Author: Site Staff

Dear Blending:



Promoting the concept of diversity in the workplace is, above all, a process of education. Organizations that report the greatest success (and fewest problems) with diversity obtain maximum productivity from their total workforce. The fundamental concept that your people must understand is easy to grasp: Organizations that get maximum productivity from a wide variety of people tend to perform better than those organizations that don’t.

We have not seen a valid tool for accurately measuring the return on investment in diversity, nor do we believe one exists that would work in a universal sense for most organizations. This article, Diversity’s Business Case Doesn’t Add Up, casts doubt on the claims of some companies that they have proved the ROI of their diversity efforts.

That is not to say that there’s no business value in managing a diverse workforce well; it’s just that no reliable method has been developed to measure that value definitively. That being said, if Company A has developed systems, procedures, policies and a culture that allows men and women from diverse backgrounds to succeed, while Company B’s systems work only for certain types of people, it stands to reason that Company A is going to perform better. The argument needs no help from a measurement tool.

Some people will resist your effort to promote diversity, no matter how skillfully executed. Don’t let that deter you. Also, don’t fall into the trap of implementing diversity programs for business reasons, only to have them devolve into tools of political correctness. That would lend credence to skeptics who doubt the value of promoting workplace diversity.

More than gender, race, ethnicity and sexual orientation, diversity manifests itself in an almost unlimited array of dimensions. For examples, diversity can be broken down into:

• Education (where, and how much)
  
• Regional origin
  
• Age
  
• Marital status
  
• Parental status
  
• Communication style
  
• Various and sundry other ways
  

Bear in mind that diversity efforts should highlight both differences as well as similarities that exist among your workers. Recognizing differences along with similarities helps you build an organization that captures the best work from all kinds of people.

Make your company a great place to work, for as wide a variety of people as possible. Avoid getting too hung up on trying to prove the ROI of diversity, and spend more time (and money) on things that simply make sense. Ultimately, being successful with diversity means nurturing a culture in which diverse people can be happy, productive and successful.

SOURCE: Richard Hadden and Bill Catlette, co-authors, Contented Cows Give Better Milk, www.ContentedCows.com, December 14, 2005.

LEARN MORE: United Technology Corp. uses diversity as a recruiting strategy. Also, please read how Pepsi is tracking its diversity outreach.

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.

Ask a Question

Dear Workforce Newsletter

Despite flat to reduced profits from some of the major managed care companies during the first half of 2006, commercial health care cost and premium increases have settled primarily in the 6 percent to 8 percent range, with some insurers reporting further deceleration.

Several managed care companies reported lower earnings in the first half compared with the same period last year because of the impact of costs related to implementing the Medicare prescription drug benefit.

For example, Humana Inc., based in Louisville, Kentucky, reported a 7.9 percent drop in first-half profits, with the earnings decline occurring in the first quarter of the year because of high administrative costs for its Medicare programs.

Analysts were unconcerned about Cigna Corp.’s 45.9 percent decrease in profits, noting that profits for the year-earlier period were amplified by several factors, including the sale of its retirement benefit business. First-quarter 2006 earnings were adversely affected by reduced returns in its health care business and higher-than-expected Medicare Part D losses, but the second quarter produced improvement in its health care unit earnings and strong results in other segments.

“They still have some work to do, but they’re in better shape than they have been in the last couple of years,” says Bradley Ellis, director at Fitch Ratings in Chicago.

Philadelphia-based Cigna reported flat enrollment of 9 million, stabilizing its membership base after years of significant declines and helping to moderate revenue losses.

“We’re still seeing a lot of consistency and stability there,” says Joseph Marinucci, credit analyst with New York-based Standard & Poor’s Corp.

Aetna Inc., based in Hartford, Connecticut, reported flat first-half profits because of a ratio of medical costs to other costs that was higher than previous quarters—driven by high-dollar claims in areas such as oncology, neonatal intensive care and cardiology—and an underperforming small-group book of business caused by increased competition in key markets such as the Northeast and mid-Atlantic region.

