Author: Linda Davidson

Managing temporary-help expenses involves negotiating a pricing agreement that creates a win-win situation for three parties: the organization, the temporary-staffing company and the temporary workers.

It’s important to keep in mind that the agreement you negotiate with the temporary-staffing service will have a direct impact on what they pay temporary workers assigned to your company. Though it’s important to negotiate a fair deal for your organization, if you negotiate rates that are below market average, you’ll likely end up with second-choice candidates who are lacking the skills, commitment and quality you need.

One way to determine if the rates you’re being quoted are competitive is to compare pricing between services. Keep in mind, however, that rates will vary depending on the volume of temporary workers you use (higher volume creates more negotiating power) and the skill set you require.

For instance, highly specialized skills in the technical area are in great demand, command high rates and leave little room for negotiation. Although some companies prefer to negotiate based on the markup the temporary-staffing company adds to the pay rate, temporary-staffing services discourage this practice because they believe it undermines their ability to control pay-rate decisions, and treats the service as a commodity versus a professional resource.

The best approach to managing temporary-help expenses is to establish your buying criteria, conduct research to identify services that meet your requirements, and compare rates between those services. Also, be prepared to incur periodic rate increases. These may occur quarterly or annually—sometimes sooner if the skills you need are in very high demand.

The American Staffing Association reports that hourly wages for temporary employees have increased more than 5 percent in the past six months. You can be sure those increases were passed along to client companies and were reflected in higher bill rates.

Workforce, November 1999, Vol. 78, No. 11, pp. 63-64.

Take a quick look at most companies today, and you’ll likely see aworkforce that’s comprised of a growing number of temporary employees. Infact, a closer look will reveal that many of these workers are filling positionsof increasing responsibility and importance.

The old image of temporary laborers who were brought in for a brief stint tocomplete menial, low-skilled tasks has been replaced by highly skilledprofessionals who are managing some of the most critical and complex projectsfor months on end. This shifting workplace trend, one that places core businessfunctions in the hands of temporary employees, seemed to happen almostovernight.

And just at the time when organizations are most in need of supplementaryskills and services, temp workers are digging in their heels and demandingimproved conditions and better on-the-job treatment.

Some temps are mad as hell
Many temporary-industry analysts believe what’s beginning to emerge is acollective voice that in some ways suggests that temps are mad as hell and aren’tgoing to take it anymore. “It” being what the growing rank oftemporary employees believes is second-class status in a two-tiered system thatplaces them at the bottom. And anyone who’s been following the Microsoft case(see “Supreme Court Decisions Require ADA Revision,” Workforce, August1999) knows that it’s getting more difficult (and more risky) for companies toturn a deaf ear to the rumblings of temp workers who complain about substandardtreatment and a caste system they label unfair.

And before you dismiss what might appear to be the petty whining of atransient group of nomads, consider this: The U.S. Bureau of Labor Statisticsestimates there were more than 2.9 million people employed as temps in 1998, andthey project a whopping 53-percent increase in temp workers by the year 2006.The largest growing segment of temporary workers, according to the NationalAssociation of Temporary Staffing Services (NATSS), based in Alexandria,Virginia, is in the technical and professional sectors, which now make up over11 percent of the temp industry.

And as the temporary workforce grows, unrest among temps could spell nothingbut trouble for HR and their organizations. Yes, the level of contentment amongthis group is important indeed, particularly when you consider that these arethe folks developing your software, managing your financials, doling out legaladvice and interfacing with your most important assets: your regular workforceand your customers.

So why are temps so unhappy? It would seem they should be clicking theirheels in celebration. After all, there’s more work available for them, theirpay levels are increasing, and they’ve got all that flexibility — what’sthe gripe? “This whole concept of flexibility is a joke,” says CynthiaHunter-Shupe, an administrative professional in Damascus, Maryland, who’s beenworking as a temp since 1987. Shupe says that although many people are drawn totemp work so they can enjoy more flexibility in their work life, her experiencehas been that, in reality, temps are allowed very little flexibility while onassignment. But that’s just one of the many issues that exist for temporaryworkers, she says. She also cites the lack of benefits, lack of communicationand feedback while on assignment, inaccurate job descriptions and other issuesas fuel for the fire of discontent among temp workers.

Shupe says she has worked on hundreds of assignments, and claims that whilepay and benefits have gotten better since the late 1980s, when she first startedtemping, she believes companies can and should do more to improve workingconditions for temporary employees. Shupe feels so strongly about the issue,that in addition to working as a career temp, she’s formed a consultingcompany, Shupe Contingent Services LLC, that sponsors Contingent.com,a Web site designed to help temp workers and client companies improve thesuccess of alternative staffing relationships. Hers is just one of severaltemp-related Web sites that have cropped up in recent months.

Though Shupe’s site is geared toward addressing the issues of temporaryworkers and client companies through training and research, other sites providea venting mechanism for temps who are frustrated with their working conditions.

Temp 24-7, for example, encouragestemps to log on and “share the pain.” Included in their menu is TempTales of Terror, Gripe of the Week and Temp Term of the Week. (One writer sharedhis definition of the aptitude test given by temp agencies as a “battery oftests designed to evaluate the temp’s ‘propensity towards subservience,’‘overworkability’ and ‘likelihood of suing.’”) A temp fromIndianapolis shares his “gripe” when he describes how a five-minutetrip to the restroom prompted his supervisor to send in another co-worker tocheck on him.

Temps’ issues are getting more visibility
But temps aren’t the only ones acknowledging the shortfalls of temp life.Even the Department of Labor (DOL) in their publication, Occupational OutlookQuarterly (Spring 1999), cites the disadvantages of temp work, stating thatalthough temp firms are increasing their benefit provisions to their workers inhigh-demand occupations, “many other workers go without health insurance,paid leave and pension plans.” The report also highlights other drawbacks:

“Temporary workers often receive limited feedback on theiraccomplishments because they often move on after completing a project; they don’tenjoy the satisfaction of seeing the long-term effects of their efforts. Inaddition, temporary workers may be treated as company outsiders and may be shutout of meetings and social functions. Some permanent employees view temporaryworkers as an obstruction to raises, commissions or overtime pay, or resentthose who receive higher pay rates.”

A Washington, D.C.-based think-tank known as the 2030 Center released areport written by Labor economist Helene Jorgensen, Ph.D., that outlines alabor-law reform that would improve working conditions for temps. The reportclaims temp workers are “less likely to have employer-provided healthinsurance and pension coverage,” and states that “they are furtherdisadvantaged because they are not covered by health and safety regulations attheir workplace (the client company), and often would not qualify for workers’compensation in case of an on-the-job injury.”

Jorgensen, who is also a 2030 Center senior policy fellow, doesn’taltogether dismiss the benefits of temporary work arrangements, but she doesdenounce the use and abuse of long-term temp workers known as “permatemps.”This is a label that describes temporary workers who are kept on assignment atone company for months and sometimes years at a time.

According to Jorgensen, many companies use permatemps to eliminate positionswithin a company and reduce costs. The temp worker is believed to get the shortend of the stick because the client company (who is not viewed as the”employer” — the temp agency is considered the legal employer), doesn’thave the same obligations to the temp worker as their full-time”regular” staff. Although these permatemps are difficult todistinguish from the regular staff, they aren’t entitled to company benefits,and Jorgensen claims they’re even denied the protection of certain labor laws.

Labor laws protect temps, too
Bernard Frechtman, an Indianapolis, Indiana-based attorney and author of”Tempnapping” (Twin Pleasures Publishing, 1997) specializes in thestaffing industry. He disagrees with Jorgensen’s claims, and says that anyonewho believes state and federal labor laws don’t apply to employees on tempassignments is seriously misinformed. Frechtman says the courts view thetemporary agency and the client company as “co-employers,” which givesworkers legal recourse against both parties. And if a company fails to apply thesame legal guidelines to both their regular and temporary workers, and the tempservice doesn’t take action, both parties will likely be held liable.

NATSS also confirms that temporary workers are protected under U.S.employment laws, including the civil rights laws, worksite safety requirements,minimum wage and overtime provisions. They’re also protected by laws relatedto collective bargaining, workers’ compensation, unemployment insurance, theAmericans With Disabilities Act (ADA), and after working 1250 hours a year, thefamily and medical leave law (FMLA), basically any law that protects a”regular” employee.

Ed Lenz, senior vice president and general counsel of NATSS, adds that theindustry as a whole is investing more dollars in temp training and benefits.Lenz also says that temp wages are on the increase and that it’s a”seller’s market for sellers of skills. We’re currently in the processof surveying our membership in an effort to measure the rate of increase intemporary worker wages in the past six months.” Lenz says the most recentNATSS survey data from 1997 indicate that temporary-employee pay rates have beenrising at an even higher rate than the workforce in general, which [according toDepartment of Labor statistics] he cites as having increased 5.6 percent overthe past three years for all workers (inflation-adjusted).

What happens to be at the heart of most temp-advocate issues is the permatemppractice raised in Jorgensen’s report. This is the exact issue that gotMicrosoft into hot water when they kept large numbers of temporary employees onassignment for long periods of time (sometimes years), had control overday-to-day management activities and treated them like full-time workers inevery regard with the exception of compensation and benefits. This, according tofederal appeals court, by definition qualified them as “regularemployees” eligible to participate in Microsoft’s stock-purchase plan andother benefits, a ruling that could cost the software giant tens of millions ofdollars.

