Author: Todd Henneman

Employers got a new reason to review their harassment prevention strategies when the Supreme Court broadened in most parts of the country what the law deems retaliation against workers who complain about sexual harassment.

    Setting a single national standard, the decision gives employees the right to sue for retaliation taken inside—and outside—the workplace. The nation’s highest court ruled that employees may win retaliation claims under Title VII of the 1964 Civil Rights Acts for subtle reprisals such as being excluded from a training lunch. Previously, lower courts applied a narrower interpretation of what they considered retaliatory, looking for actions such as termination or being passed over for a job.

    Because of the high court’s opinion, anti-harassment trainers should make sure managers understand that after an employee complains of harassment, the person must be included in all of the same lunches, meetings and activities he or she had previously attended, says management attorney Joel W. Rice of Fisher & Phillips’ Chicago office. Otherwise, managers risk being accused of retaliation.

    “Let managers know that if somebody has complained, they shouldn’t be treated different in any respect,” Rice says. “If they were part of the lunch group, they still should be part of the lunch group, unless there is some good business reason why they’ve now been taken off the list.”

    In Burlington Northern and Santa Fe Railway Co. v. White, the case decided in June by the Supreme Court, forklift operator Sheila White had complained of sexual harassment and then was reassigned to the more physical tasks of replacing tracks and cutting brush.

    Within days of complaining about the transfer, she was placed on unpaid leave for insubordination. The company’s internal grievance investigation determined that White had not been insubordinate, and she was reinstated and awarded back pay.

    A federal jury awarded White $43,500. Challenging the verdict, Burlington Northern and Santa Fe Railway, whose name changed in 2005 to BNSF Railway Co., argued that the law requires retaliation to be linked to an employment decision such as termination or denial of a promotion. The Supreme Court rejected the railroad’s reasoning.

    “An employer can effectively retaliate against an employee by taking actions not directly related to his employment or by causing him harm outside the workplace,” Justice Stephen Breyer wrote for the court. The unpaid suspension and reassignment could deter an employee from filing a discrimination complaint, Breyer wrote.

    The new standard “broadens the number of things that managers need to be careful of,” Rice says, “but the basic message is the same: If people complain, their complaints should be taken seriously because you want to make sure that harassment is not taking place and is routed out.”

    Nancy E. Pritikin, who specializes in employment discrimination and sexual harassment law in the San Francisco office of Littler Mendelson, suggests that companies make sure that their policies explicitly prohibit retaliation.

    “The main message to employers is that once an employee makes a claim under Title VII (of the Civil Rights Act of 1964), employers have to be aware that any action they take is going to be scrutinized,” Pritikin says.

Better education
    The court issued its opinion at a time when several high-profile companies face allegations of sexual harassment, three states are mandating anti-harassment training, and many employers are updating their prevention strategies.

    In May, faced with accusations that an executive assistant received virtually no help after complaining of sexual advances by its chief executive, Toyota Motor North America appointed an independent task force to review its anti-harassment practices, and its CEO retired earlier than planned. In June, computer services firm Keane Inc. announced a $1.14 million settlement with its vice president of marketing, whose allegations of sexual harassment had led to the resignation of CEO Brian Keane. The same month, Wal-Mart Stores Inc. agreed to pay $315,000 to settle two complaints.

    Charges of sexual harassment can cost companies everything from consumer goodwill to big bucks, while simultaneously emptying corner offices. Still, many companies are looking for effective strategies, especially with the stilted videotapes that typified early efforts still lampooned on TV shows like “Saturday Night Live.”

    “By nature, it’s very dry information,” says Chad Melvin, manager of employee learning at Aflac Inc., the Columbus, Georgia-based provider of supplemental health insurance known for its television commercials starring a duck that quacks the company’s name. “The presenter in an instructor-led format makes all the difference in the world. If that instructor can infuse a sense of balance between humor and detail of the concept, it resonates a little more.”

    Next year, Aflac plans to bring back a successful instructor-led course first offered last year to employees at the supervisor level and up. It already offers a follow-up “refresher” course online. And in September, Aflac plans to introduce a man­datory online harassment prevention course for all employees to complement information provided during employee orientation.

    American Electric Power Co., which has 19,600 employees in 11 states, takes a different tack, trying to make hypothetical situations hit home—literally.

    During training, supervisors are asked to imagine that the victim is their sister or daughter. “Once they look at it from that perspective,” says Mary Cofer, director of diversity and culture, “it’s like a light bulb goes off.”

    The utility covers its anti-harassment policies during employee orientation, provides mandatory instructor-led and online training to supervisors and encourages rank-and-file workers to complete an optional online course within six months of joining the company.

“An employer can effectively retaliate against an employee by taking actions not directly related to his employment or by causing him harm outside the workplace.” –-Justice Stephen Breyer, writing for the court

    “What we found is that you can stand in front of an audience and quote what the laws say until you turn blue in the face, and it really doesn’t matter,” Cofer says. “You have to make it real to them.”

    Based on that experience, the company retooled its training five years ago. Since then, 98 percent of the training’s graduates have indicated they want similar instruction in the future, the company says, and 80 percent have said they learned from it.

    Chicago attorney Aaron Maduff, who has represented victims of sexual harassment, warns that simply having a training program isn’t enough. He knows of cases where employers offered training but didn’t conduct it at the plaintiff’s location, didn’t ensure employees attended training, or last held it almost a de­cade earlier.

    The educational programs need to be provided often enough that they reach new hires, update veterans on legal changes and remind everyone of the organization’s policies because, he says, “people forget.”

    “When I am advising my clients who are businesses, I want them to have a good policy in place. I want to make sure that the policy is well-publicized, and I want to make sure I have two kinds of training going on: general training for everybody to make sure people are not committing sexual harassment and know how to report it, and training for the HR staff and the supervisors on what to do when they get a report,” says Maduff, a partner with Maduff, Medina and Maduff.

Shifting laws, regulation
    The importance of harassment prevention initiatives resonated with companies when companion 1998 rulings established that training helps employers avoid liability.

   The Supreme Court cases of Burlington Industries v. Ellerth and Faragher v. City of Boca Raton found that employers can be held liable for sexual harassment committed by supervisors, even when victims haven’t reported the offensive behavior. But the rulings also established what’s known as the Ellerth/Faragher affirmative defense. In some cases, employers can avoid liability if they prove that they took steps to prevent harassment and that the harassed employee “unreasonably” failed to use internal means for getting help.

“… You can stand in front of an audience and quote what the laws say until you turn blue in the face, and it really doesn’t matter. You have to make it real to them.” –Mary Cofer, director of diversity and culture, American Electric Power Co.

    Since those rulings, sexual harassment prevention training has become the norm.

    Nine out of 10 companies have a written policy banning sexual harassment and 64 percent provide anti-discrimination or anti-harassment training, according to a survey of 451 privately held companies in 46 states by the Chubb Corp., a casualty insurance provider.

    California this year began requiring all businesses with 50 or more employees to provide sexual harassment prevention training for supervisors. Connecticut and Maine have similar laws. Other states are expected to follow.

    Still, employers paid $47.9 million last year, excluding payments awarded through litigation, as a result of sexual harassment claims reported to the Equal Employment Opportunity Commission, the agency that enforces federal anti-discrimination laws in the workplace. That’s up from $12.7 million in 1992.

