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Success Stories Partnerships That Create Winning Solutions

When it’s time to step up to a new measured level of performance, fix an immediate problem, or find an innovative, profitable solution, there’s nothing like discovering the perfect partner for the enterprise. When that relationship thrives and succeeds, everyone wins.


Here you’ll read 4 such success stories. The companies on the following pages may be very similar to your own—the individuals involved all striving to successfully confront a variety of employee-related business issues through truly strategic workforce management initiatives.


All of these firms share a common ground—the utilization of companies that understand that there’s more to business than offering a product or introducing a service. Their business is built on relationships and partnerships that drive results through the engine of workforce management. And that’s the real benefit of successful partnering.


  Aramark Serves Improved University Workforce Management


  ER-One Averts A Potential HR Emergency


  American Office Takes Strategic Approach with Abra Suite


  Automated Prescreening Enhances HR Cost Savings

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Bad News, Good News For CEOs Who Get Stock Options

The value of stock options awarded to CEOs plummeted by 60 percent between 2001 and 2003, according to a new proxy analysis by human resources consultants Watson Wyatt. The average value of those new stock option grants declined from $10.2 million in 2001 to $4.2 million in 2003. Meanwhile, the value of restricted stock awards increased 58 percent, and the average value of other long-term incentive awards rose 80 percent, according to Watson Wyatt. The analysis looked at CEOs who were in their jobs between 2001 and 2003 at 373 of the largest publicly traded US companies.


The consolation for CEOs was the dramatic increase in the value of their unexercised stock options from previous grants. They were up 79 percent, from a median of $6.7 million in 2001 to $12 million last year, thanks to the stock market rebound. Nevertheless, the average total value of the CEOs’ pay elements declined by about $5 million over the two-year period.
 
Ira Kay, national director of compensation at Watson Wyatt, said that the shift in stock-option value shows that companies are taking executive compensation seriously. “However, many CEOs have yet to feel the full impact of this swing, because the value of their unexercised stock options from earlier grants has skyrocketed,” Kay says.


Nevertheless, the “golden age” of stock options may be over, he says. Companies will need to find a new mix of incentives and rewards that will replace stock options as a way of keeping key executives motivated, Kay says.

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Effective Succession Planning is Hard to Come By

Most companies aren’t executing succession-management plans well, according to a study by DDI and Chief Executive magazine of 1,200 senior executives in the United States.


Seventy-three percent of respondents said that “defining the skills, experience and attributes required for successful senior leadership is important.” Still, only 22 percent say their company has a highly effective system for doing it.


Some companies blame the lack of available talent for not implementing their succession plans. DDI says these promising employees are often working at the company but have not been identified. “Organizations will find more success developing leaders from within the organization than from bringing individuals in from the outside,” says DDI’s Matt Paese.


More information on workforce planning is available online.

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Human Resources Departments in Top Companies Spend Less Per Employee

The human resources functions that are “world class” spend less per employee each year than the average company, according to The Hackett Group.

 
Hackett says that the human resources divisions of companies it defines as “world class”–the top 25 percent of companies among the thousands Hackett studies–spend $1,390 per employee annually, 27 percent less than median companies. They also have 11 human resources professionals on staff for every 1,000 employees, compared to 16 at other companies, and their labor costs are 31 percent less. Their spending for outsourcing and technology also is about 8 percent less than median companies.
 
These top-performing companies pick and choose what they outsource. They’ve been spending 55 percent less than median companies, for example, on outsourcing staffing and development, largely because hiring has not been a hot spot in recent years, says Hackett HR Program Manager Patty Miller. That usage might rise as hiring need rises, she says. On the other hand, world-class companies spend 25 percent more than median companies on outsourcing total rewards–a category that includes health and welfare, pension and saving and compensation administration.
 
Miller says the research shows that technology and outsourcing–often touted as silver bullets for human resources cost containment–are not really the answer. Process simplification, however, might be. The world-class companies have 69 percent fewer health and welfare plans per 1,000 employees served and 46 percent fewer compensation plans. This allows companies to hire fewer human resources employees and run processes more efficiently. “There’s this misconception that to cut costs in HR you eliminate staff and replace them with technology and outsourcing support,” Miller says. “But the numbers simply don’t bear this out.”
 
World-class companies also have 61 percent fewer voluntary terminations.

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Dear Workforce What Are the Audit Requirements for 529 Plans

Dear Wary:



First, a reminder/disclaimer that this article is intended to provide useful information, but shouldn’t be construed as legal advice or a legal opinion.

