Category: Archive

Worksheet: Calculating Turnover Costs

Turnover Ratio: The number of employees who left, divided by the average number employed per year.
Separation Costs
Interviewer’s time (hours spent x hourly rate*)	$
Terminated employee’s time (while on payroll: hours spent x hourly rate)	$
HR administrative functions (terminated paperwork: hours spent x hourly rate)	$
Separation pay	$
Total separation costs	$
*Include benefits in the hourly rate.	$
Replacement Costs
Advertising	$
Internal communications (development time x hourly rate)	$
Interview time (hours spent x hourly rate for interviewer)	$
Administrative functions (typing, copying: hours spent x hourly rate)	$
Applicant testing (such as validated aptitude tests)	$
Applicant travel expenses	$
Applicant relocation expenses	$
Total replacement costs	$
Training Cost
Employee workbooks (printing + time for development x hourly rate)	$
Orientation(s) (new employee time + staff time x hourly rates)	$
On-the-job training (employees’ time x hourly rates)	$
Total training costs	$
Separation + Replacement + Training =	$
Per Employee Cost
(total costs ÷ number left in the company) =	$
Source: (The Career Press, 2007)

President Bush announced a legislative proposal Monday, February 4, allowing the Pension Benefit Guaranty Corp. to raise premiums it charges underfunded pension plans.

The proposal, included in the president’s fiscal 2009 federal budget, is aimed at helping the agency close a $13.1 billion deficit in its single-employer program, according to the budget. The proposal was originally advanced by Bush in 2005 as part of his comprehensive pension reform plan but was not included in the Pension Protection Act of 2006; it was also included in the fiscal 2008 budget but failed amid opposition from pension plan industry lobbyists.

The 2009 budget also includes a series of proposals previously presented by Bush that would simplify the rules applied to a variety of defined-contribution plans and other savings plans. Among other things, the proposals would consolidate 401(k), SIMPLE 401(k), SARSEP (salary reduction simplified employee pension), thrift, 403(b) and governmental 457(b) plans into a new “employer retirement savings account.”

The account would be subject to the same rules that generally apply to 401(k) plans. The retirement plan proposals, included in previous presidential budgets, have also failed to go anywhere because key lawmakers were concerned the accounts could undermine the current employer plan system.

“I really haven’t seen anything new in here [the president’s 2009 budget], and we don’t think these proposals will see any significant action this year,” said Ted Godbout, a spokesman for the ERISA Industry Committee in Washington.

The president’s budget also proposed a 6 percent increase in funding for the Department of Labor’s Employee Benefits Security Administration, to $147.9 million. The increase is intended to let EBSA “increase the quality, timeliness and transparency of pension information disclosed to the public and employees, as well as to maintain the strong enforcement record of recent years,” according to a Labor Department press release.

This story was originally filed by Pensions & Investments, a sister publication to Workforce Management. To comment, e-mail editors@workforce.com.

A weak showing in last year’s USA Today Super Bowl Ad Meter got (or, depending on whom you believe, contributed to getting) CareerBuilder’s agency, Cramer-Krasselt, fired. So, does a significantly worse showing in this year’s survey mean that the online job site’s new agency, Wieden & Kennedy, ought to be worried?

Wieden’s debut spots for CareerBuilder, which kicked off a new campaign dubbed “Start Building,” placed 39th and 47th in USA Today’s annual popularity contest. The best of C-K’s three “Office Jungle” spots last year finished 16th, and its top “Office Monkeys” spots rated 11th and fourth, respectively, in 2006 and 2005.

CareerBuilder also aired a third ad on Fox after the game. A spokeswoman said CareerBuilder and Wieden jointly determined that the other two spots were more relevant to the Super Bowl audience.

Asked about the Ad Meter results, a CareerBuilder spokeswoman said Wieden was safe, adding: “We’re very excited about this campaign.”

She also maintained that the Ad Meter was not the sole criterion in C-K’s firing last year. “The whole decision wasn’t based on the poll or any single factor.”

