Category: Staffing Management

Turnover among sales reps in the pharmaceutical and biotech industries rose from 10 percent in 2002 to 14 percent in 2003, according to a new analysis by the Hay Group.

It costs about $89,000 to replace a sales rep. In addition, Hay Group says that the higher turnover rates can hurt companies when sales territories are left vacant and sales-rep/doctor relationships are severed.

Different answers for different folks
Big Pharma may not realize why people leave. Hay Group Vice President Bob Davenport says that “the real reasons why employees left does not tend to jibe with what HR reports.” That’s because “individuals don’t like to burn bridges” by saying negative things about their former companies, he says.

In Hay Group’s study, employers say that their exit interviews show that the main reason sales reps quit is because of a better job somewhere else. But Hay’s surveys of sales reps show that the biggest reason is “issues with an immediate manager.”

Davenport says the companies that are effective in their retention programs are often doing three things effectively:

1. The most forward-thinking companies pay close attention to how they develop and assess their sales managers. They make sure not only that managers are trained in retention strategies but are also continually getting feedback from sales reps as to how their managers are doing.
    
2. Their compensation plans “fairly represent performance.” This is easier said than done: Davenport says that many companies plan on paying high performers twice as much incentive as an average employee. But, he says, “when we go through data by company, on average, high performers earn only 50 percent more than average performers.” The incentive plans are often very complex and don’t achieve the result that companies intend. Employees hear their company telling them that they have a lucrative incentive plan, but it doesn’t come to pass. Davenport says that employees end up thinking, “They tell me I’m a high performer but I’m certainly not being paid like one.”
   
   
3. They have a bead on what issues are important to employees. Smart companies, he says, have figured out how sales representatives can move up the career ladder, either within the sales field or by moving to a different part of their business. And they’re in tune with issues such as work/life balance, particularly because so many sales reps are young women. “What are you doing to allow people to perhaps be part-time reps for a while?” Davenport asks.

At least 50,000 New York City construction jobs, or 25 percent of the total, are part of the untaxed—and at times unsafe—underground economy, according to a new report from the Fiscal Policy Institute.

The study, the first comprehensive estimate of job numbers that elude the usual government data-gathering methods, is based on 2005 figures and probably understates the true count by as much as 15 percent, says James Parrott, author of the study and chief economist of the New York research group. The institute defines jobs as underground if they are misclassified as independent contractor work or consist of employment by contractors who work “off the books,’’ a segment that has boomed with the explosion of residential construction in recent years.

The fiscal costs of the underground sector were $489 million in 2005 and likely to reach $557 million in 2008, the study said.

“Taxpayers are forced to pick up the tab for Social Security and the other payroll taxes that go unpaid when construction workers are hired off the books,” Parrott says. “And law-abiding employers are put at a real disadvantage, forced to bear many costs shifted to them from employers breaking the law.”

Costs fall into three categories: payroll taxes for Social Security and Medicare and social insurance premiums covering workers’ compensation, unemployment insurance and disability insurance ($272 million in 2005); forgone income tax collections ($70 million); and the shifted cost of employee health care onto the workers themselves, taxpayers and other employers ($148 million).

In addition to the fiscal cost, the underground construction labor market puts workers at risk, the study said. Last year, 29 construction workers were killed on the job in New York City. Half of the deaths occurred among workers at very small construction firms and three-fourths of the workers were employed by nonunion companies.

“It is surprising that (construction workers in the underground economy) is such a large number,” Parrott says. “It is a significant share of total construction activity in New York City. It’s puzzling that the problem has grown to this extent without a more concerted government response.”

The report called for better state and city enforcement of employment and tax laws and social insurance requirements. In addition, it said New York City and the state should require prevailing wages for all affordable housing contracts and any construction project benefiting from city and state funding, zoning or land action. The lack of prevailing wage standards has led to cutthroat competition and less-skilled and less productive workers, the report said.

But affordable housing developers criticized the idea of applying prevailing wage standards to affordable housing projects, saying it would raise the cost of such construction by 30 percent to 40 percent and greatly slow construction.

“I think it would be incredibly damaging,” says Ron Moelis, a principal at L&M Equity Participants, a major affordable housing developer. “Right now, the subsidy levels needed to build affordable housing or low-cost housing for lower- and moderate-income people are incredibly high. The city is currently putting not only land, but also millions of dollars into affordable housing, and we are barely making a dent.”

