Author: Site Staff

Union membership as a part of the overall workforce in the United States grew last year for the first time in a quarter-century, according to analysis by the Bureau of Labor Statistics.

The news, published January 25, came a day after the Ford Motor Co. announced it would further reduce the number of hourly workers by 11,000 on top of the 44,000 jobs the auto¬maker has shed since 2006.

It represents part of the seismic shift in the makeup of America’s unionized workforce. Today, a union worker is more likely to be a low-skilled, low-paid service worker than a skilled, well-paid manufacturing employee.

“The future of the unions is the $8-an-hour home health care worker,” says David Gregory, professor of law at St. John’s University. The unions may have regained membership with lower-wage service workers, but they cannot regain the dues lost along with higher-paid jobs, Gregory says.

Though the growth in union membership as a percentage of the workforce is decidedly small—a gain of one-tenth of 1 percent to 12.1 percent of the workforce in 2007 from 12 percent in 2006—it represents the first increase for unions since the Bureau of Labor Statistics began collecting annual union membership rates in 1983, when 20.1 percent of the workforce was unionized.

“Union membership has been falling or stagnant year after year after year,” says Ben Zipperer, a research associate at the Center for Economic and Policy Research in Washington. “But over the past few years, unions have slowed that decline.”

Unions showed a net gain of 310,000 members, many of them coming from Western states. California added 200,000 union jobs in 2007. For the first time, a greater percentage of the workforce in the West was in a union than the workforce in the Midwest.

In 2007, 11.3 percent of manufacturing workers in the Midwest were unionized, a drop from 11.7 percent in 2006, making manufacturing workers less likely to be unionized than the average worker, according to the government’s labor statistics.

“You always think of manufacturing as a union job, but that’s no longer true,” Zipperer says.

While jobs were lost in manufacturing, the unions made gains in health care, construction and education.

“What you are seeing is a cumulative effect of new approaches,” says Joshua B. Freeman, a professor of labor history at the City University of New York Graduate Center.

Freeman says unions, particularly those representing service employees and health care workers, have renewed their focus on training and funding union organizing efforts. Union efforts, particularly the seven unions under the umbrella organization Change to Win, have centered on jobs that employers cannot easily ship overseas in sectors that have been growing: health care, construction and education.

“I think the emphasis of Change to Win, and leaders like Andy Stern, is this constant focus on the need to organize,” Freeman says. “It has changed the whole labor movement. But as an organization, Change to Win has not been a big factor.”

While new union workers may not earn as much as colleagues in manufacturing, the growing numbers could prove important in electoral politics, since union households are more likely to vote. This is particularly important in the fight over the federal Employee Free Choice Act, which would make it easier for unions to organize in a workplace.

Researchers caution that the increase, which is slight, could be a statistical error that could easily be wiped out by a faltering economy.

“There’s no telling what’s going to happen next year,” says Zipperer, “because the economy is very dynamic at the moment.”

—Jeremy Smerd

What Were They Thinking?: Unconventional Wisdom About Management

Facing growing competition and financial pressure, many companies have responded by cutting employee benefits to maintain their profits. A 2005 survey by Deloitte found that 90 percent of the responding companies planned to rein in costs during 2006 by changing their active employees’ health plans. Companies are also cutting back pension benefits, either freezing or canceling defined benefit plans—those programs that pay retired employees a fixed sum depending on their final wage and years of service— and either eliminating retirement programs completely or substituting defined contribution plans where employees manage their own accounts and assume more of the risk of ensuring they have the financial resources to permit them to retire.

So, a 2004 Deloitte survey discovered that only 10 percent of corporate executives would offer a traditional defined benefit retirement plan if they were able to create their companies’ retirement benefit programs from scratch. Many people predict a similar movement in health care plans, with programs migrating from defined benefit to defined contribution plans. In these types of plans, employers put up some money and employees are then largely responsible for using that money to purchase insurance and manage their own health care. The advantage to employers is that their financial obligations are known—they are determined by the money to be allocated to the plans—and more controllable. In each of these changes in both pensions and health care, the trend is clear—companies are shifting risk and liability, and also decision-making responsibility, to their employees; indeed, such a shift is an explicit objective of many of these changes. But companies, in their haste to cut short term, visible costs and transfer decision making to their workforce, haven’t thought very carefully about the implications of these actions for their profitability and productivity. If they did, they would see that many of the changes will have feedback effects that can either limit or even eliminate the supposed benefits. For one thing, such changes ignore the time and expertise required to manage benefits. Moreover, the emphasis on employee responsibility for their own benefits management (1) ignores the advantages of specialization and the division of labor, (2) causes employees to spend time on issues that are far removed from their primary jobs, diverting effort from their work, and (3) removes an important way in which companies have traditionally competed to attract talent, at the very moment that talent is going to become increasingly scarce.

