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Dear Workforce How Do I Change Problem Behaviors of an Otherwise Good Employee

Dear Taming a Problem Child:

Take an employee with great attention to detail, sense of urgency and personal commitment to getting the job done; add a few interpersonal skills, and you’ve got the recipe for a star performer. Here is what to do:

Get the facts
Sometimes irritating behavior is under-reported by co-workers; more often, the story grows in the telling. One of the worst things you could do is to confront an employee with bad or insufficient information. Doing so can has a negative impact on the employees, their perception of you and your organization, and negates the effectiveness of the intervention.

Get at least three specific examples of each problem behavior (this is generally an ample number to convince the employee that a change is warranted).

Observe the behavior yourself, if possible. This makes it easier to describe the conduct and its impact when you speak with the employee. The employee will also be less embarrassed than if you have only tales brought to you by co-workers. It’s one thing if the boss sees an opportunity for you to improve. It’s another thing entirely if your co-workers are talking about you behind your back.

If it is impractical for you to see firsthand what’s happening, then compile specific, detailed observations (day, time, specifically what happened, etc.) from co-workers to reinforce your coaching.

Prioritize and be patient
In most cases, such as with the employee you describe, there’s more than one distinct behavior to be changed. Only so much can be accomplished at one time. Trying to deal with too many problems at once will only increase frustration for everyone and may actually undermine your coaching effort.

Before meeting with the employee, decide which behavior(s) you will work on first. Prioritize the rest and plan to work on each over a reasonable period of time. The employee above, for example, could easily be coached to hand off work to the appropriate person. Learning to get to the point quickly when sharing information may take more time and might be better done after you’ve had an initial success with the employee.

Determine what you want
Telling someone what they are doing wrong is only part of the solution. Tell the employee what you want clearly and in enough detail that they will get the picture of what desired behavior sounds and looks like. It is best to share several specific examples of each desired behavior with the employee.

Tell the employee above, for example, that they should typically wait at least a full workday before repeating a request for information, and not to go to other employees unless the first person can’t help. This is a specific, measurable and easily understood solution to the last issue mentioned.

Meet with the employee and plan positive reinforcement
Meet privately with the employee to discuss the needed change, the advantages to the employee if changes are made, and the specific behaviors you want to see—and to develop a plan to monitor those changes as they occur.

Working with the employee, develop a plan to ensure that he or she gets immediate feedback when undesirable behaviors occur, as well as positive reinforcement when improvement happens. Since you may not always be available, the employee might even consider asking a co-worker for help in this respect. You should plan to meet with the employee at least weekly to discuss progress and provide additional support as needed.

Time for a team checkup
One final thought: If all you are hearing is complaints, it may be time to take a critical look at your team. Good teams do more than complain; they pitch in and help one another succeed. Do your employees truly understand that they are empowered and are expected to help others? Do they have the assertiveness and coaching skills needed to do so well? Enhancing co-workers’ abilities in these critical areas will result in more team cohesiveness and better overall results.

SOURCE: Richard D. Galbreath, Performance Growth Partners, Bloomington, Illinois, January 24, 2008.

LEARN MORE: Please read more on the importance of setting job goals and managing performance year-round.

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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House Passes Mental Health Parity; Difficult Conference Looms

Legislation that would bolster mental health benefits gained strong House approval Wednesday night, March 5. It now heads for what could be difficult House-Senate negotiations to produce a final bill.


In a 268-148 vote, the House passed a measure that would prohibit companies that offer mental health and substance-abuse benefits from charging more for them than they do for medical and surgical benefits.


The bill expands current parity law, which requires equal annual and lifetime dollar limits. Under the House measure—and a Senate companion—co-payments, deductibles, and out-of-pocket expenses also would have to be equal.


Unlike the Senate bill, the House version would mandate coverage for all conditions listed in a diagnostic manual published by the American Psychiatric Association. 


Critics say that provision would force companies to finance treatment for disorders like jet lag and caffeine addiction. Advocates argue that broader coverage prevents “discrimination by diagnosis.”


The Senate bill, which passed that chamber unanimously last fall, has the strong backing of business groups. Their House allies criticized the Democratic majority for not allowing a House vote on the Senate bill. The Bush administration opposes the House bill and supports the Senate version.


Rep. Howard “Buck” McKeon, R-California and ranking member of the House Education and Labor Committee, faulted the House bill for providing “preferential treatment for mental health benefits.” He said it “has little chance of becoming law.”


The measure may put all benefits in jeopardy. “Some employers may choose to drop their mental health coverage rather than comply with burdensome mandates,” McKeon said. 


Rep. Robert Andrews, D-New Jersey, disputed McKeon’s assertion. “There is not one shred of empirical evidence” that employers have discontinued mental health coverage in states that have stronger parity laws than the one the House approved.


