 years in a variety of senior human resources positions, including senior vice president of human resources for The Gap Inc., headquartered in San Francisco. Stanley earned bachelor’s degree in political science from the University of Iowa.

Bruce Johnson took this position in June 2003. He comes in with 25 years of experience in the human resources field and is responsible for developing and implementing all human resources strategies and programs into company’s worldwide operations. This is Johnson’s second go round with Timberland. He left the company in 2002 to take a position as vice president-human resources with DuPont Textile and Interiors. The company is headquartered in Stratham, New Hampshire. Johnson has a bachelor’s in history from Middlebury College.

Robert Foreman joined the company in 1999. Prior to that, Foreman spent 14 years at PepsiCo, part of which he served as vice president, human resources for Frito-Lay International. Foreman has a bachelor’s in political science from State University of New York.

Brian Brooks was a employee benefits and compensation consultant at Hewitt Associates, 1980-83, and spent the rest of the 1980s with Towers Perrin, where he became a partner and specialized in executive compensation. He earned his economics degree at the University of Wisconsin Madison and law degree at Vanderbilt University School of Law.

Jeffery Smith recently retired from his post as chief human resources officer, general counsel and secretary. He came to the telephone company from Broadwing Inc, and left after completing the merger agreement between Cincinnati Bell and Broadwing at the end of 2003. He has been replaced by Brian G. Keating, vice president of human resources and administration, and a 25-year veteran of Cincinatti Bell. The company is headquartered in Cincinnati.

John W. Holleran is holding this position since 1996. From 1991-1996, he served as vice president and general counsel. He began at Boise in 1979. The firm is headquartered in Boise, Idaho.

Sources: Compensation: Aon Consulting eComp Database. Biography: Workforce Management

Clarification: Workforce Management apologizes for any mistaken impressions that may have resulted from reporting about the retirement of Brent Stanley, the former senior vice president of human resources at PG&E Corp. His retirement was not related to controversies over pay levels for top executives in the company, according to PG&E. “There is no question about the facts. He retired voluntarily, and there were no other issues involved except that Brent and his wife wanted to retire,” said Leslie Everett, a PG&E Corp. vice president.

Workforce Management, June 2004, p. 45 —Subscribe Now!

No one knows exactly how many executive coaches there are, but it is clear the numbers are swiftly rising.

    The International Coach Federation reports that it had 8,000 members at the end of 2004, up 31 percent in two years. About 35 new members a week were willing to pay the $190 annual dues to become members of the organization, which claims to be the largest such group in the world.

    Twana Ellis, the ICF’s director of member services, estimates that there are about 40,000 coaches who work with businesses and individuals around the world. There is no official registry of coaches and no one seems to be keeping count. One of the problems is that, like consultants, anyone can call himself a coach, print up business cards and go looking for clients.

    The federation is developing standards, and plans are in the works to institute a qualifying process that involves mandatory credentials. The backgrounds of the ICF’s coaches are diverse, with lawyers, college professors, psychologists and counselors among its members.

    At this point, the ICF has no qualifications for members other than that they submit an application and pay the fee. But Ellis says the organization plans on raising the bar. It has also developed a list of voluntary standards and a code of ethics.

    Another coaching group, the Worldwide Association of Business Coaches, doesn’t disclose its membership numbers but reports that its base is growing. The association is selective, requiring full members to submit five client testimonials.

    “These standards tell our colleagues and business clients that we’re serious and committed professionals with experience,” association member support specialist Lorenda Franklen says.

Workforce Management, February 2005, p. 56 — Subscribe Now!

T he proxy list of public companies with the most highly compensated human resources executives confirms what some have known for years: PepsiCo and its subsidiaries are a great training ground for top people managers. Three executives who worked for Pepsi or its Frito-Lay subsidiary turned up among the 10 highest-paid human resources executives in a proxy analysis of more than 5,000 companies by Aon Consulting’s eComp Database.

    Leo Taylor, executive vice president for human resources at Pulte Homes, worked as group manager of corporate human resources for Frito-Lay. Bruce Johnson, senior vice president of human resources at The Timberland Co., also worked for Pepsi. Robert Foreman, vice president of human resources at SPX Corp., spent 14 years there.

