Howard Winkler, Southern Company, March 25, 2004
Linda Lingle, Governor of Hawaii, August 9, 2003
Jim Foote, Vice President and Director of Global Rewards, Motorola, June 1,2003
Robert Berman, Vice President, Kodak, May 25, 2003
Paula Patineau, Vice President and Chief People Officer,ATK, May 18, 2003
Jim Grenier, Vice President of Rewards and Human Resources Operations,Intuit, May 4, 2003
Mary McLeod, Executive Vice President of Human Resources, Charles Schwab,April 6, 2003
Commander Sam Jenkins, USN, March 9, 2003
Whitney Shelley, Director of International HR and director of learning anddevelopment, Kinkos, March 9, 2003
Pete Barry, Vice President, Armor Holdings, February 23, 2003
Michael Cherkasky, CEO, Kroll, February 23, 2003
Timothy Landon, President, Tribune Classified, February 9, 2003
Mark Sullivan, Corporate Director of Learning Technology and Operations,Honeywell, February 9, 2003
Deb Capolarello, MetLife, December 2002
John Boehner, Congressman, December 15, 2002
Robert Reich, Former Labor Secretary, December 15, 2002
Anne Murray Allen, Cultural Integration, Hewlett-Packard, November 17, 2002
HOWARD WINKLER, SOUTHERN COMFORT
Most people don’t think of utilities as being on the cutting edge of workforce management. An exception is Southern Company, which as of March 24, 2004, was worth about $22 billion on the New York Stock Exchange.
Howard Winkler is human resources strategy director for this 25,000-employee Atlanta energy firm, which seems to have staked out a perennial spot on Fortune’s “most admired” list. Southern Company’s 4.4 percent turnover rate is considered low even in the relatively stable utility industry, and its average employee tenure is 19 years.
“Our turnover verges on being too low,” Winkler says. “It doesn’t create as much opportunity to bring in new talent and new points of view, nor does it always provide enough velocity [upward mobility] of career experience for people already in the company.” Southern Company, he says, has more people with the ability to move up than it has open positions.
Given the limited opportunities for promotion, the workforce-management team spends more time working on, and getting people excited about, the company’s culture and mission. “People feel like they’re part of an organization that’s doing something important–and we are,” Winkler says about his company, which powers parts of the southern United States at relatively reasonable prices for consumers. Southern Company also plays up its relative stability, which includes no company-wide downsizing in the last five years. Winkler says that productivity has increased since 1998. Employment has stayed roughly flat, though the company has added 342,000 customers, 7,517 megawatts of generating capacity and $1.8 billion in annual revenues.
Winkler swaps ideas with a group called the HR Strategic Issues Council, which meets twice a year and is led by the La Jolla, California, consultant Jim Walker. Winkler says that the group, whose members pay $5,000 annually to join, addresses such questions as, How do we move talent in our organizations? What are our big leadership issues? How do we move to a higher-performing workforce?
Winkler is putting together a small in-houseworkforce-planning group to study the “potential for some loss down the road.” The average age at Southern Company is about 45, and in a decade, power-plant operators and others will retire in large numbers. This planning group will be projecting the number of retirements at the company as well as the number of replacements available in various regions.
Southern Company is also trying to reduce its high labor costs–about 70 percent of non-fuel operations and maintenance expenses. Managers are using online labor-cost-modeling tools to analyze how they can reduce labor expenses by, for example, having a technician do what a higher-paid engineer is currently doing. Meanwhile, the company is trying to better integrate its suite of talent-management activities. It rolled out a new leadership-development program, but hasn’t yet tied it to its performance-management system and its candidate-selection criteria.
Winkler says that David Ratcliffe, who takes over the company’s CEO/chairman position in July, will be a big supporter of these talent-management initiatives. “Ratcliffe’s a real culture activist,” Winkler says. “He’s a guy who is very keenly engaged in talent and workforce issues.”
Winkler views workforce management as a continuum by industry. On one side is major-leaguebaseball, where talent is most valued, human resources trends emerge and workforce management is most sophisticated. On the other end are coal mines. Utilities, he admits, are closer to the coal-mining side. “Utilities aren’t commonly thought of as talent hothouses,” he says. “But we do have a lot of interesting things for a company that has such a conservative profile.”
Linda Lingle, GovernorofHawaii, August 9, 2003
Hawaii is itself acontradiction–tiny in size, but large inmilitary and tourism importance.Governor Linda Lingle is a bit of acontradiction, too. She’s a Republican in astate where they’re ascommon as cloudy days. She’s the first mayor and thefirst woman to beHawaii’s governor. On an island where many residents aredescendents ofNative Hawaiians, Lingle was born in St. Louis.
Lingle–who is pro-choice and anti-school prayer–is a former employee of theTeamsters and was later a popular mayor of Maui County. She’s restoringtrust toa state plagued by scandals in the Democratic legislature, andrecently signed abill giving the public more access to what’s going onwith thegovernment-contract selection process.
She’s telling her cabinet members that since they don’t have thepay-for-performance options the private sector has, they should findcreativeways to reward state employees for good ideas. “Employees’ideas just weren’tlistened to in the past,” she says. “We’re going tomake it clear we’re notgoing to blame somebody if some new idea justdoesn’t work out.” One stateemployee, Aaron Fujioka, had an idea for areverse-auction, where Hawaii putsgovernment contracts up for bidonline, with the lowest-bidder winning. Linglewants the legislature toenact it.
Without the opportunity to give bonuses, Lingle’s especially interested inoffering employees chances to upgrade their skills by attending tradeshows,seminars, and conferences.
Ultimately, Lingle says, a cleaner state government and a better economyshould help stop top talent from moving to the mainland, and help bringbackHawaiians who moved to places like San Diego and Silicon Valley.”They wouldprefer to be here, but there just were no opportunities,”she says. Lingle hasbeen personally talking up the state’s good pointsin live teleconferences withgroups of former Hawaiians who are beingwooed to come home.
