Gillian Flynn – Page 9

December 1, 1994July 10, 2018

Attracting the Right Employees and Keeping Them

Every organization has its star employees. They may be the folks sitting in the senior ranks at headquarters. Or they could be the high-potential new kids on the block. But they all have something in common: The ability to continually outperform their peers, the determination to constantly strive for improvement and the creativity to reinvent their job tasks.

Unfortunately, they may lack a quality just as important to your business: company loyalty. In these days of downsizing, belt tightening, and limited advancement openings, your best and brightest could be turning a roving eye to other opportunities. Think it won’t happen to you? Think again. Because when businesses began to hack away at the employer-employee contract, they may have cut some of their losses, but they also severed a work-force mindset: Today’s employees put their own welfare before their company’s, and if that means packing up and heading somewhere else, then so be it.

With limited resources and a finite supply of talent, companies must pay extra attention to getting the right employees—and keeping them.

Smart companies recruit employees they can retain.
Dallas-based Texas Instruments was hiring more than 3,000 college graduates each year back in 1984. One decade and several downsizings later, the company extends only about 200 job offers to college grads each year. With this limited recruitment effort, retention depends on getting the right people in the right job in the first place. “The requirement has changed,” says Dan McMurtrey, manager of placement services with TI’s corporate HR department. “It’s not: hire 200 good students. It’s hire 200 superb students.”

Unfortunately, not too long ago, Texas Instruments’ recruitment strategy wasn’t reaching the superb students. The company was visiting a limited number of campuses and administering an assessment test battery that took more than three hours for students to complete. “We were taking an awful lot of flack in working with campuses. Students didn’t like it, deans didn’t like it. This battery was worse than any final exam these students would take,” says David Current, manager for TI corporate university relations.

That way of testing created a twofold problem. First, it restricted the number of students that TI could reach; second, it didn’t give candidates much of a feel for what TI was like as a company, and it certainly didn’t promote the company’s best attributes. Current decided that for successful recruitment, TI would need a tool that would assess the student’s fit with the company while serving as an introduction to Texas Instruments. But, in order to engage a large number of students in the first place, it also had to benefit the candidates. Says McMurtrey: “We said ‘How do we package some sort of approach so that the student will want an assessment test?’ It seemed ludicrous at the time, but we think we’ve done that.”

The result was “Engineer Your Career,” a tool that assesses candidates both professionally and personally for their fit with TI while introducing the student to the company’s culture—and providing career planning information. The kit, designed by Personnel Decisions Inc., contains a disk which opens up a brochure that tells the student a little bit about TI—its products, its history, its values.

Following the introduction is a self-selection tool. “This gives the student an opportunity to basically open the doors of Texas Instruments, look inside and see what our environment is,” explains Current. In the self-assessment, candidates respond to 32 questions about work preferences, such as work environment, working conditions and relationships. In answering, they also may respond to what degree they agree or disagree. For instance, one question asks how the candidate feels about smoking in the office, and the student can reply with a response from strong agreement to strong disagreement. At the end of this section, the computer displays a bar-like code to show the candidate’s relative compatibility with the company. If there’s a potential problem, it informs the student of this. So in the case of smoking in the office, if the student responded that he or she felt strongly in favor, the computer would signal that TI has a non-smoking environment, which may be an issue for the student. It also highlights strong matches. By being honest and open about TI’s work environment and expectations, the company effectively allows a job candidate “inside” the company, so the applicant can make an informed choice rather than finding out too late that the situation won’t work.

Following this section is a built-in resume writer for the student to complete, followed by job opportunities that are currently available at TI. Because the job listings are on disks, TI can update them each time it issues a new disk. A “career mapper” section gives TI further information about a candidate’s skills and interests to better match the student with openings.

All students who complete the “Engineer Your Career” program and mail it to TI receive direct feedback on their fit—as well as a manual that informs students on getting started in the work force. “We think we’ve packaged assessment and product advertising in such a way that it’s desirable even if the individual doesn’t want to come to TI,” says McMurtrey. “It’s a useful, initial graduating-senior self-help kit.”

TI is currently introducing the disks to campuses where it does not usually recruit, and is awaiting the results. McMurtrey predicts that the Engineer Your Career program will benefit recruiters on three levels. First, TI may use the disks to prescreen candidates in deciding which students they want to interview when visiting campuses. Second, TI can use the personality assessment to screen out individuals who just wouldn’t fit, no matter how well-qualified they are. For instance, the company is evolving toward self-directed work teams, so a person’s inability to be a team player would definitely weigh against him or her. “Our decision to select an individual certainly won’t be based just on skills; it will be biased heavily toward such things as interpersonal relationships,” explains McMurtrey.

“By having students apply for jobs on disk, we can reach a wide range of universities. We can find the applicants who are the best, who fit the best.”

Finally, by providing an honest view of TI values and culture, students go into the process with open eyes. Says McMurtrey: “Many may decide to self-select out, and that’s good. It’s going to increase the quality of the face-to-face interviews that we do have on campus.”

Current sees nothing but benefits from the new process: “This disk is an important tool. We can’t continue to use the same apparatus to mount a campaign at a wide range of universities. It’s cost prohibitive. With this approach, you can effectively reach every campus in the nation. This will allow us to find the ones who are the best, who fit the best, and allow us to engage those individuals.”

Another company using testing in its recruitment process is ServiceMaster. The Downers Grove, Illinois-based company, which employs people for pest control, lawn treatment, and cleaning services, knows that to run a successful business, each of its 36,000 employees must have certain work ethics.

For one thing, these employees, who often work at people’s houses and businesses unattended, must be trustworthy and responsible. “Our first objective is to keep risky employees out of the organization,” says Bill Selkirk, senior administrator of loss control, claims and safety management. “We believe that every applicant is a potential success or a potential loss. We want to make sure that we’re on the potential win side of the picture.”

Pre-employment testing plays a major part of ensuring retention. Screening out those who will not succeed with the company saves it time and money. ServiceMaster’s test screens for seven risk factors not wanted in the organization. These are:

Theft
Drug Use
Violence
Poor customer relations
Poor work values
Unsatisfactory cognitive skills
Unsafe work habits.

The test, developed by London House, doesn’t just cover whether a worker has engaged in certain activities in the past, but whether the candidate has a propensity toward certain behavior or even tolerance of it. For instance, to keep drug users out of the company, ServiceMaster goes beyond physical testing to find candidates’ psychological viewpoints. “Alcohol or drugs are only tested for during a short window of time in a person’s application process,” says Selkirk. “We look at a person’s attitude toward alcohol or drugs. If they are tolerant of it in the workplace, we don’t want them. This doesn’t mean that they take drugs or alcohol, it just means that they have that propensity.”

Attitude toward safety was another important issue in employee retention. Because 90% of workplace injuries are due to people’s behaviors and attitudes, rather than any sort of malfunction, screening out candidates who ignore safety considerations is a must. And it worked: After the test was in place, ServiceMaster enjoyed a 44% reduction of injuries in those employees hired by testing.

Just as important, the test enabled ServiceMaster to extend employment invitations to only those employees who indicated that they would stay with the company for a substantial amount of time. This is significant, because ServiceMaster is in an industry that traditionally has trouble with retention. “Being a housekeeper is not exactly most people’s ultimate goal in life,” says Selkirk. “So for many, many people it’s a stepping stone. We really want to control that. We want people who want to be in a service-minded career, who are not ashamed of being a housekeeper or a maintenance mechanic or a bug sprayer. We want people who have a high level of service-mindedness and low turnover propensity, who will give their best no matter what job they have in life.” The testing has helped screen out these job hoppers: The company went from turnover rates of about 180% a year down to about 14% after testing.

