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The Dual Role of Recruiting and Engagement

M anagers do all the heavy lifting at AlliedBarton Security Services, the largest American-owned contract security company operating in the United States.

    With more than 3,000 clients, including 200 Fortune 500 companies, AlliedBarton must be prepared to put 400 to 500 security guards on a new site within two to three weeks if client needs suddenly shift or an incident triggers a demand for higher security. A break-in at a company’s offices or a shooting rampage on a college campus may generate a sudden unforeseen demand for massive security staffing.


    The managers at AlliedBarton’s 100 locations are responsible for meeting surges in demand and training the new hires.


    “At headquarters, we look at both macro- and micro- level demand, but our local leaders manage trends in each market,” says Jim Gillece, chief people officer and senior vice president of human capital management. “We’ve found that even with spikes in demand, we can fulfill needs. It’s a well-oiled machine.”


    At thousands of companies like AlliedBarton, local managers shoulder the responsibility for recruiting, onboarding, training and engaging new hires. Their success, according to the latest research, hinges on their ability to not only meet rapid changes in staffing needs but also to create high levels of employee engagement.


Managing swings
   Based in King of Prussia, Pennsylvania, AlliedBarton has grown from 8,000 employees to 53,000 employees in nine years through acquisitions and organic growth. Strong demand for workplace and campus security services generated $1.5 billion in revenues for the company in 2007.


    Gillece does not focus on long-range forecasts for overall workforce needs for all positions.


    “We plan future needs for different levels in the organization,” he says. “The skills needed at various levels have changed over the past few years. We are readying leaders for the next step and focusing on transitions from one level to another.”


    Security companies operate in a low-margin industry, so cost is always a factor. AlliedBarton is in a period of high growth and strong customer retention levels, but sharp shifts in demand and constant consolidation in the industry set off unpredictable staffing changes.


    “It’s difficult to project the need for employees because we have to be prepared to integrate after acquisitions,” Gillece notes.


    AlliedBarton’s managers typically maintain strong relationships with feeder pools, which include community-based organizations, the CIA, the FBI and local police.


    “We nurture these relationships,” Gillece says.


    For seasonal spikes at the national level, which include high demand from retailers during the holiday season, AlliedBarton taps flexible talent pools.


    “The key is maintaining the flexibility to redeploy where the needs are greatest,” Gillece says.


    The local managers and their direct reports onboard and train the large groups of new hires brought in to meet a surge in demand. Many of the company’s managers moved into their positions after years in the ranks. In Philadelphia, where the company was founded, 50 percent of the managers come in through entry-level positions.


    “Fifty percent is an aspirational goal for our other locations,” Gillece notes. “But there is also great value in watching the external reservoir because of the mix of new ideas that outside hires bring with them.”


    AlliedBarton has concluded that formal training programs are not the best vehicles for preparing new hires for security assignments. Instead, managers mentor new employees and assign them to shadow more experienced workers. Simultaneously, managers must ensure that both new hires and longer-term employees remain engaged in their assignments and committed to the company.


Managing engagement
   When managers at companies such as AlliedBarton bear so much responsibility for both hiring and training new employees, the science of selecting the right candidates for managerial positions becomes all the more critical.


    Candidates for managerial jobs must have the skills to handle recruiting and the ability to engage employees.


    “We know that managers are the key to engaging individuals,” says Tom Rath, global leader for the workplace research and leadership consulting practice at Gallup, Inc., which conducts massive worldwide studies on employee engagement. Gallup has studied 10 million employees in the past decade to establish global benchmarks for engagement.


    Engagement metrics have emerged as a leading indicator of future financial performance.


    “Executives at the Fortune 50 are talking about employee engagement in their analysts calls,” Rath reports.


    Extensive research by Gallup and other consultancies shows that engaged employees are more productive and profitable, more custom-focused, more likely to refer their company as a good place to work, more likely to recommend the company’s products and services and less likely to leave the organization.


    Gallup measures employee engagement with a set of 12 questions that gauge employee attitudes linked to business outcomes. Gallup refers to this set as Q12. Corporate leaders, local managers and other employees can have a direct impact on the attitudes identified through the Q12 process.


    Gallup has also documented the cost of disengagement. It calculates that of all U.S. workers age 18 or older, 18 percent are actively disengaged at a cost of $382 billion a year to the U.S. economy as a whole. Gallup’s semiannual engagement surveys show a steady rise in disengagement levels since the second half of 2006.


    Other studies have reported the effect of disengagement on employee performance across all geographies and age groups. A Watson Wyatt Worldwide study found that Canadian companies with high employee engagement levels demonstrate greater annual total returns to shareholders—known as TRS—higher market premiums and higher productivity levels than those with low engagement.


    In 2007, the high-engagement companies reported TRS of 24.1 percent and $484,000 in revenues per employee compared with TRS of 14.6 percent and $328,000 in revenues per employee for companies with low engagement levels. These financial measures of the importance of engagement indicate that companies must modify their recruiting and selection processes to include engagement factors.


