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“Mind the Gap” to Improve the Performance of New Hires

If you travel, particularly in the U.K., you will recognize this often used phrase: “Mind the gap.” You hear it as you enter and exit subways or when you embark upon or depart the trains. You are warned not to fall through the cracks as you transition from one place to another.


    The same advice could be given to HR leaders as you start 2007. The news is full of stories about talent management, the importance of getting and keeping the “right” employees, and the impending lack of employees as the workforce changes. With these dire warnings come many ways to select and retain employees. However, in addition to getting them on board, you then have to keep them.


    Minding the gap refers to a method of learning from your new-hire talent in order to help the new employee become productive right away. New employees want to be productive, and if they are not, they will leave. This is particularly true for hard-to-get talent.


    In this article I will explain the results of a study done with a technology firm that was doing an incredible amount of hiring in 2006. They learned from studying—or “minding”—their gaps.


What is the gap?
   When you hire a new employee, there is a transition period between the hire date and the time when a new employee becomes optimally productive. This transition denotes a productivity gap, and it is important to minimize this gap in order to create and sustain long-term competitiveness and performance. In our 2006 study, we examined the “productivity gap” for a set of new technology employees.


    Productivity gap is defined as the difference between an employee’s energy level at work “today,” and the level where the employee is most productive. The calculation is as follows:


    Productivity gap = (energy today – energy where most productive)


    Why energy? We used energy because it is a validated metric that predicts performance, and our ability to quickly assess energy (one question) allowed us to conduct the research without taking so much time out of the employee’s day that the study itself negatively affects productivity.


    How it works: We expect a productivity gap with the majority of new employees. It takes time to learn the job, to make things work with a new team of colleagues, to get processed (e.g., get new computer, find desk, learn how to use phone, equipment, etc.), and more. Thus, we anticipate and find in our work that there is a gap between an employee’s energy at the time of being hired (we study energy at work specifically) and the energy where the employee is most productive. In most cases, the gap is negative.


    Typical new employee gap: Energy today = 3
   Energy where most productive = 7


    Productivity gap = -4


    However, we want the gap to be minimal, and we want to close the gap as soon as possible. It is up to the manager to “mind the gap” and work to make sure the gap is reduced. You want the employee to be at the level where he/she is most productive as soon as possible, and you certainly don’t want the gap to increase.


    Goals are to reduce the gap or move to a positive gap. It is better for productivity to have an employee working slightly above where most productive; however, our research shows that you do not want the employee to move to a state where she/he is more than one point above where most productive, because prolonged time in that “overly energized” state leads to lower productivity and burnout.


    In this study: We examine the gap for 183 employees who started participating in the Pulse Dialogue process during 2006. In this snapshot of the study (which is now continuing), we report data from June to October.


    Background: In each data collection, we asked employees to rate their energy level. We also asked for levels where the employee was most productive on this same scale. This is a process that I have researched and validated in numerous studies for the past 10 years (across hundreds of thousands of employees). Unlike many employee metrics, energy is an optimization construct, not a maximization one. That means it is negative to be at the too-high or too-low levels. Thus, we find out where employees are most productive (by asking them at multiple periods of time) and then run analyses using both energy and where people are most productive. Gaps predict outcomes such as turnover, customer service, sales and other performance outcomes. The goal is to reduce the gap and help employees remain at a level of energy where they are most productive.


What did we learn?
   First, we learned that the trend, overall, was headed in the right direction from June to October. The mean gaps from Time 1 (June) to Time 2 (October) are as follows:


    June: -1.16
   October – 0.97


    Second, we learned that there were significant differences in the trends when the patterns were viewed by manager and then within a manager’s department by job level (or grade). See the graph below as an example:


Productivity Gap Chart
Manager No. 1: Gap by Job Grade


    The goal is for the gap (difference between employee energy and where most productive) to be reduced over time (or for the trend line to go down). That means the employee is moving toward an energy level that is close to where he or she is most productive.


    In the chart above, you can clearly see that when it comes to Job Grade 1, this manager is having a very positive experience. Between Time 1 and Time 2, the gap was reduced significantly. But for all other grades (grades 2 through 4), the gap increased. In addition to asking employees to rate energy and where productive, we also asked one open-ended comment question asking them about the new-hire experience. We content-analyzed this data, and we were able to connect the stories to the metrics.


    In general, across organizations, we find that more attention is given to the Grade 1 (or entry-level) employees. Everyone expects they need training, mentoring and communications because they are really new. These are the people coming in who have less experience in the field, and it’s accepted by all peers that they need training. However, as one becomes more senior in a career, then there is a natural tendency to let new senior employees take care of themselves. In the current intensively busy environment in which we all work, no one would want to waste time trying to help someone who does not need help. In fact, you might think that it would be a waste of time.


