Author: Ed Frauenheim

Surprising as it may seem, Hewlett-Packard’s spying scandal may coincide with a revival of the famous “HP Way.”

    Defined as a workplace culture of integrity, innovation, accountability and respect for the individual, the HP Way served as a beacon that for years attracted employees to the Palo Alto, California, computer maker.

    But former HP employees say the company’s reputation for sound people practices diminished over time. One former employee who now works at a supplier to HP says the company often failed to hold employees accountable in the 1990s, and then ex-CEO Carly Fiorina essentially overreacted by laying off workers indiscriminately.

    “When I talk to people who are still there, it’s gone from being someplace special to just being another job,” he says. The former employee spoke on condition of anonymity because of the sensitivity of his position at an HP supplier.

    HP has weathered challenging times during the past several years, from the tech industry implosion in 2001 to a controversial merger with Compaq to Fiorina’s ouster in February 2005. The 150,000-employee company has also announced job cuts exceeding 32,000 in recent years, even as it has continued to hire in places including the U.S., India and China.

    Once a mainstay on Fortune magazine’s list of the 100 best companies to work for in America, HP hasn’t appeared on the list since 2001. Amy Lyman, co-founder of the Great Place to Work Institute, which compiles the list, says there has been a decline in company ethos during the past five years.

    “Their senior leadership lost the HP Way for a while,” she says.

There has been a decline in company ethos at Hewlett-Packard during the past five years. “Their senior leadership lost the HP way for a while.” –Amy Lyman, co-founder of the Great Place to Work Institute, which compiles Fortune magazine’s list of the 100 best companies to work for in America

    The recent spying scandal revealed particular waywardness. In an effort to determine who on its board of directors leaked information to the press, the company violated the privacy of directors, journalists and employees.

    Even so, there are signs HP is turning its ship in the right direction. For one thing, the company has shown solid financial results under Mark Hurd, who took over as CEO in early 2005. Hurd has won praise as a leader, and HP’s stock is trading higher than it has in years.

    Along with this success in the market has come greater employee satisfaction, according to HP. The company said its annual “Voice of the Workforce” employee survey, taken earlier this year before news broke of the probe into boardroom leaks, “showed marked improvement across many key employee satisfaction areas from 2005 to 2006.”

    Meanwhile, HP is still winning workplace awards. It earned a spot this year on Working Mother magazine’s best companies for working mothers, marking its 16th year on the list. And in the spring, Business Ethics magazine ranked HP second on its list of the 100 best corporate citizens. HP is one of just 16 companies that have made that list all seven years of its existence—and HP has been in the top 10 each year.

A    lthough HP’s board-leak probe was a setback, Hurd apologized for the privacy invasions and pledged to prevent similar abuses in the future. “Our culture, our core, which we call the HP Way, remains strong and ethical. But clearly, changes are in order,” Hurd said in testimony to Congress in September.

    There seems to be renewed focus on the HP Way, Lyman says.

    “You can kill a company culture,” she says. “Mark Hurd appears to be trying to recover it.”

Workforce Management, November 20, 2006, p. 25 — Subscribe Now!

Bulk buying is in these days when it comes to talent management software. Just ask Christopher Faust, executive vice president of global strategy at HR application vendor Softscape.

    In 2003, about 50 percent of Soft­scape’s customers bought a single talent management product, such as a performance management or recruiting application. This year, Faust says, it’s a different picture: Roughly 90 percent of Softscape’s sales involve multiple products, which are typically linked. Wayland, Massachusetts-based Soft­scape expects to record sales of more than $40 million this year. “Instead of just buying performance management, they might also include some component of learning management or even succession planning,” Faust says.

    He isn’t alone in seeing talent management applications snapped up in pairs or more. It’s a broader industry trend, says Jason Corsello, analyst at market research firm Yankee Group. The main factor behind the buying shift, he says, is that organizations recognize they can make better use of their workforce data when they integrate applications such as performance and compensation management. “The suite approach is finally starting to take off,” Corsello says. “The true value is starting to resonate.”

    Troy Kanter, president of the human capital management division at HR software and services firm Kenexa, offers a case in point. By connecting applications, organizations can assemble profiles of successful workers from performance management software and then use those profiles in a recruiting application to guide their hiring, he says. Kenexa, which sells products ranging from pre-hire testing and applicant tracking software to performance management, succession planning and HR analytic tools, also is seeing most customers buy more than one application at a time. “Four years ago it was the exception,” Kanter says. “Now it’s the rule.”

    Talent management software refers to applications for tasks such as recruiting, performance management, learning management, compensation management and succession planning. These areas are considered strategic as firms recognize the value of employee contributions and try to make the most of their human capital.

    Just how vital talent management is to organizations was revealed in a joint study earlier this year by consulting firm Knowledge Infusion and the International Association for Human Resource Information Management, a professional society. In the survey, which polled members of the association, nearly 78 percent of respondents said they see talent management increasing in importance during the next three years.

    On the other hand, the study indicated companies have a ways to go in knitting together their HR software. More than 40 percent of organizations have little or no integration from either a process or technology standpoint, the survey found.

    The suite approach to buying might seem to favor the biggest players in the field—SAP and Oracle. These titans have long pitched a comprehensive and connected set of HR applications, including talent management products, as the best way to go.

    Even so, Oracle and SAP tend to be a step or two behind the smaller vendors that focus on a few talent management products, says Jason Averbook, chief executive of Knowledge Infusion. That’s because the giants have hundreds of products, including non-HR software products, to work on, he says. And customers in many cases want more functionality than Oracle and SAP can deliver, Averbook says. The big vendors “always catch up, but they’re never going to be bleeding edge,” he says.

    SAP and Oracle, for their part, argue that stitching together applications from multiple vendors is expensive. “While niche players may offer different features and functionality, none can provide the true business benefit realized from an integrated architecture,” Oracle said in a statement.

Workforce Management, October 9, 2006, p. 35 — Subscribe Now!

To Freddye Silverman, going global with HR tech systems amounts to a major journey. Silverman is part of a team installing Oracle human resources software at Travelport, a new travel services company that will operate in at least 25 countries. The goal is to have a single source of trusted HR data worldwide for Travelport, which was part of the Cendant conglomerate and includes the Orbitz travel services Web site. Silverman hopes the system will save on costs and allow executives to analyze information quickly to make key business decisions. But the team has a ways to go, with hurdles including lengthy upgrades.

    Fixing bugs and making other improvements to the HR information system will require time-consuming patches for each language, such that the entire process can last a day or more. Having to pause operations for that long about once a month is far from ideal in Silverman’s view. “We’re counting on Oracle to make this more streamlined going forward,” says Silverman, who was vice president of human resources technology solutions at Cendant and now is working on Travelport’s HR technology initiatives.

    Travelport isn’t the only company wanting more from its HR technology when it comes to global plans. Many big multinationals want to establish consistent workforce management methods around the globe—to the extent possible given local laws and customs. Vendors of HR software systems promise to help them with worldwide rollouts, but the products available often leave much to be desired, with such issues as cumbersome navigation for users. What’s more, many applications lack features required to meet country-specific requirements, both legal and cultural.

    Recruiting software products known as applicant tracking systems aren’t always capable of accommodating the various ways job candidates apply for positions and the ways organizations outside the U.S. consider applicants, says recruiting consultant Gerry Cris­pin. The software may not be able to handle names when the format isn’t the typical Western approach of first name followed by last name, he says.

    “Applicant tracking systems cannot be configured to meet the broad range of recruiting practices that currently exist in our own country, let alone the vast cultural differences that exist between countries,” he says.