    Pepsi is so well known for training hard-charging human resources executives that it even has something akin to a brand identity. “People will say, ‘Get me a Pepsi-type person,’ ” says Frank Allen, a New Jersey-based human resources recruiter. Hal Johnson, a managing partner with a division of Heidrick & Struggles International Inc., the executive search and leadership consulting firm, estimates that 30 to 35 of the chief human resources officers at the 200 largest employers in the United States got at least part of their training at PepsiCo or one of its divisions.

    Among the more prominent graduates of the Pepsi human resources program: Ken DiPietro, the top human resources executive at Microsoft Corp.; Eva Sage-Gavin, chief of human resources at Gap Inc.; John S. Bronson, a director at G & K Services and former vice president of human resources at Williams-Sonoma Inc.; and Della Wall, group vice president of human resources at Kroger Co.

    In defining “a Pepsi-type person,” Allen says that the executive would be performance oriented, with a bottom-line focus to go along with traditional responsibilities like training and development, compensation and benefits. From the first interview on, Pepsi hiring executives know what they are looking for, Allen says. “They are looking for human resources candidates that are coming from established companies, ones with a good reputation for the HR function. Then in the interview process they stress a partnership with business.”

    The company’s track record is also affirmed by Ed Lawler, director of the University of Southern California’s Center for Effective Organizations. “Pepsi has a long track record for producing strong HR executives,” he says. “It’s kind of an academy company for human resources.”

    Lawler says that the company recruits at top-ranked schools, often at the master’s degree level. “That said, it is not that they are known particularly for innovative practices in human resources,” he says. “Rather, they are known for hiring good, solid people who do their jobs well.”

    Taylor credits PepsiCo with being “a great training ground for top talent in the human resources arena. The folks who go through Pepsi or Frito-Lay are exposed to strong leaders,” he adds. “You cannot be a wallflower in that human resources organization and survive.”

    Not every former Pepsi executive has worked out. One, Gregory Horton, was fired by Internet giant AOL from his position as executive vice president of human resources and then sued by the Web service on a claim that he siphoned thousands of dollars from corporate accounts for personal use.

    Timberland’s Johnson says a stint with ITT Industries Inc. probably helped pave the way for his career more than his time at PepsiCo. But he learned powerful lessons in business practices, such as the value of a big investment in human resources. “It was a terrific experience for me,” he says. “There are an awful lot of PepsiCo alumni out there.”

Workforce Management, June 2004, p. 46 —Subscribe Now!

Despite government studies showing that pharmacy benefit managers can save employers money on prescription drugs, the PBM industry can’t seem to shake its unsavory reputation. The most recent blow to the troubled industry came in August, when New York State Attorney General Eliot Spitzer sued Express Scripts Inc., alleging that it inflated drug costs to the state’s largest employee health plan. Express Scripts denies the charges, saying it has saved the state $2 billion since 1998. Even before the suit was filed, two other industry leaders, Medco Health Solutions Inc. and Caremark Rx Inc., faced legal troubles of their own. Medco settled two separate suits, requiring it to pay $71.8 million in fines and penalties. Among the accusations by prosecutors: PBMs have inflated the cost of prescription drugs, siphoned off rebates intended for customers and improperly switched patients to more expensive drugs to benefit from manufacturers’ rebates.

    Concerns are filtering down to employers. The HR Policy Association is working with a coalition of 50 large employers on a plan that would bypass benefit managers and set up direct negotiations with manufacturers. A memo outlining their position obtained by Workforce Management cites costly markups and payments made for placement of certain drugs on formularies, the list of approved drugs offered to plan members. These industry practices “can interfere with employers’ and consumers’ right to know the true cost of a drug,” the memo says.

    In the industry’s defense, the Pharmaceutical Care Management Association released a study by PricewaterhouseCoopers showing that drug managers save New York consumers an average of 25 percent on prescription drugs, which could translate into savings of $91 billion over the next 10 years. Other studies by the U.S. General Accounting Office, the Congressional Budget Office and the Federal Trade Commission have also found that PBMs help keep the cost of drugs down. “Ultimately, what consumers and purchasers want to know is: What is the bottom-line price?” says Phil Blando, a spokesman for the association.