First impressions can make or break a relationship.
Every good salesperson knows the customer makes a decision to buy sooner rather than later. Likewise, employee loyalty needs to be cemented in a new hire’s early days. With a good initiation, the company can continue to build employee loyalty from the beginning. With a shaky introduction, the company must backpedal to right its wrongs before it can proceed. Corning Inc. has made a strong commitment to getting employees off on the right foot. After implementing an orientation program in 1983, the Corning, New York-based company watched retention rates rise 25% among employees who underwent orientation.

So important is a smooth introduction to Corning that orientation is the first thing an employee does. “They don’t even report to their place of work the first day,” says Susan Richter, senior education consultant. Instead, orientation classes are available each Monday, with only two new hires necessary to form a class.

On the first day of orientation, new hires are steeped in the Corning culture. They learn about its history, heritage, values and the various positions within the company. On the second half of the day, they take care of some business like signing up for benefits and receiving their security badges.

The new hire also receives a new-employee workbook, which covers each of the seven learning modules that new employees will go through, along with questions and summaries of each section. Richter says that the workbook gives orientation a sense of validity—it seems like a carefully thought—out program rather than a series of time-consuming lectures. “It’s designed to let employees know what is going to happen throughout the orientation process—and the fact that it is indeed a process. It’s not something you just go through, sit there and be done with it.”

Corning then waits six weeks before finishing the remaining five modules of orientation. This time period allows the new employees to become more familiar with the company as well as to spend some time learning about their new division. At the end of the six weeks, all those hired within a six to eight-week time period attend a two-day orientation session. They begin the day learning about Corning’s performance development and review process-what to expect and how to prepare for it.

Because diversity is high among Corning’s values, new employees also attend a module called Valuing the Individual. Here, employees break into three groups and discuss the advantages and disadvantages of being a white male, a woman and a minority at Corning. Richter says this module is particularly important in opening the diversity discussion among new hires and sending a signal that Corning values diversity. “It’s a real eye-opener for some people who think that there are no disadvantages to being a white male. Well there are. Or those who think there are only disadvantages to being a woman. Well that’s not true, there are advantages to being a woman at Corning as well,” says Richter.

The second day begins with teaching new employees how to read parts of the annual report so that they understand what it means to them as an individual and how their actions effect the company. Speakers introduce such simple ideas as encouraging doublesided copying to save paper and discouraging first-class flying on business trips. This is important, because spending habits at an employee’s former company could be very different from what’s accepted at Corning. This makes it clear from the start what is OK and what is not.

“New employees decide within the first six or eight weeks whether they’re going to stay at a company. Orientation gives people the sense of belonging.”

Because new employees may feel hesitant about using the company’s resources at the beginning, a person from the Employee Assistance Program tries to encourage the program’s use. Says Richter: “It really makes everyone as an employee feel that if they’re just having a really rotten day, and they want someone to talk to, these people are here to listen. You don’t have to have a drug problem or be in bankruptcy or have marital problems. They really eliminate some of the myths that are there.”

Finally, members of Corning’s research and development, and engineering groups present some of their projects. “It really is a big show and tell,” says Richter. “They set up a table full of products. For some people this may be the only time they see some of the end products that Corning sells. A lot of people are familiar with the cup or plate that Corning sells, but they’re not familiar with headlamps or TV tubes or cellular ceramics.” Again, it’s a matter of making the employee feel familiar with the company.

Richter says that although orientation is currently only for salaried employees, Corning is looking into shaping up its non-salaried employee orientation as well. She says that Corning’s orientation plays a major role in employee retention. It provides new employees with a lot of contacts within the company, and it ensures that they have a smooth move into the culture. “Employees decide when they join a new company within the first six or eight weeks whether they’re going to stay at that company. That first impression is such a lasting impression, which is why we try to get the orientation done in that time frame. It gives people the sense of belonging and being valued and important. We try to capitalize on that.”

A little attention goes a long way.
Turnover doesn’t always happen right away. Most employees want to make their situation work, and leave only when they feel they have no other choice. The Big Six accounting firm Deloitte & Touche discovered a major problem of this sort two years ago: It was losing its women employees.

It wasn’t that the Wilton, Connecticut-based company was hiring unevenly; in fact, for the past 10 years, approximately 50% of its new hires have been women. and because it takes about 10 years to become a partner, the firm was expecting to see an increase in the number of women coming up the pipeline for candidacy to partnership. Instead it was seeing a decline. “That concerned us from one primary standpoint,” says Jim Wall, national director of HR. “We were having a talent drain of capable women. We had to do something about it.”

Deloitte & Touche took action. It launched a Task Force on the Retention and Advancement of Women to find the problem and fix it. It retained the services of such groups as Catalyst, the Charles Rogers Group and Work/Family Directions. It also interviewed women at all levels of the company, as well as women who had left the firm.

What they discovered were three main areas of complaint. Although work-life balance did play a part, it was really the work environment and what they felt was limited advancement opportunity that had women up in arms. They felt they were being left out of both informal networking and mentoring systems. Fixing this would be a challenge, because the exclusion was subconscious rather than deliberate. “In a male-dominated business society, men network, and often do so—I don’t believe intentionally—but often at the exclusion of women,” admits Wall. “Informal mentoring systems within the firm worked better for men. Men tended to sponsor other men. Mentoring occurred as a more natural process for men than it did for women.”

To solve this problem, Deloitte & Touche knew it could do nothing less than retool the work environment itself. Beginning in early 1993, it made some changes. One such change was a renewed commitment to flexible work arrangements, such as reduced workload and flextime. The firm also developed plans for company-sponsored networking and formal career planning for women. Also, the firm’s 5,000 partners, senior managers and managers attended two-day workshops concerning “Men and Women As Colleagues,” at a price to Deloitte & Touche of about $3 million.

“We were having a talent drain of capable women. The informal mentoring and networking systems within the firm worked better for men than women.”

The result? Retention of women at all levels has risen, and for the first time in the history of the firm, turnover rates for senior managers—the last position before partnership—have been lower for women than men. Deloitte & Touche is finding that retaining talented women also attracts talented women: It now has the greatest number of female employees in the Big Six. Says Wall: “The external recognition in the marketplace is helping us retain people. It’s helping us develop our own business. It’s helping us tremendously in recruiting. The business reasons for doing this are coming home very quickly.”

But it’s not just women who need a commitment from their employer. All employees want recognition. All employees want to feel their employer takes an interest in their career. And today that desire for attention is elevating from a plea to a demand. “There’s been a change in the employer-employee contract,” says Lincoln Norton, CEO and chairman of HRSoft, Inc., which produces HR planning software systems. “Retention today is more about what’s in it for the employee. Vertical growth in a down- sizing environment doesn’t happen. So when you’re down to that, the employee has to say, these are the reasons I work for this company: I’m learning, I’m growing, I’m evolving.”

Kansas City, Missouri-based Hallmark works hard to identify its high-potential employees early on to ensure they are challenged and kept interested. It’s a major part of the company’s culture for senior managers to identify these employees, and take them under their wings, nurturing them into the company. “It ranges from inviting them onto special project teams or planning sessions or finding reasons for them to make presentations at higher-level staff meetings to senior execs,” says Dave Pylipow, director of employee relations.

