People moving into key executive positions | |
| Karl Grass has been appointed vice president and general manager for Sage Abra HRMS and Sage Payroll Services at Sage Software in St. Petersburg, Florida. | |
| Ronald Bottano has been appointed senior client partner at Korn/Ferry International in Los Angeles. | |
| Sherry Luper has joined Silkroad Technology as senior vice president of human resources in Winston-Salem, North Carolina. | |
| Gary Fisher has been appointed HR director at Gate Gourmet based in Zurich, Switzerland, and Reston, Virginia. | |
| Andrew Young has been named chairman of Working Families for Wal-Mart Steering Committee. | |
| Christy Suerth has been appointed director of human resources at Proactive Worldwide. | |
| Bill Ziegler has been appointed talent acquisition leader in the human resources department at Deloitte Services in New York. | |
| Gregory Troyhas been named vice president and chief human resources officer at Modine Manufacturing Co. in Racine, Wisconsin. | |
| Jane Loftus has joined GeoLogistics as senior vice president of human resources in Santa Ana, California. | |
| Rod Fralicx has rejoined Hay Group as general manager in Chicago. | |
| Charles Harvey has been named vice president of diversity and public affairs for Johnson Controls in Milwaukee, while Brian Cooke has been appointed vice president of manufacturing and technology. | |
| Yvonne Wolf has been appointed vice president and chief people officer at Denny’s Inc. in Spartanburg, South Carolina. | |
| Art Brown has been named regional manager for CPS Human Resource Services’ Northeast region, based in New York. | |
C-Suite April 2006
| People moving into key executive positions | |
Kathryn Hayley has been appointed CEO of Aon Consulting’s U.S. operations. | |
| Mary Britt Tetro has been named vice president of global staffing for Armstrong Holdings Inc. | |
| Kevin Loo has joined CyberShift as vice president of technology and product development. | |
| Ted Blumenberg has joined Harvey Nash USA as CFO for its U.S. operations. | |
| Nick Sharma has been appointed senior vice president for Satyam Computer Services Ltd.’s global infrastructure management in Boston. | |
| Bill Nicholson, Peter Weinberg and James Ferrari have joined Buck Consultants. Nicholson joins as principal in the communication practice in the Atlanta office; Weinberg has been named a principal in the HR management consulting practice in Chicago; and Ferrari will be in the St. Louis office as principal and local retirement practice leader. | |
| Patricia R. Willard has joined Heidrick & Struggles as chief human resources officer in Chicago. | |
| Anna Miranda has been appointed human resource manager at Pro Source Inc. in Irvine, California. | |
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Dear Workforce How Much Money Should We Budget for Training
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Trainer salaries paid to internal training staff members
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Seminars and conferences
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Hardware, such as audiovisual equipment, computers, copiers, etc.
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Off-the-shelf materials, including prepackaged materials in any format for e-learning (such as books or manuals)
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Custom materials tailored to meet a designated training program
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Facilities and overhead, such as costs for leasing a classroom/building
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Outside services provided by outside consultants.
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Dear Workforce How Do We Ease Stress Associated With a Major Organizational Change?
Lawsuit Reveals Team Building Gone Berserk
Patrick Smith, COO of Alarm One Inc., isn’t apologetic about how he handled the shocking people management crisis involving “team-building” spankings at his now disgraced home security firm.
The behavior was wrong, and he stopped it. Speaking by phone this week from his office in Anaheim, California, the beleaguered executive said that in hindsight, he’d communicate a few things more specifically about “do’s and don’ts” to employees, but he wouldn’t change much else.
“Swatting is not camaraderie building,” he noted. “You have to understand the sales mentality. Sales guys are just that way.”
The real problems involving the sales team took place more than two years ago, he said. That’s when he heard a complaint from an employee about a woman on the sales team who was hit with a paddle. With the help of the HR director, he personally launched an investigation into employee reports of humiliation–by telephone and e-mail.