The move toward giving employees responsibility for benefits is striking and huge. Many companies are experimenting with insurance plans that make their people more “cost conscious” by taking an active role in health care decision making. For example, Definity Health, now part of United Healthcare, and one of the vendors of consumer-driven insurance programs, boasts on its Web site that “you, the consumer of health care services, are given direct access to your health care dollars and the freedom to make choices.” The shift to defined contribution retirement plans, already well under way, does the same thing for retirement—people are responsible for deciding whether or not to participate in an employer’s program, how much to contribute, and where and how to invest their retirement assets.

There are three big problems with these changes in who makes the decisions. First of all, remember Adam Smith and the famous pin-manufacturing factory, which illustrated the efficiency gains from specialization and a division of labor? The whole premise of specialization is that people who only have to learn about a subset of decisions and activities can become more expert than those who have to cover a broader range of issues. Specialization permits people to delve more deeply into a subject. And specialization gives people practice and experience and the proficiency that comes from that practice and experience. In other words, specialization promotes efficiency. Michael Jordan may have been a great professional basketball player, but his career as a baseball player was short and undistinguished. In every field of endeavor, outstanding achievement and great performance come from years of experience and hours of practice.

Making everyone—and I mean everyone, including people with limited education, limited resources, and possibly even limited reading and English language skills—responsible for managing their health care and retirement decisions violates the most basic ideas of specialization and expertise. It is important to recognize that decisions about health care and retirement are decisions with substantially more complexity, financial importance, and risk than the typical consumer purchase decisions so often used in the misguided analogies I see. Confronted with too many choices that they don’t necessarily want to make, many employees literally don’t do anything. There is convincing evidence, in the case of retirement benefits, that the more choices employees face, the less likely they are to sign up for any plan, thereby forgoing employer matching dollars. And the more investment options they have, the more likely they are to leave their assets in money market accounts that don’t provide sufficient returns to ensure a decent prospect of retirement.

Second, when do employers think people are going to make these benefits decisions and gain the expertise to do so? Clearly some of this learning and decision making will occur on the job. My employer, Stanford University, occasionally runs retirement seminars during the workday and provides calculators on its Web site to help people navigate the myriad choices and complexities of benefit management; and once a year we also have a series of benefits fairs that people can take time off to attend. This is all nice, and maybe even pleasurable for some—for example, a young Texans Credit Union employee remarked, “Co-pays, 401(k)s, flexible spending accounts—it was fun figuring out what everything meant.” But I wonder if anyone actually bothers to calculate how much time is diverted from people’s principal work activities to the task of managing their benefits.

Of course, every action provokes a counteraction, and employers’ decisions to force people to make time-consuming decisions that tax their abilities has stimulated the development of an industry to—surprise!—do for a fee what companies themselves used to do for their workforce in simpler times. So, Health Advocate, a firm founded in 2001 by five former Aetna U.S. Healthcare employees, charges companies a monthly fee of $1.25 to $3.95 per employee to help people deal with their health insurance decisions. Another company, in Assist, markets claims assistance to employers as an employee benefit, also charging a per-employee per-month fee. Medical claims assistance is a growing business because dealing with insurance companies and coverage can tax even the most skilled and educated workers. But how about this for an idea: instead of offering assistance and advice as an added benefit, or hoping that somehow employees can cope on their own and not spend too much company time doing so, why not offer benefits that don’t require a PhD to figure out?

It is also important to note that much of the shifting of risk from companies to their employees is economically inefficient. That’s because companies can spread risk—for instance, of incurring a catastrophic medical expense—across their entire employee base while individual employees have much more difficulty in diversifying their risk. Moreover, economists argue, for risk-diversification among other reasons, individual employees are going to be more risk averse than companies; in the case of medical insurance, for example, many employees are reluctant to retire or even change jobs for fear of losing health insurance. One survey found that more Americans were afraid of rising health care costs than terrorism or even losing their jobs.

If something like insurance is more valuable to an individual than it costs a company to provide, the obvious course is for the company to purchase that product or service and provide it to the employee—precisely the opposite of what is occurring. The current trend of off-loading of risk to employees is contrary to much of conventional economic theory, which argues for the assumption of risk by those entities—in this instance companies—that have a comparative advantage in doing so.

