Author: Site Staff

Dear Eager:



There are a number of compelling reasons for training employees.

• Attracting and retaining customers. The defining moments that occur in customer interactions determine whether a customer will come back, and the tools and strategies needed to be effective far exceed what can be acquired through experience alone.
  
• Aiding in recruitment. Surveys conducted by the Gallup Organization indicate that employer-sponsored training is a major attraction for employees entering the workforce or deciding whether to remain in their current position.
  
• Employee retention. Trained employees who have skills to deliver, feel that they contribute to the organization and are recognized by their managers are less likely to look for another job. It is true that the better trained your staff is, the more attractive they are to other organizations. But it is equally true that offering training opportunities to employees makes your company more desirable and makes recruiting of top-flight talent much easier.
  
• Mutual benefits. Years of downsizing have changed expectations of an employer’s loyalty to the worker. This has been replaced by a more explicit agreement: “We’ll offer you new skills while you work for us–skills that can be taken with you when you leave. While you are here, you not only perform the functions of your position but also use your talents to improve our competitive position.” Thus, training benefits both the individual and the organization.
  
• Motivation and unified culture. Training can be particularly valuable in keeping employees motivated during periods of uncertainty, such as downsizing or during mergers, by confirming that the organization is willing to invest in them. Such training also is a cost-effective way to establish a common language and focus, speeding the transition to effective, integrated operations.
  
• Maintaining a competitive edge. Customers demand service skills, expect their needs to be understood and satisfied and also presume your employees will possess knowledge of your products and services.
  
• Commitment and innovation. Untrained workers seldom look for a better way or suggest workable improvements. Give your employees the training to hone their skills and boost efficiency, and they will be more likely to be committed to organizational objectives and seek innovative ways of making your company more effective.
  
• Profitability. Achieving the above benefits certainly enhances your organization’s overall profit.
  

SOURCE: Sharon Daniels, CEO, AchieveGlobal, Tampa, Florida, Dec. 29, 2004.

LEARN MORE: See howtraining is linked to organizational performance.

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.

In early October, pension reform was hurtling toward a vote in the Senate after two committees melded their bills into one bipartisan piece of legislation.

But businesses halted the process to battle proposed increases in pension plan payments for financially ailing companies. They also object to limiting so-called smoothing of pensiogn assets and liabilities, saying that it would increase funding volatility.

“A lot of companies have run the numbers and understand how the bill will affect their bottom line,” says Lynn Dudley, vice president of the American Benefits Council, which represents about 250 large corporations. “We’ve hit a bump in the road, not a roadblock. Everybody wants more money in the plans, but we have to do it in a way that doesn’t cost jobs, that doesn’t cost people other benefits.”

While corporate leaders make their case with senators, the Senate bill has been held up by Sens. Mike DeWine, R-Ohio, and Barbara Mikulski, D-Maryland, who are trying to build support for an amendment that would allow three-year smoothing of assets and liabilities. The Senate bill would institute a one-year limit.

Their measure also would impose higher “at risk” funding for companies whose plans are less than 60 percent funded. The Senate bill calls for stricter rules if a company’s credit rating is less than investment grade.

DeWine wants to avoid socking manufacturing companies with higher pension payments as they deal with the vicissitudes of a cyclical industry. General Motors, for instance, would have to increase its contributions because it has a junk-bond rating, even though the company asserts that its pension plan is not in jeopardy.

The Senate legislation is similar to President Bush’s proposal that would define full funding as 100 percent. The administration is worried that continuing multibillion-dollar defined-benefit pension terminations will lead to a taxpayer bailout of the Pension Benefit Guaranty Corp., which has a $23.3 billion deficit.

The Senate may not act this year on pension reform because floor time is limited, according to a senior Republican Senate aide. In addition, the DeWine-Mikulski amendment has thrown a wrench into a delicate two-committee negotiating process.

“There’s quite a bit of fatigue that has set in with some members,” said the Senate aide, who is not authorized to speak for his boss on the record.

On the other side of the Hill, the House Ways and Means Committee is expected to act in November on pension legislation written by the House Education and Workforce Committee.

“If we can just get a bill to conference, (DeWine and Mikulski’s) concerns are going to be on the table because they’re the same concerns we have,” says Steve Forde, spokesman for the workforce committee.

