Author: Site Staff

Soon-to-be New York Gov. David Paterson has walked picket lines and championed pro-worker legislation for years, but union leaders are not expecting dramatic change now that their longtime friend will be in charge in Albany.

Labor officials say Paterson is more progressive than Eliot Spitzer, but some worry that an intense pressure on the incoming governor to build consensus could make it difficult for him to move significantly to the left of his predecessor. Union officials say they often had to convince Spitzer that their ideas were both correct and politically feasible; with Paterson, the emphasis will be on political viability.

Unions also have close ties to Paterson’s father, former state Sen. Basil Paterson, an influential labor lawyer who represents 1199/SEIU United Health Care Workers East, the United Federation of Teachers and Transport Workers Union Local 100.

In the short term, union officials say they will have to be sensitive to the fact that Paterson did not win office on a platform that was tested in a campaign. Any talk of what changes he might make in Spitzer’s priorities is premature. Restoring confidence in the executive should be his No. 1 goal, officials say.

In the long run, labor leaders are hoping he will get behind measures that would tie development to livable-wage jobs; maintain health care spending; and raise taxes on wealthy New Yorkers.

Stuart Appelbaum, president of the Retail Wholesale and Department Store Union, insists Paterson will be motivated by one way of thinking.

“David has shown that he’s directed by his own inner compass and he does what he thinks is right,” Appelbaum says. “He’s not afraid to challenge others when he thinks there’s a better direction. And he’s done that consistently.”

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

If Congress does not allow more highly skilled foreign students to work in the country after they graduate from U.S. universities, American high-tech companies will lose their ability to develop innovative products, Microsoft chairman Bill Gates told a congressional committee on Wednesday, March 12.

At a hearing of the House Science and Technology Committee, Gates outlined immigration reforms that he said would help fill “a critical shortfall of skilled scientists and engineers.”

He also advocated improving science and math education and increasing federal funding for basic research.

On immigration, Gates urged lifting the annual cap on H-1B visas for highly skilled immigrants. Last year, the 65,000-person ceiling was exceeded on April 2, the first day that companies could apply for visas for the next fiscal year.

Gates also recommended that Congress increase the number of employment-based visas, or green cards, extend the time that foreign students can stay in the U.S. after they complete their degree, eliminate visa limits for individual countries and make more highly skilled foreign employees permanent residents.

H-1B legislation may not be viable on Capitol Hill. The immigration issue is volatile and brittle following the collapse last year of a Senate bill that would have increased border and work-site enforcement while creating a path toward legal residency for undocumented workers.

Gates essentially is calling for a targeted fix for highly skilled immigration. Without it, Microsoft and other firms will suffer.

“American companies simply will not have the talent they need to innovate and compete,” he said. “Our higher education system doesn’t produce enough scientists and engineers to meet the needs of the economy.”

Last year, Microsoft was unable to hire one-third of the foreign-born candidates it sought because the company couldn’t obtain enough H-1B visas. Gates warned that companies will relocate operations to countries where they can find scientists and engineers.

Microsoft opened a facility in Vancouver, British Columbia, in 2007. Gates praised Canada for policies that ease the hiring of foreign nationals.

“That government recognizes that competing for talent … is very, very important,” Gates said.

Gates received gentle questioning from most of the committee, which was celebrating the 50th anniversary of its founding with the hearing. Chairman Bart Gordon, D-Tennessee, referred to Gates as a “rock star.” Many of his colleagues were deferential and called Gates “sir.”

But Rep. Dana Rohrabacher, D-California, challenged Gates about whether H-1B visas deny jobs to American graduates. Even if they didn’t excel in school, they shouldn’t be shut out of the job market, according to Rohrabacher.

“These ‘B’ students deserve to have good jobs and high-paying jobs,” he said.

Gates acknowledged that Microsoft uses H-1B visas to attract the best talent from U.S. schools. 

