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Companies Step Up Benefits Communication to Combat Unions

As discussions around the Employee Free Choice Act heat up in Congress, employers are stepping up their communications to employees about the benefits they offer as a way of combating unionization efforts.


Too often employees aren’t aware of all the benefits that their employers offer them, making unions’ claims of a better life all the more appealing, says Joseph Lazzarotti, a partner in the benefits group of Jackson Lewis. “Unions are just making these general statements that if employees join, their lives will be better without anything on the other side coming from the employers,” he says.


And with retirement benefits and health care issues of such great concern to employees given the economic downturn, union organizing efforts have really focused on benefits, experts say.


As a result the number of companies that are stepping up their communications efforts around benefits is skyrocketing, says Steve Peterson, a principal in the communications practice at Hewitt Associates. While Hewitt had a handful of firms doing this a few months ago, it now has more than 20 companies adopting these strategies—many of which have just started in the past few weeks, Peterson says.


“This is definitely one of the hottest things we have seen for the year,” he says.


Employers’ concerns about union activity have grown this year as a result of the Employee Free Choice Act, which if passed would make it easier for unions to organize. Smart companies are being proactive and getting in front of potential union campaigns by getting their communications out first, says Michael Sullivan, a principal in the labor and employment practice of Goldberg Kohn in Chicago


“A lot of times firms don’t start doing this kind of communication until they have received a union organizing petition, and by that point it’s characterized as union-busting,” he says.


Also, unions’ promises of a better life often are not necessarily accurate, says Michael Lotito, a partner at Jackson Lewis.


“There have been several studies that show that union pension plans are terribly underwater,” he says.


Unions argue that if employees were represented, they could increase their wages, Lotito says. By better explaining how much companies are spending on benefits, employers can help workers understand how their total compensation is actually much higher than they thought it was, he says.


“At a typical company, the cost of employees’ benefits could be adding 30 to 40 percent to the worker’s take-home pay,” Peterson says. “But employees don’t usually see it that way.”


To clarify this point for employees, more companies are customizing their benefits communications to illustrate how elements such as a 401(k) match, profit sharing and, if applicable, a pension add to the employee’s retirement nest egg, says Liz Davidson, CEO of Financial Finesse, a Manhattan Beach, California-based provider of financial education.


Traditionally, Financial Finesse’s retirement workshops would be more focused on the overall retirement picture, and include such elements as Social Security and outside investments, she says.


But today, more employers—especially those in the manufacturing sector—are asking the firm to focus their retirement seminars on the specifics of what the employer offers, Davidson says.


“We are getting much more into the specific benefits and digging into the numbers,” she says.


While Financial Finesse has always had some clients that used benefits education as part of an effort to deflect union organizing activities, Davidson says she has seen a huge pickup this year.


“In the past, particularly among manufacturing clients, it might have been something on their minds particularly,” she says. “But now it’s always part of the conversation.”


To design an effective benefits communication program that will counter union claims, companies need to understand where their vulnerabilities are, Peterson says.


Companies can use tools such as employee satisfaction surveys to identify which benefits are most important to their workforces, he says. “For example, they can see if employees at a certain plant or location are really unhappy about the 401(k) match being taken away,” he says.


Once that is figured out, companies need to train their frontline managers on all of their benefits and make sure that the message gets communicated effectively, he says.


Companies that are already doing this are also making sure to have tracking mechanisms in place to determine how effective their communications strategies are in deflecting unionization efforts, Davidson says.


“They can see which plants are high-risk, medium-risk or low-risk and then see if there is progress after a communications campaign,” she says.


While communicating benefits can help counter unionization activities, it really should be part of an employer’s ongoing workforce management strategy, experts say.


“Training people about what benefits they have and how to use them is essential because you are paying for these benefits anyways,” Sullivan says.

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Five Insights From Leadership Research

Let’s face it: Leadership development has been stuck for a long time. The most fundamental questions are still in dispute. For example: What is this thing we call leadership? Is it genetically hardwired into some people but not othersCan it be developed? And if so, what methods really work?


Ironically, these questions persist in the midst of a veritable mountain of printed material. Every bookstore contains dozens—if not hundreds—of books on the subject, many written by scholars for prominent business, military and governmental leaders. Tens of thousands of articles are available, and the number of speeches on the subject is way beyond counting.