    And offensive sexual remarks continue to be the most common form of ridicule in the workplace, according to an annual survey by the Novations Group, an employee performance consultancy. Thirty-five percent of respondents heard improper sexual remarks last year.

    The EEOC recently decided to increase its investigations into cases that might indicate “systemic” patterns of discrimination within a company, industry, profession or location.

    Accusations of systemic discrimination can lead to larger payouts.

    To settle what the EEOC portrayed as a systemic problem, Cracker Barrel Old Country Store Inc. has agreed to pay $2 million to 51 current and former employees of three of the company’s 535 restaurants after several female and black employees complained of harassment.

    The consent decree calls for Cracker Barrel, which did not admit any wrongdoing, to train employees at those three locations about harassment and report sexual and racial discrimination complaints periodically to the EEOC.

    “We believe that our policies, procedures and actions clearly show that this kind of behavior would not be tolerated in our stores,” according to a statement by Cy Taylor, who retired earlier this month as president and COO of Cracker Barrel. “However, in our never-ending quest to get better at what we do, we plan to use this as an opportunity to improve.”

    The EEOC’s new focus means employers must realize that individual charges of sexual harassment to the EEOC could result in broader and deeper investigations, says Donald Livingston, a partner with the law firm Akin Gump Strauss Hauer & Feld and general counsel of the EEOC from 1990 to 1993.

Common missteps
    New laws, evolving legal interpretations and changing regulatory priorities make it vital for employers to periodically review their policies and practices.

    But when implementing their policies, companies tend to make similar mistakes, says Eli Kantor, an attorney in Beverly Hills, California, who has represented employers.

    One error is investigating a complaint and assuming the problem is resolved without checking back. Kantor recommends that someone from human resources follow up with the accuser a week or two later, even if the employee hasn’t complained again.

    “If you don’t, they’re not going to complain to you,” says Kantor. “The next thing they’ll do is go to the EEOC or file a lawsuit.”

    Another error is not taking a complaint seriously, Kantor says. No law defines how promptly companies must investigate complaints. Kantor suggests that it be handled within a week or two. Maduff, the Chicago attorney, recommends that the investigation start within 24 hours, if possible.

    Despite the legislation and legal rulings pushing harassment prevention training, few independent studies have verified its effectiveness.

    Lisa Keeping, an assistant professor of management and organizational behavior at Wilfrid Laurier University in Waterloo, Ontario, recently completed a meta-analysis of research on sexual harassment education and found that training seems to make a “modest” difference. But Keeping cautions that the conclusion is based on the scant data looking into prevention training’s effectiveness.

    “Companies certainly are spending a lot of money on training, and we really don’t know how effective it is,” Keeping says. “We need more cooperation from more organizations so people doing the research can get in there and work with them.”

Workforce Management, July 31, 2006, pp. 33-35 —Subscribe Now!

Barbara Kinzer, 64, joined Borders Group Inc. in 1992 as a bookseller–her first job in more than 25 years after spending decades unable to work because of her role as a diplomat”s wife.

    “The State Department assured us that my volunteer experience would translate,” Kinzer says. “But no would give me the time of day.”

    That is until she applied for a retail job at a soon-to-open Borders superstore.

    Kinzer quickly became an assistant manager, then general manager. After five years, she moved from the District of Columbia to Borders headquarters in Ann Arbor, Michigan, to help start a training program. Last year, she transferred to the charitable Borders Group Foundation, where she reviews grant applications.

    “I”ve had this opportunity do this huge number of things after 50 when most of my friends have retired,” says Kinzer, whose husband, George, has also joined Borders.

    Borders also is one of the companies recruiting through an online service, Retirementjobs.com, which connects workers ages 50 and older with jobs. Retirementjobs.com is the latest player focused on helping recruiters find qualified mature workers. Rivals include retireejobs.com and Senior Job Bank.

    “The tipping point, we have established, has arrived,” says Tim Driver, CEO of Retirementjobs.com. “There is a gap between people expected to exit and enter the workforce that is widening rapidly. It”s the wave of the future: People are redefining retirement and companies have dramatic new needs.”

    Because of the aging of baby boomers and fewer young people entering the workforce, some experts predict a labor shortage. By 2014, 21 percent of the workforce will be 55 or older, compared with 16 percent in 2005, according to the Bureau of Labor Statistics. At the same time, statistics indicate that the workplace is becoming less hostile to older workers. Age discrimination complaints to the Equal Employment Opportunity Commission fell for a third consecutive year–down 7 percent, to 16,585–in the year that ended September 30, 2005.

    To appeal to job hunters, Retirementjobs.com boasts that it screens companies and certifies them based on 12 criteria as friendly to age 50-plus workers, Driver says. The site”s database lists 15,000 certified “friendly” jobs. Users can jump into a second tier that lists 60,000 uncertified jobs.

    “Increasingly employers want to be seen as friendly to 50-plus workers,” says Driver, a former executive with Salary.com. “They have done their homework and figured out that it makes a ton of sense to be focused on these workers who are twice as likely to stay on the job, a lot more experienced and industrious, flexible regarding their work schedule and pay and, frankly, relate well to customers who frequently these days are older themselves.”

    At Borders, for example, 15 percent of the workforce is 50 or older, spokeswoman Anne Roman says. That”s double what it was six years ago, and the nation”s No. 2 bookseller hopes that figure will reach at least 20 percent.

    In addition to job listings, Retirementjobs.com offers sections on continuing education, resources on everything from writing résumés to joining the board of a nonprofit organization, and inspirational stories by older workers who transitioned into new jobs.

    “What we”re creating is a whole environment that”s specialized for 50-plus workers,” Driver says. “We”re covering both career topics as well as financial topics that are germane to this group of people who need to have answers to questions like, ‘What steps do I need to take to avoid the wrong impact on my Social Security?”

    Greg O’Neill, director of the National Academy on an Aging Society, says older workers tend to like “transition” jobs.

    “They don”t want to go from full 100 percent work to full 100 percent not work,” he says. Though up to half of past generations have said they plan to work past age 65, O’Neill says, only 13 percent have done so.

    “Will the baby boomers be different?” O”Neill asks. “Are they actually going to do what they say: work longer? I think they will.”

Barbara Kinzer, 64, joined Borders Group Inc. in 1992 as a bookseller–her first job in more than 25 years after spending decades unable to work because of her role as a diplomat’s wife.

    “The State Department assured us that my volunteer experience would translate,” Kinzer says. “But no would give me the time of day.”

    That is until she applied for a retail job at a soon-to-open Borders superstore.

    Kinzer quickly became an assistant manager, then general manager. After five years, she moved from the District of Columbia to Borders headquarters in Ann Arbor, Michigan, to help start a training program. Last year, she transferred to the charitable Borders Group Foundation, where she reviews grant applications.

    “I’ve had this opportunity do this huge number of things after 50 when most of my friends have retired,” says Kinzer, whose husband, George, has also joined Borders.

    Borders also is one of the companies recruiting through an online service, Retirementjobs.com, which connects workers ages 50 and older with jobs. Retirementjobs.com is the latest player focused on helping recruiters find qualified mature workers. Rivals include retireejobs.com and Senior Job Bank.

    “The tipping point, we have established, has arrived,” says Tim Driver, CEO of Retirementjobs.com. “There is a gap between people expected to exit and enter the workforce that is widening rapidly. It’s the wave of the future: People are redefining retirement and companies have dramatic new needs.”