In fact, some of Microsoft’s temps have in recent months launched what’sknown as the Washington Alliance of Technology Workers (WashTech), aCommunications Workers of America (CWA) affiliate that’s trying to organizemore than 10,000 permatemps. Most of the members were hired through tempagencies, and work as long as a year without a break on Microsoft’s Redmond,Washington, campus. Many involved with the alliance are potential plaintiffs inthe class-action litigation against Microsoft. One of their goals is to pushthrough a bill to study Washington state’s growing contingent workforce andtheir working conditions — a bill that, if approved, could trigger similarefforts by other temporary workers who may be contemplating the possibility oforganizing their collective bargaining efforts.

The Microsoft case is one of several that’s being closely watched by NATSS,and by companies using temporary employees as part of their overall staffingstrategy. However, Lenz feels the coverage of the Microsoft case has beenskewed. “Media coverage of the Microsoft case has largely been negative,one-sided and, frankly, misleading.” He claims the case isn’trepresentative of a typical staffing arrangement because many of the workerswere initially classified as “independent contractors” and thenshifted to the payroll of staffing firms after the IRS reclassified them asMicrosoft employees. Lenz says that customers should be able to avoid Microsoft’s”fate” if they limit their contacts with the assigned employees to theextent necessary to ensure that the job gets done, and “leave just abouteverything else to the staffing firm so it can fulfill its role asemployer.”

Microsoft case could make companies overly cautious
Oddly enough, to Lenz’ point, the suit filed against Microsoft and theresulting publicity may initially lead to practices that further segregate tempworkers from other employees on the job, something that may potentially add totheir second-class status. Ginger Thaxton, president of Creative ManagementConsultants based in Pompano Beach, Florida, specializes in the temp-staffingindustry. Thaxton helps clients maximize their temporary-staffing resources, andsays all eyes are on the Microsoft case.

Thaxton says she’s very concerned about the potential rippling affect ofthe case. “Companies can’t let the ‘Microsoft cloud’ affect theirrelationship with temporary employees. There’s a lot of fear out there rightnow, and if companies pull back and become so cautious with temp workers thatthey further exclude them from activities, this will only create more of a castesystem.”

Advice on managing temps is mixed
What should companies do to stay out of trouble without alienating theirtemporary workers? Thaxton believes companies should treat temporary workerslike regular staff if the assignments are kept relatively short-term in length(6 months or less). “You have to treat temps fairly. That means includingthem in social activities, checking on their work and giving them feedback ontheir performance. Otherwise, they’ll feel unimportant.”

Lenz, however, feels otherwise. “Integrating assigned employees into thecustomer’s corporate culture by including them in company social activitiesand other functions increases the likelihood that they’ll be considered thecustomer’s employees.” Lenz also says customers should avoid recruiting,making wage and benefit decisions and providing training (other thanworksite-specific safety training). Does Lenz believe these decisions will maketemporary workers feel second class?

“Probably not. Most temporary workers report high satisfaction withtheir job experience, and since most work for very short periods of time, theabsence of strong attachments with the customer’s workforce is unlikely to beof great concern.” Lenz further supports his point by citing BLS reportsthat indicate 34 percent of temporary employees now prefer temporary work totraditional employment — up, from 26 percent two years ago.

Darlene Kennedy, director of human resources for Oakley Inc., the FoothillRanch, California-based manufacturer of sporting accessories, agrees more withThaxton’s advice. She strongly believes in treating temporary employees likeregular staff — including them in social events, managing their performance andcreating a collaborative environment. “We try to do the right thing bymaking the temporary workforce feel like they’re just as important as everyoneelse. They contribute as much to our operations as our regular workers, and ifyou start treating them like outsiders it creates an “us-versus-them”environment, and that doesn’t work here — teamwork is too important.”

Kennedy uses a large number of temporary workers to support their operation,one that’s subject to seasonal highs and lows. During certain times of theyear, Oakley’s temporary staff can balloon up to 500 temps — almost 30percent of their entire workforce. Kennedy say she tries to convert hernon-seasonal temps to regular employee status after 90 days, and she tries tokeep track of how long temps have been on assignment. Otherwise, she doesn’tworry too much about the potential legal backlash of treating everyone the same.

Managing a blended workforce and keeping workers happy is a complicated job,one that will only grow in complexity as the workforce continues to change. AndHR professionals like Kennedy need to keep their eye on two balls — one is thelegal exposure that goes hand-in-hand with using temporary workers, and theother is supporting an environment that fosters collaboration and high workperformance for all employees. Kennedy subscribes to a philosophy that helpsguide her actions. “Someone once told me that when you only focus on thelegal issues, and only focus on your exposure, you forget the risk that comeswith dividing and separating the workforce. You have to keep both in mind.”Kennedy seems to do a good job of managing this delicate balance.

Workforce, October 1999, Vol. 78, No. 10, pp. 44-50— Subscribenow!

Dr. Jac Fitz-enz is founder and chairman of Saratoga Institute, a research firm in Santa Clara, California, known for benchmarking best HR practices. Workforce interviewed Fitz-enz to get his response to the key findings of “The Official End-of-the-Millennium State-of-HR Survey.”

Workforce: Seventy percent of the survey respondents indicated there’s been a significant to dramatic change in HR in the past 3 years, moving HR from an administrative support function to a strategic business partner role—how much progress do you think HR has really made?

Jac Fitz-enz: I wouldn’t say there’s been a dramatic change, but there has been movement in some companies. Our data show a shift toward a higher percentage of professionals and fewer support staff. Outsourcing has something to do with that. More transaction “stuff” is going out to shared service centers and outsourcing companies.

WF: Sixty percent of the respondents feel HR is at least somewhat better respected than before, and feel their image within the organization overall has improved. How do you think that increased respect is being demonstrated?

JF: I have no idea. I haven’t found non-HR folk speaking any better of HR now. Maybe we’re believing our own journal articles, which quote CEOs but seldom get reactions from people in the trenches.

WF: Almost 75 percent of respondents indicated that half to most of what employees bring to HR could be handled just as well or better by supervisors or managers. What do you think?

JF: If that’s true, why don’t they train the supervisors and send the people back when they come in? By continually doing the supervisor’s job, they’re negatively reinforcing a bad situation. Just like with your kids. If you continue to clean up after them, they’ll let you do it. Stop whining and solve the problem!

WF: When asked about employee workloads, almost 30 percent said they believe current workloads are unrealistic and jobs will need to change to reflect reality. Do most HR people have the skills needed to address issues around workforce planning, job analysis, redesign, etc.?

JF: This is a very complex question, and the answer is different in each company. HR needs to be a senior-level consultant to top management. This implies a set of skills that not more than 15 to 20 percent of HR people possess, starting with financial knowledge. How can you advise a business executive about the structure of the company and the use of human assets when you don’t know the difference between an income statement and a balance sheet?

WF: What do you think most CEOs would say HR’s top priorities should be?

JF: Despite what journals show in CEO interviews, if you surveyed 10,000 at all types and sizes of companies, you’d probably hear things like this: 1) Get me good people when I need them, 2) Keep me out of trouble, 3) Keep expenses down, 4) Come quickly when I call, and 5) File and smile. Those are my views, as unpopular as they may be.

Workforce, August 1999, Vol. 78, No. 8, p. 70.

Motivating “A+” employees takes A+ managers and team leaders. A+ managers attract and retain key employees because they build trust and commitment—the basis of loyalty. According to Caela Farren, president of MasteryWorks Inc. in Annandale, Virginia, and author of Who’s Running Your Career?Creating Stable Work in Unstable Times (Bard Press, 1997), here are some of the things that top managers do.

Appreciate uniqueness.
Managers who genuinely appreciate the uniqueness of each person know what counts to key employees in terms of both their professional and personal lives. They help create work environments that are in synch with their talents, interests, values and personal life. They build trust and confidence, and become partners in the ongoing process of developing tomorrow’s leaders. They help employees answer the question, “How am I unique?”

Assess capability.
A+ managers assess the capabilities of their team members in these areas—reputation, performance (both individual and team) and breadth of support networks. They recognize potential, they seek out talent, they have powerful conversations with employees. They speak to others about their employees’ capabilities, and they open doors to opportunity.

Anticipate the future.
A+ managers lead others in the organization. They’re constantly helping employees determine how the world of work is changing and how these changes will impact their jobs and new skill requirements. They don’t worry about the future—they feel secure because they’ve already envisioned the ways their industry, organization, key professions, other corporations and competitors might change over the next decade.

Align aspirations.
A+ managers realize that changes in life situations—family, health, technology and organizational strategies—may alter goals and aspirations, so they maintain ongoing conversations with key employees. They know that harnessing the ambition and passion of their people to the mission of the organization can only produce great benefits for both. By encompassing both the business goals of the organization and the professional goals of the employees, A+ managers create win/win partnerships built on trust and loyalty.

Accelerate learning.
A+ managers realize that continual learning is the requirement of the day. Workers must constantly build their knowledge and competence or risk obsolescence. Employees believe this as well. They want challenging work and want to know that their skills are up to date.

Workforce, August 1999, Vol. 78, No. 2.

Just when you thought enough had beensaid on the subject, along comes another article to remind you of the obvious:Recognition increases employee satisfaction. It’s an ubiquitous message thatafter a while starts to sound like an endorsement from the surgeon generalhimself: Exercise reduces the risk of heart disease.

    Of course you knowemployee recognition is important; you’re in HR, you’ve listened to theexperts and heard their stories, and you’re probably already doing a lot toshow your employees you care. So all right, already – hasn’t enough been saidabout employees’ wants and needs? You’d think so, but the answer is no. Whenit comes to employee recognition, many companies still don’t get it. So forthat reason alone, the discussion must go on.

