Author: Scott Hays

As long as he kept a low-profile and didn’t draw attention to himself, Gilberto Hernandez figured he could coast through life with limited reading and writting skills.

Hernandez dropped out of school in the ninth grade, entering the workforce because he needed money to pay for food, clothing and shelter. Prior to landing a job as a groundskeeper for the Phoenix Parks, Recreation and Library Department in 1997, Hernandez toiled as a janitor for the Phoenix Elementary School District. It was a good job that paid well.

Still, he was nagged by the notion he could do better, maybe one day even go to college. So last year, when the City of Phoenix offered Hernandez the chance to attend six hours of classes per week to improve his reading, writing and math skills, and work toward his General Equivalency Diploma, the 31-year-old groundskeeper returned to school for the first time in almost 20 years.

The Phoenix Literacy Program began in 1988 after a citywide study revealed that many employees lacked the basic skills to be considered “promotable.” The program has since served more than 1,000 city employees from seven different departments. “They come out with enhanced skills and increased self-esteem,” says June Liggins, Phoenix personnel curriculum and training coordinator. “The program has not only made for more productive city employees, but has met our demands for a future workforce.”

“Ever since I started taking classes,” says Hernandez, “I ve had a whole new outlook on life.”

Even Hernandez front-line supervisor, John Melisko, reports that “not only have his communication skills improved, but he seems more confident in himself. He always has been a good employee; now he s a better one.”

As much as 20 percent of the American workforce may be functionally illiterate. In everyday work life, this deficiency translates into secretaries who can t write letters free of grammatical errors, workers who can t read instructions that govern the operation of new machinery, and bookkeepers who can t manipulate the fractions necessary to compute simple business transactions.

The Washington, D.C.-based National Alliance of Business (NAB) and the National Institute for Literacy estimate employees lack of basic skills results in a $60 billion loss in productivity for American companies each year. Why? Because workers who can t understand warning signs or shipping instructions cause mistakes, workplace accidents and damage to equipment.

According to a 1994 survey by the Bureau of Labor Statistics, only 2.2 percent of U.S. employers provided basic skills training. And the skills shortage will only get worse, thanks in part to the integration of information technology into the U.S. workplace. Gone are the relatively simple single-product assembly lines of yesteryear; in today s high-tech workplace, one assembly line may produce a dozen items, each with its own complicated set of directions.

As American companies retool to meet the demands of a new global economy, workers must continually upgrade their knowledge and skills to qualify as “promotable.” It s little wonder that U.S. presidents and pundits alike continue to hammer home the need to improve employee education, efficiency and well-being. There used to be a time when people who were functionally illiterate could find jobs. No longer. Modern economies demand a well-educated labor pool, and skills have become the key competitive weapon.

Employees skills are employers competitive edge.
The American Association for Career Education in Hermosa Beach, California, defines literacy as an individual s ability to read, write and speak in English, compute and solve basic math problems, and develop one s knowledge and potential through listening skills. Of course, it s undeniable that all of these skills should be taught in high school, but in many areas of the country, the nation s educational system can t be relied upon to produce literate graduates.

If you believe the research that some 20 percent of the U.S. adult workforce can t read the OSHA instructions posted on a wall, and the dearth of basic worker skills has a direct impact on company productivity, then how can you afford to ignore the problem? Yet most companies will spend money to implement, say, a new statistical process-control program, only to discover their workers don t have the ability to synthesize the information. As technology becomes even more footloose, employees skills become the employer s competitive edge.

Myron Kanning, vice president of human resources for Batesville Casket Co. in Batesville, Indiana, discovered several years ago that workers at his company s manufacturing plants didn t possess the skills necessary to conduct on-the-line quality analyses of burial caskets prior to the final control inspection station. “We tried to get our employees to assume more responsibility, which would have led to improved productivity, but they didn t have the confidence to handle even routine decisions,” recalls Kanning. “In order to move forward in a rapidly changing market, you have to make sure employees at lower levels can assume greater responsibility. But you can t empower someone who can t read and write.”

According to a 1998 survey by the Manufacturing Institute s Center for Workforce Success in Washington, D.C., one third of manufacturers report that job applicants have inadequate reading and writing skills, and nearly one fourth report that job applicants have inadequate oral and communication skills. It s estimated that deficient employee skills have prevented one in five manufacturers from expanding.

“We ve got a lot of smart machines, but few smart workers,” says Phyllis Eisen, executive director for the Center for Workforce Success. “As an industry, we re dancing as fast as we can to catch up. Manufacturers are spending billions of dollars every year on education and training just to make up for what other institutions have failed to do in the past. Right now, there s a huge lag in productivity on factory floors across the country because workers can t learn the new technology.”

