Author: Susan Marks

Aworkforce, no matter how widely dispersed, absolutely must understand company strategies, know it has an opportunity to provide input, and be connected to the company’s mission and direction, says Per-Olof Loof, Sensormatic Electronics Corporation CEO and president. When they are informed, workers, in turn, will do their jobs better. Clients expect a workforce to behave and treat them the same whether they are in Singapore, Munich, or Miami, and that’s a real challenge for any global company, he says.

Large Company

Name: Sensormatic Electronics Corporation Location: Boca Raton, Florida, operations in 113 countries Business: Electronic security Employees: 5,200

Technology can help open the doors of communication and information transfer, but a company has to use whatever means possible, Loof says. Sensormatic once relied on telephone lines, after-the-fact videotapes, and discussions, whereas now it uses live broadcasts, real-time webcasts via the Internet, and company intranet to keep its employees informed and in touch.

Loof spends more than 50 percent of his time on the road meeting with employees and customers because he thinks it is important that management be visible and personally connected.

A big part of Loof’s communication strategy involves town hall meetings. They are held immediately after each quarterly earnings call in a different Sensormatic location. The meeting is broadcast live to the company’s dozen biggest sites and is webcast to others. For those employees without Internet access, it’s available by telephone. The session also is taped for those who can’t participate live.

It’s not a gripe session, but an overview of what happened in the quarter and what’s ahead. It includes a question-and-answer session that deals with pertinent topics. Since logistics prevent live, from-the-audience questions, Loof asks the questions based on his sense of what the issues are, and provides straightforward answers. Last quarter, the main topic was the company’s recent layoffs and whether more were expected.

“The objective is to be very open and very honest and address those questions that people wouldn’t want to or wouldn’t feel that they could ask.”

Sensormatic also counts on its intranet to communicate with workers. It has bulletin boards and electronic newsletters. “People want to stay connected, and this is a way for us to be able to talk about that.” Loof even has a personal bulletin board called “Ask Per,” where employees can ask him questions directly. In a little more than six months, Loof has received — and answered — 146 questions on everything from strategic corporate issues to mileage compensation.

When it comes to training, Loof admits it’s tough to keep a worldwide workforce informed about product updates. “Training people across the globe is an issue where you are never happy.” Sensormatic uses its intranet and the Internet, but primarily counts on more conventional classroom methods of training.

However a company decides to deal with its dispersed workforce, Loof offers this advice: Overcommunicate with your employees, especially in uncertain economic times like now. A personal connection is great if it’s possible, though company size can make that difficult. “But even companies like Wal-Mart have managed to connect their management to the people who work at the company,” he says. “And they employ 1.2 million people.”

Workforce, September 2001, pp. 80-81 — Subscribe Now!

Van Walbridge, president and CEO of Mobile Tool International, Inc., a Westminster, Colorado, manufacturer of telecommunications, CATV, electrical utility, and contractor construction equipment, agrees that communication is and always has been the biggest issue for any geographically dispersed workforce.

Medium Company

Name: Mobile Tool Int’l, Inc. Location: Westminster, Colorado, and 6 locations nationwide Business: Employee-owned manufacturer of telecommunications, CATV, electrical utility, contractor construction equipment Employees: 870

The company has close to 900 workers at six facilities from Maryland to California. Operations span different time zones, employee and union contracts vary by region, and staff members who interact every day don’t get enough face-to-face time, Walbridge says. It’s much more difficult than running a business in a single location or in a place where people see each other and can interact and develop relationships, he says.

That’s where technology solutions like the Internet can provide a tool to help keep a company connected and employees informed. But just putting the technology out there won’t necessarily solve a problem, says Mike Christie, a consultant specializing in operational and technology issues at Hewitt Associates in Lincolnshire, Illinois. Expectations have to be aligned and cultural issues addressed.

At Mobile Tool, this is accomplished mainly because individual plant supervisors are good communicators and run consistent operations. They follow the same corporate guidelines in areas such as attendance, rewards for outstanding performance, and disciplinary actions, Walbridge says. But they handle day-to-day operations themselves. Corporate managers serve as resources and work with plants on performance goals.

