Category: Commentary & Opinion

General Motors Co. and GMAC’s second-highest tier of executives are limited to salaries of $500,000 and are prohibited from receiving bonuses unrelated to performance under Treasury Department guidelines.

The goal of the limits set December 11 by Kenneth Feinberg, the Treasury’s special master for executive compensation, is to focus executives on long-term gains and financial stability rather than short-term growth, it said in a statement.

Feinberg already had set limits for the top 25 executives at GM, GMAC, Chrysler Group and Chrysler Financial. The new limits apply to the next 75 highest-paid executives.

At least 50 percent of each second-tier executive’s total compensation must be held for at least three years.

In most cases executives’ cash salary is to be limited to 45 percent of the total. Any cash incentives are to be delivered over two years, eliminating large lump-sum cash bonuses, the Treasury said.

The four companies’ compensation committees, under rules set by the government, identified about 12 executives who qualified as exceptions to the $500,000 limit.

Chrysler and Chrysler Financial weren’t affected by the limits because few of their lower-ranking executives were paid more than half a million dollars.

Filed by Neil Roland of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Fritz Henderson, CEO of General Motors Co. since March, resigned Tuesday, December 1, chairman Edward Whitacre said.

Whitacre will succeed Henderson on an interim basis while a search for a new president and CEO starts immediately, Whitacre said at a press conference.

Henderson guided GM through the automaker’s 39-day bankruptcy in June and July after replacing the ousted Rick Wagoner in late March.

The automaker, which hasn’t posted an annual profit since 2004, is desperately trying to rebound from 2009’s sales collapse.

In a press release, Whitacre stated: “At its monthly meeting in Detroit today, the General Motors board of directors accepted the resignation of Fritz Henderson as director, president and CEO of the company.

“Fritz has done a remarkable job in leading the company through an unprecedented period of challenge and change. While momentum has been building over the past several months, all involved agree that changes needed to be made.

“To this end,” Whitacre continued, “I have taken over the role of chairman and CEO while an international search for a new president and CEO begins immediately. With these new duties, I will begin working in the Renaissance Center headquarters on a daily basis. The leadership team—many who are with me today—are united and committed to the task at hand.

“I want to assure all of our employees, dealers, suppliers, union partners and most of all, our customers, that GM’s daily business operations will continue as normal. I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks.

“We now need to accelerate our progress toward that goal, which will also mean a return to profitability and repaying the American and Canadian tax payers as soon as possible.

“In closing, I want to once again thank Fritz Henderson for his years of leadership and service to General Motors; we’re grateful for his many contributions. I look forward to working with the entire GM team as we now begin the next chapter of this great company”

Filed by Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com

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Dear Over-Reliant:

 

Prehire assessments should never be the only determining factor in your hiring decisions. Not only are you passing over qualified people, but your actions also may be interpreted as discriminatory. Organizations with the most effective hiring policies are more likely to:

Use valid assessments that accurately predict job performance. Organizations must use the right kinds of tools for each job. An ability test for a worker in a manufacturing plant is a far cry from the complex assessment tools needed to evaluate top executives. Assessments that do not demonstrate a reasonable measure of job performance waste time and money and expose your company to litigation risks.

Ask candidates during job interviews to give examples of their skills. Develop interview questions to identify specific skills and ask applicants to how they applied those skills. Know which answers you are looking for from each question and don’t be afraid to challenge any answers to make sure you have made job qualifications clear.

Use simulations to gauge job-related abilities and skills. Job applicants can be asked to perform specific tasks relating to the job or take a multiple-choice online test featuring video simulations of various situations. These force candidates to demonstrate the skills they claim to possess. A simulation often serves as a good predictor of job performance. Carefully consider language and other barriers, including timed simulation, that may adversely affect protected classes of applicants.

SOURCE: Deborah Millhouse, CEO Inc., Charlotte, North Carolina

LEARN MORE: Please read a Dear Workforce article on how to avoid subjectivity in prehire assessments.

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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Dear Workforce Newsletter

Would you miss the Academy Awards? The Grammy Awards? The MTV Video Awards? No, not if you’re in the movie business or the music business.

So, if you’re in the HR business – you don’t miss the special Workforce Optimas® Awards issue.

The new breed of HR decision maker faithfully reads the Workforce Optimas® Awards issue looking for winning ideas to use in their own organizations.

The Workforce Optimas® Awards issue celebrates HR achievements and inspires the new breed of HR decision makers.

Since 1991, the annual Workforce Optimas® Awards issue has been a source of ideas, direction, and inspiration to HR leaders everywhere.

Why? Because this must-read issue celebrates HR’s success at solving some of the biggest business challenges of our time.

