Author: Ed Frauenheim

Structure of Work
1. There will be an increased focus on infrastructures—such as social networks and wikis—to support building strong relationships and collaboration.

2. The structure of work will become more adaptive, more informal and less focused on formal structure and static design solutions.

3. (tie) “Agile” organizations will have survived rampant aggregation and consolidation, and all organizations will be developing greater agility.

There will be greater demands on HR professionals to be businesspeople, with competencies in finding and retaining talent and in managing contract and freelance workers.

Organizations will have the ability to personalize the employee value proposition, helping employees find value in the work they do based on how they interact with the company. Some employees will be full time and long term. Others will be short term and part time.

Flexibility will no longer be optional. Employees will expect to utilize both short- and long-term flexibility options to meet their needs.

The most successful organizations will have a performance culture or meritocracy and will demand extraordinary effort from those who wish to achieve leadership positions.

8. Technological progress and the evolution of virtual networks and social vetting—that is, using networks such as LinkedIn to establish trust and research people’s backgrounds—will increase workplace flexibility. The trends will increase the use of emerging work structures that involve engaging professional and social networks through means such as “crowd sourcing”—when an organization invites the public to help solve a problem.

9. Organizations will work across internal and external boundaries, connecting and customizing internal actions to external customers and investors.

10. The talent market will look a lot more like eBay than Monster or Yahoo HotJobs. Candidates will put themselves up for bid for specific work, hours and duration and will name their minimum price, including benefits and perks. Employers will contract with each worker for what will be delivered.

Global Business
     1. Companies will need to balance the need for a unified global culture with local strategic and cultural differences and make core global values locally relevant and easily understandable for all employees.

2. (tie) The business world will continue to be flattened by globalization, changing demographics, the ubiquity of technology and regulatory compliance. Conducting business on this level playing field will require a change in mind-set, strategies and operations.

Operating in a global economy will create even more demand for leaders with global experience. This means it will be more important for key talent to have expatriate experience.

4. (tie) Companies will find their best people anywhere in the world, so successful workers will be willing to work outside their home country.

The concept of offshoring will cease to exist. Talent will exist globally and companies will go where the talent is. The purpose will not be to get the lowest-cost labor, but rather the highest-quality talent. This will be especially true with technical and creative workers.

Global companies will become more adept at managing a global enterprise on a 24/7 basis, with more management and technology systems in place to allow work to be easily passed around the world.

There will be a more progressive use of partnerships and alliances across functions, organizations and customers to build more collaborative and innovative ways to compete and win market share.

8. The hunt for inexpensive labor will continue, but the evolution of economies from low cost to high value will be quicker, and increasingly, a low-cost labor strategy will be more difficult to sustain.

9. Organizations will master the paradox of managing both large global companies and micro units at the local level. They will meet the challenge of being global even as they react to local conditions.

10. Organizations that leverage supply chain efficiencies on a continuous basis globally will flourish. Organizations embedded too deeply in any single geography will be at an increasing disadvantage.

Work and Society
1. Societies throughout the world will focus on work as a more important crucible for social progress and values. The memory of today’s financial crisis will leave a legacy of greater scrutiny and regulation of issues such as fairness, pay differentials and ethics, particularly in traditional Western economies.

2. Millennials will redefine work, doing work at home and taking home to work. This means blurring the boundaries of life and work. More workforce mobility will allow people to work from home and at different hours.

3. There will be more emphasis on collaboration and using technology to support it.

4. As the generation born around 1980 takes its place leading major global organizations, the formative events in those workers’ lives—such as aging parents, the terror attacks of September 11, 2001, and the 2008 financial crisis—will lead to greater C-suite emphasis on corporate social and environmental responsibility.

5. Flexibility will be an expectation of employees.

6. There will be a significant problem of retirement in the West. With people living longer and fewer people in the workforce, retirement will have to be redefined.

7. Balance will still be an issue. Work practices in the most successful firms will have had few changes. Technology, and especially ubiquitous connectivity through wearable devices such as eyeglasses with built-in computer screens, will continue to blur the distinction between working and not working.

8. For nations such as India, where a large number of young employees are entering the workforce, there will need to be a major shift to address their needs and concerns. These are people who may frequently ask, “What’s in it for me?” Organizations need to show that they have the flexibility to adapt to these changes while being able to maintain a strong culture.

9. (tie) Generation Y issues, such as the perception that Gen Y employees will require greater workplace flexibility policies, will have had far less impact on business reality than predicted. Talented people, willing to work very hard, will flourish in most organizational settings.

Corporate responsibility and serving the wider community will be an integral part of an organization’s business strategy.

Recruiting and Workforce Development
1. Recruitment and development will increasingly be seen as part of an integrated workforce-supply optimization process. Both will become virtual, global and just-in-time, but they will also be transformed through an increasing emphasis on optimization, differentiation and return on investment.

2. There will be a continued and increased demand for top talent. The gap between the best and the rest will be greater. There will be more demand for creativity, innovation and thought leadership.

3. Employers will compete as intensively for workers as they do for customers. Branding an organization as a place for workers will be as important as branding for consumers.

4. Firms will become adept at sourcing and engaging transient talent around short-term needs, and will focus considerable energy on the long-term retention of smaller core talent groups.

5. Leadership development will be a critical need. Global leaders must develop strong decision-making, business and people management capability in diverse cultures.

