Author: Shari Caudron

We hear a lot these days about “thinking outside the box;” about searching in new places for new ways of solving our companies’ problems. It’s a useful concept. Our organizations aren’t the same as they were 20 years ago, so why should our management practices be?

But when you think of that box, that set of parameters that dictates conventional thinking, what does it look like? Is it your job? Your company? Your industry? To come up with truly innovative solutions, you probably have to search outside the boundaries of all three of these entities. However, there’s one more box you may want to consider peeking out of, and that’s the United States of America. As Michael Marquardt, professor of global human resources development at George Washington University in Washington, D.C., explains: “American companies think they’re the keepers of the best management practices. Consequently, they don’t try to learn as much as they can from other places.”

Whether U.S. business executives are arrogant or simply myopic is open to debate. What’s irrefutable, however, is that there’s a lot North American HR professionals can learn from their counterparts in companies overseas.

Granted, there’s a lot we do superbly in this country as well. “I think we’re considered the best country in the world in the practice of HR development,” says Marquardt. Adds Ron Kirchenbauer, vice president of HR for Ericsson, a Swedish tele-communications firm with a U.S. division in Richardson, Texas: “I think the pay-for-performance movement in this country is among the most progressive anywhere.” And HR consultants agree that management concepts we’ve pioneered, such as reengineering and the learning organization, put us on the cutting edge.

Our skill in these areas entice business people from around the world to visit our companies. In fact, many people attribute the success the Japanese have had since World War II to the fact that they came to the United States on study tours, looked at the best management practices American companies had to offer, and then adapted those practices to their own organizations. “They were under no illusion that the Japanese had all the answers,” Marquardt explains.

Unfortunately, American managers don’t appear quite so eager to learn from their foreign colleagues. “We tend to think U.S. companies are the most dynamic,” says Andy Craggs, international practice leader with The Wyatt Co. in San Francisco. “We’ve got the most research. Everybody has MBAs. We think we’ve got everything figured out. But in fact, things aren’t working very well in the states in a lot of areas, including health care, unemployment, homelessness and worker uncertainty. If something isn’t working with our system, let’s look outside and see what we can learn from others.”

Few international HR managers are naive enough to think that just because an HR practice works well in another country it will work just as well here. You can’t indiscriminately import a management practice into the states any more than you can casually export one—as many U.S.-based multinationals have discovered, albeit the hard way. You need to take a look at differences in cultural expectations, the legislative environment and labor-force economics when considering whether a practice that works in, say, Germany, would also work in the United States.

Furthermore, a management practice with tremendous upside potential probably also has a downside. Many European companies, for example, provide greater benefits and job security to their employees than we do in the states. But the cost of doing business is higher, the government bureaucracy is overwhelming and companies are slower to respond to marketplace opportunities. Simply put, there are two sides to every coin.

Given these caveats, what can we learn from HR practices in companies outside the United States? How are employees treated differently or better than here in the states? How are the HR functions managed? And are there HR programs in other countries that we have yet to consider?

To learn the answers to these questions, Personnel Journal asked international HR consultants, academics and practitioners what they considered to be the best—or at least better—HR practices in other countries. The wide array of responses indicate that American personnel professionals can indeed learn much from other countries.

Look around the world for ways to involve your work force.
So what are some of these better practices? For one, European and Japanese companies do a better job soliciting input on business decisions. “Even though in the United States we claim to be participative, I think we still tend to put all the power in the top executive levels,” says Craggs. “There’s such a focus on business results that we’re forced to make decisions that are tough on employees without looking at all the options. We can learn from companies in Europe, where employee input is sought on nearly every business issue.”

In many countries, such as Germany, worker input actually is mandated by law. Any company there with more than 100 employees has to set up a works council, which is made up of employees elected from various parts of the organization. German employers must gain the consent of the works council before they can appoint or dismiss employees, set working hours, introduce overtime or even change prices in the lunchroom. In addition, councils have the right to be consulted on a wide range of planning issues, such as decisions to open new plants or close existing ones. They also are entitled to information on company performance.

U.S. managers might see this as a real pain in the neck, but there’s little evidence that German managers feel constrained by the works councils. “In the end, you have to establish a good working relationship with the councils, and if you do, you have no problems,” says Thomas Ranft, personnel director of the London, England branch of Deutsche Bank AG.

Although worker input isn’t quite as rigidly mandated in Scandinavian companies, employees there do have a great deal to say about management decisions, particularly those related to compensation, safety and capital expenditures, explains Alex Hainey, president of Drake Beam Morin Canada, Inc., who has served on the boards of two Norwegian companies.

And the participative management style of Japanese companies is well documented. Within Asian manufacturing firms in particular, workers are more attuned to business results than they are here. U.S. firms are picking up on the bottom-up communications style engaged in these firms, but Craggs says, “we’re still a bit behind the times.”

Furthermore, human resources operations tend to be more entrepreneurial in Asian companies (with the exception of Japan) than they are here. The economies in countries such as Hong Kong, Malaysia, Singapore and Thailand are expanding so rapidly that HR managers have to constantly create and innovate just to keep up with their expanding work forces. They create new programs out of necessity. “In terms of compensation and benefits, these countries are assimilating new information and learning new ideas at a much faster pace than I’ve seen in the United States,” says Jacque Vilet, senior international compensation and benefits manager with National Semiconductor in Santa Clara, California. “I predict they may surpass us in terms of innovation in the next 10 years.”

Explains Vilet: “There are companies over there that are doing skill-based pay although they don’t call it that. They don’t know what skill-based pay is. What they’ve done is reconfigure their factories to improve the work flow. This has resulted in a team model where a group of employees handles a particular process from start to finish. As a result, managers are realizing they have to change the way they pay people because now employees are doing multiple tasks and they have to learn all these new skills. The key is that they have thought this through themselves.”

Human resources professionals in other countries also are more willing to informally share information with one another, whereas HR managers in American companies are often reluctant to ask colleagues about their companies’ HR practices, preferring instead to rely on formal market surveys. “We’re more close to the vest,” says Jack Fitzhenry, human resources director for Cupertino, California-based Apple Computer’s Pacific division. Why? Because we like to have lots of data, we’re concerned with confidentiality, and we’re fearful of violating U.S. antitrust laws, he explains.

“My staff members, whether they’re in Canada or Hong Kong, seek information from their colleagues on a regular basis,” Fitzhenry says. For example, Apple was looking to hire a general manager for a plant in Hong Kong. The top candidate wanted a car and housing allowance that matched what he was getting at his current position. Apple’s HR managers thought the allowances he requested were high, but instead of searching for market surveys to validate the amounts, they called the HR manager at the candidate’s existing company and asked about the standard car and housing allowances. Turns out, the candidate was telling the truth. “Just by making a couple of phone calls, we were able to put our minds at ease,” says Fitzhenry. “We couldn’t do that as easily here.”

Continuous learning is an established practice overseas.
According to Marquardt, the concept of continuous learning is much more enthusiastically received in companies in Asia and the Middle East than it is in North America. Why? Because in both regions of the world, teaching is considered the most important thing a person can do, much of which has to do with the cultural legacies left by Confucius and Mohammed. Because teaching and learning are regarded so highly, the role of managers is seen as being one of teaching or facilitating; of being someone who helps the people around him or her learn.

For instance, in many Asian corporations—specifically those in Japan—whenever one’s subordinates are being trained, the manager is there. “This indicates that I think the learning that’s occurring is important,” Marquardt says.

Because of this strong emphasis on learning, mentoring roles in companies such as Toyota are taken very seriously. In fact, for a year or two before retirement, managers make a great effort to pass along their experience and wisdom to new people. “They realize the past has some value that we can learn from,” he adds, “where-as in the United States we tend to look only toward the future.”

In Asian companies, the focus on learning also includes an emphasis on developing international management talent, as opposed to just developing local talent. Management training courses frequently include language training, international diplomacy and etiquette. In other words, it’s assumed managers will be working across borders. This is because companies there view the Asia-Pacific as one business region, explains Paul Morris, international consultant with The Wyatt Co. “Companies in the United States might have a regional manager who covers several states,” he says, “but there, they’re trying to develop managers who are able to do business in all of Southeast Asia or all of Greater China.”

The focus on learning in Scandinavian and Nordic companies begins when employees start new jobs. More specifically, Ericsson’s Ron Kirchenbauer believes these companies do a more thorough job in helping new employees integrate into the company culture. “In the United States,” he says, “we tend to let employees find their own way through the company.” In Scandinavia, however, companies help new employees understand their internal customers, their suppliers and where to go for certain kinds of information. “It’s more than simply passing out a contact list,” Kirchenbauer says. “New employees are taken around, introduced to people and given a thorough understanding of their role as it relates to everyone else’s.”

In many parts of the world, training incorporates a greater respect for and acknowledgement of the employees’ personal lives. Companies in Africa, the Middle East, Asia and Latin America, for example, regard their employees as whole people, who have needs and interests beyond professional and technical ones.

Take an organization like Hitachi. When Hitachi conducts management training courses, participants are given skills in management techniques just as you would expect. But, according to Marquardt, who co-authored the book, The Global Learning Organization, participants might also be taught to create haiku—the unrhymed three-line Japanese poems—to give them a sense of creativity and poetry. They might also review the rules of decorum for Japanese tea ceremonies, in which peaceful, simple living is encouraged. In addition, the courses could include book briefings, in which participants are exposed to a fairly diverse group of books in an effort to expand their knowledge of current literature. The point is that an effort is made to develop the whole person.

In many parts of the world, respect for the employee as an individual includes a high regard for the employee’s family. Latin American companies in particular are very concerned about family members. “When they hire a person, they’re also hiring that person’s family,” Marquardt says. At Carvajal Inversiones, a printing company located in Cali, Colombia, the family is so important that the company is in the process of developing a kindergarten where it plans to enroll employees’ children in an effort to detect talents and teach parents how to help develop those talents. Indirectly, the program is intended to help employees acquire the skills to build stable and solid families.

Sam Bernstein, international consultant with Hewitt Associates, L.L.C., in Lincolnshire, Illinois, confirms that respect for a person’s family life is greater outside the United States. “When a European goes on vacation, he or she isn’t reachable. There’s a clear dividing line between work and family. The same is true of Mexico. The Mexican executive on vacation is spending time with family and doesn’t want to be bothered by the office,” he says. When an American executive goes on vacation, however, everybody in the office usually has access to that person’s phone number. “American companies pay a lot of lip service to the importance of being family-friendly, but it just isn’t as natural to our culture,” Marquardt says.

How to learn from the practices of other countries.
What are HR professionals in the states supposed to make of all this? Primarily, it’s food for thought; a way to think outside of that proverbial box and look at ways to learn from the practices of companies in other regions of the world. When deciding how to integrate innovative or better HR practices into your own company, however, you need to start, well, inside your own company.

Applied Materials, Inc., in Santa Clara, California, for example, formed a series of global task forces that are charged with identifying the best HR practices in the company, regardless of where in the world they originate. There’s a global compensation task force, a global job-grading task force, and global mobility, benefits and training task forces. The goal, according to Carol Kaplan, manager of global compensation and benefits, is to look at which HR practices can be standardized across the 14 countries in which Applied Materials operates, and which practices need to managed on a local or regional level.

In coming up with recommendations, HR managers from each of the firm’s major divisions met for one week during each business quarter in 1994 to brainstorm and share information about successful country-specific practices. By the end of the year, members of the task forces presented their recommendations to company executives.

“By working together as a group, we’re able to come up with programs that meet all our needs,” she says. “In the United States, we’ve made a mistake in thinking that because we’re U.S.-based, what’s good for us is good for everybody around the world. What happens, then, is that we export programs that aren’t culturally sound and that ends up creating animosities toward corporate headquarters. It’s hard to restore those relationships once they’ve been broken. By coming together, we’re learning from each other, and finding better overall ways to do things.”

Apple Computer is also learning to listen to input from its HR professionals located outside U.S. borders, although the process has been slow. According to Fitzhenry, the first step has been for Apple’s American HR managers to be sensitive to their counterparts overseas and allow them to implement the kinds of programs that make sense for their cultures, as opposed to “cramming our programs down their throats.” Has the company begun to import any successful programs? “Not yet, and shame on us for not doing that,” Fitzhenry says. “Right now, we’re at the stage of sharing information about our programs; we haven’t taken the best of what they do and tried to make it work here. But as Asia, in particular, becomes more and more important to our business, we’ve got to wake up and understand that there’s a lot we can learn from the things they do extremely well.”

Of course, the truth of the matter is that HR practices are becoming more standardized, and differences, where they exist, just aren’t as great as they used to be. Look at the analogous trends under way in many parts of the world relative to flexible benefits, teamwork, flatter management structures, the decline of corporate paternalism and the increasing use of contingent workers. HR professionals are well on their way toward creating their own global village, and the village leaders are those who aren’t boxed in by their thinking.

Question: Which employee would you rather manage? A) The marketing manager in the double-breasted suit who sits behind a mahogany desk in an office with hunting prints on the wall? Or, B) The graphic artist in the black jeans and T-shirt who sits at a drawing board lit by a lava lamp? If you answered “B,” chances are you have a few lava lamps of your own hanging around.

Creative workers, after all, are known, and even revered, for being a little, shall we say, unconventional. For example, one writer claims she can’t work certain times of the year because atmospheric vibrations from Russian woodpeckers interfere with her creative process. In a burst of creative zeal, perhaps she becomes one of those woodpeckers. Sure, she’s entertaining to be around, but the same characteristics that make creative people such as her so valuable as employees also can make them a pain in the paintbrush to manage.