Lessons learned
   It does not take long to see from the data that, at least with this particular manager’s team, all levels of employees needed help. The trends indicate that the productivity gap went up over time for the more senior people. This represents a productivity problem and a talent management challenge. If new senior employees feel their experience with the organization makes them less productive, they will not stay.


    In this sample at least, the employees live in a city where there are ample opportunities to find employment elsewhere. Thus, if the HR team can diagnose a new-hire acculturation problem and act on it, they can save their organization money by reducing search expenses and by optimizing the productivity of the talent that just hired.


    When an HR team has data across its organization, it can use data from other parts of the business to help a particular manager. In this case study, we look to the data from Manager No. 2 to understand positive experiences for the senior job grades (see chart below).


Productivity Gap Chart
Manager No. 2: Gap by Job Grade


    The trend data above clearly show that Manager No. 2 is creating an environment where new hires in all job grades are experiencing a reduction in their productivity gap. In contrast to the data from Manager No. 1’s group, the more senior employees are seeing a significant reduction quickly.


    The opportunity for HR is to assess what’s working for Manager No. 2 and share those best practices with other managers. This is one of the most effective forms of learning any HR manager can use because learning from peers creates the kind of tactical outcomes for managers that are rarely seen in other types of learning environments.


Going beyond traditional talent management
   Talent management goes beyond just hiring; it means optimizing the talent that you bring into the door. However, in HR few employers are truly studying the new-hire experience in the detail that this case represents. We do a much better job of spending money to do exit interviews than we do to study the experience of new hires. This case is just one example of how data can be used to learn and to break through traditional ways of managing talent.

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Uniform Metrics Could Speed HRO Deals

One of the main challenges that a company the size of Arinso faces in the HRO market is how to handle those prospective buyers who require a lot of education.


    Too often, these employers require months and months of discussions and education before they can even decide what they need from an HRO provider, says Rudy Vandenberghe, executive director at Arinso.


    “Sometimes we don’t participate in a request for proposal because we know it will be a nine-month sales cycle just to discuss each item,” he says. “We just can’t afford to do that.”


    But now Houston-based outsourcing advisor Equa¬Terra, along with Accenture HR Services, SAP and Arinso, may have devised a solution to buyers’ troubles.


    A working group set up by the four companies has created a way to standardize a statement of work—the outline that is the basis of an outsourcing agreement. By agreeing on standards for the metrics to be used in a service level agreement, buyers would be able to see the pricing and performance indicators for each of the prospective providers on a single sheet of paper.


    “Currently, all providers have different definitions for the same thing, and it’s hard for buyers to know what they are talking about,” EquaTerra chairman Mark Hodges says.


    By having all the parties agree in advance on standards, an outsourcing advisor like EquaTerra wouldn’t have to explain what each provider does. “The buyer can just look at a form and see it,” Hodges says.


    If successful, the project would cut the sales costs for HRO providers by reducing the sales-cycle time, Vandenberghe says.


    It also makes the pricing clearer for buyers. In recruiting, buyers can see how much each provider charges per hire, per month, for different levels of employees, Hodges says. EquaTerra hopes to bring more providers into the group and have a client try out the program in the next few months.


    The working group doesn’t hold lofty hopes that all buyers are going to want to use the system.


    “I am supportive of this initiative in that I think it will be good to educate clients,” says Christian Marchetti, managing director in the Paris office of Accenture HR Services. “But I don’t believe this is a standard that the whole industry should apply.”


    The group is targeting middle-market clients, or those employers with 3,000 to 15,000 employees, to use the service. “Bigger employers will want more customization,” Hodges says.


    However, Hodges admits it might be a challenge to get even some midmarket clients on board. “They may see it and say, ‘But can I tweak this or that?’ ” he says. “But this is the direction more of the industry is going.”


Workforce Management, January 15, 2007, p. 16 — Subscribe Now!

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PeopleClick Plans to Play to Its Strength

Big-name applicant tracking system providers such as Vurv Technology and Taleo are moving quickly to broaden their services and evolve into holistic talent management companies.

PeopleClick, meanwhile, is staking its future on a different strategy: Rather than being all things to all people, the Raleigh, North Carolina-based company is opting to deepen its expertise in talent acquisition. All options are on the table to advance the objective, says Brenda Hodge, PeopleClick’s vice president of marketplace solutions—including the prospect of going public, acquiring other companies and changing its leadership team.


“Talent acquisition is the cornerstone of workforce management,” Hodge says. “If companies don’t hire the right person, nothing else will fall into place, regardless of how much they spend on performance management, development and succession planning.”


PeopleClick, which has 340 employees, is committing 28 percent of its annual revenue to research and development to create talent acquisition tools, Hodge says. She declined to disclose the company’s revenue.


