Author: Ed Frauenheim

Oracle’s much-anticipated Fusion project, aimed at blending the best of various software product lines into a new set of applications, is approaching some key tests. 2008 is the year Oracle has pledged to start delivering its Fusion applications, which are slated to include human resources software.

Some customers and analysts have made critical comments about Fusion recently, saying Oracle has been vague about plans for the applications and questioning whether the project is on schedule. Expectations also are building up for the HR applications that will eventually emerge.

AMR Research analyst Christa Degnan Manning says Oracle is under pressure to produce software that smartly weaves in social networking and collaboration features, which are becoming priorities for organizations.

“Oracle really has to get the first version of Fusion right,” she says.

Oracle officials project confidence that Fusion will not fizzle. At the company’s recent 2007 user conference in San Francisco, Oracle provided an overview of Fusion characteristics and highlighted progress with related “middleware,” which is software that connects separate programs. During a keynote speech, Oracle chief executive Larry Ellison said the first three Fusion applications, in the area of sales productivity, will be available in the first half of next year.

Ellison also touted Fusion as reaching a new height in business software, beyond merely enabling efficient operations.

“It’s not going to automate a process,” he says. “It’s going to help you make better decisions.”

Fusion debuts
    Oracle first announced plans for Fusion in early 2005, soon after the company acquired rival software maker PeopleSoft and its line of business applications. In late 2005, Oracle told Workforce Management that heavily used human resource applications including payroll, benefits management and recruiting would be rolled out in 2008.

Asked about the current schedule for releasing Fusion HR applications, Oracle is less definite. “We are not disclosing additional information about Fusion Apps availability at this time except that Fusion Applications will begin rolling out in 2008,” Oracle spokeswoman Amy Grady said in an e-mail.

At Oracle’s OpenWorld conference, Ellison said the first Fusion applications are designed to tell salespeople who their customers are, which products they ought to sell, and which references they should use to sell successfully.

Sales is a critical area for organizations. But by prioritizing the sales arena, Oracle is running counter to a market trend showing HR applications to be the fastest-growing area of business software. Thanks in part to concerns about talent shortages, revenue from “human capital management” applications is slated to rise 11 percent annually between 2006 and 2011, to $10.6 billion, according to AMR Research.

As a result, the market is fiercely competitive. Oracle and archrival SAP each account for 24 percent of total HR software revenue, AMR Research says. But other players include a host of firms focused on “talent management,” meaning key HR functions such as recruiting, performance management and employee development. There also are vendors that sell a broader range of HR and business software, including Lawson and Workday.

Workday was founded by former PeopleSoft leader Dave Duffield soon after he failed to prevent Oracle’s takeover of PeopleSoft. Workday’s applications are designed to be easier to use, easier to change and easier to integrate compared with traditional software from vendors such as Oracle and SAP. Stan Swete, vice president of product strategy for Workday, says he doesn’t hear potential customers talking about Fusion so much as they are fed up with the difficulty of upgrading to later versions of Oracle’s existing PeopleSoft and Oracle E-Business Suite products. Such software switching can last months if not a year or more.

“Each of these upgrades is becoming more and more like an implementation,” Swete says, referring to the process of installing software in the first place. As a result, Swete says, customers are thinking: ” ‘So why wouldn’t we consider implementing something new.’”

Upgrade or implementation?
   Oracle has argued that moving from existing Oracle applications to Fusion will be an upgrade rather than an implementation, and that it will be simple to make upgrades once Fusion is in place.

But there have been questions recently about Oracle’s progress on Fusion. Pat Walravens, equity analyst at investment firm JMP Securities, wrote in a November research note that “something seems to have gone awry with the original Fusion applications plan, which was to deliver some major applications, such as ERP [enterprise resource planning], CRM [customer relationship management], and core HR, by the end of 2008.”

What’s more, some argue Oracle has been fuzzy about Fusion. “We’re coming up on almost three years now,” says Jason Averbook, chief executive of consulting firm Knowledge Infusion. “Customers are saying, ‘Just tell me the truth. What is Fusion, and what should I do?’ “

During the recent OpenWorld show, one attendee said she has been disappointed by the amount of information Oracle has provided about Fusion at its annual conferences.

“Each year, I don’t get as much information as I’d hoped,” she says.

The attendee, a systems administrator at a financial services firm that uses Oracle, spoke on condition of anonymity for fear of reprisal from her employer.

