Author: Samuel Greengard

Here are six ways to steer clear of gangs:

1. Never assume your company is immune.
   Gangs aren’t lured only by high-tech equipment, and they’re not just interested in selling drugs. Liquor, auto parts, clothing, even food are desired items. What’s more, other employees often provide the perfect conduit for distributing illegal-and legal-contraband. Legitimate businesses owned by gangs include: restaurants, auto repair shops, pager outlets, clothing stores and day-care centers.
2. Adopt tough screening procedures and conduct thorough background checks.
   Nothing weeds out a problem applicant faster than a solid background check. The money you spend per employee can greatly reduce the odds of problems. Gang members have become highly skilled at forging Social Security cards, driver’s licenses and green cards. They rely on friends with legitimate businesses for references, and they move around the country to avoid detection. The broader the check you do, the better.
3. Learn the signs and symbols that gangs use and educate employees.
   For some gang members, clothing and jewelry can serve as identifying marks. However, many gangs now are concealing their identities. Other more sophisti- cated gangs simply don’t use traditional markings. Graffiti and hand signals may serve as warnings that gang members are present. Obviously, it’s important for employees to know what to look for and to have a way to inform authorities-anonymously, if necessary.
4. Stay in contact with local law enforcement agencies, and trade information with other companies.
   Police often know what methods gangs are using and what types of illegal activities they’re conducting. If you suspect gang activity within your workplace, then it’s best to consult with law enforcement officials. It’s also a good idea to find out what other companies are experiencing and what methods they’re using to keep thieves and gangsters out.
5. Take security seriously.
   Video cameras, access cards, one-way turnstiles that allow only a single person to enter at a time, and trained security officers can make a difference. Gangs typically case a workplace before committing a crime. As a result, the more obstacles you’re able to throw at them the more likely they are to go elsewhere.
6. Adopt a zero-tolerance approach.
   A lax attitude can lead to enormous problems. Not only can it send a dangerous signal that the company is soft on crime, it also can lead to civil lawsuits from employees who are injured by another worker. Keep in mind that insurance companies might not pay a claim if they can prove that an employee should have been terminated for previous actions. Be prepared to prosecute and face the media, if necessary.

Thoroughly checking a job applicant’s background is one of those things that sounds like a good idea. After all, you don’t need to look past a newspaper or the nightly news to hear about the onslaught of crime and violence plaguing Corporate America. You don’t have to glance beyond the high turnover and sagging productivity many companies find themselves dealing with. But when your human resources department gets buried by the load of everyday work, it’s entirely too easy to gloss over things and dismiss a background investigation entirely. Add to that a dizzying array of legal restrictions and difficulty accessing information and it’s possible—if not probable—you’re hiring someone without knowing who they really are.

Just look at the facts. Experts say, depending on the position and industry, between 10% and 30% of all job applicants distort the truth or lie on their resumes. That’s about double the estimates from 20 years ago. Some exaggerate their educational or professional accomplishments; others fill in employment gaps. Many try to hide irresponsible work patterns; a few attempt to conceal a criminal background. A couple of years back, when the Port Authority of New York and New Jersey ran an advertisement for electricians experienced at working with a Sontag connector, it received 170 responses, despite the fact such a device doesn’t even exist. The Port Authority placed the ad simply so it could determine how many applicants falsify information on resumes.

Horrible, but not hopeless. HR professionals like Bobbi Navarra say they have learned to look beyond the resume to know just who they’re hiring. “The hiring process can set you apart from the competition,” states the director of human resources administration for APCOA Inc., a Cleveland-based company that operates parking facilities at 400 urban sites, including 70 airports, in 42 states. Every time the organization considers hiring a new employee, it conducts a battery of checks. Depending on the exact position, the investigation can include driving record, credit history, criminal record, education and employment verification. But the company doesn’t stop there. It also might carry out a detailed reference check and conduct an interview that probes specific issues. “The perception is a parking company would never spend the time and energy to do all this, but if you’re committed to excellence, then it’s absolutely necessary,” says Navarra. “Nowadays, you have to know who the people are who work for you. The risk is just too great to ignore.”

Better safe than sorry.
Indeed, the horror stories abound. Not long ago, for example, McDonald’s Corp. found itself paying out $210,000 in damages to a family of a 3-year-old boy who was assaulted by an employee who had a previous conviction for child molestation. And a Florida furniture company recently got walloped with a $2.5 million judgment for negligent hiring after an employee—whose background hadn’t been checked—returned to a home after a delivery and viciously attacked a woman with a knife, nearly killing her. At the ensuing trial, it became clear the man had an extensive criminal record and a long history of mental problems. Says Edward Niam, president of Hudson, Ohio-based Corporate Solutions Inc., a company that conducts background checks: “The entire incident would never have taken place if the company would have spent a few dollars on a criminal check.”

The dollars spent for a check are nothing if you consider workplace violence and harassment cost businesses more than $4 billion a year, according to the National Safe Workplace Institute in Monroe, North Carolina. Or that workplace theft tops out at more than $120 billion annually—more than 10 times the cost of all theft that takes place in the streets of America. Or that a single lawsuit for negligent hiring can drain a company of millions of dollars and severely cripple its stability.

The companies that use background checks and other screening tools generally find themselves with far fewer problems. They find themselves reducing hiring and training costs and creating an environment in which violence, crime and sexual harassment are kept to an absolute minimum. “No system is going to eliminate every problem and no amount of interviewing or screening is going to make the workplace a perfect environment,” says Niam. “It’s all about reducing the odds that incidents take place. Investing dollars and hours up front can save enormous headaches later on.”

The words sound convincing. The concept seems clear enough. Yet few companies screen job applicants as thoroughly as APCOA—particularly those hiring lower-paid service workers. That’s because screening applicants requires serious effort and a commitment to use all available resources. And, getting reliable information about a person isn’t easy. According to a recent survey conducted by Alexandria, Virginia-based Society for Human Resources Management (SHRM), 63% of all human resources professionals have refused to provide information about a former employee for fear of a lawsuit. Nearly 40% indicated that HR professionals should refuse to provide job-related information to prospective employers, even if the information is honest and factual. And while 92% of respondents in the survey indicated they do speak to an applicant’s former employer, only 61% verify educational information, 42% check driving records and 25% conduct credit checks. “There’s a dire need for better reference information, but fear of litigation keeps employers from providing much more than name, rank and serial number,” says H. Kenneth Ranftle, chair of SHRM’s board of directors.

Add to that the fact that over the last two decades, laws and restrictions have become ever more confining. One of the major issues, of course, is that Americans respect their privacy a great deal and resent others having access to what they would consider personal information. So, legislation such as the Freedom of Information Act denies access to such things as arrest, trial and conviction records. Yet, a tort—known as negligent hiring—holds employers responsible for determining an existing conviction record. In other words, not investigating a person’s background can lead to a lawsuit if that person commits a crime or infringes on another individual’s civil rights. Not making things any easier, 20 states have their own policies about how one can search criminal records. These laws override federal restrictions.

And that’s not all. The decentralized nature of information translates into a major obstacle for any HR department going the route alone. Many records, including criminal convictions, are generally not available in a central repository. In most states, they’re stored in county offices, which must be searched individually. Although an individual might have a felony conviction, there’s no way to know without checking a specific locale or knowing where that person has been in the past. If an applicant has falsified information about where he or she has lived in the past, a criminal check alone isn’t going to pull up any hits.

Anticipate the obstacles.
Despite all the hurdles, it’s possible to legally obtain the data needed to make intelligent choices, experts insist. Perhaps the most basic but useful tool is a Social Security trace, which verifies previous addresses. Another popular tool is a motor-vehicle records check, which can show violations, convictions and restrictions—usually for the last three years. An education check can confirm degrees and offer transcripts. A credit history can show how individuals have handled money and whether they have any judgments or liens against them. And criminal conviction and court records can show civil litigation and any felonies a person has committed over the last seven years. (For a complete discussion of various background checks, please see, “How To Screen Job Candidates Effectively,”).

Although each individual check can be useful, experts say it’s often more important to look at how everything fits together. According to Niam, a cross section of checks can expose someone who is using a false name, has lied about the employment history or fabricated other information. He points out, for example, a Social Security trace can verify a current address, and also show where that individual has lived in the past. That information can be used to check the accuracy of employment dates and also provide a framework for conducting a county-by-county search for a criminal conviction. Likewise, the fact an applicant doesn’t have a motor-vehicle record might be an indication of a suspended license due to alcohol or drug problems. With an accurate list of previous addresses, it’s possible to probe deeper into that issue. The cost of conducting a background check? Depending on the firm and the scope of the check, typically $50 to $200. In a few cases, the fee can run as high as $500. Turnaround time is typically 24 to 72 hours.

Many companies take the issue seriously enough to willingly plunk down the cash. At Atmel Corp., a San Jose, California-based producer of highly specialized semiconductors and microprocessors, all prospective employees are thoroughly investigated, using a variety of methods. The 10-year-old company, which has almost 3,000 workers in the United States and overseas, has been growing at an annual rate of more than 50%. That puts tremendous pressure on recruiters to fill positions, says Bobbi LaPlante, Atmel’s manager of human resources. “It’s a huge challenge,” she says. “The problem is nobody ever wants to think the preferred candidate can possibly have anything wrong. Recruiters often don’t want to wait the three to five days needed to get the information about an individual’s background. They want to make an offer immediately, and they think it might show bad faith on their part to tell a person they’re checking on him or her. All it takes is getting pinched one time for you to realize you can’t make exceptions. The reality is the money spent on screening is an investment.

Match the tools to the job.
Atmel—which frequently uses outside consultants—conducts different types of checks for different positions. Line employees, who typically work in chip fabrication, undergo a Social Security verification and a criminal check. Since education and financial issues aren’t important for the job, the company forgoes any background check to verify that information. At the management level, the firm conducts a more detailed investigation. It verifies education, checks that employment dates are correct, conducts a Social Security check, and a criminal-record check. And, depending on the position, it sometimes requests a credit check. “The higher we go up the ladder, the more we focus on personal references,” says LaPlante.

Any type of criminal violation catches HR’s attention, although several issues weigh into a decision about whether to hire the applicant. For example, if an individual has a DUI (driving under the influence) conviction, it’s considerably less of an issue if the person isn’t going to be driving for the company, says LaPlante. However, if the individual has been convicted of criminal fraud, that eliminates the candidate from consideration altogether. And when it comes to checking the accuracy of the information that’s been provided by an applicant, the same general rules apply. “If someone is a few months off in their employment record, it isn’t something we’re too concerned about. Obviously, you have to allow for some margin of error. We get a lot more concerned if someone has worked somewhere and doesn’t put it down. Or when the person claims to have a degree or credentials and doesn’t.”

The company is particularly careful about who it hires for reasons that extend beyond possible violence or theft. Industrial espionage always is a concern, particularly for a technology company like Atmel. There’s also some concern about an individual’s employment history and what information that individual claims. Even the perception one is carrying secrets to a new company can spawn lawsuits. And then there’s the general issue of finding people who are reliable and honest. “You want someone who’s stable and productive,” says LaPlante.

Although the firm has never had a violent incident or a problem with theft, LaPlante recently was reminded how insidious the problem can be. Under pressure from a manager who had an open position and desperately needed to fill it, the HR department allowed an engineer to begin work before all the usual checks were completed. Only a week into the new job, the background investigation revealed the person had falsified his degree, work experience and other facts. Although Atmel had to pay a week’s salary, that was the least of the headache. HR also had to go back to find a new candidate to fill the position. “It reminded us a couple of hundred dollars and some patience are a good investment,” says LaPlante.

APCOA’s Navarra is no less committed to knowing who the company is hiring. Although it uses Hiring Authorities (the name given to managers who hire employees) to make employment decisions at its various locations, it has established a standardized process for checking on applicants. After a Hiring Authority has weeded through applications and narrowed the list of finalists, an outside company checks on the applicants’ driving records and looks for criminal convictions. Additionally, management candidates are subjected to a credit history check, as well as education and employment verification. Navarra says approximately 15% of all entry-level applicants falsify information and approximately 5% of all management candidates—something that’s usually apparent after a background check.

But the company doesn’t limit itself to verifying information. It also conducts reference checks in-house. In some cases, that translates into a phone call and direct questions to an individual listed as a reference. In other situations, staff sends out specialized forms and then examines the responses. “Usually, a person puts someone down as a reference who’s going to say something good, and many people assume there’s no point in talking to them because of that. But asking the right questions can provide clues and insights into attitudes, behaviors and actions. It can open up things the reference might not otherwise discuss,” Navarra explains. For example, HR managers might ask a former employer whether the candidate ever showed signs of irresponsible behavior.

At Intuit Corp., the Menlo Park, California software company that produces Quicken, reference checking has turned into something between an art and a science. The organization typically requests that applicants for management positions supply between five and nine references—occasionally a dozen. Then the HR department calls these personal and professional references and asks specific questions, such as: “What are the candidate’s strengths and weaknesses? Can you describe a project in which the candidate achieved outstanding results? Can you describe a situation in which a candidate’s performance was disappointing?” “We find the folks we call are pretty open and honest,” says Sharyn Vucinich, staffing manager for Intuit. “The common perception that they’re only going to say positive things isn’t true.” And if those conducting the interview—a combination of hiring managers and those from other departments—run into roadblocks, they simply ask the candidate for more references.