Finally, when companies shift decision-making tasks and risks onto their workforce, they make themselves less desirable as employers, compared with companies that offer more generous employee assistance. Here a little historical perspective helps us understand the likely consequences of such moves. Companies began offering benefits such as retirement and health care coverage in the early part of the twentieth century for several, quite self-interested, reasons. First of all, these efforts, sometimes referred to as “welfare capitalism,” helped to forestall unionization drives. Second, companies offered these benefits to attract and retain employees. Ford Motor Company, for instance, experienced such high turnover that it could scarcely operate its assembly lines. Raising wages and providing employee assistance represented an effort to build a workforce that would provide competitive advantage. Similarly, Eastman Kodak’s pension efforts arose from its enlightened self-interest in attracting an experienced, educated, and loyal labor force.

There has been much commentary on the coming shortage of labor throughout the industrialized world, a consequence of declining birth rates. In the United States, the passing from the workforce of the baby-boom generation is expected to create numerous job openings and labor shortages in vital industries such as oil and gas, air traffic control, and government, as well as throughout the economy more generally. If there is one thing that is clear from looking at Fortune’s best places to work lists, it is that most of those companies offer benefits that are more generous than standard for their industry or for the economy as a whole. Thus, it seems ironic that companies are cutting one of the ways that they have traditionally attempted to achieve an advantage in attracting employees just at the moment that the competition for labor is about to increase.

Shifting decision making and the risk for funding retirement and health care, as well as other benefits, onto the workforce at first glance looks like a shrewd way to take costs out of the system. But many of these gains are ephemeral. Individual employees do not have a comparative advantage in decision making about retirement and certainly not about medical care, and the time required to manage their various accounts is often going to come out of time spent on other work. Moreover, worrying about retirement and health care can distract people’s focus and make concentration and effort more difficult. Perhaps that’s why the best employers offer more generous benefits and use the idea of specialization and comparative advantage to have decisions made by those most qualified to make them, in partnership with their people.

Source: What Were They Thinking?: Unconventional Wisdom About Management, by Jeffrey Pfeffer. Reprinted by permission of Harvard Business School Press. Copyright (c) 2007 Jeffrey Pfeffer. All rights reserved.

Chapter 14: The Ultimate Broken Window

    If a customer in your bookstore notices that the wallpaper is a little faded, that’s a broken window. But it’s a broken window that is easily repaired: you can replace the wallpaper with a minimum of difficulty and an affordable expense (in most cases).

    What’s more important is that the customer in a bookstore probably won’t stop coming to the store because the wallpaper is faded. Yes, her image of the company might be a bit diminished, and she might indeed wonder if the books are dusted often enough, but if the titles that customer wants are in stock and the prices are acceptable to her, she will likely overlook the wallpaper unless and until another broken window makes itself known to her.

    That will not be true if the broken window occurs in customer service.

    I know, you’ve read it here before, but this point can’t possibly be stressed vehemently enough: Bad customer service is the ultimate broken window. There is nothing more damaging to your business than the consumer’s belief that you don’t care about what is bothering him or her.

    Think about it: You offer a product or service to the public or a segment of the public. Every member of that group has a right to expect that you will deliver that service or product to their satisfaction. It’s not an option; it’s a necessity, in order to have anything even resembling a successful business.

    In the case of customer service, we have the person who is meant to provide that service or product interacting directly with the public. This is the person who is the face of your business to the consumer. And if that encounter goes badly, especially because the person entrusted with delivering service doesn’t do so, it goes beyond worn carpets and loose neckties. It enters into the realm of deal breaker.

    It doesn’t take a huge amount of imagination to understand that a person who enters a business expecting something—anything—and not getting it will be disappointed. Take that idea a little further, and you’ll see that one bad customer service experience—one—can take a customer and turn him or her into a former customer in a heartbeat. No second chances.

    Think about this disturbing scenario: You go to a restaurant and order spaghetti; when your order comes, you find an insect crawling on your pasta. Here’s my question: Are you going to throw out the bug and eat the spaghetti, or are you going to insist that the entire plate be removed? Or will you leave the restaurant? And even when that is done, how likely are you to go to that restaurant again?

    Exactly.

    Customer service isn’t just the department where complaints are addressed. It’s any encounter between an employee of your company (or, if we extend this idea as far as it goes, any representative of your company, including your product) and the people who might ever be interested in buying your product or service. Any encounter. Sales personnel are involved, clearly, in customer service— they serve the customer directly. But those who deliver the product, service it, and install it are also involved in customer service. The receptionist who answers the phone is a customer service employee. The people who drive your trucks, write your press releases, design your packaging, and pay your bills are all customer service employees. You are a customer service employee.