    Employers commonly focus on whether a candidate has the skills to fit the job and the role, Rath notes.


    “But this misses the larger question of whether the candidate can boost the engagement of other employees. It’s crucial to know whether the candidate will be not only a great individual worker, but also an employee who can build the engagement of the team.”


    These employees have the greatest potential for managerial work.


    Rath draws a distinction between core personality traits and the acquired attitudes measured by Q12, which can be affected by the employee’s experience on the job.


    “The goal now is to perfect a set of pre-employment questions that measure the core traits which create the potential for creating engagement,” Rath says.


    Gallup has been using core trait engagement testing for some time in hiring managers internally and now has the tools to score candidates based on their ability to boost engagement at the team level. It is now refining the testing to identify specific components within the trait.


    The science behind it
Pre-employment testing for the ability to build engagement is now a science, Rath says.


    “We can identify people who have the ability to drive engagement. If you have three or four candidates whose skills are comparably matched, this can be the tie-breaker.”


    Because the characteristics Gallup has identified as the essential predictors of the ability to engage others are personality traits rather than learned skills, the candidate selection process is the only opportunity to ensure the organization benefits from the best managerial talent.


    “The skills necessary to perform a specific job are still the key to evaluating a candidate, but the second factor is the ability to engage,” Rath explains. “It is the natural ability to create esprit de corps, not just for the sake of the candidate’s own self-interest but for the sake of the team as a whole.”


    Gallup’s research indicates that it is possible to identify and measure this trait through behavioral questions. To pinpoint the right questions, Gallup reviewed nearly 10,000 validated pre-employment questions to uncover a subset that enables organizations to assess whether a candidate has the ability to boost engagement levels.


    This approach allows companies to hire managers with strong potential and to select candidates for other positions who have the ability to raise engagement levels among their co-workers.


    “Some of the questions elicit answers that are easily identified as socially desirable, so we also use different questions that do not call for socially desirable answers to avoid people outsmarting the test,” Rath notes. “If someone is trying to game the system, we can discover that at some point in the process.”


    Although Gallup does not publicize the full results of its research findings on the exact traits that mark the potential for outstanding managers, Rath readily describes the general characteristics documented by the studies.


    “The best managers create strong relationships and see each person as a whole rather than as a means to an end,” he says. “This gives them the basic ability to get people to move toward a goal.”


    Gallup’s research indicates that once a manager is on the job, the key question is whether the manager focuses on the employee’s strengths, directs attention to the employee’s weaknesses or ignores the employee. If the manager focuses on the employee’s strengths, the probability that the employee will be disengaged is 1 in 100.


    If the manager focuses on the employee’s weaknesses, the probability rises to 20 in 100. But if the manager ignores the employee, the rate for active disengagement is 40 out of 100.


    The point is that most employees can be moved out of active disengagement by the right managerial practices. Selecting the right candidates for crucial managerial positions ensures not only the skills necessary to adjust staffing levels but also the ability to engage the workforce as a whole.

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Relief for Pain at the Pump

The view from his window gives David Lewis, CEO of Stamford, Connecticut-based human resources consulting firm OperationsInc, a pretty good sense of the discomfort that his employees are experiencing from rising gas prices. “My office looks out upon three gas stations,” Lewis says. “I watch the guys climbing up ladders with poles, changing the prices every week.”


Lewis allows two of his 25 employees to work from home, and another two are able to use public transportation to get to clients’ work sites. But for the remaining staffers, who live in distant suburbs, there’s no real alternative to an increasingly expensive daily round trip of as far as 70 miles by car. Each upward tick in prices at the pump makes Lewis a little more nervous about losing hard-to-replace talent to job opportunities that offer a less costly commute. “My big­gest concern is that somebody is going to walk in and say, ‘I’m quitting because I can’t afford to keep coming here,’ ” he says.


Lewis isn’t the only employer who’s noticing that for the American workforce, gasoline prices are reaching a tipping point. With the cost of regular unleaded hovering around $4 a gallon nationwide, the cost of filling the tank is eating up so much of workers’ incomes that many are finding themselves in financial crisis, compelled to make painful and humbling cutbacks in their lifestyles simply so that they can afford to drive to work each day. Research shows that workers’ stress over gas prices is actually harming their productivity, and it’s leading them to re-evaluate their career priorities as well. Recruiting consultants say workers increasingly are turning down job offers that might require a longer commute, and many are now looking for a job closer to home, even if it doesn’t involve a salary bump or professional advancement.