Rep. Patrick Kennedy, D-Rhode Island and one of the bill’s authors, also dismissed McKeon’s argument. “No one questions when you get a broken arm, but when you have a mental illness, it’s discriminated against,” he said. “[His bill] is not preferential treatment.”


Kennedy, who has had his own battles with substance abuse, characterized the measure as a “truly landmark piece of civil rights legislation.”


Whether it will survive a House-Senate conference is a different matter. Kennedy’s father, Sen. Edward Kennedy, D-Massachusetts and chairman of the Senate Health Education Labor and Pensions Committee, will be one of the negotiators. He and Sen. Pete Domenici, R-New Mexico, are the authors of the Senate measure.


Both lawmakers praised the March 5 House vote. But in a press conference following unanimous approval of the Senate measure last fall, Domenici emphasized that businesses, insurers and mental health advocates not only backed the bill but had spent years crafting it.


“We’ll go to conference carrying that with us, knowing that it makes the bill pretty passable,” Domenici said in September.


In contrast to accolades for the Senate bill, the House version drew opprobrium from business groups. They said it would negate medical management practices, mandate out-of-network coverage, subject businesses to different coverage rules in different states and raise insurance costs.


“One of our member companies has pre-existing contracts with more than 150 plans, all of which would require amendment or renegotiation, severely disrupting the entire spectrum of benefits offered,” wrote Edwina Rogers, vice president of health policy at the ERISA Industry Committee, in a letter to House members.


Another bill that has drawn less criticism from business, the Genetic Information Nondiscrimination Act, was added to the parity legislation. The measure, which was approved 420-3 by the House in April 2007, prohibits health insurers from canceling or denying coverage based on a person’s genetic information.


But a coalition of employers warns that the bill could subject companies to excessive punitive damages for paperwork mistakes when keeping health records.


—Mark Schoeff Jr.


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Tool Do Homework Before Shopping for Sales Incentive Software

There’s more to buying a sales incentive management solution than writing a check. Before committing the time and money, consider your company’s needs and which product will come closest to meeting them, say industry analysts and compensation executives who have been there and done that—like Gary Lawrence, senior manager of sales compensation at Waste Management. Other advice:

    Know what you’re after. Do you want a stand-alone sales incentive management program or a complete sales performance management solution? There are different vendors for each, so it pays to know what you’re looking for from the outset.


Review existing processes and correct what’s broken. Switching from a spreadsheet to a sales incentive management solution won’t fix glitches in how you calculate commissions or other errors in the plan. Failing to address such problems beforehand will only add to implementation time because you’ll have to stop and deal with them along the way, Lawrence says.


Understand how a sales incentive solution will fit into existing HR systems. If you’re upgrading existing core HR software, consider waiting until that is up and running before adding a sales incentive management program. That way you avoid double trouble should the larger implementation hit a snag.


    Consider available IT resources. Does your company have the servers and personnel to commit to an on-premises solution? The answer will determine whether you license on-site software or use a hosted or software-as-a-service solution.


    Hire a consulting firm. At Waste Management, Lawrence hired a consultant to draw up a request for proposals and evaluate vendors. “It was such a large purchase we wanted to dot all our i’s and cross our t’s before we asked senior leadership for funding,” Lawrence says.


    Ask for demos. Ask vendors to demonstrate how they would handle a few of your current incentive plans to see if what they provide matches or bests your present program. Other things to look at: the level of detail in reports, and how flexible programs are, in case you want to customize something.


Demand support. If you’re spending big bucks on a solution for thousands of users, make sure you’ve got adequate vendor backup. At Waste Management, Lawrence’s project team has a standing Tuesday morning conference call with their counterparts at Varicent to discuss strategies and problems.


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Special Report Background Checking–Digging Deeper

When Bruce S. Fillpot applied for a job as a financial analyst at Intel Corp., his résumé did not lack distinction. A past president of the New Mexico Society of CPAs, he had helped write legislation and authored numerous articles in professional publications. During his career, he had worked for the “Big 4” accounting firm Ernst & Young, as vice president of investments for a national brokerage firm, and had most recently been chief investment officer at REDW Trust Co., an Albuquerque financial services company.

Fillpot disclosed on his application that he had sued REDW, but Intel, the semiconductor giant, offered him the job in October 2005, contingent on a background check. A month later, Intel managers called him into a meeting and it was then that things started to go awry, according to court documents.

During the November 10, 2005, meeting, Intel questioned Fillpot “at length” about issues that arose from his background check, including a bankruptcy and the REDW suit, Fillpot, 48, alleges in a discrimination suit he filed in December 2007.

On November 28, 2005, the company withdrew the job offer.