Open communication also is the norm at Mobile Tool. That means sharing company financials with employees and explaining regional differences in salaries or even workforce reductions. If employees truly understand what’s going on, they don’t have to focus on spin, rumors, and innuendo, Walbridge says.

Companies also have to understand that different people prefer different forms of communication, he says. “Some of them like to read it, some of them like to hear it, some of them like to experience it.” As a result, Mobile Tool communicates in a variety of ways, such as the written word, video, e-mail, and, of course, telephone.

The company is employee-owned. Employees hold 76 percent of the stock and constitute a majority on the board of directors. Walbridge insists that any company can and should be open with its employees. “I know of no downside to that, to providing some of the basic financial information so that the employees can know where they have an effect on the company.”

Company-wide profit-sharing further works to turn Mobile Tool’s dispersed workers into a cohesive workforce, he says. Employees have to count on each other to perform and generate profits.

Workforce, September 2001, pp. 78-80 — Subscribe Now!

Whatever kind of recognition and incentive program a company decides to use,it takes support from the top to succeed — especially when return on investmentis the name of the game, CultureWorx consultant Smithson says.

Medium Company Name: Behlen Manufacturing Co. Location: Columbus, Nebraska Type of business: manufactures livestock equipment; grain storage; drying/handling systems; building systems Number of Employees: 1,400

    At Behlen Manufacturing Co. in Columbus, Nebraska, there’s no question that the boardroom buys into incentives for its employees. The company capitalizes on employee involvement and offers cash incentives, gain sharing, and profit sharing. Gain sharing is a monthly bonus based on productivity, and profit sharing an annual reward based on profits. The result is tremendous employee loyalty and productivity, says chairman and CEO Tony Raimondo. “Our employees are all in the business fight with us, so our theme is ‘Make the company better off, and we will share.'”

    He cautions, however, that sharing the fruits of a company’s success with its employees is not just an incentive program but also a way of life. Leadership truly has to believe that the company and everyone in it will be better off or it won’t work. “I see a lot of CEOs who simply are not comfortable with that, and I don’t think they should do it, because the employees are very smart, and the whole baseline is trust and respect.”

    Behlen manufactures livestock equipment; grain storage, drying, and handling systems; and building systems at several plants from Cullman, Alabama, to Baker City, Oregon. The company’s incentive system begins with a program called Awareness Is Money, which awards a minimum of $250 a month to an employee with the best idea about how to improve safety and productivity. The real bonus comes when the ideas are implemented and production increases. Depending on productivity, all employees also are participants in gain-sharing or productivity-sharing teams that can earn monthly bonuses of up to 12 percent of a person’s base pay, Raimondo says. Teams typically are made up of 10 to 30 people who participate in a product process from start to finish — such as manufacturing a building beam. Office employees as well as factory workers participate in the program.

    Behlen’s profit-sharing plan is a further incentive. During a good year, for example, employees might receive 140 hours of pay as a cash bonus just before Christmas.

    The programs are dedicated to creating participatory production environments rather than more traditional authoritative work cultures, Raimondo says. “We are always searching for ways to add value to customers. We think the key is the employees. If they share in the rewards, they will take better care of the customer.”

Workforce, June 2001, pp. 111-112 —  SubscribeNow!

The experts offer a few suggestions for companies re-evaluating or thinkingabout adding incentive/reward programs:

• Don’t rush into making modifications to your pay program just because theeconomy softens, says Hewitt Associates’ Frank Belmonte.

• Particularly in down economic times, pay special attention to and rewardyour high performers. “The cost of losing them is going to far exceedthe investment you make to retain them,” Belmonte says.

• Be sure that company leadership supports the rewards/recognition programsand allocates resources for the programs, says Kimberly Smithson, consultantand president of the National Association for Employee Recognition.

• Train managers, leaders, and supervisors on how to deliver recognition. A20-year pin in an inbox doesn’t cut it, Smithson says. “Goodrecognition is timely, personal, and very specific.”

• Recognition and rewards have to be consistent and fairly administeredacross an organization. That’s a common gripe among employees, Smithsonsays.

Workforce, June 2001, p. 111 —  SubscribeNow!

Lincoln Contractors takes a creative approach to incentives thatdistinguishes the company from its competition, and nets big returns. Thefamily-owned Milwaukee firm gives points — what it calls miles — as salesincentives both to generate excitement and to reward outstanding jobperformance. The miles, available to any of its 115 employees, can be exchangedfor merchandise, travel, or sporting event tickets.