Even when a reference isn’t overly cooperative or forthcoming with information, it’s still possible to glean insights about the candidate, according to Edward C. Andler, president of Bridgeton, Missouri-based Certified Reference Checking Company. At the very least, he says, it’s often possible to get some idea just by the tone of the voice and the demeanor of the person answering the questions. What’s more, basic information, such as employment dates, job title and whether a previous employee is eligible for rehire, can help a great deal. He also points out there are other ways to overcome reluctant sources. One of the most effective strategies: calling one’s counterpart at another company and engaging in old-fashioned networking—informal and off-the-record, if necessary. “The worst the person can do is say, ‘No.'”

Regardless of whether a company conducts its own checks or contracts with an outside firm, Andler believes the crucial thing is to verify those being considered for a position are really who they say they are. He explains: “Most crimes and most problems are committed by a small percentage of people. It might be difficult to determine a top performer from an average performer, but it’s relatively easy to spot the vast majority of individuals who are poor performers, dishonest or have other problems. Once you weed out the bottom 20% of the work force, quality and productivity will increase. Once you get the troublemakers out of the loop, you’ve solved many of your personnel problems.”

Take advantage of tests.
Background checks and interviews with references can certainly go a long way toward weeding out undesirable applicants. But a diligent HR department doesn’t stop there. In fact, verifying the accuracy of information is sometimes just a start. James M. Powell, a senior vice president at Charlotte, North Carolina-based Pinkerton Services Group, argues organizations also can screen applicants by using personality tests, psychological assessments and structured interviews. He also believes an individual well heeled in the art of interviewing can expose inconsistencies and potential problems. “Many companies are beginning to understand it isn’t just an issue of theft or violence. They need to provide a high level of customer service and they have to find people who can do that.”

One of those companies is Nordstrom Inc., a Seattle-based department store chain. It uses the Reid Survey, an integrity test, to screen for violent tendencies, drug use and dishonesty. The paper-based test takes approximately 15 minutes to complete and immediately is fed through a scanner to obtain results. It’s given to anyone who a manager shows interest in pursuing beyond the application process. “Although it’s only one step in the hiring process, it immediately eliminates people who are suspect,” says Joe Demarte, vice president of personnel. And he has the numbers to back that statement up. When Nordstrom conducted a controlled test of 400 applicants at one store, it tracked the results of the Reid Survey. Approximately 100 weren’t recommended, but the company hired them anyway. Three months later, 44% of the group had left the company, compared to a 22% turnover rate for those who scored in the appropriate range on the test.

Overall, approximately 20% to 25% of those tested aren’t recommended for hire, says Demarte. “[The test] simply increases the probability of tagging those who wouldn’t be acceptable employees.” He explains a Nordstrom interviewer has roughly a 60% chance of screening out an undesirable applicant. With the assessment test as an additional tool, the probability rises to 90%. “Spending $5 on the test is well worth it. It’s a negligible cost compared to the alternative of having employees steal and treat customers in an undesirable way,” he says. Nordstrom also conducts criminal, driving and credit checks, depending on whether they’re relevant for the position. It typically spends $20 to $30 per applicant for anyone being seriously considered for hire.

Nordstrom isn’t the only company that has turned to testing and a more structured approach to hiring. A growing number of firms are using psychological assessments—and even personality tests—to match workers with a predefined profile of who a successful person is within that company. Says Pinkerton’s Powell: “The tests can’t tell you whether to hire the person or not. They simply provide insights into how that individual might function in that environment. They can show a person’s strengths and weaknesses.” Pinkerton’s Stanton Survey, for example, gauges an applicant’s attitude and provides some insights into how well the individual is likely to handle a particular position.

Don’t underrate face-to-face interviews.
All the discussion about background checks and screening, however important, overshadows another important part of the process: face-to-face interviewing. It’s one of the most powerful screening tools that exist, although many human resources professionals fail to use it effectively. “By asking good questions and by probing beneath the surface, it’s possible to find out a lot about a person. No amount of testing can ever take the place of a human being asking questions. A trained interviewer is crucial to finding people who have the people-skills to flourish,” says Demarte. Adds Atmel’s LaPlante: “A good interviewer who phrases things the right way can coax a good deal of information out of someone.”

One of the most effective methods is simply asking the applicant questions that are relevant to the job: How would you handle a customer who gives you a hard time? What would you do if another employee yelled at you or told you that you weren’t doing your job right? Such questions can evoke responses that provide clues about how that individual might react in a stressful situation or deal with others.

Pinkerton’s Powell agrees people often will provide all sorts of information, and applicants will admit to all kinds of things, if the questions are well designed. Another technique that works best, Powell believes, is a structured interview. It can eliminate many of the variables and inconsistencies that can sneak into the process—particularly at decentralized organizations that use field managers for hiring. Rather than sitting an applicant down and saying, “Tell me about yourself,” the exact questions are phrased ahead—and are often linked to follow-up questions. The process is constructed to address the specific needs of a specific job and so questions are tied into job functions. Popular in the 1940s and ’50s, it’s now making a strong comeback.

At Ameritech Cellular Services, the Hoffman, Illinois subsidiary of Ameritech Corp., structured interviews are becoming the norm. That has created greater uniformity in the way the hiring process works and reduced the potential for legal problems. Hiring managers use a behavioral approach that focuses on past accomplishments and actions. From this, they’re able to get a much better idea who the people are and what they bring into the organization. Candidates answer questions directly relating to skills and abilities. “It’s not just an exercise in running down all the points of the resume,” says James A. Riecks, director of human resources. “We’re shifting toward competency-based systems, which really zero in on the attributes of a candidate. We’re looking for specific examples of how they succeeded on previous jobs rather than examining their entire work history.” In some cases, the company also uses computer-based simulations to determine if an individual has the skills to do the job.

Yet the firm doesn’t overlook conventional methods. Once an applicant is considered a finalist for a position, Ameritech conducts a background check—using a variety of different methods. It also has hiring managers and staff who check references. “The philosophy is driven from a cost perspective. If you can do a better job up front, if you can select a person who has the skills and attributes to fit the organization, you’re probably going to lower turnover, boost productivity and eliminate problems,” Riecks explains.

Whatever method you choose, ensure consistency.
Of course, there’s no single formula that works for every company in every situation. Experts say one of the keys to creating a solid screening program is to first determine what the company’s needs and concerns are. A candidate for the accounting department will require a far different background check than an individual who will drive a delivery truck. A sales manager will dictate an entirely different approach than a shipping clerk. Likewise, different industries require different types of screening. Certain sectors, particularly those paying low wages and with little opportunity for advancement, are far more prone to attract candidates with questionable backgrounds.Yet, as Niam puts it: “Nobody’s immune.”

Whatever approaches a company takes, those on the front lines say consistency is a key to success. Not only does a standard approach ensure the organization will follow its stated policies and pursue its goals, it also reduces the odds of a lawsuit. “You don’t have to screen everyone you hire,” says Niam, “but anyone who you consider for a specific position should be subjected to the exact same screening procedure and background checks as everyone else.” That’s also true for pre-employment drug tests and post-hire physicals. Moreover, it’s important to avoid tests and checks that aren’t relevant for the position and could be construed as a personal invasion. In some instances, they could serve as the basis for a discrimination suit. And when it comes to psychological and attitude assessments, experts caution that a test must not be biased toward a specific race, gender, religion or age group.

Niam also points out one should never assume all information is accurate and up-to-date. Mistakes take place. Credit reports are notoriously sloppy, for example, and things aren’t always how they appear on the surface. “It’s important to discuss an inconsistency or a red flag with a candidate. It’s crucial to give him or her the opportunity to explain why there’s a discrepancy or a problem. In some cases, a person will make an admission of guilt if confronted. In other instances, an individual may have a valid explanation.” Of course, there’s a big difference between an employment gap of a couple of months and a criminal conviction. And that’s when human judgment and expertise plays a role. No matter how sophisticated tests and checks become, HR must still weigh the results.

Finally, there’s the issue of not overstepping certain boundaries in the pursuit of information. Courts have found some employers liable for collecting intrusive data about job applicants and employees. Although virtually every employer requires a release form that allows the employer to check references and background information, that doesn’t provide carte blanche power to conduct an investigation and ask any question. One California company that began asking candidates about their sexual orientation and inclination to attend church found itself the target of a major class-action discrimination suit. By the time the dust had settled, the firm had coughed up $2 million for a settlement.

Of course, all the checks and tests in the world can’t eliminate every problem. Crime, violence and unproductive workers always will be a part of the workscape. People with emotional problems or a poor work ethic sometimes slip past even the most careful scrutiny. Yet human resources professionals who screen applicants and conduct background checks insist the money and time invested is well worth it. “It reduces turnover, it reduces theft and it cuts down on liability,” says APCOA’s Navarra. “You can have the best product or service in the world. You can create an award-winning training program. But if you haven’t selected the right person for the job, it’s all for naught. An organization is only as good as its employees.”

Don’t let time and financial pressures rule the process.
Finding the time to thoroughly check candidates might be difficult. Spending $50 to $200 to have a candidate screened seems like a hefty sum—particularly when a company is hiring thousands of employees a year. But it’s time and money well spent. If only a single violent incident is avoided or theft is curtailed, thousands—perhaps millions—of dollars can be saved. Moreover, reducing turnover, absenteeism and other problems pays huge dividends. Finally, remember that every applicant doesn’t require a background check. Only the individual or persons seriously considered for the position.

Customize screening tools to fit your needs and situation.
There’s no single template that can determine the right approach, since no two companies are alike. Consider the needs and concerns of your company and the type of position you’re trying to fill. Learn about all available options so you can make an informed choice. And avoid screening methods that have no relationship to the job. For example, a credit check is almost always unnecessary for a truck driver or assembly line worker.

Verify information on resumes—and call the references.
Experts agree one of the biggest mistakes human resources recruiters make is not thoroughly checking resumes. Of course, many companies aren’t terribly cooperative. But there are ways to dig beneath the surface and piece together a picture of who the candidate really is. “The questions that are asked are key,” says Edward C. Andler, president of Bridgeton, Missouri-based Certified Reference Checking Company. So, choose your questions carefully.

Use structured interviewing, whenever possible.
Ask specific questions relating to skills and ask how an individual would react to a hypothetical work situation. Behavioral questions can provide strong clues as to how a person might react in a given situation. Written assessment tests also can provide insights.

Use professional services that have the expertise and resources to conduct a check.
Yes, it might cost a bit more up front, but firms that specialize in background and resume checks generally have the manpower and knowledge to dig beneath the surface.

Companies that use long-term temporary workers from staffing agencies need to be aware of the legal obligations and risks involved in establishing programs designed to motivate those workers. These risks include IRS audits and penalties, and Department of Labor liabilities. The chief concern, according to Irene Cohen, CEO of Corporate Staffing Alternatives Inc., is in not violating the agency’s status as employer of record.

“Most companies don’t have a problem until the temps have been there for more than six months,” she says. At that point, the more you treat them like regular employees, the harder it’ll be to convince the Department of Labor or the IRS they aren’t, or they shouldn’t be, your employees.

In terms of motivating employees, Cohen explains employers should be careful not to:

• Offer temps company business cards with their names imprinted on them
• Put the temporaries’ names on their office doors
• Extend special recognition awards directly to temporaries
• Directly invite the temps to company parties or picnics or offer free meal tickets. Instead, extend the invitation through the staffing agency, if you use one. If not, exercise good judgment as to the kinds of gatherings you invite temps to, and the frequency with which you include them.

Ideally, Cohen says, to stay clear of legal risks, all motivational incentives-whether financial or otherwise-should be arranged through the staffing agency. “You want to avoid liabilities under tax and labor laws, and the only way to do that is to make sure that nothing makes the company look like the temporary’s actual employer.”

Karen Ford, an employment and labor lawyer with Littler, Mendelson, Fastiff, Tichy & Mathiason in San Francisco, adds that employers should recognize the possible risk. And to be on the safe side, they should check with an employment lawyer before devising any type of motivational program for their temporary employees.

In the long run, the question of employer status isn’t based on hard and fast criteria, she says, but on a combination of many specifics. “What you want to look at is the totality of circumstances,” she says.

Although benchmarking is a powerful tool for achieving organizational change, it’s not always as simple or straightforward as it seems. In fact, many organizations find themselves getting tripped up over several common problems. Here are some things to keep an eye on:

Ignoring Internal Processes.
Finding best-in-class companies is a key part of benchmarking. But all the information in the world about how world-class companies operate won’t do a bit of good if there’s nothing to compare it to. Internal benchmarking offers a starting point and is crucial to the overall process.

Missing the Real Issues.
Some companies focus too closely on details and completely miss The Big Picture. Others conduct too broad of a search—looking for the best employee orientation program in the United States, for example—and wind up chasing rainbows.

Emphasizing Numbers Rather Than Processes.
Quantitative data has its place and can prove highly useful. But benchmarking isn’t just a science, it’s somewhat of an art too. Qualitative issues shouldn’t be ignored.

Lack of Commitment from Management.
If management isn’t willing to backup a project and provide the necessary support and funding, the process is doomed from the start.

Becoming Too Industry-centric or Company-fixated.
Just because a company is in a different industry doesn’t mean it can’t provide useful information. Many processes and practices transcend industry lines. Also, a lot of great benchmarking information comes from other-than-famous or award-winning firms.

Superficial Research.
Benchmarking works when a company finds other organizations that are truly outstanding. A lack of effort in identifying best practices can easily translate into a study of mediocre practices. Moreover, it’s essential to assemble a list of appropriate questions that can provide solid information.

Egos.
It’s easy for those involved in benchmarking to become overly defensive and sabotage the program or become overly ambitious about ramming change down everyone’s throats. Benchmarking requires a delicate balance and functions best in an environment in which people don’t feel threatened.