6. With a more flexible workforce, employers will struggle with the funding of workforce development. They will be hesitant to train workers only to see them leave. Training and development may be tied to some contractual time commitment on the part of the worker.

     7. (tie) More focus will be placed on searching for people who match companies, not just people who have the skills that companies need.

The lack of skilled workers will be a global phenomenon, making the war for talent a global war. Successful HR professionals will be much more adept in fighting this war and will develop expertise in work visas, employment and privacy law around the globe.

9. (tie) Workforce development will be seen as a holistic approach that meets the needs of clients, individuals, organizations and surrounding communities.

There will be more development inside and outside of work. People will be encouraged to take a “social sabbatical” as a development experience, for example.

Strategic Role of HR
     1. The strategic role of decisions about talent and how it is organized will increasingly be recognized as pivotal to an organization’s sustainable strategic success. Leaders will be held accountable for the quality of those decisions.

2. HR issues will be measured much more as part of the business plan.

     3. Talent management will become the prime focus of HR.

     4. HR will be heavily involved in helping build organizational strategy, including such decisions as which markets to enter, which countries to choose for expansion and which analytics to inspect.

     5. (tie) A “decision science” approach will be the foundation of human resources. HR will view talent in a supply-chain fashion and help the business understand workforce trends to make sound decisions.

HR will be part of strategy formulation and execution discussion.

HR will play a more significant role in developing leadership for an organization.

HR will go the way of finance and accounting. There will be two career paths. One will be the equivalent to the comptroller in an organization, focused on HR delivery and compliance issues. The other will be equivalent to finance: focused on the business strategy relative to talent needs, workforce development and organizational design.

9. The full-time permanent jobs that remain in HR will require more business acumen and more HR depth than ever imagined, leading to a continued and greater global shortage of the needed talent.

     10. (tie) The role of the “HR department” will vary widely, becoming the repository of expertise and advice on talent in some organizations, but in others, this role may be taken by experts from other disciplines, with HR focusing more on processes, vendor management, etc.

To remain successful in a flat world, predictability, sustainability, profitability and risk management are critical. Hence, HR’s value will also come from helping the organization tackle such areas as people-related challenges, risk and compliance issues, sustained growth and the looming talent shortage.

The ratio of HR staff to firm population will be dramatically smaller.

Compensation and Benefits
1. Companies will need to offer tailored benefits to meet diverse needs and attract talent. As a result, there will be more menu-like choices available for employees relative to their personal lifestyle (e.g., risk-reward incentive designs, benefit options, etc.).

2. (tie) Increasingly, organizations will help their employees understand that benefits have expanded to include an organization’s ability to provide opportunities to build skills and career in an inclusive and flexible work environment through challenging work assignments, career mobility, formal and on-the-job learning, coaching and a feedback-rich culture.

Executive compensation still will be a critical responsibility of HR, and there will be even greater reliance on outside consultants to help design programs. But corporate boards, concerned about consultants being too close to executive management, will seek HR expertise, resulting in many more HR professionals having positions on corporate boards.

There will be more creative ways to tie employee wealth to firm performance, such as performance shares, and not just stock options.

5. There will be more accountability associated with CEO and senior leader pay, with more transparency.

6. (tie) Traditional compensation and benefits will evolve toward a focus on total rewards, with a commensurate emphasis on customization, differentiation and integration across all elements of the employment relationship.

Compensation and benefits will be more tied to financial results and behavior results—that is, demonstrating the right competencies, which will be defined more from the customer point of view.

Organizations will have to work to educate employees on the total value proposition they receive. Compensation is only one component.

9. Benefits will be more globally similar, and portability will increase.

10.There will be an expansion of creative benefit offerings to address different workforce needs, such as elder care, pet care, concierge services and
 

During these days of economic anxiety, employees at insurance firm BlueCross BlueShield of Tennessee may be a bit calmer than the average American worker, thanks to a stress-reduction program launched four years ago.

    The 4,500-employee firm has trained about a fifth of its workforce in the HeartMath system, an approach using biofeedback technology to help people calm their minds.

    Sharon Gilley, BlueCross Blue­Shield’s manager of organizational development, says the training is helping the firm’s employees make sound decisions even as workers nationwide face worries about reduced retirement accounts, higher costs of living and fears of a protracted global recession.

    “They sleep better, they feel better, they’re less irritated,” she says. “That tells me that they’re thinking better.”

    The financial crisis of the past few months has ratcheted up economic anxiety among American workers to severe levels, experts say. A recent poll by employee assistance program provider ComPsych found that 92 percent of employees say financial worries are keeping them up at night. Such stress can affect businesses in the form of employee health problems, retention troubles and decreased productivity.

    BlueCross BlueShield of Tennessee is helping employees cope in a number of ways. CEO Vicky Gregg, for example, reassured workers in an October e-mail that the private, not-for-profit company is financially strong. The firm also gives employees access to massage therapy, an employee assistance program and personal health advocates who can address stress.

    And it is continuing the program from HeartMath, a Boulder Creek, California-based company that sells stress-relief tools to individuals and organizations. HeartMath’s system uses software and a heart monitor to help people learn to change their heart rhythm pattern and create physiological “coherence” in the body. Stress leads to an irregular, jagged pattern. But when people shift to a more positive emotional state, HeartMath says, the heart rhythm pattern becomes smoother and coherent.