    Many employers find themselves caught in the middle. One of several drug-purchasing groups put together by Aon Consulting Inc. includes seven large employers that contract with Medco for a group drug plan covering 1 million workers. Pricing must be considered, but so should performance and safety, says Gerald Smith, an Aon vice president. “Companies have due diligence to be effective in the way they manage their programs and not just look at price.” A step in the right direction would be to have more openness in the process, Smith says. “We want to make sure all the arrangements are disclosed so we understand everything that is going on.”

Workforce Management, October 2004, p. 43 — Subscribe Now!

Betsy Zikakis, senior vice president of marketing for Workscape, a human resources benefits and workforce management software firm, is nonplussed by all the noise erupting from the technology heavyweights that dominate high-end software applications: SAP, PeopleSoft and Oracle. Her company focuses on two main lines of the human resources technology business, and the firm has gotten good enough to attract clients like General Motors and Dow Chemical.

    Zikakis figures when clients arrive at Workscape, they’ve already checked out the human resources software the big ERP players sell and decided to shop around. “We see a lot of people looking for alternatives,” she says.

    Still, when Oracle announced its $9.4 billion hostile takeover bid of PeopleSoft more than a year ago, “people were really nervous,” Zikakis concedes. PeopleSoft is one of the oldest players in the human resources tech world and is a comfortable, trusted name to many workforce managers. Oracle, on the other hand, has a win-at-any-cost reputation to go along with its tech savvy.

    One of the unsettling questions facing workforce managers is what happens if Oracle wins the takeover fight, now in its second year. PeopleSoft is the leading provider in the United States of the kind of monolithic foundational software systems that can tie a Fortune 500 company’s many divisions together, linking sales, manufacturing, human resources and other functions into a dandy package of state-of-the-art technology. But these systems can take years to install and can cost $100 million or more.

    The research firm IDC estimates that licensing sales for human resources management and payroll processing software were $4.5 billion in 2003, and will grow at an annual rate of 5.6 percent to $5.7 billion by 2007. The broader category of enterprise applications software, which includes HRMS and a wide range of other business products, took in $65 billion during 2003, IDC reports. In the fierce competition to control the market for human resources and payroll processing software, SAP was first, taking 11.8 percent of the market share worldwide, compared to 11.3 percent for second-place PeopleSoft. Oracle, with 3 percent, was a distant fifth.

    The fight by Oracle to take over PeopleSoft has not only dominated headlines but also elevated the visibility of these high-end enterprise resource planning systems that have become so important to corporations that human resources executives who ignore them do so at their own risk. Already, the technology has forced human resources to rethink its traditional role. Now the stakes are even higher. Experts say that workforce management executives who insist on keeping their focus on conventional administrative functions such as benefits administration or payroll could find themselves on the outside looking in, losers in the strategic battle by corporate leaders to extract ever greater productivity, profits and talent from the workforce.

Behind the curve
    In his book Rethinking Strategic HR, John Sullivan, head of the human resources program at San Francisco State University, says that human resources professionals have been behind the technology curve compared to counterparts in, say, finance or manufacturing, who “are light years ahead in the extensive use of technology.” Ron Hanscome, a technology-industry analyst with Meta Group Inc., says that staying current with technology is a matter of survival for human resources. “A working knowledge of technology is an absolute requirement for anyone in the HR business,” Hanscome says. “There is a real need for HR to understand how technology can make a difference. Those who understand technology and its applications will have a good career. Those who don’t will be relegated to do more administrative things, and ultimately their jobs might be outsourced.”

“Driving workforce productivity is an enormous priority, a major imperative for companies. We are not your mother’s HR department anymore.”

    Hanscome believes that when the dust settles, PeopleSoft will be able to fend off the attack by Oracle. “The market is well served with three strong competitive systems–it drives innovation, it keeps prices reasonable,” he says. “Each is working very hard to cover more and more human resources, particularly the more strategic HR functions.”