Failing To Follow Through and Implement Change.
Many a benchmarking project has been derailed because of the time and energy required to make changes. There’s certainly no shortage of obstacles along the way. A benchmarking team must be willing to work through problems and stay on track over a period of months or years.

There’s nothing like a whiff of reality to make you realize yesterday’s winning formula can easily turn into tomorrow’s recipe for disaster. And Mike Burns is well aware of the fact. The vice president of HR and Total Quality Culture at Goodyear Tire and Rubber Co. has seen the automotive and tire business undergo massive change during the last few years—part of a larger transformation affecting industry as a whole. As the huge Akron, Ohio-based manufacturer has struggled to keep pace with the changing workscape, the organization has focused on finding new and better ways to get things done in all functions. “Success is measured by how well you can adapt. What worked in the past isn’t necessarily going to work in the future. Today, change is an absolute necessity,” he says.

Indeed, Goodyear has analyzed, deconstructed and then reassembled various practices in new ways, gaining remarkable insights into the way the company and its people actually work. In HR alone, the company has scrutinized everything from benefits to training procedures, looking at other companies and examining best HR practices. Then it has put all the information together—in both quantitative and qualitative forms—to provide a crystal-clear snapshot of what it’s doing well and ways it can improve (see sidebar). But, perhaps most important of all, this ongoing benchmarking has harvested brainpower and enthusiasm the company didn’t know existed. By measuring itself against other organizations and then soliciting input andinvolvement from its key HR employees, Goodyear has managed to empower its work force while finding more efficient ways to get work done.

And Goodyear isn’t the only company using this technique. During the last several years, few things have fractured the corporate psyche more than the pressure to achieve outstanding results with dwindling resources. As one company after another has restructured and downsized, the emphasis on reengineering and TQM has grown to almost a fevered pitch—and the need to squeeze greater results out of less raw material has become de rigeur. As HR departments struggle to meet this challenge, one thing has become clear: Improvement doesn’t take place in a vacuum. That’s why a growing number of HR functions have turned to benchmarking—that is, thoroughly examining their own practices or procedures and measuring them against the way other companies operate. HR has learned it’s essential to understand what works best and how that can be applied to a philosophy of continuous change and improvement.

It’s worth the sweat.
Benchmarking embodies the idea that it’s possible to examine best practices of other companies and then implement changes based on those observations. It usually requires a good deal of internal analysis and ob-servation, as well as phone calls or site visits to obtain the actual information. When it’s done correctly, it’s often a com-plex and formal process that involves detailed questioning, research and analysis. Benchmarking might also include statistical data that a company can plug into a matrix for determining what im-provements are desirable—and possible. Regardless of the approach, benchmarking always requires steadfast dedication to the idea of making changes in behavior as well as to the actual systems that drive a company. Explains Alfred R. Pozos, director of the International Bench-marking Clearinghouse for the American Productivity and Quality Center (APQC) located in Houston: “It demands a great deal of introspection and honesty. It’s part logic and part intuition. You have to be prepared for your ego to get slapped around a bit.”

Indeed, like any business practice, benchmarking sometimes can be gut-wrenching, frustrating and time-consuming. Says Charles Bent, staff director of planning and research at NYNEX Corp. in Marlboro, Massachusetts: “Benchmarking doesn’t always tell you what you want to hear: it doesn’t always work how you think it will and neatly solve your problems. It’s possible to do all sorts of research, use the best models available and still not identify best practices and how to apply them. Benchmarking is a complicated equation.”

Adds Patricia Nazemetz, director of Human Resources Policies at Xerox Corp.—the Stamford, Connecticut-based company that launched the American benchmarking bandwagon in the early 1980s: “When it comes to benchmarking, not everything fits into neatly defined questions and parameters. It’s a constant and ongoing process, and it involves balancing different perspectives and needs.” But it also can provide fuel for the corporate fire. “When a company asks the right questions and gets the right answ-ers, it can lead to amazing insights… and changes,” says Sara Olberding, manager of the information center at the Cincinnati-based Association for Quality and Participation. Adds Pozos: “It can be a tremendous resource and can provide remarkable insights.”

For these reasons, benchmarking suddenly has become fashionable and hot. More than 70% of Fortune 500 companies use benchmarking on a regular bas-is, including AT&T, Eastman Kodak, Ford Motor, IBM, Weyerhaeuser and Xerox. Not surprisingly, it has become yet another corporate buzzword and spawned its own cottage industry. Books about the topic are everywhere, and consultants increasingly are peddling expertise. Many trade associations now offer training programs and materials to help companies navigate through the benchmarking tangle. Some even provide in-formation online—including ethics and guidelines—using the Internet’s World Wide Web. A few corporations now mar-ket their own benchmarking expertise to other firms as well.

Benchmarking: Learning from HR’s best.
Yes, benchmarking has earned its place in the corporate arsenal. And today, it’s used to study human re-sources functions as well as manufacturing functions. These days, HR departments are discovering that benchmarking is necessary and useful. Rapidly advancing technology, new ways of tackling work and leading-edge management approaches translate into a far greater need to understand the people side of the business and align human resources with company goals. Indeed, with HR increasingly involved in corporatewide reengineering and total-quality initiatives, many in the human resources field are finding benchmarking is an inescapable part of corporate life. It’s essential to understanding such things as compensation, benefits, staffing, outsourcing and training. And companies that have used benchmarking successfully in HR often have leapfrogged the competition and found themselves enjoying a substantial competitive advantage.

Benchmarking revolves around a simple enough concept: A company—wheth-er it’s among the fattest of the Fortune 500 or a virtual unknown—can improve and find more efficient ways to get work done. In a world in which the bar constantly is raised to ever-greater heights, it’s necessary to study—and often to learn—the methods that deliver superior performance. Of course, one of the best ways to advance is to look outward at what other organizations are doing, especially those that have demonstrated outstanding results. That could mean studying an organization that has been the recipient of the Malcolm Baldrige Nation-al Quality Award or other recognition, or one that simply has a practice that seems interesting, innovative or particularly noteworthy.

Benchmarking also is effective for measuring performance within an organization and comparing it to general performance industrywide. Although companies and their cultures vary greatly, knowing what’s typical within an industry can provide insights. “It’s great to look at best practices, but it’s also useful to take the temperature of the industry and see where you are relative to everyone else. That’s what often provides the best clues about how to embark on a bench-marking project,” says Robert Sahl, general managing partner for WMS and Company, a King of Prussia, Pennsylvania-based consulting firm that specializes in benchmarking studies.

Whatever tact a company takes—a variety of benchmarking models exist—one thing is certain: Benchmarking provides a method for focusing on specific factors that can lead to success or failure. It’s an indispensable tool in the ongoing struggle for continuous quality improvement. And although an individual project might take months to complete and cost anywhere from a few thousand dollars to hundreds of thousands of dollars (the APQC found that a typical organization spends $40,000 to $50,000 on a project), it can reap huge rewards and pay for itself within weeks or months.

Xerox learned that fact years ago. Perhaps more than any other company, it has proven just how powerful benchmarking techniques are and what they allow an organization to achieve. The company constantly examines other organizations—as well as itself—in the never-ending quest for improvement. Within HR, virtually everything—from training to work-and-family issues—has been scrutinized at one time or another. Yet the level of sophistication continues to grow and evolve.

Xerox’s benchmarking process in-cludes 10 steps:

• Identify what’s to be benchmarked
• Identify comparative companies
• Determine data collection method and collect data
• Determine current performance levels
• Project future performance levels
• Communicate benchmark finds and gain acceptance
• Establish functional goals
• Develop action plans
• Implement specific actions and monitor progress
• Recalibrate benchmarks.

A methodical approach keeps the process on track.
Another company that follows this approach is Goodyear. Benchmarking since the late 1980s, Goodyear has examined a wide range of human resources practices, including employee training and benefits. Yet, regardless of the specific practice, they have found that the fundamentals of benchmarking remain the same. “You must ask yourself honestly, ‘Where are we really at and what do we hope to achieve?’ You essentially start with a blank piece of paper, you develop highly focused questions to learn about specific practices and then you seek answers,” Burns explains. At Goodyear, that can mean conducting interviews over the phone or in person, engaging in academic studies or using outside consultants to gather information.

Recently, when the company began studying compensation strategies, it created an internal task force comprised of individuals from various departments. All came together to develop questions and explore topics such as variable pay, top performers’ pay and what role education and training has in determining an employee’s compensation level. Team members first determined what the company wanted to learn and then created a specific agenda. After conducting interviews and documenting results, the team compared notes about various practices. And it presented recommendations for change.

Unlike some companies, Goodyear doesn’t relegate benchmarking to a particular group of employees. It’s a mainstream activity that transcends departmental boundaries and job titles. Employees receive training as needed and are then expected to participate in the process. If the training department needs to get a better idea of how it compares to other companies in terms of cost or methodology, for instance, it engages in its own benchmarking study. “The idea is to build a whole quality culture and have the systems in place to support it,” Burns explains.

But that’s no easy task. Getting out of the starting block and determining the appropriate approach for benchmarking can be overwhelming. As NYNEX’s Bent puts it: “There are so many things you can consider and examine that you have to make it a point to focus on what’s really important. Many companies waste their own time and other companies’ time asking the wrong questions or grappling with issues that aren’t all that significant.” What’s more, firms easily can find themselves swimming in percentage comparisons and statistical formulas without identifying best practices and gleaning from them. Quantitative and qualitative data both have an important place in the overall scheme of things, but it’s also important to understand what works best in a given situation.

In fact, a methodical approach can often pay huge dividends. Morristown, New Jersey-based Gemini Consulting, with 1,600 employees spread throughout the United States and beyond, finds benchmarking essential to streamlining and improving its HR function. But, according to Joseph DeGennaro, vice president of HR, the company puts a premium on maintaining an overall perspective and not getting caught up in the enthusiasm and hype. Says he: “Benchmarking can serve as a valuable tool and help you achieve outstanding results, but it’s essential to figure out where you want to be—and where you should be—in the continuum.”

Pre-plan, learn to network and focus your search.
How do successful companies navigate their way through the benchmarking maze and get a project off the ground? How do they ensure they’re getting the results they need? Those in the trenches say it’s important to develop a solid strategy and use methods that have a proven record of success. And that almost always begins with identifying specific practices that require a closer look and putting the entire matter in perspective.

“Benchmarking a manufacturing or assembly process is much simpler than dealing with people issues,” says the APQC’s Pozos. “The softer side of HR requires those involved in the benchmarking process to take a step back and consider cultural issues and attitudes that aren’t easily quantified or understood.” And that usually means carving out enough time to do some worthwhile thinking. “If you can’t focus on the important issues and see the broader picture, then you’re likely to wind up in a situation in which you’re constantly running around putting fires out. You wind up with no time to reflect. It’s crucial to block out time to identify areas that require benchmarking and then think about the issues that need to be resolved and how that can best be achieved,” says Nazemetz.

When Goodyear embarks on a benchmarking project, it also spends up to three months planning and preparing for the task. There are meetings, analysis, strategy sessions and developing materials to help streamline the process. There are lively discussions about what the company hopes to get out of it and what it hopes to achieve in the long run. Those who participate in the process receive training on how to use their analytical skills to benchmark successfully. “It’s essential that the project is a good investment and not just something that seemed like a good idea,” Burns explains.

Because it’s such an investment of time and money, it’s not surprising that many who engage in benchmarking have learned that having a trusted network of colleagues can prove invaluable. NYNEX’s Bent is one of them. By participating in the Alexandria, Virginia-based American Society of Training and Development’s (ASTD) Benchmarking Forum, for example, he not only has access to background materials on benchmarking and industry data, he also can connect with colleagues at any of the 50-plus firms who are equally committed to studying best practices.

Of course, learning about the inner workings of other companies is a key element to effective benchmarking. And while ASTD and APQC can open doors, these organizations aren’t a one-stop shopping service. Many desirable companies simply don’t participate in these forums. So what’s a company and HR department to do—especially when award-winning companies are inundated by requests? Olberding of the Society for Quality and Participation suggests targeting previous award winners that no longer are so highly sought after, but have the materials and public relations infrastructure in place to deal with requests. It’s also important, she notes, not to overlook lesser known companies that have received media attention—even in trade magazines. First-tier companies, such as Motorola, Xerox and Federal Express, typically are flooded with requests and simply can’t accommodate everyone. Finally, Olberding points out, a prospective candidate for benchmarking shouldn’t mirror too closely one’s own company. “The whole idea is to compare,” she explains.

Effective benchmarking requires more than knowledge of how to network, however. Asking the right questions is vital. Says Patrick Murray, principle of HR Effectiveness Inc., a Beaverton, Oregon company that advises and consults on benchmarking and publishes an annual report of best practice companies: “The industrial tourism business—let’s go find out everything we can about a topic—isn’t particularly effective for benchmarking. It’s far more useful to find companies that have great programs and then focus on important questions in specific areas. That’s what gets results.”

Adds Bent: “It’s essential to know what you’re looking for and stay away from a fishing trip. One of the weaknesses of benchmarking is that people call up and say they’re involved in a project and they have a set of questions. The fact is, they have 20 questions all over the place. They aren’t focused on anything in particular—let alone a particular process. They ask how you structure your funding for training or how you evaluate things in general. That’s not benchmarking. It’s just an interview and it wastes everyone’s time. The questions must be tightly focused. It can’t become a scattergun approach.”