    This means you can’t afford to have any employee of your organization have a negative encounter with a consumer (and we should make it clear that every business has consumers, not just the ones that sell a product directly to the public). Each person in your employ is an ambassador representing your company in its relations with other nations, and every human being on this planet is another nation, by our definition.

    A good ambassador keeps in mind that the art of diplomacy is his first and best tool. Are some customers going to be unreasonable? Of course, some will. Does that mean an employee is justified in treating that person in a curt or irritated manner? Absolutely not.

    Every business deals with disgruntled customers, even those that work business-to-business. And in many cases, those customers will not understand the workings of your business and will therefore demand something that you really and truly can’t deliver. Many of these will be belligerent or unreasonable and will not approach your employee in a friendly, jovial, accepting manner.

    These are the very people to whom your employees must be most accommodating. An ambassador knows that the loudest, nastiest, least reasonable representative of another country is the one who can cause him the most trouble. That belligerent diplomat will go back to his capital, report that although he was making a most understandable demand, it was met with total ambivalence or, worse, outright contempt, and he will recommend that diplomatic relations with the other country be discontinued immediately.

    By the same token, a loud and unreasonable customer does not see herself that way. She sincerely believes that her complaint is justified and natural, that her needs, indeed, demand action, and fast action at that. She thinks that your employee, in denying her request, is the one being rigid and unhelpful.

    Furthermore, trying to dissuade a customer from complaining is counterproductive. The customer should be made to believe that the company agrees that her complaint is justified and is doing everything it can to correct the problem. Thanking the complainer for pointing out the broken window (real or imagined, in your estimation) is not a bad tactic. Think of the times that you have brought a problem to the attention of a company you have dealt with, as a colleague or a consumer. Which would you have preferred: being told you were wrong in your complaint or being appreciated for your observation and told specifically what would be done to rectify the problem?

    Every relationship has a seller and a buyer. Yes, every relationship. And this means that in every situation, someone wants something from the other, and someone is deciding whether or not to grant that request. In business, the lines are usually very well drawn, and we know very clearly who is selling and who is buying. But when problems arise and one of the parties decides a complaint must be made, everything changes.

    Keep in mind that a customer who is voicing a complaint is already in a state of mind you’d rather avoid. This person is likely to be irritated and could very well be agitated to the point of behavior that is not characteristic of the relationship as it has been established to this point. Voices might be raised. Unfamiliar words (or at least those that have not been used in the relationship up to this point) might be uttered.

    The key is not to respond in kind. Two angry people are going to get a lot less done than one angry person and one who is keeping a cool head. You can make points with all your customers by making sure you remain calm and collected in all dealings, especially when they don’t do the same. It demonstrates control and reiterates the point that you are taking the situation seriously and trying everything you can to help resolve it to their satisfaction.

    All of your employees need to have this idea drummed into their heads on a regular basis. It doesn’t matter how agitated and verbally abusive a customer might get, there is no excuse for returning that attitude in kind, and any employee who does so will be fired on the spot, no matter how justified the abrasive behavior may seem at the time. No exceptions, no second chances, no excuses. Fired. On the spot.

    Poor customer service is the ultimate broken window because customer service is the one thing that every business must deliver to its consumers. A breach of that trust, an employee whose actions indicate that he or she is not interested in the customer’s concerns, is as blatant and damaging a broken window as you can imagine. And a muddled chain of command is as bad as an obnoxious employee.

    I hope you’ve never had to spend any time in a hospital, but if you have, you probably understand the idea of poor customer service. Members of the support staff (that is, anyone except doctors) in a hospital know their jobs extremely well, I’m sure. They understand the routine, speak the language of medicine, and know the reasons that things work the way they do for patients.

    The problem is, the patient is not included in this particular information stream. Patients are generally worried about their health and might not be reacting to situations the way they normally react to stress when living their normal lives. They are, understandably, on edge. But patients also don’t understand the routine of hospital work: the time at which certain things are done, the jargon that surrounds virtually any aspect of health care, the reasons that doctors appear when they appear and leave the orders that they leave. Patients don’t live in the hospital for a good chunk of their lives, and so they don’t “get” the rules the way staff members, who have had years of experience, do.

    So when patients are told that things are the way they are and that they, the patients, must adhere to rules they don’t understand and have never encountered before, they are likely to be a little less calm and pleasant than they might in another situation.

    The problem is, I’ve yet to find a hospital where the staff understands this. Indeed, they seem to think that patients should know what they, the trained staff, know and that patients are simply being obtuse—or worse, stupid— when they ask questions or challenge a rule that to the staff is perfectly justified. There is less explaining and more complaining in hospitals than anywhere else on the planet, in my experience.