One other factor in pension reform is whether the White House wants to achieve a breakthrough to give Bush a retirement security victory at a time when Social Security reform is languishing.

If pension legislation does not pass by January 1, plan costs will increase as they begin using the 30-year Treasury bond rate to calculate their liabilities instead of a corporate bond rate.

—Mark Schoeff Jr.

Fifty-six percent of human resources professionals believe there are “major differences” between what employees from different generations want from their jobs, according to a survey of 100 HR managers conducted by Sirota Survey Intelligence, a Purchase, New York, firm that specializes in attitude research.

Such assumptions are gross generalizations and often result in managers lumping employees into categories that are not accurate, says David Sirota, chairman of Sirota Survey Intelligence and co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want. “HR people talk in terms of Generation X and Generation Y, and it often distorts what people are like,” he says. As a result, companies do not understand what motivates these employees.

For example, employers often assume that job security isn’t as important to younger employees as it is to their older colleagues, Sirota says. But that’s just not true. “All employees are motivated by pride in one’s work, a sense of camaraderie and being treated fairly, no matter how old they are,” he says.

Eric Chester, president of Generation Why, a consulting firm in Lakewood, Colorado, agrees that job security, equity and camaraderie are important to employees of all ages, but he says employers need to recognize that these things may have different levels of importance for workers of different generations.

For example, younger workers may feel that flexibility is more important than getting promoted, while older employees would rather get a promotion than have Wednesdays off, he says. “We have so many people who built their lives around their jobs, but the younger generation wants a life first and then a job to accommodate that lifestyle,” he says. “HR managers need to revisit their policies and make sure that they accommodate this different mind-set.”

 —Jessica Marquez

Most company executives plan to establish metrics to determine employee return on investment in the next several months to measure the effectiveness of their human resources departments, according to a recent survey conducted by Veritude, a Boston-based consulting firm.

The survey found that 81 percent of executives currently measure the effectiveness of their HR departments by examining employee turnover and labor costs as a percentage of revenue. Sixty-one percent, however, said they will soon look at a different major metric: employee return on investment.

This means that rather than looking at one factor, such as productivity or cost per hire, companies will roll all of these metrics together. That will let them see how much return they are realizing from their employees’ efforts, versus what’s spent on hiring and retaining them, says Jim Del Rosario, vice president of talent acquisition for Veritude.

“Over 50 percent of expenses at companies are people costs,” he says. Companies are getting squeezed harder and one of the things that they are looking at is whether they are getting the highest value from their workforces.

The survey, which was based on responses from 105 executives at companies with 10,000 employees or fewer, shows that companies are planning to use more complex analytics to measure the effectiveness of their human resources initiatives, Del Rosario says. “Companies are becoming much more sophisticated than they ever have been before.”

—Jessica Marquez

Dear Keep Them:



Job accommodation is one of the most important tools employers have for retaining valuable employees withdisabilities or those who have been injured. This refers to changes in the work environment or in the way a job is typically structured to enable employees with physical or mental limitations to perform the job.

Following are guidelines to help employers successfully accommodate and retain these employees:

Educate managers, supervisors and employees about job accommodations that will allow the employee to continue to add value to the enterprise.
Education can avert a variety of problems, including managers who make policy changes without considering accommodation needs, supervisors who fail to understand the benefits of accommodations (and therefore don’t think about them), and co-workers who resent what they perceive to be special treatment. Additionally, education helps ensure that employees know they can request accommodations when needed, before productivity suffers.

Decide who will handle accommodation requests.
Whether it is one person, an accommodations team or managers/supervisors, you must clearly designate the responsibility for processing accommodation requests. Let all employees know where that responsibility lies.

Develop a process for determining effective accommodation options.
Occasionally, the employee will know what type of accommodation is effective and will make a specific request. Often, however, the employee knows only that there is a problem, but not the solution. In such cases, employers need to make effective decisions about accommodations.

SOURCE: Anne E. Hirsh, associate manager, Job Accommodation Network (a service funded by the federal government that provides free help for employers), Morgantown, West Virginia, December 27, 2004.

LEARN MORE:Hiring Without Limits

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.

Wise companies know how to police themselves for potential problems in their employee benefit plans. But those procedures are even more important now as the IRS ramps up its employee benefit plan audits this month.