When Kodak’s human resources department embarks on a benchmarking project, Kay Stammers, director of re-engineering and benchmarking for HR at the firm’s Rochester, New York headquarters, tries to include staffers who are knowledgeable and interested in the topic to head the research. “It’s important to have people who understand the nuances of the topic and [who] understand the underlying issues,” she says. Yet she’s quick to point out it’s also vital to ensure fresh input into the process. “Sometimes, it’s good to have someone who knows absolutely nothing about the process involved. The questions they ask can be quite different.”

At Xerox, benchmarking teams often bounce ideas back and forth. And by the time Xerox is ready to use the telephone or a meeting to conduct a benchmarking interview with another organization, the focus is perfectly clear. As expected, this no-nonsense approach spills over into the meeting itself. “You have to establish trust and confidentiality up front,” says Nazemetz. “You have to be able to talk about the ugly stuff as well as the pretty stuff and be sure it’s not going to wind up on the front page of The Wall Street Journal.”

Adapt to your own culture.
Murray also says that the group must be prepared to ask tough questions: “What does this mean to us? Which of these ideas fit into my environment? What kind of changes do I need to make to produce the kind of improvements I’m seeking?” And more than anything else, successful benchmarking demands flexibility and commitment. Elaborate reports that chronicle the way other companies manage people and processes don’t transform an organization on their own. And firsthand knowledge of how high-flying organizations succeed doesn’t lead to instant change by osmosis. “Benchmarking is more than the act of collecting data,” says Murray. “It’s one step in the overall process of organizational change. The data must be applied in a way that’s meaningful and useful.”

Indeed, as cultural, practical and financial issues become intermingled, it’s important to maintain your perspective. “To make benchmarking work, you must have people who can step back from the issues and figure out what changes need to take place and how to go about doing that,” says the APQC’s Pozos, who formerly conducted benchmarking for telecommunications giant Pacific Bell. Yet aligning HR with corporate goals and extracting solutions from all the data isn’t an easy task. “What works well within one culture will often fail within another. It’s easy to lose sight of The Big Picture when you’re sorting through all the details,” says Bent.

In fact, understanding one’s corporation and its culture is key. As Kodak re-engineered operations—including HR—it has increasingly turned to benchmarking to supply answers. Using detailed questionnaires, surveys, E-mail, videoconferencing and other methods to communicate with other firms, it constantly surveys the landscape for new ideas and ways to tweak existing practices. Once armed with the information, Kodak incorporates ideas and outstanding practices into its own corporate fabric—while striving to retain its own identity. “Benchmarking isn’t about duplicating what others are doing, it’s about implementing ideas and modifying them so they’ll work within your own culture,” explains Stammers.

Xerox’s Nazemetz agrees. In 1988, Xerox began rethinking its health-care program as costs began creeping upward and employees began complaining that it wasn’t meeting their needs. At the time, other firms were beginning to move away from single replacement products and toward one large insurer. So the company embarked on a thorough benchmarking project—combined with surveys, interviews and focus groups—only to discover its demographics and culture were better suited to the existing system, with some changes and improvements. “It would have been very easy at the time to buy a cookie-cutter product and show management we were taking action. It was the easiest and least risky solution. But today, we have a product that works well and one that other companies are taking a close look at,” says Nazemetz.

View benchmarking as an evolution.
Because maintaining perspective can be so difficult, many companies now opt to use outside consultants to help them steer through the choppy waters of benchmarking. Not only can consultants help keep the discussion open and honest, they often are able to provide additional perspective and ideas—since they’re looking at the company from the outside in. They know the critical-success factors, they know who the leaders are within the industry and they know how to obtain the necessary information and use it. An added benefit—a consultant also can design a benchmarking survey to protect the confidentiality of sensitive material. And that’s usually ideal for industry surveys.

But don’t neglect your internal resources. Murray believes one of the keys to benchmarking success is to adopt a philosophy of involvement and participation from the start. “The bigger the change, the greater the resistance. But the more people are involved and understand what’s going on, the fewer the problems.” He suggests HR managers try to involve employees as much as possible. That might translate into opening up a planning meeting, using team-based interviews, passing around tape transcripts after an interview and establishing debriefing sessions that allow questions and an honest critique to flourish.

Experts say it’s also wise to view benchmarking as an ongoing and continual process. Although completing a best-practice analysis might take a year or more, it’s essential to keep an eye on that practice and not allow complacency to set in. It’s not a question of will it require future attention, but when, says Nazemetz. And while it certainly isn’t possible, or desirable, to benchmark every process on a regular basis, “it’s important to pay attention to the broader environment and consider what might be outdated,” Nazemetz explains.

It’s also important not to fall into the trap of considering benchmarking a panacea for a company’s every ill. It’s simply one piece of an organization’s ongoing commitment to quality; it’s nothing more than a tool for achieving larger organizational goals. As such, it shouldn’t substitute for original ideas and creativity either. These two qualities can lead to far more spectacular gains. “Many an innovative leap forward has been achieved without ever analyzing what other companies are doing or examining best practices,” says Gemini’s DeGennaro. “It’s vital to allow new ideas to come to the surface.”

Besides, benchmarking can create its share of problems. One of the most nettlesome, according to Pozos, is that those involved with a benchmarking project can easily fall into the trap of thinking employees aren’t performing their duties well if another firm’s workers are achieving better results with the same practice. Another problem is that animosity and fear typically arise when employees know they’re being studied. Then there’s ego and political issues. As Olberding puts it: “Unless you’re willing to be totally critical and honest, you’re not going to get valid results. You’re only short-circuiting the process.” Finally, there’s the not-too-surprising fact that a poorly designed program can wreak havoc. And not all management teams are willing to fund or support benchmarking to the degree needed.

However, when benchmarking works, the results are often impressive. It’s possible to shave days off a training program without losing results or save millions of dollars a year on outsourcing. Benchmarking within HR can help identify ways to structure a medical plan more effectively or determine whether turnover exceeds the industry norm and what the ramifications might be. “In many cases, the cost of doing benchmarking is paid back many times over. It’s simply an investment, but one that can provide a spectacular return,” says Nazemetz. And not just in obvious ways. Today, Xerox actually is profiting from the sale of benchmarking materials it has developed over the years to other firms willing to buy its knowledge and experience. Most firms, of course, never make it to the level of Xerox. But if they successfully benchmark, they gain rewards of their own.

A few years ago, for example, when forest-products manufacturer Weyerhaeuser saw its performance had slipped from near the top of its industry to the bottom quartile, it began an ambitious benchmarking project—with much of the effort focused on human resources. Working with HR Effectiveness, it began to study ways to cut the human resources bureaucracy down to size. A seven-member team spent approximately two years benchmarking several high-leverage areas: staffing and selection, compensation, development and technical training, and the organization’s performance management process. After examining numerous companies—mostly using the telephone—the $9.2 billion company with 38,000 employees—began making some changes. When the sawdust had finally settled, the Tacoma, Washington-based company had cut HR staffing by 25%, redesigned its pay-for-performance system and created a job-description system that more closely reflected the company’s business goals.

Concludes Xerox’s Nazemetz: “The realization that companies can share information—particularly in HR—and that it can benefit everyone is important. It can help people do their jobs more effectively and efficiently and greatly streamline processes. Benchmarking isn’t about copying other companies or importing best practices wholesale, it’s about integrating bits and pieces of useful information into a company and its culture. When that happens, and when goals are aligned with the larger mission of the company, it’s possible to make tremendous progress.”

Let’s face it. Unless you’ve been living in the outer reaches of Mongolia during the last year, you’ve heard of Windows 95. Lately, you’ve seen the ads cascading across pages in magazines, you’ve heard the Rolling Stones singing Start Me Up on TV commercials, and you’ve marveled at Microsoft Chairman Bill Gates’ ability to achieve near ubiquity. In August, when Microsoft launched Windows 95, you couldn’t open a newspaper without seeing a barrage of articles analyzing virtually every aspect of the new operating system.

Now that the frenzy has settled down a bit, swarms of PC users and companies are quietly migrating to the new computing environment. They’re loading the new Windows software onto their hard drives and clicking their mice into previously uncharted territory. In many cases, thanks to an array of new and improved features, they’re realizing significant gains in productivity. Others, somewhat less fortunate, have discovered that Windows 95 carries a hefty price tag in terms of the time and resources required to get it running smoothly. Despite the largest beta test in history, a few bugs are inevitable. Regardless of the exact circumstances, one thing is obvious: If you aren’t already using it, you probably will be in the next six to 18 months. As Rick Ross, president of the New York City-based consulting firm Iris Development, puts it: “It’s not a question of if, it’s a question of when.”

Make no mistake. Windows 95 is a significant event in the personal computing world. Dataquest, the San Jose, California market-research firm that tracks computer industry trends, estimates that 76 million PCs worldwide will use Windows 95 by the end of 1996. And that has serious ramifications for human resources. Not only must individuals and companies make the decision about when to upgrade to the new operating system and how to best go about doing it, they also must make the physical transition—a process that requires ongoing training and attention. It’s estimated that U.S. companies will spend upwards of $80 million for Windows 95 training through 1996, says Chuck Gorman, CEO of J3 Learning, a leading producer of self-paced training materials for Windows 95 in Minneapolis. Hardware and software upgrades to make the operating system run efficiently will likely run into the billions of dollars.

Consider operating on a higher level.
Those who have used Windows 3.1 over the last few years know that it offers capabilities that simply don’t exist within DOS. The easy-to-understand graphical interface, as well as the ability to effortlessly exchange data between programs and multitask (run several programs at once) has proven an alluring capability. By the end of 1994, 63% of 200-plus million computers worldwide were running Windows. Yet—partly because it’s built on the decade-old DOS platform—Windows 3.1 suffers from severe limitations. It doesn’t use the computer’s memory efficiently, it’s prone to crash, and it’s difficult to configure both hardware and software. As if all that isn’t enough to cause a psychological lockup, the interface is less than intuitive and the underlying DOS file structure has dictated 8.3-character filenames (eight characters, a dot and three more characters), such as XYZCORP1.DOC. For many, these cryptic filenames have seemed like Egyptian hieroglyphics. Locating the file on an 850-megabyte hard drive a few months later can be like prospecting for pineapples in Persia.

Windows 95 attempts to deal with many of these problems and limitations. Because it no longer depends on the conventional DOS structure and is a true 32-bit multitasking, multithreaded environment, it can easily run a substantial number of programs at the same time (including DOS applications). It doesn’t crash often—particularly if you’re using 32-bit applications written specifically for it. It allows the use of long filenames, such as XYZ Corporation sales for December 1995; and it incorporates Plug and Play, which greatly simplifies the process of adding new hardware—particularly modems, printers and CD-ROM drives.

Glance at the new interface and you can see the changes. The most obvious—and most hyped—has been the Start button, which brings up all folders and programs available for launch with a simple click of the mouse. A taskbar at the bottom makes it easy to switch between active programs. Clicking the right mouse button calls up dozens of commands and actions that used to be hidden under layers of menus. Shortcuts allow a way to create an object—whether it’s a physical device such as a printer or a disk drive or a document—on the desktop. Once there, it’s possible to drag files from the Explorer (the replacement for File Manager) to the object and have it process the desired action.

Windows 95 offers an array of other new features. Exchange, a powerful universal mailbox, can manage E-mail, faxes and other documents across multiple services and networks. Multimedia capabilities—including video and sound—are much more tightly integrated. Windows 95 offers an easy way to set up a TCP/IP connection required for the Internet. A few simple steps and you’re browsing the World Wide Web or checking out a Use-net group. By connecting directly through the operating system, many of the conflicts of the past have been eliminated, including confusion over communication ports. There’s Dial-Up Networking, which allows mobile users to easily connect to the corporate computer from the road and upload files or browse a data base. And there’s Briefcase, which provides an easy way to transfer files between a Windows 95 desktop system and a notebook computer. By simply dragging files into the briefcase and then copying the entire briefcase, it’s simple to keep track of files and transfer them.

The operating system supports a wide array of networking protocols. Besides TCP/IP, it handles Novell Netware 3.x and 4.x, IPX/SPX, Microsoft DLC and NetBEUI. “It’s extremely easy to connect computers and network them without a lot of elaborate hardware and software,” says Steven Buck, president of OnPoint Technology, a software-development company in Aurora, Colorado. “There are a lot of advantages, particularly for individual departments or small companies. It’s a lot less expensive and a lot less complicated than adding a stand-alone server with its own software. Windows 95 makes networking accessible to a whole new group of users.” Adds Ross: “It’s an excellent product to have in the corporate networking toolkit.” And while it doesn’t have the same level of built-in network security as its big brother, Windows NT, it offers a good deal more security than previous versions of Windows.

You pay for the power.
All these improvements come at a steep price, however. Windows 95 demands a more powerful computer—a 486 or Pentium system—to run well. Although it uses memory more efficiently than Windows 3.1, it also demands more of it. Anything less than 8 megabytes using 32-bit applications is likely to slow a system to a crawl. Sixteen megabytes or more is ideal. And because it’s a much larger program and the software that runs on it devours disk space, anything less than a 500-megabyte hard drive is likely to resemble an overstuffed closet. “The baseline has clearly moved up,” says Chris Le Totq, principle analyst at SoftTracks, a Los Altos, California software research company. “The requirements are much greater than under Windows 3.1 or Windows for Workgroups.”