Filed by Tom Fredrickson of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

By David Sterrett

A new McDonald’s Corp. commercial tells the story of Karen King, who began her career as a teenage crew member in the 1970s and rose to head the company’s $10 billion Eastern U.S. division.

The spots are meant to resonate with American teenagers, who are leaving the workforce in droves—and leaving McDonald’s with a labor crunch that threatens to take a bite out of its surging sales.

“It’s a shrinking labor market, and we recognize less people will be available to hire,” King says.

The declining number of teenage job seekers presents a super-size challenge for McDonald’s, where 40 percent of the top 50 managers—including CEO James Skinner—worked their way up from the cash register or fry vat, and which more than ever needs qualified workers to keep service from bogging down in an era of computerized cash registers and electronic ovens.

“There is a direct correlation between the quality of the crew and sales restaurants do,” says Steve Bigari, a former McDonald’s franchisee who now works with fast-food companies on labor issues.

With the number of teenage applicants dwindling, McDonald’s has rolled out a new commercial emphasizing the opportunity for advancement at the company.

For years, McDonald’s has manned its crews largely with teenagers. In the 1990s, 45 percent of its U.S. employees were under 20. Today it’s 33 percent of the workforce, which totals 650,000 employees.

Getting harder out there

It’s not just that fewer teenagers are working at McDonald’s—fewer are working, period. Last year about 44 percent of American teens held jobs, down from nearly 60 percent in 1982. The reason isn’t clear, but many attribute the shift to an intensified focus on academics and after-school activities.

Whatever the explanation, the trend scares fast-food operators. “Everyone I talk to in the industry says it’s becoming harder and harder to maintain their operations standards given what is happening in the workforce,” Bigari says.

About half the employees in the fast-food industry are between 16 and 25 years old. The number of jobs in the industry is expected to increase about 17 percent in the next decade, while the number of workers in that key age group is expected to increase 0.3 percent.

McDonald’s is trying to get ahead of the coming squeeze with its aggressive new recruiting campaign, launched in May and driven by the TV ads featuring King. The company also revamped the recruiting portion of its Web site to facilitate online job applications, which are routed to franchisees, who hire the bulk of McDonald’s frontline workers.

Lurking behind the recruiting drive is another reality: McDonald’s could ease its labor crunch by raising wages. But that’s a last resort for the franchisees. Increased payroll costs come directly out of their pockets.

Steve Russell, McDonald’s U.S. senior vice president of human resources and chief people officer, says the company doesn’t feel pressure to raise wages, which vary by restaurant but average about $7.35 an hour, 26 percent more than the current federal minimum wage of $5.85.

Touch screens and new menus

At the same time it expands recruiting efforts, McDonald’s is trying to be more selective about its hires. About half of its stores require applicants to take a short test designed to measure their experience and behavior patterns. Russell says the number of stores utilizing the test quadrupled last year and the company continues to “rapidly deploy it.”

The increased scrutiny matches the rising sophistication of fast-food jobs. Burgers are no longer flipped on a griddle but cooked in an oven operated by an electronic timer. New menu items have forced kitchen staff to master new preparation techniques and have given order takers more buttons to locate on cash registers with touch screens—easy to use but often intimidating to workers uncomfortable with technology.

In the 1990s, 45 percent of McDonald’s employees were teenagers; now it’s 33 percent.

Fumbles with the equipment slow down order times—a big turnoff for customers looking for a quick meal. That’s why it’s critical to find, and keep, qualified workers. An internal McDonald’s study shows that stores with higher-performing crews reduce turnover by 30 percent and increase sales by $200,000 annually.

“Now more than ever, we realize our people are the main drivers of our business,” Russell says.

This week in Las Vegas, McDonald’s is having a meeting of 15,000 managers at which employment will be a primary topic of discussion.

Industry observers say McDonald’s has done more than any of its national competitors to promote employment, even while it may pay lower wages than some regional and national chains, such as coffee giant Starbucks Corp.

The effort may be paying off. Last year, according to Russell, McDonald’s reduced its turnover by 9 percent, matching the chain’s increase in sales, which hit $21.6 billion. The company won’t disclose its retention rate; the industry averages about 150 percent annual employee turnover.

But it remains to be seen how McDonald’s will replace the teenagers who continue to drop out of the workforce.

