Category: HR Administration

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SAP Hires Executive Julie Roehm

Former Chrysler marketing executive Julie Roehm is the new senior vice president of marketing at business-software company SAP.

Roehm, 40, whose last full-time marketing job ended with a stormy legal battle five years ago, is known in the auto industry for her tenure as marketing communications director at Chrysler. In 2004 she was in the middle of a controversy for signing up Dodge as a co-sponsor of the “Lingerie Bowl” as part of a pay-per-view program during the Super Bowl’s halftime show. Under pressure from the public and from dealers, Dodge scrapped the program.

Roehm also initiated several innovative marketing efforts at Chrysler and in 2005 was named sister publication Advertising Age‘s first Interactive Marketer of the Year.

Roehm joined Chrysler from Ford Motor Co., where she orchestrated the successful U.S. launch of the Focus small car in 1999.

More controversy followed her in 2006 when she left Chrysler to become senior vice president of marketing at retail giant Wal-Mart Stores Inc. Her tenure ended there less than a year later after she was fired over an ethics dispute. She later filed a walsuit against Wal-Mart for breach of contract and she alleged the company engaged in a smear campaign against her.

At SAP, Roehm will report to Jonathan Becher, the chief marketing officer. A spokeswoman at SAP told Advertising Age that Roehm will be based in New York. Roehm declined to comment when contacted by Advertising Age, saying only that she was in the “midst of several changes.”

Advertising Age is a sister publication of Workforce Management. Automotive News, also a sister publication of Workforce Management, contributed to this report. To comment, email editors@workforce.com. Auto

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Ailing Economy Hurts Return-to-Work Efforts for Injured Employees: Analysis

The economic downturn has made it more difficult for injured employees to return to work, according to a study by the Workers Compensation Research Institute.

In a report released Nov. 29, Cambridge, Massachusetts-based WCRI studied workers’ compensation procedures and outcomes in Pennsylvania and Wisconsin, which were deemed to have faster and higher return-to-work rates than other states.

In the study, WCRI said the economy has reduced the impact of certain workers comp practices in those states.

“Against a backdrop of high unemployment, some injured workers may face even greater challenges in returning to work, potentially leading to increases in the duration of disability,” WCRI said in the report.

It said the Great Recession made it more difficult for employers to offer modified work duties for injured workers that would allow those employees to re-enter the workplace during their recovery.

“Employers are leaner and less inclined to offer light, transitional or modified duty in the economic downturn, particularly employers who do not want to have to lay off another employee in order to bring an injured worker back to light duty during the healing period,” according to the study.

The institute also said there are fewer jobs for unemployed injured workers to seek, and that some employers are reluctant to hire workers with permanent work restrictions.

Despite increased challenges, the down economy has created a financial incentive for employees to return to work as soon as possible—particularly when they stand to lose temporary disability benefits, the study said.

Sheena Harrison writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Detroit 3 Salaried Labor Costs to Overtake UAW Hourly Costs, Researcher Says

For the first time in modern history, overall salaried labor costs next year at the Detroit 3 are expected to exceed those of all UAW-represented factory workers, says Sean McAlinden, chief economist for the Center for Automotive Research, or CAR.

The center estimates that the Detroit 3’s 66,000 salaried U.S. employees next year, earning on average at least $122,500 in cash compensation, will bring in slightly more total income than the carmakers’ estimated 115,000 hourly workers earning about $69,000 each, McAlinden says.

Until 2009, hourly employment vastly exceeded salaried employment at the Detroit 3, said McAlinden, speaking on the sidelines of a CAR conference Nov. 29 on automotive labor in suburban Detroit. But plant closings and hourly attrition now has salaried employment accounting for about 37 percent of total U.S. employment at the Detroit 3, he said.

McAlinden said a recent pledge by General Motors Co. CEO Dan Akerson to cut vehicle platforms by half and consolidate advertising with fewer agencies recognized that salaried labor costs are mounting.

“It’s really about where are we getting kicked on labor costs,” McAlinden said.

An analysis by the center found that the new Detroit 3 contracts with the UAW, completed this autumn, will raise the cost of hourly labor less than 1 percent annually over the contracts’ four years.

At GM, that means UAW labor costs will add just $85 per North American vehicle built over the four years to $1,702 from $1,617, McAlinden said. The additional cost in four years to Ford is $96 per vehicle to $1,756 from $1,660. At Chrysler, the cost per vehicle rises to $1,293 from $1,127 today.

