Author: Site Staff

New York has launched an effort to ensure that bankers and other finance professionals laid off in the Wall Street meltdown stay in the city.

The Web site www.careerlinknyc.com provides guidance for the recently unemployed on how to apply for benefits and links to job search and training sites. It also includes links to stories with tips on how to capitalize from the Wall Street collapse.

The project is one of several initiatives discussed at the “Future of New York City” conference sponsored by Crain’s New York Business on Tuesday, February 3. The effort reflects the new reality that the financial services sector may not play as significant a role in the city’s economy as it has in the past. Professionals in the industry who have been laid off will need to reinvent themselves.

The city plans to spend $170,000 developing and marketing the Web site. In addition to that effort, Mayor Michael Bloomberg also announced plans for a new $10 million angel fund and a startup incubator to help new companies get off the ground. A spokeswoman for the city said details on those plans are not available.

Addressing a panel on emerging industries, Sara Horowitz, the founder and director of the Freelancers Union, said the city needs new policies to support independent workers. She cited an estimate from the city comptroller’s office that shows that half of the new jobs created in the city over the past decade are held by the self-employed.

Horowitz encouraged Wall Streeters and other laid-off professionals to consider becoming independent contractors. One way the city can help is by developing new zoning rules to encourage “co-working” spaces where independent professionals can share office space.

Even though independent workers may not go to work every day in a traditional office setting, Horowitz said, “People still want to go out and work with other people.”

All the doom and gloom in the financial community may provide an opening for the city’s biotech industry, said Sharon Mates, chief executive of Intra-Cellular Therapies. Consolidation in the pharmaceutical industry—most notably the possible merger of Pfizer Inc. and Bristol-Myers Squibb Co.—is an opportunity to attract top talent from research institutions in New Jersey.

To capitalize on the opportunities, Mates says the city should provide more funding for public-private partnerships like the biotechnology centers being developed at the Brooklyn Army Terminal and the East River Science Park. She also said organizations like the New York City Investment Fund, a private investment fund that aims to diversify the city’s economy, should step up investments in biotech to help spur the industry.

“The intellectual capital here is unmatched,” Mates said. “This is an opportunity for growing it and there is still financial capital—it’s the price of the capital that’s changed.”

Filed by Matthew Sollars of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Rep. Hilda Solis will have to wait a while longer for her nomination as the next secretary of labor to come before the full Senate after a committee postponed its vote on her nomination on Thursday, February 5.

USA Today reported Thursday that the California Democrat’s husband had not paid $6,400 in tax liens against his auto repair business until February 4. Some of the penalties had been outstanding for 16 years.

White House Press Secretary Robert Gibbs said in a briefing Thursday that Solis’ nomination is not in jeopardy.

“We reviewed her tax returns and her tax returns are in order,” Gibbs said. “We’re not going to penalize her for her husband’s business mistakes. Obviously, her husband I think has and should pay any taxes that he owes.”

The Solis confirmation process has been stalled since her appearance before the Senate Health, Education, Labor and Pensions Committee on January 9. Solis refused to state a position on a controversial bill that would make it easier for employees to form a union and did not offer her opinion about right-to-work laws and other policies.

After the hearing, panel Republicans submitted a series of written questions to Solis about the union legislation as well as her service on the board of American Rights at Work, an advocacy organization. Solis had not indicated her position in House financial disclosures, according to published reports.

Solis had apparently answered the follow-up queries from senators, but a committee vote was postponed indefinitely, according to a note posted on the door of the hearing room on Thursday.

The statement, issued jointly by Chairman Edward Kennedy, D-Massachusetts, and ranking Republican Mike Enzi of Wyoming, said the vote was delayed to give committee members time to “review documentation submitted in support of Representative Solis’ nomination.”

Even if all Republicans on the committee voted against Solis, the Democratic majority would prevail. The committee also could send the nomination to the Senate floor without a vote.

Once Solis is put before the whole Senate, any member could prevent a vote by placing a “hold” on it. But Kennedy and Enzi said that has not happened.

“There are no holds on her nomination, and members on both sides of the aisle remain committed to giving her nomination the fair and thorough consideration that she deserves,” Kennedy and Enzi said. “We will continue to work together to move this nomination forward as soon as possible.”

If Solis gets a Senate vote, she will almost certainly be confirmed. Democrats hold a 58-41 majority, with the results of a Minnesota election still in dispute.