Talk to HR managers in companies that employ a large number of creatives, and they’ll tell you these people are emotional, defensive, passionate, egotistical, overly sensitive and mysterious. And although they may be greatly respected for their ingenuity and cleverness, and for their ability to think outside the box, they’re also viewed as iconoclasts who would just as soon flout the corporate structure as learn to work within its boundaries.

Yes, these are stereotypes, but like all stereotypes, they contain a germ of truth. “Creative people are high-maintenance,” says Lori McAdams, director of HR for Lucas Digital Ltd. in San Rafael, California. She should know. Half of her company’s 650 employees are involved in some type of cutting-edge creative endeavor, mostly in creating visual and audio effects for feature films. They removed Lieutenant Dan’s legs in “Forrest Gump,” made Jim Carrey’s tongue slither two feet out of his mouth in “The Mask” and created herds of digital dinosaurs for “Jurassic Park.”

“Creatives live in a different world,” she says. “They’re visionary, independent and extremely bright. When their talent is nourished, they can do amazing things.”

But nurturing creative talent in the business world is different from nurturing talent in an art school, a recording studio or at a writer’s retreat. Why? Because in corporate America, creatives are hired to produce a product. They must contend with the daily realities of budgets, deadlines and client needs. They have to work with many other people to get a job done. And although most creatives are thankful to be hired and paid for their creativity, the very structure that makes that job possible is what they rebel against. The trick, therefore, is for HR professionals to find ways of channeling their talents toward a profitable solution.

“My biggest challenge is assimilating the creative spirit into the corporate environment,” says Paul Barker, creative director of the specialty design division of Hallmark, Inc., based in Kansas City, Missouri. “Most creatives began creating as a form of personal expression,” he says. “Creating products in the business world is different from creating something to be hung on an office wall or in a museum, however. Their creative potential has to be pointed at larger opportunities.”

But can creative potential be directed? What kind of environment do creative employees need in order to thrive? And what about companies such as Lucas Digital and Hallmark in which the output of highly creative people forms the lifeblood of the business? How do they manage the imaginative?

Give creative people tools and resources that allow their work to shine.
“First, realize that the best creatives are at their very soul artists who would be creating whether or not they chose to make a living at it,” says Allison Polly, vice president and creative manager for McCann Erickson, an international advertising agency based in New York City. For this reason, they’re largely self-motivated. The quality of their work matters. And, as Barker says, “Creatives often feel guilty getting paid for doing the kind of work they want.” (How often do you hear an accountant say that?)

But don’t assume that creatives simply wag their tails looking for opportunity. Their enormous intrinsic motivation will flounder if it isn’t supported and encouraged by external factors. What are those external factors? What should managers do to keep creative employees creating?

Because creatives are internally driven, what matters most to them is the quality of the work itself. Whether they’re writing advertising copy, designing theme parks or creating computer games, their rewards come from seeing their precious ideas reach fruition.

In the advertising industry, for example, creatives are hired based on the quality of their “book,” which refers to a portfolio of print ads or a reel of television commercials. “Creative people want to create the best,” says Karen Abbate, vice president and creative director at McCann Erickson. “We don’t feel the need for external motivation. We do it for ourselves.”

A creative director at Glendale, California-based Walt Disney Imagineering-the division that designs Disney theme parks and attractions-adds that his creative staffers feel tremendous rewards just being able to work for “The Mouse.” “There’s a certain magic here that people like to be associated with,” he says. “The quality of Disney work is so superb that creative people love to work here.”

To bring about this satisfaction in creative employees, companies should invest in the kinds of resources necessary for these employees to do their best work. At New York City-based Conde Nast Publications Inc., home of trendy and upscale magazines such as Vogue, Architectural Digest, Vanity Fair, Bon Appetit and Details, the creative employees’ rewards come from being able to spend money on a quality photo shoot, traveling to research a story or having the budget to print a complicated design spread. “Our employees get satisfaction from seeing their work produced in a quality manner,” says Freddy Gamble, HR director. “It’s them on that page.”

For this same reason, managers at Lucas Digital have found that the most effective method of motivating their employees is giving them the latest “toys” to play with. “Our employees constantly are striving for a new look or a new technique to be used in films,” McAdams says. “They’re constantly pushing the envelope.” Not only does the company make sure employees have access to the latest digital technology, but managers make these resources available to employees for use in personal projects. “Making these tools available not only rewards employees, it helps them realize what else they’re capable of achieving,” she says.

At the J. Paul Getty Museum in Los Angeles, some of the most creative employees are mount makers who find ways to secure the exhibits so that they’re able to withstand what the organization calls “seismic events.” They look for creative, unobtrusive ways to affix a vase to a stand, for example, or secure a large sculpture without harming the artwork or obscuring it from view. “Most of the items in our permanent collection already are secured,” says Kristen Kelly, manager of administration. “But we also are starting to display traveling exhibits, and each new and different object will require a new and different way of securing it.”

Because the seismic mitigation work is part of the mount makers’ job descriptions, the museum supplies these workers with materials and space, and allows them a fair amount of time in which to work on new technologies. “However, we have to put limits on it,” Kelly adds, “because other parts of their job are important too.” The amount of time allowed for projects fluctuates and is decided by museum conservators who manage the mount makers.

Despite the limits, the creative workers remain motivated to pursue the technology because, “They’re at the forefront of developing seismic mitigation techniques,” Kelly says. “If they can come up with ways to protect the collections of other museums, they’ll receive tremendous recognition. Being on the cutting-edge like this is all the motivation they need.”

Provide ongoing recognition and appreciation.
Although creatives are self-motivated, this doesn’t mean that they don’t require and respond to external recognition. They pour their heart and soul into their creations-their “babies.” They need to feel special: After all, they are. Not everybody can think like a 15th century artist as do the conservators at the J. Paul Getty Museum. Not everyone can create TV ads that people watch like soap operas, like the “Sharon-and-Tony” series created for Taster’s Choice by McCann Erickson.

Constant reinforcement from managers is essential in getting good work from any employee, but especially from creatives. They can be insecure, and thus need reassurance more often. Moreover, “creatives are ego-driven, especially in our business,” Gamble says. “Our publications employ some of the best fashion and art directors around, and we have to make it clear to them that we know they’re special.”

Ideally, this recognition should come from creative managers who understand the creative process and can appreciate good quality work. When an accountant tells an artist her work is pretty, it may be nice, but the compliment isn’t nearly as meaningful as one coming from an art director who’s able to comment on the artist’s ingenuity and sense of perspective.

Despite the need for recognition, however, HR managers in companies with a large number of creatives agree that formal reward programs aren’t nearly as effective as giving creatives regular pats on the back. Besides, if you develop a recognition program solely for creative employees, it can alienate the administrative types and reinforce an “us-vs.-them” mentality.

Just as important as recognizing creatives’ accomplishments is keeping them stimulated and inspired to continue producing. Creative people get bored easily. For them to continually produce fresh, new ideas, the right sides of their brains need constant arousal. Let them get out and breathe a little.

That’s why Fisher-Price in East Aurora, New York, encourages its toy designers to get out and regularly visit such places as toy stores, day-care centers, trade shows, parks and playgrounds. These workers face the daily challenge of creating toys for 1-, 2- and 3-year-olds. These are grown adults, mind you, who must think like toddlers for a living. How successful do you think you’d be if you had to think like a baby while sitting at your desk in a business suit? Probably not very, even if you wore a bib and drank from a two-handled spillproof cup. Original ideas, after all, don’t always happen because someone sits in a room waiting for them.

For this reason, the company also frequently organizes offsite meetings to give creative employees a necessary change of scenery. “We’ve had brainstorming sessions on the brink of Niagara Falls,” says Tom Mason, senior vice president of research and development-the same job Tom Hanks had in the movie “Big.” “We’ve sat around plastic tables in a Toys ‘R Us store. You see, we want our designers to come up with crazy ideas, and to do that they need constant stimulation.”

Managers at Fisher-Price have discovered that a variety of assignments is another key to success in product design, and rotates its designers among different product categories. One year, a designer may work on kids’ furniture. The next year, he or she may design girls’ toys. The goal? Fresh ideas, new approaches, off-the-wall techniques, products parents will buy and toys kids won’t put down.

This need for continual stimulation becomes obvious when you look at the environment in which creatives work. Given the chance, many will surround themselves with what may be considered rather unconventional office decor. Mark Moore, an art department manager at Lucas Digital who’s worked on such movies as “Star Trek VI” and “Baby’s Day Out,” has in his office what he calls a “wall of inspiration.” On it are old comic strips, photos from Aviation Week and Space Technology, covers of music magazines, and illustrations of skateboards, cars, robots and kitschy 1950’s-style spaceships.

Abbate, who has written advertising campaigns for AT&T, Kodak, Toshiba and Nestle, has the letters of the alphabet stretched across one wall in her office, sculptures of the numbers one to 10 on another and a stop sign painted in green with the word “go” on it on the third wall. Down the hall from her is a creative director who has a lamp with a shade in the shape of Elvis Presley’s head.

So what’s the point? That what’s inspiring to one creative may not be to another, but all of them need to express themselves and to create the kind of environment that stimulates them the most.

In the interest of fairness, however, companies that employ both creatives and non-creatives should allow non-creatives the same opportunity to decorate their offices as they see fit. That’s what Hallmark does. “Employees in the business unit also can do what they want to their offices, but they don’t tend to follow suit-at least not until recently,” Barker says. “As the environment in the creative department gets wilder, I’ve noticed the business people starting to let their hair down a bit more.”

Creatives require flexibility and a minimum amount of structure.
Freedom to express themselves isn’t enough to keep creative workers productive. If you ask any of them what sounds the death knell of creativity, chances are they’ll say “structure”-rules and regulations, endless rounds of approval, strict dress codes, hard-and-fast office hours, rigid assignments and fill-in-the-blank paperwork. Therefore, if you want your creatives to perform to the best of their ability, loosen the corset that binds your corporation.

This doesn’t mean allowing them to create whenever and wherever they please, free from all company rules. You still have a business to run. What it does mean is recognizing that creatives need some flexibility. So don’t impose structure where it isn’t necessary. “Creatives come in and out of their productive periods,” Gamble says, “unlike people in administration, who may have a similar mood, pace and work flow throughout the day.” So if it isn’t necessary for a creative to be at his or her desk from 8 a.m. to 5 p.m., why insist upon it if 10 a.m. to 6 p.m. works just as well?

Of course, structure means different things to different people, and varied assignments require various structural elements. At McCann Erickson, for example, employees work in team environments, so regular working hours there are a must. The creatives have gotten used to it and they don’t object. The kind of structure that has gotten in their way, however, is the need for several layers of management approval. “Creativity is very subjective,” Abbate says, “and with each approval, work gets watered down in an effort to please people. Here, we keep the levels of approval to a minimum so that our ideas stay intact as much as possible.”

What’s most important is being flexible with creatives’ work assignments. Sure, creatives are hired to do a specific job and they must respect the parameters within which they work, such as budgets, deadlines, product guidelines and client requests. A project supervisor or creative manager should be put in charge of communicating and enforcing these parameters. But give creatives the freedom to innovate whenever possible. “Creatives don’t take explicit direction well,” Gamble says. “If you’re too specific in your instructions, they’ll get bored and feel resentful. If you can recognize their intelligence and their ability to figure things out, and give them the room and space to execute an idea, it will pay enormous dividends.”

Hallmark’s Barker agrees. “Our employees are conceptors and idea generators,” he says. “We want passion to show in their work. That’s why we give them guidelines, not directives.” For example, managers may tell a team that it needs to create a birthday card for mothers falling in the $2 price range, and that the copy should be written using a me-to-you style. “That’s all we’ll tell the team,” Barker says, “because we want the members to focus on the content, the depth of expression and the relevance of the solution. They aren’t simply wrists executing an idea.”

Furthermore, as important as it is for creatives to be respectful of deadlines and budgets, don’t put them in charge of devising or enforcing them. Put a numbers person on the design team and let him or her sweat the details. At Lucas Digital, for example, three-person teams work on every visual effects project. These teams usually include a visual effects art director, who actually creates the effect; a supervisor, who determines which method should be used to create the effect; and a producer, who’s in charge of budgets, scheduling and interfacing with the client.

Employ creative people to manage and evaluate creatives.
Just as important as having numbers people in charge of creatives’ budgets and deadlines is having other creative people as their supervisors. “I think it’s essential that creatives manage other creatives,” Barker says. “They’ve lived the experience and know what it takes. Hallmark would never put an individual in charge of the financial department who didn’t understand finance. Without some expertise in the creative process, how can you expect someone to effectively manage those employees?”

Of course, because of their aversion to structure, routine, and in some cases, human interaction, not all creative people will want to be managers. Generally speaking, those who do will make it known and position themselves to pursue such opportunities. “Here at Fisher-Price, the process tends to be one of natural selection,” Mason says. “Those with a desire to get involved in management tend to think about bigger business and people issues, and they work to get noticed.”

The company doesn’t penalize creatives who want to stay creating, however. Instead, it offers a dual career path. One path leads toward management; the other toward the ability to take on larger creative projects. Creative employees may jump to the management path at any stage in their careers, Barker says.

And speaking of management, HR professionals agree that one of the toughest aspects of managing creative employees is evaluating them. “They aren’t doing anything quantifiable,” says Kelly of the Getty Museum. “A mount maker can appear to be staring into space for a whole day and then the next morning come in and execute a brilliant idea.”