Small Company Name: Lincoln Contractors Supply, Inc. Location: Milwaukee, Wisconsin Type of business: rents/sells construction equipment, tools, supplies Number of Employees: 115

    Lincoln sells and rents construction equipment, tools, and supplies in sevenstores throughout Wisconsin, and is one of the largest independent distributorsof its kind in the United States. Its products range from a 20-cent concreteanchor to a $100,000 rough-terrain forklift.

    Its incentive miles program works like this: If a Lincoln employee wants anew backyard grill, for example, he or she can “buy” either a charcoalmodel for 5,500 miles or a more upscale gas-powered version for 25,000 miles.One employee recently redeemed his miles for an all-terrain vehicle, another gota John Deere garden tractor, and another plans to take his wife to Spain nextyear with airline tickets “purchased” with miles, says Dale Guenther,company vice president.

    Here are some features of Lincoln’s incentives program:

• For every 10 customers an employee signs up, he or she earns 1,000 miles per customer, for a total of 10,000 miles.

• To help get rid of old stock, employees receive miles equal to the dollar amount of an item sold.

• Exemplary service nets extra miles. One employee attended a trade show, generating numerous leads, and received 25,000 miles for a job well done.

• As a sales promotion, for every foot on a stepladder or inch on a diamond blade sold, employees earned 20 miles.

• Employees earn 1,000 miles for each year they are with the company.

    Employee response to the program has been enthusiastic, Guenther says.Participation doesn’t cost employees anything, and the system generates salesand creates employee loyalty. Before the miles program, Lincoln relied solely oncash bonuses as incentives. But it’s the newer program that nets big results, henotes. In the first year of the little more than two-year-old plan, business wasup almost 40 percent. In the second year, there was a 17 percent increase.

    The program also is flexible, and can be adjusted yearly to account foreconomic or product changes. Though he won’t say what the program costs Lincoln,Guenther insists it’s cost-effective, especially because it’s stepping out ofthe box, doing something different from the competition. Product manufacturersalso help defray the cost of some bonus promotions.

    Once a month, Lincoln buys miles — perhaps one to two million — fromprogram originators MMS Incentives, the Norcross, Georgia-based company thatserves as project administrator. MMS operates about 3,200 incentive/rewardsprograms a year for tens of thousands of customers and employees. Clients rangefrom Fortune 100 companies to the “Joe’s Beer Dealership” down thestreet, CEO Mylle Mangum says.

    Mangum won’t talk about specific pricing, except to say it varies by companyand objective. But she will say that MMS usually can provide an incentiveprogram for one-half to two-thirds less than the amount companies spend in cash.A travel reward, for example, can cost a lot less through MMS because of itsbuying power in the marketplace. The company also has its own travel agency.”We can send anyone to the Ritz Carlton anywhere in the world a lot morecost effectively than if an employer were just going out and buying atrip,” Mangum says.

    This kind of rewards program is also a lot more effective from an employer’sstandpoint than cash. A travel reward may cost a company $350 to $500, but thetrophy value to an employee can be much greater — as much as $1,000 to $1,500,Mangum adds. An employee rewarded with cash ends up pocketing it and paying anenergy bill with it, for example. It’s not a “company currency” — theemployee doesn’t think of it necessarily in conjunction with a reward for workperformance at Lincoln. The miles or points program, on the other hand, isprivate labeled Lincoln Contractors points, and the reward is associateddirectly with the company. It optimizes what Mangum calls the share of”mind value.”

    Guenther stresses, however, that every employee — whether a phone operatoror a sales manager — should have an opportunity to participate. If they areleft out, non-sales employees can get frustrated. “Our bookkeeper just hadher 31st anniversary, and she got 31,000 miles.”

    Rewards or recognition programs like Lincoln’s don’t put ready cash in anemployee’s pocket. And, Eisen adds, people like cash. “It’s right there,right in their face. They can take it home in their paycheck or put it in theirpocket. It’s something they feel.”

    She says these types of rewards still can serve as extraordinarypsychological and emotional incentives.

Workforce, June 2001, pp. 109-110 —  SubscribeNow!

