Author: Site Staff

The Senate has approved a minimum wage and tax measure that would eliminate the tax deductibility of punitive damage awards.

Senate Finance Committee Chairman Max Baucus, D-Montana, included the punitive damage provision as part of the measure designed to reduce the taxes of small businesses faced with having to pay more to minimum wage-earning employees. The small business tax relief bill was added to the larger minimum wage bill late last month.

The House version of the minimum wage increase bill does not contain the punitive damage provision, and differences between the two versions eventually will have to be ironed out by a conference committee.

—Business Insurance

The author of the law that allows U.S. workers 12 weeks of unpaid leave for family or medical needs is set to introduce a bill that would expand the scope of the original measure.

Sen. Christopher Dodd, D-Connecticut, announced Thursday, February 1, that he intends to offer a bill that will provide six weeks of paid leave for employees. Dodd, chairman of the children and families subcommittee of the Senate Health, Education, Labor and Pensions Committee, wrote the Family and Medical Leave Act.

Since that bill became law in February 1993, 50 million people have taken time off work for the birth or adoption of a child or to care for themselves or a sick immediate family member. Under the FMLA, they are guaranteed that their job will be protected.

Dodd is concerned that many people don’t take advantage of FMLA because they can’t afford to abandon their paychecks. “I fail to see why that right should stop at a certain income,” he said at a Capitol Hill press conference.

The U.S. workplace hasn’t kept pace with the reality of dual-income families, Dodd says. When both parents work, they sometimes have to make wrenching decisions about caring for a sick family member or staying on the job.

“These are questions they go through contortions trying to deal with,” Dodd says.

Under Dodd’s proposal, employers, employees and the federal government would share the costs of the leave.

It’s not possible to estimate the price tag right now.

“I think a far better question is, what happens if we do nothing?” Dodd says. “What happens to families?”

It took Dodd seven years to guide the FMLA into law. The political terrain may be just as difficult this time. He benefits from having his party in charge of the Senate. That makes it likely the bill will get a hearing and be marked up.

Dodd still must persuade enough Republicans to support the measure to get at least 60 votes in the Senate. In the early 1990s, he succeeded in getting key conservatives on board. He believes he’s off to a good start this time because the first co-sponsor of the bill is Sen. Ted Stevens, R-Alaska.

Another constituency he’ll have to convince is the business community. Although companies don’t advocate wiping FMLA off the books, many executives want to see some of its regulations modified. They say abuse of the system raises costs.

Dodd argues that FMLA has been a boon to business because it has increased productivity, retention and employee engagement.

“I’m counting on some of our critics from 20 years ago standing up and saying that this works,” he said.

Debra Ness, president of the National Partnership for Women & Families, also stresses the benefit for business.

“There’s money saved because of the high cost of turnover,” she said.

The Department of Labor is conducting an FMLA review. It is accepting comments from the public until February 16. Ness vowed not to let the agency undermine the law through regulatory changes.

At the Dodd press conference, Ness released a study by Jody Heymann of Harvard and McGill Universities, the 2007 Work, Family, and Equity Index: How Does the U.S. Measure Up? It shows that 168 countries around the world have paid maternity leave and 145 provide paid sick days. The United States does neither.

“America’s paid leave policies are shameful,” Dodd said.

—Mark Schoeff Jr.

Big-name applicant tracking system providers such as Vurv Technology and Taleo are moving quickly to broaden their services and evolve into holistic talent management companies.

PeopleClick, meanwhile, is staking its future on a different strategy: Rather than being all things to all people, the Raleigh, North Carolina-based company is opting to deepen its expertise in talent acquisition. All options are on the table to advance the objective, says Brenda Hodge, PeopleClick’s vice president of marketplace solutions—including the prospect of going public, acquiring other companies and changing its leadership team.

“Talent acquisition is the cornerstone of workforce management,” Hodge says. “If companies don’t hire the right person, nothing else will fall into place, regardless of how much they spend on performance management, development and succession planning.”

PeopleClick, which has 340 employees, is committing 28 percent of its annual revenue to research and development to create talent acquisition tools, Hodge says. She declined to disclose the company’s revenue.