   What’s really worth talking about is that all forms of recognitionaren’t created equal – in fact, some are believed to be far more effectivethan others. Personal and public forms of recognition appear to be at the top ofthe list. Like it or not, employees want you to make a fuss over them. Most wantrecognition to be public, personal and done with sincerity and effort. Thepayoff? When it’s done the right way, personal and public forms of recognitioncan bring employee satisfaction, commitment and loyalty to new heights.

    So what does it taketo get to “Wow” with employees today? What experience or reward can youprovide that will move them in a way that makes them stop, think and feel“Wow, I really make a difference here. This company really appreciates what Ido”? Some believe it’s as easy as paying top dollar in the market, othersclaim it calls for stock options and bonuses, and many still insist it’sthings like onsite concierge services, exercise facilities and total flexibilityin planning work schedules that satisfy employees and make them take notice.

    Though few wouldargue the value of any or all of these benefits, it’s hard to say if theyreally do more than inspire a modest nod of approval from today’s ceaselesslypursued worker. In fact, many employees no longer consider these to be special“perks” or unique benefits. Rather, those are standard expectations they’dlook for from any employer.

    What does appear tobe a truly effective form of recognition is the type that’s based on personalattention and public celebration. You’ve probably experienced this at one timeor another yourself. Think back to a time when you were on the receiving end ofemployee recognition. What was most meaningful to you – what made you say,“Wow”? Was it the big check you used to pay off your charge cards? The giftcertificate you “re-gifted” to a friend? No, my guess is it was somethingfar more personal. It could’ve been something as simple as a handwritten notefrom the president of your company, or as grand as an airplane pulling a bannerwith a thank-you message from your manager. If it was memorable, it likelyevoked emotion and made you feel that your individual effort had made adifference.

 

Personal forms of recognition can bea powerful motivator
    Disney is one organization thatunderstands the power and value of personal recognition. Next time you visitDisneyland in Anaheim, California, check out the windows of the shops on MainStreet, U.S.A. Those decorative windows do more than add an attractive elementto the overall Main Street theme. They serve a dual purpose of honoring Disneycast members who made significant contributions to the Disneyland organization.

    Having your name painted on one of theMain Street windows is the highest and rarest honor afforded to a Disneylandcast member. Cast members are actually given a replica of the window during aformal ceremony, something that Renié Bardeau says marked the highlight of hiscareer (second only to having coffee with Walt himself). Bardeau, whose name wasimmortalized last year on an upper-story window that reads “Kingdom PhotoServices – Magic Eye to the World,” served as photographer and photo archivistat Disneyland for nearly 40 years.

    When asked how he felt about receivingsuch a rare and distinguished honor, Bardeau responded “I was elated, awed,dumbstruck – and it was completely unexpected. At Disney, no job is menial. Andthe great thing about Disney is that, sure, they’re a big company and a bigprofit machine, but they still take time out to recognize their people. Itreally shows they have their values in the right place.” Bardeau, who’s nowretired from Disney, displays his replica window on the wall of his home officein Arizona. He says it serves as a constant reminder of his rewarding years withDisney and has value that money could never replace.

    Why are personal and public forms ofrecognition more meaningful than monetary rewards and traditional“off-the-shelf” programs? According to Dee Hansford, an Orlando,Florida-based recognition consultant and founding board member of theChicago-based National Association for Employee Recognition, “The powerfulimpact of peer recognition is greatly underestimated by organizations. We allneed and want to know the work we do is important, and to have that validated[publicly] is one of the greatest sources of satisfaction we can have. Public orpeer recognition that’s personal in nature answers those deep needs we allhave of belonging and contributing to something worthwhile.”

    Bob Nelson, author of the best-selling1001 Ways to Reward Employees (Workman Publishing, 1994) and 1001 Ways toEnergize Employees (Workman Publishing, 1997), says that each form ofrecognition has value to it, and therefore, it’s important to use a variety ofapproaches rather than just one or two. And although cash is nice, and fewpeople will deny the opportunity to get more, Nelson says that it doesn’t havethe same impact as personal recognition that’s public in nature, something hebelieves addresses the human requirements for security, belonging and status -all of which are at the heart of motivational theory. “Cash has no trophyvalue and is quickly forgotten, whereas a public or social form of recognitioncan create a feeling and memory that may last for a long time. A gift or mementocan be symbolic and help extend a memory of achievement.”

    Dallas-based Southwest Airlines is alsoknown for taking personal and public forms of recognition to new heights. WhenSouthwest earned the “Triple Crown” award for the fifth consecutive year in1997 for best on-time performance, best baggage handling and fewest customercomplaints, CEO Herb Kelleher honored Southwest’s 24,000 workers in a verypersonal way. Kelleher had each of their names engraved onto the overhead binsinside the “Triple Crown One,” a specially designed Boeing 737-300 plane hededicated to the workers in recognition of their outstanding contributions tothe airline’s success.

    According to Ed Stewart, Southwest’spublic relations director, it’s celebrations like this that make Southwest anemployer of choice. “We like to celebrate as many victories as possible aroundhere,” says Stewart. “We have the lowest turnover rate of any airline – onceyou’re here you never want to leave.” Stewart boasts that [the companytreats employees so well that] one family actually has 12 family membersemployed by the airline.

    You may be thinking that’s all welland good, especially for companies that have unlimited resources. But where doesthat leave the average organization that doesn’t own a Main Street and can’tafford to dedicate planes to their employees? Should you just stick to theone-size-fits-all method of recognition and hope it’s enough to get the jobdone? Definitely not – meaningful recognition doesn’t have to be costly orextravagant.

 

Personalizing recognition is easierthan you think
    The HR team at Sacramento-basedCalifornia Public Employees’ Retirement System (CalPERS) gives testimony tothe fact that making recognition meaningful is possible for any organization,regardless of size or budget. Their story shows it takes little more thanputting time and effort into some creative planning, and personalizing the eventso that the recipient feels special. Heidi Evans, labor relations analyst forCalPERS, tells what she refers to as the “Dennis Andrade Story.”

    Andrade, an associate analyst in HR forCalPERS, was responsible for developing HR’s Web page on the company’s newintranet. Evans says the project was a huge undertaking, calling for lots ofevening and weekend work, and many personal sacrifices on Andrade’s part.

    According to Evans, “Dennis managedan incredible workload during that two to three month period, but you’d neverknow it from his attitude – he just kept plugging away until he got the jobdone. He was never short with anyone, even though he was in a big crunch to meethis deadline and was also managing the duties of his regular job.” The HRstaff wanted to do something special for Andrade at the end of the project. Theyput their heads together and came up with the idea of “Dennis Andrade Day,”a special recognition day devoted to Andrade who, during the course of theproject, had affectionately been dubbed “Laptop Man” because he was neverwithout his computer.

    Evans and the HR team organized theevent so that staff from each of their 8 functional departments signed up for acertain hour during the day when they’d take time out to recognize Andrade. AsEvans tells it, “We all knew Dennis was an avid fisherman, so the day had afishing theme to it. People did everything from writing and singing specialsongs for Dennis, to giving him personal cards, pictures for his desk, and onegroup even got creative with a special fishbowl display. It was really touchingbecause you could see that everyone put a concerted effort into honoring him.”

    How did Andrade feel about theirefforts? “It was overwhelming, I knew they were planning something, but Ididn’t know the details,” he says. “It was really a once-in-a-lifetimekind of thing that I’ll never forget, and it really changed my attitude aboutrecognition. I never felt I really needed it before, but it’s made me abeliever – I think it really makes a person feel appreciated and supported.”Andrade says his family also appreciated the company’s efforts. “Theysacrificed a lot of time with me during the project, and it made them feel goodthat the company went out of their way to show their gratitude.”

    Evans said other employees got almostas much out of planning Dennis Andrade Day as he did. “I’ve never seenpeople get so revved up over planning a celebration for someone else – theenergy was incredible. One of our co-workers who’s been around for severalyears said it was the most fun he’s ever had at work.”

 

Giving personal recognition is alearned skill
    If giving employees personalrecognition is so easy and fun, why don’t more companies do it? Authors JamesM. Kouzes and Barry Z. Posner cite statistics in their book Encouraging theHeart: A Leader’s Guide to Rewarding and Recognizing Others (Jossey-BassPublishers, 1999), which suggest that only 50 percent of managers actually giverecognition for high performance. Equally concerning are data that indicate upto 40 percent of the nation’s workers feel they never get recognized foroutstanding performance. The explanation for this, according to Kouzes andPosner, has a lot to do with fear and emotions.

    In their book, Kouzes and Posnerexplain, “Expressing genuine appreciation for the efforts and success ofothers means we have to show our emotions. We have to talk about our feelings inpublic. We have to make ourselves vulnerable to others.” And that’ssomething the authors claim is difficult for many people, and to some it’seven terrifying.

    Hansford echoes these sentiments: “Ihear all the excuses why people don’t give employees personal recognition -some say they don’t have the time, others claim they pay employees and feelthat’s recognition enough, and quite a few say past recognition effortsdidn’t work. I think the biggest reason people don’t give recognition isfear. When we put ourselves on the line to share how we feel about someone’sperformance or actions, we take a risk – and we’re not always confident in ourown skills as recognizers.”

    According to Hansford and others,giving personal praise is a learned skill. It isn’t something that comesnaturally for everyone because it requires people to make a human connection ona very personal level. “These are basic skills we can all learn, just like welearned to surf the Net. We need to view them as critical skills that will helpus motivate our people, keep our top performers and grow our businesses.”

 

Personal recognition increases employeeloyalty
    Apparently, employees substantiate theargument for perfecting the skill of personal recognition. Their commentssuggest that when they feel valued and personally appreciated, they’re not aslikely to see if the grass is greener somewhere else. Of course, that’sproviding they feel they’re being treated fairly overall, and that has a lotto do with how they view their compensation.