That inquiry, and the cultural values that supported it–including “camaraderie building” practices where sales team members were encouraged to compete and the losers were forced to eat baby food, wear diapers and endure public spankings with a rival alarm company’s yard signs–has cost the company dearly in dollars.
And its reputation is in the diaper pail.
On April 28, a jury in Fresno, where Alarm One has a facility, awarded former employee Janet Orlando $1.7 million. The jury found that she was subjected to sexual harassment and sexual battery at meetings where sales teams competed.
Katherine Hart, a Fresno attorney who represented the defendants, said during a phone interview on the day of the verdict that employee conduct at the security company was “reprehensible, but the intent was not to be malicious or sadistic.
“It was young people acting juvenile and engaging in juvenile behavior,” Hart noted. “They didn’t have much supervision and the company promoted salespeople without enough training. One woman (a plaintiff in an earlier case against Alarm One) was bruised (with a metal paddle). It was meant playfully–slaps on the butt. Then catcalls. It escalated.”
Before dismissing Smith and other company executives at the firm as smarmy or stupid or both, look straight into the mirror, leading human resources professionals say. Some version of the extreme spanking case could be happening at your company.
There are lessons you can and must take away from the case no matter how extreme it is, says Atlanta attorney Stephen Paskoff, who spoke about the consequences of allowing bad employee behavior and what to do about it in a keynote speech at a Society for Human Resource Management conference last month.
“People say, ‘Oh, that could never happen at our company,’ ” Paskoff says. “I ask, ‘What makes them think this couldn’t happen?’ “
It’s a question Mark Keppler, professor of human resources management at California State University, Fresno, understands. He served as an expert witness in the civil suit, and estimates that he has spent at least 30 hours studying transcripts and other case documents.
“Alarm One was out of control–and they never got it,” Keppler says. “It was only after a woman was hospitalized for being hit with a metal sign that the spankings stopped.
“Everything they did was wrong,” he continues. “They had inconsistent policies. Their employees were relatively young–most were 18 to 22–and the company had insufficient policies and insufficient training. The human resources department declined to take a complaint from an employee seriously.”
Alarm One’s human resources director at the time has since left the company and is now working for a financial firm in Southern California. She hasn’t returned several phone messages.
Keppler says the investigation conducted by Alarm One was woefully inadequate, involving phone calls and e-mails when the situation required a far more personal, hands-on, comprehensive investigation.
“Lesson 1: If you have a problem in a remote location, you must go there,” he says.
The Fresno professor likens the atmosphere at Alarm One to a strip club: Language included comments such as “Bend over, baby” and “You’ve been a bad girl.” He says a very bad situation was seriously compounded by very bad policies–such as “specifying that employees could go to only a few upper-level managers with problems.
“Lesson 2: The company needed a policy to allow people to come forward,” Keppler continues. “Lesson 3: Do a serious investigation, or the plaintiff’s attorney will do it for you. Lesson 4: If you have a problem, you better make sure your answer will sound good on 60 Minutes.”
Though Alarm One didn’t deny that the spankings and other humiliating tactics took place, Smith says he doesn’t agree with the verdict and calls the victim “an opportunist” because she has a past history of workplace problems and has been arrested for shoplifting.
“If I’d do anything differently, I’d go into more detail with employees and more do’s and don’ts,” Smith says. “We were lacking in specific examples like why you shouldn’t do things like throw water bottles (in team-building exercises). You don’t do it because you don’t have their permission to do it.”
No, Paskoff says flatly. “You don’t do it because it is wrong. Companies must have a few core values that people recognize and just know ‘We don’t do that here.’ “
And that’s a key problem, Paskoff notes, because a company’s essential commitment to good behavior must go far beyond sending a memo, or trotting out an ethics code or mission statement, or allowing different rules of behavior for different subgroups in an organization.
“It’s not bringing in an expert on behavior and being done with it,” Paskoff says. “Leaders have to be able to talk about behavior, and to say, ‘We do this because this is who we are.’ HR focuses on law and regulations, and not on culture–though they say they do. The emphasis must be on corporate citizenship, not Title VII or tort laws.”