Barker agrees that evaluating creatives is challenging. “It’s extremely difficult to measure creativity and innovation,” he says. “It’s ethereal. There are lots of vapors. But when creative work is wonderful, you know it intuitively.”

Because of the inherent difficulty in judging creative work, there’s no one right way to do so. Sure, there are some tangibles, such as meeting deadlines and staying within budgets, but evaluating creative output can be pretty arbitrary. That’s why at Lucas Digital creative employees’ supervisors evaluate them, in part, based on their eagerness to take on new work and to pursue ongoing learning of new technologies and techniques. “We know if the motivation is there, their work will be good,” Moore says.

Seeking to eliminate the arbitrary nature of creative evaluation, Hallmark takes a more thorough approach, evaluating employees based on four criteria:

1. How creative managers and senior creative people view the quality of a creative’s portfolio.
2. How well a creative’s work sold.
3. How well a creative’s work performed in consumer preference tests-in other words, how often his or her products were chosen over similar products manufactured by Hallmark’s competitors.
4. How fellow team members rate the creative’s ability to resolve conflict, be a team player, solve problems, and so on.

Which categories are most important? “Because creativity is so subjective, 60% of the evaluation is based on the subjective feedback of creative managers and consumers,” Barker says. Thirty percent of the evaluation score is based on team feedback, and only 10% comes from sales.

In addition to evaluating creative employees’ work, managers must help them. The perfect, most wonderful, “why-didn’t-I-think-of-this-sooner” solution to a creative problem rarely appears spontane-ously. More often, an idea is born and then nurtured into adulthood through a process that involves a lot of rejection and revision. “Rarely does a designer’s original idea make it to the big screen intact,” Moore says, referring to his world of visual effects. Simply put, there’s a lot more rejection than acceptance in the life of most creatives.

“Here at Fisher-Price, our product plan calls for us to develop 100 new and innovative products a year,” Mason says. “To get those 100 products, we start off with approximately 5,000 ideas. This means we reject at least 4,900 ideas a year. How? Systematically, and hopefully, without hurting our employees’ feelings. Still, it can be a pretty negative environment.”

But what does systematic rejection look like? “If we’re completely honest and forthright and timely in response to an idea that won’t work, employees accept the rejection easier,” Mason says. “We don’t wait to reject an idea and we don’t B.S. employees about the reason. It’s still a difficult pill to swallow, but employees get used to rejection very quickly. Here, in their first week on the job, their work will be rejected several times.”

Indeed, creatives who’ve played the corporate game know they can’t get married to their ideas. There are too many people to please and too many constraints on creativity from the bottom line. But don’t count on them to be stoic in the face of such rejection. Kid gloves are in order.

Keep in mind, there’s no one-size-fits-all creative.
The linear thinkers among us may think all creative brains work the same way. Hardly. The interests, motivations and passions of creatives vary greatly and are reflected in the kind of work they choose to pursue. Even creatives that do basically the same thing can demonstrate great variety and skill level.

“Creatives often are misinterpreted,” Moore says. “They don’t just sit at a desk and spit out ideas. They are multi-dimensional.” When assigning projects to them, consider their backgrounds, interests and enthusiasm for a project. The designers for “Jurassic Park,” for example, weren’t just visual-effects people. They had to know about creature design, anatomy and paleontology. The people who worked on “Star Trek” had to know about space and how to “create energy effects,” he says.

Because of the variety of projects, Lucas specifically looks for people with varied backgrounds and expertise in certain subjects. Recently, for example, the company hired an artist because of her background in zoology and her interest in animals. It brought her on as a contract employee to create highly-stylized mosquitos, zebras, rhinos and other animals for a film on which the company was working. It became obvious pretty quickly that her talent had wider applications, so the company hired her into a permanent position. A recent project had her creating facial expressions for dragons to be used in the upcoming feature film “Dragonheart.”

Personal interest in a project creates the kind of passion that can’t be faked. People gravitate toward work that interests them. Employees who work at Vogue, for example, “know that vichyssoise is served cold,” Gamble says, where-as staffers at Details, a publication geared toward Generation Xers, could care less. And the marketing executive with the hunting prints would wonder why either topic mattered.

And therein lies the final management challenge: getting creative and non-creative types to work together effectively. “Non-creatives need to understand that creatives aren’t just staring into space all the time,” says Kelly, “and creatives need to realize that the ‘suits’ aren’t just making rules and pushing paper. Each type of employee needs to understand what the other is doing and why.”

How do companies do this? Communication, training and teamwork. Hallmark sends its creative managers to a business leadership course, for example, in which they complete projects that require them to make decisions about distribution, advertising, technology and inventory control. Through this process, the creatives become aware of all the factors-in addition to the creative design-that affect sales.

At the same time, business managers can attend a course in which they must create a product line for a hypothetical group. In one recent course, managers were asked to develop a line of cards for the Lapland culture in Northern Finland. “They realized how much information they need to complete a project,” Barker says, “which increases their sensitivity toward the creative employees. Now they know when creatives are doing such things as looking through magazines, they’re really searching for ideas and gathering information.”

To foster even greater understanding between creatives and noncreatives, Hallmark puts them together in product teams. The company also measures employees based on many of the same performance objectives, including sales figures, consumer product performance and their ability to meet deadlines.

In thinking about non-creative employees, Abbate adds: “I actually think we’re more similar than we’re different. Every job requires creativity regardless of whether the word ‘creative’ is posted on the office door.” Furthermore, everyone can be sensitive about their work, everyone wants to be appreciated, everyone wants the best tools and resources, and everybody wants their work to shine.

“We’re just not that different from normal people,” agrees Mason. Maybe not. But then how do you account for lava lamps and Russian woodpeckers?

Managers in the United States are great at jumping on bandwagons without stopping to evaluate whether the direction the wagon is traveling is the right one for their particular company. Ask your HR colleagues about highly publicized management initiatives-diversity training, total quality management and reengineering, for example-and chances are they’re involved in such efforts or are thinking about becoming involved in them.

The reason business people tend to follow each other’s lead is because, when done right, strategic initiatives do save money and create more efficient organizations. The press reports on successful programs, people take note, and in an effort to improve their own organizations, they follow suit.

And so it goes with contingent staffing. You read surveys indicating that 44% of CEOs say that they rely more on contingent workers now than they did five years ago, and you don’t want to be left out. You hear how companies such as McDonnell Douglas and Georgia-Pacific use contingent workers as an integral part of their staffing strategies and assume that what’s cost effective for them might also be profitable for your company.

But is the use of contingent workers as cost effective as everyone claims it to be? How much money do temporary workers really save a company? And how do companies that rely on contingent staffers substantiate their savings?

In seeking to answer these questions, Personnel Journal searched for national studies comparing the costs and returns of contingent workers with the costs and returns of permanent employees. We found none. There’s no way to calculate an average cost benefit for contingent workers, we discovered, because of great differences in the type of work they do, the length of their assignments, the nature of the employing companies and so on. The cost effectiveness of contingents, therefore, not only varies from company to company, it’s likely to vary from department to department.

Unfortunately, we also couldn’t find a single company that was able to document the savings provided by their contingent work force. Instead, most managers who rely on complementary workers told us something like, “It’s apparent intuitively that temporary employees who are brought in to handle unpredictable bulges in work are cheaper than maintaining permanent employees on standby,” as did David A. Riggs, first vice president and director of purchasing for Mellon Bank located in Pittsburgh.

He’s probably right, but HR professionals today must account for their actions and demonstrate the bottom-line benefits of HR strategies. How do you prove contingent staffers are saving your company money?

Calculating the cost effectiveness of contingents.
“You must evaluate the ‘true productivity’ of contingent workers,” says Myrna Hellerman, senior consultant with Chicago-based Sibson & Co. This is the output of goods and services produced per hour by contingents, divided by the input, which is the cost of employment per hours worked. Cost effectiveness depends not only on wages and benefits, you see, but also on productivity. High-wage labor might be cost effective if it’s also high output, whereas low-wage labor may not be if the output also is low.

Although the equation seems pretty straightforward, in the real world there are additional factors, such as training costs and the length of time on a job, that must be considered to calculate the true productivity of contingents. Stanley Nollen, professor of management at Georgetown University and author of the study Exploding the Myth: Is Contingent Labor Cost Effective? published in 1993 by New Ways to Work, suggests HR professionals looking to calculate the return of contingent workers do the following:

1. Compare the agency’s charge or the wages paid to contingent workers with the wages and benefits paid to regular employees doing the same kind of work.
2. Compare productivity between the two groups. If you don’t have any way to measure productivity, Nollen suggests calculating three scenarios in which you assume the productivity of contingents is:
• 10% better than the productivity of permanent employees;
• equal to the productivity of permanent employees; and
• 10% less than the productivity of permanent employees.
3. Calculate the unit labor cost per employee, which is the cost of employment adjusted for productivity. If the wage and benefit cost of contingent workers is 12% less than regular employees, for example, and productivity is 7% less, then the unit labor cost of contingents is still 5% less than permanent workers.
4. Factor the cost of training contingent workers, such as classroom rent, wages and lost output.
5. “Now comes the really hard part,” Nollen says. “You have to look at the payback of training after the training is over.” That’s done by determining the value of output produced by the contingent worker and comparing that to the money you’re paying for that person’s wages and benefits. After training, the output that workers produce for the company should exceed the cost of their wages and benefits, and that gap is how you earn back your training costs.
6. The last thing you need to consider is how long the contingent worker stays on the job. “The problem is that if you lay out training costs up front, you have to wait to get the repayment over time,” Nollen explains.

After all these factors have been considered, Nollen says that you face three possible outcomes. You’ve paid back all the training costs through increased productivity; you don’t get all the training costs paid back, but you’re still ahead because the lower wages and benefits you pay contingent workers provides savings large enough to cover the unrecovered training costs; or you don’t get the training costs paid back, and furthermore, so much of the costs remain that they consume the savings you’ve generated by paying contingents lower wages and benefits.

Putting the formula to the test.
Nollen used this formula when he evaluated the cost effectiveness of contingent workers in three companies, including a large financial institution that used temporary workers to cope with fluctuations in work load. These workers were hired primarily to do 10-key data-entry work in the operations division, work that was also done by regular full-time employees.

In this company, temporaries received a wage rate approximately 12% lower than regular employees. The temps got no benefits except those provided by their agency. Because the fee paid to the agency was the same as the benefit cost for regular employees overall, the company paid less for temporaries.

Productivity records showed that the temporaries produced 7% less output per hour than regular employees after accounting for differences between the two groups in shifts and number of hours worked. Because the productivity shortfall was not as big as the wage savings, the unit cost of contingent labor was lower by 5%.

Training costs also were low at the company-only approximately $260 per new contingent worker-because the agency supplied people with some prior data-entry experience. This meant it only took four to six months for training costs to be recovered. Because the average temporary stayed on the job seven months, training was a good investment.

In conclusion, because unit labor costs were lower and training wasn’t expensive, contingent labor was cost effective for data-entry jobs at this company. In the two other companies, however, contingent workers weren’t cost effective because training costs were high and the workers’ stays on the average were too brief to make up the training costs.

How to boost the returns.
If, after completing your own evaluation, you determine contingent workers aren’t cost effective, instead of scrapping them altogether, Hellerman suggests taking a hard look at how you use them. “Obviously, for contingent workers to be cost effective, we need ways to maximize output and minimize input,” she says.

A mail-order processing firm with which Hellerman worked, for example, would frequently temp-up to handle seasonal peaks in the business. On the surface, the $6-per-hour temps appeared less expensive than the $9-per-hour employees. But the temps could only process 500 pieces of mail per hour, whereas regular employees could process 1,500 pieces. The actual unit labor cost, therefore, was twice as high for temporary workers. “The whole argument for using temps went out the window,” explains Hellerman.

Still, it didn’t make sense for the company to get rid of temps altogether because seasonal fluctuations were a business reality, and maintaining a full-time staff of permanent employees during low periods would be cost-prohibitive.

What the company did was analyze the work flow to determine the actual amount of steady work. Managers discovered there was more regular work than previously estimated, and that instead of relying on temporary workers 68% of the time as they had been, they could reduce their usage of temporaries to 30%, saving money and boosting productivity in the process.

Another way to increase the cost effectiveness of contingents is to carefully analyze the arrangements you have with suppliers. “The savings aren’t to be found in reducing the number of heads that come in the door, it’s in the way the relationship is structured between the company and the staffing agency,” explains Mitchell Fromstein, president and CEO of Milwaukee-based Manpower Inc.

Nashville, Tennessee-based Northern Tele-com, for example, recently signed an agreement giving Manpower total responsibility for meeting its temporary staffing needs in the United States and Canada. By going to a single supplier, the company not only has been able to negotiate volume discounts, but has significantly reduced administration and paperwork. “We used to work with 60 to 70 suppliers,” explains Elaine Windsor, professional programs manager for the company’s National Resourcing Center in Ottawa. “Now, one company will handle and bill us for all our needs. In terms of invoice processing alone, this represents a significant savings.”

Jeffrey Schmidt, managing principal with Towers Perrin in Chicago, agrees that preferred-supplier arrangements are a smart business move for employers looking to get a handle on their costs for temporary workers. He adds that companies also should have a clear view of the skills and competencies needed by contingent employees. “If you don’t, you’re almost guaranteed a high-error and low-productivity rate.”