Pylipow estimates that the senior-level execs at Hallmark could name right off the top of their heads the 15 most important players in their divisions for the long-term. “Once they identify a high-potential, they begin to figure out ‘How do I keep that person plugged in?'” says Pylipow. “Most of those folks just crave the opportunity to show you what they can do, and respond well when they know they’re being recognized.” Hallmark has indeed tapped an important part of employee retention. In a Robert Half survey of 150 executives, 34% said that it was lack of praise or recognition that most often caused employees to leave a company.

On top of providing this sought-after attention, Hallmark has a number of other initiatives to direct its employees toward a future with the company. For instance, Hallmark’s profit-sharing system provides larger chunks of money to employees the more years they rack up.

Also, to demonstrate the value it places on long-term employees, the more seniority a worker has, the more steps must be taken for any termination proceedings. Wall himself must sign off on any termination for employees at Hallmark two to four years. If an employee has been with the company five years, it takes two vice presidents to approve termination. “Employees here know they’re going to be treated fairly,” says Wall. “It doesn’t mean we don’t fire people, because we do, but anybody who does lose their job has had a very thorough review of their case.” This process not only emphasizes the importance of tenure, it also provides employees with a sense of security and the freedom to share thoughts or to disagree with superiors without worrying about it coming back to haunt them.

Finally, Hallmark celebrates seniority by recognizing employee anniversaries. In particular, the 25th anniversary brings a big celebration, with an appearance by the chairman of Hallmark if possible. Little gestures like recognition and praise have reaped big rewards for Hallmark—it has a turnover of only 5-1/2%—and 3,000 employees, some now retired, have made it to the 25-year mark with the company. “Folks tend to stick around for quite a while, so we think we’re doing something right,” says Pylipow.

With employees quickly becoming business’s greatest asset, employee retention must become a company’s highest priority. It’s not enough to hope employees will stay. HR must give them the reasons to stay.

Personnel Journal, December 1994, Vol. 73, No. 12, pp. 44-49.

September 1, 1994June 29, 2023

HR Must Take Proactive Steps To Curb FMLA Misuse

Think fast: An employee returns to work on Monday after six months on workers’ comp leave. On Tuesday, he tells you that he needs to take another four months’ FMLA leave. What do you say? How about this: An employee with a history of poor performance ratings is about to be terminated from the company. The day before you inform her, she informs you that severe emotional stress will require her to take time off. Her poor performance history also includes several cases of falsely reported sick days. Can you turn her down? Can you terminate her? Try this one: A new father wants to stay home with his child in the mornings. However, his job as a sales rep receives its highest level of business in the mornings. What do you say?

Welcome to the second stage of Family and Medical Leave Act implementation. You’ve rearranged your leave plan to accommodate the 12 weeks of unpaid leave required. You’ve posted the necessary notice of FMLA rights. You’ve probably even had a few employees out on FMLA leave already, and juggled duties until they returned to their former positions, as mandated. But that, as many employers are discovering, is only the beginning. Because unless you tie up all the loopholes provided by this act, you may be in for an unpleasant surprise. Unless you make 100% sure your supervisors understand this act, you may invite trouble. Bottom line: If you don’t make it your business to keep current and confident on the provisions of the FMLA, you’re allowing this employee-friendly bill to be misused and misunderstood. What was intended to be a shield may become a sword, with the employer held as captive.

The FMLA tends to be an underestimated law. Described by many as a “feel-good” initiative, it’s often pushed to the back of the compliance to-do list, shadowed by the toothier Americans with Disabilities Act (ADA). It is true that other employer mandates have a harsher bite. The Department of Labor’s FMLA action to date has been focused more on resolving cases than on penalizing wayward employers: In the first half of fiscal year 1994, the DOL resolved 278 of 302 violations. Outcomes involved payments of back wages, restoration of benefits, and returns to former positions rather than harsh penalties. However, signs loom on the horizon that the DOL is tiring of issuing stingless reprimands. J. Dean Speer, director of policy and analysis for the Wage and Hour Division, has stated that his division, which oversees the FMLA, is encouraging the labor solicitor’s office to begin pursuing FMLA cases “to establish a presence.” And many predict that, although FMLA lawsuits won’t reach the proportions of some of the civil rights litigation, they will make more than a ripple. Employers who hope to reach compliance through trial and error may get themselves into trouble along the way. “There will be enough lawsuits that employers should not put it on the back burner,” says Janice Stanger, an associate with the San Francisco office of William M. Mercer. “They want to look at compliance in a proactive and intelligent fashion.”

And, unfortunately, non-compliance is only one potential snag. On the flip side of this issue is over-compliance: Many companies, all too aware of our litigious society, follow the dotted line to correct implementation, and on the way allow employees to get away with more than the law ever intended. And it’s easy to see why—the FMLA favors the worker. Consider this: When someone is about to be hauled off to jail—denied liberty—the arresting officer must read the person’s constitutional rights. Yet the employer must provide a worker his or her FMLA rights in writing.

Some abuse can be prevented, some can be curbed.
Certainly most employees will use FMLA in the spirit in which it was intended. It’s not as if masses of spiteful workers are eyeing the Act and plotting its abuse. Yet intentional misuse of the FMLA continues to surface.

Abuse has become a serious issue only recently. Early on, the FMLA had enjoyed a period of good will atypical of most new legislation. For instance, a 1993 survey conducted by the International Foundation of Employee Benefit Plans revealed that of almost 100 respondents, only 1% felt they’d experienced intentional abuse of the Act.

It’s likely that companies themselves gave the current abuse an inroads by not focusing on its prevention in the infancy of the FMLA. For instance, a 1993 Hewitt Associates survey revealed that of 628 employers, only 18% were concerned about potential abuse by employees. More were worried about administrative questions, such as recordkeeping. Such inattention has left the door open for the abuse—and concern over abuse—that we see now.

“There is a lot of fear among our members that their employees will take advantage of the situation and will try to take time off for conditions that aren’t covered by the law or aren’t authentic,” says Mary Reed, legislative representative for the National Federation of Independent Business, which has about 30,000 members affected by the FMLA. Adds David Block, a partner in the New York City-based law firm of Jackson, Lewis, Schnitzler and Krupman: “Most employees are good employees. But it’s those people who know how to work the system where it’s going to be the biggest problem.”

The abuse doesn’t always look the same. It could be an employee documenting exaggerated—or untrue—medical complaints. It could be a new father taking time to spend with his child, but actually using that leave working at his in-home business. Employees may take advantage of the overlap between the FMLA and other laws to take more than their share of time off. The extent and intention of the misuse may vary, but it’s still misuse.

Human resources plays a major part in protecting business from abuse—whatever form it takes. In a 1994 survey conducted by William M. Mercer and the University of California at Berkeley, more than half of 299 respondents reported that in their companies, human resources would be the primary administer of the FMLA.

One obvious role for HR to play in fending off FMLA abusers is that of police officer—and sometimes detective. When faced with an employee applying for leave, HR must first assess the situation. Does the certification seem sound, or does it need further investigation? “You hope that the instances of employees just getting a doctor to sign [medical certification] are small, but I don’t think that’s going to be the case, especially with what I call the more suspect,” says Block. “Certain things are very easy to document and are very tangible. Other issues, such as stress and back injuries, you can’t really tell.”