With vehicles easily costing more than $30,000, the increase in hourly labor costs is almost unnoticeable over the terms of the contracts, he said.

The negotiations were marked by lump-sum bonuses and inflation boosts substituting for wage increases or a restoration of cost-of-living allowances.

McAlinden said job promises in the new contracts were largely misread by the 113,000 UAW workers covered by the agreements.

The center says net hourly jobs at the Detroit 3 will rise to just 120,400 through 2015 from 110,150 today, not including about 3,000 salaried employees working with UAW representation.

That’s less than the 12,000 hourly jobs that Ford alone said it would bring by 2015. GM said it would bring about 6,400 new or saved jobs and Chrysler 2,500.

McAlinden said the carmaker figures included retained jobs and the transfer of some jobs from one plant to another. Two more assembly plants are slated to close by 2015 and one will reopen—GM’s Spring Hill assembly plant in Tennessee.

All told, the center estimates that U.S. auto industry employment will rise from about 580,000 today to 750,000 in 2015 with the supplier sector accounting for about 150,000 of the new jobs. McAlinden said suppliers are growing—after huge cuts during the auto recession—to accommodate a projected gradual rise in U.S. vehicle sales to about 15 million units in 2015.

UAW president Bob King’s pledge to organize workers at foreign automaker plants also is being closely watched, although labor expert Art Schwartz says it could be a difficult battle.

“He is swimming upstream,” said Schwartz, president of Labor & Economics Associates in Ann Arbor, Michigan, and a former GM contract negotiator. “This is going to be very tough.”

While this year’s labor talks with the Detroit automakers largely avoided the drama of past negotiations, the deals still aren’t likely to make the UAW more appealing to transplant workers, he added.

UAW leaders said earlier this month that the union has yet to pick a target for its organizing drive, but the union is training members for the campaign.

If King were to target one foreign automaker, Schwartz said, he may go after Volkswagen AG, which in May opened a plant in Chattanooga, Tennessee. In Europe, Volkswagen workers are represented by German union IG Metall, a partnership that could work in the favor of the UAW, he said.

But even if King does pick VW, he may have trouble getting the German union to back his cause, Schwartz said. “IG Metall is way more concerned with what’s going on in Germany than in the U.S.,” he said.

Volkswagen spokesman Tony Cervone said in response to his comments: “We have a policy and working practices across the globe that ensure employees have a voice in the workplace and we encourage that at Chattanooga.

“But ultimately if our employees feel the need for formal representation, it’s their decision to make,” Cervone added. He declined to comment further.

King could also avoid picking a target altogether, Schwartz said. “The danger of that is once you pick a target, people are going to hold you accountable.”

David Barkholz and Christina Rogers write for Automotive News, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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ADP’s Next Big Things

Sixty-two years ago, Henry Taub took a risk quitting his accountant job to launch a company processing other businesses’ employee paychecks. In 1961, Taub and his partners gambled again by switching to new computers from IBM to increase capacity. It was a move that over time helped the company—Automatic Data Processing Inc., commonly known as ADP—become the country’s largest payroll processor.

ADP is at it again. In October, the Roseland, New Jersey, business launched a Web-based human capital management software suite called Vantage HCM that was 18 months and millions of dollars in the making. In the same week, the $9.9 billion company bought the RightThing, a highly regarded player in a budding recruitment process outsourcing, or RPO, industry that analysts say continued to grow during the recession.

ADP’s product launches and acquisitions are part of a plan to expand ancillary services, international operations and human resources and business process outsourcing, which while still small, are growing three times faster than its mainstay payroll business, according to one analyst.

It’s all part of ADP’s strategy to step out of the back office and compete head on with the largest HR software vendors in the industry, heavyweights such as Infor, Kronos Inc., Oracle Corp., SAP, Ultimate Software Group Inc. and Workday Inc.

“ADP has been moving aggressively beyond payroll for several years,” says Don Weinstein, the company’s senior vice president of product management. Strategic acquisitions and new products have helped ADP deliver a comprehensive, single-source solution for clients, he says. “The combined effect of all these actions has clearly raised our profile and overall competitive position in the HR marketplace.”