One of the stumbling blocks for Solis centers on a union measure, the Employee Free Choice Act. It would allow a union to form when a majority of workers sign authorization cards and prevent companies from requiring a secret-ballot election supervised by the National Labor Relations Board.

Organized labor’s top legislative priority, the legislation is fiercely opposed by Republicans and business interests. Solis’ sentiment is no mystery. She is a co-sponsor of the bill, as was President Barack Obama when he was in the Senate.

Unions want Congress to act quickly on the measure, which could sharply increase the number of workers covered by collective bargaining units. Currently, about 7 percent of private-sector employees and 12 percent of the overall workforce belong to a union.

Although Solis doesn’t have a long record on employment issues, she has been embraced by organized labor.

In a statement, AFL-CIO president John Sweeney urged the Senate to quickly confirm Solis. He said she would promote training, “green-collar” jobs, wage enforcement, workplace safety and fairness and would be a union champion.

“She understands that working men and women deserve the freedom to choose whether to form a union without employer interference,” Sweeney said.

—Mark Schoeff Jr.

Despite some bleak employment news this week, a large number of executives appear to be bullish on a need for talent.

More than three-quarters of executives surveyed by Korn/Ferry International Inc. say demand for talent will increase more in the next five years than in the previous five.

In addition, 52 percent predicted a recovery in 2009, with 35 percent saying it will be the second half of the year before there are signs of improvement. Another 39 percent said labor market challenges will linger until 2010.

Half of executives looking for jobs said they are “very confident” in their abilities to find one in 2009 that meets their expectations.

The Korn/Ferry report, released Thursday, February 5, arrived as the number of initial jobless claims in the U.S. climbed 5.9 percent the week ended January 31, the Department of Labor reported.

There were 626,000 initial claims for unemployment filed, up from the previous week’s revised figure of 591,000, according to the report released Thursday, February 5.

The Labor Department report corresponds with the most recent Monster Worldwide Inc. employment index, which fell 13 points to a reading of 118 in January. It is down 42 points from a year ago.

“The fact that employers have chosen to begin recruiting in 2009 on a cautious note is not surprising given the uncertain nature of the global economy,” said Jesse Harriott, senior vice president and chief knowledge officer at Massachusetts-based Monster.

“However, there are a few bright spots, including recruiting activity in public administration as well as in the agricultural sector. Furthermore, online recruitment activity still remains higher than levels seen during 2003 after the last recession.”

Monster’s index is based on a review of online job ads taken from a selection of corporate career Web sites and job boards, including Monster.

—Compiled by Rick Bell from Staffing Industry Analysts reports

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Job cuts by tech firms are putting the controversial H-1B guest-worker program in the spotlight once again.

Sen. Charles Grassley, R-Iowa, kicked off the latest debate in January by publicly calling on Microsoft to prioritize American workers over foreign guest workers as the software giant downsizes. In the wake of Grassley’s letter to Microsoft, questions have been raised about the legality of axing H-1B workers first. And H-1B critics have stepped up their attacks on a program they say makes little sense during a time of corporate belt-tightening.

H-1B visas rarely go to exceptional talent and often are used by “body shops” that provide contract labor to other companies, said Ira Mehlman, media director of the Federation for American Immigration Reform advocacy group. 

“H-1B visas are not being used as they were intended,” Mehlman said.

Controversy about the guest worker visas also has spilled over into the federal bank bailout. In early February, Senators Grassley and Bernie Sanders, I-Vermont, introduced legislation to bar banks that have received a taxpayer bailout from the U.S. Treasury Department or the Federal Reserve from hiring H-1B guest workers for a year.

Their amendment to the stimulus bill under discussion in Congress came in the wake of an Associated Press report finding that banks receiving the most federal aid had requested visas for thousands of foreign workers even as they laid off employees amid the economic collapse.

H-1B visas are one of a number of guest-worker visas that allow foreigners to work in the United States temporarily. Long backed by the U.S. tech industry as crucial to American competitiveness, H-1Bs let computer programmers, electronics engineers and other skilled workers stay in the country for up to six years. 

Except in limited cases, companies do not have to seek an American worker before hiring an H-1B.

In 2007, Grassley introduced legislation to make all employers applying for an H-1B visa pledge that they have made a good-faith effort to hire American workers first and that the H-1B visa holder will not displace an American worker. Grassley’s recent letter to Microsoft chief executive Steve Ballmer continued in that America-first vein.