Intel “retaliated against Plaintiff for filing and participating in an EEOC charge of discrimination against [REDW],” the suit says. New Mexico court records show Fillpot sued REDW in October 2003 for violations of the state Human Rights Act, retaliatory discharge and breach of contract. After the company filed a counterclaim for conversion, which in tort law means an illegal taking of another’s property, the litigation was settled in January 2007.

Fillpot also alleges that Intel discriminated against him because he had filed a bankruptcy action. The federal Bankruptcy Act prohibits an employer from discriminating “with respect to employment” against someone who “is or has been a debtor or bankrupt” under the act. He came out of bankruptcy in February 2003.


Widespead screening
In checking out Fillpot, Intel wasn’t doing anything unusual. A 2006 survey of human resource professionals by the Society for Human Resource Management found that 85 percent of those surveyed hired outside agencies to conduct background checks of potential hires and, of those, 96 percent reported using criminal records checks—up from 51 percent in 1996.

What was out of the ordinary about Intel’s research was that it extended into civil lawsuits. A civil records check is still far less common than a criminal records check. In the 2006 survey, SHRM did not even include it as a statistical category. But many screening services now recommend it as part of the hiring process for executive-level positions. “It can be a good addition to a well-reasoned and consistently applied screening program,” says Gregg Freeman, associate general counsel at HireRight, a background screening service based in Irvine, California.

Some security consultants even advise civil records checks in the hiring of lower-level positions, such as executive secretary, that have access to corporate bank accounts. FBI statistics show more than 14,000 arrests for embezzlement in 2005, the most recent year for which numbers are available.

“If you’re hiring into a position of authority, these days corporations need to do their homework,” says Peter Turecek, a managing director of Kroll Inc.’s business investigation and intelligence division in New York.

But experts also say civil records checks are a screening tool that employers need to handle with care.

“An employer has the right to make an informed [hiring] decision based on relevant information,” says Les Rosen, president of Employment Screening Resources in Novato, California, and author of The Safe Hiring Manual. “But the employee may also have a right not to have this [civil suit] information considered.”

Courts in the U.S. have frequently addressed the issue of misuse of criminal records in hiring decisions and also the issue of in what circumstances an employer can be held liable for not doing a criminal background check. The Fillpot case could set something of a precedent because there has been little guidance from the courts about how to use—and not to use—civil records.

“It’s a question of using the right records in the right way,” Freeman says.


Crossing a line?
A survey by ChoicePoint, a screening company in Alpharetta, Georgia, found that a majority of workers were comfortable with employers doing criminal background checks, but felt that civil suit checks are an invasion of privacy.

As with criminal records, the Internet has helped fuel the supply of accessible civil records. In the federal court system, the PACER service provides access to civil records from all over the country. State courts from Los Angeles to Pittsburgh and Dayton, Ohio, to San Francisco have made the contents of civil dockets available for download.

On the demand side, employers are under ever-increasing pressure to get the hiring decision right, whether to avoid workplace violence or sexual harassment litigation or to comply with Bush administration policies affecting post-9/11 homeland security or immigration reform. A 2002 study by executive search firm Christian & Timbers found exaggerated or completely false information in 23 percent of a sample of 7,000 executive résumés.


“With civil records, you have to proceed carefully. If an applicant filed a discrimination claim against a
former employer, that’s not the type of thing that should influence an employement decision.”
—Gregg Freeman, associate general counsel, HireRight


Rosen says civil records searches conducted by his company have uncovered allegations of trade secrets violations and evidence that one job applicant was “a serial litigator who sued past employers with regularity.” Another had allegedly been violent. “Sometimes you come across these red flags in civil cases,” he says.

At Kroll, Turecek says his investigators would look out for any litigation involving intellectual property if the client “is hiring into a company where intellectual property is a valuable product.” Another key search area for top-level positions would be any shareholder or breach of fiduciary duty litigation in the applicant’s background.

“It’s an insurance policy [against a negligent hiring suit] and a fairly low-cost one, all things considered,” Turecek argues.

Experts could not cite any precedent for an employer being held liable for failing to do a civil records check, but the College of Physicians of British Columbia recently sued a Vancouver executive search firm, alleging Caldwell Partners did not inform the college that a job candidate had sued her last employer and had taken the matter to trial.

“If you’re hiring for a position of trust, the standard of care is higher,” HireRight’s Freeman says. “So it may be more cost-effective to do a civil records search.”

“If an employee harassed somebody or gave away trade secrets and a search of civil cases may have revealed that, the employer may have some explaining to do,” Rosen says.

According to Rosen, a basic civil records check run on a job applicant’s name costs about $25 per county, compared with about $18 per county for a criminal records check. But Rosen points to a number of practical problems with getting useful results from civil records checks, including the following:

Where to look. Unlike a criminal case, which is usually brought in the same jurisdiction as an applicant’s residence, the jurisdictional possibilities for a civil case are much more diverse.