For today’s ADP, such a lofty ambition isn’t as risky as it once was. By its own estimate, the company has a customer base of 570,000 including Acuity Brands Inc., CarMax Inc. and Credit Suisse First Boston, and processes paychecks for 1 in 6 U.S. workers. With a seemingly recession-proof core business, reserves of $1.4 billion in cash and liquid assets and a credit rating higher than the U.S. government’s, ADP can well afford to spend on acquisitions to expand. And it has.

In the three fiscal years ended June 30, ADP paid $534 million for 17 companies, including Workscape, which now fuels the talent management portion of its human capital management offering, and tax and compliance software-maker MasterTax. In the same time, ADP acquired HR software companies in Italy, the Netherlands and the United Kingdom, deals that have pushed its non-U.S. business to 20 percent of annual revenue.

ADP’s most recent acquisitions include the RightThing acquisition, which analysts estimate has annual revenue of $60 million to $75 million; W. Ray Wallace & Associates Inc., a tax-credits services provider; and Asparity Decision Solutions Inc., an employee benefits software-maker. Officials wouldn’t disclose what ADP paid for the deals.

Companies want one place to go to manage HR processes, and employees want one place to manage their worklife, and ADP is giving it to them, Weinstein says. It’s not just easier, it’s cheaper, he says. He points to a PricewaterhouseCoopers study that showed companies spend $1,400 per employee on HR costs, but cut that by a third if they outsource the work. “We assembled the broadest solution, and clients want to buy as much as possible from us,” he says.

ADP offered payroll, HR benefits, time and labor management and other back-office HR processes through a service bureau model long before anyone had ever heard the expressions “software as a service” or “cloud computing.”

The company’s new human capital management suite, which is being sold to companies with 1,000 to 20,000 employees, includes all those familiar offerings. But the Web-based software has been rewritten from the ground up to do a better job of integrating services added through acquisitions and to streamline workflows. ADP is expected to use the suite for its push out of back-office offerings and into talent management and other, more strategic HR services. The Vantage HCM software includes improved search functions and a revamped user interface with an iTunes-style recommendation feature that makes suggestions for actions an employee might take based on aggregated usage patterns.

The upgrade reflects a fundamental change in software, not just for ADP but for the HR industry—what Weinstein calls the “consumerization of information technology.” He says: “We no longer focus on the HR practitioner but the employee and manager,” with the ultimate goal of having training-free products. It’s yet another sign that ADP is stepping out of the background and into a more front-and-center role with its clients’ employees.

Early reviews of the new push have been positive. Josh Bersin, president and CEO of the learning and talent management research firm Bersin & Associates, called Vantage HCM “well-integrated and complete.” Gary Bragar, HR outsourcing research director at industry researcher Nelson Hall, wrote on that firm’s blog: “I could easily see how this platform can make an organization’s talent more effective, especially when combined with project management and implementation consultation.”

It’s not the only consumer-friendly software ADP has rolled out recently. In July 2011, the company launched a free smartphone app called ADP Mobile Solutions that works on Apple iOS devices, i.e., the iPad, iPhone and iPod, Android, BlackBerry and other smartphones. The app includes payment statements, time and attendance, retirement savings, a corporate directory, company news and other features, and, according to Weinstein, will work with Vantage HCM and other ADP offerings.

By acquiring the RightThing, ADP gains an instant entree into the RPO industry, which analysts say saw steady, if slower growth during the recession after companies that weren’t doing as much hiring minimized overhead by outsourcing recruiting to an outside specialist. Employers slowly are starting to hire again, but job applicants’ qualifications don’t always match open positions, a problem that an RPO partner can solve more quickly and economically than an in-house HR staff, ADP’s Weinstein says.

IDC HR program director Lisa Rowan expects the U.S. RPO industry to grow 12 percent this year after a spell where there were more deals struck but overall spending declined because companies weren’t hiring much. By buying the RightThing, ADP “went from basically zero to 60 almost immediately,” she says.

Besides being an industry leader, ADP chose the RightThing over a slew of competitors because it was a good corporate culture fit, and financial results “were favorable relative to their peer set,” Weinstein says. “We were also impressed with the technology assets they were using to run their business.”

ADP is betting big on new products and acquisitions because those businesses are growing at three times the rate of ADP’s mainstay payroll business, according to HR research fellow Keith Strodtman at HfS Research. But when it comes promoting RPO, the company faces multiple obstacles, including turning it into a mass-market business. “If they figure out how to scale the business, they will have a huge customer base at which to sell these newly acquired services,” Strodtman wrote in a blog post on the the RightThing acquisition.