45%
Percentage of employees who have fallen behind on their finances because of gas prices

The potential impacts of these shifts have U.S. companies scrambling to find ways to ease commuters’ pain. Roughly half of employers have instituted programs and benefits to assist employees, ranging from providing ride-sharing databases on corporate intranets and free shuttles from public transit stops to offering compressed work­weeks that reduce the number of trips from home, ac- cording to a recent study by Challenger, Gray & Christmas, a Chicago-based nationwide executive outplacement firm. Others, such as Lewis, are reimbursing employees for some of their gasoline costs or even contributing some of the cost of buying or leasing a more fuel-efficient car.


Corporate HR leaders and consultants say that no single remedy works for everyone, and that an employer should evaluate data about workforce commuting patterns, staffing needs and cost-to-benefit ratios before embarking upon a program. While any such effort requires some financial commitment, experts say that investing in commuter assistance can provide companies with a significant strategic advantage when it comes to retaining and competing for talent.


So Lewis decided to help out his employees. He gave an American Express card to everyone in his operation who drove to work, and allowed them to charge up to $100 a month to pay for gasoline purchases. “It was easy to set up,” he says. “And people seem to have really appreciated it. It doesn’t cover all their commuting costs, but they don’t expect that. This gives them a little more breathing space. It costs us an extra [$20,000]-$25,000 a year, but fortunately, we’re in a business that even in this economy is doing very well, so we can afford it.” Lewis’ company may actually come out ahead on the deal, considering that the program’s cost is a fraction of the replacement cost of an experienced HR consultant, which can exceed $100,000.


How high fuel prices hurt workers, employers
    High gasoline prices are a huge problem in a nation long accustomed to getting to work by car. U.S. government data shows that nearly nine in 10 Americans drive to work, with nearly eight in 10 driving alone. And those daily commutes can be lengthy because they’re based upon population distribution and workplace locations that remain from an era of cheaper fuel. The fortunate ones, who commute five miles or less each way to work, amount to less than a third of the workforce. Twenty-two percent travel six to 10 miles each way, while 27 percent travel 11 to 20 miles and 23 percent cover more than 20 miles each way. Two percent of workers are what the U.S. Census Bureau calls “extreme commuters,” spending 90 minutes or more on the road each way daily.


39%
Percentage of employees who have cut back to a lesser standard of living because of gas prices

Recent studies create a stark picture of the discomfort caused by fuel costs among workers. A June Gallup survey found that nationwide, 11 percent of Americans say the high price of gas has left them with little or no disposable income and/or wrecked their family budgets, with 9 percent saying they are hurting financially. A study released in May by Florida State University management professor Wayne Hochwarter, which examined the plight of 800 full-time employees who drove an average of 15 miles each way to work, showed an even higher level of distress. Hochwarter found that 45 percent have fallen behind on their finances because of gas prices, and 39 percent have been forced to cut back to a lesser standard of living.
Thirty percent are considering cutting back on food, clothing and medicine to keep up.


The researchers have news that’s nearly as bad for their employers. According to Gallup, 15 percent of Americans say they can no longer afford the cost of driving or commuting to work because of fuel costs. Hochwarter’s study of long-distance commuters found that one in three would quit their job if they could find one closer to home.


Fortunately, most don’t seem to have followed up on that threat—at least so far. But companies already are seeing the impact of higher gas prices on corporate recruiting. While commuting costs once were a deterrent only for lower-wage employees, the expense of a lengthy drive from the nearest suitably posh suburb is starting to cause even job candidates in the $150,000-$200,000 range to think twice about making a career move. In the recent study by Challenger, 34 percent of companies said they’ve had job candidates turn down offers because of the commute.


30%
Percentage of workers considering cutting back on food, clothing and medicine because of gas prices

Paradoxically, even when job candidates want to switch to a job in another region with a shorter commute, they sometimes have to nix the move because prospective buyers for their old homes are deterred by the cost of driving to work from there. “People in the Phoenix area, where we’re based, are really stuck,” says Mickey Matteson, an account executive for Recruiter Relocation, a firm that helps job candidates settle in new locations. “If you want to take the bus to work here, you’d need to get five transfers and walk a half-mile in the heat. We’re seeing deals not come together because of this.”


Beyond that, stress from fuel prices is combining with a tough economy to threaten workforce productivity. Hochwarter found that workers stressed out about gasoline prices tended to be “less attentive on the job, less excited about their work, less passionate and conscientious and more tense.”


“What I see is that people are just worn out from this,” Hochwarter says. “They see no end to this—they hear the news media talking about five, six, seven dollars a gallon in the future. Worse yet, this is happening at a time when corporate profits are down and nobody is getting the 4 to 5 percent raises of the past, which might have helped them to keep up. Instead, they’re falling behind and struggling financially, and they’re thinking, ‘The company isn’t stepping up and helping me out. The days of me busting my butt for my employer are over.’”


84%
Percentage of workers who expect their companies to institute measures to remedy rising commuting costs

By the same token, workers clearly are looking to employers to do something about the problem of rising gas prices. A survey released in June by Opinion Research Group found that 84 percent of employees expect their companies to institute measures to remedy rising commuting costs. Fifty-one percent wanted the opportunity to work from home, and 42 percent wanted their companies to provide allowances for gasoline, as OperationsInc’s Lewis has done.