    Companies have had global operations for decades, but in the past several years many firms have increased their activities outside North America, and there’s been a bigger push to operate with uniform methods throughout the world. Consistency has taken on greater urgency for a number of reasons, including the ability to save money by cutting down on redundant back-office operations and multiple license fees for software applications installed on a single-country or regional basis.

    Organizations also find themselves eager to enforce standard worldwide practices to increase overall effectiveness, demonstrate good corporate citizenship or comply with regulations. The ability to data-mine is another benefit. A universal HR information system can allow a firm to get a tighter grip on real-time operations, see weaknesses such as gaps in needed talent and deploy workers more effectively.

    Computer giant IBM, for example, has created an application dubbed Professional Marketplace that tracks the skills, availability and billing rate of Big Blue tech professionals throughout the world. The system captures data for more than 90,000 IBM employees.

    At first blush, it might seem the software would be a tool to accelerate the shift of technology work to lower-wage nations such as India, where IBM employs thousands of computer professionals. But George Lockmer, project manager for the application, says Professional Marketplace instead cuts down on the time it takes for managers to assemble teams and prove to potential clients that IBM has the resources for projects needing people in multiple countries. That’s “the real opportunity,” he says.

    IBM hasn’t always seen such global capabilities in the commercial HR applications it has considered or used. In choosing a new learning management system recently, for example, it chose a product from Saba in part because the application stood out for its ability to track the training of employees worldwide. IBM recently decided to scrap a set of commercial applicant tracking systems it was using, largely because the applications were too slow to process the massive number of applications IBM receives around the world.

    IBM is putting in place a new applicant tracking system in the Asia-Pacific region and may use the same vendor for other regions as well, says Barbara Brickmeier, IBM vice president of HR on Demand—the company’s catchphrase for creating a quickly deployed and adaptive workforce. As it sought to replace sluggish software, Big Blue found that not all applicant tracking systems can work in all countries, Brickmeier says. On the other hand, she sympathizes with companies aiming to sell her their products, given that IBM does business in 140 nations and employs people in 70.

    “Serving IBM’s global needs is a challenge for many vendors,” she says.

Worldwide boom
    Human capital management applications are one of the fastest-growing areas of business software, and North America is the biggest market for the products. The region accounted for 59 percent of the $5.5 billion spent worldwide last year on human capital management applications and related services and hardware, according to research firm AMR Research. But other parts of the world are enjoying faster growth. Spending on HR technology in North America climbed 7 percent last year, compared with a 20 percent rise in Europe and a 22 percent gain in the Asia-Pacific region.

    From 2005 to 2010, revenue from HR technology in North America will increase 7 percent per year on average, AMR predicts. That compares with 11 percent in Europe, 18 percent in the Asia-Pacific market and 21 percent in Latin America.

    Many HR software vendors tout systems that can span the globe. SuccessFactors says its software is available in 15 languages and has users in 134 countries. Last year the firm, which sells a range of products including performance, compensation and succession management, updated its software to take into account data privacy laws in Europe. Its European customers needed an option to limit the ability of managers to view the personnel data of lower-level employees.

“Applicant tracking systems cannot be configured to meet the broad range of recruiting practices that currently exist in our own country, let alone the vast cultural differences that exist between countries.” –Gerry Crispin, recruiting consultant

    SAP, one of the industry’s biggest players, boasts that it has versions of HR applications tailored for 46 different countries. The latest is Colombia, added in February, says David Ludlow, SAP vice president of product management for human capital management applications. Among SAP’s capabilities is flexibility for how different regions and nations structure employee compensation, Ludlow says. Many South African operations want to include a car allowance, he said, while European divisions may offer employee loans as part of an overall package.

    SAP also has teams of people monitoring legal developments around the world, including federal rules and legislation at the state level. “We deliver legal changes every three weeks,” Ludlow says.

    Even the way SAP’s software looks has shifted to take into account global realities. Now that many large organizations are establishing HR service centers in lower-wage nations such as India and the Philippines, the people using SAP’s software may be new to the field. Also, turnover rates may be high, Ludlow says. So SAP created a simpler user interface for much of the software.

    “You can’t go through three-month training cycles,” he says. “It has to be easy to use.”

    SAP rival Oracle also says its HR applications are ready for global clients. Like SAP, it keeps tabs on legal changes around the world and updates its software to make sure clients are in compliance. The company also says that global installations of its Oracle E-Business Suite Human Resources Man­agement System require less patching than those of some competitors, where patches are necessary both for different languages and for country-specific versions, or “localizations.” Oracle’s product is designed so that separate localization patches aren’t needed.

    Silverman gives Oracle’s E-Business HR software high marks for blending a common underlying application with localizations that work for different countries. But she still worries about too much downtime in the system because of upgrades. Patches, she says, are typically distributed monthly. Also, “when you have to patch, you have to patch in every single language.” Those separate fixes can take three to five hours for each language, she says, and Travelport may eventually have 10 languages installed.

    Then there’s the matter of manager headaches when using the software. Silverman says Travelport is a heavily “matrixed” organization, meaning managers may have some responsibility for employees who don’t report to them directly—sometimes in other geographic regions. The structure of Oracle’s software simultaneously makes the helpful localizations possible but can frustrate managers with indirect reports, Silverman says. The application is set up around “business groups,” which may require managers to have multiple security profiles if they want to see data about indirect reports, she says.

    “The average user cannot navigate around the system easily,” she says.

    In a statement, Oracle responded that Travelport’s organizational structure is atypical, and that “the Oracle HRMS product is not the only product available today that has issues supporting this unique type of organizational structure.”

    Oracle also indicated Silverman and her crew have reason to believe their downtime will decrease. “[O]ur Oracle Support group has worked with other customer organizations to come up with workarounds that help solve and streamline these language patching issues,” the company said in a statement. “A few customers who have similar models to Travelport have experienced significant reductions in the amount of time it takes for language patches.”

Different applications, different challenges
    Some types of HR applications may be easier to install and use globally than others are. Learning management systems don’t have as many country-specific laws to worry about as do recruiting applications, says Abhas Kumar, senior vice president of strategy and integration for learning technology firm NIIT USA. Learning management applications, which typically track the training and certifications of employees, primarily need to display and accept multiple languages for global organizations, Kumar says. For languages such as Arabic and Chinese, he says, that requires what’s known as “double-byte” capability, a software feature that allows for characters more complex than those in the Roman alphabet used in English.

    “It’s not a trivial issue, but it’s been done” for NIIT products, he says.

    Recruiting technology systems, mean­while, often get dinged by observers for their global shortcomings. Shally Steckerl, who heads up research for the staffing department at software giant Microsoft, says recruiting applications can stumble on issues such as the legality of asking candidates certain questions about their background, translating salary information into the local currency and handling different address conventions in their data input fields.

    “The application should be able to flex” with differences around the globe, he says. “Some applications can’t flex.”

    To be fair, makers of HR technology systems face tough challenges. The field of human resources still lacks universal definitions for some basic metrics, including headcount and turnover. Compounding that problem is great variance around in the world in laws affecting employee management. Then there are different cultural beliefs that can run deep.

    Consultant Crispin says some parts of the world have fixed attitudes about which jobs are appropriate for a certain gender, race, ethnicity or age. Recruiters with such attitudes, he says, aren’t likely to take advantage of a cutting-edge recruiting application that slices and dices applicants’ experience, skills and attitudes. Instead, he says, they’ll use the tool only to fill out the application after they make the hire. “The ATS application then becomes an expensive Excel spreadsheet,” he says.

    The solution, in Crispin’s eyes, is not to customize the application to help search for candidate data not relevant to performance, but for the multinational companies to resolve the cultural gap between local approaches and international standards.