Paskoff, president and founder of Employment Learning Innovations Inc. in Atlanta, says that human resources leaders must communicate to all employees that sexual and racial jokes and banter are unacceptable–not for the rank and file, not for leaders, not in sales meetings, corner offices or golf courses.
“You say, ‘If a workplace issue doesn’t look or feel right to you (any employee), tell us. If something isn’t right, don’t cover it up and lie.’
“Someone at Alarm One should have known they were expected to speak up.”
At a recent corporate ethics event, Paskoff says he heard a comment–as well as other similar concerns–that exemplifies the reason no one in human resources should pass the spanking case off as completely bizarre or incomprehensible.
Like others at the event, an HR executive said, ” ‘We have all of the systems, but I’m still scared to death,’ ” Paskoff recalls. “The trouble is, they have all the processes in place and those processes are not attached to daily behavior.”
Despite headlines and the magnitude of the company’s mess, Smith says “everyone” at the company is happy and the work environment is very good. Alarm One–which had 400 employees at its peak in 2002–now has only 50 employees because of changes in the industry, Smith says. It is currently developing a new strategic plan for building the company.
“We still do accounts, but we just don’t do them with salespeople anymore,” he says.
Though Alarm One is a private firm that won’t reveal specific financial information, the embattled COO does admit that “business isn’t growing.”
“Yes, that is correct,” he says. “Business is good, but it could be better since the Janet Orlando case.”
Defense attorney Hart says the case is “an example of what happens when top management isn’t in touch at the grass-roots level. “The managers must have been out of touch. If they’d acted more like the CEO at Costco (Jim Sinegal), who personally visits every store, this never would have happened.”
Orlando’s attorney, Nicholas “Butch” Wagner, sums it up this way: “They (the defense) used three common tactics: 1. Blame the victim. 2. Circle the management wagons. 3. Deny, deny, deny.
“It cost the company $3 million,” the Fresno lawyer estimates. “Alarm One exhibited very poor post-harassment behavior. The people who made the decisions for the company are worse than the (sales) people who made the conduct.”
The Number of U.S. Workers With Health Insurance Declines
The number of people in the U.S. workforce with employer-sponsored health insurance dropped between 2000 and 2004, according to a study based on census data and published this week by the nonpartisan Employee Benefit Research Institute.
A weak economy, an increased reliance on part-time workers and a rise in the cost of health insurance contributed to the overall decline in the percentage of people under age 65 who received employer health care coverage from 66.8 percent in 2000 to 62.4 percent in 2004.
Health insurance coverage rates declined for both part-time and full-time employees, though a full-time worker was three times more likely to have health insurance. The percentage of covered full-time employees ages 18 to 64 dropped to 61.5 percent in 2004 from 64.4 percent in 2000. The percentage of part-time workers without health insurance dropped to 18.6 percent from 19.6 percent.
“When you shift workers from full-time to part-time work, because the part-timers are less likely to have coverage, that exacerbates the rate of coverage falling across the board,” says Paul Fronstin, a senior research associate at the institute.
Nearly all large employers offer full-time employees health coverage. Large companies with 500 or more people, however, increased their reliance on part-time workers between 2000 and 2004, adding to the overall drop in coverage. The trend is unusual because the percentage of part-time workers tends to decrease as businesses get larger.
Analysts believe that large companies relied more heavily on part-time workers because unemployment rates were high, something that will change as the labor market tightens.
“Part of the increase of part-time workers is a productivity thing,” says Bob Goldberg, director of the Center for Medicine in the Public Interest, a health policy think tank that favors consumer-based health initiatives. “It’s a way of not having to pay other kinds of fringe benefits; there is a lot of cost shifting going on.”
The distribution of part-time workers varied across industries. Manufacturing and service industries were the most likely to use part-time workers, whereas the number of part-time workers declined by 3 percent in the wholesale and retail industries, according to the report.