    Consider PeopleSoft’s Enterprise Learning Management system. An electronic kiosk is set up in a central location like a break room. Retail sales associates, for example, can log on to a training module or dial up a call center and receive training on the spot to deal with a problem such as an abundance of inventory of a certain product. New prices can be set immediately, sales incentives laid out and a sales strategy provided. The system not only gives the salesperson on the floor valuable training but also provides division managers with a means of tracking the success or failure of individual employees and enables them to link their training directly to sales numbers to determine the effectiveness of the training.

    “The kicker for the COO and other management is that they can then track the subsequent impact of the training on same-store retail sales,” says PeopleSoft’s Mark Lange, a vice president with responsibilities for global products marketing. “For years, training has been an expense. The CFO has never been clear on what kind of return on investment is generated for that expense. Now for the first time, you can have store training through the kiosk, with up-to-date information on how their stores performed.”

    The goal is to make every employee a competitive asset. “Driving workforce productivity is an enormous priority, a major imperative for companies,” Lange says. “We are not your mother’s HR department anymore.”

    PeopleSoft’s business results remain strong, despite the attack by Oracle, Lange says. As it stands, German powerhouse SAP is tops in sales worldwide, while PeopleSoft is No. 1 in the United States. Oracle would be a strong No. 2 if there were a takeover, but that would leave only two major players in an important segment of the software market. Seeing an obvious advantage in having only one major competitor instead of two, SAP has come out in favor of the takeover, publicly questioning an antitrust lawsuit filed by the Department of Justice to block Oracle.

    SAP argues that it has the broadest, deepest system on the planet, one that can incorporate payroll, performance management, benefits administration, the handling of regulatory-compliance issues, e-recruiting and employee self-service transactions. But the main thrust of the SAP business, like that of its competitors, is integrating human resources systems under the broadly defined umbrella of workforce management. As this plays out, human resources is less about collecting and processing employment data than it is about taking responsibility for such things as coaching management on how to better manage teams. One of the roles of human resources executives should be identifying high-potential people in a company, connecting them to measurement criteria, creating a development plan for them and following their progress every step of the way, says SAP’s David Ludlow, vice president responsible for MySAP HR. “We believe management of the workforce has been elevated to higher levels within a company,” Ludlow says. “If we look at some of the valuations of the companies, more and more are being attributed to intangible assets, and one of those intangible assets is people. When we talk about writing a performance appraisal, it is not just an individual assessment. It’s about how someone’s performance is tied to the overall goals of the company.”

    Joel Summers, senior vice president of Oracle global HRMS development, says the future of human resources “is all about connections”–or wiring in large amounts of corporate data that can go horizontal or vertical to promote profit-making strategies. Oracle is recognized as a leader in creating powerful databases. Playing to its strength, its systems mine and integrate massive amounts of information into data repositories, absorbing workforce information on a day-to-day basis and then feeding it out to heads of manufacturing, sales, finance, human resources and other divisions. This is especially valuable in tying together global operations, where workforce requirements and legal requirements can vary from one country to another.

The future of human resources “is all about connections”–or wiring in large amounts of corporate data that can go horizontal or vertical to promote profit-making strategies.”

    One example of the many challenges facing large corporations is the complex compliance and governance regulations passed in recent years in the crackdown on corporate malfeasance. “We have to have audit trails so that every [keyboard] touch is captured somewhere,” Summers says. “We have to have learning systems that allow us to distribute information on business ethics, explaining what the law says.” The way this might work for a company with thousands of salespeople is that teams from the legal and human resources departments would get together, set up a mandatory business-ethics course, record compliance as each person takes the course–with follow-up notices to employees who miss the training–and then feed the response rates up the management chain to the CEO.

Oracle plays rough
    Ever the hardball player, Oracle wants to control more of the market that is now going to vendors like Workscape. Smaller companies that concentrate on a limited number of applications, such as providing benefits administration, contend that their products are less expensive, perform more tasks and give better value.