Resources. Only a few states have statewide civil records databases, requiring investigators to conduct searches county by county, which adds to costs.

Identifiers. Civil case records do not generally provide a date of birth, address or other identifying information that can match a record to a specific applicant.

“You may have no idea whether you have the right person unless you read the first few pages” of a civil complaint, Rosen says. “You put all of these problems together, [and] that’s why we say to clients, ‘It’s not as easy as you think to do a civil search.’ ”

And it can get much more expensive if investigators have to go to the courthouse and pull court files. Under the Fair Credit Reporting Act, “You really have an obligation to pull the file,” Rosen notes. “And someone knowledgeable has to read it.”


What’s the relevance?
Once the information from lawsuits is collected, the employer faces the trickiest issue of all: How to use it in making the hiring decision. Any adverse employment action based on data covered by the Fair Credit Report Act must be disclosed to the job applicant and, Freeman says, the employer “is open to the risk that the applicant will claim you improperly relied on the record.”

Freeman recommends a “rational relationship” analysis. Does the civil suit disclose something about the applicant that is reasonably related to the requirements of the position?

“It’s most likely useful when the applicant was a defendant in a case that may go to his integrity—for example, breach of contract. That’s an issue that could potentially be considered job-related,” he says.

Some screening services suggest that cases in which applicants are plaintiffs are also useful. “A search of federal and county civil court records will help identify an applicant with a history of suing others,” AccuSearch, a Phoenix-based service, says on its Web site. But Freeman and others believe using those cases is more risky because, among other things, there are laws that bar retaliation against those who exercise valid legal rights.

“With civil records, you have to proceed carefully,” Freeman says. “If an applicant filed a discrimination claim against a former employer, that’s not the type of thing that should influence an employment decision.”

In The Safe Hiring Manual, Rosen says a personal injury suit brought by an applicant “would not likely have bearing on job performance (unless the applicant was suing a past employer and had a custom and practice of doing that).” He also raises the dicey subject of divorce cases.

“Often such lawsuits will have a detailed description where the parties are bringing out all the dirty laundry,” he says. “As interesting as that might be to read from a human-interest point of view, it is likely to have little bearing upon employment.”

Divorce record searches, in particular, make the privacy lobby uncomfortable.

“With 50 percent of married people getting divorced, it seems rather pointless to check on divorce filings,” says Beth Givens, director of the Privacy Rights Clearinghouse in San Diego. “I don’t think there’s real value in it for the employer. Just because somebody gets divorced doesn’t mean they will be a bad employee.”

According to court records, Fillpot filed for divorce in 2000. While the case was pending, he and his wife filed a Chapter 7 bankruptcy petition. The employment suit against Intel says he was also required to discuss a “divorce with child support.” But he alleges only retaliation for the earlier REDW suit under Title VII of the Civil Rights Act and for the bankruptcy under the Bankruptcy Act’s prohibition on discrimination.

Rosen, who in addition to running a background checking business is also an attorney, says the basic rule for using civil records in making a hiring decision is whether the information is a “valid predictor of job performance.” Assuming Fillpot’s history did influence Intel’s decision, “The defendant may say they were looking at the underlying behavior. … But there must be a valid business justification for why the underlying behavior is relevant. You have to be looking at the behavior, not the bankruptcy itself, and the distinction between the two is very fact-specific.”

Whatever happens with Fillpot’s allegations, Rosen adds, the case underscores the complexity of civil suits. “You need to be very cautious in using civil case records.


Workforce Management, March 3, 2008, p. 35-39 — Subscribe Now!

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Their BlackBerrys Your Problem

For most employers, allowing employees to have mobile access to e-mail and Internet servers through their own phones, BlackBerrys or other devices is an attractive proposition. Every organization wants more efficiency and productivity, and the ability to remotely access data systems with a mobile device lets employees instantly communicate with one another and respond to the business’s clients and customers. With the popularity of Apple’s iPhone and the competing devices now either on the market or being rushed to it, prices will continue to drop and technological capabilities will rise. In a world where work and personal life seem to merge more every day, it’s increasingly difficult for organizations to limit employees to Internet or e-mail access only through company-owned devices. That’s just not how business works anymore.

While the technology has tremendous advantages for employers, there is a flip side to this development. The systems that allow employees to communicate instantly with customers are also the ones employees use to communicate with friends, family and, quite literally, everyone else connected to the Internet. From pre-teens to seniors, mobile devices are increasingly the preferred device for how we communicate, whether it’s e-mailing, talking or filming and posting video to YouTube.