Smart recruiting is something Lingle’s familiar with. She got some of herhighest-ranking advisors to take massive pay cuts to work for her,including onewho was making about $250,000 and is now earning under$100,000. “Making adifference was more important than making money atthis point in their lives,”she says. Lingle says she was able to scoresome of her big recruiting victoriesbecause of the excitement somecandidates had about being part of the firstRepublican administrationin Hawaii.
You can hear that excitement in the voice of Linda Lingle, who is optimisticabout the latest transition for a state that has served as an importanthub,first for trading fur, and later for growing sugar cane andpineapples. Aftersome trying times in recent years, new data showsthat confidence in the state’seconomy is on the rise. Lingle says theNavy might reposition a carrier groupfrom the mainland to the regionbecause of the growing military importance ofNorth and South Korea.Companies are finding that Hawaii is a good place to puta call center,she says, since so many languages are spoken there. Lingle alsosaysthe Japanese government will do a large cancer-research project in Hawaii,and that the U.S. and global film industry will be making more moviesin Hawaii.
“The state is finally finding itself as a natural bridge between the UnitedStates and Asia,” Lingle says.
Jim Foote, Vice President and Director of Global Rewards, Motorola, June 1,2003
Seventy-five years ago, Paul and Joseph Galvin started Motorola in Chicago asthe Great Depression was beginning. Nowadays, Motorola and its workforce are ohso global. You can find Motorola equipment in space, and if you work forMotorola, you’re about as likely to be working outside the United States asyou are inside. Few, if any, global companies of its size have their wholeglobal workforce on one human resources management system, as Motorola does withSAP.
Jim Foote, vice president and director of global rewards for Motorola, hasbeen going through a four-year process of improving incentives at the company.The result is an incentive plan that Foote, a Harvard Business School grad whoworks out of the company’s Schaumburg, Illinois, headquarters, designed.Checks went out in April to approximately 93,000 people, based on 2002performance.
Unlike some other companies’ incentive plans, in which a small part of theplan is weighted to the overall organization’s business results, this one isheavily weighted that way. The vast majority of the incentive employees can getis based on how their Motorola business–such as the personal communicationbusiness, which makes devices such as two-way radios–does in terms of cashflow and profit.
The underlying philosophy is that employees should be paid according to howthe company does. In Motorola’s view, it’s not fair to shareholders ifemployees get a big incentive even when the company isn’t prospering. Footebelieves that with this structure, employees will together make the businesssucceed. “Individual performance is important,” he says, “but individualperformance in the absence of business performance isn’t getting us whereshareholders want us to be.” In other words, Foote says, “if you’re doingwell and the business isn’t, you’ve gotta work even harder. The message thatwe want to send to our folks is that cash flow and profitability are key driversof this business, and each of you can contribute.”
One employee can still get 30 percent more–or 30 percent less–thananother employee, but it’s 30 percent more than a figure based on Motorola’sbusiness results.
Another aspect of the Motorola incentive plan is that everyone from ahigh-ranking exec to an entry-level employee is on the same plan. “There’sno sense of there being an elite incentive plan and a plan for the rest of theemployees,” he says.
The Motorola incentive plan needs constant attention. When Workforce talkedto Foote last week, for example, he was working on tweaking the plan for itsworkforce in Brazil. In that country, new legislation provides tax incentives tocompanies that have “Brazil-specific metrics” in their incentive programs.Brazil wants you to reward employees according to how your company is doing inBrazil.
Foote’s team is using a “rewards planning system” based on softwarefrom Kadiri. Motorola uses this to track stock options, incentives, salaryincreases, and more. As is the case with any vendor software, Foote’s team–andparticularly Craig Morgenroth, who manages the rewards planning system–had toinvest time in customizing the software to work for Motorola.
Meanwhile, on the benefits front, Motorola, like virtually every othercompany in America, is trying to do something about rising health-care costs. It’shoping to catch diseases early on, and requires every U.S. employee to gothrough a half-hour health screening every year. The standard screening includesbasics like weight and blood-pressure tests, with the option to add on checkssuch as prostate exams and other procedures. Employees get an individualizedwellness assessment–with a body-fat analysis, for example, as well as advicefor people with symptoms such as an irregular heartbeat.
Motorola is also paying $300 twice a year to employees with certainconditions like diabetes who agree to participate in a disease-managementprogram. Nurses make sure employees are getting exercise and taking insulin. Inaddition to saving the company money, says Foote, “we may save you from havingan amputation of your foot, may save you from going blind.”
When it comes to restructuring incentives at Motorola, the company is, inFoote’s words, “doing a lot of state-of-the-art stuff.” It’s tough work.For one thing, Motorola’s incentive plan was a bit of a mess before theserecent improvements. Also, it’s a challenge to figure out “the right way”to design an incentive plan. Sometimes, someone from Motorola’s top brass willgive Foote a call and ask, “What’s the standard for incentive plans?” AndFoote’s answer is, “One standard? There isn’t one. There’s like 10different standards.”
Robert Berman, Vice President, Kodak, May 25, 2003
If you’d invested a dollar in Kodak stock 10 years ago, by now you’dhave–well, about a dollar.
Eastman Kodak hasn’t exactly been a Wall Street darling, and in recentyears, there’s been a perception that Kodak has fallen behind as photographyhas shifted from 35-millimeter film to digital. Indeed, Richard Stice, an equityanalyst with Standard & Poor’s investment advisory services, says Kodak’sbeen “a little bit late to the game.”
Bob Berman, Kodak vice president, is one of many senior leaders at Kodaklooking to change all that. “We’re clearly at the forefront of makingdigital photography easier to use.” Meanwhile, Berman adds, “photographicfilm is going to be around for a long time. It will be a gradual change.”