“These top people are going to be hired,” Gates said. “The question is, what country will they work in?”

Once they’re on board at Microsoft, they can be catalysts for projects that create more openings. “The ‘B’ and ‘C’ students are the ones who get [the] jobs around these top engineers,” Gates said.

Rohrabacher also questioned whether Microsoft is ignoring unemployed U.S. scientists and depressing high-tech salaries through the use of H-1B visas.

“These jobs are going begging,” Gates said. “We’re not kidding. It’s not an issue of raising wages. We’re hiring as many people as we can.”

In an interview after the hearing, a former computer programmer who was in the audience disputed Gates’ assertion of a tight U.S. high-tech labor market.

“Total baloney,” said Gene Nelson, who lost his job with Genuity when the tech bubble burst earlier in the decade and is now an anti-H-1B advocate. “They’re asking for almost impossible combinations of qualifications.”

He also asserted that companies have the upper hand on immigrants because the firms own the H-1B visas. This allows them to depress the salaries of foreign workers. The visas are “a government subsidy,” Nelson said.

But Gates argued during the hearing that H-1B visas are an important weapon in the zero-sum talent war. It’s better to retain foreign graduates so they contribute to the U.S. economy rather than letting them work at home.

“Our youngsters are competing with [foreign] students, even if we turn them away from this country,” Gates said.

—Mark Schoeff Jr.

After nearly eight years of litigation, a federal judge granted final approval of a $14 million class-action settlement in an ERISA lawsuit against New York Life Insurance Co. that was filed by employees alleging that the insurer mismanaged its pension funds by exclusively investing in its own mutual funds.

U.S. District Judge Bruce W. Kauffman affirmed the settlement in Mehling et al. v. New York Life Insurance Co. last week in U.S. District Court for the Eastern District of Pennsylvania.

The judge awarded $4.2 million of the settlement as attorney fees and administrative costs for the plaintiff party. The remaining amount will be deposited in the New York-based New York Life retirement plans to directly benefit the plans’ participants who were involved in the settlement class. In addition to the monetary settlement, New York Life also agreed to receive independent advice on their investments through May 31, 2010.

The suit stems from allegations that New York Life improperly invested billions of dollars in assets of various New York Life-sponsored employee benefit plans into New York Life mutual funds in a scheme to boost profits and help the funds appear more attractive to investors, according to the original complaint filed in November 1999.

Further, the suit alleges that New York Life’s actions drained millions of dollars in “excessive and easily avoidable” fees and expenses as the insurer’s trustees continued to invest in “inappropriate and over-priced New York Life proprietary vehicles” when better-performing options were available from investment managers unaffiliated with New York Life.

The plaintiffs argued that New York Life’s investment advisor also was president of the insurer’s mutual funds and that trustees who approved the pension investments were not made aware of options that would have been less expensive to maintain.

New York Life denied the allegations and “asserted that the plans’ investments, or menu of investment options in the case of the 401(k) plans, have at all times been prudently selected,” according to a statement by the insurer. The company further contended that ERISA does not prohibit the investment of a retirement plan’s assets in proprietary mutual funds offered by the plan’s sponsor, provided that the investments and fees are appropriate.

“The company’s receptivity to a settlement centered on the fact that the bulk of the settlement monies would go to work for the affected employee and agent participants in the plans,” said a spokesman for New York Life in a statement. “The result is a reaffirmation of New York Life’s commitment to its employees and agents through the company’s highly competitive benefit and pension plans.”