    Dr. Robert Kotler, a prominent Beverly Hills plastic surgeon, says his practice is run with the idea that the patient should be included in every aspect of care, and he makes it a top priority to hire support staff (nurses, receptionist, office manager and so on) who will empathize and understand a patient’s needs.

    “Before they get to see the doctor, patients deal with the office staff on the phone, in the office, and in the examining room,” he says. “If they have an experience that is unpleasant with one of those people, they’ll have a bad taste in their mouth before I walk into the room, and I might not be able to change that. It won’t matter how well I do my job if the people who run the office can’t validate the valet parking ticket. The patient will already have a bad impression of my practice.”

    Customer service relates to every aspect of business, and once it becomes a broken window, it is remarkably hard to repair. Remember the insect in the spaghetti? No matter how apologetic the restaurant owner might be, and how diligently he might ensure that the situation can never recur, how likely do you think it is that the customer will return for another chance?

    Now, it’s possible that you might gain more customers after the changes are implemented to increase customer satisfaction, but how many have you lost for life before that happens? Find out what your customers’ concerns are by mystery shopping yourself and asking the most disgruntled of your customers to mystery shop your business for you (turn an enemy into an ally) and give them some discount or free incentive to do so. Yes, you can do it yourself, and you should, but only in addition to the people who are going to be most critical and who don’t have the emotional attachment you have to your business and the people in it.

    Poor customer service is the ultimate broken window. Excellent customer service is the ultimate pristine, clear, clean window. Which would you rather have?

CAN I HELP YOU?
• A product failure or glitch in delivery creates bad will. Bad customer service loses you a customer for life.

    • All employees are customer service employees. Everyone in the company does something that affects the consumer’s experience with the company. Doing so without respect for the consumer is fatal.

    • Each employee is an ambassador for the company, in all dealings with other people. If the employee talks to a friend about the company, the employee is representing the company. Employees must know they are important “faces of the company” and must act accordingly.

    • Support staff matters. If you think an employee who doesn’t provide the core service of the company isn’t representing the company in all dealings with the public, you are asking for trouble.

    Source: (Warner Business Books, Hachette Book Group, 2005)
 

Worksheet: Calculating Turnover Costs

Turnover Ratio: The number of employees who left, divided by the average number employed per year.
Separation Costs
Interviewer’s time (hours spent x hourly rate*)	$
Terminated employee’s time (while on payroll: hours spent x hourly rate)	$
HR administrative functions (terminated paperwork: hours spent x hourly rate)	$
Separation pay	$
Total separation costs	$
*Include benefits in the hourly rate.	$
Replacement Costs
Advertising	$
Internal communications (development time x hourly rate)	$
Interview time (hours spent x hourly rate for interviewer)	$
Administrative functions (typing, copying: hours spent x hourly rate)	$
Applicant testing (such as validated aptitude tests)	$
Applicant travel expenses	$
Applicant relocation expenses	$
Total replacement costs	$
Training Cost
Employee workbooks (printing + time for development x hourly rate)	$
Orientation(s) (new employee time + staff time x hourly rates)	$
On-the-job training (employees’ time x hourly rates)	$
Total training costs	$
Separation + Replacement + Training =	$
Per Employee Cost
(total costs ÷ number left in the company) =	$
Source: (The Career Press, 2007)

President Bush announced a legislative proposal Monday, February 4, allowing the Pension Benefit Guaranty Corp. to raise premiums it charges underfunded pension plans.

The proposal, included in the president’s fiscal 2009 federal budget, is aimed at helping the agency close a $13.1 billion deficit in its single-employer program, according to the budget. The proposal was originally advanced by Bush in 2005 as part of his comprehensive pension reform plan but was not included in the Pension Protection Act of 2006; it was also included in the fiscal 2008 budget but failed amid opposition from pension plan industry lobbyists.

The 2009 budget also includes a series of proposals previously presented by Bush that would simplify the rules applied to a variety of defined-contribution plans and other savings plans. Among other things, the proposals would consolidate 401(k), SIMPLE 401(k), SARSEP (salary reduction simplified employee pension), thrift, 403(b) and governmental 457(b) plans into a new “employer retirement savings account.”

The account would be subject to the same rules that generally apply to 401(k) plans. The retirement plan proposals, included in previous presidential budgets, have also failed to go anywhere because key lawmakers were concerned the accounts could undermine the current employer plan system.

“I really haven’t seen anything new in here [the president’s 2009 budget], and we don’t think these proposals will see any significant action this year,” said Ted Godbout, a spokesman for the ERISA Industry Committee in Washington.