    As with physical journeys around the world, a little luck may be required when rolling out HR systems globally. Silverman, at least, is hoping for some good fortune as she and her colleagues try to smooth out the worldwide wrinkles at Travelport. “We’re crossing our fingers,” she says.

Workforce Management, October 9, 2006, pp. 29-32 — Subscribe Now!

Nadine West is a living, breathing rebuttal to predictions of a massive U.S. labor shortage in the near future.

    West is 73, sells homeowner and automobile insurance for a unit of financial services company First Horizon National Corp., and has no plans to retire anytime soon. What keeps West on the job is the sense of community she finds in her Memphis, Tennessee, office, as well as the satisfaction of making a difference.

    Most people know very little about insurance, says West, who has spent four decades in the industry. “I enjoy helping and leading them.”

    There are other people like West in her company, her industry and in the U.S. economy. They are part of the reason why the alleged lack of talent looming from the aging of America is more a bogeyman than a legitimate worry for many companies.

    Peter Cappelli, management professor at the University of Pennsylvania’s Wharton School, likens alarms about a talent famine to breathless warnings from information technology professionals that computer systems could fail catastrophically when clocks rolled over to January 1, 2000.

    In retrospect, of course, the Y2K hype was overblown. With that example in mind, the current sky-is-falling labor predictions could easily be called Gray2K.

    It is true that in 2014, some 78 million baby boomers will fall between the ages of 50 and 68. But partly because many of them will work beyond the age of 55, the U.S. labor force will continue to grow during the next eight years, according to government projections. Other factors helping to soften the blow of baby boomer retirements include immigration and the prospect that U.S. companies will send more work offshore.

    The real question surrounding the U.S. labor force in the next five to 10 years is where tightness in specific talent markets might emerge. Already some industries, occupations and geographies are showing signs of a squeeze.

    Companies should pay close attention to the talent trends affecting their firms or industries, Cappelli says. On the other hand, he says firms would be wise to tune out the doomsayers.

    “The claim that there’s something about the demographics of the United States that will cause a labor shortage is wrong,” he says.

    The claim may be wrong, but Gray2K is everywhere. Consultants and vendors of HR technology frequently forecast a desperate battle over employees as they pitch their products or services.

    “Everyone is preparing for the impending war for talent as our population ages and people begin leaving the job market,” reads a recent promotional piece from recruiting software firm iCIMS.

Crisis mode
    Among the loudest voices sounding a Gray2K labor shortage alarm is consultant and author Roger Herman, who preached the importance of keeping good employees during the economic downturn in 1990. In 2003, he co-authored a book titled Impending Crisis: Too Many Jobs, Too Few People.

    The book’s cover jacket displays a chart purporting to show a shortage of 10 million workers by 2010. That figure comes from the difference between what the U.S. Bureau of Labor Statistics projected as the civilian labor force in 2010 and the number of jobs it estimated for that year.

    The BLS’ most recent projections show a smaller difference of 2.4 million between the two figures for 2014. In any event, the bureau explicitly warns that these figures are not strictly comparable. Norm Saunders, coordinator for research projects in the BLS’ projections program, says one problem in mixing the two data sets is that people can hold more than one job. But he’s not surprised the figures have been misrepresented.

    “If it’s a good sound bite, some people will run with it,” he says.

    Saunders says shortages in the U.S. labor market tend to be short-term and isolated, thanks to the laws of supply and demand: Wages rise in the area lacking enough workers, drawing new people into the field. He also says the overall labor force can increase beyond the BLS’ projections. A jump in wages could reverse a decline in the share of men in the workforce as well as accelerate the rate at which women are joining. Saunders also says immigration, which is assumed in U.S. Census Bureau population projections to be 900,000 documented immigrants arriving in the states each year, could be higher.

    A larger percentage of older people have been working than in the past, with the trend likely to continue. Plus, Saunders adds, work at U.S. organizations in many cases can be sent to other countries. That’s been happening in growing numbers of service fields, including banking, software and travel services.

    As a result, Saunders has a dim view of any looming wide-scale lack of talent.

    “My sense is, it doesn’t exist,” he says. “There are lots of different ways for the supply to grow to meet the demand.”

    Herman concedes that the bureau’s projections for the labor force and jobs are “apples and oranges.” Yet, he says, the numbers nonetheless point to trouble ahead in hiring.

    “We don’t know if the shortage is 10 million or 14 million or 8 million,” Herman says. “The key is, we’re going to have a multi­million-person shortage of skilled workers.”

Science, health care worries
    Many in corporate America share the labor shortage concern. Semiconductor giant Intel believes a U.S. labor shortage is coming, especially in the sciences. It’s particularly true for people with master’s degrees and doctorates in fields such as physics, chemistry and engineering, says Robin Renowden, who heads Intel’s global college recruiting activities.

    Attitude is part of the problem, he says. Americans of college age aren’t willing to stick it out to get advanced degrees in the sciences even if good jobs await them a decade later, Renowden says. “Nobody’s got that long-term focus anymore,” he says.

    Worldwide, the 100,000-employee company in recent years has been hiring 2,500 to 3,000 people a year directly out of colleges and universities. About 60 percent of those hires have earned advanced degrees, and roughly 50 percent of the hires are in the United States. Despite a move to cut 1,000 management positions, Intel expects to continue hiring newly minted doctorates and master’s and bachelor’s degree holders in the years ahead. With the advanced-degree holders in particular, Intel wants experts to do such things as improve manufacturing methods and create advanced computer chip designs.

    But Renowden says the company worries about both a lack of highly trained American scientists and fierce competition for a limited number of H-1B guest worker visas, which can be used to import technical talent for up to six years. The annual cap on H-1B visas is 65,000, down from a high of 195,000 earlier this decade. The H-1B program makes an exception each year for up to 20,000 foreigners with advanced degrees from U.S. universities.

    About a third of those receiving doctorates in science and engineering from U.S. universities are foreigners. But stricter immigration rules instituted after the terrorist attacks of September 11, 2001, combined with greater opportunities elsewhere, may be making the U.S. less attractive to top students around the globe. A report this year from the National Science Foundation said that while the United States remains the predominant destination for foreign students, the U.S. share of foreign students has declined in recent years.

    Some labor advocates argue for limited use of foreign scientists in the U.S. workforce. According to this view, U.S. students would have a greater interest in physics and computer science doctorates if fewer foreign scientists were admitted to the country and wages rose in the field.

    Not everyone agrees there’s a scarcity of scientists and engineers in America, or that one threatens. Donna Fossum, senior policy analyst at the Rand Corp. think tank, co-wrote a 2004 report finding no evidence of shortages of scientific, technical, engineering and mathematics personnel in the U.S. workforce since 1990. And future shortages appear unlikely as well, according to the report.

    Fossum still does not see signs that a shortage of technical talent is looming. Assessing the nation’s supply of science and technical workers is complicated, she says. New trends suddenly emerge, such as the growing importance of encryption and other security systems.

    “We’ve got a quickly moving target,” Fossum says.

    Health care, by contrast, seems certain to be hit by labor pains. By 2020, 44 states and the District of Columbia are expected to have shortages of registered nurses, according to a 2002 report by the federal Health Resources and Services Administration. For many health care organizations, the crunch has already arrived. An April report from the American Hospital Association trade group found that 118,000 registered nurses were needed to fill vacancies at U.S. hospitals.

    Physical therapists, occupational therapists and pharmacists also are in short supply, says Kevin Scanlan, chief executive of the Metropolitan Chicago Healthcare Council, a group that represents about 140 hospitals and health care organizations in the Chicago area. The aging of America amounts to a “double whammy” on the health care workforce, Scanlan says. That workforce is growing older and retiring just as the demand for hospital, clinic and home care services is taking off thanks to baby boomers’ increasing health needs.