Aetna says its medical cost trend is projected to average 8.5 percent for the year with premium yield greater than 7 percent.

“It will be interesting to watch them in the second half to see if they can increase pricing at all,” Ellis says. “The problems they have are something they can fix.”

Overall earnings for the managed care sector, though, were solid, driven by substantial double-digit earnings for Minnetonka, Minnesota-based UnitedHealth Group Inc. and Indianapolis-based WellPoint Inc.

“The sector is doing fairly well on a profitability basis,” Ellis says.

UnitedHealth is still dealing with the ramifications of probes into its stock-option granting practices. The company recently announced it would delay filing quarterly earnings reports with the U.S. Securities and Exchange Commission because of its ongoing review of these practices. In response, S&P revised its outlook on the company to “negative” from “stable,” citing a potential financial restatement arising from misaccounting for its stock-option plan.

Even with the revision, though, the company is still the highest-rated health care carrier, Marinucci notes. “They’re going through some challenges, obviously, but the model still seems to be holding up,” he says of UnitedHealth. “We still have some concerns about accounting and governance. We’re concerned about further balance sheet impairment. But the bottom line is the money and earnings are still being generated at a significant clip.”

The major managed care companies reported that medical cost trends have hovered in a predictable range. WellPoint, the largest managed care organization in terms of membership, says it continues to expect its 2006 medical costs to increase less than 8 percent.

Humana, meanwhile, reported that medical cost trends for its fully insured commercial book of business were in the 5.5 percent to 6.5 percent range, a decline from the 6 percent to 7 percent range reported in the first quarter of 2006.

“We’re seeing some compression in medical inflation,” Marinucci says.

Insurers say they are pricing their products at or slightly above their medical costs.

“We remain very disciplined in our underwriting approach and will not sacrifice margin for market share,” WellPoint CFO David Colby says.

Drugs costs moderate

Moderating pharmacy trends are a key driver of the deceleration of overall medical cost trends, insurers say. Aetna, for example, was projecting pharmacy cost increases in the high single digits, but now expects these cost trends to fall in the mid-single-digit range. The insurer expects its pharmacy costs, which account for about 15 percent of total medical costs, to decline in the second half of the year because several drugs, including the blockbuster cholesterol-reducing drug Zocor, are shifting to generic status.

Pharmacy costs could moderate further than expected in the second half of this year due to discounted pricing offered by Zocor manufacturer Merck & Co. and the unexpected introduction of generic Plavix, which is used to prevent heart attacks and strokes, says Sally Rosen, a senior financial analyst with A.M. Best Company Inc.

The movement toward consumer-driven health plans could have an impact on cost trends going forward, observers say.

WellPoint president and CEO Larry Glasscock says there still is tremendous interest from employers in CDHPs, and that nearly every quote the insurer develops includes a detailed review of WellPoint’s consumerism capabilities.

New members are key

Achieving membership growth, meanwhile, is a key factor for health insurers, analysts say. Certain companies are seeking to increase enrollment by focusing on the government segment of the market rather than the commercial business because of opportunities presented by the revamped Medicare program and states turning to managed Medicaid programs to control rising health care costs. A.M. Best, though, remains ambivalent about government-funded programs because of potential changes in reimbursement rates, Rosen says.

Managed care companies have been increasing membership primarily through acquisitions or by taking accounts from other insurers, primarily Cigna, analysts note. But consolidation in the industry is expected to continue on a smaller scale than it has in recent years because of emerging antitrust concerns, they say.

UnitedHealth, for example, had to sell PacifiCare Health Systems Inc.’s commercial health insurance businesses in Tucson, Arizona, and Boulder, Colorado, to secure regulatory approval for its acquisition of the Cypress, California-based insurer.

“As some of these companies get bigger, that’s going to become an issue,” Rosen says.