Berman says Kodak’s opportunities are bigger than ever, and that the “info-imaging”industry–everything from health technologies to production work inHollywood–is a $385 billion market. Info-imaging is, he says, “much more thanphotography.”
Kodak and its workforce of roughly 70,000 worldwide is indeed changing. OnApril 2, it hired a new president and COO, Antonio Perez, a digital-imagingexpert and 25-year veteran of HP who Berman says understands what Kodak needs todo to keep growing its digital units. CEO Dan Carp had been doing the COO job inaddition to his own for eight months. Kodak has been downsizing. It’s addingan HR component to its SAP system. It’s turning a lot of its classroomlearning into e-learning, and instead of sending people to executive MBAprograms, it sometimes now uses on-the-job training.
Berman is working hard to improve the company’s leadership. “On the onehand,” he says, “we have a very good reputation for the caliber of ourleadership. But as our business goes through transformation, we know we need toraise the bar on that.”
For the top executives, the top 1 percent of Kodak leaders, Berman and histeam are trying to increase the amount of feedback they get on how they’redoing, and are increasing the amount of coaching that senior execs andworkforce-management execs get. For front-line leaders, Kodak’sworkforce-management staff has identified a set of competencies necessary forsuccess, and then–when interviewing–is looking for people who have thesecompetencies, which are as follows:
Ability to Adapt: Deal effectively with paradox, conflicting realities,ambiguity, and contradiction.
Focus Externally and Globally: Have a strong sense of external reality, withfar-reaching networks and contacts.
See the Big Picture: Think strategically; think about the whole system andthe future; think about what is good for Kodak as a whole.
Communicate: Communicate honestly and candidly; convey bad newsconstructively; clearly articulate and convey ideas.
Radiate Confidence: Inspire others; balance risk and results with confidence.
Drive to Win: Drive for success; focus on what really matters; be obsessedwith getting results.
Lead with the Values: Respect and optimize people’s contributions; create aspirited and energizing environment; leverage diversity; develop people andfuture leaders.
Focus on Growth: Recognize and seize opportunities to grow the business;value curiosity and expansive thinking; innovate.
Drive Change: Drive organization change rapidly and effectively.
Kodak is working on a major long-term initiative to build what the companycalls a “Winning and Inclusive Culture” in its home in Rochester, NewYork. This means strengthening management skills, making sure employees arelistened to, making sure employees don’t need all sorts of approvals frommanagers to do things, improving morale, and generally making the company morediverse and inclusive.
Chief Diversity Officer May Snowden has every employee taking an hour-longonline diversity-training course, which covers discrimination and harassment,and includes scenarios showing how uncomfortable situations betweenemployees–and between supervisors and employees–can be prevented.
Also, for a little over a year, Kodak’s innovative Resolution SupportServices program has been solving employee disputes before they become lawsuits.In short, employees can have problems resolved through a trained facilitator,and if that doesn’t work, employees can choose a single adjudicator or apeer/management panel to hear the case. Snowden says that more than 80 employeeshave used the system, which started in Rochester and is expanding to plants inColorado and Oregon and then to elsewhere throughout Kodak. Most disputes arebeing resolved at the initial stage, with the facilitator.
Snowden is also analyzing how an increasingly diverse American workforce willaffect Kodak in the future. She’s measuring the success of all of herdiversity initiatives by examining the makeup of the workforce, the diversity ofits customers, company turnover, the diversity of its candidate pools fromcolleges and search firms, the amount of purchases from minority suppliers, andthe company’s reputation. DiversityInc has put Kodak on lists of top companiesfor diversity.
While its stock hasn’t done a whole lot of good the last decade, bear inmind that Kodak is still the world leader in its market. Cash flow is up,inventory is down, and its stock was a top performer in the Dow last year. Kodakis acquiring Applied Science Fiction Technologies, a company whose system canquickly turn film into digital images. Customers will eventually be able to usethe technology in Kodak’s thousands of kiosks in drugstores around America.
Stice, of Standard & Poor’s, is telling people to sell Kodak stock, butthat’s partly because, he says, people aren’t traveling much right now, andthus aren’t taking as many photos. He sees Kodak’s digital unit beingprofitable by year’s end. That’s impressive for a company that some thoughtwould be practically out of business by now. “It’s such a big ship,” Sticesays, “and turning it in another direction takes time.”
Paula Patineau, Vice President and Chief People Officer, ATK, May 18, 2003
If you watched any of the second Gulf War on television, you’ve heard about”precision systems.”
ATK, an Edina, Minnesota company, makes them, and Paula Patineau is ChiefPeople Officer. “It’s fascinating,” she says, “they can shoot somethingfrom so far away and it can just dead-on hit something. Even a facility next toa hospital or something–they can hit it and make that building implode so there’svery little damage around it.”
The success of precision systems has lifted the spirits of the12,000-employee ATK workforce, which was already generating rising earnings,sales, and cash-flow from its bullets, motors, tank shells, and relatedproducts. Since the war, Patineau says, “It is easier to recruit and generallyeasier to retain. We just have happier, more productive people.”
Aside from some additional contracts to make ammo, ATK hasn’t seen a hugeuptake in government business since the war. The government tends to buymaterials pretty consistently over time. ATK has been growing solidly for years,increasing earnings by the double digits, and taking market share fromcompetitors.
Some of what’s on Patineau’s desk:
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Succession planning and exec compensation: Patineau and the rest of the ATKleadership have been working on making a smooth transition to new CEO DanMurphy, Jr.–a former U.S. Navy admiral–who takes over in October. ATK has hadthree regimes since it was spun off from Honeywell in 1990, all going indifferent directions. With a new CEO coming in, Patineau’s team is analyzingnot just what and how he should be paid, but how a comp package should bestructured for the whole executive team, including how options might beexpensed.