At a press conference during OpenWorld, Charles Rozwat, Oracle executive VP, argued customers have received an adequate product road map.

“Customers I talk to are very happy with the amount of information they have today,” Rozwat says.

At OpenWorld, Oracle officials outlined certain features of the coming Fusion applications. These include a “service architecture” designed to make it easy to integrate Fusion software with other business applications, “embedded business intelligence” to mine data for making better choices, and “software as a service” readiness—meaning the applications can be delivered over the Internet besides being installed on a customer’s internal computers.

Outside views
   Some observers are satisfied with Oracle’s disclosures about Fusion. Wayne Fuller, application systems engineer for financial services company Wells Fargo, says he is “absolutely” satisfied with the amount of information Oracle has given on Fusion applications.

Analyst Walravens wrote in his research note that Oracle’s Fusion road map “is probably good enough for now, as most customers seem focused on preserving the value of their existing investments.”

But that doesn’t mean the pressure is off when it comes to Fusion HR applications. Organizations have become more and more focused on closely connected talent management “suites” and emerging social networking tools. “Web 2.0” technologies such as blogs, wikis and corporate social networks are seen as potential spark plugs for increased collaboration, productivity and—ultimately—profits.

Oracle is keenly aware of these trends. Its OpenWorld conference went so far as to include an “Unconference,” where attendees could generate their own sessions. And at the annual HR Technology Conference & Exposition in Chicago this October, Oracle demonstrated how a test version of its WebCenter product could allow employees to set up informal networks devoted to a particular topic, as well as alert colleagues about job openings.

Degnan Manning says the HR tech conference demonstration heightened customer anticipation that Fusion will incorporate social networking tools. Building in such tools adds to the challenge of meshing the best features of Oracle’s existing product lines, she argues.

“Fusion has become increasingly strategic and complex,” Degnan Manning says.

Still another hurdle for Oracle is continuing to upgrade its existing applications even as it creates Fusion. But Oracle argues it is up to the task. Ellison, in fact, portrays Fusion as central to the company’s future. People ask when Fusion will be “done,” he told the audience during his keynote address.

“What do you mean by done?” Ellison says. “I think we’ll be working on Fusion applications for a long time.”

Right now, though, observers are starting to expect some concrete results from nearly three years of work on Fusion. And Ellison and crew have yet to convince everyone that Fusion will be a potent force, at least initially.

Fuller of Wells Fargo, for example, has no desire to move to Fusion’s first release.

“I don’t think Fusion will in two years be as good as PeopleSoft is from a functional standpoint,” he says. “Any new product has to develop.”

Starbucks may not have an official corporate social networking site, but employees of the Seattle-based coffee chain still can connect online.

    A recent search for “Starbucks” under the “Companies/Co-workers” category at MySpace groups turned up 65 listings. These include groups at the popular social networking site focused on specific Starbucks stores, ex-Starbucks employees and criticism of the company. At “The Starbucks Crew” site, there’s a heated debate about unionizing.

    The most popular Starbucks company/co-worker group at MySpace is “Starbucks HQ.” With more than 4,800 members, the group bills itself as “the UNOFFICIAL Starbucks group site reserved for the purpose of edification, enlightenment, venting and expounding by Starbucks partners worldwide.” Recent postings address matters such as iced cappuccinos, transferring to different stores and “Top Ten Things I Would Say to Customers if I Knew I Wouldn’t Get Fired.”

    (The author, “Cho” from Boise, Idaho, ranked this as No. 1: ” ‘Gimme a grande coffee’ is not an appropriate response to ‘Hello! How are you today?’ “)

    Andrew Gonis, a 21-year-old Starbucks employee from Laguna Niguel, California, founded Starbucks HQ two years ago. His aim was to improve upon an existing Starbucks employee group full of “negativity” and spam. Gonis thinks he succeeded, as evidenced in part by the 20 to 30 new postings or replies every day.

    Despite his fondness for “Starbucks HQ,” Gonis would welcome an official Starbucks corporate social network. For one thing, it would relieve Gonis—who is taking college classes in restaurant management—of his heavy moderator duties.

    Starbucks did not respond to requests for comment.

    For now, Gonis logs on to Starbucks HQ multiple times a day to check for spam or approve new members. All the effort stems from his appreciation of Starbucks as an employer and the communal feelings he shares with other “partners.” Of the site, he says, “It’s an extension of your family, I guess.”