    John Reimnitz, a senior statisticalanalyst for The Gallup Organization, a Lincoln, Nebraska-based research companythat’s best known for conducting the Gallup Poll, believes the company’scommitment to personal recognition has increased his loyalty as an employee.Reimnitz was this year’s recipient of the prestigious “Mountain TopAward,” a designation given to an elite few viewed as the highest performersin Gallup’s worldwide organization of 3,000 employees. Reimnitz was recognizedfor successfully managing a large programming project that called for extendedhours and time away from his family.

    Earning the award also entitledReimnitz to a trip to Los Angeles to attend the prestigious “People’s ChoiceAwards,” an annual celebrity event that Gallup sponsors. Although Reimnitzsaid he had fun hobnobbing with stars from the cast of “ER” and celebritieslike Barbara Mandrel, he got the most satisfaction from receiving the awarditself and setting a new standard of performance within The Gallup Organization.

    “Receiving an award like this helpsmake the sacrifices worthwhile – it’s nice to know that you’re valued. Whatwas even more meaningful was the fact that my performance was responsible forthe company adding a senior level to the statistical analyst position; I was thefirst person to receive that title. It made me feel like I had raised the bar ofperformance for the company.” Reimnitz adds that his name has become a companysynonym for solid performance. “When managers want to hire an analyst, I’veheard that they tell recruiters to find them a ‘John Reimnitz’ – it’sreally nice to know you’re making a difference.”

    How much loyalty does this type ofrecognition buy? Reimnitz admits he’s had other offers – some that haveincluded more money – but in his words, “Money can only go so far.” Reimnitzalso feels he’s fairly compensated at Gallup, and says because he’s beentreated so well, it’s unlikely he could be wooed away by a competitor,regardless of their offer. However, Reimnitz says that his loyalty probablywouldn’t be so strong if he felt he wasn’t paid competitively. “I thinkthat would be frustrating,” he explains. “If I didn’t feel I was paidfairly, I’d question the sincerity of the recognition. It would probably tendto make me want to test the waters.”

 

Hold managers accountable for employeerecognition
   One way HR can reinforce the value andimportance of personal employee recognition is to build it into theperformance-management system and make managers and others in the organizationaccountable for supporting this behavior.

    Lisa Marks, director ofspecialty-product sales for Gallup, says that managers in the organization areresponsible for giving frequent recognition to employees. “We measureeverything at Gallup, and our employee surveys actually measure how wellmanagers are doing in the area of employee recognition. One of the questionsasks the employee whether or not they’ve received recognition or praise withinthe last seven days – we take this stuff very seriously.”    

    Stew Leonard’s, the world’s largestdairy store, located in Norwalk and Danbury, Connecticut, is known for itsoutstanding customer service. They also hold managers accountable for personallyrecognizing employees’ efforts. Jill Tavello, vice president and daughter ofStew Leonard Sr., says employee recognition is tied into the managers’performance review. “We can’t have happy customers without happy employees,so we go out of our way to recognize their efforts on a daily basis. We believethat a handwritten note from the manager is very meaningful to our employees, sowe actually track how often they send these out.” Tavello says that turnoveramong their full-time regular staff is among the lowest in the area, and wellbelow the industry average.

    Creating a culture that embraces thepower of personal recognition may take time, effort and a lot of reinforcement.And although you might be facing an uphill battle, the rewards will more thanpay off over time. Getting employees to “Wow” is about fostering the humanconnection, encouraging others to put a personal touch on their recognitionefforts, and modeling the right behavior in your own day to day activities. Sowho’s at the top of your list today?

Workforce, July 1999, Vol.78, No. 7, pp. 44-49  SubscribeNow!

Monday, April 26
Irvine, California

Some things in life are easy to count. Like the number of people you know who say they love their job (and are perfectly suited to the work they do). Or the number of people you work with who have the energy and willingness to get up every morning at 4:30 a.m. to commute two hours to the job they love. What about the list of people you’ve met who have stayed in one marriage for more than 30 years (and appear to be genuinely happy)? I bet that list is pretty short. Most of us know someone who fits one, maybe two of these descriptions, but few of us meet someone who fits them all. Enter Sibby Curtis, vice president of human resources for AirTouch Cellular’s Irvine, California-based Sierra Pacific Region.

Sibby’s one of those intriguing people who after one meeting leaves you wondering, “How does she do it?”—”it” being the schedule, the work, the pace, and the ease with which she appears to balance it all.

Sibby does, in fact, get up at 4:30 a.m. every morning of the week (with the exception of Fridays when she works in the San Diego office), and makes the 80-mile drive from San Diego to the AirTouch office in Irvine. She says her husband helps make the schedule more bearable by also rising early to read her The Wall Street Journal as she gets ready for another busy day at AirTouch. And the days are always busy, especially in light of the fact that AirTouch has recently merged with Newbury, England-based Vodafone, another telecommunications company that, when combined with AirTouch, will create Vodafone AirTouch PLC, the world’s largest wireless communications company—an almost $10 billion enterprise.

The Sierra Pacific Region has close to 3,000 employees from Sacramento to San Diego. Sibby has a staff of 40 HR professionals that include senior HR consultants, employee relations specialists, compensation consultants and analysts, staffing consultants, a training and development manager and multiple trainers, a communications specialist and several administrative staff. She reports locally to Nancy Hobbs, executive vice president and general manager of the $5.2 billion region. Hobbs is the second highest-ranking woman in AirTouch and the person Sibby credits for much of her own success at AirTouch.

Sibby says she really doesn’t mind her early morning drive because she truly loves her job. She said it also gives her time to check her usual 20-plus voice-mail messages in the morning before getting into the office. When I called Sibby to set up our day together, she told me things were hectic, to expect a full schedule that included multiple meetings. She told me her day usually started at 7:30 a.m. I graciously (hopefully) offered to meet her at 8:00 to give her some time to get settled before I arrived—and my body time to absorb some caffeine on my wimpy 2.7-mile commute to her office. But no, Sibby wanted to jump right in at 7:30, bright and early—so that’s when our day began.

7:40 a.m.
Sibby meets me in the lobby and offers to buy me coffee at the kiosk outside. I follow behind her and she immediately sets this brisk, purposeful pace. I’m wondering if the heels I’m wearing are a mistake. She orders a decaf nonfat latte, which surprises me given her early morning schedule and a demeanor that radiates high-octane energy. We quickly grab our coffees and head up to the 11th floor of the AirTouch building.

7:50 a.m.
We settle into Sibby’s office, which overlooks the expanse of Irvine and the surrounding foothills. I make note of a framed saying on her bookshelf that I think captures some of Sibby’s spirit: The most effective way to cope with change is to create it.

I mention the lovely view to Sibby, and she briefly looks up from the Palm Pilot® she uses to manage her busy schedule and gazes out the window. “Oh yeah—it is nice,” she says, almost as though she forgot (or never realized) she had a view.

Within seconds, Kathy McCann, Sibby’s assistant, scoots into the office and gives Sibby a few updates, reminding her of a hiring decision that needs her attention.

8:00 a.m.
Two staff members bustle in with purpose and energy. I get the feeling that Sibby sets the tone for a vigorous pace, and I start to wonder if I’ll eventually run out of adjectives to describe how quickly these people move. Parish Pullen, senior compensation consultant, and Tony Flores, compensation analyst, get right to work on the numbers. Parish is in the middle of implementing a new HRIS system, and Sibby has asked for an update on the metrics the new system will measure for the management reports.

Parish says a few words about their progress, and passes the meeting over to Tony, who’s only been with AirTouch for three weeks. Tony walks us through the management metrics which will capture turnover, productivity, headcount, new hire and training ratios.

The three discuss benchmarking possibilities and other national norms they want to look at to gauge their progress in critical areas. They also talk about how they’ll disseminate the information to management and decide to put the info on one shared drive that management staff can access through the network system, versus HR e-mailing or printing out the data.

One of several themes begins to emerge and is carried throughout the day: All decisions appear to be made with two goals in mind: improving efficiency in operations and encouraging management self-sufficiency.

9:00 a.m.
The meeting wraps up and I take a minute to check out Sibby’s bookcase, which is bursting with top reads from all the management wizards: Peters, Block, Drucker, Ulrich, Booth and more. Knowing Sibby, I make a guess she’s probably read them all—she confesses that a couple of them have escaped her attention. Sibby takes a minute to check her e-mail, which she said was caught up when she left on Friday. She scrolls down a screen of red messages (indicating urgency), and calmly notes that about 31 messages have already come in. We chat about the challenge of managing the daily e-mail deluge.

9:10 a.m.
Michelle Watts, senior HR consultant, comes into the office toting her tissue box (which explains why she’s not moving quite as spryly as her co-workers).

Michelle has HR responsibility for 1,250 employees in customer care and engineering. She and Sibby discuss the HR implications of outsourcing one of their business areas. They talk about potential adverse impact issues if they can’t reassign all of the employees and review severance packages, retraining options and potential legal glitches.

Sibby’s approach with Michelle is very consultative; she listens a lot and mostly asks questions. They both agree the plan Michelle has recommended makes sense. After two meetings, I already get a strong sense of Sibby’s management style.

9:30 a.m.
Out goes Michelle, in comes Maria Powers, director of training and development. I start to think that what Sibby really needs in her office is a revolving door to manage the traffic flow brought on by these back-to-back meetings.

Maria has come in to discuss the revamped new-hire orientation, which accommodates approximately 50 new hires every two weeks. She outlines her vision for the three-day orientation which includes among other things a role-play exercise to reinforce corporate values, and a diversity exercise that has the employee draw a picture of a person based on a profile described by the trainer.