Newly appointed CEO Ron Kupferman is heading the company’s strategy. He took over after Stephen Sasser resigned in late December.


PeopleClick also is promoting Mike DeFrancesco to CFO. DeFrancesco, who has significant experience with both public and pre-IPO companies, has been at PeopleClick for three years and will continue to oversee the accounting and finance functions that were under his control when he was vice president of finance. Meanwhile, Geoffrey Jesberg has been hired as senior vice president of PeopleClick’s affirmative action division.


In addition, the company is making several departmental changes. Technology and customer services are being consolidated under Tom Bright, who takes on the dual role of executive vice president and COO. Integrating technology and customer services is a significant move, Hodge says, because it allows the company to develop a deep understanding of clients’ needs and respond with appropriate innovations.


“We are committed to our strategic mission and are putting in place the building blocks,” Hodge says.


Although there is no timeline set for an initial public offering, Hodge says the company would consider going public under the right conditions. She declined offer more details.


Sterling and Assess Systems, though it hasn’t moved to acquire its partners.


PeopleClick’s decision to strengthen its niche position could be fruitful, says Kevin Wheeler, a recruiting industry analyst at Global Learning Resources in Fremont, California.


“General Motors is not the only game in town; there are also very successful boutique car companies that exist,” he says. “The same dynamic can apply to applicant tracking providers.”


Given the size of the market, however, PeopleClick probably won’t see as many customers as it would if it became a diversified provider.


“The convenience of one-stop shopping is alluring to many customers,” Wheeler says.


Not surprisingly, Taleo and Vurv are in a race to evolve into broad talent management companies. In recent years, both companies have adopted new brands and launched strategies to gain awareness as diversified talent management providers.


Gina Ruiz

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Building Profit Through Building People

It’s all about the people.


    HR professionals hear that time and time again. However, the difficulty in this statement is how to provide a link of HR’s strategic impact to the bottom line. HR professionals must have a proper understanding of how the vital links among employee, customer and shareholder or stakeholder satisfaction interact. By focusing on these critical links, and continually measuring and evaluating progress toward goals, HR can successfully link the people component to profit. Without a committed and engaged workforce to back it up, a company will not be able to truly succeed and sustain any competitive advantage, regardless the strengths of its other operations.


    Continental Airlines and Sysco Corp., two very different companies, started at different places to create a competitive advantage using the value profit chain approach. They demonstrate how focusing on the links from a people-driven perspective pays off in real profits. Continental, a highly centralized, high-fixed-cost business in the midst of financial trouble, chose to focus on people to avoid bankruptcy and make the airline profitable. Sysco, a successful decentralized organization with low fixed costs, chose to focus on people to improve its already profitable business.


At Continental, people were the turnaround key
   Continental was a business in trouble. It ranked at the bottom of every category tracked by the U.S. Department of Transportation, and at the top in customer complaints. Employees were stuck in unfulfilling jobs, and their frustrations were evident to customers, management and co-workers. Employees were not recognized for their crucial roles in satisfying customers and helping the business grow. There was inconsistent leadership and lack of vision. Employees felt undervalued.


    However, in the span of a single year, the company was able to turn things around dramatically by leveraging the value profit chain. The main driver was the implementation of effective management practices based on the philosophy of the value profit chain. These new practices transformed the attitudes and work habits of the entire workforce. As a result, customers could not help but notice—and respond.


    At the base of this turnaround was the “Go Forward” plan. It articulated a consistent strategy with regard to customers, shareholders, operations and employees. It articulated the customer value proposition: We will provide consistent, safe, high-quality service. This delivery on this promise to customers drove the revenues needed to be profitable. The plan also articulated the employee value proposition: We will provide a winning environment. The goal was to create an environment where people could see how individual and team performance could influence others when they work together toward the same goals.


At Sysco, it’s all about the people
   On the other hand, Sysco’s performance has been consistently solid. It has always had a strong customer value proposition focused on delivering the right products at the right time to meet customer needs. The company has demonstrated that focusing on associates and customers can lead to even better performance that consistently outperforms its industry.


    When business analysts dig into why Sysco is so successful, they note things such as sales mix, use of technology, size, healthy cash flow, brand recognition, warehousing efficiencies and wide geographic reach. Though true, a differing view is that it’s all about the people.


    The driver of all the business-strengthening strategies is people. The analysts have recognized this focus on people, noting recruitment and retention of well-trained sales staff, investments in the sales force, entrepreneurial management structure and high-quality customer service.


    Sysco has one of the highest associate retention rates in the industry, and this factor directly affects its standing in the marketplace. The impact of the customer “churn,” or lack of customer loyalty, on the revenue growth and cost of the operations is also a factor. Reducing customer churn can result in measurable difference for companies in low-margin industries such as Sysco’s.