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

People moving into key executive positions
	Alfred Ramirez has been named director of talent acquisition and diversity at ACT. Prior to joining ACT, an organization best known for its college admissions exam, he was executive director at Diversity Focus. Ramirez is also the former president of the National Community for Latino Leadership in Washington, a national think tank for leadership development. He held several White House appointments in the 1990s, including special assistant to the president and associate director of the White House Office of Presidential Personnel. He also served as senior advisor at the Corporation for National Service and executive director of the White House Initiative on Educational Excellence for Hispanic Americans.
	Kate Shehan has been named vice president of human resources at Morton’s Restaurant Group. Prior to joining Morton’s, Shehan was vice president and director of human resources and training for Crown Golf Properties. She has served on the board of directors for the Council of Hotel and Restaurant Trainers for four years
	David Morrison has been named president of recognition award supplier Bruce Fox Inc. Morrison joined the company’s board of directors in May 2006 while serving as executive vice president of Evigna. Previously, he was president of Corporate-Elements.
Pamela Thompson has been named vice president of human resources for Olympus America. Most recently, Thompson was vice president of human resources at Tandem Labs. Before that, she was vice president of human resources at Teva Pharmaceuticals USA. She has also held senior HR positions at Wyeth Pharmaceuticals.
Bob Kovalsky has been named a senior vice president at Adecco. He will oversee Adecco’s newly established mid-Atlantic division, which encompasses the New York metropolitan area, Delaware Valley, Maryland, Eastern Pennsylvania, Northern Virginia and the District of Columbia. Kovalsky has run one of Adecco’s largest regions in the U.S. for the past six years. He previously worked at Olsten.
Chris Power has been named CFO of Salary.com. Before joining Salary.com, Power held several positions at Monster Worldwide, including CFO of global operations for Monster Worldwide and CFO for Monster Worldwide’s North America division. Prior to Monster Worldwide, Power was a vice president at Nortel Networks.
The Bostonian Group has appointed two new managing directors. Bob Clark has been named managing director of the firm’s retirement services practice. John Mancuso has been named managing director of the firm’s executive compensation and benefits practice. Previously, Clark was managing consultant for the retirement services practice. Before coming to the Bostonian Group, Clark worked at UBS, New York Life Investment Management and Cigna. Mancuso previously held positions at PricewaterhouseCoopers and Watson Wyatt Worldwide.
Margery Sinder Friedman has been named senior vice president at the Segal Co. An attorney, Friedman was most recently a member of the labor and employment practice group at Morgan, Lewis & Bockius in Washington.
Cynthia D. Sparkman has been named senior vice president of human resources at PreCash. Prior to joining PreCash, she was vice president of human resources for Cameron.
Ronnie Ng has been named director of sales and business development for the Asia-Pacific region at Cartus. He will be based out of Cartus’ Singapore office.
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Manpower’s latest quarterly employment outlook survey showed its weakest hiring projections in four years.

The report, released Tuesday, March 11, revealed 9 percent of the 14,000 U.S. companies responding to the survey expect reductions in staff levels between April and June, according to Melanie Holmes, vice president of corporate affairs for the Milwaukee-based staffing giant. A majority of respondents—60 percent—expect no change in their workforce levels, and 26 percent plan to increase hiring.

By comparison, during the first quarter of 2004, 13 percent of employers anticipated cuts in staffing, while 61 percent thought headcount would remain the same and 20 percent projected increases.

Manpower’s outlook at the same time last year was somewhat stronger, with 7 percent of respondents anticipating staffing cuts.

Despite the tepid outlook, Holmes says this shouldn’t be troubling for the labor market.

“We are not seeing any signs of mass panic out there,” she notes. “Companies seem to be taking a wait-and-see approach.”

Holmes says this cycle is different from previous recessionary periods because it is less volatile. The market is not experiencing the historic dips that normally precede an economic downturn.

Nevertheless, employers are hesitant to move aggressively with hiring plans, she notes.

Evidence that the labor sector is losing steam seems to be mounting. The Bureau of Labor Statistics has reported two straight months of negative job growth. According to its most recent report, 63,000 jobs were shed from the economy in February. That is on top of the 22,000 that were lost in January.

These figures are of concern, says Sylvia Allegretto, an economist at the University of California-Berkeley Center for Labor Research and Education. Given its population and economy, the U.S. should be adding 150,000 jobs a month. Jobs in manufacturing, retail trade and construction are the weakest, according to the BLS reports.