Despite all these resources, the study of leadership begs for a more scientific approach. Imagine where medicine, engineering, physics, space exploration, chemistry or aviation mechanics would be if these disciplines had relied on the opinions and personal views of leading practitioners, devoid of research and published results.


Five insights from our leadership research
Success in understanding any complex field requires that researchers apply scientific rigor and then share their findings. For the past five years, one of the authors of this article, Joseph Folkman, has led a team that has been analyzing a substantial data base of approximately 200,000 feedback instruments—commonly called 360-degree feedback reports—that pertained to approximately 20,000 managers. These questionnaires were collected within hundreds of companies.


The results of this research are published in a book co-authored by Folkman and Jack Zenger, The Extraordinary Leader: How Good Managers Become Great Leaders. Our research has continued, and additional findings are being published by the authors through the Zenger Folkman consulting organization.


Our data-driven approach to understanding leadership has led to a number of unexpected insights. This article will share five of our fundamental findings. Our hope is that this will lead to additional questions, debates and research—all of which will further our understanding of leaders and how they develop.


1. We need to set our sights higher.
Earlier in his career, one of the authors co-founded a highly successful supervisory skills training firm. The firm’s underlying objective was to teach frontline managers the basics—and because so many su¬pervisors lacked these fundamentals, merely getting them to the point of adequacy turned out to be a worthwhile (and profitable) achievement. Teaching them how to be among the best managers in their respective companies was never considered.


In hindsight, the skills provided stopped way short of the ultimate target: to produce extraordinary leaders who, in turn, produce extraordinary results for the company. Many of today’s organizations fall into a similar trap. They focus on under-performers with the intent to bring them up to an adequate level. Or, conversely, they invest heavily in their high-potential managers and provide few developmental resources for everyone else. Our research indicates that neither approach is optimal. Organizations will reap huge benefits by helping the vast pool of good managers learn how to become great.


In short, we’ve been putting our leadership development emphasis on the wrong populations. Rather than focus on the top end or the bottom end, our efforts should be directed to the large group in the middle. Building these good leaders’ capability to behave like top-tier leaders can produce results that are far beyond incremental.


2. We need to stop emphasizing weaknesses.
Future leaders learn at a young age that the way to improve themselves is to fix their weaknesses. By the time they start their careers and receive their first supervisory assignment, the habit is deeply ingrained. They ignore their strong points in favor of an in-depth analysis of their shortcomings. They have developed a bone-deep belief that if they raise those lower scores, they will be better leaders.


Nothing could be farther from the truth. In our re¬search, “lack of weaknesses” was not the distinguish¬ing feature of the best leaders. Instead, they possessed a few profound strengths. They used these strengths to great advantage in the organization—and, in turn, were known for being world class in two or three areas.

A caveat is in order here. Our research identified one situation in which working on weaknesses is the right thing: when the leader has what could be termed a “fatal flaw.” All leaders have some areas where they’re not so strong. Such rough edges aren’t a problem if the leader has outstanding strengths that compensate. But if the shortcomings are so serious that they prevent a leader from seeing his or her strengths, they become a brick wall of sorts. The leader cannot move forward until this wall is torn down.


As we analyzed the least effective leaders in our data base, we found the following list of typical fatal flaws:


  • Inability to learn from mistakes

  • Interpersonal incompetence

  • Lack of openness to new ideas

  • Tendency to blame others for problems

  • Lack of initiative

Playing it safe is perhaps the most risky thing a leader can do. Better to get out and make something happen than be perceived as a conservative, careful non-contributor.


3. We need to invest more in identifying and developing strengths.
Being an extraordinary leader doesn’t mean doing 34 things reasonably well; it means doing three or four things extremely well. The implications are revolutionary. When a leader develops three or four competencies to a certain level of proficiency, then this person will join that elite group. These strengths cannot be just any behaviors. The strengths must be in areas that make a difference. They must be traits or behaviors that others readily see, and that make a positive impact on how the organization functions. We have identified these as “differentiating compe¬tencies.” We discovered that there were 16 such dif¬ferentiating behaviors. The leader would be advised to work on competencies from this list.