There s definitely not a lack of funds available for adult literacy programs. Both the federal and state governments provide millions of dollars each year for adult-education and family-literacy programs; private sources expend additional millions. But the problem persists. And, more to the original point, as changes in the nature of work require accelerated skills and training, the lines between workers and supervisors and managers blur as “work teams” help raise creativity and productivity. Increasingly, those companies most dedicated to training their employees to do it better, faster and cheaper will get the jobs.

Enhanced employee skills mean better business.
Most everyone agrees illiteracy exists as a serious problem in society. Attitudes associated with workplace literacy problems, however, vary widely. Some CEOs and human resources managers believe a lack of basic skills in the workforce isn t their responsibility—that it s up to employees to learn on their own how to better read and write. Others realize they ve got to stop blaming the falling standards on someone else, and to stay competitive, workplace illiteracy must be treated like any other business crisis.

According to one survey canvassing more than 300 executives, 71 percent reported that basic written communication was critical to meeting the changing needs in the workplace, yet only 26 percent offered any kind of training. And while 47 percent of the executives recognized the need for workers to improve basic math skills, only 5 percent proffered any kind of basic math skills training.

So what s going on here?

Well, to begin with, HR managers know there are never any easy answers in solving a workforce problem—especially one as sensitive as adult illiteracy. At Batesville Casket Co., for example, a literacy program instituted several years ago failed to garner the support of its own employees. “They were too self-conscious to even come forward and participate,” says Kanning.

This is not at all atypical. It s estimated that 10 percent of the millions of Americans who can t read or write never participate in literacy programs simply because they don t want to admit, particularly to an employer, that they can t read or write.

“Research indicates the illiteracy stigma is comparable to that experienced by victims of sexual abuse,” says Jack Fenimore, president of Newburgh, Indiana-based Literacy Now, a nonprofit distributor of educational material. “A high percentage of people won t even admit to their own family members that they can t read and write.”

Raising adult literacy standards.
Although most HR managers realize, however loosely, the link between productivity and the basic skill level of employees, many still ignore the importance of workplace training in improving competitiveness. “Human resources managers need to ask themselves, ‘What improvements haven t we been able to do because of the low skill level of our workforce? ” says Steve Mitchell, senior director in workforce development for the National Alliance of Business.

So what can you do about it?

Too often, corporations spend money on employee training for managers, supervisors and salespeople, but ignore those at lower levels of the workforce. Time and resources need to be committed to solid training programs that will combat adult illiteracy. Between 1986 and 1994, for example, Schaumburg, Illinois-based Motorola Inc. spent $40 million to train 8,000 of its production workers in basic skills.

Around this same time, the company also started assessing job applicants who were interested in working for its factories. “We needed people with the skills and competencies to learn and apply new knowledge,” says Don Moretti, director of human resources selection and assessment for Motorola. A program was developed based on extensive job analysis. “We defined those requirements that would lead to success, then developed a test to measure those identifying components.”

The results? “People who scored high on the tests also possessed high performance skills,” says Moretti. “And people who scored low on the tests possessed low performance skills.”

The three-hour assessment test consists of multiple choice questions in four different areas: practical arithmetic, reading and comprehension, forms completion and visual tracing. There s also a video-based assessment tool. Moretti admits there s a certain investment that s needed by any company looking to develop an assessment tool, “but we have a dollar value that can show our return, over using just a non-valid selection process.”

The company finally discontinued its basic skills training in 1994, “mostly because our existing workforce had already been trained,” says Jim Frasier, manager of learning research and evaluation for Motorola University. “We also know that our incoming workforce has the required skills because they ve passed our assessment test.” These days, Motorola revalidates literacy and other workplace skills, but focuses mostly on how employees can improve their critical thinking skills.

Maintaining employees skills is crucial.
Helene F. Uhlfelder, Ph.D., is director with the Atlanta office of AnswerThink, a management consulting firm. She says that right now, there s a gap in the kinds of skills and knowledge Corporate America has and the kinds of skills and knowledge Corporate Americans will need in the future. “Which means you have two choices: You either screen applicants differently, or you train the ones in your existing workforce. It all comes down to priorities.”

And your priorities should meet not only the needs of your employees and customers, but also the needs of your company. The City of Phoenix came to the conclusion that programs had to be confidential, voluntary and customized. Other Phoenix features include attending classes on city time, courses matched to meet individual needs, and programs instituted at no cost to city departments. On the other hand, Batesville Casket Co. offers self-pacing and self-study. Managers should settle on whatever works best for each particular company.

“If we don t invest in our employees today, we won t maintain our industrial status in the world,” warns Eisen of the Center for Workforce Success.

