Author: Site Staff

A dearth of science and engineering workers threatens to diminish U.S. competitiveness and undermine the economy, according to a new report by the National Association of Manufacturers.

The group is calling for a national workforce strategy that includes improving high school math and science education, inspiring students to pursue high-tech jobs, reforming U.S. immigration policies to attract high-skilled foreign workers and increasing federal funding for basic research in engineering, math, computer and physical sciences.

Jobs requiring science and engineering education or technical training are going unfilled, even as the number of graduates in those areas declines, NAM argues.

“We need action and we need it quite quickly, if we’re going to head off what is already a looming 21st century skills shortage that is being felt in some workplaces today and will become increasingly acute in the future,” says NAM President John Engler.

Developing a “high-performance workforce” is the top concern of manufacturing executives, Engler says. By 2012, more than 40 percent of factory jobs will require a post-secondary education.

In that same year, the United States faces a 500,000 shortfall in engineers and scientists, Engler says. But the number of students earning bachelor’s or master’s degrees in science and technical fields has declined from one in six in 1960 to less than one in 10 in 2001. In 2000, there were 207,500 engineering graduates in China compared to 59,500 in the United States.

If these numbers don’t turn around, the United States will fall behind in the global economy, according to NAM.

“We are truly facing a competitive crisis with India, China and others,” says Randel Johnson, vice president of labor, immigration and employee benefits at the U.S. Chamber of Commerce. “We have to take on this challenge in a direct manner.”

Meeting the challenge will require more than just bolstering workers’ science and technical skills, according to Daniel Pink, author of A Whole New Mind. “What matters is whether one has the capacity to invent things the world didn’t know it was missing,” he says.

For the United States to stay competitive, it has to be the source of new ideas. He pointed to the iPod as an example. It’s manufactured in China but designed in California. This division of labor doesn’t bode well for people narrowly trained in technical fields. High-tech workers have to know fundamental science, understand marketing and sales and have empathy for customers.

“To be effective today as an engineer, you can’t be just a slide-rule-dictated technician,” Pink says. “The capacity to innovate comes from the skills of synthesis, from multidisciplinary thinking.” Such habits could be developed by adding history, art and English classes to curriculums dominated by calculus and thermodynamics.

While the United States grows domestic scientists and engineers, it will have to allow more high-skilled foreign workers into the country to meet job market demands.

Capping immigration ostensibly to protect U.S jobs is “counterintuitive,” says Johnson. “It’s wrong.” Ultimately it forces companies to send operations abroad, where they can be closer to talent.

—Mark Schoeff Jr.

In a unique move, Bank of America is bringing its recruiting back in-house after having outsourced the function for the past four years.

Bank of America’s decision may seem counterintuitive given that many companies are in the midst of outsourcing their human resources functions. But industry experts say that the bank found itself in a very unusual situation.

After merging with FleetBoston Financial in 2004, the bank was left with two human resources outsourcing providers. Bank of America had a 10-year contract with outsourcer Exult, which was acquired by Hewitt in October 2004, to handle all of its human resources processes, including recruiting and staffing. Fleet, meanwhile, had signed a seven-year contract with Fidelity earlier in 2004. Under that agreement, Fidelity provided Fleet with administrative support for its human resources operations, payrolls and benefit programs covering about 250,000 employees and retirees.

As part of the compromises made during the merger of the two banks, Bank of America agreed to use Fidelity as its human resources outsourcing provider, says Naomi Bloom, managing partner at Bloom & Wallace, a consulting firm in Fort Myers, Florida.

“It had nothing to do with Exult’s capabilities,” she says. At that point Bank of America could either outsource its recruiting and staffing to Fidelity as well or bring it in-house. The bank chose the latter. “Fidelity does not have the same recruiting capabilities that Exult has,” Bloom says. “Until or unless Fidelity can do that, Bank of America had no choice.”

Jenny Engle, a Fidelity spokeswoman, says that Fidelity does offer staffing as part of its human resources outsourcing package, but she declined to comment further on Bank of America’s decision.

Tara Murphy Burke, a Bank of America spokeswoman, also declined to comment on why Bank of America was bringing the recruiting function back in-house, but she confirmed that the bank expects to grow its human resources staff from 1,200 to 1,500 as a result of the move.

Industry experts agree that the Bank of America decision will remain unique even as more human resources outsourcing contracts come up for renewal, says Michel Janssen, managing research director at Everest Group.

Recruiting is usually one of the last functions a company outsources, largely because of the importance that corporate culture plays in hiring. But once companies outsource recruiting, they usually stick to it, Janssen says.