So, in companies that do this kind of analysis and then negotiate with their suppliers, are contingent workers cost effective? “I’d say they are,” Schmidt explains, “but not enough companies are evaluating their use of contingents from a cost benefit standpoint.” If you’re using large numbers of contingent workers without knowing the return they provide, you risk weakening the organization’s ability to withstand unpredictable business cycles, rather than strengthening it

Several years ago, Rohm & Haas Texas Inc., a Houston-based chemical company, jumped on the total quality bandwagon to boost its competitive position. Work processes were redesigned. Mission statements were drafted. And to encourage employee input and participation, workers were reorganized into mandatory teams designed around natural work processes.

For example, the company formed a team of employees to monitor sulfuric-acid manufacturing. In the past, an employee may have been responsible for only three kettles out of a process that involved 17 different manufacturing kettles. As is typical in many factory environments, this employee rarely was concerned with what happened before the chemical substance reached his or her kettles, nor did the worker care much about what happened to it afterward. He or she fell prey to the classic “It’s-not-my-job” syndrome.

By cross-training employees to understand the entire sulfuric-acid manufacturing process, management believed employees would care more about the end result; that they would search for ways to eliminate mistakes and come up with ideas for process improvements. Like other companies involved in teaming efforts, Rohm & Haas believed a newer, better company could be grown from a cross-pollination of employee ideas, values and perspectives.

Unfortunately, as managers discovered, the diversity that makes teams so successful also can stand in the way of their success. Why? Because it just isn’t that easy for people to overcome their differences, whatever they may be, and work together effectively.

Rohm & Haas is typical of many Houston companies in that the work force is diverse-about 40% of employees are considered legal minorities. These individuals often feel overlooked by the white male power structure, explains Rolando De La Pena, the company’s internal consultant for Total Quality Leadership training until September 1993. (De La Pena is now a senior HR representative at Amoco Production Co. in Tulsa, Oklahoma.) “Texas is somewhat of a racially delineated society,” he says. “The good-ole-boy system is in place.” Because of this, differences in others aren’t readily acknowledged or accepted; in fact, differences make many employees uncomfortable.

For this reason, instead of blithely accepting their new team assignments, Rohm & Haas’ employees started migrating to teams composed of members with whom they felt they had more in common. An African-American employee, for instance, would apply for an open position on a team with more African-American members. An employee with many years of service would search for a team with other long-service employees.

The migration was slow and subtle because employees had to wait until team positions became available through the open-bidding process. But within three years, the carefully designed mix of heterogeneous teams had been replaced by teams of like-minded members. The diversity of experience and perspective the company was hoping to achieve was lost as the teams became increasingly all black or all white.

Managers realized the clever and deliberate reorganization of teams was a sign of deeper diversity problems; problems that, if left unchecked, would affect the entire quality effort. To remedy the situation, Rohm & Haas introduced diversity-awareness training to sensitize employees to differences in others. “The focus of training was to move employees from fearing differences in others to valuing them,” De La Pena explains. “We wanted employees to feel OK not only having different viewpoints, but challenging them in others.”

Working with an external diversity trainer, the company launched five-hour awareness seminars funded by the HR department. Though it was predominantly racial and ethnic tension that revealed the need for such training, the initiative actually focused on tension that any kind of difference creates, including age, gender, religion-even differences in communication styles. Training also emphasized that while homogeneous team members will come up with quick, easy solutions because members think alike, innovative solutions that are acceptable to the entire work force can only come from teams in which members view things differently. Hence, for the good of the company and individual employees, it would behoove workers to learn how to interact with one another more effectively. “We made clear there was not only a social and moral reason to accept diversity, but a business reason as well,” De La Pena says.

Rohm & Haas couldn’t require unionized factory employees to attend the courses, but by gaining the union’s support and encouragement, 95% of employees participated. Was the training successful? Did employees begin to see the reasons for understanding differences instead of avoiding them? “We polled every employee right after the workshop,” he says, “and then we polled them three to six weeks later. The data were consistent that employees viewed the initiative as positive. They began to realize two people can view the same situation and come to different conclusions, and that neither conclusion is wrong.”

Today, because there’s less resistance to new ideas, and employees are more willing to work across their differences, the company’s quality initiative is back on track. The awareness seminars helped people realize that some of their stereotypes were wrong, De La Pena adds, and that process improvements can only be realized if employees are comfortable challenging each other.

With all the talk about Workforce 2000 and our melting-pot society, you’d think companies would realize diversity awareness is a crucial preliminary step to team building, but-unlike Rohm & Haas-not all of them do. This is because for years in corporate America, an employee’s primary workplace goal was to assimilate and conform. Differences existed, of course, but they were either superficially ignored-in the case of gender and race, for example-or they were segregated neatly into separate functions. There were the marketing people, for example, those in accounting and the suits upstairs. To a large extent, these groups thought, talked and acted differently from one another, which was OK, because they rarely were given the opportunity to interact.

Today, however, companies realize the benefits of bringing employees from diverse backgrounds, perspectives and functions together. But it takes work. It isn’t enough to put people together in a team and assume that positive synergy will be the natural result.

“I don’t want you to come in here with any Pollyanna thoughts about the benefits of diversity,” explains R. Roosevelt Thomas, president of the American Institute for Managing Diversity at Atlanta-based Morehouse College. “I want you to understand the realities of diversity-the opportunity for gain and the opportunity for loss. Sure, teams can be very effective. But teams also can be very dysfunctional.”

The diversity issues that teams confront are myriad, and they begin with the obvious physical differences related to race, ethnic background and gender. According to Elsie Cross, a diversity consultant with Elsie Y. Cross Associates, Inc. in Philadelphia, it takes a lot of skill to listen to people in the team environment who are obviously different from oneself.

“The work of the team is to seek inclusion of everybody’s ideas and everybody’s point of view,” she explains. “The wider the point of view or the wider the diversity, the more effective the team can be. But for this to happen, people have to learn to see each other as equals, and that’s not easy.” Men talk over women, she says. Whites expect that people of color communicate the same way they do. People with accents are assumed to be less qualified; older employees, less creative; workers with disabilities, less capable.

But diversity issues go way beyond obvious physical differences to include differences in communication styles, problem solving, professional experience, functional expertise, management level, training and education, and work ethics. When team members don’t recognize these differences for what they are, unfair stereotypical judgments occur.

“I may not understand how someone thinks or why it takes them so long to make a decision,” says Martha Stoodley, an organizational consultant in San Jose, California. “Therefore, I may say ‘Chinese people always act like this,’ or ‘Women act like that.'” Given this ignorance, the entire team runs the risk of degenerating into a group of typecasting, name-calling, finger-pointing, untrusting employees.

For all these reasons, “I think you can make a serious case about taking a team that’s coming together for the first time through an introduction to diversity,” Thomas says. “This way, you’re legitimizing the fact that people are going to see the world differently and that’s OK. Unless you’re prepared to accept, understand and deal with diversity, it can lead to some very serious disruptions on the team.”

At CoreStates Financial Corp., for example, a bank holding company in Philadelphia, a diversity-awareness initiative was launched a full year before the company embarked on a quality effort that eventually will reorganize employees into self-managed teams. The awareness initiative is similar to the one undertaken by Rohm & Haas, but as a three-day course, it’s much more in-depth. Participants are taught not only to be aware of diversity issues, but they’re given the skills to deal effectively with differences. “We did diversity first be-cause to pursue quality effectively, we have to learn to value each other’s differences,” explains Tim O’Malley, assistant director of diversity.

To date, more than 1,200 of the company’s 14,000 employees have attended three-day diversity-awareness sessions, and a group of 12 employees has completed an eight-month training program to prepare them to serve as internal diversity consultants. These consultants will work with the company’s primary business units to make sure diversity objectives are considered at every stage of the company’s reorganization. “We’re still not at the team stage,” O’Malley says. “But the diversity foundation is being laid so that when we begin to pursue quality, we’ll be able to work across our differences.”

As important as diversity awareness is to teaming, however, it may be important for some companies to take a step back even further and assess the organizational culture to learn what specific diversity issues exist.

A 1,000-employee operating unit within IBM’s marketing and services division did this as a preliminary step in the company’s move to cross-functional teams. “You can’t just create an environment that allows everyone to achieve without doing some work to understand what your environment is today,” explains Jan Dillon, culture-change manager.

IBM’s cultural assessment revealed two things. One, that the IBM culture supported individualism. “We tended to recruit, motivate and reward independent, individual performers,” explains Dillon. Two, that employees were expected to conform and adapt to the company’s unwritten code of conduct; in other words, to be an IBMer. “To make sure this happened, we looked for employees who had a certain style, experience and background,” she says. Obviously-and much to the chagrin of management-both of these cultural expectations would prevent effective teaming unless they were ad-dressed and changed through a targeted diversity initiative. Today, all of the company’s quality efforts are structured around collaborative group efforts.

At IBM, as in many quality-driven companies, the teaming process is almost indistinguishable from the company’s diversity efforts. “Our definition of managing diversity also could be the definition of our desired culture,” Dillon says. “And inherent in that is the fact that we need to come together very effectively as teams to satisfy client requirements.”

What this means is that diversity awareness is embedded in all of the company’s cultural change efforts-so much so, that you might not even hear the word diversity mentioned. This is because the company defines diversity management as a way to create an environment that allows everyone to excel so that IBM can achieve its corporate objectives. Diversity, in other words, is not a standalone effort.

For example, the company is currently sponsoring a leadership-development program in which existing cross-functional teams attend a three-day training session that helps them focus on real-life business issues. Team members, who attend the course together, learn about culture and organizational change and acquire teaming and leadership skills. By working on concrete business problems, team members are forced to focus and work together on potential solutions.

Through these workshops, IBM has found that having a clear objective goes a long way toward overcoming the potentially negative aspects of diversity and capitalizing on the benefits of diverse viewpoints. In fact, says Stoodley, this kind of focus is what makes “teams the ultimate diversity program.” When team members have a clear purpose, it’s easier for them to stay on track and not let petty differences get in the way.

Focus is the primary reason teams have been so successful at overcoming diversity barriers at Ortho Biotech, Inc. in Raritan, New Jersey. Here, cross-functional teams have been in place since the company was formed in 1990 and today, virtually all of the company’s 500 employees work in teams in one way or another. But even though teams have been part of the corporate structure since the beginning, it doesn’t mean there weren’t potential diversity issues to contend with. How did the company avoid them?

First, it drafted a mission statement designed to integrate business and diversity goals. “We knew if we didn’t build into the company vision a core value of respect for diversity, then our team endeavors wouldn’t stand a chance,” explains Andrea Zintz, vice president of HR. To gain buy-in, every employee in the new company participated in the development of the one-page mission statement, which includes a section that reads: “We recognize we can only attain (our) vision by maximizing the contributions of every member of our diverse work force and by continuing to develop an organization that values employees of all races, genders, levels, cultures and lifestyles.”

The second activity undertaken to provide focus for employees was the development of a list of norms and behaviors that were expected of employees in support of the diversity goal. For example, one of the diversity norms reads: “We value the input of employees of all races, genders and levels.” A behavior in support of this norm is: “We listen fully to a different point of view before making a judgment and strive for a win-win situation.” These norms and behaviors are posted in every conference and team meeting room to constantly reinforce their importance. So that employees have the skills to put these values into play, Ortho Biotech also sponsors a mandatory three-day managing-diversity workshop for all new employees.

Zintz firmly believes that the company’s inclusive environment and the effectiveness of teams is the result of the shared vision, norms and behaviors. “Everyone points to the same set of values to guide what they’re doing,” she says. “These guidelines fuel everything we do.”

Colgate-Palmolive Co. is another organization that’s learned the importance of having clear business objectives in handling diversity issues. Three years ago, as the company’s Kansas City, Kansas-based plant was reorganizing into teams, managers realized there were some problems related to racial and gender bias. If ignored, these biases could hurt the new teams. Working with outside diversity consultants, Colgate managers recognized the importance of mission statements.

According to Ronald Grover, who was the company’s first-line supervisor for training and development during the reorganization, each team had a mission statement that defined not only what the team was going to do, but also how members would treat each other. “Basically, each team had a statement to the effect that they would not do anything ‘at the expense of others.’ “

Each new team at Colgate also conducts an exercise in which members list their expectations for each other—i.e. respect for each other’s ideas, thoughts and diversity. “Through this process, there’s a lot of discussion about differences,” Grover says, and this helps members understand the various differences they bring to the table. “If you don’t sit down and talk about your expectations with team members, not just behaviorally, but also in terms of job performance, that’s when labels and generalizations emerge,” he adds.

Taking clues from the companies we talked to, organizations wishing to avoid the strife that differences create should:

• Assess organizational culture for hidden diversity issues
• Embark on diversity-awareness programs before making the move to teams
• Clearly define the company’s goals as well as the goals for each team.

What other activities can help people look beyond their differences and work together effectively? Linda Moran, executive consultant with San Jose, California-based Zenger-MillerAchieve suggests these additional activities:

1. Establish ground rules for the team-similar to mission statements, but more specific. For example, a ground rule might be that if someone on the team has an issue with another member, that person must confront his or her colleague directly.
2. There should be a forced rotation of team responsibilities. For instance, the task of attendance taking might rotate at each meeting. Or, on production teams, each member might be required at some point to complete a technical task, such as welding. “This helps get people outside their own biases,” Moran says. “Instead of assuming that a person can’t do something, you have a forced rotation of the task so the person has a chance to demonstrate his or her competencies.” In some situations, teams can benefit from rotating the leadership position among members.