Competitiveness in the 21st century will turn on the quality of the country s workforce, not just on its technology and management know-how. By creating an environment in which employees feel comfortable enough to improve their skills, employers not only engender loyalty, but increase productivity. Boosting employee literacy isn t just good social engineering, but an economic necessity.

Workforce, April 1999, Vol.. 78, No. 4, pp. 70-74.

Before you send employees on international assignments—or even short business excursions—make sure they understand the basic challenges that face anyone traveling to a foreign country.

As many human resources professionals already know, international business travel can be an extremely stressful situation—long hours on an airplane, language differences, currency exchange issues, the logistical nightmare of just finding your destination. Imagine if you’re a less seasoned traveler with no experience in the country you’re visiting. Traveling to a new land just adds to the sense of fatigue of a new assignment—your employees are already stressed, going through different time zones, eating different foods.

Hopefully, you’ve already encouraged your employees to read some travelers’ guides and take time to educate themselves about their new destination. While they’re learning about the country they’ll be visiting, they should also be prepared to know the nuts and bolts of international business travel, safety and health issues.

First and foremost, make sure you obtain the proper documentation to ensure that your employees pass all customs, immigration and visa requirements. In some countries, it can take up to three months or longer just to obtain employment authorization. The visa applications should be one of your first steps in the process. Don’t dillydally and wait until just before your employee’s supposed to leave for his or her new assignment to start worrying about paperwork.

Once that’s behind you, walk your employees through the various travel arrangements, and the health and safety issues upon arrival. Arriving in any destination is a challenge—made even more difficult if you’re traveling to a different country with an entirely different culture. Your company should develop strategies that’ll make the lives of your employees on the road a lot more enjoyable, and eventually more profitable.

Here are tips for you and your travelers.

• Always pack small packages of food to carry aboard the airplane. Also, call the airline in advance to ask for special meals, if necessary.
• It’s a good idea to carry a list of the items your luggage contains in case something is lost or stolen during your trip.
• Decide whether to buy foreign currency before you leave the U.S. or after you arrive. Take some money in local currency for arrival expenses such as tipping and taxi rides. Take the rest of your money in travelers’ checks.
• Think about obtaining health, travel and accident insurance coverage—better safe than sorry. Also, be sure to obtain information on medical, legal and professional services, and how to obtain those services in an emergency.
• Always carry extra copies of your passport photo. They come in handy when you’ve lost your passport or even for an international driver’s permit.
• Stock up on business cards before you leave.

• Before your trip, study the health and safety conditions of the country in which you’ll be staying. This research should include current political conditions, weather, common wildlife, even the crime rate.
• Leave valuable items at home, including jewelry, cellular phones and unnecessary credit cards.
• Master the local currency before you do anything that puts your fortune on the line.
• Ask for an up-to-date map when you arrive in a city and take a reconnaissance walk to get familiar with the city’s feel and your neighborhood. If you’re in a non-English speaking country, jot down the hotel’s name and address.
• Learn a few key phrases in the host country’s language.
• Learn about the values of a country, and be aware of how you will fit into that culture in every aspect of your behavior.
• Register with the U.S. consulate. It will facilitate help if you have an emergency. If you’re working in a country with no U.S. officials, register in an adjacent country, if possible, leaving your itinerary.
• Find out how the local telephone works. Make a list of addresses and telephone numbers of any local contracts you have—the police, hospitals, consulate.
• If you’re arrested, ask permission to notify the U.S. consulate.

• Some countries require the employee and all family members undergo medical examination as part of the process. Make an appointment with your physician and make sure you’re caught up on all of your vaccinations. Educate yourself about health risks in the country you’re visiting. Immunize yourself to those diseases found in that country.
• Take copies of all your eyeglass and medical prescriptions, blood type, and so on. Take extra prescription drugs in original containers, and check with that country’s laws to see if those drugs are permissible to bring into the country. Take extra eyeglasses or contact lenses.
• Remember that the cost of medical evacuation of a sick or injured person is extremely high. A company may have to spend $30,000 to airlift the person to another country that has a medical center or back to the United States, so don’t fudge when it comes to your health.

“Moving to another country is a difficult transition,” says Jeff Davidson, frequent traveler and author of The Joy of Simply Living (Rodale Press, 1999). “In fact, most people are sorely underprepared for it. They have no idea how cut off from their formal world they’re going to feel. If nothing else, make sure you have e-mail access to everyone who counts. It’s a relatively inexpensive way to stay in touch, no matter where you are. Also, every country and city has a Web site that you can visit in advance; print out the pages that matter to you. Many Web sites even have global map capabilities.”

