Author: Site Staff

Legislation signed into law Monday, July 7, by New Jersey Gov. Jon Corzine will allow employees’ children to retain coverage through a parent’s group health insurance plan until age 31.

That provision, included in a broader health reform measure, S. 1557, amends a 2006 law that had allowed older dependent children to continue coverage through a parent’s group plan until age 30.

Since the enactment of New Jersey’s original law, other states also have bumped up—generally to age 25 or 26—the maximum age employees’ older dependent children can retain coverage through their parents’ group plans.

Legislators have seen such an extension as increasing the likelihood that younger state residents will have health insurance coverage.

Because of federal pre-emption of state laws and rules that relate to employee benefit plans, the New Jersey measure does not apply to employers that self-fund their health care plans.

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

Despite a weak job market, two New York-based tech companies that provide niche job-hunting services are expanding.

Urgent Career recently unveiled a new service that helps companies hire good salespeople, while BountyJobs, which operates a Web site that connects headhunters to employers, has raised $12 million in venture funding.

Urgent Career has spent the past six months developing a technology based on linguistics that analyzes and matches sales people with compatible employers. The startup promises to reduce the time companies spend on vetting candidates as well as improve the retention of talent.

“It’s hard to get good salespeople,” said Jeffrey Stewart, co-founder of Urgent Career, adding that even in bad economic times firms need a robust sales force. “Growth companies don’t have the time and resources to cut through the noise.”

The startup charges clients a fee of 20 percent of a successful hire’s salary. The service is free for job seekers. Job candidates go to www.urgentcareer.com, type in their phone number and are connected to an interviewer. The callers’ answers are digitally transcribed and analyzed by Urgent Career’s proprietary technology.

So far, the company has been advertising its service via targeted online ads as well as cold calling, Stewart said. It has also received referrals from candidates it has successfully placed. About a dozen companies, including Mimeo.com, a New York-based online printing service that Stewart founded in 1998, are using Urgent Career. The 12-man shop is Stewart’s eighth startup in the past decade.

Clickable, which helps smaller marketers develop and manage search ad campaigns, recently hired a direct-sales professional using Urgent Career in less than six weeks, according to David Kidder, Clickable chief executive.

“The hiring process took little energy on our side,” he said, noting that it would have taken him twice as long to vet candidates on his own.

While most of Urgent Career’s business currently comes from New York-based companies, Stewart plans to offer the service in 48 metropolitan areas around the nation and eventually expand into Montreal, Toronto and the U.K.

Separately, New York-based BountyJobs announced it has raised $12 million in venture funding. The capital infusion, led by Greylock Partners, will be used to expand its 30-employee staff and enhance its technology.

BountyJobs provides an online communication platform where headhunters can connect with employers. The two-year-old firm has doubled revenue each quarter since its November 2006 debut and has helped headhunters place thousands of jobs each year, said chief executive Jeremy Lappin. He notes that the company is prospering despite the weak economy. BountyJobs takes 25 percent of new hires’ salaries.

Niche career sites like TheLadders.com, a site for $100,000-plus salary jobs that has been doubling revenue since 2004, have been relatively immune to the slowing economy as well. However, Stewart of Urgent Career noted that it will become more difficult to sift through candidates as less-qualified job seekers enter the market.

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

Two new studies that speak to the state of the HR software market agree that spending on HR technology is likely to keep growing this year.

The reports, from advisory firms Towers Perrin and AMR Research, indicate that a tumultuous, sluggish economy isn’t crimping sales of applications for such tasks as tracking basic employee data, recruiting new workers and managing compensation.

Thomas Keebler, leader of Towers Perrin’s global HR function effectiveness practice, was surprised to see that just 15 percent of organizations surveyed by his firm expect to reduce spending this year on HR technology—a category that includes HR software expenses plus internal and external staffing costs. Last year, that figure was 18 percent.

“I had expected to see much more contraction,” Keebler says.

Factors behind investments in human resource software include greater recognition of the importance of talent and looming demographic shifts in the workforce.

In recent years, HR applications have been one of the fastest-growing fields of business software. AMR Research says that in 2007, the market grew a faster-than-expected 13 percent, to $7.2 billion.

In its 2008 human capital management market-sizing report, AMR upped its projection for the pace of growth in HR software. Last year, AMR predicted a compound annual growth rate of 11 percent from 2006 to 2011, to a total of $10.6 billion. This year, AMR expects a rate of 12 percent from 2007 to 2012, to a total of $12.8 billion. 

“While the bulk of this market to date has been in core HR records, benefits and payroll administration transaction automation, the scales have tipped significantly this year into the strategic HCM process areas of workforce acquisition, management, development and assessment,” AMR wrote. “Together, these areas represent 62 percent of the market.”