With that out of the way: Officially known as the Section 529 College Savings Plan, this program is not subject to provisions of the federal Employee Retirement Income Security Act of 1974 (ERISA). There are no participation requirements, plan documents, summary plan descriptions, Form 5500 filings or discrimination tests. Employers have no fiduciary responsibility for the plan, nor any tax-reporting obligation.

Because they aren’t governed by ERISA regulations, 529 plans also have no audit requirements. That does not mean, however, that some element of audit or compliance won’t be instituted in the future.

Employees expect the company to monitor the plan’s performance, especially if it is an employer-sponsored plan. This requires periodic assessment and an investment of time and money.

About 529 plans
Many companies are considering offering 529 plans to their employees. These plans aren’t new, but they’re getting increased attention, thanks largely to the Economic Growth and Tax Relief Reconciliation Act of 2001. This federal law created additional tax benefits and greater portability among state programs.

Surrounded by economic uncertainty and escalating benefit costs, employers want to provide benefits that support financial security without draining their budgets. On an ongoing basis, a 529 plan is relatively inexpensive. An employer only has to set up a payroll deduction and periodically assess the plan’s performance. However, there may be significant up-front costs for choosing an investment fund, educating employees and communication.

Fund selection
Select an investment-funds manager that demonstrates due diligence. All 50 states, as well as the District of Columbia, sponsor 529 plans. These plans have the same features and are treated identically by federal tax laws, but vary regarding state income taxes, contribution limits, penalties, out-of-state issues, fund performance and other matters.

Selection costs could be significant, depending on the analysis required. For example, if your employees live in several different states, you’ll need to research the tax benefits each state offers.

If an employer selects one state plan, chances are good that employees living in that state will enjoy tax savings not experienced by employees who don’t live there. Also, plan designs differ from state to state. In New York State, for example, a student must be in the plan for three years before distributions can be made. This type of plan probably won’t work for employees whose children are already in college.

Communication
Ensure the program’s success by providing employees with adequate education andcommunication. Without those important elements, you’ll wind up supporting a program for a small percentage of employees. Communication can be costly. It might include newsletters, brochures and information sessions. Your investment manager also should have excellent communication materials.

SOURCE: Annamaria Azzara, Principal, Buck Consultants Inc., New York, New York, July 11, 2003.

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.

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 Dear Workforce Newsletter
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India’s Latest Import Turnover

About one in three employees in India’s outsourcing companies quit within one year of getting the job, according to Dow Jones Newswires in New Delhi.
 
In response to the job-hopping, salaries in India’s $3.6 billion outsourcing industry are on the rise. Some companies, according to Dow Jones, are also finding themselves short on staff and are being forced to have poorly trained employees answer the thousands of customer-service calls pouring in from U.S. consumers.

“The quality issue has to be addressed,” says Nandan Nilekani, the CEO of Infosys, one of the larger companies in India. “The kind of increased scrutiny which we have got in the global media means that even a small quality issue can have much bigger resonance.”


Arun Seth is Managing Director of BT Worldwide, a British company that has outsourced some of its back-office operations to India. Seth tells Dow Jones, “As a result of higher attrition and growing salaries, there are big concerns over the competitiveness of the Indian outsourcing industry.”


For more information, see “A Call-Center Scam Prompts Greater Scrutiny.”


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Dear Workforce How Do We Prevent Division Presidents from Undercutting HR

Dear Miffed:



My first emotional reaction: fire the division president. This sounds radical, but it would sure send a message. Of course, the supervisor would quit, but she may quit anyway.

As far as preventing other employees from trying the same tactic, there isn’t any way to do this. The question is how successful they would be.

Now, to my more logical reaction. What have we learned here about how engaged the human resources staff is with senior executives? In this company, it’s obvious that the official did not have a high enough regard for human resources, and didn’t know the right way to handle these situations, which is to consult the chief human resources officer.

It would be easy to point a finger and snicker at this one, but couldn’t this happen in your company? If you say no, are you sure?

Conventional wisdom says you shouldn’t “buy” loyalty if someone is ready to leave, and permitting an employee to brag about a deal without being disciplined is foolish.

SOURCE: Roger E. Herman, certified speaking professional and certified management consultant,The Herman Group, Greensboro, North Carolina, co-author of How to Become an Employer of Choice and Impending Crisis: Too Many Jobs, Too Few People, July 22, 2003.

LEARN MORE: Please read ourHR’s Role Must Be Expanded in the Boardroom.

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.

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 Dear Workforce Newsletter
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Workforce Management June 2004

Dangerous business
By Sheila Anne Feeney
It might seem tough to recruit employees to work 16-hour days that begin with the donning of flak jacket. But offer salaries of $20,000 a month and it’s easy to find people with the right job skills. Then comes the hard part: deciding if they have the right stuff for work in a war zone.