Any company with expatriates should always establish an immigration and travel policy—a handbook, if you will—to help manage your employees’ anxieties and expectations. It will not only go to alleviating a lot of stress, but it can also save you on legal fees and help streamline the entire process. In other words, don’t let the experience ruin your employee’s stay. After all, you never get a second chance to make a first impression.

Workforce spoke with Tom Nides, senior vice president of human resources, about Fannie Mae’s work/life initiatives for employees, and its outreach programs for the community. The highlights:

Do you feel people actually come to work for Fannie Mae because of its work/life initiatives and its outreach programs?
It’s a combination of those things, yes. But everything flows from our corporate mission statement to put low- and moderate-income people in houses. We’re also practical in our understanding that every individual employee has his or her own needs, and we have a reputation in Corporate America for addressing those needs. Consequently, when people come to us for jobs, the first thing they ask about is our benefits programs. We try to provide the whole smorgasbord of benefits for our employees, and also to use those programs as recruiting tools to bring new employees into the company.

Why all this time, money and effort on corporate social responsibility when employee loyalty is tenuous, at best?
Our turnover is well below 10 percent, which is terrific for a financial service company. We don’t buy into the proposition that employees aren’t loyal. People want roots; they want to feel a part of a company. If you can give them a reason to stay, they’ll stay. People leave all the time, sure, but we find good business for us is keeping our employees here. We spend thousands and thousands of dollars training each and every employee for the sole purpose to keep them here. The longer they’re here, the more they understand the company and that makes for a better employee, and ultimately a better company.

You grant 10 hours paid leave per month for volunteer work. How has this impacted the company’s bottom line?
It’s had no measurable impact on revenues, but then I would argue it’s hard to measure these things. On the other hand, we’ve been pleasantly surprised by how well these programs are received by our employees. We’ve probably had upwards of 30 percent employee participation, and we’ve just come off a phenomenal year.

Why is it important that employees balance their work and home lives?
For instance, if employees know their company is willing to help them when there’s a family health-care crisis, then they’ll want to come to work and they’ll stay focused on their work. A lot of our employees have children, and they think it’s terrific that we encourage them to volunteer at their children’s schools. We want our employees to know they need to balance work and family because if they’re not happy at home, they won’t be happy at work.

Do you believe the profitability and viability of a company depends on its ability to gain the confidence, support and trust of its employees and their families, as well as the community?
It’s our number one issue. If you don’t have the loyalty of your employees, then you have a company that’s not on the cutting edge. Our employees like to come here. We have a company that’s relatively small by number, but large in capital. Consequently, we need to count on a small number of people to do an enormous amount of work. We want them motivated and fired up to come to work.

Have you been able to track a link between your efforts to be a neighbor to the community and enhanced employee productivity?
This isn’t a complete science, but we survey our employees every 18 months. We really care about what they think. We’ve tried to find out what motivates them. This much is clear: The things we do for the community as they relate to our corporate mission—building houses, getting involved in volunteer programs—are very much part of what people respond to at Fannie Mae. To me, our employees believe this company is committed to our programs in the communities and that makes them feel better. We believe our employees are happy about working here, and consequently their productivity is linked to their happiness.

Have you developed any fresh perspectives about corporate-community relationships?
We’ve decided that what communities really want is bricks and mortar, not a lot of mumbo-jumbo or fancy press releases. They want real buildings. So we’ve decided to focus on cities in tangible ways. People want things they can touch and feel, and we believe that’s what we can provide. We’ve decided to play that role in cities by bringing builders, realtors and community groups together, and then providing some of the money to make a difference in the community. People want real money and real progress. And that’s been our focal point from day one.

Want to do something nice this year for your low-income workers—without spending money? The Internal Revenue Service has a program called Earned Income Tax Credit (EITC). Here’s how it works: You make advance payments to qualified employees from the taxes you’d normally withhold, and their salary, in some cases, increases by as much as $100 per month. You then claim the amount on your quarterly employment tax form, and you’re done. It’s that simple.

Most of you may already know about EITC. After all, it has been around since 1975, and revisions to the laws made in 1993 further increased overall awareness (not to mention participation rates). Still, it never hurts to revisit a program that increases the take-home pay of people who may be struggling just to make ends meet—especially when you consider more than 15 million workers may qualify for this particular tax credit program.

“Most employers are concerned about benefits and pay, and this is one way they can provide additional income to qualified employees,” says Wayne Goshkarian, president of Phoenix, Arizona-based AGB, an employee benefits consulting firm.