As the economy improves and the unemployment rate declines, competition for workers will likely increase full-time employment rates. In March, the unemployment rate was 4.7 percent, down from 5 percent at the end of the fourth quarter.
“Unemployment is now getting down to a level that employers, in order to retain more workers, will let them work more hours,” Fronstin says.
Small businesses, however, will continue to struggle to provide health insurance for their workers, Fronstin says.
“The costs of health insurance are still going up. They’re just going up slower,” Fronstin says.
Marriott Under Microscope in Diversity Study
Some companies ask whether having a diverse workforce is good for business. At Marriott, where six of every 10 workers are minorities, the company begins with the premise that diversity is good, then asks how to effectively manage its eclectic workforce.
Or, as Adam Malamut, a senior director of human research at Marriott, says in a tone worthy of a nuclear physicist, “How can we harness that energy to create an experience that is memorable for our guests?”
To answer that question, Marriott has partnered with George Washington University to launch an exhaustive three-year investigation into how differences in race, ethnicity and gender affect the ways workers relate to one another. It will explore whether those differences create tension and dissatisfaction in the workplace—problems that may eventually lead to turnover or unhappy customers.
The research into “relational demography,” funded by a $263,000 grant from the National Science Foundation, is unique because it is the largest study of its kind.
Lynn Offermann, a professor of industrial and organizational psychology at George Washington University, will lead a research team that will gather data from 40,000 employees at Marriott hotels throughout the United States. That is more than a quarter of its worldwide total of 143,000 workers. Researchers will analyze the data to see what makes employees tick in diverse work environments.
Offermann will explore a host of sensitive issues that workers face in order to answer questions like: Is the experience of a white person in a predominantly black work unit similar to that of a black person in a white work unit, or likewise, in a Hispanic or Asian work unit? There is some evidence to suggest that a white male might react more negatively than others to being a minority in a work unit because white men have historically been in the majority and have held most leadership positions. This hypothesis is based on research that suggests men tend to react more negatively in female-dominated work environments compared with women in male-dominated work environments, Offermann says.
“We’ve seen gender issues explored, but we don’t know whether that will hold with race,” Offermann says.
The study will build on gender research done by Harvard Business School’s Rosabeth Kanter, a best-selling author who wrote Men and Women of the Corporation, and work done by Anne Tsui, a professor at the W.P. Carey School of Business at Arizona State University. Tsui says the long-term study is valuable because it is “rare in diversity research.”
Eventually Offermann, along with Malamut, a co-principal investigator and former student of Offermann’s, will take their research to Marriott hotels where staff diversity has led to profitability and low turnover. They’ll see firsthand what is working there. They believe that if employees strongly identify with the company and their work unit, their individual differences will seem less significant.
Marriott says it has already collected some data that suggests hotels where associates are happy are 10 percent more profitable than similarly staffed hotels where satisfaction is not as great. Those numbers led the company to believe it had stumbled onto a hypothesis that this study will try to pin down.
“It’s not enough to chase demographic diversity,” says David Rodriquez, executive vice president for lodging and human resources for the hotelier. “You also have to be very concerned about the inclusive environment you are building.”
Given the demographic shifts in large urban markets, where traditional minorities will soon become numerical majorities, companies will no longer have to “chase” diversity. Diversity will be a fact of life.
“We want to be able to tell organizations what to do in order to successfully manage diversity, because diversity is where it’s at,” Offermann says.
EEOC Turning Attention to Broader Cases
The country’s chief watchdog on employment discrimination will shift its focus to cases of “systemic” inequality that transcend a single complaint, rather than solely responding to cases brought to its attention by individual plaintiffs.
In unanimous votes at an early April meeting, the Equal Employment Opportunity Commission directed the agency it oversees to increase its investigation and litigation of cases nationwide in which a pattern, practice or policy of alleged discrimination has a broad impact on an industry, profession, company or geographic location.