Sibby and Maria talk about the value of extending the orientation beyond three days, and agree to leave it as is for now.

10:00 a.m.
We leave the office with Maria and follow her down the hall for another meeting. I look at my watch and am amazed it’s only 10:00 a.m. and we’re already on to meeting number four. We meet in the conference room with Maria, Michelle and Claire Burns, also a senior HR consultant, to discuss ongoing training for the senior HR consultant team.

They look at a two-day training session that builds skills and competencies for functioning in a consulting role. The discussion eventually turns to the upcoming merger with Vodafone and the fact that AirTouch is currently on a different fiscal calendar. Sibby tells them they’ll have to move all their planning, budgeting and so on to accommodate Vodafone’s fiscal calendar. The team groans at this and asks if Vodafone would reconsider this decision. Sibby makes it clear that it’s not likely, and argues the benefits of moving to a different schedule.

11:00 a.m.
I’m ready for a quick break, but Sibby’s got other plans for us. We stop by Jacqueline Walker’s office. Jacqueline is senior employee-relations consultant for the region. She just returned from maternity leave a week earlier, and Sibby takes time to coo over a stack of new baby pictures.

We quickly move to the purpose of the meeting, which is to discuss the upcoming affirmative action audit. Jacqueline is proud to announce the preliminary numbers look good—no underutilized areas, meaning the AirTouch workforce reflects the demographics of the area. Sibby takes a minute to boast about the diversity of their workforce and the number of women in executive level positions. When I ask about women executives at the very top of the organization, she concedes that some imbalance remains.

Our discussion with Jacqueline turns to the Vodafone merger. In just two days, Vodafone’s chairman of the board, Lord Ian McLaurin, will make his first visit to the Irvine facility. Sibby will be part of the management team that meets with McLaurin. Sibby asks Jacqueline, who grew up in England, for some guidance on protocol. “What do I call him: Mr. McLaurin or Lord McLaurin?” Jacqueline gives her a brief lesson in British etiquette, explaining the appropriate way to address him is either “Lord” or “Sir.”

12:00 noon
Finally, a short break allows us to make a quick (there’s that word again) visit to the restroom. I decide to freshen up with some lipstick, but as I look in the mirror, the reflection I see is Sibby holding the door open, ready to leave—forget the lipstick.

I follow behind, but have to work at keeping her pace. I’m starting to see how she gets her exercise. She indulges me with a quick stop by Juan Rameriz’ desk. Juan is their HR assistant and an avid runner. We chat briefly about his numerous marathons and the fact that he placed 58th in the Los Angeles marathon last month. (I start to think that “fast” must be a job requirement at AirTouch.) He was going to run in the Boston Marathon this year, but had to pass because AirTouch sent him to Hawaii for an all expenses-paid trip, which he earned as a “Service Legend Employee,” a designation awarded for maintaining exemplary performance and living the AirTouch values.

12:10 p.m.
We make a brief stop by Sibby’s office, where she takes a minute to check messages and scan her e-mail. She reviews the file of a potential hire that one of the VPs wants to make. Sibby chuckles and sighs as she notes that the candidate has had 17 jobs in five years. She says the VP has final say over the hiring decision, but she plans on making a strong recommendation against the hire. (The VP takes her advice and agrees to continue the search.) We talk a few minutes about the labor shortage and the difficulties of finding good people, particularly for their Customer Care customer service area, where they’ve had to add 300 new people.

12:40 p.m.
I feel like a kid in school when Sibby tells me we actually have time for a “quick” lunch break. We head across the street to a little deli, and I scan the place for an open table, but I hear Sibby placing her order “to go” and I do the same. “We’ll take our lunch back to the office so we can get in some work.” Of course we will. I’m starting to feel like such a slacker.

1:00 p.m.
Parish Pullen sticks his head into Sibby’s office and reminds us we have a 1:15 meeting with some vendors who are here to provide an update on their services. Parish says he wants to do a “Plus Delta” (a list of pluses and minuses) on their handling of one of their major projects to date. So far the minuses win out. I wonder for a minute how these supplier folks are going to feel about my presence in the meeting. Sibby says they don’t know I’ll be there.

1:15 p.m.
Sibby and I join Parish, Tony and the two gentlemen from the service company, who appear to be happy with my attendance. “Oh, what a perfect opportunity—we couldn’t have planned this better,” the account manager says. I’m thinking he’ll be eating those words in a few short minutes.

Parish proceeds to list the issues that have come up as a result of the project being 20 percent over budget and behind schedule. I can see the sales manager and his account rep begin to sweat. Sibby asks a few questions, and tells the two that she had put effort into talking up the benefits of this new program to the workforce. It’s clear her credibility is on the line if the program is delayed and/or mismanaged.

1:45 p.m.
We’re still in our meeting with these two sorry souls. Sibby told Parish upfront that we have exactly 30 minutes available for the meeting, and out of the corner of my eye, I see her look at Parish and point to her watch. Parish picks up the cue immediately and, even though the group is engaged in a “passionate” discussion of who did what and where things went wrong, Parish abruptly interrupts the conversation, announcing that Sibby and I need to leave.

1:50 p.m.
Back in Sibby’s office we make plans to meet at 5:00 p.m. after she gets out of a “confidential” meeting with her boss Nancy and others on the senior management team, which Sibby is a part of. The meeting agenda includes a discussion about how HR can put their “best foot forward” with their new owners and a plan for Lord McLaurin’s arrival in just two days. This is the only meeting of the day I’m not invited to.

2:00 p.m.
I make the 5-minute commute to my house to catch up on calls and paperwork.

5:00 p.m.
Back at AirTouch again. As I arrive in the lobby, I feel as if I’m about to start my second day at AirTouch. It’s hard to believe it’s just the continuation of Monday. If I’m feeling it’s been a long day, then I think Sibby must really be tired, given the fact that she’s been up and about since 4:30 this morning. Kathy meets me in the lobby and brings me back to Sibby’s office.

Sibby bounces in looking as fresh as a flower, and again I find myself thinking, “How does she do it?”

5:15 p.m.
Sibby and I catch up on the meeting, which she said ended at 4:00, giving her time to check her e-mail and spend 15 minutes with Executive Vice President/ General Manager Nancy Hobbs discussing an upcoming organizational move. We talk a little more about all the changes taking place at AirTouch and the concerns she has about the merger, which are surprisingly few.

Her main concern for the moment is the new corporate vice president of human resources in San Francisco, a Harvard MBA grad who has been in the role for about four months. He’s responsible for an HR organization that supports a worldwide base of 13,000 employees. While he has spent the last 10 years in operational and staff jobs at AirTouch in cellular, paging and international operations, he has nobackground in HR. I see Sibby, for the first time of the day, showing some signs of stress. “I just hope he’ll value and support the strategic business role that HR currently fills at AirTouch.” End of discussion.

6:00 p.m.
Margaret Jordan, communications specialist, arrives with a digital camera to take a few shots of Sibby for our article. She tells Sibby how photogenic she is and clicks away in her office, and we move to the lobby for a couple of different shots.

6:20 p.m.
Marie is back for another meeting, which I think marks meeting number nine for the day. I’m betting we’ll make it an even 10 before I walk out. Sibby and Marie discuss a management training outline that Sibby wants completed for the upcoming HR strategy meeting. Marie was planning on having it complete by next week, but Sibby tells her it has to be in the corporate VPof HR’s hands by Friday.

6:40 p.m.
Bingo! We hit my predicted tenth meeting of the day with Parish. He and Sibby meet to talk about him pulling together information that Lord McLaurin has requested for their meeting on Wednesday. He apparently wants to look at employee info for their division, average length of service, education, etc. He’s also interested in turnover info, local unemployment stats, average household income, etc. Parish makes his notes and heads out about 7:00 p.m.

7:20 p.m.
Sibby and I discuss the day, which she says is for the most part pretty typical. We part company in the parking garage, where Sibby heads for her car to make the truck back to San Diego. I pull out of the garage, thankful that I’ll be home by 7:30. (Sibby e-mails me the next day to tell me she had 25 new voice-mail messages to respond to on her way home—a very productive ride.)

8:50 p.m.
Sibby arrives home and is greeted by her golden retriever, Kelsey, and her husband, Ken, who is placing dinner on the table. “Yes, I’m spoiled,” she confesses in her e-mail message to me.

9:00 p.m.
Sibby and Ken watch her favorite show, “Ally McBeal.”

10:00 p.m.
Sibby dozes off, resting for six and half hours before she starts all over again on Tuesday.

Workforce, June 1999, Vol. 78, No. 6, pp. 60-66.

Desperate times often call for drastic measures, and few know this better than those who are trying to recruit information technology workers in today’s tight market. Just how far are some organizations willing to go to acquire the cutting edge talent they need? To extreme lengths, according to David Weldon, senior editor of Computerworld, a Framingham, Massachusetts-based IT news publication.

In fact, the bar on what companies will do to wow potential IT workers may have just been raised again. Computerworld’s April 5, 1999, issue reported that Mirronex Technologies Inc., an IT consulting firm in Skillman, New Jersey, used the appeal of a new BMW to seal the deal with IT talent they needed to launch an e-commerce project. “They needed five highly skilled ERP (Enterprise Resource Planning) professionals right away, and they were willing to pay dearly for those skills,” says Weldon. And dearly they did pay when they gave away five customized BMWs worth somewhere in the neighborhood of $45-50,000 each. Try to compete with that.