Workforce Management, October 22, 2007, p. 32 — Subscribe Now!

The phrase “sales force” took on a new meaning at Lawson in 2005.

    New chief executive Harry Debes arrived at the business software firm determined to make Lawson’s sales team bigger and more assertive. A turbocharged sales organization is key to Debes’ strategy to pitch Lawson’s HR software and other products to the Fortune 500 companies traditionally served by software titans Oracle and SAP.

    First he bumped up the number of U.S. pre-sales professionals—the product experts who give demonstrations to customers—from about 50 to close to 70. Then he boosted the sales account executive roster in the U.S. from nearly 70 to more than 110. Seven of the new sales staffers came from Intentia, the Sweden-based firm Lawson merged with last year. Many of the rest came from other software firms, including Oracle and SAP.

    In September, Debes hired an executive vice president of global sales, Eduardo Sanchez, who brings more than 25 years of experience in global technology sales and consulting, including 13 years with business software firm Micro Strategy. For much of the past year, Debes led the sales team.

    That team has benefited from additional training, an improved system for producing software demonstrations and the adoption of Salesforce.com’s application for tracking customer leads, says Travis White, Lawson’s senior vice president of global marketing.

    As important, White says, is the shift in attitude wrought by Debes on the sales staff. “Harry has re-instilled confidence in people,” he says.

“We’re well established in our vertical markets, and our sales force is upbeat. I think it is going to be a big year for us.” –Travis White, senior vice president of global marketing, Lawson Software

    Debes, White and others at Lawson are convinced that the company’s software can run effectively at large firms. In particular, Lawson is after big customers in certain vertical markets such as food and beverage, health care and fashion. “With in those industries, we’re quite confident that we can sell to any company, including the largest ones,” White says.

    That stance comes as Oracle and SAP have turned their sights on Lawson’s bread-and-butter clientele—the midsize market.

    For the year ended May 31, Lawson saw its revenue reach $750 million, up from $391 million the previous year. Most of the gain came from the addition of the Intentia business, however, and the company posted a net loss for the year of $21 million.

    Lawson hopes to stem that red ink in part through the launch this year of a new set of HR applications. In a brazen move, Lawson has declared that it aims to become the king of the HR software hill despite sales that are less than a tenth of those posted by SAP and Oracle.

    White argues that the new HR software will be coming to market just as the reinforced sales team is getting smart about Lawson’s new competitive landscape.

    Debes believes the quality of the sales person is key when competing against SAP or Oracle for business. And Lawson’s sales team is ready to get into those battles, White says. “We’re well established in our vertical markets, and our sales force is upbeat,” he says. “I think it is going to be a big year for us.”

Workforce Management, October 8, 2007, p. 23 — Subscribe Now!

After about two years of development, Lawson plans to release a suite of HR software products in the coming months. If not for a set of coding tools, that launch might have been scheduled for much further down the road.

    Lawson’s new HR applications were built using a technology it calls Landmark. Company chief executive Harry Debes estimates the Landmark tools made coders at least 10 times more productive. “It’s like going from horses to tractors,” Debes says. After a pause, he adds, “Horses to buses is better.”

    The Landmark tools allow developers to generate lines of code automatically, by describing what they want out of the software at a higher level. The time-saving technology is the result of a roughly five-year effort at the company that involved co-founder Richard Lawson.

    Landmark technology bears some similarity to “object-oriented programming,” a method of creating software that allows for coding to be reused and can reduce development time.

    But Larry Dunivan, Lawson’s vice president for human capital management, says Land mark stands head and shoulders above comparable tools.

    In fact, the company has been touting the technology as it drums up interest in the coming HR applications. It’s relatively rare for software vendors to talk up the process behind their products. But in Lawson’s case, the discussions may serve as advance marketing. That’s because the company is thinking about selling a version of Landmark as a product, Dunivan says.

    It could help companies more quickly stitch together their different applications or create composite software tools, he says. An example of a composite tool would be a program that allows a company to identify automatically which of its training programs leads to the greatest improvements in employee performance ratings, or which leads to the greatest increase in sales generated by employees.

Workforce Management, October 8, 2007, p. 36 — Subscribe Now!

Workday has persuaded close to 20 clients to sign on for its human resource management system, which was launched last year.