    Because of the aging of baby boomers and fewer young people entering the workforce, some experts predict a labor shortage. By 2014, 21 percent of the workforce will be 55 or older, compared with 16 percent in 2005, according to the Bureau of Labor Statistics. At the same time, statistics indicate that the workplace is becoming less hostile to older workers. Age discrimination complaints to the Equal Employment Opportunity Commission fell for a third consecutive year–down 7 percent, to 16,585–in the year that ended September 30, 2005.

    To appeal to job hunters, Retirementjobs.com boasts that it screens companies and certifies them based on 12 criteria as friendly to age 50-plus workers, Driver says. The site’s database lists 15,000 certified “friendly” jobs. Users can jump into a second tier that lists 60,000 uncertified jobs.

    “Increasingly employers want to be seen as friendly to 50-plus workers,” says Driver, a former executive with Salary.com. “They have done their homework and figured out that it makes a ton of sense to be focused on these workers who are twice as likely to stay on the job, a lot more experienced and industrious, flexible regarding their work schedule and pay and, frankly, relate well to customers who frequently these days are older themselves.”

    At Borders, for example, 15 percent of the workforce is 50 or older, spokeswoman Anne Roman says. That’s double what it was six years ago, and the nation’s No. 2 bookseller hopes that figure will reach at least 20 percent.

    In addition to job listings, Retirementjobs.com offers sections on continuing education, resources on everything from writing résumés to joining the board of a nonprofit organization, and inspirational stories by older workers who transitioned into new jobs.

    “What we’re creating is a whole environment that’s specialized for 50-plus workers,” Driver says. “We’re covering both career topics as well as financial topics that are germane to this group of people who need to have answers to questions like, ‘What steps do I need to take to avoid the wrong impact on my Social Security?”

    Greg O’Neill, director of the National Academy on an Aging Society, says older workers tend to like “transition” jobs.

    “They don’t want to go from full 100 percent work to full 100 percent not work,” he says. Though up to half of past generations have said they plan to work past age 65, O’Neill says, only 13 percent have done so.

    “Will the baby boomers be different?” O’Neill asks. “Are they actually going to do what they say: work longer? I think they will.”

Economist Richard Florida begins his book The Flight of the Creative Class with the story of Oscar-winning director Peter Jackson, whose The Lord of the Rings trilogy earned more than $3.75 billion worldwide. Jackson bought an abandoned paint factory in Wellington, New Zealand, and transformed it into a high-tech filmmaking facility where dozens of transplanted Americans work with expatriates from Europe and Asia.

    “In an industry synonymous with America’s international economic and cultural might, film production, the greatest project in recent cinematic history was internationally funded and crafted by the best filmmakers from around the world,” Florida writes. “But not in Hollywood.”

    Hollywood isn’t the only industry losing intellectual capital to other countries. In his new book, Flight Capital, globalization scholar David Heenan tells of superstars like Ana Maria Salazar, an Arizona native who in 2000 left her job at the Pentagon to join a think tank in Mexico City and now hosts an English-language radio news program.

    It all points to what could be an ominous trend for domestic organizations: top-tier talent leaving the Land of Opportunity for a new Promised Land. They’re driven away by forces that, left unchallenged, could lead to a migration of American-born talent.

    “Forget terrorism and weapons of mass destruction,” writes Heenan, a former Citigroup executive. “The next global war will be fought over human capital.” This phenomenon could leave companies short on specialized talent, experts say, and may mean that executives should reassess their recruitment, location assignments and governmental lobbying strategies.

Immigration hurdles
    The forces fueling this phenomenon include tighter restrictions on visas since the September 11 terrorist attacks, making it difficult for colleges and companies to bring foreign talent into the nation, and other countries’ aggressive recruitment of talent, globalization experts say.

    The U.S. Citizenship and Immigration Services, for example, announced it had hit its annual cap for issuing H1-B visas for fiscal year 2006 more than a month before the fiscal year began. Last year, the cap of 65,000 H1-B visas was reached October 1, the first day of fiscal 2005.

    The shortage of work visas costs companies money. Denials of and delays in processing visas cost U.S. businesses $30.7 billion from July 2002 to July 2004, according to the Santangelo Group, a consulting firm in Washington, D.C.

    “Our bipolar immigration policies have ended up being counterproductive for the economy,” says Michele Wucker, a senior fellow at the World Policy Institute and author of the forthcoming book Lock Out: Why America Keeps Getting Immigration Wrong When Our Prosperity Depends on Getting It Right.

    “Most Americans think of immigrants being the source of the lowest-wage workers when, in reality, we depend on the world’s most innovative talent to come here,” Wucker says.

    Florida, a public policy professor at George Mason University, suggests that U.S. attitudes are alienating foreign nationals. His 2002 best-sellerThe Rise of the Creative Class demonstrated that economic growth prospers in places with technological innovation, a well-educated workforce and tolerance of diverse populations, typified by a sizable gay community.

    “Talented people are saying, ‘The place is difficult enough to get into and it’s so overwhelmed with the security mentality and it’s overwhelmed with fighting terrorism, it doesn’t look the kind of place that I necessarily could fit into,’ ” Florida says.

    Foreigners look less favorably upon the United States these days. The Pew Global Attitudes Project reports that anti-Americanism continues to grow because of the U.S. war in Iraq and what is perceived as a unilateral foreign policy. Sixty-one percent of those polled in France, 57 percent in the Netherlands, 39 percent in Great Britain and 39 percent in Germany see the U.S. as too religious.

“Forget terrorism and weapons of mass destruction. The next global war will be fought over human capital.” –David Heenan, author of Flight Capital

    “At precisely the point we’re so dependent on foreign talent, that talent flow may be being redirected across the world,” Florida says. “This really hits at the breadbasket of our innovative and creative capability, which has always come not from American creativity, but because the United States was the meeting ground for the world’s best and brightest.”

    Before tightened immigration policies sparked by the September 11 attacks, top-tier foreign students were staying longer in the United States, filling gaps unmet by the native workforce. Seventy-one percent of foreign citizens who received doctoral degrees in 1999 remained in the U.S. in 2001, compared with a two-year “stay rate” of 49 percent in 1989, according to a study by economist Michael G. Finn of the Oak Ridge Institute for Science and Education.

    No comparable study has been conducted in the changed political environment since 2001.

Grads leaving
    Downward statistics show that fewer foreign students are coming to the United States. For example, 31 percent of the class of 2004 from the Massachusetts Institute of Technology’s Sloan School of Management were foreign students, compared with 38 percent in 2000. Visa applications for students fell by 74,000 from 2001 to 2003, according to The Flight of the Creative Class.

    One of the most pressing problems is the loss of foreign nationals who repatriate upon graduation. Julie Gavage, a native of Belgium, is a second-year student at Harvard Business School. She’ll return to Belgium after graduation, working for McKinsey & Co., a management-consulting firm with locations in 45 countries.

    Gavage says she always planned to return home. “My decision is motivated by the fact that Belgium is a very open country and that I will have opportunities to work on international projects,” she says.

    Visa shortages have forced some foreign students who would have preferred to work in the U.S. to fall back on their second choice: accepting jobs in their home country, says Sheryle Dirks, director of the Career Management Center at Duke University’s Fuqua School of Business.