For 2008, AMR expects the HR software market to grow 13 percent again.

AMR’s conclusion, based partly on a survey of vendors, differs a bit from findings in the Towers Perrin report, which stems from a poll of end-user organizations. The Towers Perrin HR service delivery survey suggests growth in the HR software market may slow this year.

Thirty percent of organizations polled expect to increase their spending on HR technology this year, while 55 percent plan to keep it the same. That compares with 42 percent last year who planned to ramp up spending and 41 percent who said they were keeping it the same.

The more modest growth indicated for this year is partly a function of companies steadily increasing spending on HR technology for several years, Keebler says.

“Some of that is a natural leveling off,” he says.

—Ed Frauenheim

Thirteen U.S. senators on Wednesday, July 2, asked for an investigation into how the Pension Benefit Guaranty Corp. calculates benefits due to participants in the pension plans it takes over.

The group—which includes Sen. Barack Obama, D-Illinois, the presumptive Democratic candidate for president—asked the Government Accountability Office to investigate how the PBGC initially estimates benefits due and why there have been, in some cases, lengthy delays in final benefit determinations. In addition, they want the GAO to examine the extent to which benefits calculations change between the initial and final determinations.

In their letter to the GAO requesting a review of the issues, the senators wrote that while the PBGC initially pays participants in terminated plans an estimated benefit without interruption, the agency “routinely takes several years to calculate the final benefit amount.” That final benefit amount is at times significantly different from the initial estimate, resulting in situations in which participants will see their monthly benefits decrease, while also being forced to pay back overpayments, according to the letter.

The senators cited the example of employees and retirees who participated in pension plans sponsored by Republic Technologies International Inc., a now-defunct Akron, Ohio-based steel bar manufacturer. The PBGC took over the plans in 2002 after the company filed for bankruptcy. The plans had $108 million in unfunded PBGC-guaranteed benefits.

The PBGC later won a court victory that effectively allowed it to avoid liability for about $100 million in so-called shutdown benefits—a type of early retirement benefit paid when a company closes a facility—to participants who were members of the United Steelworkers of America. The litigation delayed final benefit determinations, a PBGC spokesman said.

According to the senators’ letter, the PBGC took six years to make final benefit determinations, with some retirees facing 70 percent decreases in monthly benefit payments.

A PBGC spokesman said the agency is reading the letter and for now it does not have a comment. However, PBGC officials previously have noted that it can take some time to make final benefit determinations, because pension plan records can be in poor shape at the time a plan sponsored by a bankrupt company is taken over.

Other senators signing the letter include: Sen. Max Baucus, D-Montana, who chairs the Finance Committee; Charles Grassley, R-Iowa, the panel’s ranking minority member; Edward Kennedy, D-Massachusetts., the chairman of the Health, Education, Labor and Pensions Committee; and Mike Enzi, R-Wyoming, that panel’s ranking minority member.

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

A new Japanese law requiring employers to combat obesity in the workforce or face fines will not lead to punitive measures against overweight employees in America, Japanese firms say.

The law that went into effect April 1 forces companies and government, the two sources of health insurance in Japan, to measure the body fat of employees between the ages of 40 and 74.

Employers may be required to pay more into the national health care system if the waistlines of employees, their families and retirees exceed the government’s limits of 33.5 inches for men and 35.4 inches for women.

Unlike Japan, employers and government in the U.S. have been leery to punish people into losing weight, preferring instead to use financial incentives to reduce health risks, according to a recent Watson Wyatt survey that said such incentives had increased in recent years. Still, more employers are using strong tactics to outlaw smoking, and a National Business Group on Health survey of employees last year suggested they would support penalties aimed at obese workers.

“We’re not going to hold anybody to any kind of penalties,” says Mary Ann Hauert, director of human resources in North America for Sunstar, a Japanese maker of oral hygiene products.

Employees in Japan who are determined to be overweight can choose to participate in weight-loss programs, but participation may become mandatory if the company faces fines, Hauert says.

Employers in Japan must reduce the number of employees who show symptoms of metabolic syndrome—obesity and high blood pressure, cholesterol and blood glucose. These risk factors can lead to vascular disease and diabetes. Companies must reduce the number of obese employees by 10 percent by 2012 and 25 percent by 2015.

The campaign has even led to the coining of a new Japanese word, “metabo,” to replace the word obese or metabolic. Metabo has quickly come to represent a new national ethos.

“Goodbye, metabolic. Let’s get our checkups together. Go! Go! Go!” say the lyrics of one city’s anti-metabo song, The New York Times reported.

Sunstar, makers of GUM and Butler brand oral hygiene products, have the option of attending what they call Kenko Dojo, described by the company as a “health farm for employees” where workers can attend lectures on dieting, exercise and Zen meditation.