When the EITC was first considered in 1975, policy makers agreed the most significant objective should be to assist in encouraging nonworkers to obtain employment and to increase qualified workers’ income. Last year’s qualifying requirements for EITC broke down this way: employees who earned less than $25,760 a year and had one child living with them, employees who earned less than $29,290 a year and had two or more children living with them, and employees with no children who earned less than $9,770 a year. In addition, the Federal Government will refund any earned income tax credit not claimed by the employee for the past three years to a maximum of $1,000 per year.

Let workers know about the tax credit program.
The EITC is the only benefit delivered to low-income individuals through the tax system. Unlike other cash-assistance programs for low-income families, applicants don’t have to wait in long lines or take time off from work to apply.

For those who still don’t know about it, though, HR simply can send out notices. Pat Lally, personnel manager for Des Plaines, Illinois-based Amerihost Staffing, a human resources and payroll company with 2,900 employees at 100 hotels in 15 states, says she thought the whole EITC process would become a “massive undertaking,” but it didn’t. “These days, our people see this as a program that says we’re willing to go the extra mile for them.”

The rest is up to your payroll department.
Many HR managers may not even know the IRS requires them to notify low-income employees that they might be eligible for the earned-income credit. “A lot of people make less than $29,290 per year,” says Goshkarian. “Although most HR people have heard of the program, they don’t really understand how the credit works or even if their employees are eligible.”

It takes about 15 minutes to explain the program to your employees and determine their eligibility. Then it’s just a matter of filling out IRS Form W-5, the Earned Income Credit Advance Payment Certificate, and turning it over to your payroll department (most payroll software programs accommodate the processing). You don’t even need to send it to the IRS. Just keep the form on file. The next paycheck your employee receives will see a substantial increase.

“Just because it doesn’t cost you anything doesn’t mean you aren’t providing a service to your employees,” adds Goshkarian. “Your employees get the dollars and you’re seen as a hero for bringing it to everyone’s attention.”

If you believe the reports that health care costs will double from $1 trillion in 1996 to $2.1 trillion in 2007, you’ve doubtless come to the conclusion that no company can afford to be spendthrift with its health benefits program. In today’s rapidly changing managed-care industry, it’s not paranoid or hysterical to want a head-to-head with your benefits carrier, but it may not teach you a tenth as much as a scientifically valid employee assessment survey.

“It’s imperative that a good quality assessment program be in place to help employers gauge employee satisfaction and to refine the company’s managed-care strategies,” says Elliot M. Stone, executive director and CEO of the Massachusetts Health Data Consortium (HDC), a nonprofit corporation that collects and analyzes health care information. “And given how much time and energy surveys can take, it’s equally as imperative that employers learn how to adjust their programs based on the results.”

Stone co-authored an employee health benefits survey and users’ manual for the Brookfield, Wisconsin-based International Foundation of Employee Benefit Plans, a nonprofit educational association serving the employee benefits industry. According to the manual’s introduction, assessment surveys can provide rich information for employers in the following ways:

• Characterize the health status of employees as well as their dependents.
• Determine whether there’s a need for change in one or more health plan options.
• Specify the direction in which those changes should occur.
• Renegotiate managed-care relationships by explaining current health care needs.
• Identify employee behavior problems that can cost the company more money.

Right away, you can see a number of things that sound potentially great for human resources professionals about employee assessment surveys. And to many employees, it may be seen as a commitment on your part to maintaining a high-quality health benefits program.

But the information is only as “powerful as the questions you ask,” says Ron Deprez, president of Public Health Resources Group (PHRG), an independent health care consulting firm based in Portland, Maine. “Let’s say a large percentage of your employees have asthma. Unless you know this, you might not be inclined to pay someone to educate them on how to treat their allergies. The cost of preventative measures can be far less than the cost of hospital care. And the only way to answer these questions is with an employee assessment survey.”

Design your survey with employees in mind.
The Chevron Corp. in San Francisco, California, conducted a national survey in July 1998 of roughly 10,000 of its employees and retirees with self-insured medical plans. “It’s one thing to evaluate the finances of a company’s health benefits program, what it covers and so on, but employers also should consider what their employees have to say,” says Tanya Bednarski, manager of health and welfare plans for Chevron Corp. “Surveys give you a lot more than just anecdotal feedback.”

Chevron used an outside third-party vendor to conduct its survey. “We structured it so that the same questions were asked for each and every health benefits plan we offer,” says Bednarski. “That’s helpful to us because now we can standardize the results.”

Unless you’ve had experience designing surveys and interpreting the results, you’re better off leaning on an independent third party to do the legwork. It helps to be prepared by focusing on the type of information your company will need and use.