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Improving the company’s diversity: ATK isn’t a poster child fordiversity, but Patineau’s working on changing that. She wants to get morefemales and minorities in leadership positions, which in turn should draw moreminorities to other positions. Patineau will have several organizations helpingher, including the United Negro College Fund.
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Expanding technology: Patineau is moving all employees to online benefitsenrollment this fall. She’s phasing in online paychecks, with corporateemployees and other Twin Cities employees already underway. ATK providesbenefits information via Authoria. Patineau also is working on expandingemployee access to the PeopleSoft system from employees’ homes, becauseproduction employees don’t have PCs at work. It’s a challenge to get somepeople to adapt. “We’re kind of in the infancy of getting people to useonline tools,” she says. “Some would really rather work with a computer thantalk to a real person. It’s kind of a generational thing.”
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Gathering and analyzing metrics: Patineau, who has a background in finance,has several employees examining pay practices, productivity, and otherworkforce-management metrics at the company. A lot of ATK employees will beretiring in the coming years, and ATK is taking a look at the workforce thatwill be needed in the future. Right now, for example, the company is a bittop-heavy in some areas, with too many highly paid, top-level managers.
Patineau keeps up on the workforce-management world mainly through thepublications of vendors like Watson Wyatt, Hewitt, Mercer, Right Management,Buck, and Fidelity, the latter of which Patineau is partnering with to improveemployees’ financial planning with online tools. Ernst & Young is alsoputting on two-hour-long seminars for ATK to help employees to plan for theirfinancial futures.
ATK is partly a defense company, but a good chunk of the company works onnon-defense production, like building rocket motors for the Space Shuttle. Infact, between the company’s emphasis on precision and its non-defensemanufacturing, Patineau says “We’re really in the business of peace, notwar.”
Jim Grenier, Vice President of Rewards and Human Resources Operations,Intuit, May 4, 2003
Have no pity for the workforce-management leaders at Intuit–they’re notamong the VPs and others profiled in past newsletters whose companies aredownsizing, bankrupt, or dealing with questionable employee morale amidst a badeconomy.
Intuit’s employee satisfaction numbers–hot off the presses–are running atabout 83 percent; Intuit’s consultants, Sirota Consulting, say the norm isabout 65 percent. On top of that, 85 percent of Intuitters have pride in thecompany. Both numbers are up over last year. Quarterly earnings, the companyannounced last week, were higher than expected.
Jim Grenier is vice president of rewards and human resources operations atIntuit, which makes accounting, tax, and other software–like QuickBooks andTurboTax–for consumers and small businesses, and is generating more than $1.5billion in annual revenue. He reports to senior VP Sherry Whiteley.
Grenier sits in a corner office in a typical Silicon Valley business park,right off Highway 101. On the wall in the lobby are Intuit’s values, whichread that “the best person for most jobs will be someone here at Intuit” andthat “managers at Intuit have a responsibility to create an environment thatencourages people to speak openly, knowing they will be listened to when theydo.” On Grenier’s computer is a daily e-mail bulletin from his consultingvendor, Hewitt. Practically across the street is the search-engine companyGoogle. Just a few miles away is his home, which Grenier could get to by bike ina northern California climate which, he says, is sunny about 300 days a year.
J.P. Morgan downgraded Intuit’s stock April 22, saying, among other things,that “QuickBooks sales at the retail channel continue to be sluggish,” that”we are heading into the seasonally slow period for Intuit,” and that therearen’t a ton of new product releases on the way.
Grenier says, however, that these challenges are more about the economy thanthe company, and that although the company is growing more slowly thanprojected, it’s still growing. Even though Intuit’s stock has declined thisyear, it hasn’t experienced nearly the fall over time as some other SiliconValley stocks.
Nevertheless, the decline in the power of stock options as a retention toolis forcing Grenier to modify his sales pitch to employees. Intuit has given goodrewards, but hasn’t done a great job of communicating to employees what they’reall worth. It’s now about “total rewards.” Instead of everyone dwelling onwhat their stock’s worth, Grenier wants them to also think about their cashbonuses as well as their recognition awards, for which Grenier uses the vendorBravanta. These recognition awards include everything from tickets to a show toa getaway weekend at a resort. Grenier hasn’t cut back on the giveaways,despite the slow economy.
Starting this summer and continuing for about a year, Grenier’s team isgetting salespeople set up with software from a company called Callidus. Thiswill “deliver performance metrics to salespeople,” Grenier says, meaningthat they’ll see how they’re doing against their goals, and managers willsee how their teams are doing. Salespeople will view their revenue, theirtransactions, their sales, and their customer-satisfaction ratings. Right now,salespeople and managers are relying on a hodge-podge of spreadsheets and hardcopies and whatever else they can get their hands on to see how they’re doing.
Intuit’s going to spend a lot less in options than a couple of years ago.It’s also having the CEO decide when options should be handed out, rather thanhaving managers decide the timing.
Grenier came over from GE in 2000, when Intuit had about 5,000 employees.After some purchases and sales of other companies, Intuit now has about 7,000employees in the United Kingdom, Canada, and 13 States, from Colorado toConnecticut (Grenier’s home state) to Texas to Arizona, where employees answerHR questions from a call-center in Tucson. “Employees want insiders helping toanswer questions,” Grenier says. “They don’t want to talk to someone overin India or Mexico. They want to talk to someone who’s local.”
Craig Ramsay, who manages assessments for Intuit, says Intuit’ssatisfaction numbers are especially unusual for a company that’s had to holdpeople to higher standards over the last three years, from front-line employeesto CEO Steve Bennett. When Bennett and Grenier joined Intuit, the company hadabout 25 percent turnover and a third of the workforce had been at Intuit lessthan three years. Intuit’s turnover is now about 10 percent.