The president’s budget also proposed a 6 percent increase in funding for the Department of Labor’s Employee Benefits Security Administration, to $147.9 million. The increase is intended to let EBSA “increase the quality, timeliness and transparency of pension information disclosed to the public and employees, as well as to maintain the strong enforcement record of recent years,” according to a Labor Department press release.

This story was originally filed by Pensions & Investments, a sister publication to Workforce Management. To comment, e-mail editors@workforce.com.

A weak showing in last year’s USA Today Super Bowl Ad Meter got (or, depending on whom you believe, contributed to getting) CareerBuilder’s agency, Cramer-Krasselt, fired. So, does a significantly worse showing in this year’s survey mean that the online job site’s new agency, Wieden & Kennedy, ought to be worried?

Wieden’s debut spots for CareerBuilder, which kicked off a new campaign dubbed “Start Building,” placed 39th and 47th in USA Today’s annual popularity contest. The best of C-K’s three “Office Jungle” spots last year finished 16th, and its top “Office Monkeys” spots rated 11th and fourth, respectively, in 2006 and 2005.

CareerBuilder also aired a third ad on Fox after the game. A spokeswoman said CareerBuilder and Wieden jointly determined that the other two spots were more relevant to the Super Bowl audience.

Asked about the Ad Meter results, a CareerBuilder spokeswoman said Wieden was safe, adding: “We’re very excited about this campaign.”

She also maintained that the Ad Meter was not the sole criterion in C-K’s firing last year. “The whole decision wasn’t based on the poll or any single factor.”

Spat with C-K
That claim, of course, contradicts C-K chief executive Peter Krivkovich, who made a stir last winter when he quit the CareerBuilder business in a huff after, he said, he was told the account had been placed into review solely because of the Ad Meter results. “There are a few times in your life when you have to tell someone to [expletive] off and mean it,” he said at the time.

The spat kicked off a discussion within the business about the relative merits of day-after-game polls. Critics contend that the polls measure nothing except likability and are therefore useless to sophisticated marketers. But proponents say winning the so-called Ad Bowl—as Anheuser-Busch just did for the 10th straight year—is a priceless PR coup that extends the value of ads that cost as much as $3 million per 30 seconds.

Asked about the most recent poll, Krivkovich at first played coy.

“Oh, were they in the game this year?” he asked, before conceding with a chuckle that he’d seen the latest Ad Meter results. “I was sitting on a plane going through the papers, and I have to say, it was interesting.”

Filed by Jeremy Mullman of Advertising Age, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

While the prospect of a recession is rattling nerves from Main Street to Wall Street, a case of recession jitters hasn’t fully engulfed the recruiting community.

“I definitely see movement on the horizon,” says Nancy Albertini, chairman for executive search firm Patterson Blackstone in San Jose, California, which recruits high-level executives in the media and Internet sectors. “It is an upward trend in hiring.”

Her upbeat attitude in the face of bleak economic times falls in line with findings from a report by the Association of Executive Search Consultants published January 22. In the survey, 75 percent of respondents had a positive hiring outlook for the coming year. The poll of 250 executive search consultants was administered between November 28 and January 2.

North American respondents generally were restrained in their outlook; 58 percent said they are optimistic about the industry, compared with 80 percent of European and 88 percent of Asian counterparts.

AESC president Peter Felix says U.S. executive search consultants will have different attitudes about the hiring outlook depending on their area of focus. Those involved in structured finance and mortgage-backed securities are getting pummeled by the housing credit crunch. Meanwhile, executive search consultants in health care, utilities and not-for-profits are going full steam ahead.

“There are sectors that are feeling the pinch, and there are others that remain unaffected,” Felix says. “Overall, our members are telling us that they’re very busy.”

Staffing firms don’t seem to be slowing down either. “We’re not getting a sense that there is an impending jolt in staffing employment,” says Steve Berchem, vice president of the American Staffing Association in Washington. The telltale signs of an impending recession are not there, he notes.

Historically, staffing employment has taken a severe blow during the three to six months before a recession is officially declared.

“That’s just not happening right now,” Berchem says. “The industry has generally been flat for the last year.”

Berchem recalls the last recession, in March 2001. He says staffing employment was growing at a pace of 6 percent year-over-year. That changed overnight, when the industry actually began declining—falling by 2 percent—during the fourth quarter of 2000.

“It was a net drop of more than 8 percent,” he notes. “The situation got worse with each quarter.”

When the dust settled, 800,000 staffing jobs were lost from the peak in 2000, when there were 2.8 million employee assignments each day for the staffing industry, Berchem notes.

Some recruiting experts suggest that even if there were to be a national recession, it may not necessarily halt hiring.

