Author: Site Staff

Human resources professionals (502 respondents) disclose their companies’ succession planning preparedness :

1. My organization is prepared to replace a key executive when faced with a sudden departure.

Agree:	40%
Disagree:	46%
Neither:	14%

2. My organization has a well-developed management succession system.

Agree:	22%
Disagree:	63%
Neither:	15%

3. Our succession planning process relies on the systematic development of high-potential individuals.

Agree:	30%
Disagree:	49%
Neither:	21%

4. Our management succession planning is closely linked to our organization’s strategic business needs and plans.

Agree:	32%
Disagree:	44%
Neither:	23%

5. Our succession planning is a part of a broader management development effort that includes performance appraisal and other HR review systems.

Agree:	34%
Disagree:	44%
Neither:	22%

6. Our succession planning is based upon well-developed competencies and the objective assessment of candidates.

Agree:	29%
Disagree:	49%
Neither:	22%

7. Human resources and line management work closely together to ensure the viability of our succession planning process.

Agree:	37%
Disagree:	45%
Neither:	18%

SOURCE: Foresight Survey Systems International and RHR International

Personnel Journal, September 1996, Vol. 75, No. 9, p. 42.

Although workers think employers haven’t progressed very far with corporate efforts to streamline lately, they do feel in sync with their peers in their immediate work teams-a big commitment-booster.

My unit/department’s work quality is excellent	80%
I am motivated to help the company to be successful	75%
I can have day-to-day impact on success	76%
My unit/department works as a team	73%
Employees are ethical in business dealings	72%
Employees are dedicated to doing a good job	70%

SOURCE: Towers Perrin

Personnel Journal, August 1996, Vol. 75, No. 8, p. 70.

As you weigh the merits of offering flexible vacation benefits, consider the possible savings as well as the expense. According to George R. Faulkner Jr., managing consultant at A. Foster Higgins & Co. Inc. in Philadelphia, employees don’t have to be the only winners. Employers actually can save money. When the option does increase costs, it still may be worth the time in administration-especially if it improves employee morale, recruitment, productivity and retention. You be the judge.

Assume the following:

• A company has 2,000 eligible employees who can buy or sell vacation time.
• Average salary is $37,500, increasing 4% each year.
• Approximately 30% of employees earn more than the FICA wage base maximum.
• On average, 15% sell a week of vacation and 25% buy a week (though percentage buying and selling depend on level of vacation entitlement).
• Employees receive full value for time sold and pay full value for time purchased.

Assuming no employees must be replaced during their leave:

	First Year	5-Year Total
Savings from time bought	$ 333,000	$ 1,802,000
Expense from time sold	$-250,000	$-1,354,000
Net savings	$ 83,000	$ 448,000

Assuming 25% of employees must be replaced by temps or overtime help, at a rate of 140% of employee’s pay:

	First Year	5-Year Total
Savings from time bought	$ 186,000	$ 1,008,000
Expense from time sold	$-208,000	$-1,125,000
Net savings	$ -22,000	$ -117,000

Personnel Journal, August 1996, Vol. 75, No. 8, p. 78.

When employers should consider,

A vacation buying option:

• Your company needs to offer more time off (because of downsizing), but can’t increase costs.
• You want another option for employees’ flex dollars.
• You have a weak vacation program, especially for newer employees.
• Electing more time off doesn’t disrupt staffing needs.
• Replacing absent employees isn’t necessary or the costs are low.
• Section 125 of the Internal Revenue Code (use-it-or-lose-it rule) won’t create a problem with employees, administration or state law.

A vacation selling option:

• It can help employees draw down (or prevent further deposits into) a large accrued vacation bank.
• Higher paid, longer service employees with better vacation benefits won’t get a big windfall from selling vacation time at their higher rates of pay.
• The current vacation schedule is generous or most employees have relatively long service and could use the option to sell time.
• Replacing absent employees costs too much, and the company would save by reducing absences.
• Employees have other benefit option uses for the dollars they receive from selling vacations, such as flexible spending accounts, substantial health plan contributions or long-term care insurance.
• Section 125 of the Internal Revenue Code won’t create a problem with employees who could sell vacation days but don’t, and therefore risk forfeiting any unused time they could’ve sold.

SOURCE: George R. Faulkner Jr., managing consultant at A. Foster Higgins & Co. Inc. in Philadelphia.

Personnel Journal, August 1996, Vol. 75, No. 8, p. 76.

When temporary employees become more attached to their contracting companies than their agencies, you have a problem of misplaced loyalty. The temps look to their contracting companies to fulfill their needs, and are almost sure to be disappointed.

The issue of allegiance becomes more problematic if it leads to a co-employment situation. Co-employment occurs when a company’s relationship with the temporary employee takes on the characteristics typically associated with the traditional employee/employer relationship: salary and benefit review, counseling, discipline and termination. When co-employment exists, each company is liable for the employment decisions made by the other. If a contingent employee files a legal complaint and wins, both the agency and the client company could be responsible for any damages awarded.