Assessment surveys should be designed in such a way that you can mine the employee health data for trends. For openers, you want specific information about employees’ health status and their preference for services, and how they use those services. Do healthy employees use the plan? Who are the heavy users? Are there any smokers? Does age or gender make a difference? What are their coverage priorities? Some employees may want coverage for chiropractic care, while others may want coverage for other alternative therapies. Most managed-care administrators encourage several open-ended questions regarding benefits.

Some employees may fear the health data information will somehow be used against them. “That’s why you should never ignore employees’ privacy,” says Kimberly Wedell, principal with the Milwaukee, Wisconsin-based ROC Group, a human resources consulting firm. “Confidentiality is a must when conducting an assessment survey.”

To that end, it’s best to administer the survey in-house or by mail. Encourage employees to participate by posting a preliminary announcement indicating when and where the survey will be held. Make arrangements for absent or otherwise unavailable employees. Survey results should always be posted to remind employees they were involved.

Above all else, emphasize that it’s not just about saving the company nickels and dimes, but also about employees’ satisfaction with their own health plans.

Naturally, the value of any employee survey depends mainly on its validity and reliability, says HDC’s executive director Stone. Through interviews with human resources managers and extensive literature review, the employee health benefits survey he designed yielded sample questions that pinpointed key employee health status problems and health care needs. These questions were then pretested and modified to ensure that the language was neutral and unlikely to stir up expectations for change. Terminology that could have biased the results was deleted. “You want to compare the results over time and to the results from other employee assessment surveys,” explains Stone. “This type of rigorous surveying methodology ensures a high response rate and produces precise and unbiased results.”

Adjust your program based on the results.
You should realize that conducting an employee health benefits survey is a huge waste of time, money and effort unless you use the data to customize your company’s health benefits program. Gina Alongi is administrator for the Lexington, Massachusetts-based International Union of Operating Engineers (Local 4), a construction union of 2,900 heavy-equipment operators. Two years ago, members were surveyed about their views on the current self-administered health benefits plan. As a result, says Alongi, “several options were added to the existing program,” including coverage for hearing aids.

To revise and enhance your health benefits program, though, you must be willing to adjust to the results, says PHRG’s Deprez, who conducted the survey for the heavy-equipment operators. “You should also use the data to educate employees on better health practices,” he emphasizes. “Depending on your workforce, you may have to educate them about cardiovascular disease instead of diabetes, mental health instead of asthma. This sort of attention gives you a healthier workforce, and who doesn’t want that?”

Assessment surveys should also yield plenty of ammunition to renegotiate coverage with service providers. Let’s say a number of employees last year had problems processing their claims. The information can be used to remind your plan administrators about meeting their obligations. If nothing else, it puts you in a better position to negotiate coverage in the future. Based on the results of an assessment survey two years ago, Chevron actually dumped one of its significant health benefits vendors. “We tried working with the vendor, but on the second go-around, our employees were still dissatisfied,” says Bednarski.

If your company uses an HMO, you may not have to worry about surveys. The Washington D.C.-based National Committee for Quality Assurance requires that all HMOs that earn accreditation administer an annual members’ satisfaction survey. Otherwise, PHRG’s Deprez recommends companies evaluate their health plan effectiveness and performance with some kind of employee assessment survey. “If nothing else, you can make sure you’re providing a good health benefits plan to your employees at the lowest possible cost.”

One of the mysteries of life in the United States today is when the Federal Reserve Board will next raise or lower interest rates. Economists find it as difficult to forecast as the weather. It’s like watching mercury in a thermometer move up and down, day after day, year after year. There’s not much you can do but sit there and watch, prepare for the worst and hope for the best.

Given how important interest rates are to the economy, businesspeople every day struggle to make sense of it all. One quarter-point change up or down can lift a company’s spirits sky-high or send them spiraling into a bottomless depression. This may be a slight exaggeration, but it’s undeniable that change is an expected characteristic of the economic environment in which U.S. companies operate, and financing your company is getting more complicated all the time.

Low interest rates lift economy.
According to conventional theory, rising interest rates increase the cost of borrowing money, and thus cause a drop in investment because it becomes too expensive to borrow money—money that could be used to expand plants, finance research, acquire firms and produce goods and services.

Lately, though, the economy has been getting a boost from relatively low and stable interest rates. Cheaper loans are good news if you’re investing in new projects, borrowing to make long-term investments to accommodate growth, and giving workers annual raises.

“Oftentimes, companies have to rely on loans to continue doing business,” says John Wachowicz, co-author of Fundamentals of Financial Management (Prentice-Hall, 1998). “A low-interest rate environment makes it easier for businesses to raise capital, which means it’s a great time to conduct business.”

Projects that weren’t feasible when interest rates were high are reasonable in a low-interest rate environment. More or less, this means most people have jobs.