“We’re fundamentally changing the way we do our work,” says Cari Dominguez, EEOC chairwoman. Although the new initiative requires hiring additional professional staff, the agency has not estimated its cost.
EEOC field offices must formulate plans for a coordinated effort on systemic discrimination, utilizing EEOC expertise from across the country instead of relying exclusively on the field office in the region where a charge is made. Under such an approach, the agency intends to act more like a national law firm.
The agency also seeks to improve internal sharing of statistics used to identify systemic discrimination. For instance, the EEOC wants to link employer data to census information and improve access to research on national and regional economic trends.
“What we’re trying to do is change the culture so that (EEOC) employees will recognize systemic discrimination,” says Commissioner Leslie Silverman, who directed a one-year task force on systemic discrimination.
The EEOC is flexing its muscles to assert its relevance, according to an attorney who defends corporations. “They’re trying to show they’re going to be a viable agency going into the next century,” says Jonathan Greenbaum, an attorney with Nixon Peabody.
The change in focus may result in the EEOC filing more systemic discrimination cases but fewer cases overall, allowing the agency to “more strategically and effectively accomplish its mission,” says Mary Jo O’Neill, regional attorney in the EEOC’s Phoenix office. “We will be getting more benefits for victims and will have more impact based on the ripple effect of the lawsuits.”
Individual plaintiffs won’t necessarily be denied an avenue for justice because they will continue to hire private attorneys and they can turn to state equal employment offices.
A defense lawyer estimates that the EEOC might pursue 150 to 200 cases annually under the new directive, rather than the current 250 to 400. But it will try to make a bigger splash with each one, like it did when it settled a $54 million sexual discrimination case against Morgan Stanley in 2004.
“By being selective in who it sues and what it sues them for, it sets an example for the entire industry,” says Gerald Maatman Jr., senior partner at Seyfarth and Shaw.
Policies that can result in systemic discrimination include requiring employees to be 100 percent recovered from an illness or injury before returning to work, denying them absences during their first year of employment and refusing to hire workers convicted of a felony. Companies “really should look at their written policies and do self audits,” O’Neill says.
Industries most likely to be vulnerable to systemic discrimination include those that tend to recruit and hire minority workers, such as hotels, food service establishments, cleaning companies and construction businesses. The cost of compliance also could increase. Insurance providers may be unwilling to write an employer liability insurance policy for a company whose industry has been identified by the EEOC as having a systemic problem with discrimination, attorney Greenbaum says.
Cash-strapped Governments Turning Own Workers Into Public Health Consumers
While state lawmakers target private employers for not providing health care coverage, a similar issue may be brewing in many of their own back yards.
In addition to being taxed by having to provide public health assistance to a growing number of working poor, government budgets are also being squeezed by their own employees’ escalating health care costs, forcing them to shift more of the expense onto those employees. Those employees, in some cases, then turn to public health programs.
For example, while Canton, Massachusetts-based Dunkin’ Donuts may be No. 1 on the Massachusetts Executive Office of Health and Human Services’ list of employers with 50 or more employees using public health assistance, the city of Boston is not far behind, ranking sixth on the list. In Texas, 15 of the 20 employers named in the state’s Health and Human Services Commission report of employers identified by individuals enrolling in the Children’s Health Insurance Program were public employers, mostly school districts.
How can it be that public employers, which once made up for paying low wages by offering comprehensive benefits, are now beginning to contribute to the nation’s uninsured working population?
It’s the same reason states are seeking reimbursement from private employers to help shore up their overtaxed Medicaid systems, observers say. Strapped for cash, many states are reducing their own employees’ access to health benefits by relegating them to part-time or temporary status, or increasing their contributions to a point where they sometimes become unaffordable.
In July, Ohio increased state employee health plan contributions to 15 percent of premiums from 10 percent because “the state, like many other states, had significant concerns about the state budget,” according to Nan Neff, benefits administrator in Columbus. With the increase, the employee contribution for single coverage is now $47.30 a month and $128.91 for family coverage, she says.