    There are some 4,000 registered nurses graduating annually in Illinois, a number that must climb to 6,000 by 2010, Scanlan says. Chicago-area health care leaders are working to increase the capacity of nursing schools and drum up interest among K-12 students. But Scanlan is far from certain that a labor crisis will be averted.

    “I see our needs as potentially the greatest in any workforce segment that I’m aware of,” he says.

Skilled manufacturing
    Advanced manufacturing is another field facing a talent squeeze. A 2005 survey of 400 U.S. tool-and-die and machining companies found that skilled job openings equaled 4.7 percent of total skilled shop employment. The National Tooling and Machining Association trade group and machine tool maker Charmilles Technologies, a unit of Switzerland-based AgieCharmilles, published the report.

    Harry Moser, president of AgieCharmilles’ U.S. operations, says the key battle for U.S. manufacturers is to convince young people that they can earn as much, if not more, as a machinist or mechanic as they can as an office worker armed with a liberal arts bachelor’s degree. The best preparation for skilled manufacturing work, he says, is an associate’s degree with an apprenticeship or other technical training.

    “It’s a question of perception,” he says. “A technical A.S. (associate’s degree in science) and apprenticeship may not give you the prestige of a four-year degree, but will probably give you a better outcome.”

    Jay Doherty, a consultant with Mercer Human Resource Consulting, says a variety of industries that rely on experienced or credentialed professionals could be facing shortages during the next decade. It takes years, he says, for workers to get prepared and proficient in fields such as heavy manufacturing, mining, and oil and gas. “For those industries, it is a real concern,” he says. “You can’t just turn the hiring spigot on and off.”

    Mercer research has found that 20 percent to 25 percent of a key workforce in the oil and gas industry—the roughly 2 million people worldwide holding jobs in refining, exploration and production—are or very soon will be eligible for retirement.

    But those graying geologists and petroleum engineers aren’t necessarily going to quit suddenly and head for the golf course. At Baker Hughes, which sells drill bits, valves and other products and services to oil and gas firms, a substantial portion of the company’s 15,000 U.S. employees are of the baby boom generation, says Jim Wilhite, director of global human resources.

    “I just don’t see a lot of people retiring,” he says.

    Wilhite notices a similar trend in the broader oil and gas field. It has to do with accelerating exploration and extraction efforts, driven partly by China’s growing thirst for oil.

    “There’s a lot of excitement in the industry right now,” he says.

    With a current headcount of about 32,500 people worldwide, Baker Hughes has ambitious hiring plans. The Houston-based company aims to add 4,000 to 5,000 employees annually during the next several years. About 35 percent of the new hires will occur in the United States.

    It’s challenging to find enough U.S. workers with expertise in fields such as mechanical, petroleum and chemical engineering, Wilhite says. Still, the company has been hitting its U.S. hiring targets thanks to partnerships with schools such as the Colorado School of Mines and Texas A&M.

    A big question mark for the oil and gas industry is whether productivity gains in the field will continue at their historical level of 3 percent to 4 percent annually, Mercer’s Doherty says. “That probably is the key for some of these companies in terms of whether they’ll face a severe labor shortage in the next five years,” he says.

    Whether companies will face labor shortages in coming years may turn on how well they cater to older workers. By 2014, more than 20 percent of workers will be 55 or older, according to the U.S. Labor Department. That compares with 16 percent in 2004. Some firms are already taking steps to appeal to the graying set. First Horizon, for example, offers various flexible work options, including the possibility of working 20 to 32 hours a week without losing full-time benefits.

    Employee West appreciated the company’s flexibility about a year and a half ago, when heart bypass surgery kept her away from work for three and a half months. When you’re older, West says, “you don’t know when your health will be a problem.” Twenty-one percent of First Horizon’s 12,491 employees are over 50, and the Memphis-based firm earned a spot on advocacy group AARP’s list of the top 10 employers for workers over 50 in 2005 and 2006.

    Those who warn of a coming talent war often call for steps that seem to be sound no matter what the state of the labor market: become an employer of choice; use technology for better recruiting, employee performance management and succession planning; increase training budgets.

    But in Cappelli’s view, company officials who sound the alarm about an epic, demographically driven labor shortage are likely to suffer in the long run, as will their pet initiatives.

    “I’m not sure the IT people, after Y2K, benefited a lot from their arguing that ‘Oh my gosh, the sky is falling!’ ” Cappelli says. “They lost a fair amount of credibility on Y2K.”

Workforce Management, October 9, 2006, p. 1, 22-26 — Subscribe Now!

People age 55 and up are staying in the workforce in greater numbers than they have in the past, a trend that’s expected to continue. As a result, older Americans promise to help the U.S. economy make up for the relatively small “baby bust” generation. They also offer individual companies the prospect of wisdom and expertise—if employers can accommodate their goals.

    The aging of the 78 million people who compose the baby boom generation is a big demographic shift that has some observers warning of a labor shortage. By 2014, baby boomers will be between the ages of 50 and 68. Despite this huge part of the population heading into their golden years, the U.S. Department of Labor expects the U.S. workforce to keep growing through 2014.

    About 31 percent of those 55 and older were in the workforce in 1984. That number climbed to 36 percent in 2004, and the figure will jump to 41 percent in 2014, according to the Labor Department’s Bureau of Labor Statistics.

    The actual number could be higher still, says Norm Saunders, coordinator for research projects in the bureau’s projections program. “We’re going to see a lot of competent older workers who want to work,” he says.

    By 2014, more than 1 in 5 workers will be 55 or older, according to the BLS. That compares with 16 percent in 2004. AARP research from 2003 found that more than two-thirds of 50- to 70-year-old workers said they plan to work into their retirement years or never retire.

    On the other hand, a recent study from consulting firm McKinsey & Co. suggests people may overestimate their staying power. According to the report, 40 percent of retirees were forced to stop working earlier than they had planned, largely because of health problems or job loss. And while almost half of all baby boomers expect to work past age 65, just 13 percent of retirees have actually done so, the study says.

    Whether or not they reach their goals, older workers seem driven in part by a desire to make a difference. A study last year from think tank Civic Ventures and the MetLife Foundation found that half of Americans age 50 to 70 want jobs that contribute to the greater good now and in retirement.

    Another reason people are working longer is financial need. A 2003 report from the Economic Policy Institute, a Washington, D.C., think tank, said the loss of retirement wealth and the loss of access to retiree health insurance keep older workers in the labor force longer than before.

    Boomers may need to rebuild nest eggs lost in the dot-com crash, but to lure them, companies may have to change. A December report from the Families and Work Institute research group concluded that older workers are more likely to continue working when they have more control over their work hours, workplace flexibility, job autonomy and learning opportunities.

    If they can win over older workers, employers stand to win, according to an AARP-commissioned report from last year. “Replacing an experienced worker of any age can cost 50 percent or more of the individual’s annual salary in turnover-related costs, with increased costs for jobs requiring specialized skills, advanced training or extensive experience—qualifications often possessed by 50-plus workers,” the report says.

Workforce Management, October 9, 2006, p. 26 — Subscribe Now!

A few years ago, IBM’s system for grooming future executives had a bug. The computer industry giant found that at times, people nominated into its “executive resources” program were languishing there for more than five years without landing promotions.

So last year, Big Blue put a limit on the leadership development program, which involves training and career consultation. Only those individuals deemed likely to move into the executive ranks within 18 months are now eligible, says Karen Calo, IBM’s vice president of global talent.

Calo says some feelings may have been bruised when individuals were removed from the program. But IBM is working on another effort to focus attention and resources on a broader swath of the company’s standout performers.

“These are really good people we don’t want to lose,” Calo says.