Spat with C-K
That claim, of course, contradicts C-K chief executive Peter Krivkovich, who made a stir last winter when he quit the CareerBuilder business in a huff after, he said, he was told the account had been placed into review solely because of the Ad Meter results. “There are a few times in your life when you have to tell someone to [expletive] off and mean it,” he said at the time.

The spat kicked off a discussion within the business about the relative merits of day-after-game polls. Critics contend that the polls measure nothing except likability and are therefore useless to sophisticated marketers. But proponents say winning the so-called Ad Bowl—as Anheuser-Busch just did for the 10th straight year—is a priceless PR coup that extends the value of ads that cost as much as $3 million per 30 seconds.

Asked about the most recent poll, Krivkovich at first played coy.

“Oh, were they in the game this year?” he asked, before conceding with a chuckle that he’d seen the latest Ad Meter results. “I was sitting on a plane going through the papers, and I have to say, it was interesting.”

Filed by Jeremy Mullman of Advertising Age, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

While the prospect of a recession is rattling nerves from Main Street to Wall Street, a case of recession jitters hasn’t fully engulfed the recruiting community.

“I definitely see movement on the horizon,” says Nancy Albertini, chairman for executive search firm Patterson Blackstone in San Jose, California, which recruits high-level executives in the media and Internet sectors. “It is an upward trend in hiring.”

Her upbeat attitude in the face of bleak economic times falls in line with findings from a report by the Association of Executive Search Consultants published January 22. In the survey, 75 percent of respondents had a positive hiring outlook for the coming year. The poll of 250 executive search consultants was administered between November 28 and January 2.

North American respondents generally were restrained in their outlook; 58 percent said they are optimistic about the industry, compared with 80 percent of European and 88 percent of Asian counterparts.

AESC president Peter Felix says U.S. executive search consultants will have different attitudes about the hiring outlook depending on their area of focus. Those involved in structured finance and mortgage-backed securities are getting pummeled by the housing credit crunch. Meanwhile, executive search consultants in health care, utilities and not-for-profits are going full steam ahead.

“There are sectors that are feeling the pinch, and there are others that remain unaffected,” Felix says. “Overall, our members are telling us that they’re very busy.”

Staffing firms don’t seem to be slowing down either. “We’re not getting a sense that there is an impending jolt in staffing employment,” says Steve Berchem, vice president of the American Staffing Association in Washington. The telltale signs of an impending recession are not there, he notes.

Historically, staffing employment has taken a severe blow during the three to six months before a recession is officially declared.

“That’s just not happening right now,” Berchem says. “The industry has generally been flat for the last year.”

Berchem recalls the last recession, in March 2001. He says staffing employment was growing at a pace of 6 percent year-over-year. That changed overnight, when the industry actually began declining—falling by 2 percent—during the fourth quarter of 2000.

“It was a net drop of more than 8 percent,” he notes. “The situation got worse with each quarter.”

When the dust settled, 800,000 staffing jobs were lost from the peak in 2000, when there were 2.8 million employee assignments each day for the staffing industry, Berchem notes.

Some recruiting experts suggest that even if there were to be a national recession, it may not necessarily halt hiring.

“We’re living in a very different world,” says Francis Luisi, principal at Charleston Partners, an HR executive recruiting firm in Rumson, New Jersey. Factors such as employers with global vision and the millions of baby boomers reaching retirement age could make the traditional recession-related hiring slump less severe than in past cycles, he explains.

“It is simply too early to speculate on what will happen,” Luisi says.

—Gina Ruiz

A new study on telecommuting has rekindled debate about the pros and potential pitfalls of working remotely.

In January, Rensselaer Polytechnic Institute announced that research from professor Timothy Golden suggests telecommuting may harm workers left behind in the office. In particular, Golden found the greater the prevalence of teleworkers in an office, the less others in the office are to be satisfied with their jobs, with a corresponding decrease in the likelihood they will remain with the company.

Golden’s study focused on a large high-tech firm. It was published last year in the journal Human Relations.

“[I]t may be that with a greater prevalence of teleworkers in a work unit, non-teleworkers may find it less personally fulfilling to conduct their work due to the increased obstacles to building and maintaining effective and rewarding co-worker relationships,” Golden said in a statement.