4. We need to ensure that leadership has the structure necessary to support the organization.
One of our objectives in reporting this research was to make it simple and actionable, along with being empirical. Think of a traditional wall tent, with a center pole and four corner poles holding up an expanse of canvas. The amount of space inside the tent is symbolic of the effectiveness of a leader. As mentioned above, our empirical research showed 16 differentiating competencies clustered into five areas. The research can be illustrated by this tent.


The center pole represents the cluster of leadership traits having to do with character, honesty and integrity. We believe this is at the core of all effective leadership.

In one corner, the pole represents personal capabilities: technical competence, problem-solving skills, innovation and self-development. These are skills that should be acquired early in one’s career, prior to accepting a supervisory position.


In the second corner pole is a cluster of competencies about the leader’s focus on results, including setting high goals that stretch the team, and accepting responsibility for the performance of the work group.


A third corner pole represents effective interpersonal skills. These include being a powerful and prolific communicator, motivating and inspiring others, and collaborating with other people and groups. Some organizations tolerate interpersonally impaired leaders in the short run, but few put up with it for long.


The final corner pole represents leading change. This cluster includes being a champion for constant change, being the link to the outside world, and looking over the horizon for what is coming up. Here are the 16 capabilities grouped into the five “poles.”


5. We need to understand that developing strengths often requires a nonlinear approach.


Ask anyone how to go about correcting a weakness, and they will give you the standard answer: Study, practice, get feedback, repeat. Ask the same person, “OK, how would you build on a strength?” and you’ll often be met by a blank stare. We’ve been conditioned to look for and fix defects. Few of us have ever seri¬ously considered the question “How do I get better at something I’m already pretty good at?”


For this reason, some leadership theorists argue that building strengths is a fool’s errand. We would state it differently: When a person begins to excel in an area, a different approach to development is required.


In delving into the empirical data, we discovered a fascinating and previously unnoticed phenomenon: A number of supporting behaviors were statistically correlated with each of the 16 differentiating leadership competencies. We have called these supporting behaviors “competency companions,” or “behavioral buddies.”


Examples abound in the world of athletics. Why do world-class tennis players lift weights and run long distances? Why do runners also swim and bicycle? Such cross-training has become commonplace as athletes have discovered it greatly improves their performance. The competency companions represent the cross-training manual for leaders who are intent on building on their strengths.


For example: An oil company executive wanted to move his relationship-building skills from good to great. In working with a coach, he stated his goal as “I am going to be nicer!”


The coach asked what that meant and the executive said, “Well, you know, just in general I’m going to be friendly, not pushy.” Faced with this well-in¬tentioned but vague reply, the coach discussed with him the seven competency companions associated with relationship building and asked if any of the companion skills jumped out at him as ways to improve his effectiveness in relationship building.


After a bit of reflection, the execu¬tive responded, “Optimism—it hits me right between the eyes. I’ve always prided myself on my ability to find the flaw in any argument, or a potential problem that no one else noticed. That’s a very helpful trait when you’re running an oil refinery. But I can see how it undermines my relationships with others. I never saw the connection in the past, but I realize that people may not like to have a discussion with someone who’s always telling them why their ideas won’t work.”


That the differentiating competencies and their com¬panion behaviors are statistically linked is obvious from the data. The reason for the connection is less obvious. Does A cause B, or does B cause A? Or, do they simply have another common root? We hope the answer to those questions will come as we conduct further research. For now, we can say with total confidence that, for example, assertiveness is a powerful companion behav¬ior to honesty and integrity, or that networking greatly leverages a person’s strength in technical expertise.


More work to do
The Extraordinary Leader research provides new insights into the nature of leadership and leadership development. Like most research, it pushes out the perimeter of the circle of knowledge. Just beyond the circle, however, is the expanse of unanswered questions. Our hope is that many more students of leadership will approach this extremely important topic with scientific rigor.


Only in this way will we be able to answer the bigger questions raised at the beginning of this article. We are convinced that, to a great degree, leaders can be made. Genetic makeup is not the main determinant of great leadership. Certainly, some people are born with a high energy level, keen intellect and emotional hardiness. These are helpful traits, but they fail to explain the late-blooming leader. They also fail to explain the promising youth who gets derailed and never recovers.