“[Employees] sleep better, they feel better, they’re less irritated. That tells me that they’re thinking better.” —Sharon Gilley, manager of organizational development, BlueCross BlueShield of Tennessee

    HeartMath CEO Bruce Cryer likens the benefits of the system to the way a healthy body builds resistance to catching a cold. Stress management, he says, “is trainable.”

    BlueCross BlueShield of Tennessee has invested about $200,000 in the HeartMath system and has trained about 1,000 employees, including claims and customer service staff. According to BlueCross BlueShield’s initial projections, 1,000 employees practicing stress management would save the firm about $440,000 annually in reduced health care costs.

    Gilley says her organization plans to conduct a claims-data study to check on the actual health savings. Meanwhile, other results are promising. Last year, 311 employees were trained in the HeartMath system. In the wake of the training, the portion of those workers reporting that they were exhausted dropped from 35 percent to 17 percent. The share saying that they were anxious slipped from 22 percent to 9 percent.

    The stress-reduction program is not just helpful for today’s economic crisis, Gilley says. “Heart­Math tools give anyone under any specific stressors effective ways to deal with stress in the moment,” she says. “With regular practice, this is a benefit in all kinds of life’s stress.”

Workforce Management, November 17, 2008, p. 18 — Subscribe Now!

In the latest attempt by HR software firms to tap the Web 2.0 trend, Saba Software is touting a set of social networking tools for business.

The vendor in late October introduced its Saba Social product, saying the software will allow businesses to engage in a wide range of cutting-edge team¬work methods including blogs, wikis and tagging—the informal labeling of content. But there are questions about the wisdom of social networking in businesses and whether HR software can anchor collaboration at companies.

Larry Dunivan, vice president of global human capital management products at software vendor Lawson, says it’s a challenge for tools designed for HR functions to serve as the foundation for cooperative efforts in organizations, since collaboration touches so many aspects of a company.

“It would take HR to a new place,” Dunivan says.

But Maksim Ovsyannikov, senior director of product strategy at Saba, foresees incremental acceptance of a larger HR role in collaboration. And he is bullish about corporate adoption of Web 2.0—interactive technologies that typically got their start at consumer sites like Facebook.

“Social networking is huge,” Ovsyannikov says. “People management will increasingly move from formal practices to more of a fusion of the formal ones with informal processes.”

Saba plans to release its new product in mid-2009 and has not yet determined pricing. But it has spelled out coming features, including “comprehensive social networking tools” and employee profile data such as certifications to help identify mentors and advisors. Saba also plans to tie the new software to its Centra Web conferencing application.

The Centra-Saba Social connection will allow an organization to take a Web conference recording among engineers, label it and store it as part of Saba’s learning management system so others in the organization can benefit from it in new ways, Ovsyannikov says.

For example, a junior engineer could subscribe to a veteran engineer, and anytime the senior engineer posts a Web conference recording—or contributes other kinds of content—the junior employee would be notified.

Saba is unusual among HR software firms in selling a Web conferencing product. But social networking tools are becoming de rigueur in the growing field of talent management software, which refers to applications for key HR tasks such as performance, learning and compensation management.

SuccessFactors, for example, sells an application called Employee Profile that allows people to describe their capabilities and interests akin to profile pages on Facebook. By tagging themselves with labels such as having an interest in Japan, employees can connect around mutual goals or passions, says David Karel, senior director of product marketing at SuccessFactors. The software can help companies become more transparent and adapt to Gen Y’s work style, he says. “It can be culture-shifting stuff.”

Not everyone, though, is sold on corporate social networking. Katherine Jones, principal at HR tech advisory firm Independent Consulting Services, says the very name “Saba Social” raises the specter of workers not working. “How much is productive use of employee time compared to chitchat?” she asks.

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Workforce Management, November 3, 2008, p. 14 — Subscribe Now!

Advanced scheduling software is promising, but just a small percentage of companies tap its full potential.

    So says Lisa Disselkamp, a consultant who helps firms implement scheduling applications.

    Disselkamp, president of Athena Enterprises, says companies sometimes purchase demand-driven scheduling software but fail to achieve optimal shift assignments because of poor project supervision and resistance from managers who must relinquish self-styled scheduling methods dominated by personal relationships.

    “There’s a lot of ‘shelfware,’” Disselkamp says. “They will buy the product, but they’ll leave a lot of it on the shelf unused.”

    Advanced scheduling software refers to applications that create employee schedules while taking into account data about an organization’s demand, such as sales volume, store foot traffic or hospital patient counts. The products also can consider employee preferences for shift times or tasks. But there are concerns that the resulting schedules may be so variable that they hurt workers and, in turn, companies.

    No more than 5 to 8 percent of businesses have advanced scheduling software in place, estimates Walter Ross, chief executive of time-and-attendance software company Legiant. But Ross expects the market for demand-driven scheduling products to grow. Advocates point to evidence that the tools can cut labor costs, boost sales and increase productivity.

    “It’s very clear that there’s a very clear return on investment,” he says.

    But some companies that have invested in the software are missing out on their full return, suggests Disselkamp, author of the book Working the Clock: How to Win the Race for Productivity and Profits With Workforce Management Technology.

    Too often, she says, information technology departments in charge of implementing advanced scheduling tools are more concerned about staying on budget and meeting a deadline than realizing the goals of the project.

    “I just wish business leaders were more involved in the way these systems are implemented,” she says.