Of course, even with all these precautions, the opportunity exists for issues of diversity to impede a team’s progress. And sometimes, the only way to avoid or minimize that is by giving the team members time to adjust to one another. Like any solid relationship, team relationships are built on mutual trust and respect, both of which take time to develop.

As Zintz explains, “Even though employees have the skills to work across differences, it doesn’t mean they’re going to be totally trusting or comfortable with those differences. The team must have time to get used to itself.”

In today’s team-based organizations, effective human resources departments are those that know when to take charge and when to let go, when to step in and when to bow out. It isn’t an easy dance to learn, particularly when HR is used to running its own show. But for team-based management to be successful, teams have to be allowed to control their destiny to the greatest extent possible. This includes giving them the authority to make staffing decisions previously handled solely by the HR department.

This doesn’t mean that HR is absolved of all responsibility related to recruitment and hiring. What it does mean, however, is that the role of HR has to change considerably.

Take C & S Wholesale Grocers Inc. in Brattleboro, Vermont, a company that has 1,600 employees, more than $1.3 billion in sales and a corner on New England’s grocery supply market. Here, the warehouse crew has worked in self-directed teams since 1989, an organizational move that’s credited with significantly boosting employee morale and with it, the company’s profit margin.

At C & S, team members are involved in all hiring decisions. HR acts only from an external recruiting standpoint. When new employees are needed, HR advertises the open positions, screens candidates, then hires and trains the new employees. Then, the HR department places these new employees on a “rookie team” and pays them a base wage. Existing teams can select members from this team of new workers.

If, instead, teams want to recruit members from other teams, they go ahead. If they want to get rid of team members who aren’t pulling their own weight, they’re empowered to do so. If they want to reassign job responsibilities, they don’t have to ask permission. Once new employees have been trained and placed on the rookie team, HR is out of the picture entirely. Why? As Mitch Davis, vice president of the company’s people affairs department, explains, “HR doesn’t know how the work gets done. Teams members do.”

Human resources professionals in companies that are just making the move to self-directed work teams can learn a lot about team staffing from organizations like C & S. For instance, HR professionals need to be involved in the recruitment and hiring process, but they also need to know when to back off and let team members take responsibility. Let’s face it: The teams ultimately have more at stake in the selection of a new employee than the HR department does. “It’s hard for HR to get out of the way and let team members make staffing decisions,” says Edward Marshall, president of the The Marshall Group in Chapel Hill, North Carolina. “The biggest challenge HR has is becoming partners with the line organization.” HR staffers must learn to act as internal consultants who offer expertise in the hiring process, but who don’t necessarily have authority over every hiring decision.

When staffing a team, the key is balance.
So what then, does the team-staffing process look like? How does staffing for teams differ from staffing for individual jobs? At the beginning of a team venture, the staffing procedure varies little from that found in traditional, non-team-based organizations. At this stage, HR needs to manage the process because there aren’t team members with whom to consult about staffing decisions. The main difference in staffing for teams is that candidates have to be screened carefully for their ability to work well with other team members (see “Selecting Good Team Members Requires Careful Job Analysis”). “For us, staffing for teams isn’t that different from staffing for other positions,” says Susan Howard, senior on-the-job training instructor with First Trust Corp. in Denver. “For team positions, however, we pay a lot more attention to candidates’ interpersonal skills.”

At Delta Dental Plan in Medford, Massachusetts, a self-directed team provides services for an insurance contract the company acquired with Massachusetts Public Employees last year. Because this contract, which involves providing dental insurance for 31,000 employees, is Delta Dental’s largest business account, it was important that the team was staffed with qualified, motivated individuals.

From January to July 1993, the HR department—in conjunction with the director of operations—worked to recruit employees for the new 12-member service team. In selecting team members, the company wanted a group of people whose strengths complemented each other. As Tom Raffio, senior vice president, explains, the operative word in the selection process was “balance.” This was accomplished in several ways.

First, the company used the Myers-Briggs indicator to reveal the candidates’ personality types. “We were looking for a combination of introverts and extroverts, people who reflect on things and people who close on things, and people who could process claims efficiently on a daily basis, as well as those who could keep in mind the long-term vision of the company,” Raffio explains.

Next, because not all customers of the new account were English speaking—some spoke only Spanish, some French Creole—the company wanted to balance the team with some bilingual employees.

Finally, Delta Dental believed it important to have employees on board who understood the business and the company’s culture. But because it was a new account, the company also wanted employees who brought fresh insight and perspective. For this reason, employees were recruited from both inside and outside the company.

HR managers took information about the final candidates and charted it on a hiring matrix to make sure that among them, potential team members had all the attributes identified as necessary for a successful team. The candidates’ interpersonal skills then were assessed through interviews with HR representatives and other employees and managers.

Once the team members were hired, the HR department continued its hands-on involvement by providing extensive training in such areas as corporate-culture issues, team dynamics, product knowledge and statistics.

The service team has been up and running for more than nine months, and HR has been out of the picture except for a couple of interventions related to team members’ absences or tardiness. The longer the team works together, the less likely it is that HR will get involved. What will happen when turnover occurs and a new member is needed? HR will post the job and handle initial interviewing, Raffio says, but it will be up to the team members to select the final candidate.

If HR manages recruitment, team members must be involved.
Jeanne Wilson, project manager for Development Dimensions International in Pittsburgh, believes that no matter how long a team has been working together, it remains HR’s job to advertise team positions and to prescreen candidates. “Recruiting remains HR’s responsibility, not the team’s responsibility,” she says. However, interviews should be done in partnership with existing team members or, in organizations that are new to teams, in partnership with line management.

At Libbey-Owens Ford, a glass manufacturer in Toledo, Ohio, new team members are recruited by HR using a selection process in which candidates are:

• Brought in for an orientation to the company
• Tested to reveal such attributes as motivation and aptitude
• Assessed on their ability to spot defects in glass.

It isn’t until these steps have been completed and the list of candidates is narrowed down that team members get involved. At this point, they, along with representatives from HR and production, conduct small-group discussions with candidates to assess such skills as communication, cooperation and problem solving. With the list of candidates narrowed even further, interviews are conducted by team members and HR staffers. “HR manages the recruitment process,” explains Tracy Moser, HR specialist at Libbey-Owens Ford, “but production managers and team members are involved in the assessments and interviews.” Why? “We want their buy-in on the candidate, and also they often look for different characteristics than we do.”

When hiring new team members from outside the company, Libbey-Owens Ford uses a matching system in which candidates learn about each of the different teams and then indicate which team they’d like to work with by placing a marker on a job-preference poster. Then, team representatives make job offers after reviewing each candidate’s background and job preference.”We make 98% of the people happy using the matching system,” Moser explains. New employees assimilate to the team much more quickly, she adds, when they’re chosen to work on teams that interest them the most.

Wilson from DDI believes the eventual goal of team staffing is to have team members not only interview and hire new employees, but also be able to terminate low producers. How long should team members work together before they successfully can assume this accountability? “Not as long as you might think,” she says. “When I first started working with self-directed teams, I thought it would take at least a year before team members could take on the responsibility for staffing. Now I’m finding they can handle this in just six to nine months.”

At C & S Grocers, teams with openings look to other teams for potential candidates. Here, because employees are paid using a piecework compensation system, teams are competitive. Employees are compensated for every case order filled, and some top-producing teams can handle about 9,000 cases a day, which equates to approximately $20 an hour for employees.

Highly productive and thus highly compensated teams in which one member isn’t carrying his or her weight are given the authority to pass that person off to another less-productive team, picking up a more-productive employee along the way. For example, say there are eight members on a top-producing team, each earning about $20 per hour. The team tracks the number of cases handled by each member and discovers that one person is producing at a rate of only $16 per hour, which eventually could bring down wages for other members.

Because team members work together so closely, they usually will strive to help that person bring up his or her productivity. If that doesn’t work, they’ll move him or her to a team worth about $14 per hour. The $14-per-hour team will be happy to have the new member, because he or she can bring up productivity levels and potential wages for everyone on that team. The original $20 team, which now has an open position, looks to other teams for superstars who are producing at higher levels than the teams on which they’re currently members. All hiring by existing teams takes place through this internal swapping system. “It’s an open draft all the time,” Davis says. “Employees are moving up and down teams constantly.”

The cornerstone of HR’s function is training.
Some companies—especially those that have played the teamwork game for a long time—go even further in empowering employees to make hiring decisions. At Aid Association for Lutherans, a fraternal benefits society in Appleton, Wisconsin, teams recruit both internally and externally. Members are trained by HR to help them conduct effective interviews, assess a candidate’s potential and learn the legal dos and don’ts related to hiring. Otherwise, the team is responsible for all aspects of the new hire, including defining the skills needed, devising the interview questions, conducting the actual interviews, extending the job offers and training the new members.

Do team members usually agree on the best candidate? “It’s remarkable,” says Jill Murrow, service team director at AAL. “I’ve been in several new-hire situations in which team members had to choose their first, second and third choices. We’ve always agreed on which candidate was best for the job.” Teams work together so closely, she adds, that they intuitively sense who would fit in.

Another company in which teams are given great authority for hiring new members is Cummins Engine Company Inc. in Columbus, Indiana. “Teams aren’t responsible for going out on the street and recruiting people,” says Marilyn Tennell, executive director of HR. “HR handles the initial recruitment. But only team members have the expertise to decide if a candidate would be a good fit, both with regard to technical skills and personal characteristics.”

Tennell believes that the role of human resources in team-based staffing is one of providing systems, processes and procedures that help team members make good staffing choices. At Cummins, for example, HR has devised a system to help identify work flow, which helps teams determine member responsibilities. HR also has created the recruitment process to help identify potential candidates. Like AAL, the HR department at Cummins also provides team members with training to help them understand the legal requirements of interviewing, how to evaluate a candidate and how to reach a consensus on staffing decisions. “The important thing for HR to understand is that they are the supplier, and teams are the customers,” Tennell says. HR has to provide the tools necessary for the teams to do their jobs effectively, and that includes tools to help with the hiring process.

One of the most valuable tools Cummins’ HR department has developed for its teams is an assessment center. At this center, candidates go through a series of simulations that mirror job-related activities, while HR staff and existing team members evaluate their performance. “This gives candidates a clear picture of the working environment,” Tennell says, “and it gives team members a sense of how well the candidate will fit in.”

Wilson believes assessment centers can be a valuable part of the team-hiring process. Most organizations make hiring decisions based on application forms, unstructured interviews and reference checks, she explains. This format, however, doesn’t address many critical requirements for effective team membership.

“Interviews tend to work best when the applicant has had experience in the type of job for which he or she is being interviewed,” Wilson says. Unfortunately, many applicants for team positions have had no experience working in teams, so it can be difficult to estimate how effective they’ll be when placed in a team position. But assessments, which typically include two or three simulations, enable candidates to demonstrate their skills in situations similar to the team tasks they will perform on the job, such as problem solving, manufacturing and group-discussion exercises.

Team-based hiring results in tremendous benefits—and a few challenges.
In a traditional hiring situation, HR professionals recruit, screen, interview and hire new employees with little input from the candidates’ potential co-workers. HR simply introduces the new employee to the other members of the department in which he or she will be working, explains the work that person will be doing and departs. The supervisor has no loyalty to the new hire, co-workers have no reason to make sure that person fits in and the new employee is left floundering without any real allies. It’s no wonder that most turnover in organizations takes places within employees’ first six months.

When teams are involved in hiring new members, however, they have a vested interest in making sure that person is successful, explains Deborah Harrington-Mackin, president of New Directions Corporate Consulting Group in North Bennington, Vermont. “Teams spend a lot of energy on the hiring process, and they want the new person to succeed,” she says. “Their reputation is on the line, so they’ll work to find employees they know will be successful.” This means better assimilation. “You have to see it to believe it,” Wilson adds. “Teams will go to incredible lengths to make sure their chosen candidate fits in.” Quicker assimilation also means that turnover in team-based organizations tends to be a great deal lower than in organizations using more traditional hiring practices. At AAL, for example, the corporate turnover rate is only 4%.

But getting teams involved in hiring also presents challenges. “Basically, you’re taking a process normally handled by a single person and making room for several people to be involved,” Mackin says. This takes time—to train team members on the selection process, for employees to meet without work suffering, and to conduct the interviews.

Also, in a team environment, it isn’t enough to have members vote democratically on their chosen candidate; they should reach a consensus. This requires a lot of up-front work on issues related to problem solving and communication.

Still, by far the biggest challenge for HR professionals is getting out of the way and making room for involvement from team members. If HR professionals don’t take this step, they run the risk of teams bypassing their department entirely, losing their function’s valuable expertise in the process.

Susan Baker spends her days in a research lab, identifying molecules in the human body that are capable of fighting disease. Once the molecules are identified, she begins the laborious process of developing synthetic substitutes for those molecules that can be used in disease therapy.

As a senior research associate with Synergen, a biotechnology firm in Boulder, Colorado, it’s the science that excites her. Where she works is important, but not quite as important as the work itself. In fact, as a molecular biologist, her skills are in demand from other companies.

Baker is different from the average employee. She, along with other creative professionals such as engineers, software developers and researchers, are what IBM founder Thomas Watson calls “wild ducks.” Wild ducks aren’t motivated by such traditional incentives as title and promotion. They seek creativity, the freedom to innovate and recognition for their scientific breakthroughs. Furthermore, they’re apt to be more committed to their discipline than to any particular firm. Given the right enticement, wild ducks will fly to other companies, taking their talents with them and leaving half-completed research projects behind.