It also remains to be seen whether ADP’s acquisitions and product innovations will be enough to keep pace with competitors who aren’t exactly standing still. SAP is set to sell its own Web-based HCM software suite early next year. This month, Workday raised $85 million from a group of high-profile venture funds, including T. Rowe Price and Bezos Expeditions, run by Amazon.com Inc. founder Jeff Bezos. The financing round values Workday at $2 billion and sets it up for an initial public offering in the last half of 2012, according to news accounts of the deal. In late October, Ultimate Software’s stock price hit a 52-week high after the company reported improved earnings and revenue on continued new business growth, a trend company officials expect will continue through 2012, they told analysts in a conference call.

Competitors haven’t been shy about criticizing ADP for bad customer service and higher prices. Ultimate Software published a white paper that shows it beating ADP in a side-by-side price comparison. Founder and CEO Scott Scherr, an ADP executive in the 1980s, has publicly stated that by doing a better job of automating HR tasks his business could “live off ADP’s losses.”

As the largest company in the payroll business, “the criticisms for being stodgy or slow moving are natural,” says Timothy McHugh, an equity research analyst with William Blair & Co. in Chicago, who follows ADP’s stock. While McHugh says it’s too soon to call ADP’s current strategy a success, he expects more acquisitions in future.

Such continued expansion is just the sort of thing ADP founder Taub, who retired as chairman in 1985 and died in April at age 83, would appreciate.

Michelle V. Rafter is a Workforce Management contributing editor based in Portland, Oregon. To comment, email editors@workforce.com.

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How Come Our HR Decentralization Was a Miserable Failure?

Dear Cure Worse Than Disease:

Many companies, especially those who have experienced high growth, find that bringing human resources closer to the employees who receive services is a wise business decision. As you have discovered, this is no easy task.

Companies often see the satisfaction of employees decrease significantly following decentralization—(which of course defeats the purpose. But there is hope for companies considering this strategy. For example:

One entertainment company several years ago decided to decentralize its HR team. The company had grown from about 500 to 3,000 employees in five years. The corporate HR team was serving employees at about 15 locations in the U.S. This resulted in a huge bottleneck of paperwork as the HR group dealt with employees from multiple times zones, most of whom had never been seen face to face.

Nonetheless, the company managed to overcome those hurdles. The decentralization went smoothly, and the end result was superb. The company:

• Employed highly talented individuals for the field HR positions. This increased the overall expenditure for HR salaries across the organization, but resulted in a group of HR employees in the field who were knowledgeable and able to provide the service levels that were required.

• Held an extensive orientation for the field HR employees at its corporate office. After attending, those at the outlying sites had a clear understanding of all HR procedures and felt well-equipped to run the show at their location. This orientation was ongoing as we hired field HR employees long after the decentralization.

• Held monthly conference calls and hosted retreats at a designated location on a consistent basis for the field HR employees. This removed the “I’m on an island” feeling and created a strong cohesive HR team although they were spread across multiple locations. The travel costs for the retreats were high but well worth the expenditure.

• Designated a corporate HR employee to act as a mentor, sounding board, cheerleader and overall supporter for each HR field employee.

Finally, it is extremely important to acknowledge that decentralizing your HR department represents a significant organizational change, especially for employees affected by the change. Any company planning to decentralize HR should explore organizational-change strategies. It may be worthwhile to at least consider hiring an organizational development expert to assist with the process. Although each company is of course unique, employing the strategies outlined above and helping the HR team embrace the change is likely to result in a solution that is enduring.

SOURCE: Clark Souers, Executive HR Consulting Group, Burbank, California

LEARN MORE: Establishing realistic goals for HR metrics marks a big step toward becoming a high-performing organization.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Appeals Court Finds Retaliation Claim Against UPS Valid, but Judgment ‘Excessive’

The United Parcel Service likely retaliated against an injured worker when it blocked him from returning to work with lifting restrictions, according to the 10th U.S. Circuit Court of Appeals.

However, the court said a $2 million judgment against UPS in the case was “excessive,” because the company’s actions only caused monetary harm to Keith Jones, a former UPS package car driver and plaintiff in Jones vs. United Parcel Service Inc.

Jones of Kansas City, Kansas, claimed that UPS violated the Americans with Disabilities Act when the company said a lifting restriction, caused by a 2003 shoulder injury, prevented him from working any job within UPS, court filings show. A company-appointed doctor restricted him from lifting more than 20 pounds overhead after his injury, though UPS carriers are routinely required to lift packages weighing up to 70 pounds overhead.