    Why is an organization’s workforce critical to the customer retention equation? Customer loyalty and operational excellence are affected by a satisfied, productive and committed workforce. High associate retention cuts the cost of operations. Sysco emphasizes associates because committed associates drive the satisfaction of all other constituents—customers, communities, suppliers and shareholders. Employee satisfaction has been underscored with the implementation of a rigorous set of programs inspired by the value profit chain philosophy. Sysco periodically conducts customer and associate work-climate surveys to assess and correlate associate satisfaction with customer satisfaction.


In other words, it’s all about the people
   Continental and Sysco illustrate the impact that a focus on the value profit chain can have on organizations under very different circumstances. The idea is that satisfied associates drive customer loyalty, which in turn drives profitability and growth. Committed and skilled employees are the key to boosting profitability through the knowledge of the customer. Combine this idea with a strategy that is executed with excellence and innovation and this forms the basis of the modified value profit chain philosophy.


    Satisfied employees enable companies to pursue excellence in execution and develop innovative approaches. The involved employee knows what the customer wants, and is in the position to have an impact on the organization in meeting these wants. But how does a company begin in the process of implementing VPC thinking into the organization? We suggest that the first step is the development of the 5-STAR Management Model.


The 5-STAR management model
   The 5-STAR management model provides the building blocks to organizational excellence. Creating a 5-STAR organization provides a strong link from employees to customer needs and profitable growth. By establishing your company as a 5-STAR employer, you can go beyond being an employer of choice and create an employer brand that attracts dedicated employees that are a fit for your company culture, values and customers. Continental and Sysco both use this model as a method of understanding their business, customers and people. By leveraging knowledge and practices within the company, they manage to create a direct link between their people and profit.


    In other words, the 5-STAR model is all about the people.


    No matter the company structure or business model you have, you can implement the 5-STAR framework. Implementation with Sysco was far different from that of Continental. Sysco comprises many autonomous businesses, and does not use directives to force those businesses to do certain things. It was necessary to create agreement around basic principles, or 5-STAR dimensions that focus on the levers that impact employees. Here they are:


  • Leadership direction and support:
    Involved leaders who can influence a group of people to achieve a common goal generate the greatest success for their organizations.

    At Continental, the CEO and president hold employee meetings in the airline’s major hubs at least twice a year. These events generally attract 5,000 employees, who show up to hear recaps on company accomplishments and reminders of challenges to come. The talks are followed by an hour-long question-and-answer session. Smaller monthly meetings with employees also provide another forum for feedback. Toll-free numbers for employee suggestions and comments were installed, and more than 20,000 suggestions have been provided by employees since the program’s inception.


    Within Sysco, one of the ways the president of an operating company fosters solidarity among his team is by working with the night-shift associates a couple nights a week. Another operating company president personally calls the night warehouse manager twice a day, at 10 p.m. and 5 a.m., feeling that it’s important to invest his time with a critical player in the workforce while that particular company is struggling.


  • Strengthening frontline supervisors:
    The most consistent factor contributing to productivity, employee retention, good service, expense control and safety is the effectiveness of frontline supervisors.

    For Sysco, one of the most critical differentiators of operating companies with contrasting high and low work-climate survey scores is the quality of frontline supervisors in the companies. Operating companies encourage frontline supervisors to rotate their own shifts so they are available to speak with all employees. And companies pick one day a month when the supervisor works alongside employees, perhaps riding with a driver, working the day with a marketing associate or stocking the warehouse.


  • Rewards for performance:
    Identify the best performers and provide them with both monetary and non-monetary rewards.

    At Continental, effective use of rewards was a major part of the turnaround. Despite being near bankruptcy for the third time, Continental leadership gave a flat $65 reward to each employee for each month Continental ranked in the top five of the Department of Transportation on-time performance ratings. In the first full month of the program, the airline finished fourth, moving up six notches. The second month, it was in first place. In that first year, Continental was in the top five ranking nine times.


  • Inclusion through engagement and diversity:
    When employees sense that the company trusts them enough to share information about its performance, they become engaged.

    Early in turnaround efforts, Continental convinced employees that everyone was in the effort together. The HR head and a group of executives and employees hauled a cart full of 800-page “corporate policy and procedure” books out to the parking lot and ceremonially torched them in front of a larger employee audience. This symbolic gesture signaled a new attitude about engagement. Then, a taskforce of employees and executives streamlined the 800-page book to an 80-page user-friendly document that was mailed to all employees.


  • Quality of life:
    Addressing the needs of employees inside and outside work helps to improve and maintain an organization’s ability to attract, motivate and retain the most talented people in the industry.

    Sysco encourages its operating companies to think innovatively about ways to encourage a positive quality of life. For example, in some companies, employees are allowed to combine sick and vacation days into all-purpose leaves so workers can take the time off for personal reasons, such as family events or other responsibilities so they can fulfill their obligations openly and honestly.