The evolution of IBM’s programs for rising stars illustrates a broader trend in leadership development. Efforts to identify and nurture “high potential” leaders can go awry, analysts say, in part because organizations can put that label on too many employees or miss good ones. At the same time, giving lots of corporate love to “high-pos” can turn off high performers not included in the programs and cause them to seek work elsewhere.

Striking the right balance when it comes to recognizing potential executives may be hard, but it’s vital, says leadership consultant Cara Capretta Raymond. Shrinking tenure among chief executives and a likely mass exodus of leaders in the near future mean companies should start to groom individuals ages 30 and younger for the CEO slot, says Capretta Raymond, vice president of strategy and intellectual property at Korn/Ferry International’s leadership development solutions unit.

“Who are your next CEOs?” Capretta Raymond asked in a presentation earlier this year. “About 50 percent of our top leaders are going to retire in the next five years.”

Mixed outcomes
High-potential leader programs can take a variety of shapes, and often include mentoring, competency development and rotating stints in a company’s key divisions. Such programs have grown in popularity over the past dozen years or so at Fortune 500 companies, says Jeff Cohn, managing partner at consulting firm Bench Strength Advisors. Factors behind their rise, he says, include companies’ desire to rely less on external hires, which often fail to fit in, and a growing body of research showing that leadership development can boost the bottom line.

The results of high-potential leader programs have been mixed, Cohn says. “Some did it right,” he says, “and a lot of them did it wrong.”

Cohn says companies can commit sins of omission and commission with high-po programs. It’s easy to leave out promising individuals because organizations often lack consistent ways of assessing leadership talent, he says. At the same time, Cohn says, if companies are tagging 10 percent or more of their managers as high-potential leaders, they are almost certainly wasting resources. “Once the percentage gets too high, you lose focus and squander capital,” he says. Capretta Raymond suggests narrowing high-potential programs down to 2 percent to 3 percent of rising stars.

IBM’s recent move is along these lines. The 330,000-employee company, which has about 5,000 leaders with titles of director and above, has relied on executives to nominate people into its executive resources program. But it became clear that sometimes solid performers were nominated as a reward rather than because of their legitimate near-term potential to become IBM executives, Calo says. The new 18-month rule is meant to help the executives make better choices. “This isn’t a science,” she says. “It’s a bit of an art.”

Some companies are steering clear of rising-star terminology altogether. Internet company Yahoo doesn’t call anyone a “high-po,” says Libby Sartain, the firm’s senior vice president of human resources. Sartain presents a scenario: You’ve found out that a colleague has been labeled high-potential: “Think of how you’d feel,” she says. “You’re going, ‘If he’s a high-po, and I don’t know I’m a high-po, does that mean I’m a low-po?’ “

What’s more, the definition of who would truly be high-potential leaders in a company can change dramatically based on the organization’s business goals, Sartain says. If an Internet company suddenly makes a foray into telecommunications, employees with a background in that industry become more valuable, she says.

Even so, Yahoo pays special attention to its stars. A few years ago, it conducted an exercise to determine who was crucial to the company. Co-founder Jerry Yang characterized that pool of talent as the people Yahoo wanted to “build a moat” around so they wouldn’t leave.

Sartain and crew adopted that language, and the Build a Moat program focuses on training and career development of select employees. The company also identifies people with leadership potential through performance reviews and an annual “talent calibration” session held by senior executives.

But when it comes to an executive training program offered by the firm, Yahoo again has an egalitarian streak. The program’s classes are open not only to individuals earmarked for possible advancement, but to other employees as well.

“High-pros” vs. “high-pos”
A new training initiative at consumer products company SC Johnson also looks beyond just budding leaders. SC Johnson, which makes products including Ziploc storage bags and Windex glass cleaner, launched a leadership skills program last year for the 300 or so “senior leaders” just below the top executive level. The general managers, product division heads and other participants include both individuals identified by the company as high-potentials as well as those without that designation.

Sherry Johnson Metz, SC Johnson’s director of global leadership development, says the firm thought it was important that all senior leaders get training in areas such as strategic and global thinking. To focus exclusively on high-potentials would be a mistake, she suggests.

“We want the talent at all levels of leadership to be high-performing,” Johnson Metz says. “Not everyone is going to be moving up in the organization. They may not want to.”

IBM also is looking to expand the range of standout employees who get particular attention. The company already has a mentorship program for budding leaders called NextGen, and a career-development program for up-and-coming technical employees who are headed to positions such as “IBM fellow” or “IBM distinguished engineer.”

The Top Talent program in the works might include both business managers and technical employees, Calo says. It is being designed for people who are high-performing but who are not ready to be considered for an executive post in the near term.

Such efforts for great performers are wise, Capretta Raymond says. Companies with high-potential programs can neglect to create development plans for what she dubs “high-pros,” or “high professionals.” These are superior employees who may not be seen as future executives but are nonetheless crucial to a company. After all, the loss of a critical engineer or product manager can seriously set back a firm.

At the same time, Capretta Raymond says it is critical for organizations to pinpoint people who are CEO material and begin grooming them at a young age. She cites research that says CEO tenure is down to a median of five years and aging executives are going to be heading for the golf course in droves soon, leaving many top jobs open.

Ronan Knox, executive vice president of learning consultancy the Forum Corp., says programs for high-potentials should tie directly to a firm’s strategy, emphasize teamwork among rising stars and actively involve senior executives as both champions and coaches. In addition, the initiatives should shake up old beliefs and habits. Knox helped SC Johnson with its new program, which fostered fresh perspectives among leaders by having them work on projects in a Racine, Wisconsin, homeless shelter.

“What we don’t want is for people to say, ‘That which has brought me this far will carry me forward,’ ” he says.

Another key is plain-old patience, says Johnson Metz at SC Johnson. She has seen companies sour quickly on a high-potential when the individual ran into trouble in a new role. “The whole idea of stretch assignments is to learn and grow. Sometimes learning doesn’t look like 100 percent success,” she says.

Companies also can be tripped up as they decide whether or how to communicate high-potential status. Consultant Cohn says that making it public throughout a company who is in a program for up-and-comers is likely to breed internal competition. That may be right for firms where sparring is a healthy part of the corporate culture, he says, but wrong for more collaborative companies. “There is no one-size-fits-all,” he says.

On the surface, at least, the notion of a high-potential leader runs counter to one trend in management: the recognition that a heroic, decisive CEO may be less effective for a company than the overall leadership skills of the firm, including not only the CEO but also top lieutenants and even rank-and-file workers.

Cohn, though, says well-crafted programs for rising stars can shape people for this new era of leadership, teaching skills such as persuasion. “The right high-po program is always a good thing,” he says.

You don’t act polite when you don’t want to. You are more relaxed than strict about finishing things on time. You have a lot of confidence in your ability to succeed.

    These are among the statements job candidates are asked to respond to in a personality test created by software company Unicru, which recently was bought by HR technology firm Kronos.

    The test, which is part of a broader applicant assessment that considers data such as educational background, is meant to uncover work-related personality traits such as conscientiousness and agreeableness.

    Advocates of personality testing say such assessments offer useful and legitimate insights into how well people might fit into an organization. Critics, though, question personality tests’ effectiveness and suggest they can harm job candidates.

    One thing seems clear: Personality assessment is likely to become a more prominent tool for employers.

    “It will be used more and more, because new-hire turnover is very expensive,” says workforce management consultant Joyce Gioia. “It just makes sense to hire right the first time.”

    About 35 percent of U.S. organizations use personality tests as part of their hiring process, according to the Association of Test Publishers, a trade group for makers of tests including education and employment assessments.