Employers need to think carefully about giving employees access to company data systems through these devices. And employers have to decide if, when and how they will monitor the use of their systems. However much employers want to provide access to their technology systems for business convenience or necessity, they also have legitimate interests in preventing their misuse. Employers will also have to do some education with employees about what happens when personal devices are used to access company systems. Employees may mistakenly believe that by using their own devices, they have bought themselves a measure of privacy and are beyond the reach of their employer.


Once employers make decisions about the boundaries of system access and about monitoring, employers should put employees on notice, telling them what the boundaries are. They should inform employees about potential monitoring and possible access to information transmitted, conveyed or stored on their personal devices. Employers should provide these notices prior to giving employees access to the systems and, ideally, require that employees agree to the terms as a requirement of access. Employers must keep a record of the notice they have provided to employees or have a record of the employee’s agreement to the terms of use for company-provided technology systems.


If an employer fails to provide clear notice to employees of the employer’s right and ability to monitor usage, employees may claim that they had an expectation of privacy in their communications via the employer’s data systems. If an employer creates an expectation of privacy, or fails to dispel that expectation, the monitoring of these systems may violate employee rights.


Many employers are used to addressing these issues when they provide laptop computers to employees, but they fail to realize that the issues that arise are less about the hardware used than the access to data systems. Employers should carefully review existing policies to ensure that they are keeping pace with technology.


The stakes are high for employers that fail to keep tabs on their data systems. In a recent state court case in New Jersey, litigation was allowed to proceed over the objections of an employer in a lawsuit for damages stemming from an employee’s misuse of employer-provided Internet access.


The plaintiff was the mother of a 12-year-old girl. The girl’s stepfather, a company employee, circulated pictures of the child on a child pornography Web site, using the employer’s Internet access. The mother alleged that the employer had a duty to monitor its systems and prevent their improper use. The court found that there was potentially a duty for the employer to guard against misuse of Internet access and to prevent damage to others from such misuse. While it was only a ruling on a preliminary motion, the theory that the plaintiff was using to seek damages from the employer could be used in other cases in which employers failed to monitor and prevent misuse of their systems.


Compliance with employer policies and, potentially, an affirmative duty to monitor system use may also arise in disputes over the improper use of confidential company information. Employers must act to protect proprietary and confidential information, or they could lose the ability to protect against its public use. It may turn out to be a significant issue if an employer allows employees to access documents on its servers through a personal device and fails to monitor such traffic to ensure that the device is not being used to download large amounts what could be confidential data. Monitoring the access and use of such information may be a necessary step in proving that such information was indeed confidential.


There is countervailing pressure here for employers. While they may, with proper notice, monitor or gain access to e-mails that violate non-compete or confidentiality restrictions, they should avoid accessing e-mails that communicate personal matters that are not violations of company policies. The technology exists to review the content of messages, and there is software that can look for key words and phrases in e-mails in order to sift through the volume of e-mails to get to the specific issues that cause the employer concern.


Workforce Management Online, March 2008 —Register Now!

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Escape from Excel Hell

Sales reps hate spreadsheets.

More specifically, they hate the spreadsheets that compensation managers create to determine sales commissions. Companies have used Excel spreadsheets as their No. 1 tool for determining sales commissions for about as long as the program has been around. But the practice is rife with miscalculations and other problems.

Salespeople have a special name for it: “Excel hell.” Come payday, it’s not uncommon for them to spend hours doing a shadow accounting of their commission checks to make sure they got what they deserved, according to compensation managers and others.

The alternative to those dreaded spreadsheets is sales incentive management software, a specialized program that manages a reward system for meeting sales quotas and goals. The software typically includes tools to create, document and allocate incentive plans, as well as a Web-based portal that administrators can use to access the information, generate reports and integrate data with other HR systems.

The software has been around for about six years, and until recently has had a loyal, if small, fan base.

However, it’s starting to take off now that startup companies and other vendors have begun to offer “software as a service” and hosted solutions that are priced lower than the original high-end, on-site version.

Executives at companies that use sales incentive software claim to have reduced or eliminated common mistakes on spreadsheet-based commissions. They also say it has dramatically decreased the time they spend on the process, and the time reps spend second-guessing commission payouts, leaving more time for making sales calls. “We’re extremely pleased and excited,” says Gary Lawrence, Waste Management’s senior manager of sales compensation, who is supervising a sales incentive software rollout at the major garbage hauler.

In addition to Waste Management, other Fortune 1,000 fans include Aetna, Liberty Mutual, Wachovia, Verizon, Novell and Johnson & Johnson. Thousands of small and midsize businesses also have become converts.

Interest in sales incentive software pushed sales up 15 percent in 2007 to $250 million, according to technology researcher Gartner, which predicts a similar increase in 2008.