Mary McLeod, Executive Vice President of Human Resources, Charles Schwab,April 6, 2003
Charles Schwab’s first-quarter earnings missed their mark, Schwab suspendedits 401(k) match, its workforce is about 20 percent leaner since the bullmarket, its clients’ money has dried up, and its plan for an online bank isbehind schedule. If any company can keep morale up through all these blows, MaryMcLeod says it’s Charles Schwab.
McLeod is executive vice president of human resources at Schwab and a memberof the executive management committee. She says that she’s seen her share ofups and downs–as a VP at Cisco, Hallmark, and GE Capital–and that Schwab ishandling its current challenges better than anyone. “You hear we’re avalues-based company, and that people are proud to work here,” she says. “That’sall true. That’s not media hype. That’s brought our workforce through a lotof what we’ve gone through.”
The values all come from Charles Schwab himself, who sits down the hall fromMcLeod, and who she calls “one of the most decent human beings on the face ofthe earth. “In a million years,” she says, “you’d never know he’s abig deal executive.” McLeod meets with him regularly to discussworkforce-management practices, compensation, recruiting, and other issues.McLeod calls him “a great leader, and a regular person.”
Schwab has been accused of being penny-wise and pound-foolish in suspendingits 401(k) match–the idea being that it will hurt long-term retention effortsand send the wrong message to customers. McLeod says it’s a temporary move,principally associated with economic unease from the war and the leadup to it.”We wouldn’t take something away from our employees that would last forever,”she says. “We have every intention (of restoring it) when the economy turnsaround.” She also notes that the plan was very generous, matching $2 on thefirst several hundred dollars of employee contributions, and $1 after. Cuttingit represented a large savings to the company.
Meanwhile, a new book about Schwab, called “How One Company Beat WallStreet and Reinvented the Brokerage Industry” chronicles founder CharlesSchwab’s charisma and deeply held values that revolutionized the brokerageindustry. The book’s author, John Kador, says that Schwab’s us-against-themmentality makes it difficult to attract outside talent. Kador says that “executivesrecruited from outside the company face formidable barriers being assimilatedinto the community” and that “recruitment is difficult, retentionproblematic, and healthy executive development unnecessarily challenging.”McLeod says she did wonder how easy it would be to break in when she came toSchwab 18 months ago from Cisco, but that the transition was smooth. “I don’tmean to keep sounding like everything is so wonderful,” she says. “But they’vebeen open, they’ve been helpful, they’ve been extremely supportive. I justhonestly don’t know where (that accusation) came from.”
Kador also says that investors and analysts are worried about the company’ssuccession plan, and he says “it doesn’t seem to have one, and that worrieseveryone with a stake in the company’s future.” McLeod and the rest ofSchwab’s executive team is working on succession planning at the highestlevels of the company. She’s working on a new executive development program,to make sure all company officers have the skills they need going forward.
There’s more on her desk. She’s developing new training curricula for newSchwab managers. She’s also rolling out a new performance management plan forthe company, better linking people’s goals with corporate goals.
With all that’s going on at Schwab, McLeod’s still has time to show herthree Cairn Terriers, dogs that look like “Toto” from “The Wizard of Oz.”If you’ve seen the movie “Best in Show”–about people who compete in dogshows–well, that’s Mary McLeod. The shows foster a connection among dogowners. This is the kind of bond you find at Charles Schwab. “We havesomething special here that creates a sense of community,” McLeod says.Compared to her other corporate experiences, “it’s like nothing I’ve everseen anywhere.”
Commander Sam Jenkins, USN, March 9, 2003
“It’s been a good job,” says Commander Sam Jenkins, USN. “It’s beena very fun thing to do.”
You expect this kind of happy talk out of a college student describing asummer job at Epcot. Only an optimist like Jenkins would say such a thing abouttraining around 131,000 people in the area of health privacy.
Jenkins supervises the health-privacy effort for the military health service,which includes doctors, nurses, and other staff at 536 military hospitals,clinics, and treatment facilities. The medical professionals serve about 1.5million active service members, thousands of reserves when they’re called onduty, as well as millions of retirees and military family members.
To complicate matters, these servicemen and women move around a lot. The USNSComfort, for example–a naval hospital ship–is normally on the East Coast ofthe United States. It spent about four weeks in the British territory of DiegoGarcia, and now may be somewhere near the Persian Gulf. When the Comfort staffedup for a possible Iraq invasion, people were taken from places like BethesdaNaval Hospital and put on board. Then, people at Bethesda Naval Hospital had toswitch duties to fill the gaps. What this all means is the training has to beaccessible from anywhere.
Jenkins started working on this health-privacy project in the fall of 2001.He distilled the 1,300-page federal health-privacy rule (clickhere for more info) down to about 100 pages of information on what his people need todo. He got course material from a vendor called Quick Compliance, and a learningmanagement system from another, Plateau Systems, for the military to track allthe training it’s doing.
Nurses, medical-records officers, and others now have modules that each takeabout 30-45 minutes and teach them subjects like how to protect patientconfidentiality. Each year, they’ll get refresher training.
As was necessary to comply with the federal privacy rules, Jenkins made surethere was a privacy officer for every facility. He trained 343 of them inSeptember 2002 at a hotel in Washington, D.C., teaching them how to useWeb-based technology to train others about privacy. He trained anotherapproximately 150 privacy officers in February 2003 at the National ConferenceCenter, a Virginia facility that allows for interactivity. He has people helpinghim with the training, but, he says “it feels like you are doing it yourselfsometimes.” Soon, he’ll conduct a Webcast, focusing on troubleshooting thetraining system various military hospitals will use.
For companies embarking on their own massive training initiatives, Jenkinsrecommends 1) starting very early, 2) having a test site before you flip the ‘on’switch (“we went live and had to correct discrepancies as we went along,” hesays) and 3) Making sure vendors show actual examples of their software doingwhat they claim it can do. “During our reviews of products,” he says, “they’dsay ‘I have a solution for you,’ but when we asked them to demo it, it’s apower point slide. It’s not a solution.”
