Author: Site Staff

Dear Desperate:



Your dilemma is common in family-held businesses. Successful entrepreneurs are tenacious, single-minded and willing to make great personal sacrifices for the sake of their companies. Unfortunately, those same qualities often pose obstacles to taking the company to the next stage of growth. Founders frequently identify so closely with their businesses that their personal lives are inseparable. This certainly sounds like the case at your company, where a 95-year-old is still at the helm and handling day-to-day issues.

I suggest you tie the case for better human resources management to corporate growth. Your founder may continue to ignore these issues unless he realizes the impact they have on the business now–or may have in the future. Linking morale with business results enables you to build a better case for change.

Start with internal indicators. While you state that sales in 2004 were roughly $100 million, you do not indicate whether this is greater than, less than or flat relative to previous years. If sales are flat or declining over the years, try to link that to concrete actions that were taken (or not taken) relative to your employees.

For example, does employee turnover correspond to revenue trends? Have sales decreased in the years that holiday bonuses were not given? Has the generational power play led to missed business opportunities? Perhaps there are additional industry benchmarks upon which to base your argument–for example, customer service statistics, market share data, your company’s growth versus that of competitors, etc.

Once you have outlined a fact-based case–where the cause and effect of workforce-management practices are clearly delineated–you will need to strategize as to who is best positioned to present this case to your founder. It may be best to enlist other key stakeholders, whether in key positions (such as the head of sales) or key people from the other generations of owners, whose own future livelihood depends on the success of the company.

Given your description of events, however, I am not certain that this will play well in your organization. Your founder sounds as though he has fairly rigid ideas about how to run his business and what’s been successful over the years. It may be difficult to persuade him to change his ways. It also sounds as though the next generation of leaders lacks the ability to step up to the plate.

If that’s the case, and you do not see a chance that things will change as the next-in-line family members take charge, you and others may be better served looking for new jobs elsewhere. Any company–whether privately held, family-run or public–that does not pay attention to people issues will ultimately fail.

SOURCE: Keith Swenson, managing director, Capital H Group, Chicago, Illinois, Jan. 19, 2005.

LEARN MORE:Irreplaceable You

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.

When he announced a tentative deal with the United Auto Workers in October to reduce his company’s health costs by $3 billion, General Motors chairman and CEO Rick Wagoner called for more leadership from Washington on health care issues.

But GM and most other large corporations do not offer policy prescriptions for lowering health bills. They lay out themes–and leave the details to politicians.

“We believe that the federal government has a primary role to play in increasing health care quality and making the health care system more affordable and accountable,” says Chris Preuss, GM’s Washington spokesman. “We need to see a more purposeful, bipartisan discussion on how we as a nation are going to tackle this issue.”

Corporate leaders certainly highlight the bottom-line impact of health care. For two years in a row, the 160 CEOs who constitute the Business Roundtable have cited health care as the No. 1 factor hindering company growth.

When they come to Washington, executives tend to focus on incremental steps in health care reform rather than sweeping changes. In a seminar at the Brookings Institution last month, Eli Lilly CEO Sidney Taurel touted products designed to empower consumers, such as health savings accounts. He also recommended curbs on medical malpractice lawsuits and advocated improving health care information technology.

In an interview following the event, he said the complexity of health care has kept the issue out of the spotlight. “It’s not been very high in the list of national priorities,” he said.

Even when Washington does act, it cannot solve the problem alone. “We need a public-private partnership, and all the players have to take responsibility,” said Leonard Schaeffer, chairman of WellPoint Health Networks Inc., who also was at the Brookings event. “We need a culture of accountability.”

The government should facilitate innovation and help keep costs under control, while companies must acknowledge the effect of rich labor agreements, Schaeffer said. “Those costs going up are not the fault of somebody,” he says, noting that GM voluntarily entered into its agreements with the UAW.

In the past few years, employers have been ratcheting up premiums, deductibles and co-payments. The group being hit the hardest may be retirees, as demonstrated by GM’s $15 billion reduction in retiree health care liabilities. How older Americans react may determine whether broader health care reform gains political momentum.

“Those are the people who vote and those are the people who will say that we have to have some kind of regulation,” says Pat Schoeni, executive director of the National Coalition on Health Care, which advocates system-wide reform. “The tipping point occurs when enough people who are middle class suffer the consequences of rising health care premiums or having their benefits reduced because of rising costs, which is exactly what GM is doing.”

Taurel understands GM’s predicament. “It’s a question of survival,” he said. “This is affecting all companies.”

—Mark Schoeff Jr.

As companies expand their presence in China, recruiters increasingly are called upon to first assess job candidates there, despite the barriers of time zones, language and culture. Those barriers can put both interviewer and candidate at a disadvantage.