At Nucor Corp., a share-the-wealth approach also has been a success. Based inCharlotte, North Carolina, the steel producer had a record $4.6 billion inrevenues last year. It employs 8,000 people at 22 plants in nine states, andranks among the Fortune 500.

Large Company Name: Nucor Corp. Location: Charlotte, North Carolina Type of business: largest steel producer in the United States Number of Employees: 8,000

    The company pays much lower base wages — sometimes halfof what the competition pays hourly workers — then uses weekly bonus cashpayouts as an incentive. And they are not small amounts, either. Employees canearn 100 percent, 200 percent, and more of their regular hourly wage, with nocap, according to the amount of quality steel produced by, or passed through, awork team on a shift.

    It’s a production-driven system that wouldn’t work foreveryone. For non-union Nucor, however, it has worked since the 1960s, saysJames M. Coblin, vice president of human resources. “We have the highestproductivity of any steel mill in the United States in terms of tons peremployee or tons per hour. We have the highest-paid steelworkers on earth, andwe have arguably among the lowest labor costs per ton produced. So that’s prettyphenomenal if you can have the highest-paid employees but the lowest laborcost.”

    The secret to motivating people is money, he says.”If you give a bonus to somebody of 15 percent, of course they like it, or20 percent, even 25 percent, of course they love it. But if you give them abonus of 100 percent, you get their attention big-time, and when they startseeing 150 percent bonus or 160 percent bonus, they are focused on that bonus.And when they know it’s not going to be changed, like ratcheting up the basewhen they really start producing or putting a ceiling on it … they catchfire.”

    The average pay in the year 2000 for Nucor’s steel millemployees was about $63,000, and many of those people were high school graduatesliving in small towns like Darlington, South Carolina; Jewitt, Texas; andWaterloo, Indiana, very small communities where a dollar goes a long way, Coblinsays.

    In good times, when business is booming, every employee –from a receptionist to the CEO — shares in profits. Conversely, during downtimes there’s sharing, too. The company doesn’t lay off employees, but shutsdown its production lines for one or two days a week. Salaried executives stillwork, but hourly employees aren’t required to. About 80 percent of Nucor’semployees are on this production-incentive plan. Other employees also haveperformance-based compensation:

• Department managers earn annual incentive bonuses based primarily on the percentage of net income to dollars of assets employed for their divisions. These bonuses can be as much as 80 percent of a department manager’s base pay.

• Professional and clerical employees not on other plans earn bonuses based on their division’s net income return on assets.

    Senior officers earn lower base salaries, with theremainder of their compensation based on Nucor’s annual overall percentage ofnet income to stockholder’s equity, which is paid out in cash and stock.

    Coblin says the Nucor system is about giving high wages toaverage people for outstanding production, and about giving responsibility andauthority to lower-level employees. It’s the worker who drives production — andthe bottom line — not the executives. That can be a tough concept forauthoritative managers and companies to grasp.

    Another key to Nucor’s success is the simplicity of itsincentive system, Coblin says. If every employee can understand and see how anincentive plan affects him each week, then it can succeed. If not, it won’t workin the long term.

    Beyond its bonus structure, Nucor also rewards employeeswith free dinners, jackets, and hats for outstanding production or safetyrecords broken. Service awards are handed out every five years. Employeesreceive one share of stock for every year at Nucor. Workers are essential to thecompany’s success, and are stockholders.

    It’s that ownership connection that is key to employeeperformance, NAM’s Eisen adds. She calls Nucor an extraordinary company.”They are using cash to incent. Other companies use benefits to incent. Whois the winner? I think you have to look at your own workforce.”