At this point, there appears to be room for both large and small companies, though many in the industry predict that the universe of human resources software is shrinking and will accommodate fewer and fewer survivors. CEO Anthony Karrer of TechEmpower helps client companies choose learning-management and other software and then integrate it with large systems like PeopleSoft, SAP and Oracle. Not too long ago, the learning-management-software market was dominated by smaller companies with sophisticated, best-of-breed expertise. Now, PeopleSoft is moving into the field in a big way, with SAP and Oracle not too far behind, Karrer says. “The smaller public companies are going to be swallowed up or they are going to work really hard to stay out in front of the big guys.”

    As a result of the frenzied competition and new products, people-management executives itching to broaden their strategic influence already have sweeping solutions at their disposal that can enhance training, productivity and talent development across a multitude of corporate divisions. But they are faced with numerous challenges, from convincing CIOs that one product is better than another to fighting for a place at the head of the line when decisions on technology investments are debated by CEOs. Then, once the sophisticated software has been purchased, there is the problem of teaching managers how to use it and convincing them that it is better than paper.

    Some managers require more convincing than others. Despite the sweeping changes under way, there are still many Luddites in corporate America, ready to cast aside technology in the futile hope of returning to long-gone days. One of Zikakis’s chief selling points at Workscape is that her company’s compensation package gets a higher percentage of use than similar packages installed at other companies by competitors. That’s because her product is easier to use, she says. “If managers think the software is too complicated, they go back to paper,” Zikakis says. “They will create a spreadsheet and hand the spreadsheet in to human resources.”

Workforce Management, May 2004, pp. 53-55 — Subscribe Now!