Businesses shouldn’t feel uncomfortable challenging suspect serious health conditions. It’s their right. Yet it is a rather prickly maneuver. In this situation, several issues arise. First is the wording of the FMLA itself, which demands that an employee’s reported condition only be questioned in good faith. So, in the earlier case of the about-to-be-terminated employee whose leave request was suspicious, a poor service record would not support a challenge. “If you’re going to doubt a medical certification, it’s got to be based upon some evidence,” says Lynn Outwater, a managing partner in the Pittsburgh office of Jackson, Lewis. Outwater gives examples of situations that employers may—and probably should—challenge: an employee who, in the past, had a workers’ comp certification proven false, or an employee who communicated with witnesses the untruth of a medical certification.

If an employer does decide to challenge the certification, it can demand two more medical opinions, but is required to pick up the tab for these. The employer may select the physician who’ll provide the second opinion, but the physician must have no previous relationship with the company. The third opinion must be given by a health-care provider who is mutually chosen by the employee and company. It is a final and binding opinion.

Because eliciting three different medical opinions can take so long—and rack up quite a bill in the process—Block warns that in absence of a bona fide doubt involving a substantial period of leave, the company may be wise to just accept the first certificate. Those who are determined to game the system have the advantage. “The potential for abuse is that employees will be able to get notes that say what they want to say because in general, physicians will accommodate their clients,” says Block. “From a malpractice point of view you can never be wrong by saying ‘Stay home and rest.’ So there’s no incentive for the physician to say anything other than what the employee would like to have said.”

However, a quick check into the physician’s history with the employee may prove beneficial. For example, Outwater cites an experience in which an employee’s physician turned out to be a relative. The worker received false certification and was going to use the time to take a vacation. An employer can give additional discouragement to this type of abuse by forcing employees to use vacation or personal time accrued as part of the FMLA leave. This will keep workers from trying to get two vacations for the “price” of one.

HR must get beneath the surface of the FMLA.
Not all misuse of the FMLA is intentional. Very often, employers themselves are indirectly responsible for the negative outcomes of its use. That’s because those granting leave haven’t been properly educated on the more intricate details of the Act.

HR needn’t start from scratch. Most companies know the basics. But because the FMLA has been in effect only since August 1993, many employers get stumped when it comes to the trickier questions.

“The first thing that employers should be cognizant of is the rather low threshhold it takes to trigger eligibility for leave,” says Block. Take the following example: An employer reports to her supervisor, explaining that her stomach hurts and she needs to go home. The supervisor assents and tells her to take a few days off. For two weeks, the employee remains out. A few weeks after returning, she becomes ill again. The worker contacts her supervisor with the news that the stomach ailment is serious and she’ll need the full 12 weeks of FMLA leave. But the manager only grants 10 weeks, reasoning that the employee has already been out for two. It seems logical. It’s also illegal. Because from the point that the worker informed the supervisor of her illness, the employer was considered on notice that the employee could be eligible for FMLA leave, and was obligated to give the employee her FMLA notice. So the firm loses two weeks that could have been chalked up to FMLA leave because the supervisor overlooked a policy detail.

The employer, however, is not completely stuck. Once a health condition is identified as being covered by the FMLA, leave may be applied retroactively—but only under specific conditions. These are:

The employee is still out on leave when the FMLA qualifications are discovered; and
The employee is out on paid leave.

All other situations would prevent an employer from applying FMLA leave retroactively.

Ellen McLaughlin, partner at Chicago-based Seyfarth, Shaw, Fairweather & Geraldson, offers another suggestion to keep a grip on FMLA leave. If an employee uses sick days sporadically, have the worker’s physician fill out a medical certification to ascertain whether the illness is due to a serious medical condition. “Then you may get an indication earlier as to whether the time they’re taking off is FMLA leave,” says McLaughlin. This way, if it’s a serious medical condition that is causing the spotty attendance, the company may count those lost days under FMLA leave—but it must make sure each absence is verified as being caused by the medical condition. “Just saying they’re sick isn’t going to get you anywhere,” says McLaughlin.

Again, the company must balance protecting itself with making leave taking as easy as possible for those who really need it. But if a company must err, it should err on the side of caution. Says Block: “You’re never wrong in jumping the gun. If an employee says that it’s not an FMLA [condition], then you can count those leaves as unexcused absences. But you should start getting reflexive.”

Unfortunately, proactive response seems to be the exception rather than the rule. To date, employers appear to have more of a knee-jerk reaction to the FMLA’s mandates. They go through the obvious surface gestures but fail to follow through. For instance, 75% of respondents to the Mercer-Berkeley survey said that they had prepared a formal, written policy on family leave to comply with the FMLA. Yet only about 50% had prepared a form that employees can use to request leave. And less than half had prepared notices to give to employees who request leave. This type of oversight is the very thing that invites misunderstanding. And it’s the type of misunderstanding that can wind up on the DOL’s plate. “The folks over at the DOL are finding that employers are not complying,” says Kathleen Rosenow, consultant, group and health-care practice with Washington, D.C.-based Wyatt Co. “It’s not for not wanting to comply. They’ve tried to comply and something slips through the cracks.”

And there’s a lot that can slip through the cracks. “Administering this law has become a nightmare,” says Block. “It’s different than other laws. The discrimination laws, in Biblical proportions, say: ‘Thou shalt not discriminate against someone because they are white or black; thou shalt not sexually harass.’ This law is very different, it’s a ‘Thou shalt…’”

Yet employers don’t have to allow the FMLA commandments to completely disable them in their quest to keep the workplace running smoothly. Many of the mandates give business the room to tinker with policies—and a few twists of wording can protect the employer, while still serving the employee.

For instance, in addition to policing the amount of time employees take off, HR can also control the period of time in which the leave is taken. This can be done by instituting a rolling year policy. The FMLA only demands that a 12-week leave period be granted within a 12-month period. This allows the possibility of leave stacking, in which employees take 12 weeks at the end of a year and then 12 weeks at the beginning of the next. There is nothing in the Act’s wording to prevent this. However, there is nothing in the Act that says an employer must allow it. By instituting a rolling year policy, the employer ensures that leave requests will be granted only if the time has not been used in the 12 months previous to the request. Such preventive measures as this can give the employer a little perk in a legal environment that tends to favor the employee.

Know the overlaps between the FMLA and other acts.
One thing that must be done is to look at the FMLA in the big picture. The Act has many overlaps with other federal mandates, and a failure to address this can cause serious problems. “If you look at the FMLA in isolation, you can get in big trouble,” says Outwater. “Anybody who’s reading the FMLA and saying, ‘Well, that’s all I have to do’ is making a serious mistake. If the employer has not carefully integrated its policies, that minority [of abusers] is going to be able to get away with significant amounts of time off.”

One situation that allows widespread abuse occurs when an employee is out on workers’ comp leave, and the injury—for instance, a serious back trauma—also is covered under FMLA. Unless HR ensures that the two leaves run concurrently, the employee may take workers’ comp, return to the job and then decide to take another 12 weeks of FMLA leave. Mandating that the two leaves are spent simultaneously is one of the aforementioned policy tweaks that too many employers ignore.

In fact, a lot of unnecessary leave taking can be headed off—and not enough companies are taking advantage of the situation. Here’s a common problem: A company has a clear-cut policy that if a worker is out for an entire year, be it short- or long-term disability, the employer will terminate the relationship. However, if the employer doesn’t explicitly include FMLA in this policy, it may not terminate a worker who decides to take 12 weeks in addition to the provided year. To do so would be viewed as retaliatory, in that the employer is considered to have taken adverse employment action in response to an employee’s use of FMLA leave.