–Gloria Gonzalez is a writer for Business Insurance, a sister publication of Workforce Management.

As incoming Ford Motor Co. president and CEO Alan Mulally accelerates the company’s turnaround plan, industry observers predict the automaker will follow in the footsteps of General Motors with a large-scale employee buyout offer.

On September 5, Ford named Mulally, president and CEO of Boeing Commercial Airplanes, to the company’s top post. The appointment came weeks after Ford announced it was cutting fourth-quarter production by 21 percent—about 168,000 vehicles—from last year. As a result, the Dearborn, Michigan-based automaker said it would temporarily halt production at 10 assembly plants in the U.S. Ford is making the cuts because of lower sales and high gasoline prices, the company said.

“We know this decision will have a dramatic impact on our employees, as well as our suppliers,” then-CEO Bill Ford told employees. With Mulally’s arrival, Ford assumes the title of executive chairman.

The move is part of the company’s Way Forward plan, the turnaround strategy Ford Motor announced this year. Under the plan, Ford said it would close 14 factories and cut 30,000 jobs in North America by 2012. But on July 20, the company said it was accelerating the plan, and that details of what that would entail would be released within 60 days.

Ford’s next board meeting is scheduled for Wednesday. Experts believe that mass buyouts, similar to what GM offered to 113,000 of its employees, are likely to be approved at that meeting.

Currently, Ford is offering limited buyouts to employees at plants scheduled to close, as well as to 5,000 employees at Automotive Components Holdings, the spinoff company that is over- seeing the sell-off of Ford’s auto parts supplier, Visteon.

As of August 1, 5,600 employees had accepted buyouts. The company anticipates a total of 10,000 to 11,000 by year’s end, according to Marcey Evans, a Ford spokeswoman.

“We have not made any announcements related to a larger buyout program,” she says. But experts say a bigger buyout is exactly what Ford needs to do.

“I think they are negotiating with the United Auto Workers to establish a larger buyout to all of its workers at all of its plants in the U.S.,” says Sean McAlinden, chief economist and vice president of research at the Center for Automotive Research in Ann Arbor, Michigan. “That would allow them to shut down plants faster than they had planned.”

Speeding up its Way Forward plan is essential not only to appease Wall Street, but also to stabilize employee morale, says Arthur Wheaton, industry education specialist at Cornell University.

The faster Ford can get things settled on the hourly worker front, the faster it can address concerns of salaried employees who are even more anxious because they don’t have labor contracts, he says.

A demoralized salaried workforce could particularly hurt Ford’s effort to be innovative with its designs—something it needs to be competitive, analysts say.

“They need to get some new products out there,” Wheaton says. “They need to be bold.”

—Jessica Marquez

It’s not quite the same as death and taxes, but electronic employment verification is almost a certainty if immigration reform passes. Both the House and Senate want to shut down illegal employment.

Given those political realities, the Department of Homeland Security plans to launch an outreach campaign this fall to encourage employers to sign up for its Basic Pilot verification system.

The agency reasons that the more companies it brings on board now, the easier it will be when a law mandates that all 7 million of them use electronic verification for new hires—and possibly for existing employees.

As of mid-August, 10,724 employers were using Basic Pilot. In the system, companies submit citizenship and work authorization information, which is checked against Social Security and DHS databases. About 85 percent of queries verify instantly.

Some legislative language calls for Basic Pilot to expand to all employers within 18 months of a new immigration law. The DHS is acting as if the president has already signed the bill.

“We’re very aggressively planning for the enactment of the program,” says Gerri Ratliff, chief of the verification division of U.S. Citizenship and Immigration Services.

Ratliff spoke August 24 at an event sponsored by the Center for Immigration Studies, a Washington, D.C., think tank that supports toughening border security and workplace enforcement.