Nucor’s Reward System All employees at steel giant Nucor are covered by one of four performance-related compensation systems. Each of the plans relate to specific goals and targets depending on the job. Nucor also periodically has issued an extraordinary bonus to all employees, except officers, in years of particularly strong company performance. This bonus has been as high as $800 for each employee. The four ongoing bonus plans include: Production Incentive Plan: Operating and maintenance employees and supervisors at the facilities are paid weekly bonuses based on the productivity of their work group. The rate is calculated based on the capabilities of the equipment employed, and no bonus is paid if the equipment is not operating. In general, the production incentive bonus can average from 80 to 150 percent of an employee’s base pay. The vast majority of the company’s employees are covered under this plan. Department Manager Incentive Plan: Department managers earn annual incentive bonuses based primarily on the percentage of net income to dollars of assets employed for their division. These bonuses can be as much as 80 percent of a department manager’s base pay. Professional and Clerical Bonus Plan: This bonus is paid to employees who are not on the production or department manager plan and is based on the division’s net income return on assets. Senior Officers Incentive Plan: Nucor’s senior officers do not have employment contracts. They do not participate in any pension, discretionary bonus, or retirement plans. Their base salaries are set lower than what executives receive in comparable companies. The remainder of their compensation is based on Nucor’s annual overall percentage of net income to stockholder’s equity and is paid out in cash and stock.

Workforce, June 2001, pp. 112-114 —  SubscribeNow!

Competition in today’s tight labor market has forced even small companies to realize that pension and retirement benefits make a difference to employees. These benefits can be a tool to attract and retain talent, a way to compensate employees for gambling on a start-up, or just plain good sense from an employee-relations point of view.

    Jobs today are not about lifetime employment. The 21st-century workforce is transient. Most people will have more than half a dozen jobs in a lifetime. Employees like portability and practicality in retirement benefits. They are demanding and getting more choices, visible cash benefits plans, self-service participation, and access to and self-direction of investments.

    Traditionally, most companies offered defined benefit plans, which favor long-term employees. An employee works for the same company for 30-odd years, retires, then receives a monthly pension check based on a predetermined formula. That works well for people who have the same employer for life, but not so well for a mobile workforce. Termination well before retirement offers few, if any, benefits.

    Instead, there has been a shift by employers of all sizes to defined contribution plans or hybrids of defined benefit plans that offer employees more visible value, says Steve Vernon, vice president and consulting actuary for Watson Wyatt Worldwide in Los Angeles. Defined contribution plans are individual retirement accounts based on amounts contributed or allocated, like a 401(k). Matching funds are optional.

    From an employer’s point of view, these defined contribution plans can be less costly and transfer the risk and responsibility to the employee, says Craig Copeland, senior research associate with Employment Benefit Research Institute, a Washington-based nonprofit group.

    They are especially popular with small- and medium-size employers because they aren’t as complex from a regulatory standpoint and don’t require costly actuarial evaluations, adds Anna M. Rappaport, a Chicago-based principal with William M. Mercer Inc., worldwide benefits consultants.

    Here’s a look at how three companies, each involved in manufacturing of various kinds, are coping with changing workforce demographics and the retirement issue.

Workforce, March 2001, pp. 66-75 Subscribe Now!

Education is essential, given the different retirement options available to employees today,says Craig Copeland, senior research associate with Employment Benefit ResearchInstitute. Unfortunately, not all employers are providing it. As a result, people leave companies with large sums of money in their retirement plans and little idea what to do with them.

MediumCompany
Name:	MonarchMarking Systems
Location:	Miamisburg,Ohio
Type of business:	Manufacturer ofbar-code printers and related supplies
Numberof employees:	1,020

    That’s not the case at Monarch Marking Systems. Vice president of HR Rhonda Mangieri does her best to make sure of that at the Miamisburg, Ohio-based subsidiary of Paxar Corp. Monarch is a leading provider of bar-code printers and related software, services, supplies, and labels.

    The company also is on the cutting edge when it comes to technology-assisted HR. Retirement and pension options are no exception.

    Administration of Monarch’s more than $50 million defined contribution or 401(k) plan is paperless and has been since January 2000. Enrollment is primarily online through the outsourced 401(k) provider, CIGNA Corp.’s Retirement & Investment Services. (Plan enrollment and changes also can be done via telephone.)

    But Mangieri’s staff plays an active role nonetheless. Communication with employees and administrators doesn’t go away just because plan administration is outsourced. It’s especially important if employees are used to a more traditional paternalistic relationship, with direction and hand-holding from a company’s internal HR staff, says Mangieri. That staff still has a responsibility to keep on top of developments, and to remind employees of provider access numbers, plan availability, and general plan provisions.

    “It’s so important that when you outsource, people understand that you are not disconnecting them from the company but offering them more…. You always have to sell the value of your benefits and to sell the value of your benefits when they have been outsourced.”