    Among the initial customers is RightNow Technologies, a Bozeman, Montana-based maker of customer relationship management software. Kevin Boylan, HR director for the 700-employee firm, says Workday is as nimble as promised. Soon after RightNow began using the HR software in April, the company restructured itself from departments and department executives to geographic business units and regional general managers.

    To capture the shift, Boylan says, a traditional HRMS would have required a lengthy updating and probably the help of an expert system administrator. Not so for Boylan and his team.

    “We were able to do it within an hour in Workday,” he says. “We did it ourselves.”

Lawson and Workday have big plans for their new human resource management systems, but Oracle and SAP—giants of the core HR software world—have no plans to fade away.

    SAP says its software can accommodate modern corporate practices like matrix systems for managing people. This is true even though much of the data model of the core HR product has remained the same for about 15 years. SAP has steered clear of a major overhaul of that data model to avoid causing significant disruption to customers when they upgrade. But that hasn’t prevented the Germany-based firm from staying up to date with its software, says David Ludlow, SAP vice president for human capital management strategy.

    “Over the years, we have made the necessary changes to modernize it,” he says.

    SAP also offers a warning of sorts to Lawson and Workday: Keeping core HR and payroll applications current with country and state legislation around the globe is no easy trick.

    SAP charges HR software product managers with monitoring U.S. federal and state laws and has a full-time employee focused solely on shifts in payroll laws.

    “It’s getting more complicated. You’ve got changes to existing rules all the time,” Ludlow says. “It takes a tremendous amount of resources on our side.”

China’s new employment contract law is poised to strengthen the workers’ hand, but it deals employers a high card or two as well. And it may help both sides win.

In the run-up to the law, which was passed in June and goes into effect in January, employer groups warned that the statute could hurt China’s economy by overly protecting workers. The final, revised rule could restrict management’s authority, analysts say.

But the law includes some bright spots for employers. Mass layoffs may be easier to do. And high-wage employees—possibly including expatriates—will have severance payments capped, potentially saving firms hundreds of thousands of dollars for a single ousted executive.

What’s more, some analysts argue the new statute might prove beneficial to both employers and employees. Jill Malila, director of client management for the China operations of Mercer Human Resource Consulting, says the law provides some “much-needed clarity” on labor relations in the country.

“While the law limits the flexibility for a company in managing employment affairs, it does more clearly articulate the terms of the employee-and-employer relationship,” Malila says. “This can bring greater consistency in the market.”

Economic upheaval
China’s labor market is young by Western standards. The communist government only began experimenting with capitalism about three decades ago, and its economy has been called a kind of Wild West.

The new employment contract law is part of a broader push by government leaders to balance the country’s breakneck economic growth with the goal of a “socialist harmonious society.” The country’s market reforms have generated great wealth in China and reduced poverty, but they’ve been accompanied by a dramatic widening of inequality and many reports of worker exploitation.

China has experienced tens of thousands of protests in recent years, including many labor-related incidents. Low wages, unpaid back wages, lack of retirement insurance and inadequate layoff compensation have been cited as major causes of labor disputes.

Analysts say most of the labor abuses take place at Chinese-owned firms rather than at foreign-owned operations. In any event, the new law will apply to both sorts of employers.

Unlike the U.S. employment landscape, which is dominated by “at will” relationships between worker and employer, China’s employment system is based on contracts. The new law aims to improve that contract system as well as “to specify the rights and obligations of the parties to employment contracts, to protect the lawful rights and interests of workers and to build and develop harmonious and stable employment relationships,” according to a translation of the statute by international law firm Baker & McKenzie.

Among the law’s 98 provisions is the requirement that a written contract be created within one month of the day an employer starts using a worker. A company that fails to draw up the contract on time faces the penalty of paying the worker twice his wage.

Required elements of all employment contracts, including job description, compensation and working hours, are spelled out. The new decree also specifies limited conditions under which contracts can be terminated, such as incompetence and serious rule-breaking.

Protections for temporary agency workers are included in the statute, such as their right to earn the same pay as comparable workers at the firm to which they are assigned. When mass layoffs occur, the law directs employers to prioritize retaining sole breadwinners who need to provide for a minor or elderly person.

It also contains measures to help employees cope with job loss. Thirty days’ written notice, or one month’s wage, is required for terminations in a variety of situations. And the law identifies the circumstances requiring severance pay. In general, workers receive one month’s wage for each full year worked.