To be sure, the cost of upgrading is a major factor. The $90 or so you spend for a copy of Windows 95 is just the beginning. Many older systems require $1,000 or more for RAM and hard disk upgrades. The alternative, a new Pentium computer, can run $1,500 to $3,500 per unit, depending on the power of the system and the features it offers. According to industry estimates, only about 39% of current PCs are equipped to run Windows 95. Heap on top of all this the expense of additional 32-bit applications to replace old 16-bit programs, and the cost of moving into the future of computing can become quite intimidating.

And that has serious ramifications. In the corporate world, where cost and risk dictate action, the move to Windows 95 is likely to take place much more slowly than in the consumer market. One industry forecast goes so far as to say that only 4% of companies with 1,000 or more employees will move to Windows 95 by the end of 1995. “At this point, most companies have what they need running on Windows 3.1, people know how to use it, so it’s often difficult to justify an immediate move to Windows 95,” explains Buck. Adds Le Totq: “From a corporate perspective, Windows 95 is an expensive proposition. Immediately upgrading all the hardware to make an entire enterprise Windows 95-compatible isn’t feasible.” There’s also the potential for disruption, support costs and a general lack of productivity due to periodic technical problems. Moreover, many analysts believe that risk-adverse IS managers won’t be turning old 386 systems into doorstops anytime soon.

Other factors also enter into the decision of whether to upgrade immediately or wait. If a killer application comes along that’s written for Windows 95, then it might make sense to take the leap sooner rather than later. “At a certain point, says Le Totq, “all Windows users are going to get pushed into Windows 95. Software developers already are focusing their attention away from Windows 3.1 and toward 95. If the only reason to upgrade is to use 32-bit versions of Word or Excel, it’s probably not as compelling a reason as adopting a new program that allows you to do something you couldn’t do before.”

One of the problems that analysts see emerging within the corporate environment is a conflict between Windows 95 zealots and Windows 3.1 die-hards. Le Totq believes Windows 95 users are likely to pressure their Information Systems people to adopt the new operating system and they’re likely to encounter some resistance. “There are organizations in which IS has taken a heavy-handed approach and stated they won’t install Windows 95 anytime soon,” he says. “Unfortunately, that’s counterproductive. It has to be viewed on a case-by-case basis.” He believes it’s important to weigh the costs before jumping onto the digital bandwagon.

Get up to 32-bit speed.
Despite a streamlined interface and greater usability, don’t expect training to take a backseat with Windows 95. According to a study conducted by the META Group, a marketing research firm in Stamford, Connecticut, 61% of corporate Windows 95 beta users estimate that workers will need at least a day to learn how to navigate the new interface. It’s a significant cost, and one that can’t be overlooked. Poorly trained workers aren’t only underproductive, they’re likely to spend considerable time and money receiving technical support. Deena Flammang, vice president of marketing for J3 Learning, believes it’s crucial for HR to put together some kind of strategic plan from the beginning. “The organization must address where it’s at and where it wants to be,” she explains. “Is it a matter of upgrading skills from Windows 3.1? Are users moving to a GUI (graphical user interface) for the first time? Is there a particular type of learning that works best?” In some cases, that might translate into interactive multimedia training, computer-based training and reference guides. In other instances, full-day workshops might be necessary.

Nevertheless, Windows 95 promises to change the face of computing and human resources. Many of the networking and data-exchange features built into the operating system will make it easier for departments and individuals to share data and swap files. “You don’t have to be a rocket scientist to use it,” says Ross. “IS and HRIS now have tremendous remote access ability. They can create a standard build for all machines on a network and can distribute software and files to all PCs with a minimum of effort. They can easily control the system and keep users from modifying the setup.” At the other end of the spectrum, Windows 95 also allows end users to operate a PC with less technical knowledge than ever before. Although Le Totq doesn’t see Windows 95 as a revolution in the way people compute, he does see it as part of the evolution toward a more stable and usable environment.

As sure as Bill Gates will find his way onto another TV program or into another magazine article, Windows 95 will become the mainstream operating system. Although the Macintosh has long provided the ease and flexibility that Windows 95 is just now beginning to achieve, and IBM’s OS/2 has offered many of the same 32-bit features on the PC platform for the last couple of years, both have sunken into corporate oblivion. Windows NT, Microsoft’s more powerful 32-bit operating system, has proven expensive and requires a tremendous investment in hardware. As a result, most companies have shied away. Says Ross: “Microsoft has already won the hearts and the confidence of a vast user base with Windows 3.1. Windows 95 is a far superior product. Like it or not, it’s here to stay.”

It’s just another day on the Internet. Inside the offices of Hydro Quebec, a large Canadian utility, Michel Mantha is surfing his way around the world, and he’s now looking for the next great wave. Sitting in front of his computer, the HR research adviser is browsing the Internet’s World Wide Web and using its sophisticated hypertext links and graphics to boldly go where HR has never gone before. With the click of a mouse button, he’s inside the U.S. government’s server in Washington, D.C., examining a schedule of upcoming HR conferences. Then, instantly, he’s off to Cornell University in New York, looking at the latest reports issued by the Glass Ceiling Commission. A few minutes later, he’s made a lightning-fast pilgrimage to The Quality Wave, an index of sites containing information on TQM, educational programs and business theories.

Every time Mantha sees something that piques his interest, he simply clicks on a highlighted word or graphic image—including high-resolution photographs—to obtain more information. The text pours onto his computer’s screen, at which point it can be printed or saved for future reference. And if it so happens that he’s jumping to another Web site, the system transports him there at warp speed—efficiently and invisibly, regardless of whether the computer is located in Boston or Bombay. Of course, the World Wide Web is just one portion of the Internet. He also uses the Internet for E-mail and to subscribe to newsgroups that keep him informed on the latest industry buzz (see “What’s All This Talk about Gophers? The Lowdown on Online Lingo,” for definitions of italicized terms). “It’s a remarkable way to do research,” he states. “It’s a revolutionary step forward.”

Cyberspace. It’s certainly not the final frontier, but it’s fast becoming an important part of the corporate arsenal—and psyche. This international network of computers is opening new doors and new opportunities for human resources professionals who have the equipment and the mindset to venture into the online arena. Today, a growing wave of HR managers are going online to recruit personnel, conduct research using electronic data bases, send E-mail, and engage in valuable networking and discussions. Using the Internet—which connects upwards of 28 million people and 3.2 million host computers in 70 countries—as well as commercial services such as CompuServe, Prodigy and America Online, these pioneers are venturing into a revolutionary new world where data and information flow at the speed of light.

“It’s changing the way people work and think,” says Stephen Gibson, publisher of Online Sources For Human Resources, an interactive online guide and associated monthly newsletter that offer HR cybernauts tips and information on how to better use the Internet. Adds Michael Rowe, marketing director for E-Span, an online job-placement service that represents dozens of major corporations: “The online world represents a tremendous opportunity for HR. It’s one of the most powerful tools one can have at his or her disposal. Every day, more and more people realize just how powerful this medium is. They’re getting beyond the novelty and hype and discovering that it offers solutions to real problems.”

But all the gain doesn’t come without a good deal of pain. Taking the plunge into the online world can be difficult, confusing and time consuming. Not only must one decide what type of service or provider to use, it’s also necessary to learn how online systems work and how one can use them to achieve results. That often translates into learning how to use new software and understanding the finer points of online etiquette. It also means reengineering the way processes work within HR, or even adopting an entirely different way of thinking. And, as with any new medium, things don’t always work as billed. Many online products and services aren’t as useful as their promoters might like you to think.

Yet, those who have embraced the online world to recruit, research and trade information insist it’s a giant step forward. As Tim Johnston, manager of university relations for Advanced Micro Devices (AMD) explains: “The entire world is at your fingertips.”

The Internet and online services offer HR a wealth of opportunities.
Venturing online isn’t a particularly complex task in itself. At the most basic level, a computer, a modem and the right kind of software can open the door to the vast world of cyberspace. Those on a network at a major company often can wade into the Internet via a direct connection. Using a program designed for today’s graphical interfaces, such as Windows or the Macintosh, it’s possible to position a cursor on text, icon or graphical image, click the mouse, and travel from one topic, forum or site to another. Interactive and flexible, it allows an end user to gather data—or provide it—quickly and effortlessly. And, depending on the nature of the service, it’s possible to connect with others who share similar interests. You might call it the realization of Marshall McLuhan’s Global Village.

And that’s fundamentally changing the workplace of the 1990s. Although many of those who subscribe to online services use them for reading news, tracking stocks, exchanging gossip, playing games and pursuing interests and hobbies, the online world increasingly is oriented toward business. Just browse the Internet’s World Wide Web, an environment that offers dazzling graphics to complement an almost endless stream of text, and it’s clear that a growing number of companies are viewing the medium as a way to promote themselves and their products. The list includes organizations as diverse as AT&T, Honeywell, IBM, Eastman Kodak, Microsoft, Ford Motor, Pizza Hut and Ernst & Young.

But the Web isn’t strictly a marketing tool for Big Business. In the HR arena, sites such as Career Mosaic, Job Web and the Monster Board offer employer profiles, job openings, career information and human resources forums. In addition, there are long lists of consultants and services peddling their wares and offering their expertise on everything from training to career development. There also are government sites, including OSHA, where an HR practitioner can stay informed on current regulations, directives and even scan OSHA notices in the Federal Register. It’s possible to jump from one subject or service to another in a matter of seconds—by simply clicking a mouse button. Meanwhile, other portions of the Internet—such as FTP, Usenet and Telnet—offer a mind-boggling array of additional resources. You can access mailing lists for your specific interests, along with newsletters, academic studies and an array of background materials.

The breadth of the material truly is astounding, especially if you consider that the Internet is only one piece of the online puzzle. Commercial services such as CompuServe, Prodigy and America Online also feature career centers, companies promoting goods and services, and forums for discussing a wide range of HR-related topics. They’re easy to access and relatively inexpensive. And those who wade online agree that these services are becoming more powerful all the time. Today’s generation of Windows and Macintosh software provides an easy way to navigate online quickly and seamlessly. DOS and UNIX users also can take advantage of proprietary software designed to enhance and simplify the process.

Cyberspace is a new recruitment source.
Not surprisingly, many within the HR field are beginning to take notice of the vast online universe. And recruiting is perhaps the hottest area of all. Step inside the Menlo Park, California, headquarters of Cisco Systems, a fast-growing, internetworking firm, and you’re likely to see the HR department of the future. Almost all open positions are posted on the Internet—on the firm’s own World Wide Web homepage and on various career services. Net browsers can view as many as 400 ads at any given time.

And, apparently, a lot of people like the idea of looking for work online. The company receives as many as 700 resumes electronically every month—approximately 30% of the total it receives overall. Some months the figure has reached 50%. All resumes automatically are routed into a Resumix system, where they can be recalled at a moment’s notice—whether at the Bay Area headquarters or across the country at the firm’s Boston or Raleigh sites.

“Company recruiters no longer have to spend their time scouring resumes to find the appropriate candidate; they simply can fill the position,” says Barbara Beck, vice president of human resources. “Going online has provided us with a tremendous boost in productivity. It’s facilitating communication, and it’s making it easier for everyone to use HR services. It allows us to add maximum value. We’re working very hard to stay ahead of the technology curve and have an extremely sophisticated human resources organization.”

Indeed, Cisco’s Web site, besides displaying the job listings, contains information about the company’s products, its financial data, its culture and history. “And that saves a lot of time for HR, which no longer has to field as many inquiries,” Beck says.

Another HR person who finds online recruiting particularly appealing is Elaine Hart, manager of recruitment for Staples, the nation’s third largest discount office-products superstore chain. In March, the Framington, Massachusetts-based company joined the Monster Board, a career center and job-placement service on the Internet’s World Wide Web. Hart typically posts listings within Staples’ homepage; when job seekers browse through, they’re able to click on an icon to go to the company, and then search job openings by region, category and other parameters. They’re also able to get information on the company itself.

“It’s a way to demonstrate that the company is on the leading edge of technology, and it’s a way to make the entire recruiting process more efficient,” says Hart. Indeed, when an applicant responds to a posting, the E-mail message is routed directly to Hart’s computer. A process that can take weeks using traditional methods—newspapers, trade ads and paper-based resumes—now can take only hours. That allows Staples to find qualified applicants far more quickly. In addition, electronic postings create greater flexibility. Hart can modify or remove an ad if it isn’t working or if a position is filled.

Recruiting online saves time, reduces the amount of paper Hart must handle and lowers administrative costs. But, more importantly, venturing online allows the company to reach an expanded audience. Already, she’s receiving as many as a half dozen electronic resumes and applications a day. And virtually all of those who respond to the online ads tend to be highly educated, well trained and perfectly comfortable with computers and online services—a set of skills that’s becoming crucial in the 1990s. Of course, many technical specialists—particularly in computer hardware, software and networking—gravitate to online forums, making the medium a particularly fertile area for mining prospects.

This is true for college recruiting as well. Just ask Johnston. Recruiting from college campuses always has been grueling for him. Every time the manager of university relations sets up a job-fair booth, it takes hours to organize the display and get all the brochures and paperwork in order. Then there’s the arduous task of conducting one interview after another—a dozen or more in a single day isn’t unusual. There’s travel time, hotel stays and a steady crush of paperwork to follow up on. By the time he gets back to his office in Sunnyvale, California, he’s typically buried in work. “It isn’t especially cost effective or time effective to hit the road,” says Johnston, “but it has been a necessity.”

Johnston is hoping to change all that. Just more than a year ago, AMD began designing an alternative to the traditional recruiting model. Although the firm continues to seek young talent by participating in more than 30 job fairs each year, it also has ventured into the far reaches of cyberspace. The $1.6 billion corporation, which produces computer microprocessors and other high-tech devices, has begun recruiting online.