Whitney Shelley, Director of International HR and Director of Learning andDevelopment, Kinkos, March 9, 2003
A lot has changed since Paul Orfalea opened a copy-shop near Santa Barbara,California, in 1970, and named it after his curly red hair. Higher-end offeringslike video conferencing are now available at Kinko’s, and the company hasexpanded to more than 1,100 locations in China, United Arab Emirates, Australia,Netherlands, Japan, the United Kingdom, the United States, and South Korea.
Until this winter, however, Whitney Shelley, director of international HR anddirector of learning and development, had to deal with a training-managementsystem that was still from the Donna Summer era. “We really had a 1973 VW Bugon the side of the road,” Shelley says of the outdated way the company kepttrack of who’s been trained in what.
Now, her new learning management system is supposed to help Kinko’s keepbetter track of which of the 20,000 employees have been trained in things likesales, technology, and branch operations. It’s also supposed to reduceturnover. Shelley figures that if someone’s using the system, for example, tolearn to build their own Web sites–as some employees have been doing usingElement K courses–they’ll feel like Kinko’s is a place they can grow, andthey’ll want to stay. The courses on confidentiality, she says, have helpedclose some deals for Kinko’s, because if Kinko’s can convince a potentialcorporate customer that Kinko’s employees understand confidentiality, it’s ahuge selling point. Corporations are handing over reams of sensitive materialsfor Kinko’s employees to run through copiers, and they’re worried aboutsomeone spilling the beans.
Meanwhile, Shelley and the rest of the Kinko’s HR/training team arerecruiting college grads from universities with good retail-management programsand putting them through a nine-month training program. The first three monthsare spent in the Dallas, Texas, area (Kinko’s home base), working in a store,as well taking classes taught by the Kinko’s CEO, CFO, CTO, and others.Trainees live in an apartment paid for by the company. The next six months arespent doing on-the-job training, working at various Kinko’s stores.
Shelley’s also working on an “international leadership-developmentprogram.” This will help about 3,000 assistant managers learn what they needto do to become branch managers. Kinko’s likes to promote from within, andteaching leadership skills to potential branch managers should help. PDI–theMinneapolis consulting company that has its hands in a lot of work at Kinko’s–willprobably be involved in the program.
To keep up with what’s going on in the training field and related fields,Shelley reads about 15 different industry magazines. She’s trying out Saba’sanalytics software, which is supposed to generate better reports than she getsfrom her Saba learning management system. By July 1, 2003, Shelley says, she’llhave a decent handle on what kind of ROI she’s getting from her learningsystem and other efforts to reduce turnover, land new customers, and improveemployee performance.
Pete Barry, Vice President, Armor Holdings, February 23, 2003
Not a lot is mundane about the company where Pete Barry is vice president ofhuman resources.
Armor Holdings sells body armor, armored vehicles, bomb-disposal equipment,narcotics ID kits, chemical projectiles, gas masks, and grenades. Its customersare law enforcement, the military, and sometimes individuals. It has grown tomore than 10,000 employees as part of a growth-through-acquisitions strategy,and is scheduled to announce earnings today, which are likely to be about $300million for 2002.
Barry comes to mind when you hear the phrase about how workforce-managementexecutives need to be “strategic business partners.” Barry, based inJacksonville, Florida, doesn’t have to worry much about administrivia. Hereports to the CEO (two CEOs, actually–one at Armor Holdings, and one at anArmor division). He reads at least 25 books each year on business andmanagement, and shares what he learns with others in the company. He’sfacilitating a “balanced scorecard” initiative within various divisions ofthe company.
Most importantly, he helps with change management. In many cases, this meansmaking sure a company that Armor acquires stays more or less the way it is–sothat the acquiree’s positive attributes don’t melt away in an attempt toconform to the parent company. In other cases, he helps Armor prepare for newinitiatives and not resist doing things differently. “The more you can helpchange your company and initiate things that will make you better, the more yourcompany is going to achieve,” Barry says. “We need to be better than we wereyesterday.”
Barry says “the problem with a lot of HR is that we’re the departmentthat tells everyone ‘no’ all the time. We tend to live by policies andrules.” Barry’s company has a minimal number of HR policies; for Barry, suchpolicies are a waste of time, because they are aimed at the tiny handful ofemployees who are problems.
The best HR leaders, Barry says, are the ones that hire and train the bestmanagers and employees, and then get out of the way when necessary, and be aresource when needed as well.
Barry’s most valuable preparation for his current job was his work as ageneral manager at a chemical company, overseeing a $60 million business. “Iunderstand profits and margins and expenses and overheads, quality, and safety,”he says. Armor Holdings is involved in some unusual work, and Barry himself says”I’m not a normal HR person.”
Michael Cherkasky, CEO, Kroll, February 23, 2003
Life can only be described as bittersweet for Michael Cherkasky, CEO ofKroll, a former DA who has investigated everything from John Gotti to the 1993bombing of the World Trade Center.
It’s sweet in that analysts are going on Bloomberg TV to issue “strongbuy” ratings on Kroll’s stock, and net income is way up over a year ago. It’sbitter in that the brokers are excited over Kroll because the more scaredAmerica is, the more money Kroll makes. “You don’t want to do well on thebacks of misery for others,” Cherkasky says. “But you have clients who needyou.”
Cherkasky’s New York-based company and Cherkasky himself are indeed indemand right now. Kroll has its hands in everything from financial-fraud casesto data recovery to crisis-management consulting. On top of that, Cherkasky’snew book “Forewarned” just hit the shelves. It’s critical of the U.S.government for having no thoughtful system of emergency planning, only areactive system that is “a lot of show and not so much substance,” he says.In the book he argues, for example, that cargo containers coming to the UnitedStates need to be inspected. Right now, 98 percent are not.