    Business leaders often are involved in advanced scheduling projects, argues John Anderson, director of retail marketing for software vendor Kronos. “The typical case we see is that while IT plays the key role in delivery, executive sponsorship comes from store operations, where there is a high degree of focus on the software delivering business value and ROI,”Anderson says.

“The typical case we see is that while IT plays the key role in delivery, executive sponsorship comes from store operations, where there is a high degree of focus on the software delivering business value and ROI.”  —John Anderson, director of retail marketing, Kronos

    Morné Swart, vice president of product management at CyberShift, says his firm can reduce the role of IT by offering scheduling software over the Internet as a service, accessible by Web browser. The “software as a service” approach differs from the traditional method of running an application on a company’s internal computers, and is seen as easing installation and maintenance burdens.

    Apart from technology, though, putting in an advanced scheduling system runs up against shift-assigning methods that are held dear, Disselkamp says. Managers may make scheduling decisions based more on who they like and which workers are fussy than on the best interests of the firm. “Scheduling, it’s a personal art form,” she says. “It’s relationship-based.”

    But moving to a more scientific scheduling approach is worth it, Disselkamp says. “With these automated systems, you get intelligence,” she says. “You base it on business decisions.”

Workforce Management, October 6, 2008, p. 38 — Subscribe Now!

Monster Worldwide is taking steps to put a stock option scandal behind it and offer customers better job matching, but a weak hiring climate still threatens the job board giant.

In late July, the company reported progress toward the resolution of lawsuits related to Monster’s past stock option practices. Monster also announced the acquisition of recruiting software firm Trovix as well as partnerships with employment screening specialist HireRight and e-learning services provider Cornerstone OnDemand.

Nate Swanson, an analyst with investment firm ThinkPanmure, calls the Trovix, HireRight and Cornerstone OnDemand deals “baby steps toward reinventing Monster’s value proposition, providing companies with higher-quality candidates, as opposed to just high volumes.”

But a worsening job market remains a threat to Monster’s financial health. The company reported a 9 percent increase in revenue for the quarter ended in June, to $354 million, and earnings growth of nearly 8 percent, to $30.8 million. But Monster’s own gauge of U.S. online job demand fell in July.

“We anticipate that we will continue to operate in a difficult environment in the near term,” Monster CEO Sal Iannuzzi said in late July.

Monster weathers troubles
   A pioneer in the online job board field, Monster has weathered a wave of troubles the past few years. These include a decision to cut hundreds of jobs, a major data breach and concerns that traditional, comprehensive job boards are declining in importance. Monster also was among the companies accused of backdating and improperly accounting for stock options—a scandal that has tarnished the reputations of former Monster executives including ex-CEO Andrew McKelvey.

But Monster has been working to lay the backdating issue to rest. In July, the company announced a tentative settlement agreement in a class-action suit that would cost Monster about $25 million. The company also said that the New York state Supreme Court granted preliminary approval of a settlement of related lawsuits.

In a statement, Iannuzzi said: “We are extremely gratified by these developments, look forward to the resolution of the remaining actions relating to the company’s historical stock option granting practices as quickly as possible, and are eager to focus our energies on the continued evolution of the company.”

Iannuzzi has outlined a vision of expanding Monster’s reach to include online professional hubs. He also says Monster can capture many more customers.

Customers in the past have dinged Monster for the quality of its matching technology. The company hopes to improve in that area with its $72.5 million purchase of Trovix, which has developed “semantic search” technology designed to analyze résumés and job descriptions. Both employers and jobs seekers will benefit from the addition of Trovix, Monster says.

“The implementation of this technology will allow Monster to provide unparalleled match capabilities, taking us beyond keyword search into contextual search,” Darko Dejanovic, Monster’s global chief information officer, said in a statement.

HR technology consultant Jacqueline Kuhn agrees that the Trovix software improves on keyword searches. In other words, if an employer is looking for a software engineer, Trovix may return résumés that use the phrase “computer scientist.”

“They’ve got some outstanding recruitment technology,” Kuhn says, “particularly their search engine for searching résumé content.”

But Gerry Crispin, co-founder of recruiting advisory firm CareerXroads, disputes the idea that Trovix’s contextual search capability puts it above other products in the recruiting software field. Crispin says that of the 80 companies in the CareerXroads Colloquium—a group of corporate recruiting professionals that meets several times during the year—none uses Trovix.

“They’re not a player,” Crispin says.

New features for employers
   Through the HireRight partnership, Monster will let employers buy background screening services as part of their current candidate management experience on Monster.com. Monster’s deal with CornerStone OnDemand is designed to provide online courses to job seekers.

Crispin sees the Monster moves as part of a push by players in the recruiting arena to offer a wider range of services. Customers want to reduce the number of vendors they deal with, he says.

“What you see is a major trend toward mash-ups of employer-related services,” Crispin says.

It’s an open question, though, how much such services are in demand right now. U.S payrolls continue to shrink, a trend that threatens the job ads that are a key source of revenue for Monster. Monster’s own U.S. employment index fell for the month of July.

“The decline in U.S. online recruitment activity during July is likely due in part to the seasonal summer slowdown that is typical of this time of year; however, the breadth and depth of the contraction in July also suggests further softness in the country’s underlying demand for labor,” Jesse Harriott, vice president of research at Monster Worldwide, said in a statement.