Newly appointed CEO Ron Kupferman is heading the company’s strategy. He took over after Stephen Sasser resigned in late December.

PeopleClick also is promoting Mike DeFrancesco to CFO. DeFrancesco, who has significant experience with both public and pre-IPO companies, has been at PeopleClick for three years and will continue to oversee the accounting and finance functions that were under his control when he was vice president of finance. Meanwhile, Geoffrey Jesberg has been hired as senior vice president of PeopleClick’s affirmative action division.

In addition, the company is making several departmental changes. Technology and customer services are being consolidated under Tom Bright, who takes on the dual role of executive vice president and COO. Integrating technology and customer services is a significant move, Hodge says, because it allows the company to develop a deep understanding of clients’ needs and respond with appropriate innovations.

“We are committed to our strategic mission and are putting in place the building blocks,” Hodge says.

Although there is no timeline set for an initial public offering, Hodge says the company would consider going public under the right conditions. She declined offer more details.

Sterling and Assess Systems, though it hasn’t moved to acquire its partners.

PeopleClick’s decision to strengthen its niche position could be fruitful, says Kevin Wheeler, a recruiting industry analyst at Global Learning Resources in Fremont, California.

“General Motors is not the only game in town; there are also very successful boutique car companies that exist,” he says. “The same dynamic can apply to applicant tracking providers.”

Given the size of the market, however, PeopleClick probably won’t see as many customers as it would if it became a diversified provider.

“The convenience of one-stop shopping is alluring to many customers,” Wheeler says.

Not surprisingly, Taleo and Vurv are in a race to evolve into broad talent management companies. In recent years, both companies have adopted new brands and launched strategies to gain awareness as diversified talent management providers.

Gina Ruiz

Lactose-Tolerant HR: Pressure to keep the best and brightest is radically altering how companies accommodate nursing mothers. According to Forbes.com, “companies that used to wave goodbye to their female employees once they started families are now looking for ways to help them balance motherhood” and careers. The most tangible example is a rise in the number of companies providing private “lactation rooms” to be used by mothers to nurse infants at work. Forbes.com cites a recent study by the Society for Human Resource Management that found 23 percent of companies provided lactation rooms in 2006, compared with 16 percent in 1999.

Less than a year after announcing a major shift in strategy, Switzerland-based Adecco Group promoted COO Joyce Russell to president of Adecco General Staffing USA. She becomes one of the highest-ranking female executives in the $131 billion staffing industry and will be the decision-maker for Adecco’s temporary and direct-hire staffing, a division that generates $3 billion in annual revenue.

“I never stopped to think about whether a glass ceiling existed,” says Russell, 46. “I was too busy working, and I hope to channel my energy into helping Adecco continue to prosper.”

Russell, who started as a branch manager at Adecco predecessor Adia in 1987 and was named Adecco’s COO in August 2004, is taking the reins at a critical time in the company’s 10-year history.

The company is in the midst of what Adecco Group chairman Klaus Jacob calls a new chapter following a series of setbacks from 2004 to 2005 that included lackluster financial performances, an accounting scandal and the resignation of then-chairman and CEO Jerome Caille.

A cornerstone of that overhaul, which was initiated in early 2006, entails transforming the general staffing business into six profession-focused areas: Adecco Finance & Legal; Adecco Engineering & Technical; Adecco Information Technology; Adecco Medical & Scientific; Adecco Sales, Marketing & Events; and Adecco Human Capital Solutions.

Advancing the company’s efforts in these areas will be among Russell’s primary responsibilities and a critical strategic goal for Adecco.

Los Altos, California.

Scale, both in terms of branch presence and staffing capabilities, is critical for big companies such as Adecco and key competitors Allegis and Manpower, since they service large employers like IBM. These types of clients need workers with diverse skill sets. Unless staffing companies can accommodate such demands, they run the risk of losing business, Asin explains.

Employers are spending more money to recruit temporary workers with focused professional skills, such as accountants, IT engineers and legal specialists—$51 billion compared with the $46 billion spent on general temp staffers in 2006, according to Asin. He projects that temporary legal staffing will be one of the most in-demand sectors, growing at a pace of 12 percent in 2007. The legal staffing market is $1.5 billion.