The new-breed of HR leaders at Levi Strauss, Bank of Montreal, Federal Express, Disney, Continental Airlines, Mirage Resorts, the City of Phoenix, Cirque du Soleil and more than 70 other organizations have pushed HR far beyond the paper-pushing, picnic-planning policy police of the outdated stereotype.

Winners have opened new global markets, improved opportunities for women, turned around failing business units, resolved contentious labor disputes, cleaned up the environment, streamlined government, created new models for health care delivery, and confronted workplace violence.

That’s real HR with a real impact.

The Workforce Optimas® Award recognizes HR’s vision and stature in the organization.

Every year, 10 additional winners are chosen and profiled in the Workforce Optimas® Awards issue in March. The selection criteria? Making their businesses better through HR – real HR with real impact.

Find out more information about the award and the winners.

Optimas® Awards Overview: The Optimas® Award epitomizes the new breed of HR management.

The Optimas® Winning Companies: Optimas® companies prove there isn’t anything HR can’t do.

Make sure your ad is front of the top 10 companies of the year – and the new breed of HR decision makers every where. Advertise in the March issue of Workforce.

 

Dear Smooth Move:

There are many actions employers can take to facilitate the retirement transition for their valued employees.

Phased retirement. First (and this one is somewhat self-serving), offer phased retirement. Allow your seasoned employees to work part time, in temporary or project work, while they are making this change in their lives.

Honor and celebrate their accomplishments. Don’t wait until retirement time to appreciate the contributions of your older workers. Honor them periodically with special events and, during these events, have other employees tell stories about their great work, as well as the support they show their fellow workers. Profile these valuable workers in your newsletter. These actions set up the next strategy.

Have them share their expertise. Encourage your transitioning employees to teach the younger people how to do their jobs. This showcases their proficiency; but more important, it preserves your organization’s intellectual capital. You may want to use audio or video recording to enhance this process and create a permanent record.

Provide counseling. Take advantage of your company’s employee assistance program (if one is offered) to offer transition counseling. Be sensitive to the fact that this generation often does not take kindly to the need for counseling or psychological guidance. So call it “coaching” instead, which is much more acceptable. Or, seek out coaches who have experience smoothing the progress of this kind of transition.

Connect them with other job opportunities. If these former military personnel were involved in security for you, help them find part-time jobs in the private security field. If not, help them find appropriate part-time jobs, perhaps even volunteer jobs, if they can afford it. Most retiring baby boomers do not want to stop working altogether, and most retired military also have pensions.

Establish an alumni association. Invite them back periodically for special events. Keeping in touch in this way may also give you a leg up in creating a pipeline for new recruits.

SOURCE: Joyce L. Gioia, The Herman Group, Austin, Texas

LEARN MORE: Retirement is a major life change that can be stressful.

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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Dear Workforce Newsletter

Dear Interested:

 

When preparing to conduct a survey there are several things you should consider even before you formulate questions to ensure a good result.

Plan to:

• Ensure that the people completing the survey are a representative sample of your employee population as a whole.
• Select a survey sponsor/champion who can drive respondents to the survey.
• Determine and communicate what will be done with the results.
• Provide a feedback loop to the respondents.
• Choose an effective communication vehicle for the survey. In your messaging, include the objective for the survey, intended use of responses, and a process for ensuring confidentiality.
• For this type of survey, develop a question list that will take five to 15 minutes to complete.
• Identify other competing initiatives within the organization that may dilute the response rate and negatively affect “mindshare.” Factor in the length of time the survey will remain open.

After preparing to conduct your survey, you can turn your attention to formulating the actual questions by thinking about:

• Data you really need to know. Consider what it is you really want to know once the survey has been completed. What is it that you were really looking to find out? Did you ask the right questions in the right way to retrieve that data?
• Phrasing of questions. Use a rating scale (usually a three- to five-point satisfaction or importance or frequency scale) or multiple-choice questions to trigger meaningful responses. Keep open-ended questions to a minimum of two or three.

Include identifier questions. These determine how you will be able to “cut” or analyze group and subgroup responses.

Examples:
• Department
• Length of employment
• Title and position
• Gender
• Any other type of identifier that you may wish to filter results by

Also include content questions. Keep in mind the desired time frame for the survey.

Examples:
• How familiar are you with the HR services offered?
• How many HR services do you use?
• What role are you expecting HR to fulfill?
• How often are these services used?
• Which services are most important to you?
• Which services are least important to you?
• How satisfied are you with the services that you use?
• How would you rate the quality of the interaction between you and your HR representative?
• How convenient are the online services to use?
• What would you like to see improved and how might you improve it?
• How would you like to see the information from this survey used?
• Do you have other comments?