“For the most part, if companies are unhappy with their suppliers they change suppliers, but they aren’t bringing it in-house,” he says.

—Jessica Marquez

As this year’s wave of college graduates joins the workforce, employers have to make a more concerted effort to teach them the importance of participating in their companies’ 401(k) and health care plans, according to a survey by the Employee Benefit Research Institute.

The survey shows that only 45 percent of employees ages 21 to 24 are covered by their employer’s health insurance plan, with 19 percent of those being carried as dependents. Sixty-one percent of workers ages 25 to 34 are covered by health insurance, and 70 percent of workers ages 35 to 44 are covered, the study shows.

“I think employers need to reach out to younger workers and explain that health insurance isn’t just about getting sick,” says Paul Fronstin, director of the health research program at the Employee Benefit Research Institute. “It’s about insurance. Anyone can get hit by a bus.” Fronstin says that most employers want to cover young workers because they are generally healthy, and by adding them to the plan the costs are spread over a larger group of employees and thus the average health care costs per person are lower.

The research shows that young employees’ participation in their companies’ 401(k) programs is even worse. Only 9 percent of workers ages 21 to 24 participate in their 401(k) plans, versus 29 percent of workers 25 to 34 and 34 percent of workers 35 to 44.

“Employers need to think about the long run,” Fronstin says. “If 30 to 40 years from now we end up with a lot of people retiring poor, the implications for employers could mean new mandates and higher taxes.”

—Jessica Marquez

This fact sheet from the Employee Benefit Research Institute includes information on the Pension Benefit Guaranty Corp., including the single-employer program and the multiple-employer program. There are also charts showing trends in pension plans as well as a set of links to more information.

Dear Struggles:



The employment habits of IT professionals are changing, shaped generally by two factors:

• A smaller supply of available jobs during the past couple years because of recession
  
• Outsourcing of many IT positions overseas
  

Since more people are chasing fewer jobs, on the surface this would appear to make recruiting easier. Many companies, however, recruit only actively employed individuals, viewing unemployed people as “tainted” (we don’t agree with this in many cases).

Many applicants are now risk-averse, preferring to wait until the economy revs back up. Even if they’re unhappy with their current job and pay, they’re scared to leave because if the new job doesn’t work out, they could have a tough time finding another position. Also, starting salaries generally are not sufficient to entice people to leave comfortable positions.

This reluctance affects innovation as well. The high-tech boom of the 1990s resulted in the development of many new technology products and services. Enticing well-qualified veterans to leave established companies for risky startups with huge potential was much easier then than now.

How do you adjust? Your recruiters and hiring managers need to sell the company’s strengths (technology, vision, position in the market, etc.) to potential applicants. That way, you should wind up with quality hires–and most likely longer-term employees–who join your company for intangibles, not just money.

SOURCE: Mike Sweeny, managing director, T. Williams Consulting Inc., Collegeville, Pennsylvania, Nov. 1, 2004.

LEARN MORE: Hiring Sprees Are Here Again.

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 Incredible:



Shifting this responsibility to a forum or some other person would be a tacit admission that your human resources professionals aren’t capable of doing the job. Is that really the message you want to send?

That being said, your human resources department appears to have a credibility problem. This may be due to lack of action (human resources can, but doesn’t, do anything with the information), lack of empowerment (it is unable to do anything with the information) or past instances of failing to appropriately handle information. It also could stem from employees’ lack of understanding regarding the role of human resources.

That junior executives are reluctant to confide in you gives the impression that human resources is influenced by, or supportive of, senior executives–to the point of being biased in its responses to the information gleaned from departing employees. To build credibility, begin the exit interview by explaining how human resources will use this information.

It sounds as though your human resources department lacks credible methods for receiving feedback, developing new executives and recommending/implementing actions to address the issues being reported. You should institutionalize methods and procedures (if you haven’t already) to develop top executives and respond quickly to critical feedback.

This critical first step, however, requires active support from your chief executive officer. Namely, you need to handle information appropriately and report feedback directly to the CEO. If your CEO repeatedly chooses not to take action, you may want to look at obtaining more objective and comprehensive data.

Exit interviews often reveal the weaker managers/executives in an organization, yet the data seldom supports specific actions. Unwanted criticism also may be discounted by discrediting the source, such as a disgruntled ex-employee. Having a solid executive- development program helps ease some of management’s suspicions about negative feedback.

For example, let’s assume all your executives are put on a schedule to develop key accountabilities and review their success in attaining them. In this case, executives who move to the top of the list when reviews come up are likely to be received more positively by your CEO.