What companies can do
    The escalating crisis is compelling many employers to rethink the traditional benefits boundaries and reach out to help employees with commuting costs, as they already do with needs such as health insurance and child care. Challenger reports that 57 percent of the companies it surveyed say they’ve already implemented at least one program—often several—to help ease the pain at the pump.


While telecommuting from home is widely touted as the answer to gas-price woes, employers don’t seem to be embracing the concept. Only 14 percent of the companies in the Challenger study allowed employees to work from home at least one day a week. It’s not a practical solution for everyone, anyway, because by even the most optimistic estimate, 60 percent of workers still have jobs that have to be performed on site, according to a 2005 study, “Telework Adoption and Energy Use in Building and Transport Sectors in the United States and Japan,” by H. Scott Matthews and Eric Williams.


Instead, the Challenger study found that 23 percent of companies are allowing their staffers to work a compressed workweek, such as a schedule of four 10-hour days, to reduce the number of trips they need to make. An additional 20 percent are helping organize car pools for employees, and 18 percent are subsidizing the use of public transit.


“[Employees] see no end to this—they hear the news media talking about five, six, seven dollars a gallon in the future. … They’re thinking, ‘The company isn’t stepping up and helping me out. The days of me busting my butt for my employer are over.'”
—Wayne Hochwarter, Florida State University management professor

Which of these measures is best? HR consultants, academics and transportation experts counsel that there’s no one-size-fits-all solution to the problem of commuting costs. A program that’s effective at one company may not be right for another with different logistical challenges or geographical distribution of its employees. And it’s likely that an employer will have to offer an assortment of commuting benefits to meet the needs of a diverse workforce.


“The fundamental thing we’re trying to do is to get companies to offer a choice,” explains Phil Winters, a program director at the University of South Florida’s Center for Urban Transportation Research, which recognizes employers with its Best Workplaces for Commuters awards. “It’s not enough for a company to just provide a free parking spot. They’ve got to be willing to help people who want to take the bus, or car pool, ride a bicycle to work.”


Experts say that before doing anything, a company should gather and analyze an assortment of data about its workforce, including employees’ commuting patterns and the economic impact that high fuel prices are having on workers. It’s also important to assess the transportation options that are available in a particular area, including public transit agencies with which a company might be able to partner to offer fare discounts or subsidies.


It also might be a good idea to survey employees and find out what sort of commuter assistance they favor. Florida State’s Hochwarter notes that when the Florida government asked its employees how they felt about switching to a four-day workweek, most favored it, but a significant minority were strongly opposed.


“It turned out that it threw a wrench into some people’s child care arrangements,” he says. “For them, it created more problems than it solved.”


“We had trouble filling jobs for housekeepers, nursing attendants and others because they had come from far away and it cost too much.”
—Joe Cabral, chief human resources officer, North Shore-Long Island
Jewish Health System

North Shore-Long Island Jewish Health System, a regional network of 13 hospitals with 38,000 employees, went through a careful planning process 18 months ago in an effort to stay ahead of the curve on commuting expenses. “Our situation is kind of complicated,” says chief human resources officer Joe Cabral. “Our employees tend to come from within a 25-mile radius, but we’ve got some outliers. Probably about 80 percent of our people were driving to work, because the way that public transportation in Long Island is set up made it impractical for them to use. We also had the problem of having two hospitals in affluent areas where it was too expensive for some of our staff to live. We had trouble filling jobs for housekeepers, nursing attendants and others because they had to come from far away and it cost too much.”


Cabral’s team devised a multifaceted plan. One initiative was a free shuttle bus that traveled inside the 25-mile radius and connected the 13 hospital sites. To help those outside that area, the health system is setting up a second shuttle along the Long Island Expressway that will pick up employees at park-and-ride sites at the far end of the region. To assist those who still needed to drive, the health system partnered with the New York Metropolitan Transportation Council and the New York state Department of Transportation to create a ride-sharing program that allows hospital employees to schedule their commuting trips online. Lastly, North Shore-Long Island Jewish Health System expanded the compressed workweek option that it already offered to nurses as a recruiting inducement, offering the schedule to physical therapists, respiratory therapists and operating room technicians.


Some employers even have managed to turn the problem of gas prices into an opportunity. One example is Ener­NOC, a Boston-based energy management company that has made commuter-friendliness—and environmental awareness—a significant part of its employment brand. The company deliberately located its headquarters in pricey downtown Boston rather than out in the suburbs, which makes it possible for all but a handful of the company’s 300 employees to get there via the region’s extensive public transit system. To help those few who need to drive to work, EnerNOC offers to pay an additional $100 a month to anyone who buys or leases a gas-electric hybrid car.