    Above all else, it is crucial to measure customer and employee satisfaction and examine the metrics linking them to company performance. Data gathering and analysis is a critical step in driving the success of this model. If you really want to build your company into a 5-STAR one, you need to collect the data that prove that your model works and to demonstrate accountability.


    Sysco completes an analysis by correlating elements of the value profit chain with solid business results. The company looks at the relation of the climate to key human capital, operations, customer and financial performance metrics. Whether the data correlate significantly or not, the important point is that without data, it is impossible to know if what you are doing is right—and if it is not, how to improve. That road leads to failure for organizations and for our HR professionals as leaders.


A strategic summons for HR professionals
   To be a strategic partner, HR professionals must understand these concepts, knowing each link of the value profit chain. HR leaders must be proactive, and look at problems and solutions from a long-term companywide perspective. Leaders must also understand and use the data available to them in order to truly effect change in the business environment.


A key is to have a clear human capital model that is driven by business strategy and an HR structure to fill its traditional and strategic roles in the most effective way possible. By closely considering all these elements, HR can become a critical part of your company’s success.


After all, it’s all about the people. And, HR should be the steward for all aspects of people and culture.

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Making Room for Nursing Mothers

Lactose-Tolerant HR: Pressure to keep the best and brightest is radically altering how companies accommodate nursing mothers. According to Forbes.com, “companies that used to wave goodbye to their female employees once they started families are now looking for ways to help them balance motherhood” and careers. The most tangible example is a rise in the number of companies providing private “lactation rooms” to be used by mothers to nurse infants at work. Forbes.com cites a recent study by the Society for Human Resource Management that found 23 percent of companies provided lactation rooms in 2006, compared with 16 percent in 1999.

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Russell Tapped to Head Adecco General Staffing USA

Less than a year after announcing a major shift in strategy, Switzerland-based Adecco Group promoted COO Joyce Russell to president of Adecco General Staffing USA. She becomes one of the highest-ranking female executives in the $131 billion staffing industry and will be the decision-maker for Adecco’s temporary and direct-hire staffing, a division that generates $3 billion in annual revenue.

“I never stopped to think about whether a glass ceiling existed,” says Russell, 46. “I was too busy working, and I hope to channel my energy into helping Adecco continue to prosper.”


Russell, who started as a branch manager at Adecco predecessor Adia in 1987 and was named Adecco’s COO in August 2004, is taking the reins at a critical time in the company’s 10-year history.


The company is in the midst of what Adecco Group chairman Klaus Jacob calls a new chapter following a series of setbacks from 2004 to 2005 that included lackluster financial performances, an accounting scandal and the resignation of then-chairman and CEO Jerome Caille.


A cornerstone of that overhaul, which was initiated in early 2006, entails transforming the general staffing business into six profession-focused areas: Adecco Finance & Legal; Adecco Engineering & Technical; Adecco Information Technology; Adecco Medical & Scientific; Adecco Sales, Marketing & Events; and Adecco Human Capital Solutions.


Advancing the company’s efforts in these areas will be among Russell’s primary responsibilities and a critical strategic goal for Adecco.


Los Altos, California.


Scale, both in terms of branch presence and staffing capabilities, is critical for big companies such as Adecco and key competitors Allegis and Manpower, since they service large employers like IBM. These types of clients need workers with diverse skill sets. Unless staffing companies can accommodate such demands, they run the risk of losing business, Asin explains.


Employers are spending more money to recruit temporary workers with focused professional skills, such as accountants, IT engineers and legal specialists—$51 billion compared with the $46 billion spent on general temp staffers in 2006, according to Asin. He projects that temporary legal staffing will be one of the most in-demand sectors, growing at a pace of 12 percent in 2007. The legal staffing market is $1.5 billion.


The company reported revenue of 5.3 billion euros ($6.85 billion) in the third quarter of 2006—an 11 percent increase from the third quarter of 2005. Adecco Group senior managers have indicated that this bodes well for the company in achieving its long-term revenue growth goals of 7 percent to 9 percent.


Additionally, Tig Gilliam was named country manager for Adecco U.S. & Canada and begins his duties in March. Gilliam comes from outside the staffing industry. He was global head of supply chain management services at IBM Global Business Services.


Besides extending Adecco into new lines of business, Russell will handle field operations, manage client portfolio and broaden outreach to the Hispanic market. Russell will report directly to Ray Roe, chairman of Adecco North America, until Gilliam arrives. Roe, the company’s former president, incrementally increased Russell’s responsibilities until finally ceding full control this year. He will assume control of Adecco Group operations in the Asia-Pacific region.


“Joyce’s commitment to excellence and her dedication to our clients, candidates and employees are what make her a truly invaluable asset to Adecco,” Roe said. “She will drive the growth of our business, especially in our office and industrial divisions while ensuring we remain the market leader for years to come.”