The solution to this is simple: integrate your leave policies. Reword company documents. For example, if you want the total cap of permissible employee leave to be one year, revamp leave policy to be 40 weeks so that when the 12 weeks of FMLA leave is added, the total is one year. “What I suggest to employers,” says Block, “is to discard the concepts of separate disability, maternity and workers’ comp leave. Get everything under the same umbrella. If you don’t do that, you’re creating: (1) Confusion among your employees as to what leave they’re under and (2) The possibility of what I call double dipping: [The employee] takes disability now and later will take FMLA.”

Other acts must be considered in relation to the FMLA, even though they aren’t areas that invite employer regulation. One such act is the ADA, which overlaps the FMLA in several areas. For instance, a problem could show up as soon as an employee requests time off. Here’s what’s happening: An employee with a serious health condition applies for leave, and receives the mandated 12 weeks. At the end of the 12 weeks, the employee asks for another five. If the employee has a condition that is covered under both the ADA and the FMLA, the employee is indeed entitled to the extra five weeks. The EEOC’s current position is that FMLA leave is considered a right, so it does not qualify as reasonable accommodation under the ADA. There’s nothing that can be done to prevent this, but it’s something employers must know. “Sensitize management and supervisors to the interplay between the ADA and the FMLA, because sometimes they’re the ones out there interpreting the policy,” says Outwater.

Those not advised of the overlap between the FMLA and ADA can run afoul in other areas also. For instance, under the ADA, an employer is required to reasonably accommodate the worker by offering intermittent leave, a reduced schedule or a transfer to a less demanding position. However, under the FMLA, the employee is not required to accept the offer and may choose to sit out the full 12 weeks. Those implementing the policy must be aware that: (1) An employee who is covered by the ADA may very well be covered by the FMLA also; and (2) If this person does qualify for FMLA leave, the company can’t compel the employee to return to work.

In addition, if an employee does choose intermittent leave, he or she is entitled to take this for any time period. For instance, if an employee must be gone from noon to 2 p.m. every day, the employer must allow this. However, the company does have the option to temporarily transfer an employee requesting intermittent or reduced work leave to an alternative position, with equivalent pay and benefits, which better accommodates the employee’s recurring periods of leave.

Another careful balance is required when an employee announces the need for intermittent or reduced-time leave. Obviously, most employers want to know why. Under the FMLA, it’s fine to ask the necessary questions. However under the ADA, companies may ask only certain questions. “This is one of the areas that’s sort of a stickywicket with employers—just how far they can go in asking questions,” says Rosenow. She says that employers can handle the situation one of two ways. Employers may decide to play it safe and stick to the ADA line, or go ahead and ask the questions, citing allowance by the FMLA if an ADA complaint occurs.

Spread the word: Training and communication can head off trouble.
Successfully coping with the ramifications of the FMLA is still not the same as successfully using it to your company’s best advantage. Organizations that take proactive steps by training managers, informing employees and allowing appeals find that they can balance the employee-friendly spirit of the law with running a business.

To do this, HR must first ensure that management has been properly trained. Supervisors can’t protect their companies unless they know what the law allows and prohibits. “This statute is effecting the way managers have to manage, the inquiries managers have to make and the actions managers have to do,” says Block. “This requires HR to train their managers, because there’s no way you can expect them to know this.”

Unfortunately, corporate America by and large has been remiss in its commitment to educating its managers. Only 22% of respondents to the Mercer survey have trained supervisors on the FMLA, and what’s even more alarming is that 22% said that they probably would not do any training. This is precisely where companies will run into problems. Says Outwater: “Employers are not providing enough training for their first-line supervisors. The employers who are having a problem are having a problem because they are not educating themselves, they are not educating their key people. I feel that’s where the greatest vulnerability remains.”

Mercer’s Stanger, who co-authored the Mercer-Berkeley survey, advises that employers begin supervisor education immediately. She says HR should shape the program to fit its target audience. While some supervisors take to written material, others respond more positively to an ongoing education program. “I think different things would work at different employers,” she says. “There’s no one right approach that’s going to work for everybody.”

The most important issue to remember is that it’s not supervisors’ primary responsibility to inform themselves on the ins and outs of the FMLA—it’s HR’s job to inform them. That doesn’t mean managers need to be able to rattle off all of the FMLA’s provisions forward and backward. But they do need to be confident on the basics. As Seyfarth’s McLaughlin says: “When the red flag goes up, they need to know it’s a red flag.”

Outwater says that many employers are losing out simply because the people granting leaves haven’t been schooled well enough in the FMLA. “The [employee] doesn’t always say the magic words: Family and Medical Leave Act. They don’t use those terms. They just say, ‘I need time off.’ But [in doing this] they advise you of their illness,” she says. And all employees are required to do is inform an employer of their illness. If the employer is unprepared, it has only itself to blame.

Block says that managers must be drilled to handle situations such as this. “Someone hurts themselves at work, most managers say, ‘Jeez, this could be workers’ comp, get the workers’ comp form.’ You’ve got to train them to think the same way about FMLA. I don’t think a lot of managers out there have been trained in this,” he says.

That doesn’t mean that every time an employee gets the sniffles, a manager has to hover over with an FMLA notice. Block suggests that one practical way of preventing overuse of leave is to make it a policy to send out the forms as soon as a short-term disability is triggered. This makes a good compromise between giving employees room to breathe while maintaining control over leave practice.

“Employers must do more than cross their fingers in hopes the FMLA won’t do any damage. They must consider the FMLA in their business strategy.”

As HR embarks on this type of technical training, it must make the education as clear and interesting as possible. Greta Kotler, vice president of training for the American Society for Training & Development, says that the most important thing is to demonstrate what the FMLA means to supervisors in a practical way. “The real issue is to make it relevant to them and interesting to them,” she says. Kotler suggests using case studies to give managers a glimpse of what the FMLA really looks like in action. Don’t get stuck in textbook mode; instead offer examples, hypothetical or real life, of what can and can’t be done. Kotler worries that companies that don’t do this may not be offering the most effective training. “I think that—and this is what’s probably happening—if you give [information] to people in legal language, they just don’t understand it and aren’t interested. Make it real to them.”

Wyatt’s Rosenow says that unless supervisors are well trained, the ignorance can have a domino effect. Because employees look to their direct supervisors for guidance, a misunderstanding on the part of the supervisor can lead to a misunderstanding by a worker. And this, again, opens the door to unintentional misuse. “[Educating] supervisors is very very important. They are the ones out there on the front,” says Rosenow. “They are the ones getting and retaining and passing on information. If they pass it on erroneously, then you have a gap in the system. But also communication to employees is extremely important. If we miscommunicate to an employee, there’s another gap.”

Communicating with employees is definitely an important step in discouraging misuse. It also plays a large role in spreading the good will that enables an employer to put its foot down while keeping morale up. For instance, an employee who erroneously but vehemently believes that his or her FMLA rights are being violated can do a lot of damage before being convinced otherwise.

A clear communication effort can ensure that employees know that they’re receiving fair—and legal—treatment. New York City-based NYNEX, for instance, took pains in communicating to its work force when it tweaked its already generous leave program to comply to minor FMLA rules. It used several communications vehicles, but most importantly was the company’s commitment to ensuring that employees understood the Act’s implications on a personal level.

To address employees’ individual issues, work/family professionals in regional offices are designated to answer inquiries on an individual basis from employees. “We find that that’s a lot more effective than having one central number where people call in, because these individuals counsel both employees as well as supervisors, and they go through specialized training just to up-date from a benefits standpoint,” says Jacquelyn Gates, director of corporate culture initiatives. “We have a tremendous team of resource people whose major accountability is responding to individual questions from our employees.”