“There is not a readily available supply of teenage workers lined up at the door begging for jobs,” says Joni Doolin, founder of People Report, a Texas-based company that tracks employment data. “And the problem is not going away anytime soon.”

Filed by David Sterrett of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

General Motors exited bankruptcy with an overhauled sales and marketing structure, a promise of more management changes and a message that a leaner and meaner automaker is ready to win back American consumers and pay back taxpayers.

“Business as usual is over at General Motors,” CEO Fritz Henderson said Friday, July 10, in a press conference. “Everyone associated with the company must realize this and be prepared to change—and fast.”

GM’s Automotive Strategy Board—made up of regional presidents and global function leaders—and its Automotive Product Board will be replaced by a single, smaller executive committee that will meet weekly, Henderson said.

The group will focus on business results, products, brands and customers. It will cut GM’s decision-making team in half and eliminate the company’s matrix structure, Henderson said.

A key member will be Bob Lutz, the former chief of product development who had been scheduled to retire as vice chairman and senior advisor at the end of the year.

Lutz, 77, is taking a new position as vice chairman in charge of creative design, brands, marketing and communications. He will report to Henderson.

Chiefs of GM’s brands, marketing, advertising and communications will report to Lutz, who had been succeeded by Tom Stephens, vice chairman of product development. Lutz will also work with Stephens and design chief Ed Welburn “to guide all creative aspects of design.”

GM is eliminating its North American strategy board and the North American president position held by Troy Clarke. Henderson said he will head the money-losing North American unit.

“I have a number of moves that need to be made in the next couple of weeks, including with Troy, but the job no longer exists at this point,” Henderson said.

With Lutz’s move, Henderson said, GM will split its marketing and sales functions.

This will result in changes in Mark LaNeve’s job as GM North America’s vice president of vehicle sales, service and marketing, Henderson said.

“Sales will report directly to me,” he said. “We actually have a huge amount of change going on. Mark is head of sales today. We have a huge number of changes to take place between here and the end of this month, and Mark is responsible for hitting the sales numbers this month.”

Henderson said GM will have new positions in place by the end of the month. Those will involve some retirements and some people leaving the company, he said. Some people will receive new appointments within the new GM.

“I would have had this done had we closed July 31st, but we closed July 10th,” Henderson said. GM filed for bankruptcy June 1 and originally projected its exit could take as long as two months.

A whirlwind 39-day bankruptcy for GM concluded with the closing of a deal to sell key operations and the core brands to a new company majority-owned by the U.S. government.

Shaking up GM’s long-criticized corporate culture will be a key issue for Henderson as the 100-year-old automaker seeks to relaunch itself.

Steve Rattner, head of the Obama administration’s auto task force, said this week that it would be natural for Henderson to cut layers of management to make the company “a bit closer to the ground, leaner and meaner.” Henderson took over as CEO when his predecessor, Rick Wagoner, was ousted by the task force at the end of March.

The close of the court-approved sale would mark the completion of an unprecedented effort by the U.S. government to save GM and Chrysler from liquidation by slashing debt, labor costs and dealerships.

The new GM will have slashed its debt and health care obligations by $48 billion and dropped almost 40 percent of the dealers from an unprofitable network.

GM also will take advantage of a new labor contract with the United Auto Workers that the company says will put its hourly operating costs on par with Japanese competitors led by Toyota Motor Corp.

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

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Dear Fair-Minded:

Ensuring your evaluations are fair and objective requires a little planning.

Fully understand and communicate expectations

Many supervisors don’t effectively communicate performance expectations to their employees. Misunderstandings about expectations result in diminished focus on the important aspects of the job, lower productivity and quality, and perceived (and real) unfairness in performance evaluations.

A job description that lists specific activities to be performed, the measurements to be reported, the time allocated for each task—and the required results—helps eliminate many potential misunderstandings. By making result expectations clear to your employees in advance, the evaluation process becomes fair and balanced.

Focus on data

If you’ve developed a good job description, you’ve already outlined the measurable outcomes you expect. Next, you need to consistently measure and record these outcomes. One of the simplest ways is by keeping a performance “plus and minus” log on each employee. Simple forms are available from numerous sources, or you can create your own.

Have your supervisors carve out 10 minutes a day to record the performance results of their employees that either exceed or fall below expectations. (Since it’s unlikely that every member of your team will do something noteworthy each day, 10 minutes should be more than enough time.)