Curbing labor abuse
Simply requiring written contracts and instituting the double-wage penalty will do much to stem the abuse of China’s millions of migrant workers, says Tim Costello, co-director of Global Labor Strategies, a research and advocacy group based in the United States. Currently, he says, many workers flocking from rural areas to work in factories do not receive contracts and find themselves without much recourse if their employer fails to pay them.

He also says the rules on severance promise to help workers, given high turnover in China and the country’s limited aid to displaced employees. “Severance pay is really important in an economy where you don’t have much of a safety net,” he says.

In writing the statute, Chinese officials borrowed heavily from Germany and other European nations, says Andreas Lauffs, head of the Greater China employment law group of Baker & McKenzie. For example, he says, the law gives a good deal of responsibility to unions and employee representative congresses, which are similar to the “works councils” common in Europe.

Lauffs says that although attention to the law has focused on its rules for individual contracts, it bestows plenty of power to collective worker groups. Article 4, for example, gives employees and employee groups some authority over work rules. “The employee representative congress or all the employees, as the case may be, shall put forward a proposal and comments, whereupon the matter shall be determined through consultations with the labor union or employee representatives conducted on a basis of equality,” it reads in part, according to the Baker & McKenzie translation.

Lauffs says a recent meeting with a member of China’s National People’s Congress who worked on the law failed to clarify whether “on the basis of equality” means the union will have a veto over work rules. ” ‘Consultation’ means at least the union has to be heard,” he says.

The question of authority over work rules was among the lightning rods for controversy last year. A draft of the law more strongly indicated that employees or their representatives could block company rules. The American Chamber of Commerce in Shanghai warned of management “chaos” if all rules and policies required the approval of employees. In comments to government officials, that group also argued that a draft of the law was vague about what sorts of work rules were at issue.

Chinese officials appeared to take those points into consideration in writing up the final version, softening the language on employee power over rules and offering examples of the kinds of rules covered.

In July, the American Chamber of Commerce in Shanghai said it welcomed the new law as well as the way Chinese authorities had invited the public to make comments on it. “We support the law and the process by which it is has been developed,” the chamber said.

The chamber also made a plea for evenhanded enforcement: “As we have previously stated, consistent enforcement of the labor laws will be crucial to solving many of the labor practice problems in China.”

Stepping up enforcement
Enforcement of labor rules and other regulations in China has been uneven historically. And China’s official labor union, the All China Federation of Trade Unions, has been criticized as colluding with management more than aiding employees.

But there’s reason to believe things are changing on the labor front, Lauffs says. With the urging of top Chinese leaders, the All China Federation of Trade Unions has been aggressively organizing in foreign-owned companies, Lauffs says. These efforts include establishing unions in Wal-Mart stores in China. Union officials could play a role in ensuring enforcement of the new contract law, he argues. “Labor unions are becoming more assertive,” he says.

Then there’s the overall Chinese push for a more harmonious society. The need for greater worker protections was underscored recently by allegations of slave-like conditions in brick kilns in China. According to news reports the past few months, authorities rescued hundreds of people who had been forced to work long hours in kilns. Reports said dozens of children were found working in the kilns—a disturbing situation covered in the Chinese media.

Although the level of enforcement for the new law remains to be seen, companies operating in China would do well to study the statute and update their practices accordingly, says Mercer’s Malila. She says human resource departments will need to gear up to make sure they abide by the contract-writing and notification requirements. In addition, she foresees it becoming more difficult and expensive to terminate workers.

“Employers need to be sure they’re careful in hiring employees,” says Malila, who is based on Shanghai.

Layoffs, severance eased
The new law, though, doesn’t just look out for workers. Lauffs says one clause provides new legal grounds for a mass layoff—defined as a workforce reduction of 20 or more people or 10 percent or more of a firm’s employees. Added to layoff rationales such as bankruptcy and serious production difficulties is “another major change in the objective economic circumstances relied upon at the time of conclusion of the employment contracts, rendering them unperformable.” The catch-all phrase should give employers more flexibility when it comes to large-scale layoffs, Lauffs suggests.

The statute also sets limits on the severance pay of highly paid employees. If an employee’s monthly wage is more than three times the average monthly wage in the area, his or her severance pay rate is capped at three times that average monthly wage per year worked. And the length of service used to calculate the severance pay for that high-income worker is restricted to a maximum of 12 years.