    There are ways to conduct more effective telephone interviews with candidates in China, says Jack Daniels, founder and president of EastBridge Partners. EastBridge, which has offices in Boston, Hong Kong and Suzhou, analyzes global markets and sales opportunities for companies. It then manages the development process, including recruiting and hiring of management teams. Daniels was previously director of Asian operations for Rogers Corp., which manufactures advanced materials used in the computer, hand-held electronics, office automation and telecommunication industries. Here are Daniels’ guidelines:

1. It is customary to call the candidates in their home or on their mobile phones. In advance of setting up the interview, Daniels suggests exchanging e-mail notes to confirm the date and time. Military or 24-hour time conventions are standard. For example, if you plan on placing the call at 6 p.m. from Denver, specify “18H00 Mountain Standard Time.”

   
   

2. In the final confirming e-mail, list the names and titles of those who will participate in the interview.

   
   

3. In advance of the call, assign a “captain” or interview leader to moderate the conversation. Three Western colleagues talking at once will confuse the candidate. It’s also useful to write a list of questions for the candidate and determine in advance which member of the team will ask each question. The moderator should announce himself or herself, explain his role and then ask the other members to introduce themselves one at a time. Target the length of the interview to approximately 30 minutes.

   
   

4. Before launching into your list of interview questions it’s advisable to make some small talk with the candidate. Comments about the weather, a recent business trip or your child’s soccer game are all good icebreakers.

   
   

5. Make an effort to speak slowly and clearly, minimizing the use of contractions and slang. Avoid asking questions in the negative form. Asking, “Don’t you like basketball?” will leave the candidate mystified. Instead, try “Do you like basketball?”

   
   

6. Most Chinese professionals have had formal English education since sixth grade and have a good command of reading, writing and the spoken word. Speaking ability in a second language, however, falls off markedly when using the telephone. This is especially the case when speaking to strangers. As noted above, slowly warming up the interviewee with informal chitchat is a good idea.

   
   

7. Unlike most Americans and Europeans, Chinese people are rather humble and will minimize their educational and professional accomplishments. You may feel that that you’re struggling to drag information out of them. If you are unsatisfied with their responses, try restating the question in a slightly different way. It is also acceptable to ask the candidate to elaborate on a key job, task or experience.

   
   

8. Questions about job transitions are difficult in Chinese culture and are often met with incomplete or odd-sounding responses. Bear in mind that the true reasons for leaving a job in China are rarely discussed frankly. A good approach to learn more about work history is to ask detailed questions about job elements that the candidate found enjoyable or unrewarding.

   
   

9. Chinese job candidates will do quite a bit of research on your company’s background in advance of the interview. Be prepared for some very detailed questions about technologies, competitors, company financial status, internal organization, customer base and, most important, growth goals for your operation in China. If the questions seem intrusive, please remember that they have fewer tools at their disposal to assess the culture and reputation of your company.

   
   

10. It is best to sidestep discussion of the compensation and benefit package during this conversation. The subject is better addressed in a follow-up face-to-face interview.

    
    

11. Finally, toward the end of the interview, Daniels recommends that you summarize the key points that were covered and recount the candidates’ answers to important questions. Ask if they feel the need to clarify any of their responses or add some important missed point. At the conclusion of the interview, thank the candidates for their time and indicate when and how you will let them know the next step.

    
    

    “Chinese candidates are generally well-prepared and will make a strong effort to be open, communicate clearly and pick up on your culture and background,” Daniels says. “If in return you are open, use careful and metered delivery and listen well, the interview will be productive.”

Dear Listening:



Core business leaders–those who generate revenue for the company–are great sources of feedback. Getting their ideas is a great first step for human resources to improve and demonstrate its value. Some suggestions:

1) Keep the survey simple and make it easy to obtain the information you seek. Using a brief–and I mean brief–online survey can be very helpful.

2) Don’t rely on survey data alone. Schedule some appointments with business leaders and groups of key employees from those units. Use the meetings to validate survey data and probe deeper into core business needs and the performance of human resources.

3) Ask questions relating to business results, rather than human resources activities. For instance:

• What are the top three business issues human resources has helped you solve the past quarter/year?
  
• What impact did these solutions have on your unit’s profitability, quality, cycle time or ability to respond to customers?
  
• How else could human resources help you deliver business results?
  
• What things did human resources do well for you? What do you need more/less of?
  
• How is your success measured and how did human resources have an impact?
  

5) If you ask questions relating to processes, connect them to business results. Sample questions may include:

• What impact did the hiring process have on your productivity and costs?
  
• How well did the company’s training help your department solve the business challenges you have? Can you quantify the return on investment of the training?
  

4) Don’t justify the past or try to make offers in the meeting. Graciously accept the feedback and use it to shape future strategic offers to business units.