While Ohio offers health benefits to part-time employees, their contributions are based on the number of hours worked, so those part-time employees who work fewer hours pay more for their health care, Neff says.
About 5,000 of the state’s 60,000 workers are not eligible for coverage because they are either seasonal or temporary workers—a growing phenomenon in the public sector, experts say.
Permatemp proliferation
“Permatemps—people without health insurance—are almost as big a problem in the public sector as the private sector,” says David West, executive director of the Center for a Changing Workforce, a nonprofit research organization in Seattle that focuses on issues affecting low-wage and nonstandard workers. “In the last 10 years, the public-sector strategy has been to reduce the number of employees eligible for insurance.”
He says that the center’s analysis of 2004 Medicaid enrollment found that up to 10 percent of Washington state’s 160,000 employees were receiving government health assistance.
“I’m sure every state and local government has people on Medicaid,” West says.
Because many government budgets provide for a specific number of full-time positions, public entities often hire temporary, seasonal, part-time or other types of contract workers who usually are not eligible to participate in benefit plans, according to Rick Johnson, senior vice president and national public-sector health practice leader for the Segal Co. in Washington, D.C.
Dennis DiMarzio, COO for the city of Boston, attributed that city’s appearance on the Massachusetts list to part-timers, “school crossing guards and things like that.”
Because, in his opinion, the city’s benefit package is reasonably priced—$45.12 a month for individual coverage and $121.32 a month for family coverage—DiMarzio says that any eligible employee who isn’t enrolled is “irresponsible.”
“Even if you’re making $30,000 a year—that’s $600 a week—to not spend essentially $10 a week to get yourself coverage, outstanding coverage, to me is individual irresponsibility,” he says.
He acknowledged, however, that it might be difficult to afford family coverage on that income.
According to the Massachusetts list, 1,110 city of Boston employees were receiving public health assistance. The city has 17,000 active employees and about 12,000 retired employees enrolled in its health plan, according to DiMarzio.
“I’m not surprised there are folks who can’t make it on public salaries,” because “there’s always a tug of war between pay raises and benefits,” Segal’s Johnson says. “There’s only so much tax money. They can’t raise prices like private employers—that would be called raising taxes.’’
In general, public-sector employees “are probably over-benefited and underpaid, and some of that reflects the thinking of our members. They really value their benefits,” says Steve Kreisberg, head of collective bargaining at the American Federation of State, County and Municipal Employees in Washington, D.C., which represents about half of the nation’s public employees.
“So when we negotiate, the members say in a very clear voice, ‘Look, if I have to sacrifice wages, I will, but hold on to my health benefits,’ “he says. “But we’re not increasing their standards of living as much as we should because health benefits are eating up an increasing share of their income.’’
For example, New York City employees earn an average of just $28,000, which would make any kind of contribution difficult, according to Kreisberg.
“That’s about rent if you’re going to live in a lot of neighborhoods in New York City,” he says.
Subsidized workers
While AFSCME doesn’t track the number of public employees without health care coverage, it is looking into the uninsured program among a growing number of employees, such as home health and child care workers, who are not on public payrolls but whose wages are financed by government programs.
These individuals are “paid with Medicaid money, but they have no health benefits,” Kreisberg says. “There are also child care workers who are getting subsidies from public programs. In the ’80s there might have been a state agency created to employ them and provide benefits, but not today.’’
“The fact is, I don’t know of a single government that is so rich and fat and happy that it can keep up with the increased cost in employee health care,” says Darrell E. Wells, director of risk management for the city of Odessa, Texas, and chairman of the board of trustees of the Family Health Benefits Pool that provides coverage to city employees.
“Eventually the pain level rises to the point where even government has to act,” he says.
While Odessa is still offering benefits to employees at almost no cost—individual coverage is free and employees with two or more dependents pay just $27.85 a month—other Texas communities aren’t, Wells says.
As an example, he described the recent experience of a police officer who left Odessa to take a job as the police chief in another town.