There are also signs the international economy is slowing, a scary development for Monster. Monster’s “Careers International” revenue—which reflects the firm’s career-related services in Europe and Asia—has been growing fast and now accounts for 44 percent of the company’s revenue.

Iannuzzi, however, has pledged to treat a downturn as a chance to expand Monster’s market share. He repeated that stance in late July.

“We are committed to investing in critical areas that will provide a superior job-seeker experience and deliver the best products and services to our employers,” Iannuzzi said. “We are increasingly optimistic about our long-term growth prospects and believe that our ongoing investments and recent developments with respect to the resolution of some of our key outstanding litigation will benefit our customers, shareholders and associates now and in the future.”

It’s a scary time to be Monster.

    Not only is the online recruiting giant still dealing with fallout from an embarrassing stock option scandal, but it faces a host of other challenges. These include a less-than-stellar reputation among employers and job seekers, new competition, significant executive departures and, most frightening of all, an economic slowdown that is devouring jobs and the job ads that are Monster Worldwide’s lifeblood.

    Monster managed to survive the tech bust and recession at the beginning of this decade. But some observers argue that the end may be near for the job-board pioneer—at least as a stand-alone company. Gerry Crispin, a consultant with recruiting advisory firm CareerXroads, predicts Monster will be sold to one of a number of large media companies in the months ahead. “I would be shocked if it took a year or two,” he says.

    But Monster Worldwide chief executive Sal Iannuzzi says rumors of his firm’s doom are off the mark. Iannuzzi, an outsider to the staffing world who took the reins at Monster a little more than a year ago, conceded in an interview with Workforce Management that Monster has work to do to improve its customer experience and that his firm is not recession-proof.

    Yet he’s anything but fearful. A native of Brooklyn, Iannuzzi says through his thick hometown accent that a restructuring launched last summer has streamlined the company and re-energized the 5,200-person staff. Confronted by competitors with highly focused job boards and advanced job matching, New York-based Monster is fighting back with its own industry-specific sites and technology upgrades. It has fast-growing international operations. And even in face of a recession, Mon- ster is investing in its business. The firm just spent $31 million to market its brand, and by the end of the year Iannuzzi hopes to more than triple a sales force of 62 that is devoted to larger clients. There’s been speculation that Iannuzzi, 54, came to the company simply to spruce it up and sell it. But he has laid out a vision for a much bigger Monster, imagining the firm could provide hubs for people to connect both on professional matters and personal hobbies.

    Never mind that these social networking plans would pit Mon­ster against Internet titans like Yahoo and Facebook—Iannuzzi and crew are undaunted. “Monster not only can survive independently, but I think it can broaden,” Iannuzzi says. “That’s what keeps me and 5,000 other people pumped every day.”

Company’s rise
    Monster effectively cre­ated the category of the Internet job board—Web sites where job seekers can post résumés and employers can list openings and search through those résumés. In 1994, the “Monster Board” was just the 454th commercial site on the Web, according to the company. During the mid- to late 1990s, the Monster Board—later renamed Monster.com—was part of TMP Worldwide, a marketing firm focused initially on Yellow Pages ads. But the job site grew to be the best-known brand in the company, which changed its name to Monster Worldwide in 2003. Monster has since sold off assets, including its North America recruitment ad agency business.

Monster not only can survive independently, but I think it can broaden. That’s what keeps me and 5,000 other people pumped every day. —Sal Iannuzzi, CEO, Monster Worldwide

    Today, Monster’s business includes Military.com—a community site focused on members of the armed services, military families and veterans—as well as FastWeb, a scholarship search service for students. Monster has expanded into the growing area of talent management software and does work for the U.S. government, such as providing technology for USAJobs.gov, the official federal government job site.

    The company also has pushed hard into overseas markets. Monster now operates in 36 countries. It entered India and China in 2005 and is in talks to acquire Chinese recruitment site ChinaHR.com. The parent firm of ChinaHR .com already is 40 percent owned by Monster.

    In the quarter ended March 31, Monster’s “international careers” revenue—which reflects all of the firm’s career-related services in Europe and Asia—leaped 44 percent year-over-year to $153 million. That was the driving force behind the company’s overall revenue growth of 13 percent, to $370 million. Monster’s “North America careers” revenue was flat at $184 million. Monster’s net income for the quarter dropped 43 percent, to $22.6 million.

Backdating, matchmaking
    A less-beefy bottom line is just one of the problems the company has wrestled with in the past few years.

    The most glaring of its difficulties has been a flap over backdating and improperly accounting for stock options. That prac- tice, which took place at a number of technology companies, inflated Monster’s earnings by $340 million from 1997 through 2005, according to the Securities and Exchange Commission. The scandal has tarnished the reputation of former Monster executives including ex-CEO Andrew McKelvey. Iannuzzi, who worked on the company’s investigation into backdating, is untouched by allegations of wrongdoing.

    But even if its corporate image is on the mend, Monster faces other challenges. For one, its effectiveness for both job seekers and employers has been questioned. From the employer side, Monster has come to be seen as a kind of recruiting fire hose—spraying out too many résumés and not targeted matches.

    “It is an issue,” says Andie San­chez, manager of recruiting for Real Mex Restaurants, the parent of Chevys and other Mexican restaurant brands. Sanchez uses an applicant tracking system to help screen candidates, but she still wishes Monster had a more finely tuned matching system akin to the one found at dating site eHarmony.