    Mangieri’s staff has brochures for employees that list phone numbers, Web sites, and other contact information for all the company’s benefits vendors. The staff frequently updates employees about new plan or investment information from CIGNA, and periodically meets with employees to keep them informed. Plan updates and information also are posted the old-fashioned way on bulletin boards. Any HR staff member can answer general retirement-benefits questions, too, courtesy of a “cheat sheet,” even though one person specifically handles the benefits and works with third-party providers.

    Mangieri estimates that the company has reaped a 20 percent cost savings with itscurrent system. Her staff has downsized from 22 in 1996 to 13 before the full online launch in 2000 to just 5 today. Benefits administration alone went from four employees to just one person. Aside from administrative cost savings, the outsourced provider also does a better job in terms of communication with employees through material and online access, she adds.

    Employee reaction to the system has been good. They like the online visual access to their accounts better than the automated telephone responses that were used prior to January 2000, says Mangieri. There also doesn’t seem to be any reluctance on the part ofemployees or retirees to use PCs. Two years ago, Monarch, in a random sampling of about 500 manufacturing employees, found that 52 percent had PCs at home. That’s in addition to most employees already using PCs on the manufacturing floor.

    Another key element to the success of any company’s 401(k), says Mangieri, is communication between vendor and employer. “Make sure your provider understands your vision, your philosophy relative to providing services to your employees, and that one of those paramount things has to be education. They have to have a willingness to educate, to keep your group informed of what’s going on, and to do on-site educating of employees.”

Although some compensation experts are leery ofSalary.com, that’s not the case for Christi Shade, assistant to the directorof human resources for Wichita-based Restaurant Management. The company, with2,200 employees, has 150 Pizza Hut and 20 Long John Silver’s restaurants ineight states – Arizona, Kansas, Louisiana, Montana, New Jersey, New Mexico,Oklahoma, and Wyoming. That staff includes 320 mid- and top-level managers thatcan make up to $85,000 a year.

    Last September, when thecompany was trying to decide whether to buy the outlets in New Jersey, Shade wasgiven the task of finding out the fair-market salary ranges for managers andassistants there.

    Despite its size, RestaurantManagement doesn’t subscribe to third-party salary surveys or, for thatmatter, need the in-depth data they provide on a regular basis.

    For similar assignments inthe past, Shade had to count on outdated data from state departments of labor.

    This time she clicked onSalary.com. The information is accurate, current, and quick, she says. “I cango right onto Salary.com and type in state information, even down to counties,and get competitive salary rates.”

    At first, Shade says, she waswary because the site wasn’t designed for HR officials. But as she started touse it – and double-check numbers against state labor departments’ data aswell as compile company data and her own cumulative market knowledge – she foundit extremely accurate. She admits that, although the site’s job descriptionsand data met her needs in the fast-food industry, it might not be detailedenough for other industries. And she still adjusts the numbers, for example,factoring in variations for the type of restaurant – dine-in or delivery. Butthey’re a good starting point.

    “I didn’t take Salary.comat just face value,” Shade adds. “I knew what it had originally beendesigned for. I did take quite a bit of time … to check information that Ialready had against reports we had in the past, and it was extremelyaccurate.”

    As for those who faultSalary.com for not being up-front with the details, Shade suggests that perhapsthey just don’t ask for the information. The site always has been forthcomingand helpful when she has had questions on data sources and otherwise. “But ifI have a question, I do ask. Maybe that’s the difference.”

    The use of Salary.com savesRestaurant Management officials not only time – salary information is a fewclicks away, whereas ordering a survey offline can take weeks – but also thecost of purchasing Labor Department data. That can be $8 to $50 a report,depending on how detailed it is, says Shade.

    StockHouse Media’s Loveagrees that the information source may not always be clearly stated, but if shewants to peg a salary range and a Salary.com number seems out of line with theother sources she uses, it’s a simple matter to discard the number. “At thesame time, if my [paid] salary survey, plus the information I am getting from myprofessional exchange group, plus Salary.com are all pretty comparable, I reallythink that that’s a fairly accurate representation then for a salary.”

Workforce,January 2001, Vol 80, No 1, pp. 91-92  SubscribeNow!