Though Japanese computer maker NEC has said it could face as much as $19 million in fines if its metabo workforce did not lose weight, an NEC spokeswoman in the U.S. writes in an e-mail that the policy in Japan “has nothing to do with and does not reflect the practices of NEC Electronics America. Our employees are the company’s most important assets, and we are committed to a workplace that provides a healthy environment.”

—Jeremy Smerd

As the economic downturn continues, many companies are looking for new ways to cut costs.

A growing number of organizations are offering telecommuting as an answer to pricey real estate, particularly in parts of the country like New York and San Francisco where office space is still expensive despite the dismal real estate market, observers say.

“A couple of our clients right now have a stated business strategy to decrease office space,” says Janice Hand, a senior consultant at Hewitt Associates. “And to do that, they are discussing giving certain employees the ability to work off site.”

Traditionally, employers have offered telecommuting as a perk to retain key talent, Hand says. But during the past several months, companies are citing it as a way to reduce real estate costs, observers say. The fact that it might also help employees save on gasoline costs is apparently not uppermost in their minds, but it couldn’t hurt.

“Since Thanksgiving, we have heard more companies telling us that they are implementing telecommuting programs to save all kinds of costs,” says Charlie Grantham, executive producer of the Work Design Collaborative, a Prescott, Arizona-based consortium that focuses on researching and defining the future of work. “Real estate is one of their biggest fixed costs, and they want to make it into a variable cost as much as they can.”

While there hasn’t been an uptick in companies allowing their office leases to expire just yet, there is an increase in office vacancies in the San Francisco Bay area, says Jim Kelly, vice president of the business consulting division of Staubach Co., a global real estate advisor.

Kelly, who works in Staubach’s Palo Alto, California, office, is seeing as much as a 10 percent increase in office vacancies as more companies allow employees to telecommute.

Companies can reduce operating costs by 40 percent per person by letting them telecommute, Grantham says.

Sun Microsystems, which has allowed employees to telecommute since 2000, has seen huge cost savings, says Carolyn Rohrer, a spokeswoman for the company.

The San Francisco-based technology company saved $67.8 million in real estate costs in fiscal 2006, she says. More than 18,000 Sun employees participate in the program.

One issue many companies face is offering telecommuting on a case-by-case basis and not as a blanket policy, observers say. Only 27 percent of large employers in a recent Hewitt survey said they have a formal written policy around flexible work arrangements.

Companies offered telecommuting to a select number of employees as a perk and agreed to pay for their home office costs. However, they also are paying for the costs of those people having a desk with the company, Kelly says.

“Those companies end up paying 150 percent for those employees,” he says. “But they don’t see it that way; they just see it as a benefit that they are offering to select employees.”

—Jessica Marquez

In the latest tale of old-style recruiting meets new, Jobvite on Tuesday, July 1, hired an executive with experience both as president and CEO, a move orchestrated to help the Web-based online recruiting software maker break out of a growing pack of competitors.

Dan Finnigan, former head of Yahoo HotJobs’ online recruiting business and more recently entrepreneur-in-residence at a Silicon Valley venture firm, replaces Jobvite founder Jesper Schultz, who stepped into the role of chief product officer.

“We have a lot of things we want to do on the product side, and we needed to get talent to build the company,” Shultz said. Finnigan “has experience in recruiting and has run big companies, which is why I’m excited to have him on board.”

Jobvite is among a handful of startups offering online recruiting applications to small and midsize companies, more of which are turning to social networks and other Web tools to find qualified job candidates.

As they do, the U.S. market for Web-based recruiting has mushroomed to $522 million and is predicted to grow at a pace of 8 percent a year, according to a February report from Forrester Research, a technology researcher in Cambridge, Massachusetts.

Jobvite’s Web-based service lets customers create and broadcast “job invitations” to employees, business associates, job prospects or social networks such as Facebook and LinkedIn. The software works with e-mail, scheduling and other common programs to simplify such tasks as setting up job interviews or circulating candidate evaluation forms, according to the company. Jobvite competes against rivals Taleo, iCIMS and Bullhorn.

HR technology analyst Jason Averbook calls Jobvite the “Facebook of talent acquisition.” Averbook, head of Knowledge Infusion, a Minneapolis HR consulting firm, said management was smart to bring on an experienced hand. Finnigan “is the perfect complement to Jobvite in bridging old-media recruiting with new-media recruiting,” Averbook said. “That is a must as organizations transform their talent acquisition processes.”