The company does not plan to fill Russell’s COO position, as she will retain those responsibilities, which include managing expenses and staffing needs for the company.


Adecco was founded in 1996 with the merger of Adia and Ecco, two large personnel service firms in Europe. The company has 6,600 offices in 70 countries and employs 33,000 workers worldwide.  The U.S., Japan, France, Great Britain and Germany are key markets for the company.


—Gina Ruiz

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Real Learning in Artificial Worlds

To make his learning software product more appealing to Asian customers, Ron Burns had to get rid of the birds


    Burns’ company, ProtonMedia, sells technology that creates a three-dimensional computer environment, complete with classrooms, buildings and the occasional passing bird. That virtual world is designed to mimic reality in a compelling way so workers will want to spend time there and engage in learning activities. But some Asians regard birds flying by as a bad omen, so Burns cut them out of a customer’s environment.


    It’s all part of getting corporations comfortable with investing learning dollars in virtual computer worlds. “The challenge is it requires a little culture change,” Burns says. “A lot of organizations don’t have a ‘virtual reality’ line item in the budget.”


    Use of virtual reality and other game-like learning tools for employee training got a boost recently when computer giant IBM said it would tap virtual worlds for employee development purposes. Some see game technologies as holding great promise for corporate learning.


    For now, such products remain on the margin. Yankee Group analyst Jason Corsello is not sure virtual environments will ever move into the mainstream. He questions whether the companies dabbling with learning in virtual world Second Life—a place where people can choose to appear as fairies or monsters besides humans—will continue doing so.


    “I’d be interested to see if they’re still doing it in three years’ time,” Corsello says, adding that virtual environments might be useful for younger workers’ learning. But, he adds, “I couldn’t envision the baby boomers using a tool like this.”


    Games and virtual reality worlds have long been associated with teenage boys glued to joysticks and dungeon exploration. But for several years, advocates have pushed for games to be taken seriously as a learning tool. Industry conferences have emerged to showcase and debate the use of games in corporations and government. Games or simulations are now available for topics ranging from sexual harassment prevention to the training of pharmaceutical industry workers in aseptic techniques.


    Second Life has plenty of non-serious aspects, including discos and “adult” environments. But corporations are experimenting with the way it can be used for learning. IBM plans to use both Second Life and another Internet virtual world, PlaneShift, in its new IBM@Play program. The computer giant says it wants to tap into the power of video game play to make people more willing to take risks and be more flexible in their thinking.


    Colleen Carmean, director of research at the Applied Learning Technologies Institute at Arizona State University, says Second Life’s growing popularity—it now has more than 2 million “residents”—has a lot to do with a superficial reason. People’s avatars, or representations, are typically young and beautiful, she notes.


    Even so, she says, Second Life may be encouraging valuable employee development. “If you can find an environment where a worker is willing to spend time and contribute, then part of your problem is solved,” she says.


    Burns of ProtonMedia appreciates the way Second Life has put virtual worlds on the map. But he says it isn’t ideal for corporate training for reasons including a lack of security features and a lack of decorum. In contrast, his ProtoSphere software is designed to create for clients a highly secure private virtual world in which far-out avatars are off-limits.


    What’s more, ProtoSphere was built to encourage informal learning, the peer-to-peer sharing of knowledge that some experts say is vital yet neglected by organizations. Employees are asked to create a ProtoSphere profile and to pose questions when logging in. ProtoSphere then matches the employee with other live users logged on as well as relevant content such as traditional e-learning courses and blog postings.


    Workers also can arrange to meet one another in ProtoSphere and do such things as draw on a virtual whiteboard.


    “We think of this as the first true built-from-the-ground-up informal learning system,” Burns says.


    ProtoSphere typically will cost a company at least $100,000, with the price depending in part on the number of simultaneous users. The product has been available in some form for several years. So far, ProtonMedia has signed up about a dozen customers for it. Several pharmaceutical firms are clients, including Johnson & Johnson.


    Burns says he’s seeing growing interest from organizations. But customers are making him work before they invest in the still-novel technology. Besides the bird removal, Burns and his team have had to toil over the look of their avatars.


    “If you get too real, it’s creepy,” he says. “And if you get too cartoon-y, it’s not serious enough.”

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Green Card Recruiting

Intel founder Andy Grove was born in Hungary. Yahoo Inc.’s Jerry Yang was born in Taiwan. Google’s Sergey Brin was born in Russia. EBay founder Pierre Omidyar was born in France to Iranian parents. Recruiters looking for the next Andreas Bechtolsheim and Vinod Khosla, the co-founders of Sun Microsystems, might find them in Germany, Bechtolsheim’s home country, or India, where Khosla was born.