That’s a relatively small amount of money compared with the number of companies using spreadsheets, says Michael Dunne, the Gartner analyst who tracks the subject. But companies that have switched have discovered they were overpaying commissions anywhere from 3 percent to 10 percent, “so it’s real money,” Dunne says. Once a company gets to more than 100 salespeople, or if it starts selling product bundles with complicated commission structures, it’s too hard to track all the possible variables in spreadsheets. “It becomes a nightmare,” Dunne says.

The first generation of sales incentive software from vendors such as Callidus, Synygy and Oracle were installed on-site with a client, and cost $200 to $300 per person, making them attractive mainly to major enterprises, according to analysts and experts. “Between the software and implementation, it was hard to get anything under $2 million,” says Bob Conlin, Centive’s chief marketing officer and an industry veteran.

Software-as-a-service vendors such as Centive and Xactly entered the business offering solutions for a fraction of that, $20 to $50 a month per user, according to several analysts’ calculations. But many such vendors still are small companies with limited financial backing and marketing muscle, which has made it difficult for them to make major headway with customers, analysts say.

To change that, vendors are taking steps to broaden their appeal. Callidus, for example, retooled its technology so it’s available both as an on-premises or on-demand solution. Centive recently signed a deal with ADP, which will market the software and host it for its small and midsize business customers. Centive, Callidus and Xactly have partnerships with Salesforce.com. Other vendors, such as Varicent, are looking to gain market share by offering sales incentive management as a subset of a comprehensive sales performance management software package.

Large and small applications
Waste Management is a sales incentive software convert.The nation’s largest trash collector has 1,200 inside and outside salespeople who sell the Houston-based company’s collection services to new businesses and construction sites, and are compensated in one of a dozen different incentive plans. Tracking all those reps and plans in Excel spreadsheets was time-consuming, prone to error and didn’t give management enough feedback about whether commission structures were enticing salespeople to sell the most profitable products, says Lawrence, the compensation manager.

In late 2006, Waste Management struck a $3 million deal to license sales incentive software from Varicent. The software was installed in one test market in July 2007, expanded to four in February and should be in place in all 48 sales territories by early 2009.

So far, the only glitch was one that Waste Management brought on itself. The company had to delay a beta test after managers realized they needed to standardize some processes that individual territories did differently, and fix problems with the existing billing system and pricing tools so data fed into the new software was error-free, Lawrence says.

Despite the snags, Lawrence and the Waste Management senior leadership that approved the project are pleased with the results. Lawrence estimates that when commissions are completely automated, it will save administrative staff the equivalent of 15,000 workdays a year, which is the time it once took to enter commission data into Excel spreadsheets and then re-enter it into payroll software.

Also, by cutting the time that sales reps were spending on bookkeeping, it has given the sales force extra hours “without adding people,” Lawrence says. Since the weak economy has cut into Waste Management’s construction-related business, Lawrence is using the software to tailor commission plans to motivate sales reps to go after new business. Reports that the software generates give instant feedback on how well reps are meeting those goals. “We don’t want all the business we can get; we want profitable business, so we’re looking at every customer and every order to see if it fits that,” Lawrence says.

Executives have already expanded their Varicent contract to cover incentive plans for trash haulers, who earn commissions when they exceed daily quotas, drive safely and bring in new business, among other things. Waste Management initially will put commission plans for 5,000 to 7,000 garbage haulers on the software, but eventually could use it for all of its 25,000 drivers. The company is also using the software for its 110 national accounts and special waste salespeople, and in the future, could use it for customer service representatives.

Large enterprises such as Waste Management were among the first to use sales incentive software, but software-as-a-service solutions have brought it to small and midmarket companies that don’t have the budget or IT staff for on-premises software.

One of them is Speakeasy, a 330-person Seattle company owned by Best Buy. It provides “voice over Internet protocol” voice and data services to 50,000 small business customers across the country. Speakeasy uses a software-as-a-service incentive software program from Xactly to calculate commissions for about 35 sales reps. That’s not a lot of people, but between a direct sales team, in-house salespeople and sales reps who work with solution partners, Speakeasy runs four or five different incentive plans and they’re all complicated, Speakeasy CFO Andrew Hyde says. A Speakeasy employee who previously worked at Microsoft built Excel spreadsheets to manage the plans. But after he left in January, chaos ensued. Hyde calculated commissions the next month, and was up until midnight one evening figuring things out.

“It’s not something I ever want to do again,” he says.

Before joining Speakeasy, Hyde worked at Salesforce.com, the software-as-a-service pioneer, so he didn’t need convincing that it was the way to go. He tapped Xactly because the company’s software is integrated into Salesforce.com and Speakeasy was already a Salesforce.com customer. Implementation was fast—just 30 days. The fee Speakeasy pays falls within the industry average of $20 to $50 per user per month, Hyde says.