In December, Jobvite raised $7.2 million in a round of venture funding led by CMEA Ventures. The five-year-old San Francisco company has 20 employees, and as of spring had about 40 customers, including technology firms Advent, Infinera, nGenera, SupportSoft and TiVo.
Austin, Texas-based nGenera, which makes Web-based business software, uses Jobvite to broadcast job openings over its company intranet to 537 employees. Employees earn a referral bonus if someone they know takes a job they heard about through Jobvite.

“It’s a one-stop shop,” said Katie Tierney, nGenera’s recruiting manager.

Finnigan identified online recruiting as a market to watch while serving as an entrepreneur-in-residence at Benchmark Capital in 2007. He said running Jobvite gives him the chance to get in on the ground floor of an expanding industry, something he enjoyed during stints at Yahoo HotJobs and, before that, helping newspapers and telecommunications companies create what eventually became large-scale digital enterprises.

“Certain trends today are creating another era of innovation that’s going to change how we work,” Finnigan says.

At Yahoo HotJobs, Finnigan organized an online classifieds partnership with a consortium of 700 newspapers. Previously, he worked on Internet, advertising and classifieds projects at newspapers and telecommunications corporations, including Knight Ridder, SBC Interactive and the Los Angeles Times.

Michelle V. Rafter is a Workforce Management contributing editor based in Portland, Oregon. To comment, e-mail editors@workforce.com.

Employers worldwide are concerned about losing workers to more enticing locations at a time when talent in many places is in short supply, a recent survey reveals.

Manpower Inc. surveyed around 28,000 employers in 27 countries and territories to find that 31 percent of employers are concerned about the impact on the labor market from talent leaving their countries.

The “Borderless Workforce” survey states that workers in the Philippines, Ireland, Brazil, Portugal, Colombia, Mexico and Central America, and Peru were the most likely to consider relocating.

“As the talent shortage becomes more severe, employers are naturally concerned about losing employees—not just to competitors in their own markets, but to those based overseas, too,” said Jeffrey A. Joerres, CEO of Milwaukee-based Manpower, in a statement.

“More people are living and working away from their home countries than at any other point in history—about 3 percent of the world’s population. These are not the one-way migrations of yesteryear. Talent goes where talent is needed, and we are truly becoming a global, borderless workforce,” he said.

The survey showed the top 10 preferred destinations that workers are migrating to are the U.S., U.K., Spain, Canada, Australia, United Arab Emirates, France, Italy, Germany and Argentina.

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

Chrysler will realign its human resources, employee relations and communications functions under one executive.

Nancy Rae has been named executive vice president of human resources and communications. She had been senior vice president of human resources and communications. The corporate communications department had been reporting to Rae since Jason Vines, former vice president of communications, left the automaker in December.

In other changes the company announced:

• John Franciosi senior vice president of employee relations and a veteran labor negotiator, is retiring September 30 after 31 years with Chrysler.

• Al Iacobelli, vice president of human resources, who formerly reported to Franciosi, will now report to Rae.

• Lori McTavish has been named executive director of communications.

Chrysler CEO Bob Nardelli praised Rae. “With more than 30 years of company experience, she is a true leader in transformational change,” he said.

General Holiefield, UAW vice president, said of Franciosi: “We have appreciated our working relationship with John and his contributions to Chrysler.”

Buzz Hargrove, president of the Canadian Auto Workers, said Franciosi was “a very decent man” but a challenging negotiator who understood the importance of workers. “I enjoyed working with him.”

The changes were effective Tuesday, July 2.

Filed by Bradford Wernle of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Anheuser-Busch Cos. will change the way it calculates lump-sum pension payouts that will mean a reduction in payouts of about 5 percent to 6 percent in 2009 and about 15 percent by 2012, according to an internal memo addressed to salaried employees from Tim Farrell, vice president of corporate human resources. The change will affect only salaried employees.

Effective January 1, interest rates tied to corporate bonds will be used to calculate the lump-sum pension payouts and certain annuity payout options, according to the memo. The company had used the average of the 30-year U.S. Treasury bond rates for the months of August and September to determine the payouts.

“Even with these changes, Anheuser-Busch will continue to offer a very fair plan, with retirement benefits above the 75th percentile of our corporate peers,” Farrell said in the memo.

The memo also lays out an early retirement program that is not tied to the lump-sum payout change and says the company will reduce its long-term incentive program, which includes stock options and restricted stock, by 20 percent to 40 percent.

Anheuser-Busch is trying to prevent a takeover by Belgium-based InBev. It plans to reduce costs in an effort to try to convince investors that InBev’s offer is too low.

Anheuser-Busch on June 11 received an unsolicited, nonbinding proposal from InBev to acquire all the outstanding shares of Anheuser-Busch for $65 per share, or $46.35 billion, in cash. The stock closed at $62.21 on Monday, June 30, on the New York Stock Exchange.

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