    Overseas jobs appeal to U.S. students who believe that gaining international experience will help propel their careers long term, Dirks says. Employers filling positions abroad tend to seek Americans with track records within organizations or who are familiar with the country’s culture, says Kip Harrell, associate vice president of career and professional development at Thunderbird, the Garvin School of International Management.

Duke University’s Sheryle Dirks says some foreign students must return to their home countries to work due to visa shortages, while some U.S. students opt to work abroad to gain international experience.

    They also look for U.S.-educated foreign nationals who can be wooed back home. “Companies want graduates who have proven themselves domestically before they ship them off” to another country, Harrell says.

    It isn’t just high-potential graduates that the U.S. is losing. When foreign nationals return home, they take their children with them. These are the groups whose brainpower produced such business successes as Yahoo and eBay.

Countries court U.S. talent
    Simultaneously, several countries have launched initiatives to poach American talent, Heenan reports in Flight Capital. A program known as Contact Singapore has offices in five countries to court talent. Its U.S. office is in Cambridge, Massachusetts, home of Harvard and MIT.

    An agency under the country’s Manpower Ministry, Contact Singapore’s coups include attracting American Ron Frank, who taught at Harvard, as president of Singapore Management University, the country’s first private higher-education institution.

    Israel, known for talent in science and technology, hopes to attract 1 million emigrants from the U.S. during the next 15 years, Heenan writes. The reasons Americans pursue careers abroad can be “loosely defined as a better life,” he says. Americans are persuaded to move for many reasons, including the opportunity to conduct cutting-edge research and to live in cities that are safer.

    Indirect threats also could lure talent away. Architects of the European Union’s so-called “Lisbon Strategy,” intended to prepare Europe for surpassing the U.S. economy by 2010, calls for a scientific institute to rival MIT.

    As other regions pursue its talent, the U.S. private sector isn’t helpless. Organizations can take steps to retain talent, Heenan says. He recommends providing mentors who can help with cultural adjustments. Workers from India, China and Mexico told Heenan that one of the reasons they returned to their homeland is because organizations stereotyped them as “good technicians, good individual contributors,” but “not worthy of broader responsibilities.”

    Heenan proposes a 12-step plan for winning the talent war, including making it easier for foreign students to get visas. He calls on chief executives to follow the leads of Intel CEO Craig Barrett and Microsoft co-founder Bill Gates by “speaking out aggressively” on immigration and educational reform.

    Economist Florida says the U.S. private sector “lacks a powerful voice calling for change.”

    “If you ask me the difference between 1930 or 1980 and today, it’s that in those days the private sector would stand up and say, ‘We’ve got a problem.’ Right now no one is willing to stand up.”

Workforce Management, January 30, 2006, pp. 46-50 — Subscribe Now!

Pause a moment and name the jobs that your company depends upon to meet its goals for the next year. Would the list include the CEO? The CFO? Perhaps an engineer responsible for a high-potential product? A sales representative who covers a key territory?

    Edwards Lifesciences Corp. performs this exercise every year. The cardiovascular device maker understands the critical nature of certain jobs, and regularly identifies positions that are absolutely integral to meeting its business strategy. CEO Michael Mussallem says success in the cardiovascular product industry depends as much–if not more–on knowing which jobs are essential to the company as it does on pioneering innovative technology.

    That’s why he is personally involved in selecting who gets the jobs. And he has determined that talent reviews trump board agendas.

    “Out of all the activities I’m involved in, I think that this is one where I provide the most value,” Mussallem says. “Our people are essential to the success of our company, and Edwards’ Talent Development Process addresses the most critical positions that have the biggest impact on that success.”

    At Edwards–which has regional headquarters in Irvine, California; Switzerland; and Japan–about 75 of its 5,000 employees hold critical positions. They range from members of the senior management team to managers on mission-critical programs.

    The company is a global leader in products and technologies to treat advanced cardiovascular disease, the global leader in acute hemodynamic monitoring, and boasts of being the No. 1 heart valve company in the world.

    John Sullivan, consultant and management professor at San Francisco State University, says that by identifying the most essential jobs in an organization, companies are able to put their best resources into the areas where they will have the maximum effect. “Companies have been prioritizing customers for centuries, placing emphasis on high-value customers with repeat-spending habits,” he notes. “Much like a single high-value customer can make or break a business, so too can a limited number of positions.”

    As an organization pinpoints the jobs that directly produce revenue, touch customers or possess the skills needed to develop or deliver the features that differentiate it from competitors, the company’s focus moves from the top of the organization to much lower in the organization, he says.

    “When asked to prioritize jobs that are mission-critical to the organization for the first time, many human resource professionals come back with the top few rungs of the organization chart,” says Sullivan, former chief talent officer of Agilent Technologies. “When forced to really think about what positions in the organization have the ability to immediately impact a firm’s time to market or quality of goods or service being offered, the list of critical positions looks a lot different.”

    As an example, Sullivan cites FirstMerit Bank, which operates in Ohio and Pennsylvania. The bank’s manager of recruiting determined that 74 percent of revenue came from only 12 percent of the jobs. “He realized that a vacancy in a commercial lending position would cost the bank thousands of dollars in unrealized revenue each day,” Sullivan says. “As a result, openings for such positions were given priority focus.”

    Many companies, including MGM Grand Hotel & Casino and Valero Energy Corp., North America’s largest oil refiner, also find that prioritizing jobs is essential, Sullivan says. Valero spent two years mapping talent in refineries, identifying key positions and developing labor supply chains that coordinate training, recruitment and retention to fill vital gaps.

Program’s origin
    The roots of Edwards’ critical-jobs system go back to the days when the organization was a division of Baxter International, a maker of medical products based in Deerfield, Illinois. Before Vernon Loucks stepped down in 1999 after 18 years as CEO of the firm, he wanted to leave the company and its divisions well-prepared for the future. His desire led executives to identify the top imperatives in the coming years for each division and region.

A position is labeled critical based not on who holds it, but on its importance in achieving business goals. “It has nothing to do with the person, and everything to do with the business imperative.” –Robert Reindl, Edwards Lifesciences Corp.

    To help, Loucks brought in management consulting firm McKinsey & Co. At the time, Robert Reindl, now corporate vice president of human resources at Edwards, was vice president of human resources for Baxter’s cardiovascular group. He worked with McKinsey to recognize the jobs where the company needed strong performance to achieve its business imperatives. Once discussions began in 1998 about spinning off Edwards, his ability to identify critical jobs and to allocate top performers took on even greater importance.

    “We weren’t going to have the Baxter corporate leadership to lean on anymore,” Reindl says. “We were going to be by ourselves, our own independent company on the New York Stock Exchange.”

    Today, analysts characterize Edwards Lifesciences, which sells medical technologies in more than 100 countries, with 2004 sales of $931 million, as a steady performer and leader among the 19 firms racing to be the first to introduce a noninvasive heart valve. Tim Nelson, research analyst with Piper Jaffray Co., characterizes the most recent quarter for Edwards as in line with expectations and says the company consistently delivers profit growth of 13 percent to 15 percent.

    In November, Piper Jaffray graded the company “outperform” on its expected performance on the S&P 500 over the next 12 months. In comparison, the brokerage graded competitors St. Jude Medical, Boston Scientific Corp. and Medtronic Inc. all as “market perform,” expected to perform in line with the S&P 500 over the next 12 months.