Using the Internet’s World Wide Web, AMD lists information about the company, the culture, its officers, its compensation and benefits, and other areas of interest to job seekers. If an individual is interested in one of the positions listed, he or she can apply directly from his or her computer. And when AMD needs a specific position filled, it broadcasts the news to college job-placement offices and key professors all across the country via electronic mail.

“We have a network in place that allows us to automate recruiting and reach the right people,” Johnston says. “It’s redefining the entire process. Electronic media never will replace human interaction, but it’s clearly going to play a key role in the way AMD and other companies handle HR-related tasks. It’s effective, it’s efficient, and it saves time and money. Online capabilities allow a greater level of sophistication, and that is increasingly important as everyone battles for a competitive edge.”

That’s a concept that’s well understood at Lotus Development, the Cambridge, Massachusetts-based software giant. It posts ads for approximately 20 positions a year online, but the number is increasing rapidly. “We advertise through all avenues,” says Christine Leonardo, director of strategy and programs in the human resources department. “We use Internet job postings and traditional newspaper and magazine ads, as well as recruiting at conferences. It’s important to have a balanced approach. But the dramatic increase in the number of people online, especially on the Internet, is making electronic recruiting more attractive all the time. The Internet is an outstanding tool.”

One of the big advantages to advertising positions online, Leonardo points out, is that it eliminates many of the space constraints of advertising in a newspaper. Most companies that sell online space don’t severely limit the length of the text. And if a company sets up its own site on the World Wide Web, or rents space on the Monster Board or a similar service, it can provide as much information as necessary about the company, culture, benefits and any open positions. “You put an ad in a major newspaper and wind up spending a fortune without saying much of anything,” she says.

Recruiting online requires instituting new procedures.
When Lotus decided it would go online, it turned to an employment service called E-Span—a four-year-old Indianapolis company that has become a leader in the emerging world of online employment services. Leonardo must simply write the ad and send it to E-Span along with instructions on how to categorize it, and the firm posts it in its job libraries for as long as four weeks. E-Span also provides expertise on how to use the online world more effectively. Because it has a presence on CompuServe, America Online, GEnie and the World Wide Web, more than 10,000 job seekers access E-Span’s Interactive Employment Network every day. Leonardo sees it as a winning proposition. “Many of these are highly qualified people you wouldn’t otherwise connect with,” she says.

It’s an approach that appeals to growing numbers of recruiting specialists. Rowe says that the number of ads the agency posts now runs between 500 and 600 a week, and has increased tenfold during the last 18 months. “It’s a tremendous opportunity to capitalize on technology and use it to HR’s advantage,” Rowe says. “Paper-based systems aren’t going to go away any time soon. There’s still going to be a demand for newspaper and trade ads. But this certainly fits into the changing corporate paradigm.”

A paradigm that Lotus’ Leonardo knows well. Approximately 30 electronic resumes land in her computer every week—and the number continues to grow. After reviewing a resume at her PC, she passes it on to an assistant, who imports it—along with those received by fax and through the mail (the latter are scanned in)—into a resume-tracking program. Then, her department can use key word searches to find qualified applicants in a matter of seconds. It’s efficient enough that Leonardo hopes to increase the number of resumes that enter the system electronically in the months and years ahead. That could eliminate extra administrative personnel, including temporary help during peak periods.

“Online recruiting has many advantages,” states James C. Gonyea, author of the Online Job Search Companion and president of Gonyea and Associates, an online career service headquartered in New Port Richey, Florida. “You literally can create a job listing and post it within minutes. You have access to millions of people, and it’s generally less expensive than conventional methods, which require a greater support structure. Online systems require less clerical staff and less paperwork.” He believes, too, that image enters into the equation. “If you’re looking for people with a high level of skill—particularly in technical fields—recruiting online shows that you’re on the leading edge.”

Indeed, those who conduct online recruiting say that although the typical ad doesn’t elicit the same level of response as an advertisement in a newspaper because far fewer people surf online channels than read newspapers, in most cases, the response is more focused—and the level of candidates often is higher. “You often find people who are very adept and knowledgeable,” says AMD’s Johnston.

But recruiting online is a somewhat different ball game than posting ads in a newspaper or a trade publication. Gonyea points out that it’s necessary when writing an ad to go online to make sure that the wording and terminology elicit the desired response. Because resumes must be entered into a searchable data base, key words are crucial. “If you’re interested in hiring an administrative assistant, but the position might also be referred to as a secretary, you want to make sure that both words are contained in the ad,” he says. “Otherwise, a highly qualified person searching for the word secretary online might miss the ad when they conduct a search.” And the same goes for anyone searching the data base within the company. “Without strong indexing, you aren’t going to pull a list of all the qualified candidates,” he warns.

Gonyea also suggests that firms posting ads online should have the capability to receive resumes and inquiries via E-mail. “The last thing people want to do if they’re at their computers and they see a listing they’re interested in, is print their resume and mail it or fax it. When E-mail capability is missing, it’s an indication that the employer isn’t really confident or fully conversant in the technology. It can be perceived as a problem. If a company opts to recruit online, it should put all the pieces in place to do it right.”

Recruiting online is easy—but it can cost you.
The cost of establishing an online presence for recruiting purposes can vary greatly. The least expensive option is simply listing an open job in a professional online forum or an Internet newsgroup. That costs nothing, and thousands of such listings are visible on any day of the week. Turning to an outside agency such as Gonyea and Associates or E-Span, which can ensure that millions of users are exposed to the ads, can cost from $75 an ad to $3,000 or $4,000 a year for unlimited advertising. A few firms charge as much as $10,000 a year. A company that chooses to establish a homepage on the Web’s Career Mosaic or Monster Board will likely fork over anywhere from $1,000 to $10,000. And organizations intent on setting up their own Web site can spend considerably more. Although a Sun Microsystems or Hewlett-Packard workstation sitting on a desktop can become a server on the Web—thus supplying text and graphics to others on the Internet—it’s far more challenging to develop an eye-catching interface and link data effectively. As a result, the expertise of an outside consultant or agency often is required.

Still, accessing online services is simple. Venture into E-Span’s CompuServe site, and you’re greeted with a main menu that lists various tools: an introduction to the service; What’s Happening at E-Span; Resume Rules; Successful Interviewing; Networking; Tips for Searching E-Span; and direct access to E-Span’s Job Search data base. By clicking with your mouse on the topic of interest, you’re led through various menus—accessing information along the way. Once you’ve entered the actual job data base, it’s possible to browse ads by subject—marketing, computer programming, education and media are just a few of the categories included—as well as by region. A typical ad offers a page of information about the open position, as well as the company or organization. In most cases, an E-mail address complements telephone and fax numbers, and addresses.

Navigating the World Wide Web isn’t any more difficult. With software such as Netscape or Mosaic and powerful online indexes such as Yahoo, it’s possible to find HR-related sites and then click through menus and hypertext links to find desired listings. In addition, many companies—including AMD, Amdahl, Intuit, McCaw Cellular, General Electric and Schlumberger—offer their own listings within larger sites that provide information on products, services, investor relations and an array of corporate matters. In most cases, it’s possible to contact the HR department directly from the Web site.

What’s allowing HR professionals at these firms to move so seamlessly into online publishing? Gibson credits the emergence of HTML (Hypertext Mark-up Language), a typesetting language that has become the standard for documents on the Internet. Just by executing a simple command, it’s possible to convert a Microsoft Word or Novell WordPerfect document into an ASCII format that harnesses the Web’s hypertext and graphics capabilities. No sophisticated programming needed, no lengthy conversions with expensive software.

“The landscape is changing,” says Gonyea. “The old world order of storing resumes in filing cabinets is disappearing. Electronic methods of collecting, storing and recalling resumes and employment data are playing an increasingly significant role. Many companies are beginning to realize that they must complement conventional approaches with an online presence. Otherwise, they’re likely to miss an important segment of the job market. And, as time passes, it’s going to become a standard way for all companies to do business.”

HR professionals are going on-line to network and gather information.
Hunting job candidates in cyber-space is only one part of the overall picture. As HR professionals become more knowledgeable—and comfortable—with the technology, they’re venturing into other online areas. Some of the most popular uses for the Internet and commercial online services are professional forums, bulletin board systems (BBSs) and discussion groups. In most cases, HR professionals freely share information on topics as diverse as training and development, HRMS, payroll and benefits, and legal requirements. By posting a question in the appropriate location, it’s possible to have responses in a matter of hours rather than days or weeks. Often, illuminating discussions develop.

“It’s a powerful medium for networking and trading information,” says Gibson. “In many respects, it’s like having a workshop or conference available any time of the day or night. Instead of making 10 or 15 telephone calls to colleagues to discuss an issue, or searching through reference materials to get the latest information on a hot topic, it’s possible to have it at your fingertips with almost no effort at all. It’s like opening a window to a world you never knew existed.”

Mantha knows just how powerful the medium can be. The HR research adviser spends an hour or more logged onto the Internet daily. Responsible for researching a variety of HR subjects, including TQM and business process reengineering, he checks more than half a dozen different bulletin boards, where he exchanges news and information with colleagues from all over the world. In addition, he subscribes to more than half a dozen electronic mailing lists, including Cornell University’s highly respected HRNet, and reads other newsgroups by accessing a part of the Internet known as Telnet. The newsgroups include discussions and information on topics as diverse as best practices and performance management.

“It’s enabling me to do things I wouldn’t otherwise be capable of doing,” remarks Mantha. “It’s providing a tool that allows me to do my job more effectively and more quickly than others who aren’t online.” A few months ago, for example, when Hydro Quebec needed to develop an employee satisfaction survey, Mantha found himself wading deep into the Internet. Seeking other corporations with at least 20,000 employees that had conducted comprehensive census surveys, he posted a query on an Internet newsgroup. Within 24 hours, 30 HR professionals responded, including top managers at Federal Express and United Parcel Service. Says he: “I didn’t need to research the issue any further. All the information I needed was there. Without the Internet, I would have been forced to make dozens of phone calls and check back issues of magazines and newsletters.”

And that wasn’t a one-time event. During the last year, Mantha has connected with senior human resources executives at Motorola, IBM and other major corporations. “I have developed my own online network,” he says. Yet discussions with colleagues are just part of the Internet’s allure. When Hydro Quebec wanted information on diversity and women’s issues, Mantha logged onto a Cornell University Web site that offers academic papers, government reports and research on the issues. He downloaded two dozen reports—many between 50 and 100 pages—printed them out and handed them to his boss. They were used by several colleagues and served as background material for a presentation at a conference. “There’s no question that I could have gotten the same material by writing and requesting it. But it would have probably taken weeks instead of minutes,” he says.

At Cisco Systems, Beck and human resources managers routinely check other companies’ Web sites, organizations, associations and government pages so they can do benchmarking and other research. “It’s a powerful tool you can use without ever leaving your office,” Beck explains. Her staff also uses E-mail with attached files to send and receive documents and information with dozens of other high-tech companies. “If a compensation analyst needs to get information from another firm, they often do it using E-mail and the Internet. It’s quick and it’s easy.”

Though Beck and Mantha are particularly adept at using online services, they’re certainly not alone. Approximately 10% of Hydro Quebec’s HR department currently has Internet access—and the number is growing rapidly. At Cisco, virtually everyone has access from their desktop. Outside these companies, online use is also on the rise. Subscriptions to Cornell’s HRNet have increased from approximately 600 to 1,400 in 18 months. And on Prodigy, where the Society for Human Resource Management (SHRM) launched a professional HR forum last December, more than 6,000 individuals have accessed the service.

Although increasing, these numbers are still low. “There’s an opinion that the HR profession has been a bit slow to catch up to the computer revolution,” says Mike Frost, manager of the SHRM Forum. “Unfortunately, most in the profession simply aren’t using the computer to the extent of its capabilities. An online forum, among other things, encourages people to think about their computer as more than just a word processor or a data base. It’s a way to tap into lots of useful information and resources right from your desktop. It’s a way to exchange information, at a time when the flow of information is crucial. With the Internet, you don’t need a plane ticket or a hotel reservation to participate in a conference.”

The same goes for many independent BBS sites, where HR professionals can log on to electronic bulletin boards with a modem and access reams of data. “The HR profession relies on networking, information chasing and people knowing other people,” says Robert Keach, president of HR-COMM, a Pleasant Hill, California, service with more than 350 active members. “The online medium is a natural marriage between the technology and the HR profession. It’s a way to shrink the world and greatly expand connections—rather than finding yourself limited only to the cards you can fit in your Rolodex.”

HRCOMM offers an array of features for HR professionals—all at no cost. It’s possible to search the National Directory of Compensation & Benefit Surveys; advertise a job opening; search for a new job; conduct, participate and view custom-designed online surveys; track down consultants, contractors and other experts; download files and software; and engage in discussions on virtually any HR-related topic. Companies promoting their services online fund the BBS. “People only now are beginning to get a sense for what the technology can do for them,” explains Keach.

Access reams of information via cyberspace.
As the Internet, commercial services and independent BBS sites expand, the level and quality of information also is improving. As Mantha illustrates, it’s now possible to conduct serious research using the World Wide Web and other parts of the Internet, such as FTP (File Transfer Protocol), which allows public access to remote computers. Venture into the U.S. Department of Labor’s Occupational Safety and Health Administration’s Web site and you’ll get a good idea of what’s available. OSHA posts the text of the Occupational Safety and Health Act of 1970 (including Amendment 1990), OSHA notices contained in the Federal Register, the Field Inspection Reference Manual, corporatewide settlement agreements, and an assortment of directives, documents, regulations and interpretations. The Web site is updated twice a week.