This pattern is similar to the results in Manpower’s 2008 second-quarter job forecast, where companies in mining, manufacturing and construction reported decreases in hiring confidence. By contrast, companies in transportation and public utilities are expecting increased staffing levels, albeit slight ones, according to Holmes.

Employers in the West and Midwest are projecting the weakest hiring outlook in the coming months, while companies in the Northeast and South are expecting relatively stable hiring plans.

Manpower’s report also examines the global job outlook—shedding light on hiring activity in 32 countries and territories. The second-quarter outlook is a mix globally, Holmes explains.

Employers in Australia, Hong Kong and Singapore are reporting the most optimistic projections. By contrast, companies in Spain and Italy indicated the weakest hiring outlook in the second quarter.

China’s year-over-year hiring projections are weaker across every industry, casting a cloud of uncertainty over the coming year.

—Gina Ruiz

A Department of Labor report showed that corporate payrolls shrank by 63,000 jobs in February. The decline—the biggest drop in nearly five years—follows a loss of 22,000 jobs in January.

Gloomy stuff, and it appears that accounting and finance specialists are not fully immune to this bleak job market. A survey of some 1,400 finance chiefs released Friday, March 7, by staffing firm Robert Half International has led the firm to forecast a mere 4 percent increase in the hiring of corporate accounting and finance workers in the second quarter.

Indeed, 85 percent of the polled CFOs said they do not anticipate making any personnel moves in the next few months.

Of the 9 percent of CFOs who are expecting to bring on new hires, 41 percent said they were doing so to address the demands of business growth, while roughly a third cited rising workloads.

Robert Half noted that employers who are hiring are typically looking for help with general accounting, internal controls or compliance initiatives.

One bright spot: Audit firms still appear to be actively courting talent. The National Association of Colleges and Employers reported this week that accounting services firms and financial services firms were among the most aggressive suitors for the current crop of college graduates.

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

While shifting workers from traditionaldefined-benefit plans into 401(k) plans may allow corporations to lower their retirement plan expenses, many companies may wind up dealing with an unexpected problem.

“Because there’s no guaranteed retirement income with a 401(k), employees will work longer than they would have if they were in a traditional pension,” said Alan Glickstein, senior investment consultant at Watson Wyatt. “And this will curtail an employer’s ability to efficiently manage their workforces.”

Glickstein pointed to a new Watson Wyatt study revealing that workers whose non-Social Security retirement incomes are primarily derived from 401(k)s are significantly less likely to retire than workers who are covered by a defined-benefit plan.

Employees with defined-benefit plans know exactly what their pension payout will be—making planning for retirement easier—unlike those with defined-contribution plans like 401(k)s. What’s more, it makes little financial sense for employees with DB plans to keep working once they are eligible to receive the pension. Typically, the payout from a DB plan won’t increase beyond what the company has promised even if employees continue to work after they become eligible for a full pension.

That’s not the case with 401(k) plans, where the more an employee puts into the plan, the bigger the payout—assuming, of course, the employee’s plan investments pan out.

“It makes it much more challenging for companies to anticipate the rate at which their employees will retire, and also the exact periods that these employees may leave the workforce,” Glickstein said.

Indeed, Watson Wyatt’s research shows that the timing of retirement for workers in 401(k) plans is often directly influenced by business cycles, as well as the ebb and flow of the stock market. To wit: Employees whose 401(k) plans have suffered a significant investment loss are much less likely to retire (roughly 1 percent less likely to retire for every 10 percent drop in the stock markets, according to Watson Wyatt data).

Ultimately, when there are market booms, 401(k) participants retire “just when companies need to add workers,” according to the Watson Wyatt study, and when the markets decline, 401(k) participants “stay at work just when companies want to cut the workforce.”