At the end of the appraisal period, it is very easy to roll up your notes and complete the appraisal form. Keeping detailed, regular notes on performance helps supervisors objectively rate performance and provides employees with better, more credible input.

Involve the employee

Asking the employee to be involved in measurement and record keeping of their results will further improve the perceived fairness of those results. Give your employee a plus-and-minus log and ask the individual to note significant accomplishments, misses or extra value added.

Periodically meet with employees to go over the log together, and use the employee’s log as one of the inputs for the annual performance appraisal.

Telling your people clearly what you expect and measuring and providing specific comments on performance results help supervisors offer evaluations that are objective. Employees will be more appreciative of the performance evaluation they receive.

SOURCE: Richard D. Galbreath, Performance Growth Partners Inc., Bloomington, Illinois

LEARN MORE: Please read “Six Steps to Successful Performance Appraisals” for additional advice.

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.

Workforce Magazine Guidelines for Writers and Contributors

In print and online, Workforce Magazine covers HR issues through news, blogs and feature stories. In features, we often focus on how organizations manage a major asset—the company’s people—to maximize contribution to the bottom line. This is HR that is focused on business results, not on HR for its own sake. In our print publication, we write to senior-level human resources executives and C-level leaders who make workforce management decisions for the 20,000 largest corporations in the U.S. Our online content speaks to a broader HR audience, but the intent is always the same: We believe that there is no more critical element to a business and its success than its employees.

What we want from freelance writers, contributors and PR people pitching story ideas

    Most of our stories are written by our staff, with contributions from other Crain Communications publications. We do work with a small group of freelance writers, and are always on the lookout for journalists who can craft stories for our very specific audience. Our stories are timely and news-driven and offer insights to our audience on how they can better do their jobs as strategic HR leaders.

If you are a publicist for an organization with a great HR program, we want to hear from you—an e-mail outlining the story idea is best. You might also consider applying for the Workforce Magzine Optimas Awards, which recognize outstanding HR initiatives that drive bottom-line business results.

If you are a PR person for a company that markets HR products or services, and the company’s clients have impressive stories to tell concerning their success with those products and services, we’re interested in hearing about them. While we do not publish publicist-written case studies, we do read them as background for developing our own stories, if you are willing to share them with us on that basis.

Before pitching us, freelancers and publicists should become familiar with our Web site and our print publication. Please read our stories—several of them—to get a sense of what makes a Workforce Magazine article work. Here are some examples of what we consider signature Workforce Magazine articles. (If you’re not a registered user of our site, you’ll probably need to register to access these stories; registration is free, and just takes a minute. You’ll be redirected to the registration page from the article links if registration is necessary.):

here). Our Web site readers run the gamut, from high-level HR leaders at big companies to managers working in organizations of fewer than 500 people, so we look for clear, nontechnical, nonpromotional, jargon-free writing and a count of 1,000 or so words. Here are some examples of good commentary pieces:

A Benchmark Is Not a Scalpel

Is It Time to Reboot Your Defined-Contribution Plan?

Employer Stock in the 401(k) Plan: Handle With Care

Zero Tolerance for Jerks

Bearing Blame

Sharing Blame

Legal articles

    We publish contributed articles on employment-law topics on our Web site, in the channel called Legal Insight. These are most generally written by attorneys, but mediators and other HR law experts also have been contributors. We are interested in articles on timely issues in labor and employment law that are about 1,500 words long, without footnotes or case citations. The article should be in plain English, without legal jargon or “bizspeak.”

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    Although we continuously cover such topics as benefits, recruiting, HR technology and training both online and in print, we also feature stories in these areas in our print publication in keeping with an editorial calendar, which writers and publicists should consult. Please pitch story ideas about three months before the issue date.

The 2010 editorial calendar is here.

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To query and for questions, contact executive editor Carroll Lachnit at carroll@workforce.com or editor John Hollon at jhollon@workforce.com.

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Dear High-strung:

Don’t run through the next red light because you missed a signal earlier. Barring intervention, you will wind up losing solid workers fed up with being taken advantage of. Before engaging in redesign, consider the following steps:

Interview a sample of employees. Individual interviews are best, with both senior and junior employees. Explain to them that management is dissatisfied with the current distribution of work system and is soliciting ideas. If interviewing all employees proves impractical, select a representative sample. You might even run small feedback groups to glean both sides’ viewpoints on the current situation: the advantages and disadvantages, the efficiencies and inefficiencies, short- and long-tem consequences, etc. If using a group forum, everyone should feel comfortable giving input.