Two doctors who evaluated Jones in 2004 said he was later able to lift 70 pounds. But they testified that discussions with Monica Sloan, a UPS occupational health manager, prevented them from removing his lifting restrictions.

Subsequently, Jones was unable to return to UPS. He argued that the company retaliated against him for filing a workers’ compensation claim for his shoulder injury.

In a 2-1 ruling on Oct. 24, the appeals court said Jones’ retaliation claim is valid because Sloan, “on multiple occasions, intentionally interfered with the doctors’ medical evaluations in an attempt to prevent Jones from returning to work.” The court also ruled that punitive damages were appropriate in light of Sloan’s actions.

However, it said a $2 million jury award is excessive because Sloan “did not act with disregard for the health and safety of others,” and that her “conduct was not so reprehensible” to warrant such a large award. A $630,300 jury award to Jones for actual damages in the UPS case was affirmed by the appeals court.

Jones can choose to pursue a new jury trial in order to determine punitive damages in the case, the appeal court said.

Sheena Harrison writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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Building a Sales Team Starts With the First Impression

Being successful in a sales career is about much more than being persuasive. It is about strategy and skill and having a clear vision of the company’s future. But how does a company build a successful sales team?

Experts say look at a candidate’s appearance when hiring and pay attention to your initial reaction. Once they’re on the team, train, train, and train some more.

It is a mistake to rely solely on personality when hiring sales professionals, says Dirk Gorman, a founding partner of consulting group Become Capable Today, which helps organizations build sales cultures. It is about the whole package, beginning with the candidate’s appearance during a face-to-face interview.

Gorman, who also is a founding partner of the Belle Harbor, New York-based medical device distributor Empire Surgical Products, does all of his own hiring, eschewing the use of executive search companies in favor of doing the interviewing internally.

Gorman says he looks for candidates who embody the culture of his company. The candidate must dress professionally, he said, which in his business means wearing a suit.

Looking the part inspires confidence in customers and projects an air of professionalism, he says, but adds that in other industries, different styles of dress would be more appropriate. Apple Inc. is an example of a company whose employees’ attire perfectly projects the company’s culture and the spirit of its products, he says.

“If you look at Apple’s retail stores, the sales team has the look and feel of Apple,” Gorman said. “They are average people who are incredibly excited about the products. They aren’t dressed especially nicely but their uniforms are clean and simple, just like the products.”

Job hopefuls also must be able to make engaging eye contact and tell a captivating story, he said. Gorman believes it is crucial that a candidate be able not just to lay out their past accomplishments but show that they had a rational decision-making process for important moments in their life—for example, why they selected the college they attended or made a job change.

“It is important that you—the hiring manager—enjoy listening to the candidate,” he said.

Woody Staub has 25 years of experience in medical device sales and is now president of his own company, CMJ Medical, which has offices in Pittsburgh, Philadelphia and Washington, D.C. He also is a believer in the power of the first impression.

“My first impression during a job interview is going to be the customer’s first impression,” Staub said. “Candidates need to be someone that you would want to do business with. While we have great products, more and more in this economic environment people do business with people they really trust and like. That is the first hurdle.”

Staub also looks for consistency on a résumé—no large gaps in employment—and for examples of obstacles the candidate had to overcome in the past. Gorman also looks for candidates who have shown resolve in past commitments, considering all notable accomplishments, not just past work experience.

“When I look for experience, I look for experience in achievement and not just in the workplace,” he said. “There is a reason that a lot of salespeople are former athletes, both male and female. They demonstrated that not only could they achieve on a high level athletically, but they could achieve at a high level in the classroom.

“You hit some obstacles that could possibly have derailed you and you obviously figured out how to overcome those.”

Achievement could also come from work with a church or charity, or from leadership shown in clubs and organizations.

“Work experience isn’t the be-all, end-all,” Gorman said. “I do not believe that just because a person has three- to five years’ sales experience that makes them a good salesperson. Being a ‘people person’ is not enough. Sales is a strategy, sales requires an unbelievable amount of determination and preparation.”

For the right candidate, both Gorman and Staub say they are willing to take a chance on hiring a recent graduate with little work experience.