    Other job sites, such as Jobfox, have been rolling out new matching methods designed to better fit candidates with openings.

A year ago the time to bring a new product to market globally was 44 weeks. Our goal, by roughly the end of this year, is to cut that in half. —Sal Iannuzzi

    Monster concedes it has stumbled on the matching question, but Iannuzzi says the company has improved its technology. A year ago, employers received an average of 13 responses for each job posting. That figure has doubled, Iannuzzi says. “Not only do they get them, but they’re much more on target,” he says.

    Monster also has turned away work-at-home ads that cluttered job seekers’ searches and pushed out pop-up ads. It even has decided to bring back about 100 customer service positions it had outsourced. Iannuzzi says he’s not satisfied yet with Monster’s customer service, but “the trend is positive.”

Data compromised
    One thing that threw a wrench into Monster’s customer service goals was a major data breach last summer. Monster said employer client login credentials had been compromised and used to download information such as names, home addresses and e-mail addresses for 1.3 million job seekers with résumés on Monster.com. In the wake of the incident, Monster said it upgraded its security through steps such as new user authentication technology.

    Jim Hammock, co-founder of recruiting site Itzbig, has argued that Monster’s data breach amounts to an indictment of the traditional Internet job board model, where candidates post résumés with personal information. Itzbig was designed to allow job seekers to remain anonymous, with résumés passed directly from job seekers to employers if a match seems likely. “Be Found—Not Found Out” is the company’s tagline.

    Monster, though, seems to have emerged from the data breach incident without major harm to its reputation on privacy. Sanchez doesn’t regard Monster as a particular risk. “It’s not just Monster,” she says. “People are hacking into so many different Web sites.”

    In fact, despite her concerns about Monster’s matching technology, Sanchez sees the site as a crucial piece of her recruiting strategy. She also uses CareerBuilder, Yahoo HotJobs and Craigslist to find workers, but Monster is king of the hill. “We’re still finding a majority of our candidates on Monster,” she says.

    Timothy McHugh, equity research analyst at investment firm William Blair & Co., says that “Monster remains an excellent brand.” He adds that Monster benefits from a continuing trend toward more online recruiting activity.

Monster will be sold to one of a number of large media companies in the months ahead. “I would be shocked if it took a year or two.” —Gerry Crispen, consultant, CareerXroads

    On the other hand, shifts within online recruiting pose potential problems for Monster. These include the rise of candidate sourcing on popular social networking sites such as LinkedIn and Facebook—an approach seen as better able to land higher-quality “passive” candidates. “Job boards must continue to evolve,” Crispin says. “There’s no question that social networking has to be integrated into how job boards connect people and jobs.”

    In addition, companies are focusing attention on their own career Web sites. And organizations are turning to niche Web sites that concentrate on a specific region or industry. At Dice Holdings, which provides specialized career sites for fields such as technology and financial services, revenue for the first quarter of 2008 grew 30 percent—more than twice the rate at Monster.

    The niche competition comes on top of Monster’s traditional job board rivals, CareerBuilder and Yahoo HotJobs.

    Monster is “facing increased competition and an overall decline in the value proposition that they’re offering,” says Nate Swanson, an analyst at investment firm ThinkPanmure. “Similar to the way they have displaced newspaper ads, Monster is running the risk of being displaced by a handful of new competitors or new technologies.”

Taking action
    Monster, though, has a game plan for the shifting Internet recruiting landscape. Iannuzzi says Monster can coexist with LinkedIn and Facebook, and he doesn’t rule out moving into social networking.

    And Monster has its defenses against the niche trend. For one thing, narrowly focused sites have an uphill climb to lure job seekers. “Not everyone who is posting their résumé may know of the niche boards,” says Jacqueline Kuhn, a consultant who also serves as chair of the International Association for Human Resource Information Management professional group.

Monster benefits from a continuing trend toward more online recruiting activity. “Monster remains an excellent brand.” —Timothy McHugh, equity research analyst, William Blair,& Co.

    Meanwhile, Monster snagged its own stable of industry-specific sites through its January acquisition of Affinity Labs. The San Francisco-based company has created online communities for professions including education, nursing and law enforcement.

    In addition, Iannuzzi plans to increase Monster’s involvement in talent management software, the fast-growing field of applications for key HR tasks such as recruiting and performance management. Recruiting software tools can play a critical role in how job seekers interact with a company’s career site.

    Monster has a group of about 1,000 technology professionals, and they have become more efficient thanks to the company overhaul, Iannuzzi says. Business units that grew up independently made for bureaucratic gridlock, he says. “A year ago the time to bring a new product to market globally was 44 weeks,” Iannuzzi says. “Our goal, by roughly the end of this year, is to cut that in half.”

    But whether Monster has the talent to imagine, produce and introduce new products has come into question in recent months. Several prominent company officials have left, raising questions about the company’s capabilities and its morale. Among the losses was Steve Pogorzelski, who stepped down from his role as executive vice president for global sales and customer development in January. Other departures include Brian Corey, area vice president of sales, and Neal Bruce, vice president of Monster’s global innovation group.

    They are among the many Monster employees who have left—voluntarily or not—in the past year. As part of its restructuring plan, Monster decided to cut 700 jobs, a step that can undermine the esprit de corps of remaining employees.