    During the past 15 years, immigrants have launched 25 percent of all venture-backed U.S. public companies and 40 percent of venture-backed public companies in the high-tech sector, according to a study commissioned by the National Venture Capital Association. These immigrant-founded high-tech companies have generated half of the jobs in the sector.


    Recruiters working to bring in the next generation of immigrant innovators face new obstacles in their attempt to attract both non-immigrant candidates who want to become permanent U.S. residents and immigrants who want to enter the U.S. with green cards in hand. The most talented employees worldwide are increasingly unwilling to tolerate the long waits and uncertainty entailed in immigrating to the United States. Instead, they are going to Europe, Canada, Australia and other countries where knowledge workers face fewer immigration difficulties.


    A total of 1.1 million people obtained legal permanent-resident status in the U.S. in 2005, including 246,878 workers who achieved permanent status under employment-based preferences. The 2005 number was significantly higher than the 155,330 who achieved permanent status under employment-based preferences in 2004 and almost three times the 81,727 who achieved permanent residence in 2003, but shortages of knowledge workers have increased dramatically in the past year.


    Of those who received permanent residence, 220,000 achieved it through an adjustment in their immigration status, a much higher proportion than in past years, but a path still filled with uncertainties. Only 26,878 were new arrivals, the lowest number in five years. Although employers have improved their ability to import talent under non-immigrant visas and then convert them to permanent-resident status, the extremely low number of new arrivals who receive permanent status indicates that U.S. recruiters still face a hugely imperfect playing field.


Recruiting requirements
    Despite the arduous requirements for labor applications and the time-consuming recruitment and documentation process required, employers looking for top talent in hard-to-fill positions need to integrate permanent-residence immigration into their recruiting process to create a solid pipeline of foreign candidates.


    The National Science Foundation and a dozen other research groups have documented the fact that U.S. immigration policy is out of step with global trends in science, engineering and business. Recruiters for U.S. companies will find it increasingly difficult to do their job unless basic immigration policy is revised, starting with the labor certification process.


    The labor certification process requires that the position must be for a permanent full-time employee and the employer must attest to the qualifications, wages and conditions of employment. The employer must also meet requirements for specific recruiting efforts for the position, including advertising for the position with specific content about the job and the employer.


    For professional positions, the recruiting efforts must include at least three out of 10 standard recruiting outreach methods, and none of these can be used more than 180 days prior to filing the application. The recruitment report describing the recruiting efforts for the position must detail the number of U.S. workers rejected and the reasons for the rejections. Experts agree that the recruiting requirements are time-consuming, expensive and incompatible with best practices in recruiting.


    The employer must submit detailed job information to the Department of Labor’s PERM (Program Electronic Management Review System) centers, where the applications are routinely approved unless the agency’s anti-fraud or audit procedures trigger a delay. Records related to the labor certification, including the recruitment report, must be maintained for five years. Failure to provide the documents during an audit may result in up to two years of supervised recruiting—a penalty that no employer wants to incur.


    Under the new PERM rules for all labor certification applications filed since March 28, 2005, the Department of Labor set a goal for making decisions on electronically filed applications within 45 to 60 days, but this is only a goal and the DOL is not bound by it. Although application-processing times have improved under PERM, the improvement has generated more backlogs at other steps in the process in the Citizenship and Immigration Services.


    “The permanent-residence process is still deeply flawed, but for the most part, PERM has worked well for moving cases through the system,” notes Ted Ruthizer, partner and immigration chair at Kramer Levin Naftalis & Frankel in New York. “Employers must, however, meet the recruitment guidelines. Even with PERM working well, it still takes six months of recruitment and three months for approval.”


    “If only a bachelor’s degree is required for the position, the employer may face backlogs going back five years,” Ruthizer says. “For the advanced-degree candidates or those with a bachelor’s degree plus five years of experience, the process can be managed in one year unless the candidate is Chinese or Indian, in which case the applications are backlogged for years.”


    “The PERM attempt to streamline the process for permanent status has made some improvements, but achieving permanent status is still an uneven process and delays still occur,” says Ian Band, partner and business immigration law expert at Hunton & Williams in Washington. “The visa backlogs for many countries are still years long, and there is no way to predict when a green card will be issued. Employers and candidates can go straight for a green card, but it can take one to five years, and predicting when the card will be issued is impossible.”


H-1B and L-1 adjustments
    Immigration experts agree that the best immediate solution to the obstacles recruiters face is to continue to push for an expansion of the H-1B visa cap by Congress in 2007.


    “The most pressing issue is the H-1Bs,” Band says. “Employers have tried using the H-3 and J-1 training visas and the O-1 visas, but these are difficult.”