“I will consider someone right out of school. I like training folks from the beginning—my way,” Staub said. “If you find people with the right attitude, the right cognitive ability and a track record of success in high school and college, with the right kind of training you can really do well with some young reps. Put it this way: They don’t have any good habits yet but they don’t have any bad ones either.”

For Carla Anderson, founder of the executive sales search firm C. Anderson Associates based in St. Paul, Minnesota, past work experience is necessary, as are what she calls the “soft skills” of sales, like being assertive, confident and a strong problem-solver.

“At the level we are making placements, experience is crucial,” she said. “I need to know that a candidate has the skills necessary to seek out new business and that they will be able to pull a prospect through the sales process.”

According to research done by the Aberdeen Group, despite the recent economic downturn, sales training has emerged as an imperative expense for companies seeking to be competitive. Since 2009, Aberdeen’s studies have found an increased focus on regular sales training. In a survey of 970 organizations published this year, Aberdeen discovered that 707 utilize sales training. Of those, 91 percent rely on instructor-led training as their primary modality and 85 percent have defined competencies for each sales role.

Gorman agrees that training is a crucial part of building an elite sales team. His company takes it a step further than instructor-led training classes, employing instead a continuous training model. Gorman’s company has developed a smartphone training app called PEPPER, which stands for professional excellence, peak performance, elite results.

The app generates problems or obstacles that might be encountered in the field. Every morning employees receive a new problem and they are required to solve it on the spot. Their responses are shared with the entire company via an internal site, which serves double duty as both a collaborative sales communication tool and a ranking review system. The software, according to Gorman, both allows individuals to improve their sales skills and creates a collaborative environment in which salespeople can learn from one another’s successes and failures.

“We are of the firm belief that practice makes perfect,” Gorman said. “We believe that the deliberate practice of sales—just like in golf or any other skill—is the key to a strong sales team. We treat sales like a serious skill that needs to be honed,” Gorman said. “The biggest mistake I see in sales teams is not training on a regular basis. They are too confident in their ability to communicate and charm and therefore shoot from the hip”

Aberdeen’s research supports this idea. Its recent report shows a clear connection between the use of sales training and a company’s quota attainment, both for sales teams and for individual salespeople. Those companies that incorporate training into their sales strategy consistently outperformed those that didn’t.

“While we have seen companies continue to express doubt in the economic recovery, they continue to enhance their spend on sales training regardless of budget cuts or travel restrictions,” Peter Ostrow, research director of sales effectiveness for Aberdeen, writes in his report Sales Training 2011.

A major difference between high-performing companies and other firms has to do with training investments, according to the report. While the “best-in-class” firms employ 25 percent fewer sales reps than other firms, they spend a lot more on sales training: $408,000 per year compared with $302,000 and $294,000, respectively, for “average” and “laggard” companies.

In addition, according to Ostrow’s research, the top performers allocate 38 percent of their entire corporate training budget to the sales team vs. 30 percent at average performers and 22 percent at laggards.

“The ‘Best-in-Class’ learned to put their money where their talent is,” Ostrow wrote, “and are clearly showcasing peak performance results as a reward for their sales training.”

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Data Bank Focus: Unemployment

While the overall U.S. unemployment rate has dropped 0.4 percentage points in the past year, from 9.5 to 9.1, there has been disparity among racial and ethnic groups. In fact, for blacks, the rate has risen 0.7 percentage points. Asians have experiened a modest drop in unemployment and whites a disproportionate 0.7 percentage point drop. Hispanic and Latino workers realized the biggest gains, with a 0.8 percentage point drop. The best hedge against unemployment is education, with rates ranging from 13.3 percent for those without a high school degree to 4.6 percent for those with a bachelor’s degree or higher.

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More About Nonqualified Plans

The four major types of nonqualified plans, according to Investopedia.com, are:

  • Deferred compensation plans
  • Executive bonus plans
  • Group carve-out plans
  • Split-dollar life-insurance plans

Nonqualified deferred compensation plans are not funded by the employer and therefore, participants are considered general creditors of the company. This lack of a guarantee that the deferred compensation plan will be paid is one of the biggest drawbacks of these plans, according to Fidelity’s LifeDesign Financial Answer Center.

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More CFOs Are Landing in HR Territory

The recession hit Corbins Electric hard, prompting the firm to lay off nearly half of its 350 employees—including its human resources director. “We didn’t feel we had enough employees to support the HR position,” explains Lisa Autino, chief financial officer, who took over HR management.