    Companies paying for personality tests may be getting a raw deal, skeptics suggest. Scott Lilienfeld, associate professor of psychology at Emory University in Atlanta, says the testing industry has not been as open to public scrutiny as it should be, raising questions about the validity of personality assessments. “Most tests in the industry haven’t been subjected to adequate peer review,” he says. “That’s troubling.”

    Lilienfeld says tests that seek to gauge a person’s integrity can wind up harming employers by screening out quality candidates who are willing to ask tough questions. “They tend to have a high false-positive rate,” he says.

    Labor attorney Brad Seligman says false positives are a serious issue. “It can create an underclass of people who can’t get employed,” he says. “They just don’t test well.”

    Personality tests sometimes result in false positives, but so do other selection tools such as interviews, says David Arnold, general counsel for the Association of Test Publishers. Arnold doubts employers would use the tests if they were missing out on large numbers of quality candidates. He also says the validity of personality tests has been shown in numerous studies.

    Kronos said Unicru’s selection methodology has been reviewed in a number of peer-reviewed journals and at scientific meetings and research universities.

    Integrity tests differ from other psychological tests that ask invasive questions about sexuality or political views, Arnold says. And there are few legal worries regarding the tests, he says.

    Meanwhile, Arnold says, personality tests that focus on honesty and integrity can play a major role in deterring employee theft and fostering cultural fit among new hires ranging from entry-level workers to experienced executives.

    “Bottom line, these tests do a good job of identifying people who are conscientious and don’t engage in counterproductive actions,” he says.

Workforce Management, August 14, 2006, p. 29 —Subscribe Now!

 

A debate is brewing about the economic insecurity faced by American workers in today’s global economy, a discussion that so far includes economists, activists and some politicians. But one group with a big stake in the matter has been largely silent: business leaders. During the past few years, corporations have remained relatively quiet as others have begun to discuss the erosion of the traditional compact between workers and employers and grapple with ideas about how to repair or replace it.

    Few if any observers call for a return to the days when workers gave loyal service to firms in exchange for a promise of lifetime employment and comprehensive health and retirement benefits. That era may be over, but employers risk a great deal if they fail to engage in the public conversation of what should replace that earlier promise or at least address financial anxiety among their own workers, analysts say.

    On the one hand, companies’ reputations could take a hit just as the labor market threatens to tighten and places a premium on attracting talent. More broadly, anger about economic inequality may trigger new regulations on firms. And fears of offshoring could translate into protectionist laws that hurt the economy overall and sharply limit companies’ growth, says Brad Jensen, an economist with the Institute for International Economics.

    Jensen, one of a number of economists calling for a stronger safety net for people displaced from their jobs, suggests business leaders have “fallen down a little” when it comes to figuring out what to do about those who lose big in the global economy.

    “There’s a lot of good from having an open trade system, but people are anxious and scared,” he says. “The protectionist sentiment is palpable here in Washington. Businesses should be concerned by that.”

    John Castellani, president of the industry group the Business Roundtable, rejects the idea that U.S. companies have remained aloof regarding Americans’ economic fears. He says corporate leaders haven’t spoken out about “economic insecurity” per se, instead focusing on the need for American workers to become lifelong learners and for the country as a whole to remain competitive. Those steps will be critical for Americans to enjoy any sort of financial security in a fast-paced global economy, he says.

    “You can wish to slow it down all you want,” says Castellani, whose association is made up of executives at major U.S. companies. “But the rest of the world isn’t slowing down.”

    Perhaps not, but the global economy is exposing large numbers of Americans to painful economic dislocations. In a study published by the Institute for International Economics last fall, Jensen and co-author Lori Kletzer found that many U.S. workers are in services industries that can be traded internationally, such as data processing and insurance. They also discovered that these workers lose their jobs at a higher rate than workers overall do, and that job loss for them is costly.

    On average, the authors report, full-time workers in tradable services fields who are displaced and then return to full-time work suffer a 21 percent drop in earnings.

    That finding comes amid other data suggesting those at the top of the corporate heap are winning big while most employees tread water. Meanwhile, workers face the decline of employee-sponsored health and retirement benefits. Even outplacement services, which emerged in the 1980s to help cushion corporate layoffs, have shrunk. Ten years ago, companies often hired outplacement firms for as long as it took for every laid-off worker to find a new position, says John Challenger, CEO of outplacement provider Challenger, Gray & Christmas. Today, firms typically cut off outplacement services after three months.

    Most workers can find new jobs within that window, Challenger says. “But it means the people who have the most difficult time—the bottom 20 percent—are abandoned,” he says.

Concern widespread
    Amid a growing economy, layoff fears seem to have eased in recent months. Still, the overall trends have left Americans anxious and unhappy with businesses. According to a March report by retirement services firm the Principal Financial Group, 73 percent of Americans surveyed agreed completely or somewhat with the statement “I am very concerned about my long-term financial future.” And in a study published last fall by the AFL-CIO, 64 percent of adults surveyed said companies fall very short or somewhat short on being loyal to long-term employees, up from 57 percent in 2002.

    There’s strong interest in laws to bolster economic security, according to the AFL-CIO study. Eighty-five percent of those surveyed rated providing incentives for companies to keep jobs in America as a priority, and 73 percent said establishing a national health care system should be the top or a high priority.

    Politicians have begun debating these issues in the past few years. In recent months, economists from different parts of the political spectrum have highlighted one possible reform: a stronger social safety net.

    Princeton University’s Alan Blinder, who served on President Clinton’s Council of Economic Advisers, argued in the March-April edition of Foreign Affairs magazine that the United States “may have to repair and thicken the tattered safety net that supports workers who fall off the labor-market trapeze—improving programs ranging from unemployment insurance to job retraining, health insur­ance, pensions, and right down to public assistance.”

    Jensen, whose institute is known for its staunch defense of free trade, also argues for a “less-porous” safety net, which could mean extending existing Trade Adjustment Assistance programs to more workers.

    Louis Uchitelle, author of a new book, The Disposable American: Layoffs and Their Consequences, argues the true number of American full-time workers forced out of their jobs each year is about 7 percent, rather than the official annual layoff statistic of about 4 percent.

    Despite the scale of layoffs and a lack of quality jobs for people to move into, Americans largely blame themselves when they get pink slips, Uchitelle says. He’s not surprised that corporate management has remained quiet in the discussion about economic security.

    “Until we start talking about this as a social issue, companies don’t have to enter the debate,” Uchitelle says.

    Sanford Jacoby, a professor at UCLA’s Anderson School of Management, sees other factors behind the business community’s relative silence. Compared with the past, that community is more fractured along fault lines such as an international vs. domestic focus, Jacoby says. What’s more, he says, today’s crop of business leaders is missing the sort of public spokesman on social issues embodied by Marion Folsom, the Eastman Kodak treasurer who helped draft the Social Security Act during the Great Depression.

Too much investor focus?
    Jacoby traces much of the current climate back to a corporate focus on pleasing shareholders rather than other stakeholders, such as customers and employees.

    “It’s not only shifted to shareholders,” he says, “everyone else has fallen off the map.”

    Not all companies are taking a shareholder-only route. Oil refiner Valero Energy, for instance, says it has never had a layoff despite a downturn in the refining business in the late 1990s and multiple acquisitions. The 22,000-person company has fired some employees for poor performance. “But at Valero, as long as you do a good job, you know you will have a job,” says company spokeswoman Mary Rose Brown.

    Valero offers both a 401(k) and a traditional pension plan. And the company, which saw net income jump 59 percent in the first quarter of this year to $849 million, makes stock options available to all exempt employees and bonuses available to all workers.” “If executives get a bonus, everyone gets a bonus,” Brown says.