Thanks to an increased budget, the agency has hired 50 examiners and expects to conduct audits of 10,000 plans next year, up 10 percent from this year. The number of IRS inquiries—the step that precedes a potential audit—will jump more than sixfold from 300 this year to 2,000 next year.

The agency is stepping up its compliance efforts after focusing much of its time over the past couple of years on guidance and education, says Michael Julianelle, director of employee plan examinations. The IRS’ increased focus on enforcement means that at the very least, companies need to be prepared to demonstrate that they have procedures in place to detect problems within their employee benefit plans, says Amy Moore, a partner at the law firm of Covington & Burling. “The IRS auditors would rather hear that you have been careful and conscientious and someone just failed to follow procedures than that you are careless and have no procedures,” she says.

Having a self-auditing procedure in place is particularly crucial for large employers, for whom audits can often take more than a year, says Don Stone, president of Plan Sponsor Advisors, a Chicago-based consulting firm. On average, 60 percent of audits of large-company plans find some issue, and the IRS is hoping that the percentage will increase as it makes its exams more focused.

“A lot of the larger employers are realizing they need to get their house in order before the IRS comes knocking, because it’s a big time burner when they come,” he says. “It can shut down your whole human resources department.”

One area the IRS always looks at is whether the company has followed its own policy statements for its retirement plans, Julianelle says. “We will always look at how you wanted your plan to look and make sure you followed your own road map,” he says. The agency typically refers to past common mistakes made by plan sponsors when it conducts its audits, he says, adding that the 10 most common mistakes are posted on the IRS’ Web site.

For example, one common audit issue mentioned on the Web site is when companies are acquired and do not credit employees from the acquired company with the proper years of service. Another example is making sure that when employees retire, they receive the proper notifications about their options. “In the pension world, nine out of 10 audits find this mistake,” says Joe Hessenthaler, a principal at Towers Perrin.

Experts advise employers that do discover problems when conducting self-audits to take advantage of the IRS’ Employee Plans Compliance Resolution System, a program that lets employers voluntarily report issues and get time to correct them. “The whole point of the program is that if you find the issues on your own, you can correct your own mistakes,” Hessenthaler says. There are more egregious errors for which a company may still have to pay a fine, he says, “but the IRS tends to be more lenient if you make a good face effort.”

—Jessica Marquez

Dear Looking:

Although society increasingly expects business leaders to be honest, that alone is not enough to attract the most talented employees. Honest employees will of course gravitate to companies with reputations for integrity. But how do those companies attract top performers?

You must successfully project a model of how talent and honesty can work together in the company.

Depending on the industry, the most talented employees want to join high-performance organizations that are at the forefront of their industry, either in terms of market innovation or market share. Still, these top guns want to be sure that they aren’t joining the next Enron. (Remember that Enron was an organization that prided itself on hiring only the best of the best to engage in the most challenging and “cutting-edge” work.)

So what do these employees look for? They’ll want to see how your leadership balances performance withethics. Successful leaders attract the best by demanding performance and integrity at the same time. One leader I have worked with takes pride in always being on the edge–always pushing his team to achieve more and push the envelope. But while he urges his team on, he is also as vociferous in demanding scrupulous compliance with the company’s standards. Thoughtful leaders in this era must be cognizant of the risks inherent in high performance.

And this point is not lost on employees and recruits. In data compiled by Business for Social Responsibility, a U.S. employee survey carried out in 2001 by Walker Information found that only 6 percent of employees who thought their senior management was unethical were inclined to stay with their companies, while 40 percent who believed their leaders were ethical wanted to stay.

Another study of U.S. workers carried out by the Aon Loyalty Institute in 2000 found that when employees do not feel they can trust management, giving them additional benefits has no significant effect on their commitment.

Another Aon survey in 2002 showed worker confidence in management had dropped to its lowest level since the survey began in 1997. On the bright side, onestudy by Watson Wyatt suggests that employees now trust senior management more than they did a couple of years ago.

Extensive anecdotal evidence suggests that employees have more positive feelings about themselves and their work–and demonstrate greater loyalty–when they work for a company they view as having good values and ethical practices.

SOURCE: David Gebler, president and founder,Working Values, Sharon, Massachusetts, December 27, 2004.

LEARN MORE: Who Are You Really Hiring?

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.