    Over the years, the “talent management system” has become interwoven with corporate strategy. Executives are tight-lipped about which jobs have been identified as critical, except for the most obvious, such as franchise leaders, who oversee the four main businesses in which Edwards operates (heart valve therapy, critical care, cardiac surgery systems and vascular therapies), and key positions responsible for noninvasive-valve strategy.

    But even with its well-publicized noninvasive valve, inserted using a catheter sent through the veins rather than opening a patient’s chest, the company declines to cite specific job titles as examples.

    “We don’t publish a list of our critical jobs because it is totally connected with our strategy,” Reindl says. “If you saw a list of all of our critical jobs and you knew the medical device industry, you’d be able to pick off what our strategic imperatives are for the future.”

“I am a firm believer that organizations should not only prioritize jobs, but actively communicate with employees how the jobs are prioritized, why they are prioritized, and what the current ranking looks like.” –-John Sullivan, author of Rethinking Strategic HR

    At least two successors at the firm are now identified for each critical job. A position is labeled critical based not on who holds it, but on its importance in achieving business goals. “It has nothing to do with the person,” Reindl says, “and everything to do with the business imperative.”

    For veteran professionals in human resources, the critical-jobs program may sound a bit like the old-fashioned process of job evaluation. After all, job evaluation focuses on positions, not people, ranking jobs in order of their relative worth. But executives at Edwards Lifesciences say their talent management program is nothing like the job-worth hierarchy produced by evaluations. They cite the fluidity of critical jobs, which can change annually based on the business imperative. They also point to the chief executive’s hands-on involvement in succession planning for all critical jobs, not just the positions of people who directly report to him.

How it works
    At Edwards, a job becomes critical each year after the company reviews and chooses its strategic imperatives. The assessment is part of a multistage process that culminates in talent reviews by the CEO. Mussallem conducts 15 such reviews, each one taking four to five hours. He and Reindl meet with the president of each region as well as the officer in charge of each function and their human resources partners.

    They talk about the mission of their organization, key imperatives, the organizational chart and whether it will change, critical jobs that currently are listed on the chart, and the succession plan for each critical job.

    That’s also when Mussallem and Reindl look at “mitigation strategies,” steps taken if someone in a critical job is performing subpar, for example, or plans for addressing problems retaining high-potential employees. Because critical jobs intertwine with business imperatives that are updated annually, a job could be considered critical one year but not the next. Some IT jobs, for example, would have been considered vital immediately before 2000 because of concerns about the Y2K date rollover, but not afterward, Reindl notes.

    “If I told you that you were in a critical job, I also would tell you that potentially this is not going to be a critical job forever,” he says. “That doesn’t mean we might not move you to another critical job. That doesn’t mean you may not be an important person if you’re not a critical person.”

    Once deemed critical, each job is given clear objectives that are vetted by the CEO. The company also estimates a market value for the job and increases the total compensation of the job holder. It pays a premium to people in critical jobs because the external market value doesn’t reflect how important the position is to the company.

    “We want to make sure they aren’t paid below market, for sure,” Reindl says. “So they are paid either at or above market.”

    Succession planning plays an important role too. “Usually, you want to have some of your highest-potential people coming into your critical jobs,” Reindl says. “If we identify the people who will be successors to critical jobs, we will say, ‘What should be their next job or two jobs that would expedite them to get to a critical job?’ They’re prioritized in terms of leadership-development training.”

    Research suggests that such strategic approaches to succession planning help companies’ financial performance. Consulting firm Bain & Co. studied 23 high-growth companies in 2002 and found that businesses whose leaders embrace a “rigorous system” for developing and allocating the organization’s leadership capital significantly outperform companies that don’t. Less than 15 percent of the companies examined by Bain develop high-potential employees by advancing the right people through the right jobs.

    But Bain found that the organizations that adhered to a system for developing and allocating leadership capital had shareholder returns, on average, of more than 10 percent a year above their cost of capital over a 10-year period.

    The most common question that Sullivan, author of Rethinking Strategic HR, hears from human resources professionals is how to avoid demoralizing employees who learn they aren’t in critical jobs. “The short and simple answer is that prioritizing mission-critical or key jobs positively impacts everyone and hurts no one,” Sullivan says.

    Focusing on these jobs optimizes a company’s prospects at success, which in turn helps drive job security, rewards and career advancement opportunities for all, he says. “I am a firm believer that organizations should not only prioritize jobs, but actively communicate with employees how the jobs are prioritized, why they are prioritized, and what the current ranking looks like,” Sullivan says.

    Edwards has become more transparent about its critical-jobs strategy since its introduction seven years ago. In its infancy, the program had to be kept quiet because it was driven by information that wasn’t public: the pending spinoff from Baxter. Now the company is much more open about it, a change, officials say, that adds credibility with employees.

    Above all, the program works because the CEO views it as important as financials and customer and investor relationships. “By having strong talent in critical positions,” Mussallem says, “our technologies have the greatest potential to have a real impact on patients.”

Workforce Management, December 12, 2005, p. 1, 16-22 — Subscribe Now!

Bruce Woolpert, president and CEO of paving and construction company Graniterock, has learned about employee achievements by riding in a bus on a new runway at San Francisco International Airport, visiting a city park and standing on a closed highway lane where his crews worked.

    All of these field trips have been for his company’s Recognition Days, which allow Graniterock’s 750 employees to talk about their work, their teams and their individual accomplishments during the past year. It’s part of the Watsonville, California, company’s strategy to foster self-leadership and encourage innovation.

    “We want to make sure the company recognizes and knows where the credit goes,” Woolpert says. “In the absence of that, most people think the manager took the credit.”

    Each of the company’s 18 locations plans its own Recognition Day. The details vary, but the format remains the same: Employees boast to senior management and peers about what they have accomplished, and then everyone dines together on site.

    Last year employees highlighted 4,000 improvements that they had made, up from 76 when the company introduced Recognition Days more than a decade ago. As employees come up with better ways to handle payroll, clean equipment and perform their jobs, about one-third of every process changes annually, Woolpert says.

    Employees talk about innovations ranging from developing a cleaning mixture that removes concrete splatters from trucks without damaging the finish to reorganizing inventory so that the products clients often buy are near one another, not in separate warehouses.

    These accomplishments usually are linked to one of nine corporate priorities: safety, financial performance, community contribution, customer service, profit, efficiency, quality assurance, management and people.

    “It gives employees an opportunity to tell the group what they’ve been working on and what they’re proud of rather than a manager having to point it out,” says management consultant Cindy Ventrice, author of Make Their Day! Employee Recognition That Works. “It becomes very clear what’s important to them when they get to do that.”

    It also helps ensure that credit goes where credit is due, says marketing services manager Keith Severson. “One of the biggest disappointments in people’s careers is feeling someone else got credit for their ideas,” Severson says. “This is a mechanism for us not to have that happen.”

    Open to all employees, the events draw anywhere from 25 to 100 guests. Audiences typically include Woolpert, his executive committee and new hires, who are required to attend one recognition day within their first four years. Presentations range from show-and-tell tours to slide displays.

    Recognition Days fit into the company’s workforce philosophy of fostering personal growth and professional achievement as forms of employee development, says Shirley Ow, vice president of human resources.

    “They’re being challenged to do things that are out of the ordinary for their jobs,” she says.