Figuring commissions has been easy, and sales reps use the software to see how close they are to trigger points that would bump up their commissions, “and if they care, they get back on the phones,” Hyde says.


Selling systems in a downturn
Corporate concerns about a recession are curbing corporate HR and IT spending, which could result in fewer software purchases of any kind, including sales incentive programs, according to industry experts, analysts and company managers.

“This will be a challenging year for any back-office technology that doesn’t have a direct effect on the bottom line,” says Jacqueline Kuhn, chair of the International Association for Human Resources Information Management (IHRIM) and senior director of corporate and administrative services at OfficeMax.

But some sales incentive software users believe their best defense against an economic downturn is a well-motivated, well-compensated sales force, and they’re willing to pay for the software that makes that happen.

Also, companies are enthusiastic about anything that’s branded as employee self-service, pay for performance or software as a service. Sales incentive software is all of those, says Christa Degnan Manning, research director at AMR Research, a Boston HR technology research firm.

For now, providers of on-premises software remain the market leaders. Callidus, for example, handles a total of 1.8 million payees from 150 companies, including a who’s who of Fortune 1,000 customers, according to Steve Apfelberg, the company’s vice president of marketing and business development. To stay competitive, Callidus started offering a hosted version of its software, and recently partnered with IMS Health to resell Callidus’ software to IMS’ pharmaceutical and health industry customers.

Experts believe software as a service will take off once vendors come up with a technology platform that companies can configure to their particular needs, without having to do a lot of software customization, IHRIM’s Kuhn predicts.

Pure software-as-a-service vendors are the best-positioned to do well in the future “because they don’t have a lot of boring old technology around their necks” that they have to transition to a new delivery model, Manning says.

However, don’t count out Oracle, analysts say. It could be a big contender if it chooses to put its substantial investment dollars into the sales incentive software market.

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Technology Companies Are Behind the Talent Management Times

Technology and telecommunications companies employ outdated tactics for recruiting and retaining talent, according to a new report from professional services firm Deloitte.


The study of more than 150 technology and telecommunications companies in North America found that most firms in those sectors rely on financial incentives to attract and retain employees. But today’s workforce values greater freedom in schedules and control of where and how they work over financial compensation, Deloitte said in the report, released Wednesday, March 5.


“The conflicting perspectives between technology and telecommunications employers and employees suggest that the respondents are significantly challenged in how they capture their fair share of talent in the near term,” Jeffrey Alderton of Deloitte Consulting said in a statement.


The report comes amid mixed signals regarding the technology and telecommunications job market. According to the U.S. Department of Labor, U.S. payroll employment in the computer and electronic products sector dipped by 1,200 jobs from December to January, to 1.26 million. Between January 2007 and January 2008, employment in that sector fell by 35,100 jobs. In addition, payroll employment in the telecommunications sector dropped by 9,200 between January 2007 and January 2008, to 1.03 million jobs.


But payroll employment in computer systems design and related services rose by 78,500 between January 2007 and January 2008, to 1.39 million jobs.


The Deloitte survey, conducted last spring, found upbeat hiring expectations. Two-thirds of respondents expect their workforce to grow by at least 6 percent over the next 12 months, and only 6 percent expect their workforce to shrink, Deloitte said.


Even so, technology and telecommunications companies surveyed are generally less worried than companies in other industries about a prolonged global labor crisis, Deloitte said.


“This may be due to the fact that technology and telecommunications companies are considered ‘sexy’ and, therefore, have an easier time attracting talent,” Deloitte said. “It may also be attributable to their younger workforces, which are less affected by baby boomer retirements.”


In the report, Deloitte said that 71 percent of companies surveyed said they use financial rewards and incentives to attract and retain talented employees. That was by far the most-mentioned strategy. Training and development programs, cited by 48 percent of respondents, was second, followed by implementation of career growth plans, mentioned by 36 percent.


Deloitte cast the focus on financial tactics as behind the times. “Workers today aren’t as interested as they used to be in hefty compensation packages and fancy retirement plans,” Deloitte said. “What they really want—more than anything else—is direct and personal control over when, where and how they work.”


The report also argues that young “Millennial” workers aren’t the only ones interested in a significant say over their jobs. “It turns out that recent retirees who are re-entering the workforce want many of the same things as their younger counterparts,” Deloitte says. “So do ‘Gen Xers,’ although they are probably too afraid to ask.”


Many companies have taken steps in the right direction, Deloitte says.


The survey found plans to ramp up such things as mentoring and training. The next step, according to the report, “is for companies to develop such programs as mass career customization that make personalized career development a standard operating practice, rather than a one-off exercise reserved for special circumstances.”