Citizenship and Immigration Services executive director Mark Krikorian recommended that the DHS tap large employers for Basic Pilot. So far, Dunkin’ Brands is among the biggest to sign on. The company uses the system to check the status of hires at its Dunkin’ Donuts, Baskin-Robbins and Togo’s restaurants, which have 12,000 locations worldwide.

The Bush administration has requested $110 million for fiscal year 2007 to bolster Basic Pilot. Ratliff vows to increase staff and make data in the system more complete to limit mistaken non-verification. Basic Pilot cannot detect identity fraud.

Employers are wary not only of the technical glitches that can slow down or halt hiring; the dual role of the DHS also worries them.

Ratliff and her verification division are working on developing relationships with companies and making verification as efficient as possible. Meanwhile, her colleagues at Immigration Customs Enforcement are informed by the verification division when suspicions arise about a firm’s hiring record.

This tension manifests itself in the ICE Mutual Agreement Between Government and Employers program, also known as IMAGE, which is designed to foster cooperation on hiring practices. Companies might resist joining the program because it requires allowing ICE to pore over their I-9 forms.

“Many employers feel sensitivity about inviting an audit upon themselves, especially without any guarantee (of immunity),” says Irina Plumlee, head of the immigration group at law firm Gardere in Dallas.

It’s like asking the IRS to examine an employer’s books, according to Paul Don­nelly, a consultant with MediaLever, whose clients include Lookout Services, an I-9 verification firm.

“There is a schizoid relationship between service and enforcement when it comes to work-site verification,” he says.

Whether they sign up for Basic Pilot or not, employers have taken note of recent DHS raids that resulted in criminal charges for hiring illegal workers.

“There’s a lot of apprehension in the corporate community because they’re seeing a lot of enforcement action,” says Jorge R. Lopez, a partner in the Miami office of Jackson Lewis.

—Mark Schoeff Jr.

Congress may weigh in on the controversy over soaring executive pay by changing a tax rule that experts say has encouraged companies to use stock options in compensation packages.

A bill is unlikely to come up in the short amount of time remaining in the current session of Congress. One might emerge next year as part of a larger tax reform bill or perhaps as part of a measure to close tax loopholes.

But Congress is already turning its attention to executive compensation. Two Senate hearings on September 6—one in the Finance Committee and one in the Banking Committee—explored the issue.

The Finance session featured Internal Revenue Service Commissioner Mark Everson and Linda Thomsen, director of enforcement at the Securities and Exchange Commission. SEC Chairman Christopher Cox testified before the Banking Committee.

Thomsen indicated that the SEC is investigating more than 100 companies for fraudulent reporting of stock option grants.

The Finance Committee focused on a tax provision that limits corporations to a $1 million tax deduction for executive salaries. An exception was made for performance-based pay, which companies can deduct beyond $1 million. Critics say that the rule has contributed to an increase in the use of stock options.

Recent controversy has focused on the practice of backdating options, which occurs when a strike price is retroactively set to a date that would produce a gain for the option holder.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, said that the tax code is “broken” when it comes to executive compensation.

“Companies have found it easy to get around the law,” Grassley said. “It has more holes than Swiss cheese. And it seems to have encouraged the options industry.”

Modifying the deduction for performance-based pay or tightening up eligibility are options Congress may consider, Grassley said.

Grassley intends to prepare the ground for such legislation by obtaining board minutes from meetings in which companies approved backdating. He also will seek information from attorneys, accountants and compensation consultants who contributed to the decision.

Grassley gave no quarter in attacking pay schemes that lead to bloated executive salaries. “It is behavior that, to put it bluntly, is disgusting and repulsive,” he said.

Everson recommended that Congress allow the IRS to share more tax return information with the SEC regarding companies that are suspected of reporting violations. In sometimes passionate testimony, Everson demonstrated his frustration with backdating scandals.

“In the area of corporate governance, the temptation to do the wrong thing is increased when he stakes are as staggeringly high as they are,” he said. “I do find it disappointing that the boards of these companies haven’t done a better job of preventing us from getting to (this) point.”