Backers of telecommuting took issue with the study. Chuck Wilsker, president of the Telework Coalition, said a 2006 study of 13 organizations by his research and advocacy group found that non-telecommuters were either supportive of telework or indifferent.

In a statement, Wilsker’s group also blasted Golden’s study for examining just one company. “We question the validity of his research and quite frankly are surprised that it was released.”

Jessica Otitigbe, a spokeswoman for Troy, New York-based RPI, said Golden would not be available for comment. But in a statement, Otitigbe defended the study. “Professor Golden’s research is methodologically sound, peer-reviewed research published in a very respected journal,” she said. “Naturally this is only one study in one setting, but this is how one builds a body of knowledge in a particular area.”

Telecommuting is growing as a work practice and is now part of the broader mobility trend of employees working in settings that include airports, hotels and cafes. The number of Americans whose employers allow them to work remotely at least one day per month jumped from 7.6 million in 2004 to 12.4 million in 2006, according to a report released last year by professional association WorldatWork.

Golden’s study suggests that a number of factors can temper the negative effect on co-workers of telecommuting. “[M]anagers may be able to help mitigate some of this adverse impact by ensuring greater face-to-face contact between co-workers when employees are in the office, and granting greater job autonomy to accomplish work activities as employees see fit,” he writes.

Gil Gordon, head of a consulting firm focused on telecommuting, concedes that telework arrangements can end up hurting employees remaining at the office. If managers don’t assign tasks smartly, non-telecommuting employees can wind up with more than their share of work, Gordon argues. “That’s a preventable problem,” he says.

Gordon also says he has heard a lot of non-telecommuters say that a less-populous office is less distracting and more productive.

In any event, telecommuting seems likely to keep growing. Telework options are now key to attracting and keeping top workers, Gordon says.

“This really is a talent management and retention and utilization issue,” he says.

—Ed Frauenheim

The complex transition to in-house customer service has divided the Equal Employment Opportunity Commission board and raised concerns about service quality at a time when the agency is already under fire in a Supreme Court case.

A stopgap measure will help the EEOC keep its phones staffed until March after closing its call center December 19.

The four-member commission board voted unanimously last month to hire 38 temporary employees and extend the contract on its interactive voice-recognition answering system for three months, which will cost about $250,000.

But the complex transition to an in-house capability has divided the board and raised concerns about quality at a time when the EEOC is targeted in a Supreme Court case.

The temporary employees will help the EEOC’s field offices handle some 65,000 calls each month. The 24-hour answering system can resolve about 35 percent of the queries.

By late March, the EEOC hopes to have hired 61 federal workers permanently. The agency voted in August to close the outsourced facility, the National Contact Center, and establish an internal function. The move was necessary because Congress eliminated funding for the center.

Even though the EEOC is responding to a Capitol Hill action, the process of closing the call center has sparked two contentious meetings recently.

EEOC Chair Naomi Earp and Vice Chair Leslie Silverman supported extending the center’s contract during the transition. Commissioners Stuart Ishimaru and Christine Griffin voted for the December closure.

At the board’s most recent meeting, Ishimaru expressed frustration with the slow pace of the agency’s effort to put an alternative customer service system in place.

“Here we are a week before the phones are turned off and we have a proposal for what to do next,” he said. “We established an atmosphere that this is not urgent.”

Silverman took exception to Ishimaru’s characterization of the board’s attitude. “What we’re trying to do here is provide the best customer service we can under the circumstances,” she said.

Nicholas Inzeo, director of EEOC field programs, said temporary workers will be trained on customer service “soft skills” and EEOC procedures. But, he added, “We’re not going to be able to do as much as we could with the contact center.”

If claims are fumbled during the transition, it could amplify questions surrounding the EEOC’s administrative ability.

In a November oral argument involving the definition of an EEOC charge, or the action that the agency takes against an organization for alleged discriminatory conduct, several Supreme Court justices expressed frustration with the agency’s intake practices. A government lawyer at the hearing said the EEOC had improved its process for bringing charges since the case was filed.