For an online user, navigating OSHA online is as simple as clicking the appropriate menu and reading text. It’s also possible to use built-in hypertext links that allow you to jump to a variety of other OSHA-related services and sites, including the Office of Information and Consumer Affairs, the agency’s Draft Ergonomics Proposal, and an extensive list of publications and booklets on a wide range of safety- and health-related topics. Other links can lead a user into scores of government data bases, including FedWorld, which serves as a repository for a seemingly endless supply of federal-government statistics, data and information.

Government sites aren’t the only place to find useful information, either. Many independent companies—including consulting firms—post reports and surveys. And articles from business publications offer information on a wide range of HR topics. The Internet’s electronic newsstand includes American Demographics, Executive Female, Sloan Management Review, Inc. magazine, and dozens of other publications. CompuServe features Forbes and Industry Week. And America Online offers Business Week, Time, San Jose Mercury News, ABC News and many others. Frequently, it’s possible to search back issues by keyword for specific topics.

Archival data bases, such as CompuServe’s Magazine Database Plus and Business Database Plus, also can provide articles—particularly on mainstream topics such as benchmarking, pay for performance, TQM, business-process re-engineering and an array of other topics. Using key words to search a topic, it’s possible to download stories and print them on an “as needed” basis—almost always for a fee. More sophisticated services such as Nexis Lexis and Dialog offer even more advanced—and expensive—capabilities. Says Gibson: “The problem isn’t finding information, it’s sorting through everything to find the right information.”

In fact, experts say that a few minefields await lackadaisical cybersurfers. One of the biggest problems, argues SHRM’s Frost, is that the Information Superhighway can easily become the Misinformation Superhighway. “Just because you find something online doesn’t mean that it’s current or accurate. There’s a lot of garbage masquerading behind fancy graphics and interesting hypertext links. Unfortunately, information has a certain legitimacy when you see it online. But that doesn’t mean that it has been researched or that it’s being presented by a legitimate authority.”

That’s the hype factor. Although the breadth of online resources is remarkable, depth is sometimes lacking. Differentiating between a five-star site and a one-star site requires patience and critical analysis. Yet it isn’t the only concern. It’s also important to pay attention to copyright laws and take care when re-posting information online. The ease with which data can be copied makes it ripe for copyright abuse. And, finally, there are plenty of challenges in simply learning to navigate the Net. The sheer size of the online world is daunting, and there is etiquette—more often referred to as “netiquette”—you must adhere to. Users who fail to follow accepted procedures invite the wrath of others—known on the Internet as “flaming.” “It’s a little bit like learning to ski,” says AMD’s Johnston. “It is frustrating at first, but if you stick with it you will learn how to do it and it will become fulfilling. There is a ton of information out there, and the tools for obtaining the information are getting better all the time.”

Online ability is changing the HR profession.
HR professionals who venture online say that they can’t imagine doing things any other way. With AMD’s recruiting moving heavily online, Johnston can focus on ways to do his job more effectively. By broadcasting information to university job-placement offices and key professors, he’s able to reduce the time it takes to fill a position and zero in on top candidates more effectively. “I’m spending far more time using E-mail than the telephone. Although there are occasions when the phone is useful, E-mail is faster and more efficient,” he states.

And that’s just the beginning. With the company’s Web site, he doesn’t have to worry about constantly updating brochures—an expensive and time-consuming task. “You create a four-color brochure, and it’s out of date as soon as it’s printed,” Johnston says. “Online, we can change data or a graphic overnight at minimal cost.” Similarly, he isn’t burdened with trying to ship endless boxes of materials to job fairs. He simply directs potential recruits to go online and check out AMD’s Web site—which includes video clips, sound bytes, full-color graphics and text. In fact, it’s possible to learn about AMD’s Austin, Texas, facility, and then use a hypertext link to jump into the city’s site, which discusses housing, education and recreational opportunities.

Lotus’ Leonardo is convinced that the online world represents the future of HR. Soon, applicants will be able to directly access the company’s homepage on the Web and find job openings and career opportunities. By clicking appropriate buttons, individuals will be able to receive further information and fill out online forms. They will be able to apply directly, without using E-mail, snail mail or faxes. And, today, when Leonardo needs detailed information on the industry and current trends, she uses the Internet and other online services to access newsletters, magazines and even newspapers such as The Wall Street Journal. Says Leonardo: “Going online doesn’t eliminate human interaction, it simply makes it more efficient.”

Which is precisely the idea. “This is completely revolutionizing the workplace,” says Steve Scott, manager of technical recruiting at Staples. “It’s creating possibilities that couldn’t have been imagined just a few years ago.” Concludes Gibson: “The human resources field has lagged a bit as far as getting online, but it now has an opportunity to catch up and take advantage of the tremendous capabilities. It’s an extremely powerful tool that fits perfectly into the philosophy of eliminating inefficiencies and becoming a strategic partner. Like it or not, it’s here to stay.”

So grab your mouse and hit the surf—cyberspace awaits you.

Eight reasons to go global:

1. Determining headcount
   It’s one of the most difficult challenges confronting global human resources—particularly at a time when many organizations are restructuring and reengineering operations. Without adequate systems in place it’s nearly impossible to get an accurate count of personnel in various countries. And that can adversely affect many decisions.
2. Tracking expatriates
   As employees move from one country to another, it’s often difficult and time consuming to modify records and keep benefits up-to-date. A solid HRMS can help alleviate many of the nagging problems by updating records or moving a record from one country’s database to another. It also can ensure that human resources has fulfilled all legal requirements and processed all the necessary paperwork.
3. Tracking and analyzing benefits
   A well-constructed HRMS can track benefits as well as provide sophisticated reporting abilities for human resources management. It can help keep policies and procedures in place, and can alert the human resources department before a problem occurs.
4. Analyzing compensation
   As compensation models become more sophisticated—and evolve—a global system can track changes within individual countries. Again, it also can provide advanced reporting abilities and play a major role in corporate decisions.
5. Career planning and succession planning
   As corporations adapt to the global environment, so must their succession planning models. No longer can a corporation rely on the fact that top talent is located exclusively in the United States. Increasingly, employees are spread throughout the world.
   
   And keeping track of personnel and locations is a growing challenge for human resources. Likewise, providing career planning through a global network allows employees to become more responsible and reduces the workload for human resources. In many cases, workers are able to access files detailing job requirements and skill sets and even apply for positions.
6. Retrieving data on knowledge, skills and abilities
   Within many organizations, HR is finding that having the capability to produce reports on skills and abilities within particular countries helps to identify strengths and weaknesses within the organization. It also helps define hiring, training and other needs on a local or companywide basis.
7. Providing line management with up-to-date information
   More than ever before, managers in the field need accurate data at the push of a button. A well-conceived system with the proper security restrictions can empower personnel to make quick and informed decisions. And that fits into many organizations’ efforts to become flatter and less bureaucratic.
8. Streamlining payroll
   An effective HRMS can greatly simplify the process of paying individuals in dozens of different countries. Even if the bulk of payroll is handled locally in each country, a system can tackle many of the administrative details.

Bill Chickering has heard all the complaints about how difficult it is to manage a low-skill, low-wage work force. He has heard human resources professionals grumble about the lack of motivation and dependability—and what an enormous toll it takes on productivity. But the director of employee relations for Benton Harbor, Michigan-based Whirlpool Corp. doesn’t buy the sob stories. He admits that building a solid and dependable low-wage labor force takes work, but guarantees that “once an organization is able to develop its human resources, it’s possible to unleash workers’ brainpower and enthusiasm in ways that might not ever be imagined.”

Chickering speaks from experience. Whirlpool, a $7.5 billion company that sells appliances in 120 markets worldwide, employs hourly workers in dozens of locations throughout the United States. During the last six years, the company has grown 85%, while reducing turnover and increasing productivity. How? Partly by giving its low-wage workers—everyone from assemblers to janitors—a major stake in running the company.

Whirlpool does this through a stock purchase plan and gain-sharing. The latter encourages workers to view the plant they work in as their own and find ways to cut costs because the dividend goes straight to their pocketbooks at the end of the year. There’s also GED programs, college tuition reimbursement programs and ongoing training. And, perhaps most important of all, there’s an overall recognition that line employees have valuable insights and knowledge that can help the company operate more efficiently. Hourly employees serve on hiring teams; they even work alongside top executives as part of strategic groups to help decide where factories should be located and how work should be processed and distributed.

“If you expect a lot out of a work force, if you create realistic ways to get people involved and not just repeat hackneyed cliches, there are tremendous opportunities,” says Chickering. “The notion that the company would like to tap into the opinions and knowledge of its hourly work force is often met with skepticism. But once you can demonstrate over time the commitment to such a philosophy, the transformation is remarkable.”

Whirlpool is among a growing number of companies discovering the changing dynamics of the U.S. labor pool, and the need to adjust their HR practices accordingly. These companies see the need for HR to structure pay and policies to build a powerful low-wage work force. They must attract, retain and promote good workers. And, perhaps most importantly, they need to work with top management to fashion an organization that’s both solid and nimble. Says Donna Klein, director of work/life programs at Washington, D.C.-based Marriott International: “It’s a far more complex issue today than it has been at any point in the past. However, the companies that can manage their low-wage work force well are in a position to reap tremendous rewards.”

The low-wage labor pool swells as society changes.
Today, as the world economy grows more complex and intertwined, many jobs are being exported overseas—leaving vast numbers of the unskilled and uneducated clamoring for whatever work they can find. Meanwhile, wave after wave of immigrants—both legal and illegal—are flowing into the United States, many of whom are willing to work for rock-bottom wages.

In addition, society is changing from an industrial-based economy to a service economy, fundamentally changing the very nature of work. As better paying manufacturing jobs vanish with each round of layoffs and corporate downsizings, lower-wage jobs in restaurants, hotels and retailing flourish. According to the San Francisco Federal Reserve Bank, the service sector is expanding at a robust 18% annual clip. And the Bureau of Labor Statistics reports that since 1980, the service sector has expanded by 18.8 million jobs.

In many cases, these service jobs pay far lower wages than comparable unskilled jobs in the manufacturing sector. For example, the most recent figures available from the Federal Reserve Bank of Cleveland show that the lowest 10th percentile of the service sector earned only $212 a week in 1992, compared to $231 in the manufacturing sector. That translates into $1,000 a year less for service workers. “There’s a tremendous drive to increase productivity and lower costs—and in many instances the only variable is labor costs,” says Fred K. Foulkes, director of the Human Resources Policy Institute and a professor of management policy at Boston University.

Glance at statistics and you begin to understand the impact. According to the U.S. Census Bureau, almost one-fifth of America’s full-time workers receive what the government considers low pay—less than $13,091 a year. Among 35 to 54 year-olds, the percentage of low-wage workers grew from 9.9% in 1979 to 13.3% in 1983. Among the younger labor pool, the trend is even more pronounced. Those in the 18 to 24-year old age group, for example, have watched the numbers grow from 22.9% to 47.1% during the last 14 years.

However, many economists insist that government numbers don’t tell the entire story. Examine the minimum wage work force—those who earn roughly $8,500 a year full-time—and it’s obvious that the labor picture is even worse. Traditionally, Congress has set the federal minimum wage at roughly 50% of the average manufacturing wage. Today, however, the figure hovers at 40%, and is in danger of falling into the high 30s. “It’s a trend that can’t be ignored,” says Foulkes.

That has many deeply concerned. Edward N. Luttwak, director of Geo-Economics at the Washington, D.C.-based Center for Strategic and International Studies, believes that America could become a Third World country by 2020. He points out that in 1970, the nation’s GNP was $4,950 per person, while Japan was only $1,950. Two decades later, the U.S. GNP was $21,000 per person, while Japan had soared to $23,810. And by the year 2000, Japan is projected to double the GNP per person of the United States. Of course, many find the notion that the United States could suffer such a fate unbelievable. But Luttwak says that one only needs to look at Argentina for proof it can happen. A wealthy nation in the 1950s, this country has suffered a 40-year slide into poverty.

Adds Allen Scott, director of the Lewis Center for Regional Policy Studies at the University of California at Los Angeles: “Many areas—particularly America’s cities—have become vast pools for unskilled workers. It’s creating Third World conditions, and changing the responsibilities and challenges for companies and society.”

The issues stretch far beyond dollar figures on the corporate balance sheet. Not only do many of these low-wage workers require ongoing training to compensate for a lack of education and language skills, they embrace cultural and social practices that are fundamentally different than those professed by the vast majority of America’s work force. Getting them to believe in the corporate culture can be difficult, but failure to do so often results in unacceptable levels of turnover (as high as 80% to 100% a year in industries such as fast food), low worker morale and a general deterioration of the very service that’s the cornerstone of many firms that employ low-wage workers.

High turnover prompts scrutiny of selection processes.
To address the issues faced when depending on a low-wage work force, many companies are re-examining how they hire, train and reward employees. “Companies are far more selective in hiring because they’re recognizing the high cost of recruiting, retraining and turnover,” says Janet Fuersich, director of compensation consulting for New York City-based Coopers & Lybrand.

But finding educated, literate and dependable workers—especially in urban areas—is becoming a formidable challenge. “There’s a need to find people who have enough education and ability to function well on the job—so they’re often having to pay higher than minimum wage.”