This type of labor market makes it tough for companies to hire experienced workers. The unemployment rate is lower than it has been in years. Companies are struggling to find people, and they’re having to offer additional incentives over what they’re accustomed to offering to get the same quality of worker. Things could be worse. But don’t think for a moment that the current low-interest rate environment will last forever.

It’s time to think ahead.
Of course, most businesspeople would rather operate in a low-interest rate environment than the alternative. But let’s not forget the interest rate spike that moved the prime from 11 percent in late 1980 to 21.5 percent in 1981. Some companies are starting to think about how high interest rates in the future might sting.

“Many companies are taking this opportunity to adjust their capital restructure,” says James W. Wansley, head of the financial department at the University of Tennessee in Knoxville. “Everyone knows debt is less expensive than before, and the interest companies pay for debt is tax deductible. Companies should use this time to clean up their balance sheets.”

This isn’t an entirely new notion, but no one knows for sure when the Federal Reserve Board will jerk the interest rate’s levers. The worst mistake any company owner or manager could commit would be to pay no attention to the warning signs. Better to monitor worldwide economics and political trends than to ignore everything and be caught unprepared.

It’s easy enough to get carried away with a booming economy and low interest rates. But maybe it’s just a matter of time before interest rates make a significant move in the other direction. Clearly, it’s dangerous to assume that interest rates will stay at their current level, which means it’s best to take precautions now when borrowing money because even economists can’t see the smudges on the economic horizon.

In an industry plagued by low wages and a turnover rate estimated between 51 and 300 percent (depending on the source), and where the difference between four stars and five stars can turn on bed linen and turndown service, the Atlanta-based Ritz-Carlton Hotel Company attributes the success of its 35 hotels from Boston to Bali on a rigorous customer service training program.

The Ritz-Carlton serves the top echelon of the traveling market. For that reason, the company throws a lot of money and energy at training its 16,000 employees on concentrated dosages of the Ritz credo to “fulfill even the unexpected wishes and needs of our guests.” Of course, maintaining such standards is no easy challenge. You can’t be expected to provide extraordinary service with an ordinary approach to customer service.

To learn more about how the company trains its employees on the “gold standards” of customer service basics, WORKFORCE interviewed Leonardo Inghilleri, senior vice president of human resources for the Ritz-Carlton Hotel Company.

Why does Ritz-Carlton feel it’s important that every one of its nearly 16,000 employees undergo rigorous customer service training?
Customers who come to our hotel pay a premium for perfection. We have this tremendous challenge to meet and exceed customer expectations. That’s why we discuss customer service every single day of our lives. It starts with how we select our employees. We use scientific interviews to understand if an individual has the necessary behavioral traits to make him or her successful in our company. Only one of every 10 applicants is hired.

What sort of traits?And how do you ‘scientifically’ determine if a prospective employee has these traits?
A person who works for us has to be hospitable, quality-oriented, attentive to details and so on. We’ve identified the top performers by job (waiters, chefs, housekeepers, etc.), and with the help of a psychological test we’re able to determine the ideal profile for each specific job. If you want to be a successful housekeeper, for example, you have to have certain talents; and if you don’t have these traits, you’re not going to be hired. There also has to be the desire to use your talents, which a lot of people don’t have. We interview each one of our employees in a scientific way to allow us to understand if that person possesses these specific talents.

Can you give an example of the ideal profile for, say, a housekeeper?
Our housekeepers have to have exactness, they have to be attentive to detail and they have to have pride in their work. This is important because people need to feel good about their performance.

A doorman, on the other hand, has to be more of a people person. He needs to be able to send a friendly message to a customer when he’s still 100 feet away. It’s called ‘relationship extension.’ You don’t necessarily look for exactness in a doorman.

What sort of orientation does the Ritz-Carlton put its employees through?
An employee who wants to work for the Ritz-Carlton will desire to provide exceptional customer service. But the concept of desire can only exist if we’re capable of enlisting this person into the texture of our company.

Our orientation happens on the first day of employment. That’s when the person is more responsive to behavioral changes, when you can drive the company’s business philosophy into the person’s psyche. If you wait too long, the window of opportunity is closed. Therefore, from day one, we create an environment that’s caring, supportive and energizing.

For example, when you’re a new employee, you’re assigned a trainer who’s with you all the time for the next four weeks. The trainer has the responsibility to explain the tasks, make you do those tasks and review your performance.

How are the 120 hours of customer service training actually divvied up?
It depends. Our entire training system is a combination of two key elements: technical skills and the Ritz-Carlton customer service philosophy.