    Outrage about huge CEO pay packages is generating shareholder calls for reform, says Amy Lyman, co-founder of the Great Place to Work Institute, which compiles the annual list of Fortune’s 100 Best Companies to Work For in America. The concern, she says, is CEOs are being paid more than they are worth when their contributions are considered relative to those of everyone else.

    “Smart boards are going to see investor anger and start paying attention,” she says.

    Among the firms under fire for hefty CEO compensation is retailer Home Depot. Its chief, Robert Nardelli, took in $37.9 million in compensation in the last fiscal year, including the value of stock options granted to him. A recent shareholder proposal calling for an advisory vote by stockholders on the firm’s executive compensation practices failed to pass, but garnered 40 percent of the votes cast.

    As for the broader public debate about Americans’ economic worries, some of the loudest business voices have decried possible trade barriers. Business leaders such as Microsoft’s Bill Gates have called for better education and looser immigration policies to improve America’s ability to compete. In addition, the Business Roundtable’s Castellani cites executives’ efforts to make the U.S. health care system more efficient and to provide portable retirement benefits—like 401(k) plans—that reflect a working world in which people tend to have multiple employers during the course of their careers.

    Business leaders have good reason to address the financial anxiety of average Americans, argues economist Jared Bernstein, author of the new book All Together Now: Common Sense for a Fair Economy. Americans would be better, more reliable consumers if they felt less vulnerable economically, he says. In Bernstein’s view, this could be done without closing off free trade, but instead by creating policies that pool risks rather than shift them to individuals.

    Today’s businesses could then help their own bottom lines by helping to rewrite, and not erase, the social contract.

    “In other eras, corporate titans recognized that a more equitable distribution of growth, more opportunity and greater economic stability was very much in their interest,” Bernstein says.

Workforce Management, July 31, 2006, p. 38-39 — Subscribe Now!

Nancy Hemry swears she has nothing against vendors of workforce management software.

As director of human resource management systems at tech firm Qualcomm, Hemry helped install a PeopleSoft system at her firm in 1997 and is now looking at vendors for a couple of different products. But for about eight years, she and her staff have almost exclusively built, rather than bought, the company’s HR software.

Centered on a Web portal called MySource, Qualcomm’s systems cover areas such as employee profiles, pay stubs, benefits administration, open enrollment, performance evaluations, 360-degree appraisals and employee training. Most recently, Hemry’s team of nearly two dozen people added Web-based applications for recruiting and new-employee orientation.

The home-brewed approach makes the San Diego specialist in wireless communications an oddity among large firms. It also flies in the face of conventional wisdom that custom systems result in snarls, cost too much and quickly become outmoded. Jason Averbook, chief executive of consulting firm Knowledge Infusion, recommends that firms limit tailor-made applications to unique business processes, such as a company-specific incentive program.

“Spend your dollars there, as opposed to on the whole enchilada,” he says.

But Qualcomm’s applications garner praise from both company employees and outside observers. What’s more, Hemry is part of a firm with a maverick streak, quite willing to chart a different course in the realm of technology.

“In general, we always did try to look at what was in the market,” Hemry says. “It just made a lot more sense to build.”

Done waiting for Peoplesoft
Qualcomm makes software and other products that underpin mobile phone systems. Founded in 1985, it raked in revenue of nearly $5.7 billion for the year ended September 25, placing the company at No. 381 on the Fortune 500, and employs about 9,300 people worldwide. About 15 years ago, the company disrupted the telecommunications industry’s plans to settle on a particular wireless technology by introducing its rival code-division multiple access (CDMA) technology. CDMA has since become a major standard in the U.S., and is now being adopted abroad in countries including China.

That willingness to buck the trend helps explain Qualcomm’s homegrown HR technology, says Gary Morlock, a manager in the company’s HRMS group. “The culture here is one of innovation and taking new approaches,” he says. “There’s support for taking risks that could pay big dividends.”

Among the dividends, the company says, is greater productivity for managers. In an internal survey, one Qualcomm manager estimated that MySource trimmed the time needed for each merit review cycle by 80 hours. Given that the reviews are held twice a year, the savings amount to a month per year per manager that can be directed elsewhere, the company says.

Qualcomm’s bet on its own HR system has roots in the company’s rapid growth in the late 1990s. At that time, the company was adding 100 hires a week, Hemry recalls. It hoped to ease its paperwork burden by turning to PeopleSoft, which had outlined a plan to offer Web-based self-service applications. But the software company was too slow, Hemry says. “We bought PeopleSoft for the promise of the Web,” she says. “We quickly realized that we needed a solution right away.”

So Qualcomm built its portal for employee and manager self-service. And it did so in a way not common among software vendors, who tend to focus on the needs of HR administrators, Morlock says. “We built it from the employee’s perspective,” he notes. As a result, he says, a wide variety of information of use or interest to employees can be snagged from the site, including a to-do list, benefits enrollment, pay stubs and links to company policies. Employees can even pick out what gift they’d like when their anniversary with the company comes around.

In addition, Hemry’s team is working to let employees take content of their choosing from My­Source to a personalized intranet page, where they can view such things as company news, important alerts and stock quotes.

Off the upgrade treadmill
About 22 people are devoted to Qualcomm’s HR software systems. Of this group, dubbed the “Dream Team” by managers, half are assigned to the HR department and half to the information technology department.

The software developers from IT, though, are paid out of the HR budget. A staff of this size might sound wasteful, but Hemry says that even if Qualcomm used external vendors, a number of those employees would be needed to run or monitor third-party systems. In addition, after completely unhooking itself from applications including PeopleSoft about four years ago, the company has avoided upgrade charges and annual maintenance fees that can reach into the millions, she says.

Qualcomm also has skipped the major integration hassles that can accompany new versions of business software. “This has freed us up from the treadmill of upgrades and patches,” Morlock says. What’s more, the company can concentrate on exactly the features it seeks when it wants them, says Pradnya Powale, manager in the company’s IT department. “This just gives us the agility to do things on our time, based on our priorities,” she says.

In the aftermath of the wildfires that crippled the San Diego area in 2003, for example, Qualcomm added a mobile communications feature. Managers can now access data such as employees’ home numbers and emergency contact information over cell phones. The MySource eRecruiting application has features including candidate search, candidate tracking, new-hire authorizations and electronic offer letters. The onboarding section allows new employees to take care of benefits enrollment, acknowledge policies and download forms such as W-4s.

There also have been unforeseen benefits from My­Source. Qualcomm’s telecommunications group came to Hemry and asked whether information about laptops and cell phones assigned to employees could be tracked on the portal. No problem, she said. And a nice payoff ensued. Hemry says the company saved about $500,000 simply by turning off mobile phone services that weren’t needed.

Homegrown pros and cons
Qualcomm isn’t alone in cooking up its own workforce management applications. Computer chip maker Intel is among the companies that use at least some homegrown HR technology, having created learning management software. Travel and real estate services conglomerate Cendant has also done some of its own HR software coding.

Jodi Starkman, director at human resources consulting firm ORC Worldwide, leads a group of HR and technology managers from about 40 Fortune 500 companies who meet periodically. She says a handful of these companies have opted to build some homegrown systems rather than buy the software, lease it or outsource the technology .

There can be sound reasons to do it yourself, Starkman suggests. When it comes to employee and manager self-service applications, products from major vendors have not been ideal, she says. They “have not really been as easy to use or as intuitive as they could be,” she says. “Pro­gress is being made, but in many cases it is still not where it needs to be.” A custom-developed application, in contrast, may be more user-centered in design and meet specific business rule requirements of the company, she says.