    Frontline hourly workers gain experience in public speaking, for example. And guests from other facilities learn more about the company.

    “If nothing else, they get a chance to visit another facility and learn more about the Graniterock operation,” Ow says.

    But Recognition Days aren’t the only time that the 105-year-old company praises and rewards its employees.

    Tuesday Facts, a weekly newsletter, highlights the events and features special efforts by employees in “Yes We Will,” a column that takes it name from the company’s customer-service motto.

    Rock Talk, a glossy magazine mailed quarterly to employees’ homes, includes photographs of all new employees.

    All employees also are eligible for what’s known as incentive recognition awards, bonuses that range from a couple hundred to a thousand dollars as a reward for specific above-and-beyond achievements. The cash award comes with a personal letter from Graniterock’s president.

    It’s for “the individual who put his neck on the line” and demonstrates self-leadership, Woolpert says. “The only way for a company to be truly competitive is for everybody to be doing improvements around their work.”

    Supervisors also use what Ow calls “spontaneous” employee recognition. For example, departments have provided sandwiches to crews in the field working especially hard on massive concrete-pouring jobs as a way of thanking them for their hard work on the project.

    The company’s commitment to its employees hasn’t gone unnoticed.

    Graniterock is one of 37 companies chosen in 1998 for Fortune magazine’s inaugural ranking of the “100 Best Companies to Work for in America” that remains on the publication’s list today. The Society for Human Resource Management in June also named Graniterock as one of the top 25 medium-size companies to work for in America.

    “I think in this company,” Ow says, “it would be difficult for people to say, ‘I don’t get recognized.’ ”

Workforce Management, October 10, 2005, pp. 46-50 —Subscribe Now!

Last year, Google sought a new way to recognize and reward employee innovations. It introduced a program that doesn’t bestow low-cost rewards like extra days off or vendor-provided tokens like engraved trophies. In a time when consultants extol the virtues of intangible rewards, Google chose monetary bonuses.

Last year, the company presented its first two Founders Awards, totaling $12 million in restricted stock that will vest over four years. One award, for example, went to a team that developed new advertising technology.

Cash bonuses may seem out of vogue in an era of financial conservatism. After four consecutive years of increases, the percentage of organizations offering performance-based cash awards, discretionary bonuses and other forms of variable pay has leveled off, according to WorldatWork, a nonprofit compensation and benefits association. In 2005, 76 percent of organizations are using variable pay, compared with 76 percent in 2004. But management consultants say cash bonuses can work effectively if designed, communicated and monitored correctly.

Psychologist and management consultant Aubrey Daniels recommends setting criteria for earning bonuses and then awarding points to employees as they move closer to reaching the threshold. That way, workers see their progress and get positive reinforcement immediately.

“Bonuses that are not tied to some type of point system are a waste of money,” says Daniels, author of Measure of a Leader. If there’s not a point system, Daniels says, “if you don’t get the bonus, you feel like management is being mean or arbitrary or stingy. And if you get it, that’s what you expect. But if you set up criteria that say, ‘Here’s how you earn this bonus,’ if you don’t earn it, the reason is simple: You didn’t do what is listed here.”

Bonuses should be tied to the work’s impact on the overall business, says Chris Ellis, a senior vice president with Sibson Consulting. Organizations need to make clear that bonuses are based on performance and are not entitlements, he says.

“It’s incredibly important that the company continuously communicate the intent behind the performance-reward program and communicate at award time why the award is lower than expected, higher than expected, right on–that there is an ample amount of communication around why the pay is what it is relative to performance,” Ellis says.

Traps to avoid include having too many measures, treating bonus programs as static policies rather than strategic activities that require ongoing monitoring, and not measuring the return on investment, Ellis says.

Cash bonuses aren’t right for every situation. In his book 1001 Ways to Reward Employees, Bob Nelson says a drawback of cash-incentive bonuses is that they have no lasting value that reminds recipients of the recognition and becoming expected rewards.

“If you give an employee something that looks like compensation, feels like compensation and smells like it,” cautions Christi Gibson, executive director of the National Association for Employee Recognition, “it is compensation, and they’ll expect it year to year.”

Like many companies, United Parcel Service slowly has expanded its human resources outsourcing since the 1980s. Today, multiple vendors administer human resources tasks for the world’s largest package carrier.

    CitiStreet, a joint venture between Citigroup and State Street, manages UPS’ 401(k) program. Hewitt Associates administers health care. Talx, a business software and services provider, handles employment verifications. ChoicePoint provides background checks. PricewaterhouseCoopers manages UPS’expatriates program. And Mellon Securities manages a bonus stock program for UPS managers.

    But some industry experts see signs that the multiple-vendor approach of UPS may become less common as more companies look for suppliers able to handle all of their human resources processes. As more companies explore outsourcing, they’re weighing the pros and cons of one-stop shopping versus piecemeal outsourcing to so-called best-in-breed vendors.

    “While working with best-of-breed vendors, in theory, is very attractive, in practice, it is very difficult to master,” says Robert Brown, a principal analyst with Gartner.

    Even organizations outsourcing just payroll or benefits administration, for example, often select vendors capable of doing much more. That’s because companies increasingly look for vendors that could take on more processes if they decide to expand their human resources outsourcing, Brown says.

Single-vendor approach
    Twenty-three percent of companies already have consolidated their human resources services with one outsourcing provider or plan to do so within the next three years, according to a survey of 122 companies conducted by the Conference Board.

    In fact, 60 comprehensive human resources outsourcing deals have been formed since 2000, according to outsourcing advisory firm EquaTerra.

    Some companies want “a single face” for their vendor or hope to use one human resources information system. “It’s usually easier to manage (one) vendor,” says Larry Kurzner, senior vice president with Aon Human Capital Services, which provides end-to-end human resources outsourcing to clients such as AT&T.

    If Aon hires another firm to handle some aspect of the outsourcing agreement, Aon manages that tertiary relationship, Kurzner says. The client still has only one vendor to oversee: Aon.

    Organizations that use only a few vendors believe that their approach leads to less employee confusion, better integration and easier coordination of services, less time dedicated to vendor management and more buying power, according to a recent survey by Hewitt Associates.

    But going with a single vendor comes with potential downsides. “If you go with one provider, sometimes you have to compromise one area for the sake of another area,” says Robin Rasmussen, managing director of human resources research at EquaTerra.

Best-of-breed
    Research by EquaTerra suggests that companies that outsource to more than one provider are more satisfied than those with just one provider are. The reason why, though, is unknown. It could be that buyers who choose multiple vendors have a preconceived belief that they are receiving best-in-class service, Rasmussen says.

    Despite hoopla about large companies such as Bank of America, Prudential Financial and Motorola signing comprehensive human resources outsourcing deals, most companies outsource incrementally, according to a study released in May by Watson Wyatt Worldwide.

    Only 7 percent of the 135 respondents say their HR departments are mostly outsourced, according to the Watson Wyatt study, compared with 65 percent who say they are mostly insourced. Twenty-nine percent say their human resources administration is split equally between insourcing and outsourcing.

    “The value of the unbundled approach is that you’re getting the best services from those companies that specialize in those services,” says Bob Crow, a senior consultant for Watson Wyatt’s strategic sourcing practice. “I’m pretty much a fan of the unbundled model because a lot of companies don’t like to have all of their eggs in one basket, and it gives them leverage to negotiate if they keep it broken up.”