To recruit and retain technical employees, companies increasingly are reviewing the way they reward and recognize them. Some organizations are developing royalty compensation plans, whereby key research and development personnel are given the right to participate in the commercial success of the products they create. By sharing a percentage of profits with key contributors, these companies are hoping to jump-start the creativity and productivity needed for successful product commercialization.

Royalty compensation gives monetary feedback on employees’ success.
For decades, U.S. companies—leaders in inventing new technologies—have had trouble in the commercialization of their inventions, in finding ways to use them in products that are useful in the marketplace. David Balkin, assistant professor of business administration at the University of Colorado, says that one reason U.S. employers have done such a poor job in product commercialization is that technical employees often feel their contributions aren’t adequately rewarded. “A research scientist for a large pharmaceutical corporation develops and patents a successful new drug that produces $100 million in revenue its first year on the market,” he explains. “The executives of the division receive large cash bonuses, and the salespeople enjoy windfall commissions from the strong demand for the new product—but the scientist receives only a $500 honorarium for developing the drug.”

Since the 1950s, both Japan and Germany have recognized that employee-inventors should be compensated based on the value of their inventions. But U.S. policy has remained heavily focused on creating new technologies, devoting relatively little attention to adopting and applying them. In the public sector, this began to change in 1986, when the Federal Technology Transfer Act mandated that employee-inventors working in federally funded research laboratories be granted a royalty of at least 15% of any licensing income the laboratory receives. “It is estimated that more than 100,000 scientists and engineers—one-sixth of the total in the United States—are involved in such research,” says John McMillan, managing director of Houston-based William M. Mercer, Inc.

At Battelle Pacific Northwest Laboratory in Richland, Washington, a royalty compensation program has been in place since 1989 for employees involved in both government-sponsored research and private research projects. The program was developed partly in response to the Congressional mandate, but also because managers wanted to incent staff members to work harder at transferring technology to private clients. When Battelle’s researchers develop technologies that are licensed for use by private industry, the organization receives licensing fees for that technology, as well as royalties on any products manufactured using the technology. Carol Dudick, manager of technology commercialization, says that key researchers are entitled to share a pool of funds worth 10% of gross royalties or other proceeds derived from licenses and sales of intellectual property.

In the last three years, Battelle has paid approximately $200,000 to key contributors through its royalty program, but Dudick says that payouts in the first six months of 1993 equaled payouts in all of 1992. “Royalty payments are definitely on the upswing,” she says. “We’re starting to feel the success of this program.”

Another government contractor, SRI International in Menlo Park, California, has had a royalty plan since 1978, long before such plans were required legally. Here, scientists share a pool of funds worth 25% of license and royalty fees. Because of the long research time needed to come up with commercially useful technology, only about 5% to 10% of SRI researchers ever have received royalties. When they do, however, payments can be enormous, as was the case with one scientist who developed software to enhance ultrasound imaging. He’s earned more than a million dollars, and the checks keep coming.

Other compensation plans are more common—and less effective.
Despite the enormous potential of royalty compensation, only about 7% of companies currently offer such project-oriented incentives, according to a 1992 survey by William M. Mercer. “In this country, the first thing a new engineer or programmer is presented with is a document in which the engineer agrees, ‘I am an employee of the corporation and anything I develop while employed here belongs to the company,’ ” says McMillan. “This illustrates the way American corporations think and the way technical employees have been taught to think. It’s appropriate that the company owns the invention because the company provides the salary and covers research costs, but this concept has gone too far. It’d be in the company’s best interest to provide an incentive based on what the individual actually comes up with.”

Currently, companies are more likely to recognize technical contributors with financial bonuses based on a percentage of the inventor’s salary. According to a survey by the Hay Group, a management-consulting firm, 76% of high-tech companies have some kind of special pay policy for key technical people, including bonuses that can be quite substantial.

At Dallas-based Texas Instruments, an inventor can receive up to $175,000 in bonuses for a single patent, although these large awards are extremely rare. Monsanto Corporate Research in St. Louis awards employees $50,000 for significant “lifetime” achievements. And IBM gives Outstanding Innovation Awards for important inventions or scientific discoveries. Ranging from $2,500 to $25,000, about 40 of these awards are given each year.

So does this type of profit sharing accomplish the same thing as royalty compensation? Some plans may, but for the most part, McMillan is doubtful. “Most company bonus plans are set up on the basis of profitability, and company profits today reflect products that were developed years ago. This doesn’t reflect the efforts of R & D people who are working there today.” And what about variable pay plans, where team members receive a bonus based on their department’s financial performance? Hoyt Doyel, principal of Effective Compensation Inc. in Lakewood, Colorado, says that these are too small to significantly incent technical employees: “The 3% and 4% variable pay programs just aren’t effective.”

McMillan supports royalty compensation programs, despite their limited rate of use so far. “The reason they are not more widely used is that there are a lot of other issues [these programs] get saddled with,” he says. Among the questions employers must answer are: What are we trying to incent? What percentage of profits should be returned to employees? How do we determine who’s eligible? And what kind of message will this send to employees who don’t receive royalties? Yet, McMillan says, “the advantages far outweigh the disadvantages.”

Royalty compensation encourages marketplace sensibility and engages talent.
Because technical employees are hired more for their creativity and specialized knowledge than their business acumen, in the heat of discovery, they may sometimes forget the bottom line. “One of the big problems in research, engineering and software development is the fact these employees want to be very professional and create the most perfect product or system technically possible, whether or not that is what the market wants,” McMillan says. “But by basing the incentive not on an invention’s technical elegance, but on its commercial acceptance, you get the developer to focus on what the customer really wants.”

McMillan adds that because employees see no royalty checks until products actually are sold, they’re that much more likely to try to get the product out the door quickly. “This way, you have engineers and developers aligned with management’s time schedule and agenda,” he says.

SRI’s Dan Morris, director of technology marketing, agrees that royalties can give a tremendous boost to the work flow. “The royalty program plays a significant role in incenting productivity,” he says.

BMC Software in Sugar Land, Texas, has found its royalty compensation plan so successful in incenting product development that it won’t even talk about the program publicly anymore. Two years ago, the firm stated in its annual report that it had paid $4.9 million in royalty compensation and that some individual programmers were earning more than $1 million per year because the products they developed were so profitable. “We view compensation as an important part of our success,” explained a company spokesperson, “but we’d rather not do interviews on this subject. It’s very sensitive.” Put another way, BMC’s royalty plan has become a competitive trade secret.

Other companies have found royalties an effective way to encourage company loyalty among fickle technical employees. Micrografx, a Richardson, Texas-based software company, sets aside 2% of gross revenues for employee royalty payments, explains Ed Morgan, vice president of human resources. However, these payments stop if an employee takes a job with another firm. What’s Micrografx’ turnover rate? “Very, very low,” Morgan says.

Support royalty compensation with appreciation and room to explore.
Although royalty compensation is a big aid in attracting and retaining creative professionals, HR managers at organizations that provide such royalties are quick to emphasize that it isn’t just money that gets technical people excited about their projects, as exciting as money can be. Recognition programs and an atmosphere conducive to creativity are also important.

At Battelle, for instance, a lot of value is placed on recognizing employees at its annual black-tie gala. Here, employees who’ve acquired patents, copyrights or awards from the Federal Laboratory Consortium are recognized by the organization. “It’s a prestigious event, with videos highlighting the work of the award winners,” Dudick explains. “It takes a lot of pats on the back to get a commercial license agreement. This is one of them.”

Morris agrees that recognition is important for technical personnel. “Most scientists are driven by their need to discover and then get praise and recognition for those discoveries,” he says. But at SRI, Morris adds that the atmosphere and culture of the organization itself goes a long way toward incenting productivity. “Ours is a campus-like atmosphere in which scientists can explore whatever science interests them, provided they’re seeking useful applications for that science. We give them lots of freedom.”

Another way to keep technical people motivated is by giving them the technology and resources needed to perform cutting-edge research. Somebody once said that pilot Chuck Yeager stayed in the Air Force because he loved to fly experimental new aircraft but couldn’t afford to buy his own. Many technical employees feel the same way about research technology.

At SRI, for instance, 35% of funds from license and royalty fees goes to the department where the technology originated. This money often is used to buy additional laboratory equipment, something that many technical employees consider to be as much a reward as money.

“You can attract these people just by promising to fund one of their pet projects,” says Terrence Brown, assistant vice president of Compensation Resource Group Inc. in Pasadena, California. “Give them the toys they need to continue the projects they’re interested in.”

Monsanto realizes the motivational value of new lab equipment, but the organization doesn’t invest in these resources for just anybody, explains Denise Cooper, manager of HR. “They have to prove themselves before we outfit them with toys,” she says. “We don’t communicate this as an official form of recognition, but in an underground way, employees regard this as a reward for good work.”

Such companies as 3M, based in St. Paul, Minnesota, and Eastman Kodak in Rochester, New York, take this idea a step further, setting up innovation banks to fund special projects. Balkin says: “This not only allows a large venture to be supported inside the company as a separate business, but it also permits scientists and engineers to obtain resources that otherwise would find no place in a line manager’s budget.”

Another way to recognize technical excellence is through the creation of career paths tailored to these workers. In the past, for technical employees to advance in an organization, they had to leave their jobs in the laboratory and move into managerial positions for which they may not have been suited. While chasing paper and managing subordinates, their creative talents atrophied or became outdated. With technical career paths, however, employees can advance while remaining in a technical capacity. Ultimately, this is much more beneficial to the employee and the organization.

A recent survey conducted by Training and Development Magazine revealed that effective dual career paths are those that consistently reward technical workers with status, salaries and incentives that compare favorably with those enjoyed by managers. Furthermore, technical-career-path systems thrive in organizations that are committed to helping technical people assess their interests, preferences and strengths so that they can make informed career choices.

Microsoft in Redland, Washington, is among the many large research-dependent organizations that have implemented technical career paths. As Tom Corbett, a developer with 10 years’ experience at Microsoft, explains, “There’s never been any motivation for me to go into management because of better compensation or more influence.” The high regard Microsoft has for its developers is one of the main reasons the company is at the top of the software industry in the United States.

So when it comes right down to it, it isn’t just money that motivates technical employees. It’s recognizing their needs and their need for recognition. Still, there is a place for royalty compensation. “Where these plans are used, they work very, very well,” McMillan says. In terms of recruitment, productivity, product commercialization and employee retention, the royalty system can be a strategic tool in developing the type of technical employees that U.S. businesses need in today’s marketplace.

Says Doyel, “I look at what gets people excited in this country and it’s lotteries—the $86 million kind of thing. For compensation to get people excited and willing to work hard, there has to be some real potential for earnings. Royalty programs are the closest thing we have to lotteries.”

As recently as 10 years ago, the lodging industry was growing exponentially. New hotels were being built as fast as companies could plan for them. As employees were hired to staff those properties and managers hired to oversee the staff, quick movement up a vertical career path wasn’t just possible, it was practically assured.

Today, the industry is overbuilt and many companies like Marriott International, based in Bethesda, Maryland, are struggling to keep their resorts, hotels and inns profitable. Operating in this competitive environment, Marriott realizes it no longer can promise—or imply—that promotions will be forthcoming. Given the business realities, Marriott employees must begin to think about their careers in more creative ways, explains Steve Bauman, director of human resources planning. Furthermore, “Instead of the company being paternal, we have to help employees become responsible for their own career development.”

One of the ways Marriott is doing this is by training its managers to become career coaches who are able to help employees examine and manage their career options. Marriott is rolling out a workshop, called “Partners in Career Management,” nationwide. Eventually, all 6,000 management-level employees will attend the course.

The purpose of this new workshop is to provide Marriott’s managers and supervisors with a four-step model to assist them in managing their own careers, and also prepare them to hold more effective career discussions with their employees. It’s the company’s hope that after attending the course, managers will be able to:

1. Help employees identify skills, values and interests and answer the question, “Who am I?”
2. Offer ongoing feedback and help employees answer the question, “How am I seen?”
3. Help employees create a set of realistic career goals and answer the question, “What are my career alternatives?”
4. Help associates develop action plans and answer the question, “How can I achieve my goals?”

In addition, managers will be expected to learn about career resources that are available in the organization, hold career discussions with employees on an ongoing basis and identify developmental activities and experiences to help employees to build their knowledge and skills and improve performance.

The coaching workshop is proof of Marriott’s belief that career development involves a cooperative three-way relationship between the employee, his or her manager and the organization. Key to this relationship, however, is how well the employee takes advantage of the developmental and career opportunities that are available.

By training its managers to help company employees learn of these opportunities, Marriott will be closer to ultimately shifting the responsibility for career management away from the company and toward the employee.

At Marriott, employees are responsible for:

• Assessing their own skills, values, interests and developmental needs
• Determining long- and short-term career goals
• Creating with their manager a career-development plan to reach their goals
• Following through with their plan
• Learning about and taking advantage of other career-management resources that are offered by Marriott, such as the online job-posting system
• Meeting with their managers on a regular, consistent basis for career-development discussions
• Recognizing that career discussions imply no promises or guarantees
• Recognizing that their career development will depend directly on Marriott’s organizational needs and opportunities as well as on their own performance and abilities.