“We’re living in a very different world,” says Francis Luisi, principal at Charleston Partners, an HR executive recruiting firm in Rumson, New Jersey. Factors such as employers with global vision and the millions of baby boomers reaching retirement age could make the traditional recession-related hiring slump less severe than in past cycles, he explains.

“It is simply too early to speculate on what will happen,” Luisi says.

—Gina Ruiz

A new study on telecommuting has rekindled debate about the pros and potential pitfalls of working remotely.

In January, Rensselaer Polytechnic Institute announced that research from professor Timothy Golden suggests telecommuting may harm workers left behind in the office. In particular, Golden found the greater the prevalence of teleworkers in an office, the less others in the office are to be satisfied with their jobs, with a corresponding decrease in the likelihood they will remain with the company.

Golden’s study focused on a large high-tech firm. It was published last year in the journal Human Relations.

“[I]t may be that with a greater prevalence of teleworkers in a work unit, non-teleworkers may find it less personally fulfilling to conduct their work due to the increased obstacles to building and maintaining effective and rewarding co-worker relationships,” Golden said in a statement.

Backers of telecommuting took issue with the study. Chuck Wilsker, president of the Telework Coalition, said a 2006 study of 13 organizations by his research and advocacy group found that non-telecommuters were either supportive of telework or indifferent.

In a statement, Wilsker’s group also blasted Golden’s study for examining just one company. “We question the validity of his research and quite frankly are surprised that it was released.”

Jessica Otitigbe, a spokeswoman for Troy, New York-based RPI, said Golden would not be available for comment. But in a statement, Otitigbe defended the study. “Professor Golden’s research is methodologically sound, peer-reviewed research published in a very respected journal,” she said. “Naturally this is only one study in one setting, but this is how one builds a body of knowledge in a particular area.”

Telecommuting is growing as a work practice and is now part of the broader mobility trend of employees working in settings that include airports, hotels and cafes. The number of Americans whose employers allow them to work remotely at least one day per month jumped from 7.6 million in 2004 to 12.4 million in 2006, according to a report released last year by professional association WorldatWork.

Golden’s study suggests that a number of factors can temper the negative effect on co-workers of telecommuting. “[M]anagers may be able to help mitigate some of this adverse impact by ensuring greater face-to-face contact between co-workers when employees are in the office, and granting greater job autonomy to accomplish work activities as employees see fit,” he writes.

Gil Gordon, head of a consulting firm focused on telecommuting, concedes that telework arrangements can end up hurting employees remaining at the office. If managers don’t assign tasks smartly, non-telecommuting employees can wind up with more than their share of work, Gordon argues. “That’s a preventable problem,” he says.

Gordon also says he has heard a lot of non-telecommuters say that a less-populous office is less distracting and more productive.

In any event, telecommuting seems likely to keep growing. Telework options are now key to attracting and keeping top workers, Gordon says.

“This really is a talent management and retention and utilization issue,” he says.

—Ed Frauenheim

The complex transition to in-house customer service has divided the Equal Employment Opportunity Commission board and raised concerns about service quality at a time when the agency is already under fire in a Supreme Court case.

A stopgap measure will help the EEOC keep its phones staffed until March after closing its call center December 19.

The four-member commission board voted unanimously last month to hire 38 temporary employees and extend the contract on its interactive voice-recognition answering system for three months, which will cost about $250,000.

But the complex transition to an in-house capability has divided the board and raised concerns about quality at a time when the EEOC is targeted in a Supreme Court case.

The temporary employees will help the EEOC’s field offices handle some 65,000 calls each month. The 24-hour answering system can resolve about 35 percent of the queries.

By late March, the EEOC hopes to have hired 61 federal workers permanently. The agency voted in August to close the outsourced facility, the National Contact Center, and establish an internal function. The move was necessary because Congress eliminated funding for the center.

Even though the EEOC is responding to a Capitol Hill action, the process of closing the call center has sparked two contentious meetings recently.

EEOC Chair Naomi Earp and Vice Chair Leslie Silverman supported extending the center’s contract during the transition. Commissioners Stuart Ishimaru and Christine Griffin voted for the December closure.

At the board’s most recent meeting, Ishimaru expressed frustration with the slow pace of the agency’s effort to put an alternative customer service system in place.

“Here we are a week before the phones are turned off and we have a proposal for what to do next,” he said. “We established an atmosphere that this is not urgent.”

Silverman took exception to Ishimaru’s characterization of the board’s attitude. “What we’re trying to do here is provide the best customer service we can under the circumstances,” she said.