This radical recruiting approach may be the start of a new trend of increasingly aggressive hiring tactics—tactics that companies will employ to gain a head start on hiring IT professionals with ultra-edge skills, a term that’s being redefined almost weekly. Weldon confirms that skill demand is already starting to shift, and hiring companies are responding accordingly. “A year ago, SAP professionals were in peak demand, commanding the highest salaries in the IT market. In a year and a half, they’ve fallen from first to sixth place (based on Computerworld’s “Mid-year Salary Survey” (March 29, 1999).

Weldon says demand now favors professionals skilled in networking and database management, particularly ERP professionals who have the skills to lead companies into what he refers to as the “big frontier” known as e-commerce. “Most companies are already on the Web, but few are actually conducting transactions and making money from it.”

Organizations like Mirronex, who want to jump into the e-commerce game quickly, aren’t wasting time with lengthy hiring cycles. They’re targeting the staff they need, offering them top dollar, flashy perks and an accelerated hiring process.

And evidently, the focus on flash and cash is working. According to Computerworld’s 1999 Jobs Forecast survey (January 4, 1999), managers claim 74 percent of IT staffers leave for better compensation. And as technology becomes more complex and sophisticated, which it no doubt will, HR can expect salaries to increase again this year.

Part of the jump in salaries can be attributed to an increasing shift toward business center applications like ERP, SAP and Peoplesoft, skills used on projects that, according to Weldon, call for IT workers who are well versed in both business and technology. Weldon feels this requirement for dual skills may lead to an increase in full-time hiring of IT talent versus contracting and outsourcing arrangements, which he believes are more long-term solutions.

“If you’re contracting everything out, or sending a lot of your business to India, for example, you’re putting critical business functions in the hands of someone else, and you’re giving up a lot of control. IT professionals today need to have a solid understanding of your business.”

Workforce, May 1999, Vol. 78, No. 5, p. 56.

HR professionals should be able to find links in all their efforts and investments to actual measurements. This chart indicates some of the areas to look when trying to demonstrate results. For example: Improved recruiting programs for sales could lead to improved time-to-fill ratios, which means positions would get filled more quickly, allowing the sales staff to generate more revenue and reduce “down time.”

HR Programs:	Possible Measurements:
Training Programs	Productivity, sales, quality, time, costs, customer satisfaction, turnover absenteeism, employee satisfaction
Compensation Programs	Labor costs, turnover, absenteeism (pay for performance)
Modified Work Structures	Productivity, quality, customer (teams, project committees, etc.) satisfaction, turnover, absenteeism, employee satisfaction, time to deliver
Recruiting Programs	Cost per hire, yield (# of candidates recruited), time-to-fill ratios
Total Quality Management	Defects, rework, response time
Employee Support Programs	Absenteeism, employee satisfaction, employee referrals, productivity

Workforce, September 1998, Vol. 77, No. 9, p. 38.

Measurement of the results of HR’s efforts — HR’s return on investment (ROI) — is being lauded as today’s high-credibility management tool — a must-use formula for every sophisticated HR professional striving to gain respect as a true strategic business partner. But perhaps, like others in your shoes, you’ve found that walking the talk of quantitative measure isn’t as easy as it sounds.

In fact, you may even be a little bit embarrassed to admit your lack of know-how in this area. Hearing almost daily about the importance of economic value, bottom-line impact and net benefit, you’re convinced colleagues are measuring their way to a higher HR plane, leaving you behind to ponder your ignorance. Are you alone in your discomfort with the measurement task? Not by a long shot.

In the real world, there are few companies that consistently measure the bottom-line results of their HR investments. Rather, most are using extensive measurement sporadically at best, and many not at all.

Even sampling a few of the organizations that made it onto Fortune magazine’s list of “100 Best Companies to Work For in America” (January 12, 1998) indicates that quantitative measure in the HR field is in its infancy. Not only does it appear that few companies measure the return on their HR investments, but in some cases, merely discussing the concept of HR measurement seems to invoke a high level of discomfort. Even a company like Ventura, California-based Patagonia Inc., a supplier of outdoor sportswear which invests heavily in employee amenities, and ranked 24th on Fortune’s list, does little to measure return in any standardized fashion.

Terri Wolfe, vice president of human resources for Patagonia — a company known for a recreational culture, family-friendly environment and top-notch child-care centers — is quick to admit this fact. “Oh, you’d better go somewhere else to get information on measuring results because that’s not something we do here,” Wolfe responded when asked to comment on the topic of measuring HR results.

But wait — that’s no reason to breathe a sigh of relief. Measuring the return on HR investment is the wave of the future, and the time has come for HR to step up to a new challenge: bottom-line accountability.

Experts agree that measuring HR’s ROI is essential.
Few will argue the value of measuring results for demonstrating impact in any business or organization concerned with profitability and growth. But should this concept really apply to the HR world?

You bet it should. HR shines the light on its contributions when it can show in dollars and cents that its efforts and initiatives are moving the organization closer to its fiscal goals and objectives. If HR isn’t able to quantify its contribution to the bottom line, then it will continue to be viewed as “overhead” — a term which implies that the HR function merely sucks up resources as opposed to adding value.

Undoubtedly, the “overhead” categorization further removes HR from the desired position of “strategic business partner,” a designation reserved for internal business units that can demonstrate the cost and value of expenditures and investments, showing linkage to a contribution to the economic health of the organization.

Dave Ulrich, professor of business administration at The University of Michigan and author of Human Resource Champions: The Next Agenda for Adding Value and Delivering Results (Harvard Business Press, 1997), is a strong advocate for measuring the results of HR’s efforts. According to Ulrich, “That which is inspected is expected. In a world of competing demands, if we don’t measure HR work, it won’t get attention.”

A recent study conducted by New York City-based HR consulting firm Tillinghast-Towers Perrin (Towers Perrin Monitor, April 1998) loudly demonstrates how measuring HR’s contributions in actual dollars can be a big attention grabber. In the study, Tillinghast-Towers Perrin looked at 17 personal lines property/casualty insurance companies as they relate to impact on employee satisfaction, motivation and retention.

The study confirms that HR policies and practices can play a vital role in customer retention, which has a huge, quantifiable impact on the bottom line. A very strong correlation was found between customer retention levels and employee turnover. Low turnover among employees and sales agents proved to be critical in maximizing customer retention levels in the personal lines insurance business (and is likely to have the same result in other service-based industries).

The research focused on the economics of enhanced customer retention and found that a personal lines company with $1 billion in annual premiums can expect to realize an added value of up to 6 percent of its current premium volume, or $60 million, by increasing its customer retention rate from 85 percent to 87 percent. Furthermore, if this same company increases its policyholder retention rate to 90 percent, it realizes an added value of up to 14 percent of its current volume — $140 million. That’s the kind of measurement that catches senior management’s eye and demonstrates in no uncertain terms that HR’s programs can have real impact on the bottom line.

And having impact on the bottom line is something every HR organization should be concerned with today. Jack Phillips, author of Accountability in Human Resource Management (Gulf Publishing Company,1996) and president of the Performance Resources Organization, a Burlingham, Alabama-based consulting firm, says its more important than ever for HR to measure ROI. “Pressure to improve productivity and increase efficiency in a competitive environment has brought scrutiny to all functions, activities and expenditures,” says Phillips. “HR is responding with a variety of approaches to measure this contribution and ROI seems to be the best strategy to meet this important challenge.”

Phillips also points out that HR expenditures are on the increase, often making an organization’s human resources the “greatest single expenditure in most organizations.” This factor alone, Phillips says, places an even greater requirement on HR to prove to senior managers there’s a return on this investment. “The threat and extent of outsourcing is creating more emphasis on ROI. One of the most important strategies to prevent further outsourcing is to show senior management the return on investment of existing functions and processes.” Phillips also indicates that as functions are outsourced, the ROI process becomes a useful tool to measure the success of the outsourced activity.

HR is reluctant to embrace ROI measurements.
Given all of this, why aren’t more HR functions calculating the return on their investments? Phillips says he feels many HR professionals are still reluctant to accept responsibility and meet the demands of ultimate accountability. According to Phillips, many HR professionals contend that measurement and evaluation systems (particularly in ROI) are too difficult, too costly, and in some cases, impossible. Phillips is quick to respond that, in reality, ROI is possible within most budgets and can be “simplified and implemented with little cost.”

Still, it seems most companies are approaching the measurement challenge at a less-than-rigorous pace. Even high-tech leader Sun Microsystems, headquartered in Mountain View, California, and ranked 69th on Fortune’s list, hasn’t hit the ROI issue head-on, but progress is being made. Ken Alvares, vice president of human resources, explains that when dealing with HR programs, whether it be employee support services, training and development programs or quality initiatives, the measurement factor can be a difficult nut to crack.

Alvares, a self-described believer in “measuring everything you can,” says the problem lies in the fact that the end measurements are only as good as the assumptions they’re based on. “When it comes to measuring the results of some HR programs, I have a hard time trusting some of the numbers,” Alvares says. “For instance, when we’re trying to isolate revenue increase per head and start assuming those increases can be attributed to one program, I think the results are open to question.”

However, Alvares does submit that in some situations, the measurement factor can be relatively clean and easy. For instance, the Sun organization implemented a software program that allowed salary change data to be entered and calculated far more efficiently, saving hours of work and improving productivity. Alvares explains it was relatively simple to calculate the cost of completing the same amount of work before and after using the new software. However, by press time, Alvares couldn’t provide Workforce with exact costs. Measuring return on investment can be fairly simple in situations where costs and expenditures are easy to identify.

Practitioners provide how-to advice.
Calculating ROI in the above example would involve subtracting the cost of the investment (dollars spent on software, training and implementation) from the savings realized through improving productivity and reducing hours spent on the process. By dividing the net savings by the cost in dollars, you arrive at your result.