“We have several folks who are taking us up on that,” says executive vice president David Samuels. “The important thing is that we’re giving everyone the chance to make responsible, cost-efficient choices.”


Workforce Management, August 11, 2008, p. 1, 22-29 — Subscribe Now!

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Chrysler Asks UAW for Four 10-Hour Days

Chrysler LLC is negotiating with the United Auto Workers to put factory workers on four 10-hour workdays to save energy and travel.


Chrysler manufacturing chief Frank Ewasyshyn said the new schedule would affect most of the company’s plants, except those working lots of overtime such as Belvidere assembly in Illinois and the Sterling Heights, Michigan, assembly plant. The rest would likely qualify, he said.


He said the proposal was similar to what some government entities are doing to reduce energy costs. They are shifting from five eight-hour days per workweek to four 10-hour days.


“It reduces their costs and reduces our operating costs,” Ewasyshyn said.


Belvidere makes the Dodge Caliber small car and the Jeep Patriot and Dodge Compass SUVs. Sterling Heights makes the Chrysler Sebring sedan, its convertible variation and the Dodge Avenger.


Chrysler is piloting the plan in a parts distribution center in Atlanta.


Ewasyshyn said he couldn’t immediately provide specific savings, but said it was less than $10 million annually.


Chrysler is talking with the UAW International and the locals representing affected plants to approve the change, Ewasyshyn said.


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

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New SHRM CEO Bolsters Organization for Health Care Debate

Laurence G. O’Neil will take over as president and CEO of the Society for Human Resource Management on October 1, giving him a couple of months to settle in before Congress embarks on what likely will be a major health care reform in 2009.


Having served five years as senior vice president and chief human resources officer at Kaiser Permanente, a $40 billion not-for-profit health care organization, O’Neil is well prepared to lead SHRM into the fray.


“His knowledge of the public policy issues surrounding affordable health care for employees is going to be a valuable asset to SHRM,” said Susan Meisinger, O’Neil’s immediate predecessor as SHRM’s top executive. “What he brings is a view from the trenches that is very compelling when you’re offering [congressional] testimony.”


O’Neil was named on Monday, August 11, to replace Meisinger. 

Meisinger announced her retirement in January and departed on June 30, citing the need to care for ill family members. SHRM said it had reviewed a pool of more than 400 candidates for CEO.


Beyond health care, O’Neil brings to the 245,000-member SHRM a deep executive background that could amplify the organization’s emphasis on strategic HR and globalization.


Before his stint at Kaiser Permanente, O’Neil was executive vice president and chief human resources officer for global corporate and investment banking at Bank of America. He also directed HR in Asia and held several other positions for the bank.


Between Kaiser and Bank of America, he was managing partner at Heidrick & Struggles, an executive search firm.


“He’s got very broad HR expertise that he’s gained in a variety of industries,” said Cari Dominguez, former chairwoman of the Equal Employment Opportunity Commission who is now an HR consultant and corporate director at Manpower. “He’s a great choice.”


Dominguez’s strong endorsement of O’Neil, who goes by the name Lon, is based on her experience working with him when they were both at Bank of America.


“Lon is a person of ideas, and he’s a visionary,” Dominguez said. “He’s got leadership skills and is inspiring. He loves HR.”


With his knowledge of Asia, O’Neil will be able to build on SHRM’s foundation in that region, where it has offices in India and China, Dominguez said.


“Lon will be able to provide influence and direction in those markets,” she said.


He also is positioned to help SHRM meet another goal—attracting and engaging senior corporate leaders.


“One of Lon’s great strengths is his ability to work with line executives,” Dominguez said. “He has the ability to look at HR from a business perspective. He’s highly regarded by CEOs.”


O’Neil will have a chance to concentrate on promoting the SHRM brand in the C-suite rather than getting buried in the daily grind of a Washington trade group, Meisinger said.

SHRM is currently being led by COO China Miner Gorman, who became acting CEO on July 1. SHRM generated $105.4 million in revenue in 2007.

“The professional staff is very strong at SHRM,” Meisinger said. “China Gorman is quite an effective COO, and they’ll make a good team. He won’t need to focus his time on running the business side of an association.”


When he interacts with the SHRM staff, he’ll do it in a collegial way, Dominguez said.


“Lon’s style is quite consultative,” she said. “He tries to learn. He tries to probe.”


—Mark Schoeff Jr.


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Verizon, Unions Reach an Agreement

Verizon and the unions that represent 65,000 of its workers reached a new tentative three-year contract agreement Sunday, August 10, that protects union jobs and maintains employer-paid health care while providing cost savings for the company on retirement health care for new hires.


The settlement was announced hours before a union-imposed midnight strike deadline and a little more than a week after the workers agreed to extend negotiations past the August 2 expiration of their last contract.