Cherkasky says that corporations–who own the majority of America’svaluable infrastructure, from factories to amusement parks to officebuildings–and HR leaders have a responsibility to employees, to shareholders,and to the country to protect their workforces and their property. “An HRdirector needs to know where his or her people are every day,” he says. “Youhave to have people (on your HR staff) who understand where your people are andwhere they are traveling. You need to be able to very quickly contact them andgive them the best information you can (in an emergency).”
In addition to that, Cherkasky says, HR should have a record of everyemployee’s blood type and his or her drug allergies. Also, he says, you needto know who the “number two” people are in key areas of the company, in casesomething were to happen to the “number one” and decisions need to be made.HR executives, he says, should make sure not only that background checks havebeen done on their own workforce, but on vendors who tap into the company’snetwork and repair the air conditioning in the building. Another readiness tip:”People who don’t have a flashlight–we think–are silly,” he says. “Alwayshave a flashlight and a portable radio.”
For his own employees, Cherkasky says he’s got a much easier job ofemergency planning because that’s the business he’s in. He has a group ofpeople on alert 24 hours a day to monitor events that could affect hisworkforce. When word came recently that a fire had broke out in Penn Station,the team got ready to implement its emergency procedures, including contactingemployees to provide instructions. It turned out to be a small trash fire.
Cherkasky, a native of the Bronx, says that the most likely targets of aterrorist attack are high-profile companies in industries like finance, defense,and entertainment (he cites AOL Time Warner as an example). Retail companiesare, in his opinion, less likely targets. “You’re not likely to see theheadquarters of a Kmart or a Target bombed,” he says.
The “Orange alert” made life quite busy for Cherkasky, but he tries toput things in perspective. He says that most people’s fears are overblown. Hecites the example of the person who asked if his family should flee the New YorkCity area a couple of weeks ago when the alert level was raised. Despite howhorrible the multiple terrorist attacks were on September 11, 2001–when twoKroll employees died–it’s only a fraction of the number of people killed inauto accidents each year, Cherkasky says. Sometimes, he says, the best advice hecan give people is, “Don’t smoke, put on your seat belt, and go about yourbusiness.”
Timothy Landon, President, Tribune Classified, February 9, 2003
There are “print people” and there are “online people,” but to acertain extent, Timothy Landon, despite coming from a newspaper environment, hasto be both. Landon is president of Tribune Classified. The Tribune company ownsmultiple newspapers but is also a partner in the job board Careerbuilder.com.
Landon says the job boards aren’t working well enough. “The Internet hasnot fulfilled its promise in terms of meeting employees’ or candidates’needs,” Landon says. “The Internet has just replicated the newspaper model.It may be better, faster, and cheaper, but you’re pushing a lot of unqualifiedcandidates faster. It’s time we all reinvented this business.”
His company’s working on adding–within about six months–a screeningsystem online so that when an accountant who lives in Houston comes looking fora job through the Chicago Tribune, she’s screened out if, say, her salaryrange isn’t in the right ballpark, or she’s not willing to relocate. Landonsays he’s interested in providing a few screening questions that may varybased on occupation, but isn’t not interested in getting in the “enterprisesoftware business,” a la BrassRing.
Meanwhile, Landon says, this recession was very similar for his company tothe 1990-91 recession, even though that recession was marked by a slowdown inconsumer spending, and this one by a slowdown in business spending. Landon wasoriginally hoping for what he calls “job creation” to pick up in the nextcouple of months, following the patterns he analyzed from 1991. These hopes arechanging, Landon says, because “the pending Iraq conflict is chilling themarket,” in his view. Landon, who got his bachelor’s in political science,says that if the conflict gets out of control, the economy could suffer, but ifthe conflict is relatively limited (in duration and casualties), job creationshould pick back up, and a tight labor market for companies looking for “knowledgeworkers” will return.
Mark Sullivan, Corporate Director of Learning Technology and Operations,Honeywell, February 9, 2003
It is safe to say Honeywell, one of the largest companies in America, has hada few challenges of late. Over the past couple of years, the company hasexperienced a failed merger with GE, large asbestos claims, layoffs, and afalling stock price. The Morris Township, New Jersey, company could also beaffected by a slowdown in commercial air travel if there’s a war in the MiddleEast.
Meanwhile, workforce-management execs like Mark Sullivan are, in his words,”focusing on talent like a laser beam.” Sullivan, who is corporate director,learning technology and operations, is rolling out what may be the world’slargest learning management system, which will serve about 111,000 employees onfive continents.
The system will help Honeywell, Sullivan says, “make sure we have the rightpeople with the right skills doing the right jobs at the right times.” Thatsounds like a cliché, but it’s more than a day’s work when you’re talkingabout one of the 100 biggest companies in America. In addition to trainingpeople spread all around the globe quickly and efficiently, Honeywell needs toget a better handle on what everyone at Honeywell knows, because employees withdecades of company knowledge will be retiring and giving way to the “20-30-somethingcrowd,” he says.
The Saba system will help Sullivan, CLO Rod Magee, and other Honeywellersmeasure, track, and deliver the training it provides employees, who makeeverything from Space Shuttle parts to car-care products like antifreeze. Itwill also provide training for some customers, like people who use Honeywellsystems in nuclear power plants. Not only will the system handle sensitivetraining for thousands of engineers, but also will be used for more familiartopics like communications training for supervisors.
Sullivan worked tirelessly not only in selling the need for a system toHoneywell, but also in getting the thing up and running. The internal sales jobinvolved more than 25 presentations to various Honeywell departments. Theinstallation involved 10 engineers working this December and January fromBangalore, India (which saved Honeywell a lot of money, and avoided the issue ofChristmas vacations). Sullivan calls the 2,000 programmer-hour effort “extremeprogramming.” The rollout includes a 90-day pilot launch for 4,000 aerospaceemployees. He’ll expand the LMS to other U.S. employees, and then worldwide,beginning with the Asia/Pacific region.