At many fast food firms in urban areas, for example, it’s now necessary to pay entry-level workers $6 to $6.50 an hour—nearly $2 above minimum wage. Manufacturing jobs—union and non-union—often translate into an $8 to $12-an-hour wage. “The Federal minimum wage is a floor. But many organizations find that to attract and keep their labor category’s best and brightest, they must pay a higher wage,” says Fuersich. “And there’s often a shortage. That’s one reason why you see more senior citizens taking work in fast food restaurants, retail stores and banks.”

Adjusting salary alone isn’t enough, however. That’s why Chicago-based Sears Roebuck & Co. has scrutinized its HR practices. Sears, with more than 800 stores and 360,000 associates located throughout the nation, has worked during the last few years to construct standardized systems for hiring, retaining and promoting its employees. Although it’s built a stable work force in some areas, it suffers from chronic turnover in others.

The hiring process serves as the foundation for the company’s strategy. Sears now requires department managers—the people responsible for hiring virtually all associates—to adhere to a standardized interviewing process, which requires ongoing training and thorough documentation.

In addition, the stores also use paper and pencil testing for determining dependability. “We’re moving toward more testing, especially in the area of customer-service orientation,” says Sally Hartmann, manager of measurement and assessment systems in the firm’s national HR office. “We’re trying to do a better job of selecting applicants. We realize it’s crucial to think about the job requirements, ask the right questions and listen closely to the answers.”

Making sure that prospective employees understand what the job is all about has also become a priority. “It’s important to hire the right people in the first place,” Hartmann says, “but it’s also vital to give them, before they accept a job, a realistic job preview about what they can expect. That means talking to them about the job, the hours, the scheduling, the unpredictability and the need to be flexible. They must understand that they’re going to have to pitch in and straighten up, even if they’ve been hired to sell. Reducing turnover begins with recruiting and hiring.”

Sears expects that some turnover is inevitable. A certain amount actually is desirable. The very nature of the corporate pyramid is to weed out those who are less than committed to the company or don’t fit in on a long-term basis. Some observers argue that certain industries—particularly fast food—thrive in a high-turnover environment because new employees can be trained in a matter of minutes or hours and paid lower wages than long-term employees. Nevertheless, experts say that one of the most distressing problems for a company is to lose solid, dependable workers for the wrong reasons.

Says Sears’ Hartmann: “Ultimately, if we have a college student work for us for four years and then leave to become an engineer, then we view it as a wonderful partnership. However, if an associate graduates with a degree in fashion merchandising and then goes to work somewhere else, then we have really missed the boat. It’s important to identify those who have management potential and get them on the right track.” But Hartmann also admits that associates sometimes “fire” Sears. “If they’re a good employee and they leave to make 25 cents-an-hour more down the street, then we’ve failed.”

Sears now looks closely at why workers stay and why they leave, and has created a turnover management kit, which helps store managers access data from their own computers that gives them ideas on how to reduce turnover. Exit surveys that provide analysis and insight into why employees are leaving also have become part of the picture. “Overall, we know how costly turnover is in dollars from an HR and companywide perspective. But it also has tremendous costs in terms of customer perceptions and morale in the stores. So, there’s no way to attach a specific dollar amount,” says Hartmann.

Profit sharing and employee involvement foster loyalty.
Part of the reason low-wage workers leave a company is that they lack motivation to view their job as a career opportunity. They see little or no reason to buy into the corporate philosophy that management faithfully and doggedly espouses. In many instances—particularly in large cities—hourly employees feel little loyalty to their employer. They often jump at the opportunity to change jobs and earn 25 cents-an-hour more someplace else.

In response, companies must find ways to make their low-wage workers feel part of a cohesive corporate culture from day one. Sears assigns each new sales associate a buddy, who can answer questions and help the newcomer learn the ropes. Departments and entire stores also plan picnics, softball teams and other events to help build stronger bonds and encourage new workers to get to know their peers.

Sears also makes a commitment to ensuring that low-wage workers have opportunities for advancement and growth. New sales associates receive 12 hours of training that the company tries to make fun and entertaining with the use of such techniques as videos and interactive exercises.

Whenever possible, Sears prefers to promote from within. Not only do associates understand the nuances and realities of what goes on inside the stores, they often display great loyalty. “They know Sears from the bottom up. They know the customers; they’re aware of what they like and dislike in a manager, and they understand what it takes to motivate people who work on the floor,” says Hartmann. In fact, Sears recently has been focusing on making sure its most qualified associates get channeled into regional training programs, where they receive classroom instruction and mentoring. Then, they’re slotted into management positions as they become available.

Irvine, California-based Taco Bell Corp., an independent division of Purchase, New York-based PepsiCo Inc., embraces a similar approach. Says Dave Pace, vice president of human resources: “We try very hard to develop people through the system. We have people who started in entry-level positions and now are store managers, even assistant general managers running as many as 30 units. In many cases, the talent and initiative are there. It’s simply a matter of giving people an opportunity to grow within the organization.”

According to Pace, the greatest undertaking for this fast-food chain, which operates 3,500 company-owned Mexican restaurants in the United States, is distinguishing itself from the rest of the burger and burrito pack. “The challenge,” explains Pace, “is to become the employer of choice. Essentially, everyone in the industry is competing for the same labor pool.” Because Taco Bell’s “Value Menu” features ultra low-price items, which translates into razor-thin profit margins and an increased need to control labor costs, keeping low-wage workers is particularly important.

However, Taco Bell has cultivated a strong hourly work force by giving employees greater responsibility and allowing them to make decisions on their own. In most cases, crews are trained to open and close restaurants without a manager present, are allowed to handle cash and make bank deposits, and have responsibility to accept deliveries, manage inventory and even order food and supplies. “They’re able to handle a lot of duties that would traditionally be considered the responsibility of a manager,” Pace explains.

Besides making the work environment challenging, the company tries to make it exciting—and profitable. It offers an automatic stock option program for workers who have been at the company at least a year, and it has introduced monetary incentives to stores that meet key business benchmarks. That can add as much as 25 cents an hour to an employee’s pay during a specific month. More importantly, says Pace, it’s a way for store employees to identify with “what we’re trying to achieve from a business standpoint and receive a reward when they’re able to hit the goals.”

Whirlpool shares this philosophy of involving and rewarding hourly workers. In the mid- 1980s, the firm realized it had to redesign its workflow and HR policies to compete in an increasingly global environment. So it began systematically revamping work processes and its basic mindset. Whirlpool began inviting line employees to serve on hiring teams, and to travel with top executives to new plants so that the company could gain a broader perspective on production and labor issues.

The program has worked smoothly—with human resources providing training in interviewing and other personnel issues. “Not only do line employees know what it takes to do the job well, they’re suddenly accountable for the quality of the workers they hire,” says Chickering. And at Whirlpool, that’s an issue everyone takes seriously. The company’s gain-sharing program transforms each manufacturing plant into its own business. By reaching specific benchmarks and finding ways to operate more efficiently, the company and employees share in the profits. That can often translate into a $2,000 to $3,000 annual bonus [see “Whirlpool Strives To Build a Performance-based Strategy”].

But Whirlpool’s program doesn’t stop there. The company also places line employees on strategic teams that help make key business decisions for facilities nationally and abroad. The workers—some earning $12 an hour—serve alongside top managers and executives, and even travel overseas. “We want them to feel and act like equal partners in determining the company’s future,” Chickering says. “They may simply be assembling a part, but they know a lot more about how it can be done quickly and efficiently—and at a lower cost—than managers who sit in an office and crunch numbers.”

Winning over the trust of low-wage workers has been no easy task. Many employees simply don’t believe that the company means what it says. They often view the introduction of such programs and policies as nothing more than a ploy to keep them placated. But what Whirlpool has learned is that “skepticism doesn’t necessarily mean resistance, it may simply mean that they don’t know what’s involved, what’s expected of them and how they can contribute,” explains T.R. Reid, the firm’s manager of financial communications. “Everyone has to understand that there’s a learning curve and you aren’t going to remake the company overnight.”

Ultimately, adds Chickering, the company runs far more efficiently. “The more you cut down the barriers between exempt and non-exempt workers, the better the communication and the more everyone sees the big picture. No longer do workers check their brains at the door and figure that problems are someone else’s to deal with. Suddenly, they’re enthusiastic and involved. They’re truly a human resource.”

Personal support increases productivity potential.
Certainly, reducing turnover and eliminating low productivity isn’t easy. Comprehensive approaches like those at Taco Bell and Whirlpool are a start, but often aren’t enough by themselves. As a result, many companies now are taking a far more holistic approach. They’re getting involved in their employees’ lives and helping resolve personal problems that can spill over into work.

Marriott is a prime example of how a company can overcome tough challenges that extend beyond low income. Marriott’s product is largely its high standard of service, and all of the brainpower and management savvy in the world isn’t going to spell success at individual hotels without additional people support. “We have a high regard for our associates,” Klein says. “We understand that these are the people who deliver the product—it isn’t the manager or the executive at headquarters.” With personnel speaking 26 different languages and many employees less than familiar with U.S. customs and practices, there’s plenty of room for glitches. A clerk unfamiliar with U.S. social practices, for example, may inadvertently brush a customer off, or a housekeeper might not come to work because of a personal problem.

As a result, Marriott has created a series of programs for both managers and associates. Today, managers at the hotels receive extensive instruction on hiring techniques. In addition, many locations include customer and associate sensitivity training and teach about specific cultural practices. “It’s more than timesheets and payroll. It’s as much about the art of managing as the skill,” says Klein. Meanwhile, associates are placed in a detailed orientation program and then offered ongoing training and instruction in a wide array of areas—from interfacing with customers to balancing work and personal issues.

The centerpiece of Marriott’s approach is its work-life program. It’s something that, according to Klein, “focuses on the breadth of an employee’s life rather than just basic family issues.” Indeed, the company now provides ongoing educational programs on relationships, child care, elder care and legal issues. It offers a pilot hotline in Florida with trained representatives who can answer questions on a wide range of topics—including immigration, child care, education and housing—in Spanish, French and Creole.

It’s a program that has made a major impact on Marriott’s low-income work force. Employees who otherwise would miss work—or leave the company—because they don’t understand the bureaucracy or complexity of the U.S. system, are able to resolve their problems. Not surprisingly, that has led to a boost in productivity—particularly for managers who find themselves with 25% to 50% more time on their hands now that they’re free from counseling associates. Ultimately, says Klein, “the better employees are able to manage their lives, the better they’re able to serve our customers.”

Other companies have evolved toward a work-life approach as well. Seattle-based SeaFirst Bank, which operates 271 branches in the Pacific Northwest, provides a plethora of services: free or reduced cost banking; tuition reimbursement; English classes; career counseling; a discovery center where employees can improve skills needed to move up in the organization; child care, including provisions for sick children; a fitness center; and a wide array of social events.

SeaFirst also has established a variety of employee-recognition programs. It has staff excellence awards—cash bonuses of $475 to $7,500 for exceptional employees; a ThinkFirst program that rewards innovative ideas with cash incentives of $25 to $25,000; a “Teller Hall of Fame,” and an “Employee of the Quarter” award.

The philosophy has been successful. SeaFirst’s 1993 turnover rate was 19%, compared to the 22% average for businesses in the entire state of Washington. More importantly, the company has consistently ranked among the top 20 employers in the state, according to Washington CEO Magazine. Says Vicki Rohr, work, home and health coordinator for SeaFirst: “Today, as a company, you have to ask, ‘How do we motivate people? How do we make them feel that they’re an important part of the team? How do we maintain an hourly work force so that we’re better positioned for high performance?’ The cost of operating the programs is an investment—and one that generally pays huge dividends.”

Understanding the dynamics of the work force is key.
There’s no doubt that a low-wage work force presents unique challenges for human resources. Fred Foulkes believes that HR has a particularly tough role in balancing company and worker interests. “On the one hand, HR is striving to become a business partner that plays an important role in corporate decisions—and that can often mean keeping wages and costs down. However, HR also thinks of itself—and has been traditionally viewed—as a representative or advocate of employees. And that can present a huge conflict.”

He and other experts say that it’s essential for top management and HR to work side by side to re-examine company policies and practices, implement new programs that accomplish their intended goals, and learn to balance issues to create a stable work environment—one in which low-wage workers can feel valuable and important, and where the company can thrive while facing low-profit margins and growing competition.

But it’s also necessary to thoroughly understand the subtlety and diversity of today’s workplace. And that means more than just creating specific programs and communicating with hourly workers. It’s about understanding who the firm’s work force is and what kind of environment it needs to thrive. For example, Coopers & Lybrand’s Fuersich notes that in regions of the nation that have large concentrations of Hispanics—including Florida, New York, and Los Angeles—the social aspects of work are vital. As a result, it’s necessary to create an environment where employees feel they’re working together and can share common goals. Says Fuersich: “No matter what collar a work force wears, it’s crucial to understand them so that they can perform work to their potential.”

Foulkes echoes the sentiments. He also believes that a lower-wage work force is only as good as the managers and supervisors who oversee them. The habits and attitudes of management go a long way toward determining the success or failure of an organization. These individuals must know how to deal with the problems and idiosyncrasies of low-wage workers—many of whom have entirely different value systems—and they must understand what it takes to motivate and retain them. Moreover, “Many companies don’t understand that high turnover and poor training among entry-level managers can be devastating. They’re often the thread that holds low-wage work forces together.”

In the end, by giving workers the respect and credibility they deserve, and by listening to them and taking what they have to say seriously, a company can eliminate many of its most difficult problems. “Fundamental values ultimately get transferred from a company to its work force,” Foulkes remarks. “There’s no shortage of firms that depend largely—if not entirely—on lower-wage workers and manage to thrive.”