Lauffs says this feature of the law will drastically reduce the severance payments of executives in China, including expatriates who are directly employed by a Chinese subsidiary. He gives the example of a manager earning $1.2 million annually who is employed for two years and then terminated for incompetence. “Under the old law, he would be entitled to one month’s salary for each year of service, here $200,000,” Lauffs says. Under the new rule, Lauffs says, that severance payment could shrink down to roughly $2,000.

Malila cautions, however, that firms may be asked to fill in the gap for their senior managers. “We expect employers will revisit contracts with key employees and consider other ways to make up the loss in benefits under the law,” she says.

Relaxing the rule on mass layoffs may not be much of a boon to businesses in China, says Beijing-based business consultant Teresa Woodland. She argues that companies generally are growing amid the country’s boom, and major layoffs still will require negotiations with local government leaders.

Even so, Woodland is optimistic that the new law will ultimately help, rather than hurt, companies in China. She argues it could give workers at abusive Chinese firms a means to protect themselves without turning to protests.

“Yes, it increases regulation, but I think it’s workable,” she says. “You don’t hear people screaming, ‘We can’t work with this.’ “

Costello, of Global Labor Strategies, wishes the law had gone further—to authorizing independent unions. He also is concerned that the statute’s exemptions for part-time workers could lead to abuses.

But overall he thinks it is a “good law.” Although Costello primarily worries about workers, he thinks the new rule will eventually benefit businesses as much as or more than employees. In his view, better-paid workers with greater job security will turn into good consumers. “It can really unleash a huge market in China,” he says. “This is a step in that direction.”

Workforce Management, August 20, 2007, p. 35-39 — Subscribe Now!

Some workforce and recruiting experts agree with the U.S. Labor Department’s decision to retire America’s Job Bank at the beginning of this month.

    Among them is Peter Weddle, recruiting analyst and executive director of the International Association of Employment Web Sites industry group. Weddle, whose association includes the major job boards CareerBuilder, Monster and Yahoo HotJobs, says the free public job site replicated services offered by a range of private-sector sites. These include sites targeted at lower-wage and blue-collar workers, he says.

    But Weddle’s, the recruitment consulting and publishing firm that Peter Weddle heads, gave America’s Job Bank one of its 30 “2007 User’s Choice Awards.” These are based on ballots cast by recruiters and job seekers, and “recognize the Web sites that provide the best level of service and value to their visitors.”

    Weddle also notes that the closing of America’s Job Bank “has been fraught with confusion.”

    Still, he thinks the Labor Department’s move was sound. “Why should the government duplicate what the private sector is providing already?” Weddle says.

    America’s Job Bank was the United States’ first national job site on the Internet and, until its shutdown, was still one of the biggest. The Labor Department last year announced its plan to close the site. But the decision has come under fire, in part because of evidence the site was a cost-effective, appropriate government service. There’s also widespread concern that the phase-out will cause harm to employers, job seekers and states, despite at least two private-sector efforts to replace America’s Job Bank.

    The end of America’s Job Bank is likely to result in short-term problems but a long-term payoff, says Mike Chamberland, a fellow at research group the American Institute for Full Employment. Chamberland hopes that private-sector efforts to replace America’s Job Bank will be able to make improvements quickly and to address what had been some of the major flaws in the site. Among these, he says, is a user interface that has lived a long life with little updating. America’s Job Bank crammed more information onto its home page than do some major commercial job sites. Chamberland says other sites have been able to adapt quickly and learn from private-sector sites like Google.

    The primary weakness of America’s Job Bank was its high cost, Chamberland says. In a memo last year, the Labor Department said the cost of operating the site “has been as high as $27 million per year, with a current operating budget for maintenance-only of $12 million per year.”

    JobCentral National Labor Exchange, one of the private-sector services that aims to replace America’s Job Bank, is expected to cost less than $6 million annually, says Bill Warren, executive director of the DirectEmployers Association, which launched the JobCentral service.

    In addition, Chamberland says, other sites in recent years have built tools that go beyond keyword searches to match job seekers with employers, using artificial intelligence to find better fits. “Someday you will be able to put your résumé out on one of these sites and get good job leads instantly, even if the posting isn’t on the same site you are,” he says.

To some critics, the Labor Department made a smooth shift away from America’s Job Bank all but impossible in its initial decision to shutter the free government job site.

    According to this view, given such factors as high job insecurity and an already weak economic safety net for workers as well as business concern about finding the right talent efficiently and effectively, closing America’s Job Bank amounts to a misguided move.