This massive unveiling is about training, but really it’s more about threequestions which Sullivan asks, partly rhetorically, and partly because the newtechnology should help answer them. “How do we work in teams?” he asks. “Howdo we organize the way we live and work as a 100,000-plus organization? Withthese constant challenges thrown in front of us, how do we win at that?”
People, Performance, and Profits at MetLife, December 2002
Life is pretty good at MetLife, the New York company whose profits got hithard after last year’s terrorist attacks. MetLife’s quarterly earnings,announced this month, more than doubled from a year ago. The company has avoidedlarge-scale layoffs. Turnover is low; as Senior Vice President of HR and ChiefLearning Officer Deb Capolarello puts it, employees right now would rather workfor “the devil they know, not the devil they don’t know.” MetLifefills about 39 percent of jobs from within.
Meanwhile, MetLife is still doing the controversial practice of “forcedranking,” or “forced distribution,” as she calls it. MetLife issticking with the system because, she says, the company does a good job ofexplaining to employees what they need to do to improve their performance.”As an employee, you want to know where you stand, how you did, and how youcan improve,” she says, adding that her system does just that. Employeesare rated one, two, three, four, or five. A four or five employee can receiveabout 40 percent in total compensation more than a three.
MetLife’s HR team has about 400 HR professionals, or about one for everyhundred MetLife employees. The HR professionals are working on moving employeesto different jobs within their departments and around other departments, MetLifeis upgrading the company’s HRMS. They’re also hoping to improve the company’sbenefits, which include plenty of the popular and growing “flextime”benefit but not a lot of eldercare assistance. Eldercare questions–more thanany other subject–are generating phone calls from MetLife employees to thecompany’s EAP.
Capolarello says that HR executives that want to be influential cogs in thesenior management of a company can’t do it on their own. They need, more thananything, to find the right company and the right CEO to work for. “You’reonly as good as the company you sit in,” she says. “You need to find aplace where (the CEO) believes in human capital and developing it, knows howimportant the policies you have are, and knows that employees are what makesyour business run.”
John Boehner, Congressman, December 15, 2002
Congressman John Boehner, chairman of the committee in the U.S. House ofRepresentatives that covers labor and the workforce, tells Workforce he sees a”light at the end of the tunnel” on pension reform, meaning he thinks a billwill get passed next Congress. Boehner, a Republican, wants to make it easierfor employers to give their employees advice about their 401(k) plans.
He’s also hoping to get a bill passed that would allow small businesses topool their resources and purchase health insurance. Bringing some sort of comptime to the private sector is also a priority. “Flexible work schedules havebeen available to public-sector workers for years,” Boehner says, “butprivate sector employees are denied these benefits because of an outdated, 1938law (the Fair Labor Standards Act) that needs to be modernized.” Lastly, hewants a law that will guarantee union members access to information about howtheir union dues are spent.
As far as his own management practices go, Boehner (pronounced Bay-ner) sayshe works hard to build a culture of what he calls “success, teamwork,opportunity, and respect” in his office. Some of his staff refer to the officeas “Boehnerland” and to the staff Christmas party as the Boehnerland party.”It’s important to me that there be a real sense of camaraderie among staff,and we work to facilitate that as well,” Boehner says. “Everyone has a roleto play on our team, and I am no more important than anyone else.”
Robert Reich, Former Labor Secretary, December 15, 2002
Former Labor Secretary Robert Reich–having lost a race for governor ofMassachusetts–is teaching social and economic policy at Brandeis University.
If it was up to him, he’d give the weak economy a boost by exempting thefirst $20,000 of peoples’ incomes from the payroll tax, for at least one year,starting immediately.
Reich tells Workforce that “80 percent of Americans pay more in payrolltaxes than they do in income tax. By exempting the first $20,000, the typicalAmerican family would get a $2,500 bonus. Almost all of that would be spent, andthat spending would jump-start the economy.”
Reich says that the initiative would cost $350 billion. This sum, he says,would be made up after 2004 by reducing the size of the Bush tax cut forfamilies earning over $250,000 a year.
Anne Murray Allen, Cultural Integration, Hewlett-Packard, November 17, 2002
If you think it’s tough getting in-laws, imagine life at the new HP, acompany now serving more than one billion customers across 162 countries afterits May 3 merger with Compaq.
Anne Murray Allen, a 13-year veteran of HP, heads up cultural integration.Allen says the easiest integration areas have been where you have a bunch of HPpeople and an approximately equal number of Compaq people. The toughest partsare where you may have a team of HP employees and just a couple of Compaqqers.With these unbalanced groups, she says, the majority feel like nothing’schanged, and feel like everyone in the group knows how to work together. Thehandful of employees from the other team feel, however, like things don’t makesense to them and that they don’t feel totally integrated.
She says that the worries many months ago that HP would drown in a quagmireof culture integration issues haven’t, for the most part, come true. “Onbalance we’re moving along pretty quickly,” she says. “Of course it’smessy. It would have to be. It’s like bringing two families together. It’sgoing to take several years to say we’re there as one company.”
Allen says the secret to what appears to be some preliminary success at HP isthat cultural issues don’t get swept under any rugs. “We stay focused onculture. We continue to talk about culture and give people the resources theyneed.”
This doesn’t mean waiting for a problem to happen and then addressing it.It’s more proactive. “You have to actively and explicitly focus on culture,”she says. “You can’t be afraid to talk about it. It’s easy to focus on the‘what.’ Culture’s about focusing on the ‘how.’ You have to take thetime to have culture conversations. If you don’t take the time, culturaldifferences will pop up at the worst times.”
It also helps to have a CEO–Carly Fiorina–who cares about this stuff. SaysAllen: “Carly has been consistent in her messages about this. She talks aboutvalues, she talks culture, she talks the ‘how’ and the ‘what.’”