Technical training is task based. By ‘technical training,’ I mean how to service in a fine-dining restaurant or how to make a bed according to our standards. Learning how to perform a task may last an hour, or a week, and then it’s reviewed. Ultimately, each employee is certified by the trainer. There may be 19 steps to making a bed. Until you make those beds perfectly, you’re not going to earn a certification.

Customer service training is a little more complicated. We train our people how to resolve guest challenges. After all, it’s an imperfect business we’re in, and a lot of things that can go wrong will go wrong. A toilet might get clogged. A television at a certain point will break down. You have to train your people to instantly pacify our guests.

As a 24-hour, seven-days-a-week business, how do you train people to think on their feet?
You really can’t train a person to think on his or her feet. You have to select a person who’s quick in his or her thinking. First and foremost, the person has to be confident in the sole knowledge of his or her job. You can’t expect an employee who isn’t competent in his or her own skills to solve a problem. The way to teach people to think on their feet is through proper selection, strong training and the creation of the desire to satisfy a customer.

We also give them endless hours of resolution techniques for guest problems. We empower our employees to resolve any customer challenge, no matter what. You don’t pass the buck. If you’re a waiter and you hear a customer complaining about a problem with his TV, we expect you to call the engineering department and report the problem, then call back the guest to make sure the problem was resolved.

This creates unbelievable loyalty with our customers. We actually found that our most loyal customers are those who have had some minor problem, yet had that minor problem quickly resolved by a competent employee.

How do you reinforce this type of training?
Traditional companies abandon the person after orientation—but not at the Ritz-Carlton. On a daily basis at the beginning of every shift, we have a lineup meeting. Every employee in our company goes through a 10- to 15-minute meeting in which several things are reviewed, particularly why we’re in business and our continued commitment to ‘gold-standard’ customer service. During these lineup meetings, we also discuss topics sent from the corporate offices, and the same topic is discussed at every one of our hotels throughout the world on that particular day. This creates an ongoing organizational alignment. If you don’t repeat the message, people forget. How do you energize on an ongoing basis someone who has to clean 14 rooms a day? You have to discuss the principles of the company on a daily basis.

What sort of financial and time commitments are we talking about here?
It’s a huge investment on our side. Think about it: Every employee spends 15 minutes every day in a meeting. Some might see this as a 15-minute loss of productivity, but we believe these are the most valuable 15 minutes of the day. We use this time to recognize and celebrate people, and create a sense of belonging. Of course, we also offer our employees competitive pay and a challenging environment. And if they embrace our philosophy, their opportunities for growth and advancement are unlimited.

Does this sort of commitment yield the appropriate results?
Absolutely, otherwise we wouldn’t do it. It takes tremendous effort and discipline from our management to accomplish these goals.

What exactly do your employees come away with after 120 or more hours of customer service training?
From the training, they become professionals in the hospitality industry. In this industry, you’re either professional or you’re a servant. Making beds and cleaning toilets and serving meals are professions if they’re done with pride. We don’t create servants. We create professional employees who have the desire to provide exceptional customer service, and who want to be part of our company.

Are there any special considerations because it’s a high-turnover industry?
Turnover is the single biggest problem of an employer in this industry. But we choose to have a good compensation package to attract and retain the right people. We feel that a successful company is one that’s both a learning and a teaching company. You have to learn from your customers, your employees and the changes in society. At the same time, as a teaching organization, we provide our people with new skills, thereby enriching their lives both personally and professionally.

Does the fact that you have 35 hotels all over the world cause any sort of cultural problems when hiring and training employees in a customer service industry?
We had to focus a lot on the cultural aspects. We’re not an American company that goes into another country and says, ‘This is the way we do business.’ But customer service transcends culture. We don’t focus exclusively on the manufacturing aspects of the business. What we leverage is the sense of hospitality.

Every single culture has its own sense of hospitality. In Bali, we will not ask our ladies and gentlemen to say good morning and good afternoon. Instead, they’ll greet in the traditional way by joining hands and bowing. We try to identify what makes that specific country special from a hospitality point of view. And then we adapt to its citizens’ ways of being hospitable.

How can you make the program more effective?
What we’ve done recently is improve the skills of our facilitators. Our biggest fear is that our lineup meetings become repetitive, and that there’s no passion or emotion. Recently, we’ve done a major retraining of all the facilitators to make sure they’re capable of engaging the participants, enlisting their hearts and souls. It’s not just a download of information. It should be a passionate and emotional moment that re-energizes each employee for the day.

We also survey our employees. Recently, management said that from a personal growth area, we as a company were not satisfying their needs. So we identified programs that helped improve their personal growth. We strongly believe that if we don’t satisfy the needs of our workers, they’re not going to satisfy the needs of our customers. We also believe a better human being will be a better professional.