The company reported revenue of 5.3 billion euros ($6.85 billion) in the third quarter of 2006—an 11 percent increase from the third quarter of 2005. Adecco Group senior managers have indicated that this bodes well for the company in achieving its long-term revenue growth goals of 7 percent to 9 percent.

Additionally, Tig Gilliam was named country manager for Adecco U.S. & Canada and begins his duties in March. Gilliam comes from outside the staffing industry. He was global head of supply chain management services at IBM Global Business Services.

Besides extending Adecco into new lines of business, Russell will handle field operations, manage client portfolio and broaden outreach to the Hispanic market. Russell will report directly to Ray Roe, chairman of Adecco North America, until Gilliam arrives. Roe, the company’s former president, incrementally increased Russell’s responsibilities until finally ceding full control this year. He will assume control of Adecco Group operations in the Asia-Pacific region.

“Joyce’s commitment to excellence and her dedication to our clients, candidates and employees are what make her a truly invaluable asset to Adecco,” Roe said. “She will drive the growth of our business, especially in our office and industrial divisions while ensuring we remain the market leader for years to come.”

The company does not plan to fill Russell’s COO position, as she will retain those responsibilities, which include managing expenses and staffing needs for the company.

Adecco was founded in 1996 with the merger of Adia and Ecco, two large personnel service firms in Europe. The company has 6,600 offices in 70 countries and employs 33,000 workers worldwide.  The U.S., Japan, France, Great Britain and Germany are key markets for the company.

—Gina Ruiz

Lactose-Tolerant HR: Pressure to keep the best and brightest is radically altering how companies accommodate nursing mothers.
Click to read more. >>>

Kenexa, BrassRing Finis: Kenexa Corp. closed its secondary public sale of stock January 24 after raising $113.5 million.
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Even before the Securities and Exchange Commission finalized its rules on executive compensation disclosure last summer, most companies had scurried into action, preparing to provide greater transparency into sala­ries and perks.

But now a late-December change in the regulations means those companies are going to have to redo a lot of work they had already completed.

The disclosure rules, which force companies to reveal their top five executives’ total compensation along with a detailed explanation of how those packages are determined, require HR executives, compensation consultants and boards of directors to spend numerous hours drafting new tables that lay out the information.

“This is a long process,” says Steve Van Putten, East region practice leader for executive compensation at Watson Wyatt Worldwide. “It takes several meetings just to explain all of the changes to the compensation committees.”

Given that, many firms were probably annoyed when late in the afternoon of December 22, the SEC announced a change in the rules. Rather than having companies disclose stock option values as they are granted, the revised rule requires firms to disclose options values as they vest.

Under the initial rules, for example, if an executive received $100,000 that vested over four years, the company would have to disclose the entire $100,000 in the summary compensation table. Now, they will report $25,000 every year for four years.

The SEC made the change last month to be more in line with accounting rules, which require companies to expense stock option grants in their financial statements as they vest, the agency said in a release.

Most companies are pleased with the rule change because it provides a more accurate picture of what they are actually paying out in a given year, consultants say. Even so, many are probably irritated at the timing of the announcement, says Mark Borges, a principal at Mercer Human Resource Consulting and a former SEC attorney.

“Unfortunately, a lot of companies have done a fair amount of work to comply with these regulations already,” he says. It could be particularly burdensome for companies whose fiscal year ended December 15, since their proxies, which will have to comply with the new rules, are scheduled to come out this spring.

Now those companies are going to have to calculate the fair value of rewards made not just in 2006, but in previous years as well, consultants say.

“For companies that made a lot of stock option awards over the past few years, this could be quite a bit of work,” Borges says.

Washington office of Gibson, Dunn & Crutcher.

As firms go back and redo the numbers, they will also have to draft lengthy footnotes explaining what the numbers mean, he says.

The way the SEC handled the rule change indicates that in the future it will try to keep its requirements in line with accounting rules. Companies should be prepared for that, consultants say.

“There are going to be more accounting changes in the future, and the SEC will probably adopt those changes too,” says Mark Reilly, a Chicago-based compensation consultant.