Charles Elson, a University of Delaware professor, suggested that board members hold stock in the companies they oversee so that they are more closely linked to their management. He also called for more disclosure regarding compensation consultants and greater shareholder say in board elections.

“There is an overcompensation problem in corporate America,” he said. “It has undermined shareholder confidence in the system.”

In testimony at a House hearing earlier this year, Thomas Lehner, director of corporate governance at the Business Roundtable, said that the increase in CEO compensation has been consistent with shareholder return.

—Mark Schoeff Jr.

As Congress returned from its August recess on September 5, the Republican leadership on Capitol Hill put security issues at the top of the agenda for the remaining weeks of the session, lengthening the odds that immigration legislation will be approved before the fall elections.

Senate Majority Leader Bill Frist, R-Tennessee, and House Majority Leader John Boehner, R-Ohio, both indicated that bills related to funding the Department of Defense, paying for border security, setting up military tribunals for terrorism suspects and authorizing a terrorist surveillance program would be the priority until September 29, the target date for adjournment.

“We’re putting the safety and security of the American people first,” Frist said in a conference call with reporters on September 5.

As they did in the 2002 and 2004 campaigns, Republicans are portraying themselves as tougher and more resolute than Democrats in the fight against terrorism.

Legislative attention may be a zero-sum game as Congress winds down. Time spent on terrorism is time not devoted to reaching an immigration compromise.

Last December, the House passed a bill that focused on border security and workplace enforcement. In May, the Senate approved a comprehensive bill that also included a guest worker program and a path toward naturalization for most of the estimated 12 million illegal immigrants in the country.

Instead of launching House-Senate negotiations this summer to iron out differences in the bills, House committees conducted 21 hearings around the country to examine the Senate measure. Most of the sessions revolved around elements opposed by conservatives.

Boehner told reporters September 5 that House committee chairmen would meet within the next week to “assess what they heard in July and August and assess what we should and shouldn’t do.”

Neither Boehner nor Frist declared the immigration bill dead. “I’m not going to rule anything out at all,” Frist said.

Senate Minority Leader Harry Reid, D-Nevada, was pessimistic. He criticized Republicans for being in one of two gears on immigration—either opposing the Senate bill or saying nothing at all.

“I guess they’re teeing this up to get nothing done,” Reid said in a meeting with reporters September 5. “The president has been silent on this. The chances of doing something on immigration in the next 12 days are pretty remote.” Reid was referring to the legislative calendar.

Reid lamented that the GOP has conducted a “do nothing Congress” and warned that the party would pay at the polls.

One area that may get some action in September is border security funding. Boehner vowed that Congress would pass legislation that enhances border technology while increasing the number of patrol agents and the amount of fencing.

Employers may also get drawn into the fray. “You’re going to see a lot of activity on border security and work-site enforcement over the course of the next month,” Frist said.

Both the House and Senate bills contain provisions that would increase sanctions on companies hiring illegal workers and would require all employers to sign onto an electronic employment verification system.

—Mark Schoeff Jr.

Senior citizens may soon be serving Teriyaki McBurgers, Chicken Tatsutas and Big Macs alongside the 20-somethings behind the counter at McDonald’s restaurants in Japan.

McDonald’s Japan announced recently that it would abolish its policy of forced retirement at 60 for its company-owned restaurants. That change complies with Japanese legislation that took effect in April, but the company says that’s not why it is instituting it.

“Basically this decision comes from the understanding that work opportunities should be provided to employees who have ability, physical energy and drive, regardless of age,” spokesman Ryosuke Tsuji says. “We should forget about age.”

The policy change allows qualified employees to go on working for the corporate office or in one of its 2,800 restaurants. The change will have little immediate impact on company culture. The average age of workers at McDonald’s Japan is 33, and only five employees are older than 55. Further, the company’s 1,000 Japanese franchisees have not abolished the mandatory retirement age.