Market consolidation
    The competitive market of human resources business process outsourcing has fueled consolidation as suppliers buy niche expertise that they lack.

    Last year, Hewitt Associates bought rival Exult. In January, Electronic Data Systems agreed to pay $420 million for the human resources outsourcing division of Towers Perrin. And in May, Affiliated Computer Services completed its $405 million acquisition of Mellon Financial Corp.’s human resources consulting and outsourcing businesses.

    “Yesterday the industry was made up of tons of suppliers,” says Michel Janssen, president of the supplier solutions division at Everest Group. “Today the trend is to consolidate those into one main contractor.”

K en Blanchard mingles with luminaries like the Rev. Robert Schuller, Tony Robbins and Hall of Fame football coach Don Shula. He earns as much as $70,000 on the lecture circuit and has leveraged his first best-seller, The One Minute Manager, into dozens of spinoff titles spreading his mantras of good management around the world.

    But visit the Ken Blanchard Cos., his leadership-training company in an office park 30 miles northeast of San Diego, and the basic tenets of his management style are readily apparent: Lead like Jesus, and hire family.

    A life-size statue of Moses greets visitors at the front door of international headquarters; another life-size statue, of Jesus washing Peter’s feet, graces the yard in the back. Inside Ken’s office, a Bible and a smaller version of the Jesus and Peter statue are displayed on a circular conference table. A nativity scene and a sculpture of the Last Supper prominently adorn a bookcase. A framed Bible verse of Jeremiah 29:11 hangs above Blanchard’s no-frills desk.

    A look at the Blanchard business gospel tells much about a culture that embraces religion and is fueled by nepotism. The term nepotism gets an undeserved bad rap, says Adam Bellow, author of In Praise of Nepotism and son of novelist Saul Bellow. Relatives tend to work harder for less money, are loyal and have a personal stake in the company’s success, he says.

    “Very often a second-generation heir, someone who inherits the business, has a very strong desire to prove their worth,” Bellow says. “It motivates them to work harder, put in longer hours and think creatively.”

    At 66, Ken Blanchard has relinquished control of much of his firm to son Scott, 39, vice president of client delivery; daughter Debbie, 37, vice president of sales; and brother-in-law Tom McKee, 46, president and CEO.

    The One Minute Manager says that managing his own company hasn’t been his top priority for years.

    In the past, he ceded day-to-day decisions to Marjorie, his wife of almost 45 years. The couple met as students at Cornell University in the early 1960s and have been business partners since the company was founded in 1978.

    “I realized early that God didn’t put me here to manage anybody,” says Blanchard, author of Lead Like Jesus and of best-sellers including Raving Fans, Gung Ho! and Whale Done! He credits God for the runaway success of his 1982 mega-best-seller, which brought him international celebrity, launched a library of titles from The One Minute Manager Gets Fit to The One Minute Manager Meets the Monkey, and propelled his training business.

    “The phenomenon of the business was Ken’s success with The One Minute Manager,” says Rick Tait, who worked as a trainer for Blanchard from 1985 to 1992. “It gave him notoriety. It made him a household name. He is the brand.”

“There is a dark underbelly to the Blanchard regime. When you peel away the onion, they actually can be very unethical people to work with.” –Bob Nelson, former vice president at the firm

    Tait praises members of Team Blanchard for being loyal to their employees, and says that the main downside to their hiring practices is the possible lack of an outside perspective. He says his time at the Blanchard company was a “a wonderful experience” and “the opportunity of a lifetime.”

    Not everyone sings the Blanchards’ praises. Rewards-and-recognition guru Bob Nelson didn’t leave his job with the company happily. Nelson, a former vice president at the firm, says that Ken Blanchard pressured him into helping son Scott Blanchard write college papers and to get off academic probation at Cornell University.

    Ken denies the allegation, and says, “I send out my love and prayers to Bob.”

    Nelson, author of 1001 Ways to Reward Employees, left the Blanchard organization in1997 after a decade with the company and filed a since-settled lawsuit over product royalties. He also accuses Ken of not writing his own material.

    “There is a dark underbelly to the Blanchard regime,” Nelson says. “When you peel away the onion, they actually can be very unethical people to work with.”

    Scott says the question about his college papers is “going back to 1986,” and adds, “Bob worked for my father. I’m not going to dignify that question with a response.”

    Further, Ken says, “We take relationships with past employees very seriously, and our values help us sleep well at night.” Marjorie characterizes Nelson as a disgruntled former employee.

    Despite the falling-out, the new edition of Nelson’s book carries a flowery foreword by Ken Blanchard, who commends it as a “treasure trove of ideas.”

    At the Ken Blanchard Cos., about half of the company’s 260 full-time employees are relatives or good friends of one another, Scott says. The western regional sales manager, for example, is one of Ken and Marjorie Blanchard’s nephews.

    Scott contends that hiring friends and family has bred loyalty. Turnover is only about 5 percent, he says, and seven founding company members, most now in their 60s, are still working at the firm.

    Outsiders, however, say that family ties create awkward situations. In one case, two women describe the same Blanchard executive as her husband; one is the man’s first wife, and the other his new girlfriend.

    “We break all the rules,” Ken says. “We have couples working together. We have mothers and daughters. Sometimes a man might report to his wife.

    “Our rule in hiring is that if somebody you hire comes through the front door and you don’t feel a chemical difference in your body because you’re excited to see them, then why did you hire them?”

    Apparently the emphasis on Christian references and family togetherness makes good business sense. Last year, revenue was $44 million. Though that’s only a fraction of the fragmented $100 billion training industry, the Blanchard enterprise continues to grow in the midsize niche shared with such organizations as Development Dimensions International and the Center for Creative Leadership.

    Consulting company Accenture ranks Ken Blanchard as the 35th best-known leadership guru, two spots below General Electric Co.’s Jack Welch and 12 spots above computer tycoon Michael Dell.

    While many competitors remain regional, the Blanchards have offices from Boston to Seattle and wholly owned subsidiaries in Toronto and London.

Extended family
    All of this success, the family says, is based on the company’s values: relationships, success, learning and, most important, ethics. “There’s no right way to do something that’s wrong,” says Scott, who recently published Leverage Your Best, Ditch the Rest, which he co-authored with fiancée and co-worker Madeleine Homan.

    Employees describe the company as a relationship-driven workplace where the owners make employees feel like family. “There’s no difference,” says Drea Zigarmi, co-author of Leadership and the One Minute Manager. “I don’t know what it’s like to be a non-Blanchard.”

    The Blanchards and CEO McKee, Marjorie’s brother, own the company. The Family Council, composed of the five owners, convenes quarterly. It provides a venue for the family to discuss business and personal matters, ranging from their real estate holdings to Thanksgiving.

    “Our intention from the beginning was to make sure we were in dialogue together as owners and family members to make sure that our family dynamics were not going to get in the way,” Scott says. “It’s very difficult to have an effective relationship inside of an adult family. When you mix the business into that, it’s really, really difficult.”

    The man whose management lessons have influenced huge numbers of executives lost interest in working inside corporate America while attending Cornell. During his junior year, he applied for a summer sales program with a chemical company but wasn’t chosen.

    “I kissed off the business world at that point,” Ken says. “I said, ‘If they’re that stupid, why would I want to do that?’ “

    Even today he is not on his company’s executive team, and he describes his role as rainmaker. His official title is chief spiritual officer.