Unlike many organizations, Apple Computer, based in Cupertino, California, hasn’t had to make the shift from a paternalistic company to one that encourages employees to take responsibility for themselves. This isn’t because the company still believes it has a benevolent need to care for its workers, but because it never felt this way to begin with. Apple’s philosophy on employee career development is plainly stated in its career-management brochure: “Apple can’t guarantee lifelong employment. Your responsibility is to drive your own development and career.”

This doesn’t mean, however, that Apple has absolved itself of all responsibilities related to employee career development. In fact, nothing could be further from the truth. For a company that promotes empowerment and personal responsibility, Apple has made a great many resources available to help employees with career management. As Nancy Dewey, employee-relations manager, explains, “We view career management as a partnership.”

For the employees, the company’s career-management strategy is intended to help them identify skills and abilities, making them ready for current or future career opportunities. For Apple, career management is intended to help ensure that the company has the talent and skills needed for the business to succeed. The company views career self-management as central to its success, believing such a program can attract, develop and retain versatile and qualified employees.

Among the resources that are offered to employees through Apple’s career-management program are:

A comprehensive career resource library.
A collection of current information on careers through a variety of sources, including newspapers, magazines, books and audio/video tapes. The library also offers a listing of job opportunities to help employees identify internal positions with Apple and positions with other industries. Furthermore, the library houses a bulletin board that features up-to-date information on industry trends and professional associations.

Brown bag seminars.
These informal, one-hour sessions help employees keep current on industry, business and career trends.

Assessment and counseling.
Apple’s Career Resource Center offers a variety of skills and interest assessments to help employees understand themselves and appreciate how different personality types approach career planning and career choices. Confidential one-on-one counseling also is available to employees who want to discuss on-the-job career development issues.

Networking groups.
Weekly networking groups help employees who are interested in getting to know more about the functional areas at Apple, from either a developmental or career-change perspective. Members of networking groups also share leads and information on work outside the company.

Online job posting.
Apple encourages employees to pursue internal transfers through its electronic Job Finder. Employees can access job postings at any time through their desktop computers.

Until 1993, Apple’s career resources only were available to employees who were victims of downsizing. (The company cut 10% of its work force in 1992.) Last year, however, Apple’s HR managers realized it would be a smart business move to help all employees proactively manage their careers. Why? “Our industry changes rapidly, and we’re no longer certain what business we’re going to be in at any given time,” Dewey says. “We can’t offer job security, but we can offer tools, resources and information.”

Approximately seven years ago, San Francisco-based Chevron Corp. redesigned its performance-management system to focus on employee career development. Instead of evaluating employees based on past performance, the new system was designed to encourage employee growth by focusing on professional development.

Then, brutal economic realities forced Chevron to downsize, displacing 8,000 people in the process. The company realized at that point it could no longer promise career development because that implied upward growth. Furthermore, remaining employees who felt nervous about job security and advancement couldn’t be reassured with the promise that once the economy turned around, so would their chances for promotion. Operating in a slow- to no-growth industry, Chevron would have to find ways to help employees grow in place.

For this reason, the company restructured its performance-management system in 1991 to emphasize career enrichment. “Through this program, we’re helping employees who can’t advance find meaning in their work,” explains Sarah Clemens of the company’s leadership planning and development department.

Chevron’s career-enrichment process is designed to help employees enhance their effectiveness and job satisfaction, develop new skills and become better prepared to meet current and future business needs. Participation in the process is voluntary for all employees. As stated in a company brochure, “It doesn’t guarantee higher salaries or promotion, but the process does enable employees to take more personal responsibility for their own career development.”

Chevron’s career-enrichment process involves the following key components:

Preparation.
During this first stage, employees complete a self assessment, an organizational assessment and a goal-setting process.

Joint planning.
Here, the employee and manager review the results of the preparation activities and agree on a career-enrichment plan for the coming year.

Plan review.
During the third stage, the manager presents the employee’s career-enrichment plan to a group of supervisors who form the plan-review committee. Many options for career enrichment exist at Chevron, including growth in place, lateral moves, exploring new areas of interest, realignment and moving out of the organization entirely. This plan-review committee provides employees with feedback on these options.

Implementation.
The employee is ultimately responsible for implementing his or her career-enrichment plan, but supervisors and others may lend resources and support.

End-of-cycle review.
Once an employee’s enrichment plan has been implemented, the employee and the supervisor review the results and prepare for the next year. This provides an opportunity to evaluate the career-enrichment process itself and monitor the quality of the communication between the supervisor and employee.

The career-enrichment process isn’t only Chevron’s way of encouraging its employees to take responsibility for their own career development, it’s also a way for the company to support them in the process. “There’s still the expectation that if employees are loyal, they will be assured a job with the company,” Clemens says. “That’s just not the case anymore.”

Employees have to have an understanding of their own values and skills in order to contribute effectively, she says, and they have to understand the business in order to align their personal goals with organizational goals.

Says Clemens: “The career-enrichment process is our way of helping employees do both of these things.”

Harry Marks is a senior local-area network (LAN) administrator at John Hancock Mutual Life Insurance Co. in Boston. He’s challenged in his job, has had two promotions in the last year and recently received two customer-support awards. He likes working with information technology because the field always is changing.

Marks’ job satisfaction wasn’t always this pronounced. Just two years ago, in fact, he was “stuck” in the company’s accounting division, reconciling bank accounts. The work was routine, unchanging and predictable—in his words, “boring.” Through a comprehensive career-management program that John Hancock instituted in 1990, however, Marks was able to change jobs, jumpstarting his career.

John Hancock’s career-management program resulted from a survey administered by the company to find out what employees thought of its career opportunities. At the time, a hiring freeze was in effect, and 1,000 workers recently had been cut through attrition. Because of this, it came as no surprise that employees had a dim view of the company’s advancement opportunities. The company was startled, however, by the number of employees who believed that career development was solely the company’s responsibility.

To counter this notion and encourage employees to assume more responsibility for their career development, the company created several career-management resources. “We believe employee career advancement is a joint responsibility,” says Page Palmer, vice president of human resources at John Hancock. “We will offer opportunities for training and career development, but it’s up to the individuals to pursue them.”

John Hancock isn’t alone in this philosophy. Large companies around the nation are passing the bulk of responsibility for career-management on to employees. Santa Clara, California-based Intel Corp., for example, advises employees that “each of us is responsible for our own personal and career development.” Hewlett-Packard Co., based in San Francisco, tells employees, “At HP, you’re expected to chart the course for your own career, and you influence the direction and timing.” A training manager at Roselle, Illinois-based Motorola Corp. explains, “The company only can provide criteria for movement, career counseling and other information resources. The employee must make the career decision, commit to becoming a viable candidate and assume a major role in the process.”

For workers in most of these firms, this is a new concept. “Fifteen years ago, it was a company’s responsibility to manage careers,” explains Vincent Perro, principal with Sibson and Company in New York City. That was a time when U.S. companies were expanding so rapidly that management jobs were created almost faster than companies could find people to fill them. “As the company was growing, so were employees’ careers,” says Nancy Dewey, employee-relations manager for Cupertino, California-based Apple Computer.

Career development during this era in which the United States dominated the global economy simply meant taking the path the company paved for you. Human resources departments prepared very specific charts depicting the structure of career ladders in the organization and attaching detailed job descriptions and compensation plans to every rung. A methodical progression up the ladder—up one rung to manage people; up another to manage a division—was the norm for people planning a 30-year career with the same company. These career-minded individuals knew that if they just toed the line, kept their noses clean and put in their time, they’d be handsomely rewarded with expected promotions.

But not anymore. Employees are finding their careers stopped dead in their tracks, the rungs above them eliminated. Today, only about a third of all careers in the United States are pursued as traditional or vertical careers in corporations, and this number is decreasing all the time.

Employees need only look around them for proof that the employment contract has changed. The epidemic of downsizings, mergers, takeovers, plant closings and bankruptcies has created legions of workers who are happy just to have a job. The massive layoffs in this country have made employees painfully aware that the notion of a lifelong career with regular paychecks and secure benefits are no longer entitlements.

Now you could argue that this was never the case to begin with. No one—with the possible exception of entertainer George Burns—ever has been handed a lifetime contract for employment. The notion of job security never was set in stone; the paternalism of yesterday’s corporation merely was implied. Even firms that appeared to offer lifetime employment, such as Detroit-based General Motors Corp. and Armonk, New York-based IBM, have laid off white-collar workers by the tens of thousands.

Although some pundits expected the downward spiral to stop some time ago, in actuality, it spins onward. The American Management Association’s 1993 downsizing survey reveals that the number of companies trimming their work force continues to rise. Twenty-two percent of employers surveyed plan to make work-force reductions by the end of June, cutting, on average, 10% of their headcounts. By making this transition from fat and sassy to lean and mean, companies have axed entire layers of management, splintering the career ladder in the process.

Even without work-force reductions, however, the career ladder stands on shaky ground. In the rapidly changing global business environment of the 1990s, strategic planning involves one to three years at best, making it virtually impossible to plan ahead. “Because they can’t predict what kinds of products and services they’ll be selling a decade from now, companies can’t be sure what positions they’ll need to fill and what skills will be required,” says Helen Axel, a senior research fellow with the Conference Board in New York City. Xerox, for example, estimates that 25% of its job openings are unanticipated.

With firms unable to tell people for which jobs to groom, the responsibility for career management now rests firmly on employees’ shoulders. They must pull themselves up by the bootstraps. Companies can’t, and won’t, do it for them.

To aid employees, progressive companies such as John Hancock are providing tools and resources to help with career planning. Why? “Because they want to retain their talent,” says Beverly Kaye, a management consultant in Los Angeles. Employers need flexible, committed employees who understand the realities of today’s workplace. “Otherwise, they end up with an organization of gripers and complainers.” Furthermore, helping employees become adaptable to workplace changes makes sense from a competitive standpoint.

Companies must educate workers about their career-development roles.
When John Hancock discovered that workers expected the company to dictate their career paths, the company created educational services to teach employees about their responsibilities. “Up is Not the Only Way,” is a course the company offers employees that discusses the various components of a satisfying career, as well as the benefits of lateral moves. Workers also can participate in a workshop titled “Planning and Developing Your Career,” which reviews professional growth strategies.

Similarly to John Hancock’s experience, PacTel Corp., a cellular-phone company based in Walnut Creek, California, discovered the need to help employees with career education when a survey revealed that employees equated careers with promotions. On a scale of one to 10, a majority of PacTel employees ranked the importance of promotions as an eight. Employees ranked the expectation of being promoted as 7.7 on the same scale. Furthermore, 65% of respondents said to feel successful, they require a promotion within two years.

“We realized we never could grow fast enough to keep all those ambitious folks happy,” says Tracey Borst, director of organization development and training at PacTel. Employee expectations were too high; the promotional opportunities, too few. “We had to find a way to educate employees about other ways for them to grow and stay happy in their careers,” she says.

To do so, PacTel last October launched career-communications workshops teaching career-planning skills to employees and their supervisors. The two-day seminar is voluntary for employees, but required of management-level personnel. Employees attend on company time and receive regular pay.

The employee workshop is designed to help workers:

• Identify their skills, interests and values
• Learn about PacTel’s norms and how they affect careers
• Develop a realistic career plan
• Explore different career options, including lateral moves and relocations
• Learn to talk with their managers about career growth.

The manager’s workshop teaches managers how to become effective career coaches by giving direction and constructive feedback to employees, and by helping them to realistically assess opportunities within the company. “These workshops emphasize the importance of the partnership between employees, managers and the company,” Borst says. “Career management isn’t a sidebar to our work. It’s a mindset that will help us run a better business.”

Already there have been some success stories at PacTel. Susan Everett, for example, was working as a project manager in the finance department when she attended the course with her supervisor last fall. “When I finished, a light bulb went on,” she says. “I knew I needed a change.”

What happened was that Everett, who was trained as an accountant, learned she had more interest in people than numbers. She told this to her boss, who, having attended the workshop, was able to guide Everett toward opportunities in the company. Taking a risk, Everett made a lateral move to become manager of the Customer Assurance Department. “I was apprehensive at first,” says Everett. “Managing 40 people would be a challenge, but it was what I wanted. We all get so busy, we don’t often get the chance to think about long-term goals. The class allowed me to step back, see the big picture and know that it’s OK to risk making a change.”

The focus on in-house career education such as that underway at PacTel is blurring the line between outplacement and inplacement. This has been accelerated by the recent spate of downsizings, in which a lot of displaced employees wondered why they didn’t have access to career counseling before the layoffs occurred. Furthermore, employers who now are dealing with nervous downsizing survivors are finding that career education can help them feel more confident about their careers and be more productive in their jobs.

Some employers are just sticking their toe in the career-education pond by providing career talks or one-shot career-planning workshops. Others, like Intel, Motorola and San Francisco-based Chevron, are developing full-blown on-site career-education centers as a way of fostering loyalty among workers who have seen too many co-workers handed their coats and walking papers.

It was the experience of downsizing in the late 1980s that taught Intel’s HR managers that they no longer could assume the responsibility of managing individual careers. “We’d played an intermediary role,” says Mike Barnes, manager of staffing. “We went so far as to help employees develop resumes and make career matches for them.” When these carefully groomed employees had to be laid off, however, they were angry, and remaining co-workers were distrustful. The company, despite its good intentions, looked bad.

Today Intel takes a different stance. “We’ve reached a point in the corporate cycle where it’s clear that individuals must take responsibility for their own careers,” Barnes says.