SOURCE: Michael Haid and Dr. Deborah Schroeder-Saulnier, Right Management, Philadelphia, June 24, 2009

LEARN MORE: Faced with mounting layoffs, some HR professionals probably would rather not know what their employees are thinking. A recent Workforce Management study found many HR managers are under stress like never before.

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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Dear Preventing Rank Performance:

 

It sounds like the economy is affecting your business and you’re trying to get more from your employees—possibly even trying to find a way to help make decisions on eliminations. If you are not currently using forced ranking, don’t start. There is a better way—better for you as a manager, better for your employees, and better for your organization.

Forced ranking systems are a part of the performance management landscape, whether you agree with them or not, but they should not be used as the only instrument for evaluating talent. Although the “rank and yank” approach of forced ranking does require that managers differentiate performance, it can have a negative effect on employee engagement. Rather, it should be one tool in a sound performance management system, balanced by tools that uncover the symptoms behind underperformance. There is no guarantee you will end up with a workforce that embodies your corporate values or sustains high performance because of a genuine desire to contribute.

As you evaluate your talent, consider a performance management system that requires managers to set clear performance expectations, defines what “high performance” means, uses feedback as data, and features ongoing discussions around development. One of the challenges with forced ranking systems is that they don’t always evaluate employees against the organization’s defined standard for high performance.

Rather than starting off with the premise that some percentage of your workforce, which you have carefully selected through your hiring process, is inadequate and will never improve, consider this alternative. In direct contrast to forced ranking, managers who use a capacity-building approach understand that performance is not fixed.

In other words, most people can develop new skills and capabilities and learn to be highly effective through focused effort. To evaluate current performance and to build tomorrow’s teams, capacity-building managers measure an employee’s talents and passions against the needs of the organization. The aim is to gain better insight on who is the right fit for your organization, both now and in the future.

If your organization is already committed to a forced ranking system, incorporate the capacity-building approach into your ongoing development activities. This will help ensure that you will not lose valuable talent because their potential was overlooked. Raising the performance of all employees means that when you do have to cut, the remaining workforce is more capable of picking up the slack and has the desire to continue increase their contribution.

SOURCE: Cheryl Huddleston, senior consultant, Novations Group Inc., Boston, July 27, 2009

LEARN MORE: The Problems With Forced Ranking and Forced Ranking: A Good Thing for Business further amplify the pros and cons.

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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Dear Workforce Newsletter

Hammered by huge losses and lower interest rate assumptions, the Pension Benefit Guaranty Corp.’s deficit in fiscal 2009 nearly doubled, jumping to $22 billion from $11.2 billion in 2008.

The deficit in the PBGC’s insurance program for single-employer plans soared to $21.1 billion, up from $10.7 billion in fiscal 2008, while the deficit in the agency’s insurance program covering multiemployer pension plans climbed to $869 million, up from $473 million in 2008.

The big jump in the agency’s deficit is a dramatic reversal of fortune.

Starting in 2005, the agency’s financial position, aided by a strong economy, steadily improved. Its deficit, which hit a record $23.5 billion in 2004, declined each year.

That run of good fortune came to an abrupt end in fiscal 2009.

While the PBGC in 2008 didn’t incur a single loss even close to $100 million from a plan termination, it was hit by several in 2009, including its second-biggest loss. The agency estimated that its takeover this year of massively underfunded pension plans sponsored by bankrupt auto parts manufacturer Delphi Corp. will cost it nearly $6.3 billion.

And the agency could be hit with more big losses.

It says its potential exposure to future losses from financially weak companies was about $168 billion in fiscal 2009, which ended September 30, up from $47 billion the prior year.

“Exposure to possible future termination means that we could face much higher deficits in the future. We won’t fail to meet our obligations to retirees, but ultimately we will need a long-term solution to stabilize the insurance program,” PBGC Acting Director Vince Snowbarger said in a statement.

The agency’s insurance program is supported by premiums paid by employers with defined-benefit plans, as well as by investment income earned on those premiums and assets in failed pension plans it takes over.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The Pension Benefit Guaranty Corp. will share non-confidential information on defined benefit plans with the U.K.’s Pensions Regulator and Pension Protection Fund under an agreement announced Wednesday, November 4.

The PBGC and the two British agencies will share “any unrestricted information that advances the security of defined-benefit plans sponsored by private-sector companies,” the PBGC said in a statement.

The agreement “is formalizing an existing relationship that is increasingly important as the economy globalizes,” a PBGC spokesman said.

The Pensions Regulator oversees U.K. corporate defined-benefit plans; the Pension Protection Fund insures the plans similarly to the PBGC in the U.S.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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