In larger organizations, an even better approach is to have all executives within a division participate in the process. Using sophisticated automated-assessment tools, executives can easily measure their competencies and their own levels of accountability. Using various assessments (360-degree feedback, for example), objective data about each executive could be summarized for your CEO to analyze.

What’s the connection toexit interviews? Remember, executives with weaker competency levels surface first. Your job in human resources is to connect those weaknesses to business issues that need shoring up. These could include the loss of promising junior executives, volatile turnover, increased staffing costs, diminished customer satisfaction or flagging sales. Make sure this connection is spelled out when passing along exit interview information to top brass.

SOURCE: Carl Nielson, Principal, The Nielson Group, Dallas, October 25, 2004.

LEARN MORE: ReadGlean for another view.

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.

Avaya, a telecommunications firm in Basking Ridge, N.J., focuses on designing, building, deploying, and managing networks and serves more than 1 million businesses worldwide, including more than 90 percent of Fortune 500, nonprofit agencies and the U.S. government. When the company was spun off from Lucent Technologies in 2000, Avaya inherited Convergys as an HR BPO provider. Avaya wanted to grow its business globally, but at the time, Convergys only had U.S. services. As often happens during restructurings, Avaya decided the provider they inherited would not meet its global needs and decided that bringing its HR process in-house would be less expensive and more productive. So Avaya and Convergys parted ways.

The spin-off required Avaya to implement a new Enterprise Resource Planning (ERP) system in 90 days (Avaya selected SAP), and to establish the appropriate technical infrastructure to support a global workforce and the most effective mix of regional and local HR operations. Bottom line: the organization needed to get a global human resources function up and running quickly.

Avaya’s HR department added headcount and decided to create a self-service structure, intended to better serve its workforce while allowing HR to focus on more strategic initiatives. But the company quickly learned it did not have the tools and processes in place to deploy a self-service tool.

It didn’t take long to realize that HR BPO was the solution Avaya needed after all. But with 20,000 employees in 52 countries, Avaya still needed a global provider. Steve Melamed, Avaya’s Vice President for Global HR Operations contacted Convergys to renew a partnership for a shared services strategy because Convergys had proven during work with Lucent that it had the tools and processes to implement an effective solution. Another factor in the decision was that since the parting, Convergys had taken steps toward becoming a global provider.

Melamed met with Karen Bowman, president of Convergys Employee Care. The two companies worked together to accomplish the goals of both organizations. Convergys purchased the global HR Service Center footprint Avaya had created on its own, and the two entered into a multi-country, multi-language outsourcing contract. Convergys had the HR BPO expertise Avaya was lacking and provided tools such as business intelligence, case management and priority-setting for successful migration.

Setting and adhering to clear objectives and working collaboratively was key for success, Melamed said. Avaya goals: to increase data accuracy, deliver data faster and more cost-effectively, using an efficient self-service model. The organizations agreed to target self-service for 70 percent of service-center transactions over the life of the five-year agreement. In addition, Avaya looked to Convergys to reduce HR transactions and costs, leverage internally built systems and operations, manage its disparate worldwide workforce and drive increased value through measurable HR services.

As it turned out, Avaya reached its goals before the two-year mark. Even more impressive, year-to-year savings were approximately $2 million, in addition to the streamlined employee life cycle workflow and reduced correction processing. Getting there is a credit to Convergys’ building a tailor-solution that met the client’s needs. “If you don’t make the right up-front moves in an HR BPO deal, mistakes keep happening,” Melamed said.

First, the organizations clearly defined “governance”—which party would be responsible for what, with a clear decision-making process. Melamed mused, “It’s rare to find a partner who will sign up for clearly articulated cost reductions, but we found one.” In fact, Convergys agreed to an often-unheard-of stipulation: Convergys loses the contract if it fails to meet SLAs in even one global region.

With its work cut out, Convergys didn’t rely on standard customer-service metrics—such as average time-to answer calls—as measures of success. Instead, Convergys entered into SLAs based on quality provided locally. For example, how quickly a key transaction can be closed or whether new-hire letters are sent out within 24 hours – as well as guaranteed service levels and response times.

Convergys HR Business Process Outsourcing (BPO) experts focused on redesigning processes to improve case handling and service response times, lower costs, and utilize existing software and technology to maximize the value of previous investments in SAP and other technologies.

They also recommended the application of best-practice methodologies to further streamline operations and gain greater efficiencies, including acquisition of Avaya’s global HR operations network of employee service operations serving Europe, the Middle East, Africa, and Asia Pacific and reorganizing them into global shared service centers; and assumption of vendor management responsibilities to deliver improvements in cost, efficiency and quality.