Cendant has used HR technology from vendor Lawson Software, but customized Lawson’s product, says Freddye Silverman, vice president of human resource technology solutions at Cendant. For example, Cendant created its own user-interface system for inputting data. The changes partly reflected the needs of a company that at its peak housed 21 different business units, Silverman says. “We made it do what we needed it to do,” she says.

Cendant is in the process of breaking into four different companies, and each is establishing an Oracle-based HR system, Silverman says. She is skeptical of Qualcomm’s highly homegrown approach, arguing that it requires maintaining a staff savvy in both HR issues and technology.

“I can’t imagine that they wouldn’t run into problems,” she says.

By making virtually all its HR tech in house, Qualcomm is taking an ever-more lonely path. Just 10 percent of the Fortune 500 choose to build a significant amount of their workforce management software these days, down from 25 percent five years ago and 70 percent 10 years ago, Knowledge Infusion’s Averbook estimates.

Averbook served as a product executive at PeopleSoft for eight years before founding Knowledge Infusion last year, and he agrees that PeopleSoft dragged its feet on self-service applications. He also says that the seemingly eternal cycle of upgrades—the “Habitrail wheel,” as he calls it—has been a real headache for customers of business software.

But the case for doing it yourself has weakened in recent years, he argues.

Homegrown, custom systems can be costly and frequently cause problems by establishing isolated sets of data, he says. At the same time, installing third-party software systems has gotten easier with new technology standards, and many of the upgrades can be accessed by simply flipping a switch in a configuration panel—rather than through a one-off coding job, Averbook says.

What’s more, the latest generation of HR applications delivered over the Web and paid for as a monthly subscription means customers can skip huge upfront licensing costs and gain clout over their technology suppliers, he says. “You can really work with the vendors these days to get them to build what you need, when you need it.”

 

The portal was designed for employee and manager self-service. A variety of informaiton is available on the site, including a to-do list, benefits enrollment, pay stubs and links to company policies. “We built it from the employee’s perspective.” –Gary Morlock, HRMS manager, Qualcomm

 

Companies selling workforce management software as a service, such as SuccessFactors, tout their ability to push out new features quickly, which can help companies adjust to shifting business conditions. SuccessFactors, for example, offers customers a new feature each month. The company likens the frequent enhancements to the way Google and Yahoo regularly offer vast numbers of users new options, such as making phone calls over the Internet.

Morlock, though, is skeptical of the new software services. “If you’re using a Web service like that, you’re still locked into their definition of the way you do business,” he says.

Tech-smart users
Qualcomm says it can enhance its system rapidly in response to its users. In fact, those users—many of whom are engineers—may be a secret weapon for Hemry’s team.

“The engineers are not shy about sharing their thoughts,” Morlock says.

A Web-based, easy-to-use HR portal is important at a large technology company, suggests Keri Wilcomb, senior public relations coordinator at Qualcomm. A majority of employees spend a lot of time at their computers, and they’d rather spend time tackling technical challenges than jumping through administrative HR hoops, she says.

A 10-year Qualcomm veteran, Wilcomb says My­Source has greatly streamlined once-irritating tasks. Among other things, she appreciates being able to assess her vacation balance and fill out weekly time cards through the site. “You can do it right on your screen, while you are on a call,” she says. And with so many chores handled automatically, the HR department is free to answer any outstanding questions effectively, she says.

Qualcomm will not disclose an overall cost-benefit analysis of the HR systems it built, but the company points to employee happiness with MySource. In a 2004 study, 99 percent of employees responding to a survey said they were satisfied or very satisfied with the system. The survey was e-mailed to all employees, and about 25 percent responded, Morlock says.

MySource has been a factor in earning the company a spot on Fortune magazine’s list of the “100 Best Companies to Work For” eight years in a row, Morlock says.

Sell the recipe?
More than once, Qualcomm has been asked whether it would sell its HR software. The company, which markets the Eudora e-mail software application, flirted with the idea a few years ago. Qualcomm even considered selling it as-is, without support services, as a streamlined approach, Morlock says. But company executives ultimately decided to focus on Qualcomm’s core businesses.

Hemry and Morlock admit their system isn’t perfect. For one thing, the software was written before the company ramped up its overseas presence. The team has to “retrofit” many of the applications, such as merit reviews, for operations abroad, Hemry says. In addition, the “Dream Team” created something approaching a software nightmare by “hard-coding” many HR policies that change periodically, such as benefits eligibility. When these sorts of rules are altered by the company or government regulations, Hemry and her group have to ferret out the various instances the rule may be written into the software. And they may have to fix it several times.

A newer approach to this problem is the use of a “rules engine,” which is a layer of software that allows business managers to change a policy once and have it automatically update all the necessary parts of the system. “I wish we would have had a rules engine in the very beginning,” Hemry says.

She’s now assessing various vendors of rules engine products, such as Haley Systems, Ilog and Fair Isaac. But don’t be surprised if Qualcomm once again decides there’s no place like home when it comes to creating the best HR technology. “Who knows,” Hemry says with a laugh. “Maybe it will be that we end up building it.”

Workforce Management, July 17, 2006, p. 32 —Subscribe Now!

HR tech vendor Softscape is betting big on its recent growth and the momentum behind increasingly popular talent management applications.

    The Wayland, Massachusetts-based firm announced recently that it plans to add 100 employees to its base of about 200 during the coming year. Softscape, which offers applications ranging from basic human resources information management to workforce planning and recruiting, also said it has hired five HR technology veterans to bolster its services division.

    The swelling ranks come in the wake of a 22 percent rise in annual revenue last year, says Christopher Faust, Softscape’s executive vice president of global strategy. And Faust says the company is looking forward to another year of significant growth in 2006.

    Softscape’s pace has fallen from 2004, when its annual revenue jumped by about 40 percent. But that’s partly a result of having a larger base of business against which to measure progress. The 10-year-old company is starting to rake in serious annual sales. “We’ll probably break $40 million this year,” Faust says.

    Along with vendors such as Taleo, Kenexa, Oracle and SAP, Softscape competes in the field of performance and talent management software. That’s the hottest part of the human capital management market, and it should grow 20 percent annually through 2009, says Forrester Research analyst Paul Hamerman. Softscape’s expansion goals reflect both the company’s own success and the vigor of the performance and talent management arena, Hamerman says.

    “It seems to be a strong player in the strategic segment of the market,” he says.

    That assessment echoes a report last year by research firm Gartner. In a study of 26 employee performance management software systems, Gartner analyst Jim Holincheck rated Softscape, SuccessFactors and Halogen Software as the only vendors meriting a “strong positive” rating, the highest classification.

    In the past several years, there have been several mergers and acquisitions among smaller vendors of talent management software. For potential customers, that raises questions about whether anyone will be around in the future to support and maintain software they adopt.

    Softscape has fielded some acquisition inquiries, according to Faust. But he says the firm is not shopping itself around. That’s in part because the company, unlike some of its competitors, was not financed by venture capital, Faust says. Companies that are backed by venture capital often must satisfy investors who are antsy for a flipped company and a quick return.

    “We’re here for the long term,” Faust says. “We don’t have investors that are looking for an exit strategy in the next 18 to 24 months.”

    Softscape serves both large organizations and midsize firms. It offers software in a number of ways, including as a service rented over the Internet. That approach, known as software as a service, is becoming more popular, thanks in part to lower upfront costs and faster upgrades.

    One of Softscape’s priorities is to expand its consulting operations. Faust says adopting new HR systems is almost invariably challenging, despite vendor claims to the contrary.

    “It’s not easy,” he says. “That’s why we have a services organization.”

    Despite its growth, Softscape may find it hard to get its voice heard, given all the vendors clamoring for business. “The space is getting pretty crowded,” Hamerman says.

Workforce Management, June 26, 2006, p. 18 —Subscribe Now!