    Recruiting industry blogger Joel Cheesman has painted moves out of Monster this year in dark terms. “The rats are apparently leaving the sinking ship in droves,” he wrote in April. Cheesman is founder of HRSEO, a firm that helps companies tap search engines for recruiting—a rival approach to job boards like Monster.

    Iannuzzi rejects the notion that Monster has been left shorthanded. He concedes that employees’ focus has suffered from lingering headlines about the stock options scandal, and that a gloomy climate was a problem when he arrived. But he says morale has improved in the past year, partly because the restructuring made it easier to get things done. Increasing the portion of employees receiving equity rewards from about 17 percent to nearly 40 percent also has helped, he says.

    As proof of a more committed staff, Iannuzzi says voluntary turnover has decreased from upwards of 35 percent a year ago to roughly 25 percent today.

Economy is key
    Any burgeoning hopefulness at Monster, though, could be severely strained if the company’s job-ad revenue dries up in an economic downturn. Eric Wolff, an investment manager and blogger who is betting against Monster’s stock, predicts Monster’s revenue could drop sharply should the economy hit a recession. Wolff says core Monster careers revenue fell steeply in the last recession. “[W]hen the employment market swoons, Monster gets creamed,” Wolff wrote late last year.

    Iannuzzi doesn’t deny that Monster’s financial fate is largely tied to the business cycle. But he says that while Monster hunkered down during the last recession, the company is going to use this downturn to expand its market share. In a recent 12-month period, Monster did business with just 25 percent of the 31,000 U.S. companies with more than 500 employees, and just 4 percent of the 1.7 million firms with between 10 and 500 employees.

    The company’s marketing push and plans to triple its sales force stem from a belief that Monster can snag many more of those companies. “This is not a time for us to retrench, but to build and seize the opportunity,” Iannuzzi said in a May conference call with analysts.

    Despite Iannuzzi’s optimism, predictions that Monster will not remain an independent company for long persist. Fueling the speculation is the fact that Iannuzzi parachuted into his last firm, Symbol Technologies, and later sold it. He will not rule out a sale of Monster, but notes Symbol is the only company he has ever sold.

    Iannuzzi has spent the bulk of his career in financial services. He says the Monster CEO post appealed to him for its challenge and for being an intriguing business model that included the prospect of growth in China.

    Iannuzzi’s grand ambitions for Monster are in tune with the company’s latest tagline: It “strives to inspire people to improve their lives.” Yes, the firm runs the risk of becoming too diffuse, Iannuzzi says. But he can foresee Monster becoming central for broader activities around work—think teachers sharing lesson plans. Beyond that, it can branch into hobbies like rock climbing, he says.

    This vision offers Monster a way out of its concentration on job ads and résumé searching. But it means new battles against established Internet giants such as Yahoo and Google, both of which have group networking features.

    Iannuzzi, though, seems determined to put the mettle back into Monster. He says he’s not fazed by competing with Yahoo and Google.

    “Like I said, I came here for the challenge.”

Workforce Management, June 23, 2008, p. 39-44 — Subscribe Now!

Sal Iannuzzi’s first year as CEO of Monster has been quite a ride.

    Not long before Iannuzzi took over the Internet recruiting company in April 2007, the U.S. economy was expected to grow at a decent 3 percent for the year. Instead, it expanded by just 2.2 percent and the pace slowed even further this year, taking a toll on hiring and job ads. A scandal over stock option backdating at Monster repeatedly made headlines of the kind that drags down employee morale. And the company decided to ax 700 employees as part of its restructuring.

    But Monster’s financial results for the first quarter of this year beat Wall Street expectations, on the strength of fast international growth. The company says it is getting quicker at turning out new products. And Monster’s alarmingly high employee turnover—upwards of 35 percent a year ago—has fallen to about 25 percent.

    Iannuzzi, a financial services veteran with just a few years in the technology industry, says he can sense improved morale in his workforce of 5,200. At a recent company meeting with some 500 people in the room, it was obvious, he says.

    “You can see when people are turned on and when they aren’t,” Iannuzzi says. “There were a lot of lights on this morning.”

    Here are Iannuzzi’s worst and best days since he became Monster’s main man:

    Worst: “Probably the toughest day was making the decision to let go of 700 people. When we made that decision, you look at it on paper and you look at the numbers, and you know it is the right thing to do for the health of the organization. But when you stop with the numbers and you bring it to people, and you see the faces of some of the people that are involved and the impact you’re going to have on them, that’s a pretty horrible feeling—particularly when you’re the person that’s driving it.”

    Best: “Historically only about 16, 17 percent of the people in the company received equity. And even those who did receive it, except for maybe the top 10 people, let’s just say they didn’t receive much. This year, everyone was eligible for a bonus, and almost 40 percent of the people in the company received equity—and meaningful pieces of equity, where it would really make a difference in their creation of wealth. Probably the highlight of it all was one evening Lise [Poulos, Monster’s chief administrative officer,] and I were walking out of the building. This was back in February, and it was kind of late and three relatively young people were leaving and came up to me. They had just gotten their bonuses. First time they got one. They high-fived and said, ‘Thanks a lot, Mr. I.’ That’s a good feeling.”

Sal Iannuzzi’s first year as CEO of Monster has been quite a ride.

    Not long before Iannuzzi took over the Internet recruiting company in April 2007, the U.S. economy was expected to grow at a decent 3 percent for the year. Instead, it expanded by just 2.2 percent and the pace slowed even further this year, taking a toll on hiring and job ads. A scandal over stock option backdating at Monster repeatedly made headlines of the kind that drags down employee morale. And the company decided to ax 700 employees as part of its restructuring.