    In 2006, Congress created 20,000 emergency exemptions from the H-1B caps for foreign students who received an advanced degree from a U.S. university. In 2005, U.S. universities awarded 55 percent of master’s degrees and 67 percent of Ph.D.s in electrical engineering to foreign nationals, according to the American Association of Engineering Societies.


    In computer sciences and related fields, foreign nationals make up one-half to two-thirds of the graduate students at U.S. universities. Many remain in the U.S. under temporary work visas, but recruiters for U.S. companies cannot fully tap this significant talent pool given the caps on temporary visas and restrictions on green cards.


    “There has also been talk about exempting all advanced-degree holders no matter where they received their degree, which would free up a large number of H-1Bs,” Band reports. “Many H-1B employees want permanent status, but achieving that can take four to five years, and it’s still a crapshoot.”


    For H-1B employees, Ruthizer advises employers to prepare to file for H-1Bs in April and begin working toward permanent-residence status for the employee as soon as possible.


    Permanent status can be reached through adjustments to L-1 visas, which are issued for intra-company transfers for up to five years for workers with specialized knowledge or seven years for managers or executives.


    “There is no cap on L-1 visas, but some members of Congress think there should be, and this would be an absolute nightmare for companies,” Band says.


    Band advises companies to obtain a blank L-1 petition for the company and all of its subsidiaries.


    “The company files a blank petition listing all of its related firms,” he says. “Then the company and the subsidiaries that have been approved can file directly at the embassy for L-1 visas without having to go through the immigration service.”


    Band notes that some of his clients are recruiting abroad for the purpose of bringing employees into the U.S. after the one year of employment that the L-1 requires before these employees can be transferred to the United States.


    “L-1s for executives and managers are not problematic, but L-1s for workers with ‘specialized knowledge’ have become more tricky,” he notes. “More of these requests are challenged to see if the workers have knowledge that is specific to the company.”


    Recruiters who hope to use L-1 visas to bring employees into the U.S. are hampered by their inability to promise them that the L-1 can be converted to permanent residence. When key professional workers know they may encounter five-year delays in obtaining a green card, U.S. employers may simply fall out of the running for recruiting top candidates on a global scale.


    A decade ago, when the U.S. was still the undisputed leader in many high-tech industries, foreign national job candidates may have been willing to endure the hardships of the U.S. immigration system. Today, they have access to equally compelling opportunities in countries where uncertainties and time required to complete the immigration process are less burdensome. U.S. employers will have to continue to address this serious problem at the political level as the new Congress turns to immigration issues in 2007.

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SEC Rule Change Forces Firms to Redo Numbers

Even before the Securities and Exchange Commission finalized its rules on executive compensation disclosure last summer, most companies had scurried into action, preparing to provide greater transparency into sala­ries and perks.

But now a late-December change in the regulations means those companies are going to have to redo a lot of work they had already completed.


The disclosure rules, which force companies to reveal their top five executives’ total compensation along with a detailed explanation of how those packages are determined, require HR executives, compensation consultants and boards of directors to spend numerous hours drafting new tables that lay out the information.


“This is a long process,” says Steve Van Putten, East region practice leader for executive compensation at Watson Wyatt Worldwide. “It takes several meetings just to explain all of the changes to the compensation committees.”


Given that, many firms were probably annoyed when late in the afternoon of December 22, the SEC announced a change in the rules. Rather than having companies disclose stock option values as they are granted, the revised rule requires firms to disclose options values as they vest.


Under the initial rules, for example, if an executive received $100,000 that vested over four years, the company would have to disclose the entire $100,000 in the summary compensation table. Now, they will report $25,000 every year for four years.


The SEC made the change last month to be more in line with accounting rules, which require companies to expense stock option grants in their financial statements as they vest, the agency said in a release.


Most companies are pleased with the rule change because it provides a more accurate picture of what they are actually paying out in a given year, consultants say. Even so, many are probably irritated at the timing of the announcement, says Mark Borges, a principal at Mercer Human Resource Consulting and a former SEC attorney.


“Unfortunately, a lot of companies have done a fair amount of work to comply with these regulations already,” he says. It could be particularly burdensome for companies whose fiscal year ended December 15, since their proxies, which will have to comply with the new rules, are scheduled to come out this spring.


Now those companies are going to have to calculate the fair value of rewards made not just in 2006, but in previous years as well, consultants say.


“For companies that made a lot of stock option awards over the past few years, this could be quite a bit of work,” Borges says.


Washington office of Gibson, Dunn & Crutcher.


As firms go back and redo the numbers, they will also have to draft lengthy footnotes explaining what the numbers mean, he says.


The way the SEC handled the rule change indicates that in the future it will try to keep its requirements in line with accounting rules. Companies should be prepared for that, consultants say.


“There are going to be more accounting changes in the future, and the SEC will probably adopt those changes too,” says Mark Reilly, a Chicago-based compensation consultant.


—Jessica Marquez