To help employees take up the gauntlet for their own career growth, Intel has created on-site Employee Development Centers. These centers provide tools for career planning, such as computerized assessments; career-development books and video tapes; courses on resume writing, interviewing and personal growth; and career-counseling sessions. As explained to employees in the Employee Development Center brochure, “No one else is more interested or qualified when it comes to evaluating our individual interests, values, skills and goals [than you]. Employee development creates a win/ win result—employees maximize job satisfaction and career opportunities which helps make them more productive.”

Another way companies are educating employees to manage their careers is by staffing professional career specialists who offer individualized counseling. At the Los Angeles Times, a full-time specialist is located at headquarters. This specialist teaches a workshop on career assessment, organizational assessment and decision making. The specialist is then available for one-on-one follow-up counseling.

One of the risks employers take when offering career-management services is that workers will discover, through the self-assessment process, that the company is no longer right for them and pack their bags. But career consultants agree it’s a risk companies have to take. If employers are going to encourage and support employee development, they must do so in whatever form it takes. Companies are at greater risk of losing employees if they don’t provide these services.

Corporate cultures must encourage career-development initiatives.
As important as self-managed career education has become, it stands little chance of being effective if offered in isolation. Employees can spend countless hours plotting their individual career paths, but they can’t easily change their behavior unless the corporate culture and organizational systems support that change. Moreover, the fact remains that no matter how well workers plan for advancement, the promotion opportunities aren’t always there. For this reason, companies must find other ways to encourage employees to keep growing.

This isn’t an easy task. With fewer rungs up the career ladder to climb, corporate employees are topping out younger and at lower levels than they expected. At the very least, plateaued employees present productivity problems. Even worse, fast trackers and other talented people may pack up their years of experience and leave the company altogether.

In searching for ways to encourage talent that can’t advance, progressive corporations are working to develop managers into career coaches. Coaching doesn’t mean that managers plan careers for their employees or that they have all the answers to career questions. Instead, career coaching is an ability to give staff members the truth about what’s happening in the organization and prepare them for inevitable changes in the employment contract (see “Marriott Trains Managers To Become Partners in Career Development”). More importantly, effective career coaches can help employees find job satisfaction in ways other than traditional promotions.

With the proper training on how to coach, supervisors understand they don’t have to have a career path for everybody—they simply have to be truthful about employment opportunities and work with employees on career-development goals. “Managers are afraid of what employees will do with the truth that promotions aren’t going to happen to the majority of workers,” Kaye says. “But employees deserve to be told the facts about future opportunities.”

In training managers to be effective career coaches, some companies have found that supervisors develop the sensitivity it takes to work with their employees’ career needs only after receiving training that helps them examine their own jobs and their personal feelings about them. “Stuck managers can’t unstick employees,” Kaye says. That’s why, when the Internal Revenue Service—one of the nation’s largest employers—designed a manager-training workshop to help managers learn how to work with their direct reports on career development, they did so only after the successful launch of a management-achievement program, which helped managers identify their own strengths and needs.

In addressing the career needs of managers and the issue of manager-employee relationships, the IRS uses the services of its in-house career-counseling program. Opened in 1992, these regional counseling offices offer computer-based career-development software and workshops on career development. These services give managers and their employees a common language with which to talk about career-development goals.

Offer employees alternatives to upward promotions.
Another way companies are helping employees find satisfaction in their jobs is by encouraging them to use internal job-posting systems to look for work outside their area of experience; that is, to search for potential lateral assignments as a way of keeping their interest in the company (see “Online Job-posting Facilitates Lateral Transfers at Household International”). Progressive companies are trying to help employees realize that lateral movements aren’t steps down. They actually are excellent ways for employees to broaden their experience level while facing stimulating new assignments.

“Lateral movements are nothing new,” Sibson & Company’s Perro says. “But companies now are trying to change the value judgment associated with laterals to [persuade] people that it’s OK to take them.” Convincing them is essential. Companies have to move rapidly to meet changing market demands, and the best way to do this is to have flexible employees who can adapt to new job situations when necessary. If anything has been made clear in the last decade it’s that the key to sustained employability in the future won’t be specialization. It will be the ability of employees to offer flexibility and a broad base of experience. Lateral moves develop employees in this way.

Intel is one company in which lateral moves are encouraged as a viable career strategy, thanks largely to Kirby Dyess, Intel’s vice president of HR. Dyess herself started with the company as a staffing manager, moved into information services, and then became a marketing manager. Most recently, she was a business-unit manager assigned to the start-up of a new division. Because her varied background has benefited her, she’s helping to increase acceptance of lateral moves within the company. Says Barnes: “The acceptance of lateral transfers has been carried into the HR staff, and now is making its way through the organization. A colleague of mine, for example, has stepped from HR into marketing. Another colleague went from manufacturing to HR.”

Johnson & Johnson in New Brunswick, New Jersey, also encourages its employees to pursue lateral moves, according to Ron Huseth, director of career services. “In the past, upward moves were the only positive ones. But now, there’s stronger incentives for people to take laterals, because they enhance professional credentials.”

Despite the strides these firms have made in encouraging lateral moves, horizontal movement still is a hard sell in most companies. “It takes a long time for employees to get the message that vertical moves are blocked,” says Kaye, who authored the book Up Is Not the Only Way. “It’s probably more difficult for older employees, but even younger ones are wondering where the promotions are. That’s amazing to me. They’re speaking their parents’ lines.”

To ease employees into the idea of accepting lateral transfers—and to reenergize careers in the short-term—some companies are encouraging workers to pursue temporary reassignments and learn new skills through task forces, special projects, retraining or other alternatives. “It can be very challenging to put people on special assignments, especially those that are interdisciplinary,” Perro says. For example, putting a finance person on a project to develop a new product. “It’s energizing for the employee and a great way to develop personnel.”

It’s because of a program that allowed workers to take on temporary assignments that Marks is on his current track at John Hancock. He took advantage of the company’s job-rotation program two years ago when it became obvious that there was no place for him to grow in his accounting position. He wrote a letter to the manager of the Financial Sector Systems Division—who strongly supported the job-rotation program—and inquired about temporary opportunities. The manager responded and Marks was hired for a six-month assignment. During this period, he spent half of his time at the old job in accounting and half at the new one in information systems.

At the end of six months, Marks went back to his old job and waited for a permanent full-time opportunity to arise in information systems. When it did two months later, he applied for and got the job.

At Alagasco, a Birmingham, Alabama, utility company, a similar job-rotation program combats an Is-this-all-there-is? syndrome. The company has reassigned more than 75 employees. One manager traded his suit, tie and air-conditioned office for a six-month stint on the company’s construction crew. His reaction? “I returned to the office refreshed and a lot less bored.”

Human resources staffers at IBM, which creates variety by reassigning certain management jobs every two years, believe the success of lateral moves depends on how they’re positioned and presented. The company’s career-planning guide states that opportunities for lateral transfers should reflect the interests, values, skills and personal goals that plateaued employees have identified through self-assessment exercises.

“From an individual’s point of view, there’s nothing like lateral moves and temporary reassignments to build the strength and breadth of skills,” says Betsy Collard of the Career Action Center in Palo Alto, California. “Unfortunately, there’s still a stigma attached to them. People think of a career ladder, not a career lattice.”

Closely associated with lateral moves is the notion of dual career paths, in which employees are given additional challenges and compensation without having to advance into managerial positions. Dual career paths have been used for years to develop and retain technical employees. “Now they’re expanding into staff areas in which people really can get frustrated from a career standpoint,” Perro says. For instance, San Francisco-based Pacific Bell has created a dual career ladder system in its data-processing department to reward talented professionals who don’t want to move into management.

Technical career tracks must offer pay, status and recognition that’s equivalent to a managerial track. “By creating different tracks, each with attractive job titles and pay opportunities, employers stand to greatly increase motivation and retention in a wide range of specialties,” Perro adds.

To increase an employee’s interest in pursuing technical career tracks or making lateral moves, some companies are devising ways for employee’s to learn what other jobs in the company are like. Raychem Corp. in Menlo Park, California., for example, has created what it calls the IIINsiders Network, which stands for Internal Informational Interview Network. Launched last December, IIINsiders is a computer database of 360 people in the company who are willing to talk with other Raychemers about their careers, their functions and their divisions. Workers on the database come from all levels of the company, and include the CEO, senior managers, professionals and associate employees.

According to Sue Burish, career-center manager, these employees have volunteered to sit down with other employees and talk about how they got their current jobs, what they do in their positions and what the division does. “Essentially, they give career advice based on their experience,” Burish says. Employees interested in making lateral career moves simply sit down at their personal computers and search for names of employees who are working in divisions or positions in which they’re interested.

Taking its cue from Raychem, Apple Computer also recently launched an electronic database of employees who agree to do informational interviewing. Employees access the database through their own desktop computers. “The system allows professionals to share information with others who are growing careers in the same functional area or with others who are looking to make lateral moves,” Dewey says. “Rather than placing a lot of emphasis on formal mentoring, we’re using technology to set up networks for people to do real-time mentoring by sharing their expertise. Fortunately, we’ve gotten a tremendous response. Networking is such an important piece of career management.”

Enriching current jobs eliminates the need for upward movement.
If people aren’t going to move as quickly as they used to in organizations, companies have to make it more interesting and challenging for employees to remain in the jobs they currently have. If people can’t grow vertically in the organization, they have to grow in place.

Ironically, the massive organizational restructuring that has blocked career progression for millions of workers also is opening up new opportunities for them in their current jobs. “What happens,” Perro says, “is that when you take away layers, the jobs and responsibilities get reassigned. If you take away the vice president position, the people below have to make more decisions. This gives people a broader perch and broader accountabilities, and therefore, the jobs become much more challenging.”

The shift to teamwork also is creating ways for employees to find renewed enjoyment in their careers. Research indicates that job satisfaction comes from performing a variety of tasks, seeing tasks to completion, having decision-making authority and receiving frequent performance feedback. Self-directed work teams offer job enrichment in these ways.

The intense focus on customer satisfaction also enhances job enjoyment for many workers, because when employees are put in direct contact with their customers, they have the opportunity to see how their activities affect the final product.

In the majority of companies where work is being redesigned, it’s being done as part of organizational reengineering, total quality management or another strategic initiative rather than because of its value to career management. However, it’s a fortuitous coincidence that job redesign also can boost stalled careers and motivate plateaued workers.

Align compensation with the career-management system.
As responsibilities change, pay, recognition and status must follow suit. Encouraging people to revitalize their careers through job redesign, lateral transfers or technical career paths requires a substantial shift in a company’s reward and compensation system. As Perro says, “You have to use the reward system to motivate people within a job rather than encouraging them to seek a higher one.” Put another way, you have to encourage employees to develop their skills over time through a variety of challenging assignments, and then you must reward them on the basis of their demonstrated mastery. If you can’t reward people with new, more impressive titles, at least give them more cash at the end of the month. Employees will be much more willing to take on the responsibility for career management and their own personal development if they see the potential for reward.

Compensation systems are being redesigned to support career-management initiatives in a variety of ways, including:

• Skill-based pay: people are rewarded for acquiring new skills
• Variable pay: compensation rises and falls in direct relation to the organization’s financial success
• Broadbanding: clusters jobs into wide bands with expansive salary ranges and no job titles. Theoretically, broadbanding encourages employees to spend less time worrying about their next promotion and more time worrying about how to get the job done.

New York City-based RJR Nabisco Co., for example, put seven salary grades having three pay ranges apiece into four broad job bands. As one of the first companies to implement a broadbanded structure, Nabisco did so in an effort to de-emphasize the importance of titles and increase the likelihood that employees would be more willing to make lateral transfers.

Johnson & Johnson, which also has broadened its salary ranges, did so at the time it eliminated four layers of management—thus four layers of job titles. According to Huseth, broadbanding has allowed the company to continue to provide “personal, professional and financial growth” to employees who must now climb across the organization instead of up.

Career management by employees requires honest communications from the organization.
Clearly, the focus of career management today is shifting from the employer being responsible for an employee’s career, toward the employee taking responsibility for his or her career growth.

The effort to permanently change this paradigm doesn’t stand a chance, however, if organizations don’t communicate with employees about their new responsibilities and the reasons for them. “Career management requires very open and honest communication,” Collard says. “How can you expect employees to take on this new responsibility if you don’t give them the information necessary to make good decisions? You have to work on building their trust and you do this through communication.”

Right now, with regards to career management, corporate America is in an awkward in between stage. HR professionals know employees have to be responsible for their own careers, yet few employees have taken this notion to heart. Let’s face it: it’s tough to reverse generations of conditioning. We—and our parents—entered the workplace with our bosses talking about career ladders and promotions. Our culture glamorizes the climb to the top, and we idolize workers who are rising stars, fast trackers and gogetters. Successful careers have always been built on the notion of advancement—in most cases, through promotions for which the company has groomed us.

So, we have a ways to go. Employees, particularly those in industries hard hit by the recession, are distrustful and nervous about any corporate initiative that may place more demands on them. Older workers are especially resistant to the notion of career self-management. They’ve planned on promotions all their professional lives, and just when they were ready to burst out of the middle-management ranks, the door to upper management has been slammed in their faces.

What does all this mean? Have patience. It’ll take time for employees to understand their new responsibilities. But like kids who’ve gone off to college, it’s time for them to grow up and take charge of their lives. Employers can—and should—provide the necessary support, but employees are ultimately responsible. As Kaye says, “You can’t go home again.”