Japan’s recent law calls for companies to let people work longer because the age at which retirees become eligible for pension benefits is being raised. The legislation is intended to add tax revenue to save the country’s pension system and, perhaps more importantly, fill a labor shortage created by a zero growth rate in the population.

Companies can comply with the retirement law in three ways. They can raise the retirement age to a minimum of 62, or, like McDonald’s Japan, can abolish the forced retirement age in effect at most employers. Companies that pay employees based on performance, not seniority, are more likely to abolish mandatory retirement ages, according to Nhattan Nguyen, a senior consultant for Mercer Human Resource Consulting in Tokyo.

Most Japanese companies, however, do base pay on seniority, as well as team performance. A third way offered by the bill will be less expensive for companies: rehire employees who are set to retire or who have recently been forced to retire.

Employees at banking groups Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group will resign at age 60, then sign re-employment contracts on an annual basis until they are 65, the new mandatory retirement age at the company.

Since most companies pay based on seniority, they will likely choose the third option to comply with the law and fill the labor shortage, says Ames Gross, president of Pacific Bridge, a recruiter for the Asian market.

Gross says that in Japan, many companies are hiring people on a temporary basis. Known as temps in the U.S., they’re called “freeters” in Japan.

“Companies are reluctant to hire full time and are making fewer full-time offers,” Gross says. Part-timers fill labor shortages, cost less and pay taxes toward the pension system.

Japan’s efforts to confront the effects of an aging and shrinking workforce offer a preview of the issues that will face both Western European and North American businesses as baby boomers begin to retire, says Ken Goldstein, an economist with the Conference Board.

The shortage of talent may be ameliorated by the recent legislation, Goldstein says, but it does not solve the long-term problem that low birth rates pose to companies.

“The bill delays judgment day, but at some point they’ll have to do more with less,” he says.

—Jeremy Smerd

This Labor Day, the Americans who really have reason to celebrate are those at the top of the income ladder, according to a new report. The study, from the liberal-leaning Economic Policy Institute, finds that despite faster productivity growth in recent years, real income for the typical family is lower than in 2000.

“The unprecedented split between growth and living standards is the defining economic challenge of our day, and it’s begging for an activist agenda,” says Jared Bernstein, EPI senior economist and co-author of The State of Working America (2006-2007 edition).

Bernstein’s policy prescription includes raising the minimum wage, making it easier for workers to form unions, implementing universal health care coverage and “achieving truly full employment.”

Another view of how to close the gap comes from Martin Regalia, chief economist of the U.S. Chamber of Commerce. He asserts that the growing schism between rich and poor can be narrowed through continued economic growth, reducing regulatory and tax burdens on corporations, expanding energy sources, upgrading infrastructure and lowering the trade deficit. He also emphasized that more training and education of U.S. workers would substantially increase their wages.

“If you look at the statistics we get on the returns to education, they are phenomenal,” he says.

But the EPI report shows that the real hourly wage for college graduates grew just 1.3 percent from 2000 to 2005 after soaring 11.3 percent from 1995 to 2000.

With the election coming in just over two months, many Washington groups competed to frame the debate around national wage and employment statistics. A Department of Labor report released on Aug. 31 asserted that unemployment has reached new lows and wages have attained new heights.

The department stated that in 2005 real hourly wages were 1.9 percent higher than in 2000, compared to the 1.1 percent rise in wages from 1990-95. It also cited gains for women, minorities and veterans.

“Globalization is tilting against the bargaining power of blue- and white-collar workers alike,” Bernstein says.

Paul Clark, head of the department of labor studies and employment relations at Pennsylvania State University, says that employers gain in the short run when wages fail to rise. But he argues that moving toward a low-wage economy could eventually pinch companies as workers have less to spend and government struggles to raise revenue for education and infrastructure.

“If this continues, I just can’t imagine that it really is good for anybody,” Clark says.