—Ed Frauenheim


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Study More Firms Say Hiring Will Be Off in 2008

Recruiting consultancy CareerXroads released its annual Source of Hire Study, and for the first time in its seven-year history, more respondents are saying they will make fewer hires than in the previous year.


Almost 35 percent of respondents predicted they would have fewer hires in 2008, compared with 32 percent in 2007. Forty-four percent of respondents said the number of hires will remain the same. Only 22 percent of participants predicted more new hires.


Additionally, the No. 1 source of all hires is internal transfers and promotions, which mimics last year’s results, according to the survey released Wednesday, February 27. The survey included 49 employers with workforce populations of 5,000 that made 303,000 hires in 2007, according to Gerry Cris¬pin, principal at CareerXroads. The data was collected in January.


Internal transfers and promotions accounted for 30 percent of the hires that survey participants made in 2007. Some respondents said that as much as 50 percent of their hires were derived from internal transfers and promotions.


Despite such practices, the study finds, companies are not bragging about it to potential candidates. It’s a missed opportunity, Cris¬pin notes, particularly because career development is one of the key factors that prospects take into account when evaluating a job offer.


The study also notes that referrals make up 28.7 percent of all external hires. The study shows employee referrals are by far the largest contributor of candidates in this category. Twenty percent of survey respondents said one out of two employee referrals result in a hire.


About 26 percent of hires attributed to job boards, including a company’s own site. There are some promising changes under way in the area, Cris¬pin says. Companies in the survey showed an increased awareness of the flaws that lie in using online pull-down menus to determine where job seekers initially learned about a vacancy.


Fifty-two percent of respondents said they ask a candidate source-of-hire questions during the interview. And 26 percent of participants ask source-of-hire questions to employees during the onboarding process.


Direct sourcing, or proactively finding leads, contributed to 9.4 percent of hires—which was up from 6.4 percent in 2006. Cris¬pin believes the rise of direct sourcing is related to the reduction in agency hires. Third-party placement agencies now bring in 3.3 percent of hires, according to survey participants. This has been declining steadily, from 4.8 percent in 2006 and 5.2 percent in 2005.


Media print ads are falling, accounting for only 4.6 percent of hires among survey respondents, compared with 6.9 percent in 2006. CareerXroads believes newspaper ads will eventually bottom out at between 3 percent and 4 percent.


—Gina Ruiz


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Ford Rewards Employees With $1,000 Bonus

Ford Motor Co. is paying every U.S. and Canadian employee a $1,000 bonus even though the automaker lost $2.7 billion last year.


In a companywide e-mail to all employees on Wednesday, March 5, CEO Alan Mulally said that although Ford fell short of its sales goals for 2007, the automaker “met or exceeded” its objectives in every other category.


The bonus also will be paid to managers outside the U.S. and Canada. Mulally said the “performance awards” are based on improvements in cost performance, quality, automotive cash flow and financial results.


“The board of directors believe it is important to reward employees for delivering significant results and keeping the company on track to become profitable again by 2009,” Mulally’s e-mail said.


The bonuses will be paid this month.


Ford also said Wednesday that salaried employees’ merit increases, originally scheduled for April 1, will be delayed until July 1. Merit increases, unlike bonuses, are based on an individual’s performance for the present year.


Ford said hourly workers who worked at least 40 hours and were active employees through the end of last year will receive the bonus. Ford spokeswoman Marcey Evans would not say how much the bonuses will cost Ford.


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

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CEO Turnover Up 50 Percent at Big North American Businesses

CEO turnover at the 500 largest companies in the world jumped 10 percent last year from the level in 2006, driven by financial instability and a huge wave of mergers and take-privates, according to a report by public relations firm Weber Shandwick.


Top executives at 81 companies left their jobs in 2007.


Exits from North American companies jumped 50 percent from a year earlier, to 27 in 2007. The fourth quarter was particularly tumultuous for North American CEOs, with 13 leaving office in that period, the report found.


Turnover was highest in the telecommunications industry and in financial services, where the subprime meltdown claimed several CEOs, including Citigroup’s Charles Prince and Merrill Lynch’s Stanley O’Neal.


CEOs at large companies typically leave for “traditional” reasons—retirement, succession planning and the like. But last year, there was a sizable bump up in the number of chief executive departures attributed to nontraditional reasons, such as mergers, private equity buyouts, interim term completions and corporate governance restructuring.


More telling, nearly a third of the departures were against the CEO’s will, up from 28 percent in 2006, Weber Shandwick found.


The report showed that insiders, or those who have worked for a company for three or more years, are still preferred when searching for a new CEO. In 2007, nearly seven out of 10 newly named CEOs were insiders.


The average tenure of CEOs who exited office last year was six years, down from six years and five months in 2006. North American CEOs’ average tenure declined to six years and eight months from eight years and six months.


Filed by Matthew Quinn of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.