In what the Communications Workers of America and the International Brotherhood of Electrical Workers are hailing as a major leap forward, Verizon will extend union recognition by the end of the year to 600 former MCI technicians at Verizon Business—including many in New York City— who perform the same jobs as the union workforce. The deal also includes new opportunities for union workers to provide customer support and service at Verizon Business.


“This is a breakthrough agreement in many ways,” said   Communications Workers of America President Larry Cohen. “This settlement provides a framework for growth at Verizon and a good standard of living with careers for our members.”


The two sides had tangled over job protection issues, which were the most difficult issues to resolve, CWA officials said.


“We approached the bargaining tables with an interest in solving problems, and the result is an agreement that will keep us focused on delivering to our customers the best in broadband, communications and entertainment,” said Marc C. Reed, executive vice president for human resources, Verizon Communications.


The tentative agreement eliminates subcontracting of work in a number of job areas, converts 900 temporary jobs to permanent ones and brings additional positions associated with Verizon’s FiOS technology into the union bargaining units. Overall, the settlement should create 2,500 new union jobs, the unions said.


Health care had also been a focus of the talks, as Verizon looked to get workers to contribute to help offset increased costs.


The settlement preserves fully paid health care premiums for all active and retired employees. Verizon was able to get the unions to budge on future hires, who will now have to contribute to their retirement health care plans.


Verizon and the unions agreed to work together effort to achieve national health care reform. The company will provide $2 million per year to the effort.


Wages will increase nearly 11 percent over the three-year contract term. The workers, including 15,000 in the New York City area, will vote on whether to ratify the deal over the next several weeks.


“The money was where we wanted it to be, and the benefits were where we wanted them to be,” said Jerome Paredes, a Bronx field technician. “We’re not walking, which is good news.”


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

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Health Insurer Won’t Pay for Preventable Errors

Blue Cross and Blue Shield of Illinois won’t pay for hospital-based preventable medical errors, the health insurer announced this week.


Instead, the Chicago-based health insurer said it will work with network providers to stop medical errors before they happen.


“Blue Cross’s goal for years has been to work to prevent medical errors, which often go undetected,” Dr. Scott Sarran, the Illinois’ Blues chief medical officer, said in a statement announcing the move.


The medical errors covered by the initiative include “serious hospital acquired conditions,” such as preventable infections, and “never events,” which are errors in patient care that can and should be prevented—such as operating on the wrong body part or transfusion errors.



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

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California Court Strikes Down Noncompete Agreements

California law prohibits employee noncompete agreements unless the agreement involves the sale of a business, the California Supreme Court said Thursday, August 7.


The opinion in Edwards v. Arthur Andersen L.L.P. involved certified public accountant Raymond Edwards, who was employed by Arthur Andersen in its Los Angeles office. Edwards signed a noncompete agreement when he was hired in 1997, according to court papers.


After the Enron scandal, New York-based HSBC USA Inc. agreed to purchase Edwards’ practice group. As part of the purchase, employees in Edwards’ group were to resign from Andersen and would be offered a job at HSBC.


But they first needed to sign a “termination of noncompete agreement,” which was a general release of claims against Andersen. Edwards, who was concerned about potential liability in connection with Andersen’s marketing of disallowed tax shelters, refused to sign. Andersen then terminated him and HSBC withdrew its employment offer.


Edwards sued, claiming intentional interference with his prospective economic interests, among other things.


The court said in its decision, which partially overturned a lower court ruling, that “to the extent Andersen demanded Edwards execute the [termination of noncompete agreement] as consideration for release of the invalid provisions of the noncompetition agreement, it could be considered a wrongful act for purposes of his claim of interference with prospective economic advantage.”



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

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New Strike Deadline Set as Verizon Talks Slow

The clock on a possible Verizon strike is ticking once again.


Two unions representing 65,000 of the telecom company’s workers said extended negotiations have failed to produce significant progress on job protection issues and have set a deadline of Monday, August 11, for reaching a contract agreement with the company.


The Communications Workers of America and International Brotherhood of Electrical Workers had agreed to stop the clock on the August 2 expiration of the current contract, but with the bargaining process slowing down, the unions decided to establish a new deadline. A strike is possible if a deal can’t be reached by 12:01 a.m. Monday, August 11.


“The central issue is the issue of good jobs,” said Bob Master, political director of the CWA, which represents 15,000 Verizon workers in the New York City area. “That’s what we’ve been tangling over for much of the time over the last week.”


Negotiators had made progress on health care and wage issues before the initial deadline, but movement on outsourcing, subcontracting and union recognition issues has been slow, the unions said.


The bargaining unit has been shrinking as Verizon moves call centers abroad and shifts traditional union work to lower-wage, lower-benefit employees at Verizon Business and Verizon Wireless, the unions said. The percentage of Verizon’s revenue that comes from union operations has shrunk to 30 percent this year, compared with 70 percent in 2002, according to the CWA.