We acknowledge that much of leadership development happens casually and informally as people work. But we are not dissuaded from believing that intense bursts of development can have a powerful effect in creating a new mind-set and new skills. Just as formal classroom development can greatly accelerate the progress of newly minted supervisors, good science will continue to be of enormous help in our quest to develop extraordinary leaders.


Workforce Management Online, July 2009 — Register Now!

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Dear Workforce How Do We Remedy Sinking Morale After Layoffs

Dear Heartache:

 

It’s good that managers are turning to you, because now you have an opportunity to have a real business impact. The lessons to learn pertaining to layoffs: 1) Employee fear lowers morale; and 2) employees hate “surprises.” Following are some steps to keep in mind to limit morale-crippling surprise announcements of layoffs:

1. Be transparent. The first thing you need to do is to be more open with your employees (the technical term is transparency). Start by exposing your employees to all of your major business and financial metrics, because laying everything out on the table builds employee trust. Not only will exposing employees to this information give them some warning about downturns, but it might also spur them to come up with some approaches to solve your business problems.

2. Over-communicate. Not knowing what’s happening always breeds fear. Factor in the housing crisis, and you can see how the fears of layoffs only multiply for employees. The best approach to minimize fear and speculation is to over-communicate—saturating people with information. Start by sending weekly e-mails from the CEO’s office. Use these communications to demonstrate that you have an effective plan to stabilize the business. Knowing that layoff-inducing problems are being resolved will eliminate a large amount of fear. You also must address immediately and counter any rumors as soon as you hear them. Supplement written communications with periodic face-to-face meetings with senior executives to answer questions and to involve employees in the solution.

3. Be specific and businesslike. Management should conduct a “mock” layoff for the best- and worst-case scenarios, to identify what would probably happen if you had to implement future layoffs. Then, rather than saying nothing or making general statements, it’s better to be specific and let employees know approximately when the decision is likely to be made, the probability of another layoff, and which jobs or performance levels are most likely to be targeted. These details, while they may be difficult for some people to accept, should alleviate the ambiguity that could distract them—thus further negatively affecting business results.

4. Focus your retention efforts. Generally, rather than low morale, the biggest negative business impact comes from increased turnover. The best retention approach begins by identifying and prioritizing the most critical segments of your employee population that are at risk of leaving (i.e., top performers and individuals in revenue-producing and mission-critical positions). I recommend that you meet individually with this 25 percent of the workforce to identify their concerns and to let them know how important they are to the organization. Then, as resources permit, do the same with your remaining employees.

5. Educate them about the consequences. Educate your current employees so that they realize that losing a job isn’t the end of the world. Start by letting all employees know what help they will receive from the firm if they are laid off. In addition, if a significant percentage of your previously laid-off employees have successfully found jobs, make your employees aware of it.

Lessons related to layoffs
Now, turning to the layoff process itself: First, it’s important to realize that having no layoffs can actually backfire, because it can cause employees to develop the expectation of permanent job security. This isn’t a good result, because a reasonable fear of business downturns actually tends to keep your employees from becoming complacent.

A second lesson is that back-to-back multiple layoffs of a large number of employees are always morale killers. Superior options include periodically laying off a small number of individuals each time there is a downturn or conducting a single comprehensive layoff, which might hurt the employees more initially, but knowing that it is a one-time occurrence can help ease their fears of frequent upcoming layoffs.

SOURCE: Dr. John Sullivan, San Francisco State University, July 18, 2006

LEARN MORE: More advice on how to tell employees about impending layoffs.

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.

Ask a Question
 Dear Workforce Newsletter
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No Claim for Failure to Accommodate

Douglas Quinney worked as an account manager for Swire Coca-Cola USA in Draper, Utah. Driving was an essential function of Quinney’s duties as an account manager. During his employment, Quinney suffered back pain and he took several prescription medications, including Lorcet, Oxycontin, Soma and Duagesic patches to relieve his pain. In December 2001, after hearing from one of Quinney’s co-workers that Quinney was overusing his pain medication, Swire asked Quinney to take a drug test in accordance with its drug and alcohol policy. Because Quinney tested positive for hydrocodone, Swire’s medical review officer concluded that Quinney should not operate a company vehicle while taking pain medication. Quinney was placed on paid leave. He was told to stop using narcotic pain relievers or he could not return to work as an account manager. Quinney was given short-term disability.