Although the Gulf Coast hurricanes have roiled the Capitol Hill agenda, they’re not to blame for blowing pension reform off course–objection from two senators did that.

Spurred in part by the specter of bankrupt Delta Air Lines and Northwest Airlines dumping about $10 billion in pension obligations on the federal government, two Senate committees melded their defined-benefit pension proposals into a bill that had been headed for a vote by the full Senate in early October.

But Sens. Mike DeWine (R-Ohio) and Barbara Mikulski (D-Maryland) held up the bill when they objected to a provision that would have forced companies with junk-bond credit ratings to pay more into their pension plans.

DeWine and Mikulski offered an amendment that would have based a plan’s “at risk” status on whether it is funded below 60 percent, regardless of the company’s credit rating. The amendment also would have allowed companies to smooth assets and interest rates over three years instead of the one year allowed in the compromise bill.

“Corporate pension plans are in a $500 billion deficit, and the DeWine-Mikulski amendment would dig that hole deeper and put more workers’ pensions at risk,” Sen. Charles Grassley, chairman of the Senate Finance Committee, said in an Oct. 7 statement. “That’s probably why they didn’t want to vote on it today, but instead wanted to wait for big business lobbyists to drum up more support. Big businesses say they can’t afford to put money in their pension plans, but they’ve had no problem handing out huge salaries and special retirement plans for their executives.”

It’s unclear whether the Senate will take up pension reform when it returns from a one-week recess on Oct. 17. The House could pass its own pension legislation by late October, predicted Rep. John Boehner, chairman of the House Education and the Workforce Committee.

The bipartisan Senate proposal is less generous than the House proposal on so-called rate smoothing. The Senate bill would establish an interest rate for valuing pension liabilities using a one-year average of investment-grade corporate bond yields. Boehner’s bill would allow smoothing over three years, while current law permits four years.

The Senate bill requires that companies fund their pension plans 100 percent starting in 2007, with a three-year transition for large companies and five years for small ones. Underfunded plans would have seven years to reach full funding.

Senate legislation also would toughen funding rules for companies with junk-bond ratings, allow the use of credit balances if the pension plan is 80 percent funded, freeze accruals if funding dips below 60 percent and increase flat-rate Pension Benefit Guaranty Corp. premiums from $19 to $30 per employee. After assuming responsibility for several costly pension plans in the past few years, the PBGC has a $23.3 billion deficit.

Boehner dismisses the Senate proposal in part because it gives airlines 14 years to shore up underfunding. “The Senate language is irresponsible,” he says. “I don’t want to get in the middle of restructuring that’s under way in the airline industry by giving some air carriers preferential treatment over others.”

But creditors are tempted to jettison pension obligations during bankruptcy. “We’re in a race against time,” says Duane Woerth, a Northwest pilot and president of the Air Line Pilots Association.

Businesses, meanwhile, are resisting attempts to curtail smoothing.

“It is the uncertainty and inability to accurately plan and budget for their financial obligations that shakes their confidence” in having pension plans, “and may result in a freezing of a plan or possibly a termination,” says James Klein, president of the American Benefits Council, which represents more than 250 large employers.

So far, none of the legislation on the Hill makes cash-balance pension plans retroactively legal. The portable plans, which cover 8.5 million workers and involve an annual employer contribution to a hypothetical account, have been subject to age-discrimination lawsuits. Traditional defined-benefit plans, based on wages and number of years of service, become more valuable later in an employee’s career.

Congress has a responsibility to protect the plans, “and we need to do it retroactively,” Boehner says. “We cannot have a comprehensive pension reform bill that doesn’t adequately cover cash balances. How we do it and (in) what manner we do it will be a subject of great debate.”  

—Mark Schoeff Jr.

Dennis Donovan, Home Depot’s executive vice president of human resources, was the top-paid HR executive in 2004, up from second place in 2003, according to a list of the 30 highest paid HR leaders compiled for Workforce Management by Aon Consulting’s eComp Database.

    “The good news for human resources practitioners is that in every discipline their pay is moving up,” says Joe Vocino, principal consultant in Mercer Human Resource Consulting’s performance measurement and rewards practice. Particularly given the added burden of Sarbanes-Oxley, human resources leaders are crucial to making sure that companies are staying in compliance, he says.

Workforce Management, October 10, 2005, p. 36-38 — Subscribe Now!