The preceding explanation of the co-employment issue is included in New York City-based Olsten Corporation’s handbook for client companies. It also provides a list of do’s and don’ts your company should follow to avoid potential liability:

DO:

DON’T:

Train the new assignment employee to perform job tasks Take immediate corrective action if an assignment employee is violating safety rules Report any absences, tardiness or unacceptable behavior to the agency Refer all questions relative to pay, benefits, duration of position or opportunity for employment to the agency Inform the agency about any changes in an employee’s work schedule Assist the agency in evaluating employees.

Inform an assignment employee that he or she is terminated or suspended Discuss pay rates, increases, incentives or bonuses Discuss opportunities for regular full-time employment Extend an offer for employment Request that an assignment employee complete timecards or forms with your company’s name on them Counsel assignment employees concerning: tardiness, punctuality, attendance, dress code, child-or elder-care arrangements or other personal matters.

Because issues of co-employment are directly related to the client company’s own actions with regard to temporary employees, the above guidelines can provide companies with a solid foundation for dealing with temporary staffing issues.

SOURCE: Olsten Corporation

Personnel Journal, August 1996, Vol. 75, No. 8, p 46.

Here are some tips when it comes to personnel files:

• Employees should be given notice about what will be maintained in their files.
• Employees should be given reasonable access to review their files.
• Allow employees to include a written explanation about an inconsistency or mistake in their files.
• Restrict access to only those who have a reason to learn of the file contents.
• Keep medical files separate from employment files.

SOURCE: Institute for Business & Professional Ethics, DePaul University, Illinois

Personnel Journal, July 1996, Vol. 75, No. 7, p. 93.

Martha J. Watson
HR director, Minnesota Department of Human Services, St. Paul, Minnesota
Industry: state government agency
Number of employees: 7,000
Minnesota state government’s changing business: “We have three areas of change: 1) Welfare and health-care reform in Minnesota coming at the federal level; 2) Downsizing due to deinstitutionalization of developmentally disabled clients; 3) Changing the emphasis of human resources management (and the perception of HR management) to organizational development and internal consulting to better meet customer needs.”

Walter M. Oliver
Senior vice president human resources, Ameritech, Chicago, Illinois
Industry: Communications
Number of employees: 62,000
Ameritech’s changing business: “In the past three years, Ameritech has gone from a sleepy, bureaucratic company to a nimble, market-driven global communications company. We accomplished this by restructuring the company on several fronts: legislative and regulatory environments, culture and structure. We tapped new leadership and recruited new people. We compressed management layers. We pushed for those closest to customers to drive major company decisions. We outsourced and trimmed our workforce. We reorganized and consolidated. And the change continues.”

Kelly Ritchie
VP of employee services, Lands’ End, Dodgeville, Wisconsin
Industry: International direct merchant of clothing and sewn goods
Number of employees: 6,000
Lands’ End’s changing business: “Generally, we’re focused on making sure that we always provide the best quality products at the highest level of service and backing that with a guarantee as we continue to build our business both in the United States and abroad.”

Joan E. Farrell
HR manager, Lawson Mardon Label (part of Lawson Mardon Packaging, a division of Alusuisse-Lonza Holding Ltd.), Fayetteville, New York.
Industry: Consumer products packaging for food, health care, cosmetics and tobacco
Number of employees: 15,000
Lawson Mardon’s changing business: “Consumer products packaging is a volatile industry which has become more and more driven by speed to market, not only for existing products but also for new initiatives. Operationally, run lengths are shorter and SKUs have proliferated. To deliver successfully in this marketplace, companies must have highly flexible, customer-focused, technically competent employees who are empowered to take the necessary steps to deliver what customers want, 24 hours a day, seven days a week.”

Coleman H. Peterson
Senior VP, people division, Wal-Mart Stores Inc.
Industry: Discount retail stores and combined grocery operations
Number of employees: 670,000
Wal-Mart’s changing business: “Wal-Mart is changing in many ways. These changes are driven by domestic and global geographic expansion, technology and information improvements and the changing expectations of our customers. These external realities require us, internally, to change in response—from how we set our strategic objective to how we prepare our associates to serve the customer.”

Personnel Journal, July 1996, Vol. 75, No. 7, p. 57.

STAGE I:
DEFINITION
Sales below budgeted sales but ahead of the same period in prior year.

SYMPTOMS

1. Bookings below plan for four weeks or more.
2. Field reports confirm it.
3. Backlog levels off.
4. Large order levels fall.
5. Book-to-bill ratio falls below 1.
6. Profits below plan.

ACTION TO BE TAKEN

1. Defer some budgeted hires.
2. Defer some budgeted activities.
3. Heighten awareness of current situation.
4. Discuss at staff meetings.
5. Monitor overall economic conditions.

EXPECTED RESULT
Adjust revenue and expenses to meet plan. Preserve all jobs and expected future stock value.