Top dollar
By Douglas P. Shuit
The 10 highest-paid human resource leaders in U.S. public companies work in industries ranging from manufacturing to retail to advertising. Their multi-million dollar compensation packages show that workforce executives are indeed gaining elite corporate status–they are among the five highest-paid officers in their companies. But the profession still has a long way to go before it shares top billing with CEOs and CFOs.

Hiring without limits
By Joe Mullich
At IBM, disabled workers contribute millions to the bottom line, and provide a crucial point of view for a company that makes and sells technology for people with disabilities. “We consider diversity strategic to our organization,” says Jim Sinocchi, director of diversity communications or IBM, who is a paraplegic. “We don’t hire people who are disabled just because it’s a nice thing to do. We do it because it’s the right thing to do from a business standpoint.”

System failure
By Sam Greengard
Human resources leaders, IT and top management are often at odds when it comes to choosing a recruitment-management system. While human resources may view functionality, speed and performance as key factors, the IT department is more likely to regard compatibility, ease of integration and its ability to support the application as the most significant issues. Top executives often prefer to leverage a company’s existing enterprise technology investments. Unless a strong business case can be made for a best-of-breed system, cost and compatibility usually win out.

Between the Lines
The 401(k) gamble
The plans are based on choices. And at every turn, employees make the wrong ones.
   Reactions From Readers
Letters on tuition reimbursement, leadership and productivity.

In This Corner
The life cycle of a “twofer”
It’s all too easy for an internal investigation into harassment or discrimination to become an opportunity for retaliation. And voila–two legal claims instead of one.

Legal Briefings
The cost of intentional misrepresentation to an employee: $555,666.

Data Bank
The global imperative

The class of 2004
Recent grads aren’t looking for lavish perks. They’d be amazed just to land a job. Also: Fallout from gay marriage in Massachusetts. Higher medical-claims cost are coming. A human-resources coalition takes on the issue of uninsured workers.
  
 

Pension Benefits
From panacea to pariah
In the wake of a court ruling and a lack of legislation, companies are bypassing cash-balance plans, once seen as an answer to traditional pensions.		  

Contingent Staffing
Companies demand vetted temps
Facing the risk of property and identity theft, some companies insist that their staffing agencies run background checks on temporary workers–and pay for it.
  

Health-Care Benefits
Weighing the costs of bariatric surgery
Although gastric-bypass procedures and other bariatric surgeries to combat obesity are popular, they’re also costly. Employers and insurers balk at picking up the tab.
  

Training
A taste of greater profits for a Disney restaurant
A creative sommelier-training program for servers at the high-end Napa Rose restaurant has resulted in higher dinner tabs. The tips are better, too.
  

Outsourcing
A call-center scam prompts greater security
International fraud, customer dissatisfaction and a sense of lack of control have pushed companies to step up oversight at outsourced overseas call centers.
  

Human Resources Management
A tool for analysis
Human resources annual reports can reveal trends, illuminate plans for the future and be used for persuasive purposed with line managers. But they are far from universal.
  

 
May  2004

April  2003
March  2003
If you’re not currently receiving Workforce Management magazine, click here to request a FREE trial issue today!

 


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A Year After its Harassment Case, the Dial Corporation is Changing

An agreement between the U.S. Equal Employment Opportunity Commission and the Dial Corporation to prevent further sexual-harassment is working, the EEOC said last week.


According to the EEOC, the three people appointed by a court to monitor Dial say, “All evidence available to us shows that sexual harassment and related retaliation are not significant problems in the plant at the present time.”


On April 29, 2003, a consent decree resolved the EEOC’s sexual-harassment case against the soap-maker. In addition to the damages it paid, Dial also had to toughen up its no-harassment policy; revise its complaint procedure to encourage employees to come forward; and make supervisors more accountable if harassment occurs among employees under their supervision.


EEOC Attorney John C. Hendrickson says that the atmosphere at the Dial Corporation has improved since allegations of harassment were reported at its Illinois plant. “…The management of any company must be dedicated to making the necessary changes and to continuously signaling in ways large and small that employees engage in sexual harassment at their peril,” Hendrickson says. “What the Dial monitors’ report tells us is that the necessary changes are being made at Dial and that the employees are understanding the signals. That is good news for everybody.”


The court monitors found that a “substantial majority of both men and women” say that there has been a change in the environment for women in the plant in recent years. A candid report on Dial’s progress is available on the EEOC’s Web site.