NYNEX also works closely with its union, the Communications Workers of America, to spread the word. Says Donna Dolan, director of work and family issues for District One of the union: “We will do something in terms of written communication, and offer speakers at a local union meeting or a workplace lunchtime meeting.”

Alana Kennedy, managing director of human resources planning, strategy and culture change, says that the company has no problem with the FMLA. This may be due to the fact that the organization, in almost every area, goes far beyond mere compliance with the Family and Medical Leave Act. For instance, it allows employees to take up to a year off, during which time the employee continues to accrue credited service. Because it maintains such a commitment to employees, is the chance of abuse limited? “Absolutely!” answers Kennedy.

Taking an active role in FMLA leave can give a company some control.
However, many businesses simply don’t have the resources to do more than comply with the FMLA. Just instituting compliance can be a serious burden for some. These employers must do more than just cross their fingers in hopes that the FMLA won’t do any damage. They must ensure that the FMLA is considered in their business strategy.

As part of a company’s further integration of the FMLA into the organization, Stanger suggests providing an appeals procedure. Not only does this allow the company to address a worker’s confusion or anger at being denied a leave, but it also gives human resources a chance to correct any wrongs it may have overlooked. “An appeals procedure can resolve disputes before they get to the let’s call in the lawyers level. They can provide a mechanism for a third party who hasn’t been involved in the dispute to look at it objectively,” says Stanger.

Institution of an appeals procedure is another low-cost, high-gain area that is part of a smart, proactive business plan. However, employers haven’t taken advantage of it much yet. Only 27% of companies responding to the Mercer survey have done so, and 53% said they probably never would.

Other initiatives are less policy oriented but still just as important. For instance, although the FMLA allows employees who need to be out the right to leave, it does not give employees the right to drop everything on their last workday and head out. For instance, employees who know that they will be out from May to August should put in the necessary time during April to create a plan for how their work should be handled. Job duties and training remaining staff to handle the extra load should be addressed.

At this point, it may also be wise to suggest the idea of intermittent leave to the employee. For example, at some companies, workers who leave for maternity reasons enjoy the idea of coming back to work slowly rather than staying off the entire four moths and jumping back into full-time hours. These women may take off completely the first two months, return for a few hours a week the third month, and come back for half days in the fourth month. Such resolutions benefit both the company and the employee.

Also encourage workers on leave to check in from time to time. The continued communication will allow co-workers to resolve any questions that may have arisen in the employee’s absence and will also keep the employee feeling part of the work community.

All this may not prevent abuse of the Act, but it may at least, lessen the detrimental effect of losing an employee for four months.

Successful handling of the Family and Medical Leave Act really comes down to what human resources is all about: Learning, communicating, training and keeping a pulse on the organization. It requires careful treading, yes, but it is possible to ensure that the FMLA assists employees without damaging business. Now quick: What do you say to that sales rep who wants mornings off?

Note: Issues discussed in this article are intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Personnel Journal, September 1994, Vol.73, No. 9, pp. 36-45.

August 1, 1994July 10, 2018

HR in Mexico What You Should Know

Rumors abound: The labor is cheap—compensation’s a snap. Nepotism is rampant—recruiting’s a nightmare. Workers are unmotivated—training takes forever. And the stories continue, twisting on themselves, contradicting until it seems that HR issues in Mexico are scattered sections of a puzzle that may never quite fit.

The truth is, as usual, somewhere in the middle. Work issues in Mexico are neither as sunny and simple as the pro-NAFTA rhetoric proclaims nor as gloomy and unnegotiable as anti-NAFTA forces would have you think. Some practices are drastically different and require some serious maneuvering, others are mild variations of U.S. notions. “You should expect differences in the details, but you should expect to be practicing the good basics of HR professionalism,” says Bob McIlmoyle, director of administration, Latin America Group for Wayne, New Jersey-based American Cyanamid Co., a Fortune 100 life-sciences firm that’s operated in Mexico for 30 years.

As more and more companies acknowledge the post-NAFTA business opportunities in Mexico, more and more HR professionals are feeling the pressure to prepare themselves. But how to begin? “The first thing is to get familiar,” says Arturo Fisher, an international consultant for Latin America with Hewitt Associates. Indeed, the key to HR in Mexico, the solution to the puzzle, may be found by simply understanding the pieces. Identify the issues, get to know the country and adjust HR actions accordingly.

Staffing in Mexico: U.S. recruitment amplified.
Obviously, one of the first HR concerns arising when a company opens operations in Mexico will be staffing. Recruiting for the low-wage workers is relatively uncomplicated, because these workers constitute the majority of the labor pool. At operations in cities on the U.S.-Mexican border, for instance, approximately 90% of personnel are low-compensation employees.

It’s not as cut and dried when it comes to staffing high-level positions. To begin with, there’s the usual question of whether to hire locally or use an expatriate. One thing to consider here, particularly for smaller companies, is that under current Mexican labor law, no more than 10% of a company’s employees may be non-Mexicans. So expats can’t be used simply as a back-up measure. Their inclusion in a start-up operation must be a planned, necessary choice.

But even when these key professionals are identified, many companies have difficulty getting their American employees to relocate. Expats worry about the pollution and its effects on children’s health, says Kevin Duffy, director of employee relations for Nabisco International, a division of New York City-based RJR Nabisco. Duffy says that other situations in Mexico contribute to its image problem: “The infrastructure in general, from roads to schools to sewers to housing, is a problem.” Does this mean that expats should be excluded from consideration? Says Duffy: “If you have critical areas of expertise that you need that do not seem to be available in the market, then it may require an expat, but it should be relatively short-term, say two to three years, while developing the local talent.”

Schaumburg, Illinois-based Motorola, which has had operations in Mexico for more than 20 years, has used expatriates, but views it more as a strategic choice than an act of desperation. “If you’re a start-up company, brand-new fresh, you might need to have some expats down there to get the philosophy and the training going—to make sure the ideals are instilled in the new organization,” says Rebecca Lotsoff, manager of international compensation. “That’s probably not something you’ll do long-term, because expats are very expensive.”

But that doesn’t mean that everything’s rosy in local recruitment either. Those deciding to focus on the Mexican market for their high-level talent may have some tough maneuvering ahead. Because of the generally low educational levels in Mexico and the past lack of management development, a good manager may be hard to find. “What makes it difficult is not that there are no good Mexican executives. In fact, I think the Mexican executives are excellent,” says Fermin Diez, principal and general manager of Towers Perrin’s Mexico City of- fice. “The problem is, there are so many companies opening doors and growing their businesses, there’s just not enough to go around.”

Certainly, there are ways of attracting talent: compensation, benefits, a good reputation. But recruitment in Mexico is further entangled by its intense emphasis on networking. Fisher says that this is the way a lot of business is done. “It’s very common in staffing in Mexico for one of the best sources to be networking, especially for professionals and supervisor levels, even manager levels. That’s because of the culture.” Of course, there is nothing wrong with networking itself, as long as it’s simply a way of guiding good people to good jobs. The problem occurs when networking turns to nepotism, or begins to reflect the It’s not what you know, it’s who you know attitude. Nabisco, which has maintained a presence in Mexico for some time, but initiated new operations two years ago, has run into this problem more than once. Says Duffy: “The problem is that even with executive recruiters, you may get a social referral as opposed to a person who’s been referred on his or her technical merits.”