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

Democrats vented their frustration about the faltering housing market, slowing economy and burgeoning executive pay at a congressional hearing Friday, March 7.

The recipients of the ire were three current and former financial executives who Democrats believe earned too much while Americans defaulted on risky mortgage products developed by their firms.

Charles Prince, former chairman and CEO of Citigroup, E. Stanley O’Neal, former chairman and CEO of Merrill Lynch, and Angelo Mozilo, founder and CEO of Countrywide Financial Corp., testified before the House Oversight and Government Reform Committee.

Committee Democrats criticized the trio’s compensation packages. O’Neal and Prince stepped down as the leaders of Merrill Lynch and Citigroup in 2007 when their companies each lost $10 billion and suffered a stock price drop of almost 50 percent. Countrywide lost $1.6 billion.

But O’Neal received a $161 million retirement package and Prince a $10 million bonus as they walked out the door. Mozilo, who still runs Countrywide, made more than $120 million in pay and the sale of the firm’s stock.

Rep. Henry Waxman, D-California and chairman of the committee, asserted that the executives were paid far in excess of their performance while millions of homeowners fell behind on their mortgages or had their property foreclosed.

“It seems to me like everyone is hurting except for you,” Waxman said to the executives. “CEOs hit the lottery even when their companies collapse.”

Committee Republicans said it was unfair to blame the housing debacle on the executives when a number of factors and institutions—including Congress—contributed to the problem.

“If you CEOs had made nothing during this time … [it] would not have saved one home,” said Rep. Tom Davis, R-Virginia and ranking member of the committee. “Punishing individual corporate executives with public floggings like this may be a politically satisfying ritual—like an island tribe sacrificing a virgin to a grumbling volcano.”

Company board members from Merrill Lynch and Citigroup defended the executive pay packages, which they said were based on past high performance and market rates for CEO talent. They also said that they align executive and shareholder interests by making executives retain the vast majority of their company stock while leading the firm. 

John Finnegan, chairman of the management development and compensation committee at Merrill Lynch, said that O’Neal did not receive a bonus or severance payment. He said that O’Neal was allowed to retire rather than being dismissed because he could only be fired for misconduct, not poor financial performance.

Harley Snyder, chair of the compensation committee at Countrywide, said that the board reduced Mozilo’s base pay from $2.9 million to $1.9 million and required that certain financial targets be attained before he would qualify for a bonus.

Mozilo, who said the stock sale was part of a planned retirement process, has vowed to forgo $37.5 million in severance payments and other earnings if Bank of America takes over Countrywide.

In making their defense, each of the executives relied in part on personal narratives that showed them overcoming significant obstacles to rise to the top of corporate America.

Prince was the first in his family to go to college. Mozilo started his company from scratch in New York City.

O’Neal, whose grandfather was born into slavery, lived in a boyhood home that lacked indoor plumbing or running water. He financed his college education by working at a General Motors factory. He stressed that his hardscrabble upbringing gave him empathy for people who are facing foreclosure.

“I understand as well as anyone the importance of homeownership, not only financially but also socially and emotionally, and I would never do anything knowingly that would deny anybody that privilege,” O’Neal said.

Richard Parsons, chairman of Time Warner and chairman of the personnel and compensation committee at Citigroup, cited the executives’ backgrounds in arguing that compensation has to be set based on competitive factors rather than a desire to close the gap between C-suite and cubicle or shop floor remuneration.

“These are the American stories because the market works,” he said.

That provided little comfort to Rep. Elijah Cummings, D-Maryland, who related the stories of constituents who have lost their homes.

“I worry about this whole culture where the little guy gets squeezed and the next thing all he has is a debt, not a house, and the golden parachute drifts up the golf course,” he said.

Mozilo offered to assign staff to work with each House member’s office to address housing concerns in their districts.

—Mark Schoeff Jr.