    It was the success of The One Minute Manager, self-published in 1981 and nationally released by William Morrow in 1982, that spawned his Christian faith, he says. When a close friend asked him why he thought the book was so successful, Ken responded, “I think somehow God is involved.”

    To this day, he distributes a morning message to employees through the voice mail system that tells employees for whom to pray, praises unsung heroes and conveys some thought linked to the company’s values and vision. References to God and Jesus punctuate some of Ken’s more recent books, especially when he addresses the topic of ego, which he says stands for Edging God Out.

    But his spiritual leanings haven’t always been embraced professionally. “We started having internal people and clients complaining about it,” Blanchard trainer Susan Fowler says of Ken’s desire to share his religious beliefs. “Ken’s learned to express his excitement over his own faith without making other people feel like he’s imposing it on them.”

    Ken is co-founder of the Center for FaithWalk Leadership, a nonprofit organization that strives to encourage leaders to adopt Jesus as their role model.

    The center’s board of directors includes David “Mac” McQuiston, vice president of the conservative Christian group Focus on the Family, which has organized boycotts against companies such as Procter & Gamble because of their support of nondiscrimination policies, including safeguards for gay workers.

    Ken says the FaithWalk group doesn’t delve into social issues. “People have called us and asked what is our stance on abortion, gay rights, etc.,” he says. “We say, ‘No. We’re in the lead-like-Jesus business.’ “

    Despite the biblical references and Christian statuary, Scott is quick to say that religion is kept separate from the family business. “We are not a Christian company,” he says flatly.

    By his own account, Ken’s penchant for writing in parables is an outgrowth of his love of storytelling and affection for books like Jonathan Livingston Seagull.

    “The nice thing about parable writing is that people reading drop their evaluative side,” Ken says. “I always kid about how many people read In Search of Excellence–the number of people who read it versus those who bought it. We decided to write our books one chapter long because the research shows that less than 10 percent of nonfiction books are read past the first chapter.”

    Warren Bennis, distinguished professor at the USC Marshall School of Business and author of Becoming a Leader, says Ken’s contribution is “taking the richness of theoretical concepts and translating them into practical ideas useful to the general public.”

    Onstage and off, the self-described “auditory learner” illustrates his thoughts through personal stories. During a recent speech to a group of entrepreneurs at the University of San Diego, Ken explained his philosophy of leadership humility by recounting his daughter’s appointment to vice president of sales in 2001.

    “Debbie’s only experience selling was working a couple summers for Nordstrom, and (all of a sudden) she had 55 salespeople,” he recounted.

    “Her first meeting with salespeople, what did she say? ‘If I told you that I knew what I am doing, we could all have a really good laugh. But what I really know what to do is how to work with our family.’ Everyone rallied around Debbie to teach her about the business because she was there for them and was willing to admit she needed help.”

“A values-based company”
    In her simple executive office, Marjorie Blanchard displays a prized picture taken in 2003 with Pope John Paul II. “I just love this photo,” she says. “I think I look like an angel and he looks like God.”

    Marjorie, who goes by Margie and is Presbyterian, met Ken at the end of her junior year at Cornell. After graduating from college she attended the University of Massachusetts Amherst, where she earned a doctorate in communication disorders.

    She initially served as company president and, after briefly having an outsider in the job, returned to the role for 10 years beginning in 1987, a time when revenues hovered around $6 million.

    “We were actually making a good organization using our own ideas but doing it trial and error and getting a tremendous appreciation for the difficulties organizations have when they go through change, when they grow too quickly, when they aren’t growing fast enough,” she says.

    She sees Dale Carnegie as a role model for the work she and Ken do.

    “His body of work stood for something,” she says of the author of How to Win Friends and Influence People. “It lasted even after he was gone. I think our body of work, hopefully, will stand for something.”

    She and Ken hired her younger brother, Tom McKee, as an operations manager. He’s now the man at the top. Her firstborn, Scott, joined the family business at age 28, then left to attend graduate school. In 1999, he started Coaching.com, which was subsequently folded into the Ken Blanchard Cos.

    Now a single dad with two young boys, Scott is vice president of client delivery and has also tapped his guru pedigree by writing books and entering the speaker circuit.

    When asked what advice he’s given Scott about business, Ken says this: “Remember you’re going to be a better Scott than you are Ken.”

    Scott, an engaging, confident coach and speaker, says that all good companies have three “success factors,” though they are expressed in very different ways.

    “One, we have a clear vision in the leadership development business,” Scott says. “Two, we have a unique culture–as every company should have. We are a strong values-based company. And three, we value fairness and integrity. Our low turnover is the strongest testament to our company values.”

    As vice president of sales, his younger sister Debbie is in charge of 45 associates and seven managers.

    “At first I was surprised at that choice because Debbie hasn’t got a lot of sales management experience, but she is brilliant in that role,” says Pat Zigarmi, vice president of business development.

    Debbie’s husband, Humberto Medina, also is part of the company’s leadership, handling on-site consulting projects and partnerships.

    The Blanchards don’t cultivate talent only from their own family. They believe that some of their best employees can be found among the families and friends of staff. New hires tend to be attracted to Ken’s ideas, Margie says.

    “There’s a self-selection, first of all, in terms of people who even want to work here,” Margie says. “They already are believers when they come.”

    Employees can earn a bonus if someone they recommend is hired and passes a probationary period, and some longtime employees speak hopefully of their children finding careers with the Blanchards.

    “Many, many of our hires come through relationships with our employees,” Scott says. “We take nepotism to a bigger level.”

    One of the Blanchards’ basic tenets of workforce management is to share company success with employees. The firm’s gain-sharing takes a percentage of the operating income, places it in a pool and divides it equally among employees.

    Those who develop training products can receive royalties. And Ken’s co-authors receive royalties from their books.

    A philanthropic program through the Blanchard Foundation allows each employee to select a charity to receive donations, linked to employee’s salaries. Foundation donations in 2003 ranged from $58 in books for a hospice’s silent auction to more than $56,000 to Cornell, according to its IRS filings.

    The Blanchards also avoided layoffs after the Sept. 11 terrorist attacks. The company had grown a minimum of 10 percent and as much as 30 percent until 2001, Scott says. Then sales revenue fell 6 percent in 2001 and 3 percent the next year.

    Owners took 25 percent to 30 percent salary cuts, and employees gave up 5 percent to 10 percent. Contributions to 401(k) programs were frozen. But no one was laid off, and the cuts eventually were restored.

    This year, as a reward for the sacrifices and hard work, the company took its 260 employees to Hawaii.

    “It was 20 on a scale of 10 on how well it was received and how well it went off,” McKee says.

    Despite issues with former employees, longtime members of the extended Blanchard clan say the company’s entrepreneurial culture, selling power and values kept them loyal.

    “Because it’s run by this family that we’ve become very intimate with, even though they make some bone-headed decisions sometimes, we’ve gotten to know their hearts,” says Fowler, co-author of Self Leadership and the One Minute Manager. “We’ve gotten to know who they are as people. And you realize that they have really good intentions.

    “As long as you see those good intentions and you realize that the hearts of people you are working with are really pure and good and well-intentioned, you can put up with a whole lot of crap.”

Workforce Management, June 2005, pp. 42-48 —Subscribe Now!