Whether the EEOC loses public confidence during the upcoming transition will hinge initially on the performance of the temporary employees.

“It’s going to depend on who ends up answering the phones and their level of experience,” Griffin said after the meeting. “It’s better than not doing anything.”

Ultimately, an internal customer service system will work better than the call center, Ishimaru said in an interview.

“It was another layer that was added that did not add value to our process,” he said. “We should have EEOC employees answer the phones.”

—Mark Schoeff Jr.

An economic stimulus package wasn’t the only topic drawing bipartisan consensus in the House of Representatives.

Republicans and Democrats at a House Education and Labor Committee hearing on Tuesday, January 29, agreed that Carey McClure was wronged by General Motors when it denied him a job, and by a court when it ruled he was not disabled.

But the parties disagreed about whether a bill that would reform the Americans With Disabilities Act was the best way to address the situation McClure and others have faced.

McClure, an electrician who suffers from muscular dystrophy, had a GM job offer rescinded in 2000 after a doctor discovered his ailment during a required examination. The doctor maintained that McClure couldn’t meet the physical requirements of the position he had landed.

Throughout his life and 20-year career, McClure found ways to work around his disability and succeeded in his field. But when he sued GM, the company argued that he wasn’t really disabled. A trial court agreed.

“Basically, the court punished me for making myself a productive member of the workforce for over 20 years,” McClure said in testimony before the committee.

Following Supreme Court rulings in 1999 and 2002, courts have been applying a strict standard for determining whether someone has a disability. They also have held that “mitigating measures” like medication or eyeglasses can disqualify someone from disability protections.

In response, House Majority Leader Steny Hoyer, D-Maryland, introduced a bill, the ADA Restoration Act of 2007, which would redefine a disability as a physical or mental impairment.

It also would prohibit courts from considering “mitigating measures” and require that employers prove an individual is not qualified for a job.

Business advocates criticized the bill, saying it would substantially increase the number of people covered under the law and drive up company costs as they accommodate many different kinds of impairments that could encompass the flu, a sprained ankle, a chipped tooth or hair loss.

The Department of Justice said the measure would modify the definition of disability so that it did not refer to substantially limiting major life activities.

Hoyer asserted that his measure, which has 244 bipartisan co-sponsors, including the ranking Republican on the House Judiciary Committee, simply clarifies the congressional intent of the original disabilities legislation.

“The bill does not seek to expand the rights guaranteed under the landmark Americans With Disabilities Act,” Hoyer testified. “It responds to court decisions that have sharply restricted the class of people who can invoke protection under the law. Simply put, the point of the ADA is not disability; it is the prevention of wrongful and unlawful discrimination.”

Further action on the bill hasn’t been scheduled.

David Fram, director of ADA and EEO services at the National Employment Law Institute, was skeptical of the measure.

It “could lead to a deluge of unintended consequences,” he said. “I don’t think there would be a flood of litigation. I think there would be broad new responsibilities for employers.”

Those burdens would be caused by making workplace accommodations for potentially millions of people or granting their requests for leave.

“Every single one of us has some kind of impairment,” he said. “This would essentially make the Family and Medical Leave Act irrelevant—or half of it anyway.”

The ranking Republican on the committee, Rep. Howard “Buck” McKeon, said he wanted to fix a problem like the one that McClure faced. But he warned that expanding the ADA too much would dilute it.

“Resources could be stretched too thin, leaving those who need help the most without the accommodations they deserve,” he said.

McClure maintained that enlarging the ADA would not foster frivolous lawsuits. “I’ve worked with a sprained ankle,” he said. “Most of us just want to work like everyone else.”

Rep. Robert Andrews, D-New Jersey and chairman of the hearing, said states like his and California, which have broad disability laws, have not seen a spike in litigation. He said the bill would correct erroneous interpretations of federal disability law.

“The courts have confused the question of who has a disability with the question of what should be done in response to that disability,” he said.

He also argued that in the midst of fierce global competition, disability laws will help deepen the labor market.

“We can’t say to any person that we can leave your talent out,” he said.

—Mark Schoeff Jr.