    But Monster’s financial results for the first quarter of this year beat Wall Street expectations, on the strength of fast international growth. The company says it is getting quicker at turning out new products. And Monster’s alarmingly high employee turnover—upwards of 35 percent a year ago—has fallen to about 25 percent.

    Iannuzzi, a financial services veteran with just a few years in the technology industry, says he can sense improved morale in his workforce of 5,200. At a recent company meeting with some 500 people in the room, it was obvious, he says.

    “You can see when people are turned on and when they aren’t,” Iannuzzi says. “There were a lot of lights on this morning.”

    Here are Iannuzzi’s worst and best days since he became Monster’s main man:

    Worst: “Probably the toughest day was making the decision to let go of 700 people. When we made that decision, you look at it on paper and you look at the numbers, and you know it is the right thing to do for the health of the organization. But when you stop with the numbers and you bring it to people, and you see the faces of some of the people that are involved and the impact you’re going to have on them, that’s a pretty horrible feeling—particularly when you’re the person that’s driving it.”

    Best: “Historically only about 16, 17 percent of the people in the company received equity. And even those who did receive it, except for maybe the top 10 people, let’s just say they didn’t receive much. This year, everyone was eligible for a bonus, and almost 40 percent of the people in the company received equity—and meaningful pieces of equity, where it would really make a difference in their creation of wealth. Probably the highlight of it all was one evening Lise [Poulos, Monster’s chief administrative officer,] and I were walking out of the building. This was back in February, and it was kind of late and three relatively young people were leaving and came up to me. They had just gotten their bonuses. First time they got one. They high-fived and said, ‘Thanks a lot, Mr. I.’ That’s a good feeling.”

Snapping up Talx last year not only gave credit reporting specialist Equifax an entrance into the red-hot HR software arena, it immediately fired up Equifax’s financial results.

Atlanta-based Equifax acquired Talx in May 2007 in a deal valued at $1.4 billion. Talx, which provides a range of software and services including onboarding tools, contributed to just slightly over six months of Equifax’s annual results for 2007. Even so, TALX represented 12 percentage points of the company’s overall 19 percent revenue growth in 2007. Talx generated $179.4 million in operating revenue for the year, or about 10 percent of the overall Equifax operating revenue of $1.8 billion.

Talx produced $29.3 million in operating income for Equifax last year, or 6 percent of the company’s $486.2 million in operating income. Net income at Equifax last year was $272.7 million, a slight drop from $274.5 million in 2006.

The foray into employment services helps Equifax diversify from its traditional business of providing consumer information products to businesses in the United States. That market niche has been hit by the U.S. housing downturn and economic slowdown. Equifax’s U.S. Consumer Information Solutions division, which includes consumer credit reporting and scoring and mortgage reporting, saw virtually no growth in operating revenue in 2007. The USCIS unit accounted for 63 percent of the company’s consolidated revenue in 2006. That figure dropped to 53 percent in 2007.

Equifax expected a quick boost from Talx, citing its rapid growth when announcing the acquisition last year. For the last nine months of 2006, Talx’s revenue climbed 33 percent year over year to $197 million.

When it comes to the long-sought “seat at the table” for HR leaders, Libby Sartain sees both good news and bad. Sartain, who sits on the board of directors at retailer Peet’s Coffee & Tea, notes that human resource leaders are increasingly joining such boards—a clear sign of growing clout for the profession. But she notices a dearth of HR practitioners who are prepared for top jobs in the field.

On the profession’s progress:
    I probably know 20 HR people that are now serving on public boards of directors. That’s a new trend. When you look over my 30-year career in HR, it was a “personnel administrator” when I started, and now it’s a “senior executive” and even a “board member.”

    I can remember when the Society for Human Resource Management changed its name from the American Society for Personnel Administration, because we were part of management. Now we’ve moved from part of management to part of the senior leadership team. We’re that person who is part of the leadership team—some people are fighting to get that seat at the table—there to manage the return on investment in talent or human capital.

    To me, the job of HR is evolving to one of, really, talent management as a resource. Not all the administrative part, which is still there and part of the price of admission.

    The question that boards want to know about and CEOs want to know about—and HR has to be prepared to address—is, if we’re investing this much in our compensation of our senior leaders or our workforce, are we getting a return on that investment, just like if we made any other capital investment? Are we running our company with the right governance when it comes to ethics and policies? Are things above board? Because nobody wants to be caught in any of these embarrassing situations.

On the next generation of HR talent:
    That’s one of the things that I’m very concerned about. I get a lot of headhunter calls for great jobs that are very strategic, that are focused on all the right things.

    And then I try to think, who do I know who can do this job?

    What we’ve done is we’ve created some real specialists in HR. So you specialize in compensation or you specialize in organizational development, or you become a generalist. But we haven’t created the right mixes of experiences so that enough people get everything they need for that top job. They need the comp. They need the O.D. They need to have been the business partner. They need to understand talent management more than anything else. So that’s one thing I feel more HR leaders should be working on.

    That’s one of the things I’m really proud of at Yahoo. I did create the experiences, so I had two candidates who were capable of taking my job.

Workforce Management, May 19, 2008, p. 21 — Subscribe Now!