The solution to this problem is that HR professionals simply must recruit more actively, more diligently and more creatively. For instance, Lotsoff warns that it’s important to screen individuals for their actual experience and abilities, and not their executive status. Don’t put blinders on when a vice president’s resume crosses your desk. “Really find out what that person’s responsibilities were and what their talents are,” she says. “Because job titles can be inflated in Mexico; they don’t necessarily reflect the job abilities.”

Also, HR recruiters need to look beyond what’s presented them. Locals and U.S. expatriates are not the only options. Diez suggests investigating other Latin- American countries: The cost may be less than for other expats, because they already have the language and cultural background and so require little training. Also, many Latin-American executives view a move to Mexico as a career stepping stone, and so may be willing to take a more modest compensation. Recruitment can also be successful closer to home. Nabisco hunts down entry-level professionals at such U.S. colleges as University of Texas and Texas A&M, which have high populations of well-educated Mexicans with every desire to return to their home.

Compensation involves more than meets the eye.
Although the inexpensive low-skill labor in Mexico has been a recurring theme in NAFTA talks, this picture has been slightly obscured. In truth, the “cheap” labor isn’t as cheap as many have been led to believe. For one thing, the numbers are not necessarily indicative of real pay. Under Mexican labor law, employees’ pay is figured to include compensation for holidays and weekends, so the concept of per-hour pay is one that doesn’t translate. As a result, straight comparisons between hourly pay in the United States and Mexico can understate Mexican wages by 40%.

In addition, as crowds of companies snatch up available cheap labor and call for more, lower-skilled workers are beginning to have more leverage in pay demands. “One of the long-term expectations that people have about NAFTA is that the salary levels, particularly for lower-echelon employees, will rise,” says Diez. “And the advantage that presumably Mexico has of having cheap labor will evaporate.”

Other factors about the low-pay labor force also have been misrepresented. “[Labor] may be cheaper, but it’s not as cheap as originally believed,” says Fisher. “I remember people saying [pre-NAFTA] that in Mexico, minimum wage is low. In practice, you must be aware that in Mexico, almost nobody works for minimum wage. And on top of minimum wage, there are a lot of cash allowances.”

Cash allowances definitely play a major role in compensation in Mexico. Employees receive them as part of their total compensation package in addition to base pay. Some are required by law, many are customary. Those required by law are:

Christmas Bonus (Aguinaldo):
Fifteen days’ pay to all employees with one year or more of service. The majority of employers, however, provide a month of pay

Vacation Premium (Prima vacacional):
An additional 25% of pay is the required minimum. Most employers provide 80%, although on the border it’s common to see only the minimum provided

Profit Sharing (Reparto de utilidades):
Most companies (new operations are sometimes exempted) must distribute 10% of their pretax profits each year among all employees, excluding the CEO.

In addition to these statutory cash payments, many other pay practices are so common that they’ve become vital to a competitive compensation package (see, “An Overview of Legal and Compensation Practices”).

As for executives in Mexico, they too have been underestimated in terms of compensation. A 1994 Hewitt report states that executives in Mexico may earn 10% to 25% more than their U.S. counterparts. This, of course, is due to supply and demand. And this limited supply is expected to be able to demand more as companies continue to flood into Mexico. This is particularly true for execs with skills specific to industries becoming more prevalent in Mexico: telecommunications, computer hardware/software companies, consumer products firms and banking.

But in addition to base pay and cash allowances, Mexican executives are accustomed to a generous sprinkling of perks. “One thing that is very much rewarded is prestige,” says Lotsoff. “A Mexican compensation package for an executive includes such things as a club membership and a big fat title.” Although Motorola hasn’t used such gifts, Lotsoff says cars were often a major part of the package also. This practice has been dwindling since 1992, however, when company cars were ruled to no longer be tax-deductible.

“Work issues in Mexico are neither as sunny and simple as pro-NAFTA rhetoric proclaims nor as gloomy and unnegotiable as anti-NAFTA forces portend.”

Alejandro Palma, intercultural business specialist for Redwood City, California-based Clarke Consulting Group, says that the craving for status perks is particularly true at middle-management levels. This, he says, is because in Mexico’s hierarchical culture, mid-level managers have a very limited decision-making role. “They are very interested in personal status and the semblance of authority, because in reality, they don’t have that authority,” he says.

Although it’s important to recognize the practice of adding extras, experienced companies warn newcomers to first take a step back, and figure in such labor laws as profit sharing and acquired rights before issuing a compensation package.

Under the acquired rights law, if an employer provides a benefit, bonus or other term of employment two years in a row, the employees have a right to continue receiving it. This is true even if the employer hasn’t formally agreed on continued provisions. “You can’t reduce salary, you can’t take away benefits. You simply can not,” says Fisher. To do so would be considered a breach of contract, unless each individual employee’s contract is renegotiated.

The prudent HR professional starts small in such things as benefits and bonuses. “We advise companies not to go overboard, not to have the most sophisticated package on the market,” says Diez. “You can always do better, but you can never go back. Be conservative in what you provide at first. At the same time, be aggressive in the amount you’re going to provide. It’s a delicate balance.”

The same consideration should be taken in view of the 10% of profits that are funneled to employees under the profit-sharing law. Duffy warns that for a small, high-tech, low-labor company, 10% can amount to quite a lot for each employee, and should be figured accordingly into the compensation package.

Once you get employees, how do you keep them?
Just as executives can demand higher pay in Mexico, they can also flow easily from company to company. It’s difficult to forge loyalty among the dizzying amount of competition and constant wooing of execs by rival operations. Oak Brook, Illinois-based McDonald’s Corp., which has approximately 80 franchises in Mexico, knows this all too well. “We’re experiencing a little bit of pirating right now,” says Rudy Mendez, director international HR. “We’ve had to look at our benefits and compensation structure to ensure that we’re positioned competitively.”

Yes, it’s back to compensation. Because as much as the right pay and benefits can attract good executives to a company, better pay and benefits can lure them away.

Lotsoff agrees that pay is an important feature of employee retention. With approximately 2,600 employees in Mexico, Motorola keeps a watchful eye on the market to ensure it’s keeping up to speed. “You have to benchmark,” says Lotsoff. “You have to do market surveys on a regular basis on your competition.”

She warns that salary surveys should compare job duties rather than job titles. Titles in Mexico are often mismatched with the actual level of responsibility. For example, the power and decision-making capability of a senior vice president at one company may make a counterpart seem like an administrator in comparison.

Although a company can lose workers if it ignores their monetary needs, a refusal to understand family needs can also cause execs to bail out. Fisher says that one touchy area is relocation: It’s difficult, generally speaking, to uproot Mexicans because of Mexicans’ strong family ties. A move doesn’t involve just the typical nuclear family, but often aunts, uncles and parents. And the problem is, if an executive doesn’t want to relocate, another company is generally waiting with open arms. “We’ve had some instances of trying to get workers to relocate from Monterrey to Mexico City, and we’re not too successful at it,” says Duffy. “Workers can jump pretty quickly if they want to.”

So what else can HR do to forge loyalty? Companies are still experimenting, says Diez, but he sees a pattern beginning. “I think the fastest-growing trend, as far as retention, is providing deferred pay—through stock grants or stock options. In the last year and a half that has increased tremendously.” Motorola is one firm that has used this type of golden handcuff. It offers stock options to some workers, in addition to performance-based pay issued at the end of the year. Lotsoff says that Motorola is also exploring pension plans. “But we need to do some work in that area of long-term retention tools.”

For some managerial staff, long-term retention may be achieved simply by giving that person what no amount of pay can provide: specific recognition as an important member of the company. It goes back to acknowledgment of status. For instance, Palma says that mid-level managers generally act more as buffers between upper execs and line workers than as strategic business partners. Accordingly, loyalty can be encouraged simply by giving them a taste of power, such as membership in the memo loop, even if the information or decisions made are completely out of their areas.