He wrote it in the wake of the Redmond, Washington-based firm’s disclosure on January 22 that it would cut as many as 5,000 jobs in the next 18 months, including 1,400 jobs that day. Microsoft has been among the most vocal advocates for additional H-1B visas.

“My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers,” Grassley wrote in his letter. “Our immigration policy is not intended to harm the American workforce. I encourage Microsoft to ensure that Americans are given priority in job retention.”

In late January, a Microsoft spokeswoman said the company was in the process of responding to Grassley. Microsoft, which had 95,828 employees worldwide as of December, also issued a statement about its layoff process: “We made the difficult decisions on which jobs would be eliminated based on a detailed assessment of our current and future business opportunities. The initial reductions we announced affect employees in a number of business units, and a significant number of the affected employees are foreign citizens working in this country on a visa.”

Microsoft’s statement also noted that a pink slip for a guest worker can be traumatic.

“We recognize the human impact that our workforce reduction has on every affected worker and their families. For many of the employees here on a visa, being laid off means that they have to leave the country on very short notice, in many cases uprooting families and children,” the company said.

Microsoft was among the top 10 firms getting approvals for H-1B visas in the year ended September 30, 2007, according to research by technology industry publication Information Week. The top 10 was made up largely of India-based firms that provide outsourcing services, including Infosys Technologies, Wipro and Satyam Computer Services.

Asked if it intends to cut any jobs in the U.S. in the coming year, Infosys said in a statement that it had no such plans “apart from any reductions due to restructuring of units or performance-related terminations.” The company also said it disagreed with Grassley’s call for axing visa holders first.

“In a globalized world, corporate decisions should be based on economic realities rather than on political considerations,” Infosys said in its statement. “The U.S. has succeeded in the past due to its openness and free trade both in products and services. Any changes which could bring artificial restrictions on free movement of goods and people will be a huge setback to the globalization process.”

Semiconductor giant Intel also ranked in Information Week’s top 10 list of visa approvals, while technology firms Accenture, IBM and Oracle made the top 100.

Intel and Accenture did not respond to requests for comment. Oracle declined to comment for this story.

IBM spokesman Clint Roswell declined to comment on Grassley’s call for prioritizing U.S. workers.

In a twist on immigration work matters, IBM recently began offering U.S. employees who have lost their job the option of working for IBM in a less-developed country, such as South Africa, India and China. Roswell said the offer includes help with visa matters and moving costs. So far, no IBM workers have taken the company up on the offer, Roswell said.

“It’s not for everyone,” he said.

It’s not clear whether a U.S. employer could legally follow Grassley’s advice and trim its foreign guest workers ahead of qualified American citizens and permanent residents. Cletus Weber, an immigration attorney based in Mercer Island, Washington, says he believes that arbitrarily laying off lawfully employed foreign workers first could subject a firm to potential legal liability under federal anti-discrimination laws.

Title VII of the Civil Rights Act bans employment discrimination based on national origin. Asked whether Grassley’s call for prioritizing qualified American workers during a layoff would violate that law, a spokesman for the U.S. Equal Employment Opportunity Commission—which enforces civil rights law in the workplace—declined to comment.

Commission spokesman David Grinberg said in a statement that his agency looks at charges filed with it on a case-by-case basis.

But H-1B visa holders have rights, Grinberg indicated. “EEOC-enforced laws protect all individuals in the workplace,” he said, “regardless of immigration status.”

—Ed Frauenheim

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Package delivery giant United Parcel Service Inc. has suspended its 401(k) plan match for management and other nonunion employees.

Before the suspension, which took effect Sunday, February 1, UPS matched 100 percent of employees’ salary deferrals up to the first 3 percent of pay.

The suspension comes as UPS, like so many other corporations, has seen revenue and earnings decline as the economy has slowed.

In the fourth quarter of 2008, revenue declined 5.2 percent compared with 2007 to $12.7 billion, while operating profit, excluding certain one-time events, slipped 25.4 percent during the same period to $1.38 billion.

(Click here to read related stories, including those about other companies that have suspended their 401(k) matches.)

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Employers eliminated 650,000 jobs last month, bringing the total number of job cuts in the U.S. since September to 2.3 million, according to a new report released Wednesday, February 4, by TrimTabs Investment Research.

The latest round of cutbacks, coupled with the 683,000 jobs that were shed in December, makes the last two months the worst period for job losses that the Sausalito, California-based research firm has on record. TrimTabs has employment data going back to the early 1970s.