Two words run together tell the story of GM: GoFast. Hoping to stop sluggish decision-making and infuse speed and a sense of urgency into its global workforce of nearly 350,000, General Motors Corp. came up with the slogan four years ago. At the time, the global automotive powerhouse was in a downward spiral and steadily losing market share to fiercely competitive Japanese, German and Korean auto manufacturers. Top leadership at GM knew that something had to be done to shake things up. GoFast, with human resources managers in the vanguard, would be the name of the program that would lead the charge. Today, 7,000 GoFast workshops later, the term is part of GM’s culture, shorthand for ending cumbersome bureaucratic process by dealing with a problem immediately. “Just say ‘GoFast’ and everyone knows what you mean,” says Kathleen Barclay, vice president of global human resources.     GM wins Workforce Management’s Optimas Award for general excellence for turning its workforce managers into strategic partners. The company has allowed workforce management to go beyond its traditional supporting role to help reshape corporate behavior with innovative ideas and technology. In addition to the GoFast workshops, salaried GM workers are given individual responsibility to contribute to corporate business results in an initiative called the Performance Management Process. The PMP program establishes individual business objectives for salaried employees that must be linked to the worker’s unit and, in turn, to the company’s overall goals. Today, 80 percent of GM’s executives strongly agree that they are personally being held accountable for business results, compared to only 50 percent a few years ago, according to an in-house survey. Some of the dollar payoffs have been equally dramatic. GM increased its market share in 2002 for the second consecutive year–the first time that has happened in 26 years, says company spokesman Robert Minton. GoFast workshops produced documented savings of more than $500 million. Technology innovations are also part of the cost-cutting. Company executives found that if they trained local dealers by using satellite feeds to monitors set up in service bays, rather than using classrooms, they could reduce training costs from $89 per student hour to $38. That change so far has saved GM $50 million.     Now that the old decentralized setup has been replaced by a new more centralized system of management, talent is rising to the top in previously unknown ways. There has been an 80 percent increase in the number of women executives at GM, with a 180 percent increase in the number of women in the top 450 positions in the company.     The reorganization that produced those results continues, with human resources managers operating as chief agents of the corporate overhaul. GM management concedes that its decision-making was slow, lumbering and bureaucratic. Among the chief problems feeding the poor business results were highly decentralized, competitive business units. Barriers had been set up between the corporate fiefdoms. Communication was poor. GM’s chairman and CEO, Rick Wagoner, wanted to see the internal barriers torn down and the company moving forward with one mind toward common goals. And he wanted the entire corporation to be infused with what he called “a sense of urgency.” The challenge was daunting. It’s one thing getting everyone in the Detroit headquarters acting as one company. But would it also work at GM’s Daewoo operation in South Korea?    “In my mind, HR is paramount to our reorganization effort,” Wagoner says. Barclay and her team began by taking a look at the way human resources itself was performing. “HR had traditionally been positioned in such a way that it was spending a lot of time on transactional and administrative activities,” Barclay says. “We really needed to have a fundamental transformation of what human resources meant to the company as a whole.” Barclay and her team surveyed top GM executives in manufacturing, engineering, vehicle sales and other areas of the company, asking how human resources could add value and help drive change. The effort resulted in a strategic framework developed in 2001 that is still used today. It involves retraining human resources managers to think globally, learn to manage change, develop business acumen and forge relationships with other GM workers. Then came programs like GoFast and PMP.     At first, resistance to GoFast in executive ranks was “tremendous,” Barclay says. “They didn’t want to do it.” One of the problems that everyone identified was that there were too many meetings. Now, here were even more meetings. But these were workshop sessions designed specifically to eliminate meetings by bringing key players from different departments together in one room to deal with a particular problem. Simplified, GoFast works this way: once a problem has been identified, then executives and other salaried employees responsible are brought together for a one-day session. The process might involve 6 to 20 key players. A decision to fix the problem is made on the spot.     Helen Elliott, GM’s manager for human resource development in Europe, says she sees a huge change. For the first time, GM has standard training programs in every country and company facility, a sharp contrast to the days when training programs varied widely from plant to plant and from country to country.     When GM was considering the acquisition of Korean auto manufacturer Daewoo, human resources stepped in and helped smooth the cultural transition. The new company is “not the old Daewoo and not a GM clone. GM Daewoo is a merger of cultures, the best of both worlds,” says Nick Reilly, GM Daewoo’s president and CEO.     Efforts to change the GM culture are ongoing. “Human resources has a big role to play in making the company behave differently, and leveraging the strengths of the company and helping the company change its speed to go faster in decision-making,” Barclay says. “We have company-wide objectives around the world. We have everyone driving toward the same objectives.” GoFast. Workforce Management, March 2004, pp. 36-38 — Subscribe Now! Posted on January 30, 2004July 10, 2018 Exploiting Wal-Mart’s Workforce Weak Spot Taking lessons from Wal-Mart Stores on innovative approaches to products and pricing may be a smart move for a competitor. But emulating its workforce-management practices may not be such a good idea.     The Wal-Mart people formula goes something like this: pay low hourly wages, create conditions that invite yearly turnover in the range of 50 percent and price health benefits out of reach for large numbers of employees. Use the savings to keep prices low.     Those who follow the company say that the clever thing for a competitor to do may be to flip the formula and place strategic importance on pay and benefits. They argue that Wal-Mart is operating on a 3 percent profit margin yet must feed the hungry beast of Wall Street expectations by producing 20 percent annual growth rates. It really can’t increase pay and benefits without cutting into its profit margin. So why don’t competitors exploit the already high turnover rate and cause even more dissatisfaction among Wal-Mart workers by paying their own employees more?     “There is a lot of talk that conditions at Wal-Mart are creating low standards that other companies are going to have to meet–or they will perish,” says researcher Roland Zullo of the University of Michigan’s Institute of Labor and Industrial Relations. “Responding to Wal-Mart doesn’t necessarily mean meeting its employment standards.” Another way to go, which he sees as a clear trend among companies competing for a share of Wal-Mart’s business, “is to hire people with the idea of keeping them long term by giving them wages and benefits to match their contributions to the firm.”     Costco Wholesale and Trader Joe’s are among the companies often cited for putting good pay and benefits into their growth formula and making it work. So are Wegmans and Stew Leonard’s. “Wal-Mart is unassailable on price,” says Ryan Mathews, a longtime retail consultant. “They don’t do many things wrong. Workforce management is their Achilles’ heel, if they have one. If I were in their market, I would pay my people better. I’d make sure they had better benefits. I’d make sure they were happy, and I’d make sure the entire world knew about it.” Workforce Management, February 2004, p. 34 — Subscribe Now!