Convergys worked with Avaya to consolidate processes and systems in global service centers supporting 15,000 Avaya associates in 52 countries in more than 20 languages and with a high degree of HR service consistency. HR services delivered include recruiting and staffing, HR administration, payroll, benefits solutions and learning solutions, including e-learning.

The results were clearly measurable. The client realized a savings of more than 30 percent each year. Responses were faster and more accurate, with 80 percent of cases closed with five days (compared to Avaya’s prior record of 50 percent closed within 10 days). The intelligence tools provided by Convergys allow Avaya to track efficiency of HR programs with greater precision and discover work force trends and patterns. And a less tangible, but equally important benefit: Convergys helped foster an HR self-service culture among employees.

Though a recent ruling by the California Supreme Court exposes employers to a greater risk of litigation by employees alleging sexual harassment, experts say most workplaces probably have cultures and practices in place that make such a suit unlikely.

The case, brought by two female employees of the state’s Department of Corrections, centered on favoritism doled out by their boss, a male prison warden. According to court documents, he had ongoing affairs with three women who reported to him at two different facilities. The three enjoyed special treatment in the workplace as a result.

The plaintiffs claimed that their careers suffered even though they were neither involved with the warden nor subject to his whims. They still presented evidence of discrimination, such as being passed over for promotion, and showed that they feared retaliation if they complained. In ruling for them, the justices overturned two lower courts’ decisions, finding that the conditions the women endured fit a pattern of sexual harassment and violated the state’s Fair Employment and Housing Act.

Christopher Kondon, a partner in the law firm Kilpatrick & Lockhart Nicholson Graham in Los Angeles, says the ruling is “firmly rooted in real damage to real people.” But he adds that the fact pattern in this case is uncommon in the modern workplace, meaning plaintiffs would likely have to show outlandish conditions in order to prevail. Moreover, the justices excluded isolated acts, which means an employee has to demonstrate a pattern of mistreatment to make a case.

The decision could influence how companies handle workplace relationships and frame fraternization policies. The law already permits companies to ban relationships between supervisors and their reports–something UPS does, for example, largely to deter any perception of special treatment. In the event that two people in management get involved, UPS protocol is for the relationship to end or for one party leave the company.

Kondon says reaction to the case in the business community has been mild thus far. An appeal appears unlikely anyhow in part because the U.S. Supreme Court probably would not take the case. “This is a conservative court when it comes to sexual harassment in the workplace,” says Arthur Silbergeld, a partner with Proskauer Rose in Los Angeles. He explains that the justices would be almost certain to bypass hearing arguments and let stand a law that, in the court’s view, promotes a just and orderly workplace by keeping a lid on inappropriate behavior.   

—Jonathan Pont

Below is the primary body of the e-mail sent December 17, 2004, from Wendy’s CEO Jack Schuessler to all employees regarding the conversion of stock options. Some Wendy’s-specific information has been removed from the letter by the company.
 

Dear Fellow Employees:

    In February, we informed you of a change in our equity (stock) compensation strategy as part of a larger initiative, which affected the WeShare Stock Option Plan.

    During the last several months, we have been working on the strategy for the replacement of stock options. Significant consideration was given to providing competitive total compensation with direct linkages to employee and brand performance. We also considered the current regulatory environment, expectations of our shareholders and our strategic goals and objectives. Another consideration was historic stock option exercise patterns–the vast majority of employees use their options to obtain cash.

    The stock option replacement strategy will deliver incentives in a more effective manner with cash. Cash incentives are not subject to stock market volatility and, therefore, carry less risk than stock options. Unlike stock options, cash incentives will not require vesting. In addition, cash incentives will effectively align payouts with business performance. All levels of management, professional and administrative employees will now be covered by an incentive plan, with rewards aligned directly to the business unit they support.

    In order to accomplish our incentive compensation strategy, we are implementing the following:

• We will expand the eligible participants in the Management Stock Incentive Plan (MSIP) to include restricted stock awards to employees in grades [x, y and z], effective with the 2005 award.

• Effective with the 2005 plan year, we will increase the bonus targets for employees who are in an existing incentive plan, and who are not eligible for restricted stock awards.

• We will also implement, effective at the beginning of 2005, a new incentive plan for eligible employees who are not currently in an incentive-eligible position.

    During the next few months, we will provide you with more information, including eligibility and participation terms, about the new incentive plan along with the changes to our existing incentive plans. We feel these changes strengthen our commitment to deliver competitive total compensation to our employees while allowing us to achieve our strategic objectives.

Sincerely,

Jack Schuessler
Chairman and Chief Executive Officer