The Phoenix-based electrical contractor has rebuilt its staff—it’s up to about 310 employees now. But the company hasn’t hired an HR director because of the continuing dicey economy and bare-bones profit margins. “Things are still up and down,” Autino says. “We’re not expecting things to really improve until 2014. It’s been a tough ride. … We’re trying our best to keep overhead as low as possible.”

Autino’s story exemplifies a trend detected in a new survey by Robert Half Management Resources. The study found that about one-fifth of 1,400 CFOs surveyed have taken on more HR duties in the past three years. Paul McDonald, senior executive director at Robert Half, says such a change isn’t surprising in such an uncertain economy. “CFOs focus on the bottom line and reducing expenses,” he notes.

Nick Araco, president and CEO of the 2,000-member CFO Alliance, finds that taking on HR tasks “is becoming the norm” for CFOs at midsize firms. They are increasingly involved in talent acquisition, workforce development, performance metrics and compensation, he says. “When we were in that rapid, dramatic period of downturn, compensation became a cost-cutting area, where the CFO had significant influence and decision-making on compensation formulas and structures. Now that we’re in the recovery period, there’s renewed effort and focus on compensation to retain key people as the economy recovers.”

Keith Pearson, president of Pearson Partners International Inc., a Dallas-based executive search firm, believes CFOs are a logical choice to take on HR responsibilities. “If I’m CEO of an organization trying to supplement for the loss of administrative capacity, it’s fairly natural to look to your CFO because he is very compliance-focused and process-focused,” he says. “Those are things we look for in HR professionals, who need to practice compliance with standards and regulations.” Pearson had been managing HR himself but recently moved some higher-level HR functions to his CFO, because of company growth, not constriction. The first time his CFO handled a personnel dispute, Pearson says, “I thought, ‘That just saved me at least two hours.’ That was kind of an aha! moment for me—having someone as that buffer between senior management and the day-to-day.”

When his company gets bigger, he would like to have a full-time HR director. “Having an individual who is solely responsible for HR and having an individual steward of financial resources is a good division of labor,” he says.

CFOs don’t always grasp the human part of human resources, Pearson says. “At the end of the day, HR is people. You have to have a CFO who has a little of a ‘touchy-feely’ side. You’ve got to have a unique CFO who can be someone people are comfortable talking to, but still be a process-oriented person.”

Bob Scherba agrees. He’s the senior vice president of finance and people development for Williams International Co., a Commerce Township, Michigan-based jet-engine manufacturer, and he has managed some HR functions—primarily benefits—for the past 10 years.

“You’ve got to be able to wear two hats,” he says. “In your HR role, when dealing with people, you’ve got to be very empathetic about their problems and concerns. That’s the white hat. When you’re dealing with the cost side, very often you need the black hat. You’ve got to be tough. It’s not going to do people any good if the company flounders.” Wearing two different hats can be tough. “CFOs, their teams, and those still involved with HR are on information overload and are required to do more with less,” says Araco of the CFO Alliance. “It becomes a balancing act for the CFO: ‘How do I effectively make decisions in this area while still maintaining my responsibility in other areas?’ “That balancing act at times is a detriment and can be somewhat of a concern if too much rests on too few plates. That’s why CFOs believe in collaboration among financial executives and human capital professionals.”

Both Araco and Scherba, who is vice chairman of the Financial Executives Research Foundation, see some long-lasting shifts in HR functions.

“I think companies have realized that the good-old days pre-recession are probably never going to be the same,” Scherba says. “They’ve learned to manage with smaller leadership teams. I think that’s going to stay. As companies grow, they’ll see the need perhaps to split off some of those responsibilities to people who are more specialists.” Yet he expects more CFOs to oversee benefits programs. “Perhaps not in a hands-on way, but being involved with the structure of benefits packages,” Scherba says. “It’s natural for CFOs to be involved.”

Araco sees an ongoing collaborative role for CFOs within HR. “They have a respect for those who specialize in the area of human resource management, and the goal collectively would be to continue to be involved, but in a truly collaborative way—to inform them with key financial metrics, tools and resources,” he says.

“It’s almost like CFOs were forced into the area because of the downturn,” Araco adds, “but now as things slowly recover, most of them will say that their intent is to ensure that day-to-day human resource managers have the best and most accurate information” to make decisions.

Workforce Management, October 2011, pgs. 8-9 — Subscribe Now!