Dear Risk and Reward:

Attracting and retaining top talent is a challenge for even the savviest of hiring managers. Most sales representatives expect a compensation package that reflects the quantity and quality of their efforts. Generally, the more money a salesperson makes for the company, the more the salesperson expects to earn. However, when it comes to negotiating compensation, you’ll want to make sure you’re keeping sales performance the top priority. Consider the following:

First, consider the framework for your compensation model—how you want to reward people. Variable-pay models have more incentives for the salesperson to generate business, but they can be unattractive if your territory is cold. Generally, a combination of fixed and variable pay is best. You may want to look at some of your competitors’ job postings and see what is standard for your marketplace.

Consider what you compensate for. Specifically, make sure that your compensation plan promotes the behaviors you are looking for and supports the kind of selling you wish to execute. Think carefully about what role this person will play in the sales process. Will you need someone who generates leads or closes deals? How consultative or transactional is the sale? Is it a product or solution sale? Based on your responses, you may wish to create incentives that link to factors other than revenue (such as volume, profit, contacts generated or customer satisfaction).

Keep it simple. It can be tempting to base rewards on a wide range of factors. However, the compensation system can’t be so complex that the salesperson doesn’t know what should be driving behavior. The package can include gated commissions, bonuses, promotions and more. But, it will only drive behaviors if there are clear guidelines as to how the salesperson will need to perform to reach those benchmarks—and if there is a straightforward, visible process for tracking progress along the way.

Balance risk. If you have never managed an incentive plan in your territory, you may wish to consider mitigating risk for both you and your sales hire. A windfall clause, or cap on incentive earnings, is often added to ensure that the sales representative’s income stays within certain boundaries, enabling management to reduce commission on sales that exceed certain parameters. At the same time, a higher fixed component will ensure that the salesperson’s pay does not fall below a minimum threshold during the ramp-up time.

Don’t be afraid to change. While changing your plan every month would create confusion and distraction, do be sure to track it constantly. And, if it is not doing what you need it to, don’t be afraid to ask for salesperson input and change it.

Although there is no magic formula for creating the perfect plan, you can minimize stress by developing a plan that is aligned with the organization’s strategy, defines desired salesperson behaviors and results and determines what can actually be measured and thus rewarded before implementing the plan.

SOURCE: Seleste Lunsford, AchieveGlobal, Tampa, Florida, January 28, 2008.

LEARN MORE: More information on sales targets/commissions.

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.

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Dear Failure on the Front Line:

Developing supervisory skills is not an easy task. The most critical step is the first: namely, clearly defining the requirements of supervisors versus those of individual contributors. Specifically, how will success as a supervisor be evaluated, and how clear are supervisors about changes in their roles?

Select for competencies in how to lead people, rather than relying exclusively on developing these skills after the fact. For example, effective supervisors balance their need to personally achieve results with a desire to accomplish goals through others. They also are able to build relationships that balance the need to be liked with the ability to manage employees’ performance—all while maintaining trust and respect.

Understanding a supervisor’s motives—their need for achievement, affiliation and power—helps you provide effective coaching and management development. Building people-leadership skills also involves assessing emotional intelligence (i.e., self-awareness), which is the ability to manage one’s self and relate to others effectively.

It also is important to understand an individual’s leadership style: Is it democratic versus autocratic; developing versus pace-setting; authoritative versus controlling; and so on. Finally, a helpful measure for determining a supervisor’s performance lies in assessing the work climate he or she creates. Climate is a culmination of the supervisor’s role clarity, motives, competencies and leadership style, and has been shown to affect overall performance as much as 30 percent.

There are supervisory programs that use assessment tools and multi-rater feedback prior to managers attending management-development training. In-baskets and role plays also are often used to assess and develop skills that create an engaged and motivated workforce.

SOURCE: Connie Freeman and Jim Bowers, Hay Group, Philadelphia, January 3, 2008.

LEARN MORE: Organizations may be missing essential managerial skills needed for sustained success.

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.

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Dear Workforce Newsletter