The firm’s outlook for future employment figures doesn’t get much better either. It estimated that the economy could lose 1 million to 2 million more jobs in the next few months.

At the same time, TrimTabs said its data showed the national personal savings rate remained negative and did not break into positive territory in December, as the Washington-based Bureau of Economic Analysis recently reported.

(For more, read “The Country’s Outdated Unemployment Insurance System Gets a Makeover—Maybe.”)

Filed by Mark Bruno of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The Department of Labor has proposed delaying by 60 days the effective date of new rules allowing mutual fund companies to provide direct investment advice to defined-contribution plan participants, according to a notice on the Federal Register’s Web site. The DOL will make its decision based on the comments it gets from the public.

The Labor Department also wants to provide 30 days—during the 60-day delay period—for public comment on whether the agency should “allow the [investment advice] rules to take effect, issue a further extension, withdraw the rules or propose amendments,” the DOL notice said.

The Labor Department is proposing the extension because of a January 20 request from White House Chief of Staff Rahm Emanuel, who wanted to delay Bush administration regulations published in the Federal Register but yet to go into effect pending review by the Obama administration.

The Bush administration’s investment advice rules, as published in the Federal Register on January 21, the day after President Barack Obama took office, were scheduled to go into effect March 23. The proposed delay would move the effective date until at least May 22, the DOL said in its notice.

The DOL also asked the public to comment on the proposed delay within 14 days of the publication of the latest notice in the Federal Register, scheduled to occur Wednesday, February 4, according to the Federal Register Web site.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Congress will consider legislation to extend some of the curbs on executive pay that now apply only to those banks receiving federal assistance, said Rep. Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee.

“There’s deeply rooted anger on the part of the average American,” Frank said at a Washington news conference Tuesday, February 3.

He said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.

The provision will be part of a broader package that would likely give the Federal Reserve the authority to monitor systemic risk in the economy and to shut down financial institutions that face too much exposure, Frank said.

Also included in this proposal will be registration requirements for hedge funds aimed at making their finances more transparent and limits on conflicts of interest at credit-rating agencies such as Standard & Poor’s, he said.

The bill, which the committee is working on in consultation with the Obama administration, also will require financial institutions that bundle mortgages into securities to share in potential losses. This would give firms an incentive not to make bad loans, Frank said. Institutions that securitize loans improperly will incur tougher penalties.

“There have been too few constraints on major financial institutions incurring far more liability than they could handle,” Frank said.

The committee hopes to have a general outline of the legislation by early April, he said. It will be the panel’s first priority in its effort to restructure financial regulation in the wake of the worst economic crisis since the Great Depression.

Frank has summoned the CEOs of Citigroup, JPMorgan Chase and the seven other U.S. financial firms that received $125 billion from the Troubled Assets Relief Program (TARP) to testify at a February 11 committee hearing.

Frank seems to be in synch with the Obama administration in his plans for executive compensation.

Treasury Secretary Timothy Geithner said last month that he might try to extend to all U.S. companies a restriction that prohibits bailout banks from taking a tax deduction of more than $500,000 in pay for each executive.

The TARP legislation enacted in October seeks to give companies receiving aid under the $700 billion bailout a number of incentives to curb what it calls excessive executive pay.

Geithner said he would consider “extending at least some of the TARP provisions and features of the $500,000 cap to U.S. companies generally.”

Under the legislation, banks receiving bailout money must limit golden parachute payments to senior executives to no more than three times the executives’ base pay. The companies also must subject any bonuses or incentives to clawbacks if the payouts are based on a bank’s misleading financial statements.

In addition, bailout recipients can’t offer top managers incentives that “encourage unnecessary excessive risks that threaten the value of the financial institution.”

These limits apply to the CEO, CFO and the next three most highly compensated executives in a bank receiving rescue funds.

Frank said provisions on golden parachute payments and bonus clawbacks would probably be in the legislation, though he declined to provide more detail because “we’re early in the process.”

A congressional oversight panel headed by Harvard law professor Elizabeth Warren also recommended last week that the Treasury consider revoking executive bonuses at failed institutions getting federal aid.

Currently, these institutions must subject bonuses to clawbacks only if the payouts are based on banks’ misleading financial statements.

Rep. Spencer Bachus of Alabama, the top Republican on the committee, said last month that he had reservations about giving the Fed new powers, such as the authority to monitor systemic risk.