To simplify an example like this, let’s say the initial cost of an investment was $50,000 for a 12-month period (hypothetical cost of software and implementation). And let’s assume that improved productivity, reduced people hours measured in an hourly pay rate, and a reduction in temp help resulted in an overall annual savings of $75,000, or a net benefit of $25,000 ($75,000 to $50,000). Deriving the result would involve dividing the net benefits ($25,000) by the initial cost ($50,000) for a result of 50 percent. Again, this is an oversimplification of what’s typically a complex process, but it’s a framework nonetheless for measuring results in traditional financial terms.

Unfortunately, Alvares admits, not all initiatives are as easy to measure and quantify. So rather than approaching the measurement conundrum with the same old approaches, he takes a different tack by asking the HR committee to demonstrate that their investments are creating a competitive advantage in the marketplace, either through product competitiveness or people competitiveness. If a new program improves pricing, time to market or quality, Alvares believes the return will be there.

The same holds true for investments that allow the Sun organization to maintain peak productivity through people processes. “We tend to use critical incident methodology, looking at business results before and after a change initiative,” Alvares says. He cites a specific example of this process when Sun did a pilot study to see whether engineers were more productive working alone or in teams that involve a lot of interaction. The initial assumption was that engineers prefer to work in isolation on individual projects. A video camera was used to monitor a pilot group of engineers who were placed in a more integrative environment.

The findings indicated that the engineers were more productive in a group and there was a significant benefit to the sharing of knowledge that took place. Alvares said the company went forward with a restructuring in this area because key indicators led HR to believe the return would follow in dollars and cents, which the company may or may not measure down the line.

Obviously, there’s not one right way to measure HR’s ROI. The approach can vary by each initiative and its expected results. However, Phillips suggests that HR should use traditional ROI approaches because middle- and upper-level managers must support HR programs and approve additional funding. These managers prefer the same type of calculation used to evaluate investments in the plant, equipment and new products — calculations that are somewhat unfamiliar to the HR world.

Phillips recommends HR professionals use five key measures to analyze the return on HR’s efforts:

• The investment in the HR function — stated as the total department expense divided by operational expenses, or divided by employees to make it comparable from one organization to another
• Absence rate — unexpected absences and number of employees who leave the organization without being asked to leave
• Turnover — including both those who leave on their own and those who are terminated
• Job satisfaction — the percentage of employees who feel good about their work and the company, derived from standard employee attitude survey data
• Organizational commitment — productivity and performance statistics — high productivity and performance reflect strong employment commitment.

Additionally, Phillips suggests that for the measurement process to work best, employees must be involved. He recommends that employees receive training on measuring results, and are given direct responsibilities for applying and supporting the program or processes, including data collection and analysis. Phillips believes most companies have a long way to go before being fully versed in the language of measurement, but he feels strongly that even small steps can make a big difference.

Where to look for measurement opportunities.
Ulrich agrees that HR professionals aren’t doing very well in the measurement area. “When we do measure, we often look at activities, such as the number of people who had 40 hours of training this year, the number of people hired, the percentage of the workforce on variable pay and so on. Instead, we need to look at outcomes and results and ask, ‘did we do the right training, hiring and compensating to get the desired business results?’”

But, Mark Teachout, Ph.D. and executive director of learning and performance technology for USAA, a worldwide insurance and financial services company (39th on Fortune’s list) based in San Antonio, Texas, says he doesn’t believe it’s necessary to measure the results of every initiative. “If you become over-focused on the [bottom-line results], you can get to a point at which you need to do a ROI on conducting the ROI to make sure it’s worth the time spent measuring results — it can get a little crazy.” Teachout believes HR professionals should be focused more on improving results rather than proving them, and prefers to reserve true quantitative measure for cases in which accurate measurement is possible and significant dollars are involved. USAA’s “Live Work” program for new sales members is a good example of such a case.

Teachout oversees the “Live Work” program, which involves putting new service reps through an eight-week sales and service training session. During the last phase of classroom training, trainees are on the phone with actual business prospects selling policies and financial services. The training staff is able to calculate the revenue they are generating while training is in progress. Results for 1997 indicated that new trainees generated over $1 million in sales, a ROI of 192 percent, which was calculated by dividing the cost of designing, developing and implementing the training by the net benefit (annual sales revenue).

USAA also measures the ROI for an amenity package that includes the world’s largest private office building, on-site tennis, golf and soccer areas, two fitness centers and five on-site child-care facilities.

Paul Menchen, vice president for HR policies and programs at USAA, believes that, when it is coupled with a competitive compensation and benefits package, USAA’s amenity package helps contribute to a low turnover ratio. However, Menchen admits that there are no specific quantitative measures in place to firmly support this data, other than positive feedback from employee opinion surveys and exit interviews.

Menchen explains, “We feel it’s important to treat employees well and provide them with a comfortable work environment. We believe by doing so, we keep turnover at a minimum. We may not directly measure results of those efforts, but we feel confident that if we treat our employees well, they, in turn, will show that same consideration to our members,” suggesting that lower turnover ratios and happy employees can lead to better customer retention and improved business results.

Ulrich offers this advice to HR professionals grappling with measurement: “Do it, do it now. Even if you don’t have perfect measures, involve some financial, strategic-thinking, bright types who are comfortable with creating measures, and don’t let the lack of measure keep it from happening. Also, be consistent with measures and track them over time.”

In his book, Ulrich outlines five areas HR can measure to demonstrate results:

• Productivity measures — output per unit of input (improvements in these areas might be traced back to increased training, improved work structure and so on)
• Process measures, such as improving systems and workflow
• HR costs and/or benefits for any specific initiative
• Employee retention, morale, commitment and skills
• Capabilities of the organization, such as speed (cycle time), learning, shared mind set, and accountability

Despite HR’s discomfort with the topic of measuring its results, dollars, cents and ratios speak volumes when it comes to getting top management’s attention and support for HR’s efforts. It’s time to elevate HR to a new playing field, and measuring results may be the only credible way for HR to truly step up to the plate. Are you in?

Workforce, September 1998, Vol. 77, No. 9, pp. 34-40.

Outsourcing: It’s touted as the business solution of the decade, a trend that was bound to find its way into the HR suite. But it’s also a concept that initially sent many HR professionals into instant anxiety over whether or not they’d ultimately be replaced by third-party vendors.

Now after the dust has settled from the initial outsourcing landslide, HR professionals are left wondering: Where exactly does HR stand? Are entire human resources departments being sent packing because management views this function as “noncore”—a department that’s more easily and efficiently managed by an outside supplier?

That was the projection of many outsourcing proponents who thought the HR function was one of the most logical areas to outsource, mainly because it couldn’t quantify the “value-added” benefit.

In fact, some prophetically suggested it would make perfect sense to encase the entire in-house HR function in cement and dump it into the proverbial black hole; the suggestion being that outside vendors could (with eyes closed no less) perform the same functions better, faster, and more cost-effectively.

The outcome of the outsourcing trend, as usual, is somewhere on middle turf. Outsourcing has neither totally replaced HR functions, nor has it left most HR departments untouched. In the end, it has become an HR tool that helps HR departments get rid of what’s not strategic to their role while keeping what is.

Outsourcing strategy supports HR’s role, but doesn’t replace it.
Few people would argue with the steam behind the outsourcing trend. After all, outsourcing revenue, in general, is skyrocketing. This was evidenced by the March 21, 1997, edition of the Staffing Industry Report published by Los Altos, California-based Staffing Industry Analysts Inc. It projected that annual outsourcing revenue would take a 35 percent jump over 1996 figures, exceeding $108 billion by the end of 1997, and there appears to be no end in sight to this record-breaking growth.

And although it’s true that organizations are increasing their outsourcing activity in the human resources area, the HR function is far from extinction. A recent survey conducted by the New York City-based American Management Association indicates that roughly 75 percent of the more than 600 respondent firms outsource at least one or more HR activities. But what’s being outsourced are segments of the HR function, such as benefits administration, payroll, EAP services, recruiting, temporary staffing and training—rarely the HR function in total—a fact that indicates the outsourcing phenomenon has hit a speed bump at HR’s door.

Outsource the entire HR function? Most find that thought absurd, especially in a business world where change is rampant, competition is ferocious and human assets are sacred. No, HR’s role today is more important than ever, and HR outsourcing rationale supports the fact that there’s a renewed, and perhaps unprecedented, appreciation for HR’s contributions.

Just look at the “why” behind most HR outsourcing decisions. Certainly some of the appeal this option offers is related to the cost-savings factor and the opportunity to buy external expertise. But one of the main reasons companies are outsourcing segments of the HR function is to allow human resources staff more time to focus on core activities that are strongly linked to key organizational goals.

And hand-in-hand with these core responsibilities comes a more meaningful role for HR professionals, one that positions them as tough but judicious keepers of organizations’ conscience and guardians of the corporate culture. Facilitating major change efforts such as mergers, acquisitions and restructuring, and shaping culture through effective communication and workforce development, are critical activities that are at the heart of HR today. Most experts agree these strategic activities shouldn’t be managed through a third-party relationship.

HR’s leadership role also has become increasingly more important because of the level of organizational change that’s running rampant in today’s work environment. Paul Simoneau, HR manager for The Gillette Co.’s North Atlantic Group, is one who agrees that HR outsourcing decisions should be made with careful forethought. Simoneau says his organization outsources relatively few HR functions (temporary staffing, matching-gifts programs and EAP services) because he believes HR’s role is too vital to the success of the company to outsource on a large scale.