5) Let the business unit leaders know what you learn—and act on what you learn. Collecting data but failing to act on it makes the process a waste of time, and makes it doubly difficult to obtain useful feedback in the future.

This is a challenging exercise the first time around. But if you act on what you learn, you will become a force for business success and will be highly valued by operating units.

SOURCE: Kevin Herring, president, Ascent Management Consulting, Tucson, Arizona, Sept. 17, 2004.

LEARN MORE:Studies in Market-Valued Human Resources. Also:An HR Audit.

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.

A recent Hewitt Associates filing has raised eyebrows about whether the company is contemplating a sale.

On October 7, the Lincolnshire, Illinois-based firm filed with the Securities and Exchange Commission to create a severance plan for its 24 top executives in the event of a change of control of the company. Under the plan, if these executives lose their jobs as a result of a merger or acquisition, they are each entitled to a lump-sum payment equal to two times their base pay and target annual incentive, among other things.

“What raised some questions about this is the timing,” says Bill Zinsmeister, an analyst at Piper Jaffray. Creating change-of-control severance plans is standard practice for public companies the size of Hewitt, but it’s curious that the firm waited until now to establish the plan, he says. Hewitt went public in 2002, opening it up as a possible takeover target.

Kelly Zitlow, a Hewitt spokeswoman, says the company is not considering a sale and that this provision is just standard procedure.

“We know that it is a best practice to put one in place,” she says. When asked why Hewitt didn’t create the plan when it went public three years ago, Zitlow says that management and the board of directors have been working together to prioritize post-IPO initiatives and this where the change-of-control severance plan fell.

It makes sense for Hewitt to prepare for the possibility of being acquired given that it has been a takeover target for years, analysts say. With all of the consolidation in the human resources consulting and outsourcing sector, many companies are looking at Hewitt as an ideal acquisition since it is the frontrunner in the market, says Michel Janssen, president of supplier solutions at the Everest Group.

“There is no doubt that they are a potential acquisition target, just like Exult was,” he says, referring to the outsourcing business that Hewitt itself acquired in October 2004. “But I don’t see any compelling events to make Hewitt’s management team do this.”

Janssen says that the company would have to miss its earnings estimates or lose a number of clients to spark serious acquisition talks.

Zinsmeister, however, says that given Hewitt’s suppressed stock market price, now could be a good time for acquisition discussions. The company’s stock was trading at a high of $35 per share early last year and now is around $26. “There could be an opportunity here,” he says. “It’s definitely cheaper to buy than to build.”

—Jessica Marquez

Most employers are taking a wait-and-see approach to launching Roth 401(k)s in January when they become available.

In contrast to regular 401(k) plans, where an employee’s wages are taxed as income when they retire, Roth 401(k)s allow employees to contribute after-tax dollars. This could be particularly attractive to workers who are just beginning their careers and who expect to pay more in taxes in the future as their income rises.

Also, unlike Roth IRAs, these vehicles are available to individuals with income over $110,000 per year and married couples with income of $160,000 or more.

Despite these advantages, however, only three out of 10 employers surveyed recently by Hewitt Associates say they are likely to offer Roth 401(k)s when they become available on January 1.

“I don’t think we need to add another level of complication until we have a much greater level of participation in our 401(k) plan,” says Cindy Ellis, benefits manager at Cadmus Communications in Richmond, Virginia. Cadmus, with 3,000 employees, has a 65 percent participation rate in its 401(k) plan. Ellis says she would wait until the majority of Cadmus’ workers were already in the regular 401(k) before adding the Roth option–unless employees demanded it.

Randy Boldt, director of global rewards at Motorola, agrees that the communications challenge is one of the reasons the company is not launching a Roth 401(k) plan in January. Another issue that gives Boldt pause is that under current law, Roth 401(k)s are scheduled to sunset in 2010 and the Treasury Department hasn’t given instructions on how to handle the accounts if that happens.

“We want to get more guidance about some of the nuts and bolts regarding these plans,” Boldt says. Since it doesn’t seem that many of its competitors are launching Roth 401(k) plans, he is not concerned that Motorola will be less competitive by waiting until the middle of next year to make a decision.

Bob Hunkeler, vice president of investments at International Paper Co. in Stamford, Connecticut, had similar concerns when he first started looking into Roth 401(k)s. But he now is starting to warm to the concept. “On further review, there are some nice features about it,” he says.

For one, Hunkeler anticipates that offering a Roth 401(k) will cost the company little or no money. “If we do it, it will probably be sometime next year,” he says.

Currently, International Paper has 60,000 plan participants and automatically enrolls employees into its regular 401(k) plan. Hunkeler is weighing whether that would continue if the company launched a Roth 401(k).

“This is a tough one because you could argue that automatically enrolling employees into a Roth 401(k) makes the most sense, since the employees you are automatically enrolling tend to be younger people,” he says.