“With $5.5 billion in profits, Verizon can afford to stop outsourcing the high-quality, family-supporting jobs that our communities need,” said Chris Shelton, vice president of CWA District 1, which includes New York City.


A spokesman for Verizon said the company was surprised at the union’s characterization of the talks.


“We are making good progress in the bargaining,” he said. “A lot of issues have been resolved. There are other issues we’re close on.”


The threat of a strike comes as Verizon is in the midst of an aggressive push to roll out its high-tech fiber optic service known as FIOS. The company recently received permission in New York to compete with cable companies for television customers and is relying on FIOS to bolster its struggling landline business.


Workers will hold “Ready to Walk” rallies throughout the day at locations across the five boroughs, including Verizon’s Lower Manhattan headquarters. They last went on strike in 2000, staying out 18 days. In 2003, the union extended the deadline and reached an agreement, averting a work stoppage.


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

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Wider Bases for Retaliation Claims, but Not Better Chances for Plaintiffs to Win

Two recent U.S. Supreme Court decisions, Gomez-Perez v. Potter and CBOCS West, Inc., v. Humphries, have now affirmed an additional way for employees to file suit for job retaliation based on a prior claim of discrimination. As the court held, the statutory protection of “equal contract rights” allows employees to pursue retaliation claims under a relatively little-known civil rights law enacted just after the Civil War (42 U.S.C. § 1981).

However, the court’s decisions are not entirely bad for employers and business owners. While the decisions endorse an additional means to sue an employer, the decisions do not change the burden of proof needed for an employee to prevail on a retaliation claim. Thus, an employer is likely to be able to defeat a retaliation claim under the “equal contract rights” provisions of 42 U.S.C. § 1981 using the same defenses available for a claim under Title VII of the Civil Rights Act of 1964, or similar state anti-discrimination laws.

The legal definition of retaliation

Another decision,Burlington Northern & Santa Fe Railways Co. v. White also addressed the burden of proof for a retaliation claim. In that case, the Supreme Court held that an employee must prove he or she suffered from a “materially adverse” employment decision as a consequence of complaining about alleged discriminatory conduct. To meet this standard, an employee must show that the decision might have “dissuaded a reasonable worker from making or supporting a charge of discrimination” against the employer, according to the court. In other words, the act of retaliation must be severe enough that it would have a chilling effect on other employees, and make them think twice about challenging unlawful conduct.

As a practical matter, not every adverse action taken against an employee constitutes retaliation. The Supreme Court has expressly held that claims for retaliation require a “significant” rather than “trivial” harm to an employee. As the court stated, the prohibition against retaliation “does not set forth a general civility code for the American Workplace.” Thus, an employee’s decision to report potentially discriminatory behavior “cannot immunize that employee from those petty slights or minor annoyances that often take place at work and that all employees experience.”

Context is important
    The Supreme Court’s ruling on what might constitute retaliation speaks in general terms, rather than delineating specific prohibited acts. As the court noted, an “act that would be immaterial in some situations is material in others.”

For example, the court explained that “a schedule change may make little difference to many workers, but may matter enormously to a young mother with school-age children. Likewise, a supervisor’s refusal to invite an employee to lunch is normally trivial, a nonactionable, petty slight. But to retaliate by excluding an employee from a weekly training lunch that contributes significantly to the employee’s professional advancement might well deter a reasonable employee from complaining about discrimination.”

Practical tips for avoiding or defeating retaliation claims
    Although the Supreme Court’s decision may ease the way for employees to file more claims based on a wider array of employers’ actions, the new decision did not narrow many of the defenses available to employers. Still, according to the court, the standard for judging the merits of a retaliation claim “must be objective” in order to be “judicially administrable.” This means that retaliation claims are still subject to summary judgment or other pretrial disposition.

While workers will likely focus their retaliation claims on the action taken against them, employers can defend themselves by showing that there was no causal connection between the worker’s complaint and the challenged action. Here are some recommended steps to be taken:

  • Be able to show that the action in question resulted from a decision wholly unrelated to the worker’s prior complaint. For example, documentation that the challenged decision was made before the worker’s complaint is extremely helpful. Retaliation claims necessarily require a subsequent response to a prior complaint of unlawful conduct. If an employer can show that it made its decision affecting the employee before the employee raised a complaint, there should be no viable retaliation claim.


  • Be able to show that the challenged decision affected other employees who did not complain. For example, if an employer has a business need to eliminate all of its night-shift employees, a worker who previously complained about discrimination may not have a viable retaliation claim if he or she was treated the same as the other night-shift employees who also lost their jobs.


  • Be able to show that the decision-maker for the challenged action was never aware of the employee’s complaint. For example, if an employee complains about discrimination to one manager, it may not be retaliation if another manager, who was wholly unaware of the employee’s complaint, assigns the employee to a less-desirable job task. For this defense to be available, an employer should be able to show that the employee’s complaint was held in confidence and not communicated to others.