According to the EPI, productivity grew 13.4 percent during the booming period from 1995 to 2000, and even faster—16.6 percent—from 2000 to 2005. Yet median family income, which grew 11.3 percent in the latter 1990s, fell 2.9 percent in the fast productivity growth of the early 2000s, the EPI says. Meanwhile, incomes of the best-off families have grown rapidly.

The EPI report comes on the heels of a U.S. Census Bureau study finding that real median household income in the United States rose by 1.1 percent from 2004 to 2005, reaching $46,326. But real median earnings of both men and women who worked full time and year round declined.

U.S. business leaders have been relatively quiet amid a growing debate about economic insecurity felt by Americans in an era of frequent layoffs, increased offshoring and pared-back benefits. Some analysts say corporate heads would be wise to take a larger role in the discussion.

John Challenger, chief executive of outplacement provider Challenger, Gray & Christmas, suggests that evidence of stagnant wages for many workers provides an opportunity for smart firms to stand out from the pack in terms of better pay and benefits.

“Companies are more worried today about retention than they have been in a long time,” he says. “It’s time for them to be investing more in their workers.”

—Ed Frauenheim and Mark Schoeff Jr.

HR tech company Trovix has a thing about Google. For one thing, the fast-growing recruiting software firm is in Mountain View, California, and as such is surrounded by Google’s offices. It also claims its technology for matching job openings to candidate résumés is in the same league as Google’s search technology. What’s more, Trovix sees the Google success story as a model for its quest to topple bigger rivals ranging from recruiting specialists Peopleclick and Taleo to industry giants Oracle and SAP.

Look at how Google came from nowhere to beat Yahoo and Microsoft in Internet search, says Jeff Benrey, Trovix’s chief executive and co-founder. “It happens,” Benrey says. “Better technology comes and it changes the game.”

But even if Trovix has built a better résumé-matching mousetrap, that alone may not win over clients, says recruiting consultant Ed Newman. “Automatic and intelligent search is valuable, but it rarely ever gets as automatic as the marketing hype,” he says.

Trovix began selling its recruiting software last year. It is on pace to quadruple its client base from 10 in December 2005 to more than 40 this year. Clients include high-profile names such as Treo phone maker Palm and Cisco Systems division Linksys.

Recruiting applications have been criticized for being cumbersome and failing to deliver. Even so, Forrester Research predicts recruitment software product revenues will grow 4.5 percent annually through 2009.

Trovix says it differs from other vendors because of sophisticated software that mimics the way a human recruiter looks at résumés. Its algorithms are designed to take into account the relevancy of skills and job experience and how recently a candidate worked in a particular field.

Still, Benrey says Trovix isn’t trying to “automate everything.” And while the emphasis is on résumé search, Trovix lets clients add questions for candidates on application screens.

Asked to name the company that can most closely rival the Trovix search technology, Benrey points out the window toward Google’s headquarters. Just as Google’s founders spent years working on their search software before it took off, so have he and co-founder Earl Rennison, who conducted research at the Massachusetts Institute of Technology.

Nonetheless, the Trovix focus on résumés is outdated, says Dave Michaud, vice president of product marketing at Taleo. Résumés can leave out critical information, he says. Taleo’s approach is to have candidates answer job-specific questions on clients’ sites in order to match candidate skills, interests and experience with job requirements. “They’re really taking an old-school approach,” Michaud says.

Yankee Group analyst Jason Corsello has a different view. He says searching functionality is becoming more important to recruiting systems, in part so average hiring managers can use the tools more effectively and efficiently.

Jim Holincheck, analyst at research firm Gartner, says Trovix will struggle to woo corporations that already have moved from paper-based systems to an automated approach. Trovix may have a great technology, he says, but a Google-like rise to supremacy is unlikely. “Is it going to take over the world and displace everyone? I just don’t see that.”

—Ed Frauenheim