Frank said that after lawmakers address issues on systemic risk, they will consider how to bolster investor protection via changes at the Securities and Exchange Commission. The committee also will review proposals to assist struggling homeowners and expand the housing supply, and to strengthen international financial institutions such as the World Bank, he said.

—Neil Roland

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Merrill Lynch has agreed to pay $1 million to settle regulatory charges that a Florida office misled municipal employee pension funds by referring them to a short list of questionable investment advisors that included one who had a personal relationship with a Merrill manager.

The head of the firm’s 10-employee office in Ponte Vedra South, Michael Callaway, failed to disclose his use of the vacation homes of some principals of a money management firm on the list, the Securities and Exchange Commission alleged.

This firm, which was not identified, was the subject of a number of client complaints about poor performance, the SEC order contended. Many of the advisory firms on the Merrill list weren’t properly vetted by the firm.

The Merrill headquarters office for consulting services was aware that the advisor list provided by the Florida office wasn’t properly vetted and that clients were being misled, the order released Friday alleged.

There was “a vacuum in supervision of the Ponte Vedra South office,” the SEC order said.

The Florida office had about 100 clients, including pension funds for policemen, firefighters and municipal employees, during the 2002-2005 period in question.

Merrill, which was acquired by Bank of America last month, also failed to disclose conflicts of interest when recommending that clients have their advisors execute trades through the firm rather than pay fixed fees, the order alleged.

The firm made more profit from these directed brokerage commissions than it would have received if clients paid only a fee and had their trades executed elsewhere, the SEC contended.

Merrill neither admitted nor denied the charges.

A spokesman, Mark Herr, said the Florida advisors have left the firm and that the firm “voluntarily adopted changes that strengthened our oversight of the consulting services program and compensated, where appropriate, affected clients.”

Callaway, 56, is contesting the charges. His lawyer, Julian Friedman of New York, did not immediately respond to a request for comment Monday, February 2.

Callaway was a senior vice president for Merrill and was employed by the firm from 1976 to 2008, the order said. He is a resident of Ponte Vedra, Florida.

Also charged was former Merrill advisor Jeffrey Swanson, who agreed to a censure without admitting to or denying allegations.

Filed by Neil Roland of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Dear Underperformance:

This issue is more often about the system rather than the actual supervisors. If the organization has done its part to create a workable, efficient performance management system and culture of accountability, then it’s easier for the supervisors to do their jobs.

Here are six things you can do to create a system that sets up supervisors for success in the performance review process.

1. Secure ownership by senior leaders.

Senior leaders need to consistently promote performance management as critical to achieving business results. Identify role models at the top who visibly use the system. Actively involve senior leaders in communications about performance management. This gives supervisors “permission” to provide candid feedback.

2. Tie individual goals to business strategy.

Try goal-setting from the top of the organization on down. If your supervisors’ goals are linked to strategy, it will be easier to link all employees’ goals. The clearer the link, the easier it is to discuss results (or lack thereof).

3. Hold individuals accountable for living the organization’s values.

Strategy helps prioritize what work must get done. Organizational values guide how the work should be accomplished. When values are built into the review process, supervisors can more easily address destructive “results at all costs” behavior.

4. Encourage employees to take responsibility for their own career management.

An effective system should create a partnership between employees and supervisors focused on mutual success. Sure, employees need guidance and coaching from their supervisors. But to stay motivated and committed, employees need the chance to tap into their personal motivators and have a say in how their unique capabilities can be leveraged.

5. Hold supervisors accountable for providing regular feedback.

Consider tracking and compensating them for conducting regular coaching discussions. Hold them accountable both for results and for developing their teams. Don’t train them in conducting performance appraisals. Provide the skills and tools they need for the discussions you want them to have throughout the year.

6. Stop changing those forms or screens.

The critical ingredients of an effective performance management system are the business and cultural drivers, and the conversations that take place between the people who need to execute the organization’s strategy. In the end, performance management needs to be less about forms or online systems, and more about continuous dialogue and partnership around issues that matter most to employees and the organization.

When supervisors focus on performance and mutual goals year round, the performance review is a much easier conversation.

SOURCE: Mary Ann Masarech, BlessingWhite Inc., Skillman, New Jersey, March 19, 2008.

LEARN MORE: Please read “Copping Out on Performance Management,” about “bail out” ratings that allow managers to avoid confrontation.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.