Ensuring long-term executive loyalty takes on increased importance in Mexico, because losing executives often means losing several of their direct reports. This is because in the vertical orientation of Mexican business, loyalty is very often forged to one’s immediate superiors rather than the company as a whole. Says Fisher: “It’s very common when managers move to Company B that, six or eight months later, a good portion of the staff also moves to the other company.”

With the correct incentives, however, retaining employees is not as daunting as it may sound. Lotsoff says that Motorola has had very little trouble with employee loyalty in its many years in Mexico. Duffy also reports success at retention: “Our business hasn’t been all that healthy, but folks have certainly stuck with us during some very difficult times.”

Train, incent and introduce corporate culture—carefully.
As with any sort of non-U.S. operations, Mexico has its share of host-country issues when it comes to aligning workers with company goals. In this arena, Mexico’s long-standing business and cultural practices collide with more “Americanized” programs such as TQM and participative management. It’s not impossible to transfer a company’s culture to Mexico, but such a transaction must be negotiated thoughtfully. “You can’t just export whatever you have in the United States and try to adopt it as-is in Mexico,” says Fisher. “You have to customize it a bit.” Fisher gives an example of a U.S. company that had a strict policy against drinking on the job. The company was, of course, entitled to continue that policy in Mexico, but it instituted it with no explanation of the reasoning behind it. Workers who were accustomed to having a beer at lunch continued to do so, and the company fired many employees. As a result, it lost a large part of the work force that it may have saved with a more reasonable policy introduction.

Implementation of corporate culture goes more smoothly if it’s done in steps, says Palma. For instance, to get buy-in at the line level, it should be those workers’ direct supervisors who explain a policy to them. Because these two groups share a loyalty, workers are more likely to take the policy seriously if it seems to originate from their direct superiors. Fisher agrees that culture must be phased in with care: “Don’t just put something on the bulletin board that says ‘You can’t do this, because this is the way we do business.’ “

The way Americans do business is an important point: HR professionals need to keep in mind that what may be clearly acceptable or unacceptable business in the States may not be so clear south of the border. For example, Lotsoff says that Motorola has made special efforts to provide a clear message on one of its corporate policies: No gifts, tokens or allowances should be taken in exchange for anything. Although this is an obvious statement to most American business people, in Mexico, the practice does occur. To ensure workers understand Motorola’s key beliefs, each employee—on all levels—receives a card stating the company’s code of conduct, and posters with the information repeated are plastered all around operational facilities. “It’s communicated since day one,” says Lotsoff.

Nabisco has also had its share of misunderstandings. For instance, Duffy says that workers at some plants were taking the product and either using it themselves or selling it to supplement their income. He says they weren’t being deliberately dishonest, but rather continuing an already established practice. “We fully believe that the [former] owners had paid at an unsustainable level and knew workers were taking product,” says Duffy. “So when you correct wages, you also have to correct certain culturally accepted practices.”

Other problems such as attendance also must be addressed. Duffy says that, because of the importance of family to most Mexicans, if a child is sick or a special family need comes up, work will take a back seat. Nabisco is spending extra time on this issue because it is so closely linked to culture. “What we’re trying to do,” says Duffy, “is to make the workers understand that the health of the business affects the health of the family. We’re trying to tie the two together. We’ve got a lot of new workers, so it’s going to take some time.”

Once the corporate culture has been established, training is often necessary to meet actual business goals. “Even though the cost of labor is low on a unit basis, the cost is not necessarily lower, because of the low productivity in Mexico,” says Diez. “Many companies are finding that cheap labor is not enough, it has to be effective labor for it to be worthwhile having plants down here.” Statistics back him up. In a 1993 Towers Perrin survey of more than 150 Fortune 1000 CEOs and senior executives, three-fourths said that a skilled work force would be critical to the success of companies in Mexico whose strategies depend on quality or know-how.

Training plays a significant part of readying the work force to compete. Diez says that up to 3% of a company’s payroll is currently being spent on training, mainly getting lower-level workers up to speed on working on teams, statistical control measures and computers.

“Executives in Mexico can flow easily from company to company. It’s difficult to forge loyalty among the dizzying amount of competition.”

McIlmoyle suggests that training for line workers should be done by a person who is comfortable in the Spanish language, so the information doesn’t come across in a stilted manner. As for upper-level employees, emphasis is being placed on bilingual and bicultural skills.

Training also plays a role in improving performance. Most line workers have never been involved in participative management, so they’ll need more background on what’s expected of them, and may need to be coaxed from time to time. Because line workers tend to be more interested in pleasing their direct boss than striving for the company as a whole, there tends to be a wariness of instituting change. “There’s a lack of initiative to take risks,” says Palma. “You know what your boss wants, you know what your boss likes, so this has fostered a lack of accountability [to the company] among most employees.”

Continued reinforcement of the value of employee ideas can help to alleviate apathy—and when employees are empowered to do their best, they usually do. For instance, Nabisco had a problem: Every time it switched cutters at its cookie operation to change the shape of a cookie being made, changeover time for the heavy, awkward equipment was about 35 minutes. It videotaped the workers in the activity, played the tape for them and asked them what to do. Workers had the solution: A handrun crane to lift the cutters and a guide to fit the rollers easily onto the equipment. Changeover time is now seven minutes.

Duffy adds that employees who are given a little support can go a long way. “When the effort is put in to train the people and to recruit, any preconceived notion that people are unwilling to work or unable to work or low in motivation are not true at all.”

Of course, with employee involvement comes employee incentives. But here too, HR must step carefully, because again success depends on balancing group dynamics with the perception of importance. For instance, such popular initiatives in the United States as performance-based pay may ruffle a few feathers in Mexico. Palma says that the practice isn’t impossible to implement, but companies must keep close track of employees’ reactions. This is especially true of line employees, who may resist more. Why? A worker receiving more pay could be viewed as having connections to the higher echelons. It creates a distance. “It’s much more important for a Mexican person to have a congenial working environment than it is to make more money,” says Palma. “There have been cases where very good workers, ones who have performed well and received [pay] recognition for that, have left the company because they felt ostracized by their co-workers.”

Although Fisher knows of variable-pay plans that have worked, he too expresses concern at their use. “[Mexicans] are more oriented to guaranteed situations, guaranteed pay. So, pay at risk is OK, but you have to communicate it a little bit more.”

Instead, Palma suggests other reward strategies, such as making the outstanding worker a team leader. This plays into the desire for respect without isolating the worker, he says. “Employees-of-the- month programs, where it’s on a rotating basis, not permanent like salary compensation, seem to be OK, because everyone has a chance.” Other incentives include family days or other activities including workers’ families.

Palma says that so much depends on—what else?—a respect for the work force. HR has a major stake in a company’s success in Mexico, he adds. Because, rather than profit figures or business growth, it’s such things as con sideration for culture, family, performance and pay needs that employees look for when deciding the company for which they’ll work. “Word spreads,” he says. “Word spreads very quickly, and the reputation increases.”

The trick is to make all the pieces of the HR puzzle combine to form the picture of a successful business and a healthy, satisfied work force. Certain policies and procedures may have to be held up to the light, looked at from a different angle. But with the proper HR tools, some dedication, elbow grease and imagination, human resources can make the pieces fit.

Personnel Journal, August 1994, Vol.73, No. 8, pp. 34-44.