STAGE II:
DEFINITION
Sales and profits below prior year for a period of one quarter or more.

SYMPTOMS

1. Bookings below plan for one quarter or more.
2. Profits below prior year
3. Backlog declines 15%.
4. Incentive pay on sales slips below plan.
5. Larger customers’ businesses decline or develop credit trouble.

ACTION TO BE TAKEN

1. Revise Selling, General and Administrative (SG&A) expenditures.
2. Revise forecast.
3. Solicit ideas to cut costs, improve productivity and efficiency from employees.
4. Cut overtime.
5. Cut discretionary spending.
6. Redeploy sales force.
7. Increase cold calls.
8. Accelerate new product introductions.

EXPECTED RESULT
Same as in Stage I.

STAGE III:
DEFINITION
Business operates at break-even level or generates losses of less than $100,000 for a period of one quarter or more.

SYMPTOMS

1. Backlog declines 30% from previous high.
2. Bank loans increase.

ACTION TO BE TAKEN

1. Solicit ideas to cut costs, etc. from employee-owners.
2. Voluntary leaves and furloughs.
3. Same as #2
4. Hiring becomes the exception.
5. More reduction of SG&A expenditures.
6. Increase management attention.
7. Monitor Stage II actions for results.
8. Defer lower-priority capital items.
9. Introduce a more aggressive revenue-generation strategy.
10. Price cuts on specification items.
11. Sales of obsolete inventory.
12. Offer extended terms for new business.
13. Accelerate new product introductions.
14. Delay refilling of vacated positions.
15. Accelerate capital work with less than one year payout.
16. Defer raises.
17. More rigorous performance reviews.
18. Defer or reduce salaries for highly compensated employees.
19. Reduce hours.

EXPECTED RESULT
Revise plan to meet revenue expectations. Preserve jobs. Expected stock price above last year but below planned value.

STAGE IV
DEFINITION
Business generates losses for a period of two quarters or more.

SYMPTOMS

1. Lose customers.
2. Lose technological lead.
3. Core products lose market share.
4. Banks look at loans’ status more carefully.
5. Suppliers don’t send materials due to unpaid or late-paid invoices.
6. Stretch out payments to suppliers.
7. Lose good employees.

ACTION TO BE TAKEN

1. Salary deferments or reductions for balance of exempt employees.
2. Trim benefits.
3. Early retirements.
4. Voluntary resignation offering.
5. Layoffs.

EXPECTED RESULT
Downsizing required. Some loss of jobs. Stock price falls below prior level.

SOURCE: Reflexite Corp.

Personnel Journal, June 1996, Vol. 75, No. 6, p. 92.

The purpose of the study, “Making Work Flexible: Policy to Practice,” is to provide models for change. Catalyst created a framework of four goals, each with four strategies to develop a flexible work environment:

Goal I: Build organizational support

• Define and explain the link between flexibility and business goals
• Ensure and communicate senior management support
• Articulate the organization’s commitment to flexibility
• Identify and support pilot programs

Goal II: Support managers and users

• Provide tools
• Evaluate effectiveness
• Share models and case studies
• If necessary, revise systems

Goal III: Internalize the practice

• Incorporate flexibility into other organizational initiatives
• Create and support relationships and networks
• Expand and refine human resources department roles
• Assess the perceptions, experiences, and acceptance of alternative arrangements

Goal IV: Sustain the commitment

• Continually communicate internally about the issues
• Look for ways to promote flexibility externally
• Implement accountability measures
• Review and evaluate the work environment and modify activities accordingly

SOURCE: Catalyst

Personnel Journal, June 1996, Vol. 75, No. 6, p. 42.

Managers often are uncomfortable negotiating and supervising alternative work arrangements. Guidelines and examples of effective procedures help educate them about their benefits and help them negotiate terms and supervise effectively. Below are some practical tips.

Role of the Employee

• Think through which option makes sense and whether that option provides the flexibility you need
• Seek counsel from other individuals who areworking flexibly
• Consider how the arrangement might impact your work and the work of your colleagues
• Talk to your manager
• Write your proposal
• Iron out the details
• Send a copy to the appropriate people
• Communicate the new arrangement to appropriate co-workers
• Evaluate the arrangement periodically with your manager

Role of the Manager

• Address business needs
• Assess department needs
• Staff creatively
• Consider each proposal on its own merits
• Seek counsel from colleagues, especially those experienced with flexible work options
• Ask for assistance or guidance from human resources
• Be a coach
• Communicate the new arrangement to other staff in the department
• Monitor the arrangement

Role of the HR Manager

• Identify internal issues and needs surrounding flexible work arrangements
• Identify specific training needs
• Resolve employee-manager conflicts
• Serve as an internal resource
• Communicate and advise on organizational guidelines

SOURCE: Catalyst

Personnel Journal, June 1996, Vol. 75, No. 6, p. 36.