Simoneau feels the level of change taking place in most organizations today calls for HR to provide an important and irreplaceable link between the workforce and management. Simoneau, based in Boston explains: “HR needs to be at the table when decisions are being made about major change initiatives, because for the workforce to support the change, it has to understand the ‘what’s in it for me?’ HR has to be there to give [employees] that answer and help them through the transition. [HR’s] no longer there just to plan the company picnic.”

Simoneau adds: “Our role is to figure out how to leverage our HR talent and do an even better job supporting the business by adding value and playing a more significant role in meeting corporate objectives. In a way, we’re competing with outside suppliers, because if we’re not adding value, and we’re not providing extremely high levels of service and doing it cost effectively, the company may look to outside suppliers through an outsourcing plan to meet those goals.”

Simoneau says he feels strongly that HR also plays a major role in supporting and shaping the culture of his organization by serving as communicator and interpreter of the corporate message. He says, “Whether it’s good news or bad, it’s up to us as internal HR professionals to put the right spin on it and make sure the message is consistent across all divisions.”

Some HR skeptics still hold on to the idea that HR belongs in the background, maintaining that the primary responsibility of managing the human assets rests with line management and with human resources playing a limited role as facilitator. But people like Gillette’s Simoneau are seeing the opposite trend. As organizational structures have become leaner, leaving fewer managers to take care of the business, Simoneau finds management staff turning to HR more often to provide strategies for dealing with difficult issues like violence prevention, sexual harassment, and the legal issues related to corrective action and employment termination.

Simoneau recently conducted training sessions on workplace violence and sexual harassment himself, and felt the training was well received because it was delivered by an internal person who was visible within the organization. “We’re addressing issues that in the past have been unspeakable, and we’re making them speakable. We haven’t sent this training outside because these are difficult issues and we want the staff to hear first hand that we support awareness and education in these areas. Some of that might be lost by bringing in a third party that doesn’t already have internal credibility and an established level of trust.”

Simoneau admits, however, that the challenge is in figuring out how to continue to keep up with the changing training needs of the staff, particularly with a workforce that’s somewhat mobile and very diverse, keeping it cost effective at the same time.

Brenda McGhee, manager of employment services for Glaxo Wellcome Inc., knows firsthand what managing organizational change is all about from an HR standpoint. McGhee, located in Raleigh, North Carolina, was on board for the Glaxo Pharmaceutical/Burroughs Wellcome merger that took place last year. She believes HR played a critical role in the transition. “We’re still in the process of building the combined culture of two large, successful companies. As we went through this merger, we in HR were as closely involved as any other group across the country. Over the last year, we’ve become even stronger partners with the business. Our line managers really view the HR staff as true experts in the field.”

McGhee’s human resources department outsources it’s company’s relocation and EAP services, as well as its onsite wellness/fitness program and temporary staffing activities. Having these areas managed through a third-party relationship allows McGhee’s organization to save money and time. “[The outsourcing vendors are] experts in these areas. We aren’t, and don’t care to be. We’re HR experts, and we want to devote our time to core functions in this area.” McGhee says these core functions are critical to the firm and have bottom-line impact that can be measured by reducing turnover, maximizing dollars spent on training and improving processes that impact productivity.

Outsourcing isn’t always the best answer.
Both Simoneau and McGhee believe a lot would be lost in outsourcing what many believe are the more strategic functions of the human resources role. According to Simoneau: “When you start outsourcing things like succession planning, organizational design, recruiting and training in its entirety, you start losing your connection to the employees, and you lose consistency of policy application, particularly in a large organization.”

In fact, some human resources executives are thinking twice before jumping on the outsourcing bandwagon, even when it comes to some of the more commonly outsourced functions. Anthony Bonno, senior vice president of human resources for Pacific Mutual Life Insurance in Newport Beach, California, says he considered sending both benefits administration and payroll functions of his 1,800 employee organization to outside vendors, but abandoned the effort mid-stream. “On closer examination, we [in HR] found some of the alleged benefits of outsourcing these functions were misrepresented. Reporting information couldn’t be done on a timely basis, and we would have had to add more and more services to the initial agreement to meet current service levels, something that became more and more expensive. And there were requirements we had with our multiple locations that would’ve been left unmet.”

About a third of the way into the conversion, Bonno said it became clear he’d be sacrificing both service and cost levels, defeating his initial purpose and leaving his internal customers dissatisfied. His goal, Bonno explained, is always to maintain or improve service levels, and to have cost reduction, criteria that outsourcing arrangements sometimes have difficulty meeting.

Determine the value-added benefit.
Bonno does agree, however, that the outsourcing option can play an important part in augmenting the HR function. According to Bonno, “If we don’t have the functional expertise in a certain area, like outplacement for example, we’ll go outside, but only if that service adds value to the organization and service levels are higher than what we can provide internally.”

Bonno believes a service adds value if it proves to be a better alternative to what’s available internally and offers expense control, expertise and knowledge when he needs it, especially if that need “comes and goes.” Bonno’s organization currently outsources outplacement and EAP services, some soft-skills training such as communication and project management, computer training, and 401(k) record keeping. He states: “It’s more cost effective for us to buy these services. They don’t fall within our core competencies, and in each case, we can meet our goals for high service levels and cost effectiveness.”

Outsourcing suppliers agree the intent behind outsourcing HR functions is, for the most part, based on efforts to buy external expertise and to free up HR professionals to spend more time on core activities that are bottom-line related, which means the company can quantitatively measure the return on investment of time or effort in dollars and cents. These efforts might involve improving a business process that results in increased productivity and ultimately more sales, or improving employee satisfaction through new programs and contributing to reduced turnover—things that can impact the financial performance of an organization.

Distinguishing core from noncore functions can be different for every organization.
Most HR professionals feel certain functions are more easily outsourced than others. But what’s considered “noncore” can be different for every company. Functions such as temporary staffing management, basic skills training, EAP programs, relocation services and benefits-related record keeping are areas that are frequently outsourced, but to some organizations, those areas may be so essential to the business, they should remain in house.

Joe Melanson, vice president of national outsourcing company Strategix, based in Peabody, Massachusetts, feels his organization serves as an important arm to the human resources function. “We’re brought in to support HR, not to replace it. I still see a lot of HR professionals bogged down with labor and time-intensive activities like background and reference checks, activities that are nonvalue-added in nature. The day-to-day work is still very reactionary, and it makes it difficult for the HR staff to focus on the strategic initiatives that are most pressing. Outsourcing those low-return activities can go a long way in helping HR get to the more critical functions like long-term planning.”

Melanson says he believes one of the core functions of HR professionals today is determining how to recruit and retain qualified staff. “An organization is only as strong as the talent it can recruit and hold on to,” he says. “Some of that work can be outsourced, but when you’re talking about high-level recruiting and managing sensitive employee relations, those things should be managed in house, because the internal staff has a unique understanding of the people involved and the organizational culture.”

Bonno echoes this philosophy and explains: “Whatever the bottom-line issues are, they always include an employee group. The internal HR staff must have an eye toward employees to make sure their issues are on the table.” Bonno also feels the internal staff can suffer when a third party is brought in to manage high-impact issues like employment termination and performance management. “Outside suppliers don’t have the same tie to the organization. The internal [HR representative] always has a stronger relationship which allows [him or her] to operate at a different level. A third-party supplier can’t operate at the same level.”

Susan Casey, senior vice president of HR for Fidelity Investments in Boston, feels the outsourcing solution makes sense when organizations want to buy knowledge and competencies they don’t want to invest in internally. Casey’s HR department has established partnerships with outsourcing vendors to manage relocation services, and benefits and 401(k) administration. She’s considering expanding her use of outside consultants to other areas, such as compensation.

Casey says her outsourcing philosophy is to maximize time and cost-effectiveness, and to also “access the best thinking available in the areas that are critical to the business.” However, Casey points out that although she supports the third-party strategy, she also agrees organizations should keep the core functions of human resources in house. Casey says “HR is a viable operational process. It’s important that those processes be integrated into the business strategy, someone from HR has got to be part of the management team to make sure that happens.”

Outsourcing can help build internal competencies.
David Burleigh, director of marketing for Arthur Andersen Contract Services in Chicago, sees little evidence of companies outsourcing entire human resources functions. “We certainly are seeing an upsurge in outsourcing trends in the HR area, but relatively few companies are sending the entire function out to be managed by a third party, with the exception of very small companies.” Burleigh indicated these smaller organizations tend to gravitate toward a PEO arrangement (professional employer organization), or staff leasing arrangement, a form of outsourcing in which the supplier provides a variety of HR functions, usually offsite.

What’s more common, Burleigh explained, is organizations turning to their outsourcing providers to give them access to competencies they might not otherwise want to cultivate internally. Establishing an international HR function is one trend Burleigh sees emerging as more businesses expand globally. According to Burleigh, few companies have experience in this area, and she says it can make sense to buy this competency initially, rather than trying to develop it in house. “Expertise is usually the key to the outsourcing decision. If you haven’t got it and you need it, go to someone who can put you in touch with the best practices out there.”

Organizations increasingly turn to third-party vendors to gain exposure to an area of expertise they don’t currently have internally, but eventually might want to build. The outsourcing partner can offer exposure to that area, preparing the organization to eventually build that competency in house, if desired.

Most experts agree the outsourcing option for human resources continues to be a viable long-term business solution. The key is figuring out what human resources activities are core, and which are noncore. If HR professionals focus their outsourcing strategy from a strategic-partner perspective, their plans won’t conflict with efforts to support high-performance HR systems, but will in fact, support those efforts by leaving human resources to do what’s most important, managing and supporting the organization’s most valuable capital—its human assets.

 

Workforce, January 1998, Vol. 77, No. 1, pp. 40-45.