    AJB has not been a particularly expensive program, considering the scale of federal budgets. The cost of operating AJB has been as high as $27 million per year, the Labor Department said in a memo last year, “with a current operating budget for maintenance-only of $12 million per year.” The Labor Department’s discretionary funding for 2006 totaled $11.3 billion.

    Robert Reich, the former U.S. Labor Department secretary who helped establish AJB, is among those disturbed at the site’s demise. “Private-sector job banks are doing a good job and meeting an important need, but they can’t replace a free service on such a very large scale, which is available to all employers and job seekers free of charge,” Reich said in an e-mail interview. “It seems to me that the social benefits of efficiently and quickly matching employers and job seekers far exceed the government costs of providing this service.”

    Not so, says the Labor Department.

    “There is no evidence that AJB created an economic efficiency and quickly matched employers and job seekers. The private sector provides this service more efficiently, more effectively and in a more customer friendly manner,” the Department said in a statement. “Low-income workers who access electronic labor exchange services in One-Stop Career Centers are being directed to either state or private job sites in large measure, so even the publicly funded system recognizes the limited utility of AJB.”

    How well states, employers and job seekers manage in the days and months after the AJB’s June 30 closure will go a long way to determining whether people think retiring the job bank was the right thing to do.

    Bonnie Elsey, director of workforce services in Minnesota’s Department of Employment and Economic Development, is reserving judgment. She can imagine the private sector picking up AJB’s slack just fine, with market competition forcing would-be successors to keep their technology current. Echoing a Labor Department point, Elsey also says job seekers already must go to other sites besides AJB to get a comprehensive picture of the available job listings.

    But when asked if it is wise, therefore, to close America’s Job Bank, she hesitates.

    “I won’t be able to tell you a true answer to that until we see if the new partnership with the private sector works.”

Whether there’s a need for states to swap job listings or for a national labor exchange is subject to debate.

    The Wagner-Peyser Act, passed in 1933, established a nationwide system of public employment offices. And for years, states have sought to create a more efficient labor market by sharing job-opening information among themselves through America’s Job Bank, the public job Web site slated to close June 30.

    Federal law also calls for the secretary of labor to “assist in coordinating the state public employment services throughout the country and in increasing their usefulness by … promoting uniformity in their administrative and statistical procedure, furnishing and publishing information as to opportunities for employment and other information of value in the operation of the system, and maintaining a system for clearing labor between the states.”

    But in choosing to shut down AJB, the U.S. Department of Labor argued that the Internet has solved the problem of sharing job-opening data across state boundaries.

    “With the advent of the Internet, the need to ‘clear labor’ among the states, i.e., connect job seekers and employers across state lines, is no longer an issue,” the Labor Department said in a memo to state officials last year. “The Internet has enabled easy and universal access to job openings.”

    State officials, however, have taken a different view.

    “Termination of AJB services would leave the country without a national labor exchange specified in Wagner-Peyser that addresses a number of workforce needs,” a group of states and the Virgin Islands wrote in a letter last year to the Labor Department.

    The group, called America’s One-Stop Operating System Consortium, is responsible for a job-matching and case management software system for workforce development professionals. In its letter, the consortium argued that a central jobs bank makes for more efficient job searching at public employment offices. “Without the AJB application and database, users of the nation’s One-Stop Career Center public resource rooms will tie up limited public access workstations searching more web sites and conducting longer job searches.”

    Last September, the National Association of State Workforce Agencies passed a resolution that urged “the Congress and the United States Department of Labor to identify, invest [in] and implement a new technology to facilitate the sharing of interstate job matches.” The association, a group of state administrators of workforce programs and services, also called for continued operation of AJB until a new system is implemented.

    “These actions by the federal government to identify an effective interstate system would conserve millions of workforce system dollars that would otherwise be spent by individual states to replace AJB,” NASWA said in its resolution.

    Earlier this year, NASWA sent its resolution to members of Congress, with a request that $6 million in AJB funding be approved to keep the service alive for another year. But the plea so far has fallen on deaf ears.

    Even as it hoped Congress would save AJB, NASWA decided in March to endorse the JobCentral National Labor Exchange, one of the private-sector efforts to replace America’s Job Bank. The JobCentral exchange was launched by nonprofit group the DirectEmployers Association. NASWA officials, including president Ted Halley, have seats on an executive committee governing the JobCentral exchange.