—Jessica Marquez

 

“Tech Neck”: Employee ailments that derive from use of technology tools apparently is fueling a growing business at upscale spas, at least in New York City. According to Reuters, workplace woes include sore thumbs from typing on hand-held BlackBerry computing devices to “tech neck” from the strain of typing on laptops. Owners at several New York spas report offering a variety of treatments, from deep-muscle massages to special facials, to alleviate workplace stress. There is no word yet on whether these high-end body treatments are being paid for as employee benefits, but time will tell.

Marriott International Inc. went cold turkey in October, banning smoking in its guest rooms and work areas. But the global hotel chain took a step beyond most other companies by instituting a program designed to help employees drop their nicotine habit.

In a poll released in mid-December, employers ranked smoking as one of the top three health problems afflicting their workforces, along with obesity and high blood pressure. The survey, which was sponsored by the National Business Group on Health, also showed that 82 percent of companies want to support employees in their effort to quit smoking.

But one of the most popular solutions—creating a smoke-free workplace—only addresses part of the problem, according to experts. An edict to snuff out puffing won’t prevent a worker from finding alternative places to smoke.

The poll by the National Business Group on Health found that 78 percent of employees who work in a smoke-free office say that the prohibition has not inspired them to quit. The survey consisted of interviews with 508 companies and 510 employees.

To help its employees kick butts, Marriott augmented its no-smoking policy November 1 with a comprehensive smoking cessation program. Only 4 percent of companies offer such benefits, according to the business group.

Marriott provides a free anti-smoking package to all its employees and their dependents who participate in a medical plan. The initiative, which Marriott runs in partnership with the American Cancer Society, consists of 24-hour “quitline” telephone counseling and two eight-week non-prescription nicotine replacement therapy treatments each year.

Currently, a majority of Marriott’s employee health plans cover prescription smoking cessation products. By 2008, all of them will.

Marriott’s smoking ban was announced in the middle of July and put into effect October 16 to meet customer demand for a smoke-free environment. Smoking is now forbidden in all 400,000 guest rooms as well as restaurants, lounges, meeting rooms, public spaces and work areas.

In addition to pleasing guests, a no-smoking policy may lower Marriott’s health care bill. The Centers for Disease Control and Prevention says that direct medical costs related to smoking total more than $75 billion annually.

About 44.5 million adults smoke, according to the CDC. As those people drop the habit, they may become more productive. Ron Finch, vice president for the National Business Group on Health, says that cumulative lost time due to smoking breaks can add up to one day per week.

For Marriott, however, the motivation to ban smoking wasn’t based on the bottom line. “We weren’t focused on ROI,” says Karen Graham, Marriott manager of health plans. “It was more of ‘This is the right thing to do for our guests and associates.’ It was more of a philosophical decision to go smoke-free and offer this program.”

Companies seeking to emulate Marriott should recognize that smoking is an addiction, and employees may have to make several attempts to quit, according to the CDC.

The agency recommends that cessation benefits include at least four counseling sessions of 30 minutes each, cover both prescription and over-the- counter medications, cover at least two cessation attempts annually and limit—or eliminate—co-pays or deductibles related to smoking programs.

—Mark Schoeff Jr.

U.S. employers are shortening the time that new employees must wait before they are eligible to participate in 401(k) plans, according to a new survey.

The survey of 427 profit-sharing and 401(k) plans by the Profit Sharing/401(k) Council of America in Chicago found that 69 percent of plans allow employees to make contributions within three months of their hire date, up from 65 percent a year ago.

Among plans with at least 1,000 employees, 85 percent offer eligibility within three months, up from 79 percent a year earlier.

“Shorter eligibility periods are good news for workers,” PSCA president David Wray said in a statement.

Shorter eligibility periods mean, among other things, that employees will have a smaller gap between the time they stop contributing to a 401(k) plan when they leave one company and when they can start contributing to the plan of their new employer.

Reduced waiting periods for 401(k) plans also take on greater importance as more companies close their defined-benefit plans to new employees, making corporate 401(k) plans the only company-sponsored plan in which employees can save for their retirement.

—Jerry Geisel

Jerry Geisel is a reporter for Business Insurance, a sister publication of Workforce Management.