But given the uncertain fate of Roth 401(k)s, Hunkeler thinks his company will continue to automatically enroll employees into its regular 401(k) if it adds the Roth plan.

“There is just more certainty there,” he says.—Jessica Marquez

Dear Fed Up:



Your sincere intention to help the business is the key point here. Remain focused on that and leave out less-relevant issues–especially ones of a personal nature.

Ideally, you would first meet with the CFO to address the issues directly. If you feel that meeting with the CFO would be truly counterproductive–aside from your own anxiety about confronting the issues–you may want to discuss the matter directly with the president/COO. In either case, let the person know that you need to meet in private about a very important matter.

Here are some guidelines for managing the meeting. These can be adapted, depending on whom you end up meeting with:

1) Express appreciation to the person for meeting with you. Let him know the conversation is difficult for you, albeit necessary.

2) Describe what has been going on using specific examples in nonjudgmental language.

3) Describe the business impact of this situation (how it has affected other employees, heightened the company’s legal exposure, increased costs, reduced profitability, hindered production, prevented essential communications and so on).

4) Describe what is likely to happen if the situation persists. Also point out how things could improve if the matter is dealt with and corrected.

5) Ask the person to react to what you have said. Also, be sure to listen to the response.

6) Make a specific request to correct the problem, should top management fail to do so.

7) Make the choices clear. You may present several options, such as having your president:

• Confront the CFO with the need to change behavior.
  
• Move the CFO to another position.
  
• Take away certain responsibilities from the CFO.
  
• Remove the CFO from the organization, if necessary.
  

8) Ask your president what he or she intends to do.

9) Regardless of his decision, thank him/her for hearing you out and considering the situation. Offer your support in making the solution work.

Resolving this problem will go a long way toward building employee commitment to the business. Allowing it to continue perpetuates the frustration you already experience. It is important that your president/COO understands this.

SOURCE: Kevin Herring,Ascent Management Consulting Ltd., Oro Valley, Arizona, Jan. 13, 2004.

LEARN MORE:Charge Managers With Inspiring Loyalty

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.

Dear Besieged:



First, take a bow for continuing to provide employees with health coverage at a time when many other companies have chosen not to do so. Properly administered (and communicated), this decision gives you a competitive distinction in the labor market that should directly enhance your bottom line.

It is a healthy sign that your employees are complaining to you (instead of others) about the added cost. It suggests that they are interested in the matter and looking for a response. Here are a few facts and ideas that may help.

The number of Americans without health insurance coverage in 2003 increased by 1.4 million to 45 million, about 16 percent of the population, according to the U.S. Census Bureau.

Also, Managed Healthcare Executive recently reported that employer-sponsored health care premiums rose about 11.2 percent in 2004–continuing the double-digit growth rates of the previous four years. Covering a family under a PPO-type plan now costs about $10,000. As a result, many employers–especially smaller ones–have dropped health benefits altogether, leaving about 5 million more employees (plus their families) without health coverage. We don’t know of a single organization that has not raised premiums or taken other cost-saving measures in recent years. You have nothing to be ashamed of regarding your cost-sharing formula. It fares extremely well against the norm.

According to the Bureau of Labor Statistics, seventy-six percent of covered participants in health care plans are now required to contribute to single coverage ($67.57 per month), and 89 percent are required to contribute (an average of $264.59 per month) to family coverage.

This is bitter medicine, perhaps, but we’re convinced that one of the best things you can do is share the facts with your employees. Be open and honest with them about the options you have considered, including the cost of providing current levels of coverage. They will still be unhappy about having to pay higher premiums, but they should at least understand why.

While the big picture on health care costs is pretty bleak, there are a number of things you can do to lessen the impact on your organization. For example:

1. Consider setting up a plan whereby employees pay a portion of their premiums with before-tax dollars. Additionally, employers can provide employees with flexible spending accounts that enable employees to pay for copayments, deductibles and certain items not covered by insurance with funds set aside before taxes. Both of these plans will put a little money back in employees’ pockets.

2. Adopt an audit feature that offers employees an incentive to audit their health care bills and to report medical billing errors. Consider sharing half of any savings with the employee.

3. Show both the employer and employee portions of health care premiums as a line item on every pay stub.

4. Seek employee input as you contemplate future changes in benefit plans. If the consumer was neither educated nor involved, that could have contributed mightily to the backlash.

SOURCE: Richard Hadden and Bill Catlette, co-authors,Contented Cows Give Better Milk, www.ContentedCows.com, Dec. 29, 2004.

LEARN MORE: Information about onlineRx tools;health-risk appraisals; consumer-driven health care;Leapfrog;clinics;Union Pacific’s tough love;case studies;disease management;battles with employees; and auditing forineligibles.

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.