Convene joint meetings to share the data with junior and senior employees. (You also may need to allow time for junior employees to vent their frustration, including with management, for allowing these inequities to exist. Clearing the air should help people see why changes are needed. It also should stimulate clear-headed approaches to changing your operational procedures, job duties, and so on.

Start small, perhaps with a department or two, to see how your new delegation-of-duties format is working. Conduct a brief trial-and-error run to highlight bugs. Have the entire company, and not just department supervisors, meet regularly with senior managers to monitor how things are progressing. Hopefully, some kinks will come to light that can be addressed.

Report back to relevant staff within a month or so of the starting date. Share the results: the positives, the glitches, any unanticipated discoveries, and other notable information. Laying a proper foundation helps your employees support the operational changes.

This problem-solving process democratizes operational processes and should yield a more current and productive redesign system. What’s more, you should expect stronger work teams to emerge, displaying greater cohesion and camaraderie.

SOURCE: Mark Gorkin, LICSW, The Stress Doc, Washington, D.C., January 27, 2006.

LEARN MORE: Please read how HR’s push for productivity may lead to stress-inducing factors. Also, thoughts on job stress as it relates to job design.

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.

Dear Forcing the Issue:

We believe the disadvantages of forced ranking far outweigh the advantages, so you are wise to consider alternatives. Before describing another approach, please consider the following ideas.

First, some organizations tie their compensation decisions too tightly to overall ratings. This places pressure on managers to adjust the overall rating to achieve the desired merit increase, or to take the easy way out and give everyone the same rating.

Instead, consider introducing additional factors into the compensation decision. This will take pressure off the performance rating and increase the likelihood of a more accurate rating. One typical additional factor: the person’s current salary relative to the salary range for their job.

Second, don’t use just one overall rating. Consider including an individual rating for each goal and competency for a more accurate overall rating. It’s harder to misrepresent someone’s performance against a specific goal or competency, assuming that you have defined it clearly and can gather solid performance data. This approach also allows human resources to audit overall ratings to determine if they are consistent with individual ratings. For example, it would be odd if an employee’s scores were far lower than most others in the company, yet he was designated as “average.”

Calibrating across individuals is often important as well, to ensure consistency in the use of the ratings. One of the best approaches is to conduct “calibration meetings” in which managers reach agreement on how the ratings are applied to roles that have similar job expectations. Trying to calibrate nurses with accountants would be an exercise in futility.

In preparation for a calibration meeting, the manager must have complete performance data for each employee, including ratings for each goal and competency, as well as a proposed overall rating. Appraisal conversations should be put off until after the calibration meeting. During the meeting, the managers then review the proposed overall ratings and reach consensus. An effective ground rule is that a manager must agree to change a rating. It should not be forced upon them.

Let’s assume your overall rating uses a five-point scale, where 5 is the highest rating. To make the meeting most efficient, begin with the individuals whose proposed rating is 5. Each manager who has proposed rating an employee as a 5 explains his or her rationale. Other managers may ask questions and introduce additional performance data, provided they have firsthand knowledge of the individual being discussed.

When all of the individuals rated 5 have been discussed, their managers are asked if they want to change any ratings. Other managers may indicate that one or more of their employees deserve a 5 rating as well, and they are given an opportunity to provide a rationale. Once all discussion is complete, the group reaches consensus on that group of individuals.

Discussion then moves to the individuals rated 1, the lowest rating, and follows a similar structure until the managers reach a consensus. Discussion next moves to the individuals rated 4 and then the individuals rated 2. For individuals rated 3, the middle category, do a quick check to see if any manager believes any of these individuals deserve a different rating.

Once all groups are considered, a final check for consensus can be completed. When the process is conducted in a fair manner, not only do managers walk away with confidence in their ratings, but they also have a strong group understanding of how to apply the ratings in the future.

SOURCE: Bill Coon, senior organizational effectiveness consultant, Development Dimensions International, Pittsburgh, Pennsylvania, March 3, 2005.

LEARN MORE: SeeForced Ranking: A Good Thing for Business?. Also read about alternatives toforced ranking; the ethics of forced ranking; why peoplewon’t discuss the topic; an opinion piece on theproblems with forced ranking; a new studyarguing that forced ranking is good for business; and more information onperformance appraisals.

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.