Nicholas Inzeo, director of EEOC field programs, said temporary workers will be trained on customer service “soft skills” and EEOC procedures. But, he added, “We’re not going to be able to do as much as we could with the contact center.”

If claims are fumbled during the transition, it could amplify questions surrounding the EEOC’s administrative ability.

In a November oral argument involving the definition of an EEOC charge, or the action that the agency takes against an organization for alleged discriminatory conduct, several Supreme Court justices expressed frustration with the agency’s intake practices. A government lawyer at the hearing said the EEOC had improved its process for bringing charges since the case was filed.

Whether the EEOC loses public confidence during the upcoming transition will hinge initially on the performance of the temporary employees.

“It’s going to depend on who ends up answering the phones and their level of experience,” Griffin said after the meeting. “It’s better than not doing anything.”

Ultimately, an internal customer service system will work better than the call center, Ishimaru said in an interview.

“It was another layer that was added that did not add value to our process,” he said. “We should have EEOC employees answer the phones.”

—Mark Schoeff Jr.

An economic stimulus package wasn’t the only topic drawing bipartisan consensus in the House of Representatives.

Republicans and Democrats at a House Education and Labor Committee hearing on Tuesday, January 29, agreed that Carey McClure was wronged by General Motors when it denied him a job, and by a court when it ruled he was not disabled.

But the parties disagreed about whether a bill that would reform the Americans With Disabilities Act was the best way to address the situation McClure and others have faced.

McClure, an electrician who suffers from muscular dystrophy, had a GM job offer rescinded in 2000 after a doctor discovered his ailment during a required examination. The doctor maintained that McClure couldn’t meet the physical requirements of the position he had landed.

Throughout his life and 20-year career, McClure found ways to work around his disability and succeeded in his field. But when he sued GM, the company argued that he wasn’t really disabled. A trial court agreed.

“Basically, the court punished me for making myself a productive member of the workforce for over 20 years,” McClure said in testimony before the committee.

Following Supreme Court rulings in 1999 and 2002, courts have been applying a strict standard for determining whether someone has a disability. They also have held that “mitigating measures” like medication or eyeglasses can disqualify someone from disability protections.

In response, House Majority Leader Steny Hoyer, D-Maryland, introduced a bill, the ADA Restoration Act of 2007, which would redefine a disability as a physical or mental impairment.

It also would prohibit courts from considering “mitigating measures” and require that employers prove an individual is not qualified for a job.

Business advocates criticized the bill, saying it would substantially increase the number of people covered under the law and drive up company costs as they accommodate many different kinds of impairments that could encompass the flu, a sprained ankle, a chipped tooth or hair loss.

The Department of Justice said the measure would modify the definition of disability so that it did not refer to substantially limiting major life activities.

Hoyer asserted that his measure, which has 244 bipartisan co-sponsors, including the ranking Republican on the House Judiciary Committee, simply clarifies the congressional intent of the original disabilities legislation.

“The bill does not seek to expand the rights guaranteed under the landmark Americans With Disabilities Act,” Hoyer testified. “It responds to court decisions that have sharply restricted the class of people who can invoke protection under the law. Simply put, the point of the ADA is not disability; it is the prevention of wrongful and unlawful discrimination.”

Further action on the bill hasn’t been scheduled.

David Fram, director of ADA and EEO services at the National Employment Law Institute, was skeptical of the measure.

It “could lead to a deluge of unintended consequences,” he said. “I don’t think there would be a flood of litigation. I think there would be broad new responsibilities for employers.”

Those burdens would be caused by making workplace accommodations for potentially millions of people or granting their requests for leave.

“Every single one of us has some kind of impairment,” he said. “This would essentially make the Family and Medical Leave Act irrelevant—or half of it anyway.”

The ranking Republican on the committee, Rep. Howard “Buck” McKeon, said he wanted to fix a problem like the one that McClure faced. But he warned that expanding the ADA too much would dilute it.

“Resources could be stretched too thin, leaving those who need help the most without the accommodations they deserve,” he said.

McClure maintained that enlarging the ADA would not foster frivolous lawsuits. “I’ve worked with a sprained ankle,” he said. “Most of us just want to work like everyone else.”

Rep. Robert Andrews, D-New Jersey and chairman of the hearing, said states like his and California, which have broad disability laws, have not seen a spike in litigation. He said the bill would correct erroneous interpretations of federal disability law.

“The courts have confused the question of who has a disability with the question of what should be done in response to that disability,” he said.

He also argued that in the midst of fierce global competition, disability laws will help deepen the labor market.

“We can’t say to any person that we can leave your talent out,” he said.

—Mark Schoeff Jr.