  • Be able to substitute an independent decision-maker if the original decision-maker is aware of the employee’s complaint. For example, if an employee complains about discrimination perpetrated by her direct supervisor, the supervisor should not be involved in deciding the employee’s bonus a month later. Under these circumstances, it would be better for the employer to have a different decision-maker decide the employee’s bonus level, particularly a decision-maker who has no relationship to the subject of the employee’s complaint.


  • Be able to show a legitimate business reason why the decision necessarily applied to the employee who raised a complaint, as opposed to other workers. As an example, the company should be able to show that a decision was the result of a corporate policy providing that job assignments are based on seniority or level of experience. These reasons often justify why one worker is selected over another. If an employer has existing policies for making particular decisions, it ordinarily should not be retaliation if the employer follows those policies.


  • Be able to offer the employee some input when implementing the challenged action. If there are multiple options available for a worker who previously raised a complaint, ask the worker which option is most preferable. For example, if business conditions require the employer to change an employee’s work hours, or assign different duties to the employee during current work hours, ask the employee to choose. Even if both options are not appealing to the employee, it is still helpful to allow the employee to choose the “lesser evil,” provided the employer can show there are no other options available.


  • Be able to show the business need to implement the challenged action against the employee at the particular time the action is taken. If business reasons require an employer to implement an adverse decision soon after an employee raised a complaint, be sure that there are genuine reasons why the decision had to take place at that time. For example, if an employee is assigned to work on an undesirable project a week after complaining about discrimination, be able to show that the undesirable project was the result of an unanticipated emergency requiring the unique job skills of the employee who complained. On the other hand, if there is a way to delay an adverse decision, consider delaying your action. The proximity in time between a worker’s complaint and the subsequent action taken by the employer is often a factor.


  • Be able to show that your company has a policy and an internal procedure for complaints and investigations of discrimination and harassment, and that it communicates this process to employees. Be sure that policy explicitly states that there will be no retaliation for raising concerns about potential discrimination or harassment. This policy should be strictly enforced, without exception, as part of your company’s culture.


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Factors In Relocation

FACTORS IN RELOCATION—1
Company growth led the list of internal factors cited. The top external factor that companies cite is a lack of qualified people locally. Large companies particularly noted that the weak real estate market affected relocation values in 2007.
What internal company conditions had the most significant impact on the number of your employee relocations in 2007?
( ) indicates results from previous year
Internal conditions had no impact 4% (6%)
Growth of company 46%  (59%)
Promotions/resignations 37% (36%)
Knowledge/skills transfers 30% (30%)
Corporate reorganization 24% (22%)
Expansion into new territories 22% (22%)
Acquisitions/mergers 15% (19%)
Budget constraints 13% (9%)
Expansion of facility 11% (19%)
Use of short-term assignments 11% (not listed as an option in 2007)
International expansion 11% (10%)
Increased production 10% (15%)
Closing of facility % (12%)
Decreased production 4% (2%)
Expansion of telecommuting/virtual teams 3% (1%)
Security issues 1% (1%)
Other 5% (5%)
What external factors had the most significant impact on the number of your employee relocations in 2007?
( ) indicates results from previous year
External conditions had no impact 19% (26%)
Lack of qualified people locally 52% (52%)
Economic conditions 24% (25%)
Real estate market 22% (not listed as an option in 2007)
Growth of domestic competition 14% (13%)
Growth of international competition 10% (13%)
Destination country regulations 3% (3%)
War in Iraq/Afghanistan 2% (1%)
Domestic natural disasters (wildfires, floods, etc.) 2% (3%)
International natural disasters (typhoons, etc.) 1% (1%)
Terrorism/political violence 1% (1%)
Other 4% (4%)
Source: Atlas World Group’s 41st Annual Corporate Relocation Survey

FACTORS IN RELOCATION—II
The use of lump-sum payments grew last year, and employees who declined relocations cited family issues most often as their reason for turning down a move.
To what extent does your company reimburse relocation expenses? ( ) indicates results from previous year
  Transferees New hires
Full reimbursement of relocation expenses 63% (55%) 54% (42%)
Lump-sum payment 44% 32%) 49% (31%)
Partial reimbursement based on salary, position, etc. 37% (30) 41% (43%)
No reimbursement of relocation expenses 6% (5%) 5% (8%)
What reasons did employees give for declining relocation? ( ) indicates results from previous year
Family issues/ties 62% (84%)
Housing/mortgage concerns 50% (30%)
Cost of living in new location 49% (49%)
Spouse/partner’s employment 48% (49%)
No desire to relocate 45% (43%)
Personal reasons 41% (33%)
Could hurt career 2% (3%)
Other 2% (4%)
Source: Atlas World Group’s 41st Annual Corporate Relocation Survey

Workforce Management, August 11, 2008, p. 31, 32 — Subscribe Now!