“He called me on my cell phone after he was offered the job to say he had gotten his health insurance information and that something was terribly wrong,” Wells recounted.
While the town offered to pay 100 percent of the cost of his individual coverage, he would be required to pay more than $370 per pay period for employee-plus-family coverage.
“It was almost $10,000 for the same thing he was getting for a little over $300 a year here,” Wells says. “He asked me, ‘They pay pretty good around here in this little town. But they’ve got garbage truck drivers and low-level people—can they afford to spend $10,000 a year to insure their families?’ I said that’s the point. This city is sending a message. The message is, ‘We’ll insure our employees, but we don’t want your spouses and children.’
“The fact is, we’re starting to see government reject the idea that we have to provide the best benefits in town,” Wells says.
When Kip Wall, former CEO of the Office of Benefits for the state of Louisiana, discovered that about 9 percent of the state’s workers could not afford to participate in the government’s health plan, he tried to create a low-cost plan that would have provided at least basic benefits.
“We have a material percentage of state employees making under $25,000 a year,” says Wall, who now practices law in Baton Rouge.
Unfortunately, “we never could put together a plan of sufficient value to the employees to make it worth their while to invest in the product, and so it never did get off the ground,” Wall says.
“There are still some public employer plans out there to die for … but comparable to what they were five years ago, they’re not common anymore. The very rich plans are the exception,” he says.
This story originally appeared in Business Insurance, a sister publication to Workforce Management.
Five Questions for Richard Cavanagh
As a partner at McKinsey & Co. during the 1980s, Richard Cavanagh advised CEOs to leave after a decade so that the business could try new things. On March 8, soon after Cavanagh reached the 10-year mark as president and CEO of the Conference Board, he took his own advice and announced he would step down by year’s end. Cavanagh’s management skills have taken him from the private sector to the White House Office of Management and Budget during the Carter administration and to Harvard’s Kennedy School of Government, where he was executive dean. Cavanagh, 59, recently spoke to Workforce Management staff writer Jeremy Smerd.
Workforce Management: How do you motivate people at places where getting a job is the hardest part?
Richard Cavanagh: At both Harvard and McKinsey you had high turnover rates that were induced by the organizations. At McKinsey, you’d get these incredibly bright people coming in as consultants, and one out of 10 would become partners. So you were always culling. It’s a controversial view: Should you have forced attrition and should you be cutting the bottom X percent out?
WM: What qualities should managers possess?
Cavanagh: Highly talented people don’t need to be supervised, they need to be provided with opportunities; they need to be provided with, maybe, some guidance. The second thing is that people realize talent is really precious. You want to treat it well and you want to develop it and you want to keep it as long as you can. It’s not a throwaway. There’s not a constant replenishment. It’s not like energy from the sun.
WM: How is outsourcing changing HR?
Cavanagh: What it’s done is say there’s a new skill, which is how to manage contractors. Some people have been very happy outsourcing software development to somebody in Bangalore, and others have been very disappointed. And all that has to do with how well they’ve figured out how to manage contractors. Contractors have to be managed just as workforces do, except they have to be managed differently.
WM: In The Winning Performance you wrote that companies succeed because of their willingness to take risks. Should HR managers take risks?
Cavanagh: Yes. When JetBlue decided they could have people working in their homes with computers selling airline seats there was a risk to that: not having all these people in one big room. Southwest Airlines—and I’ve now named the only two successful airlines in the United States—took a risk by saying work can be fun, and we can actually get pilots to help turn the planes around faster and we can get our ticket agents to go and clean. That was a risk, and yet it worked because people like being a part of Southwest Airlines.
WM: What’s next?
Cavanagh: I still have to get out of this job. I think leaving a job is as difficult as taking a job. At the end of your watch it’s too easy to let things slip. So you have to redouble your efforts at the end. I’m too old for hard labor and too young for shuffleboard.
Workforce Management, April 24, 2006, p. 8 — Subscribe Now!