In June 2002, Quinney filed a discrimination charge against Swire, alleging that all the drugs for which he tested positive were prescribed by his doctor and that he could not stop taking them. In July and August 2002, Swire met with Quinney four times to offer him jobs that did not involve driving and for which he was qualified. Quinney did not accept any of these four jobs and quit.


Quinney filed suit in US District Court in Utah, alleging that Swire violated the Americans with Disabilities Act because it failed to accommodate his disability. Granting summary judgment and dismissing his claims, the district court found that driving was an essential function of his job, and that Swire did not have to continue to employ Quinney. The court found it “entirely proper for Swire to rely on the opinions of its medical professionals” in determining that Quinney could not drive safely. Quinney v. Swire Coca-Cola USA, D. Utah, No. 2:07-cv-788 (05/18/09).


Impact: Employers are advised to engage in an interactive process with employees seeking job accommodation. The ADA does not require employers to accommodate employees by assigning other employees to take over the duties of a disabled employee.


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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Harsh Reality: HR on the Edge as Economic Downturn, Layoffs Generate Stress

Even after 28 years as an HR executive, Ed Evans could barely sleep in the days leading up to his company’s layoffs.

“Even if I wasn’t doing the layoffs myself, I still was kept up at night,” says Evans, who retired from Phoenix-based Allied Waste in February after the company’s merger with Fort Lauderdale, Florida-based Republic Services was completed. Before he left, Evans helped oversee the integration of the two companies, which included the layoff of 800 employees.

That kind of anxiety for HR professionals seems to be exacerbated by today’s uncertain economic environment, as many are finding themselves on their fourth or fifth round of layoffs in the past 18 months and consequently under mounting personal and professional pressures, according to a recent survey by Workforce Management.

The HR Anxiety Survey, conducted May 26-June 3, also elicited some disturbing responses from the 372 respondents: Some say they drink more alcohol or have taken up smoking cigarettes; a large number are considering a career change; still others complain that they are called the company’s “Grim Reaper” behind their backs. What’s worse, few who are feeling stress have followed their own advice to use company-sponsored assistance programs.

“HR professionals are supposed to be the organizational caretakers at their companies,” says Francie Crosby, a licensed professional counselor at Cope, a Washington-based employee assistance program. “But what happens when they are having trouble taking care of themselves?”

And when they aren’t conducting layoffs, they are planning for them. In interviews with Workforce Management, a number of HR managers said they have spent anywhere from 20 to 50 percent of their time in closed-door meetings reviewing their workforces and helping managers decide who was going to get cut if another round of layoffs was necessary.

“It’s just so difficult because you have spent so much time hiring these people and making sure that you have the right staff in place, and then you have to spend hours figuring how to make reductions to meet profit margins,” says one 30-year-old HR manager at a New York-based professional services firm.

As a result of the ongoing nature of today’s massive workforce reductions, the majority of these HR managers say they are experiencing sleeplessness, increased anxiety and depression, while a few are using substances to cope, according to the survey.

For companies, the implications could be costly. Almost half of HR managers who have conducted layoffs in the past 18 months say their stress over the layoffs has affected their job performance, according to the survey. But a bigger potential problem for companies is that they could lose their HR staff. Thirty-five percent of respondents have considered or seriously considered changing careers, according to the survey. In interviews, they cite burnout and low morale as reasons that they are thinking about leaving. An additional 3 percent have already begun the process of changing careers or jobs.

Companies also need to think about the possible health problems these HR managers may experience, experts say. A 2006 study conducted by Leon Grunberg, a sociologist at the University of Puget Sound in Tacoma, Washington, followed 410 managers over 10 years and found that those involved with layoffs were more prone to sleep problems, ulcers, headaches and heart trouble up to three years after the layoffs.

“That could mean higher costs to the employer,” says Sarah Moore, professor of psychology and an associate academic dean at the University of Puget Sound.

Taking into account the implications of layoffs on those who must conduct them isn’t something that is on most companies’ radar screens, experts say.

While many employers offer outplacement services for employees being laid off, very few are focusing on the psychological implications of conducting layoffs for the HR managers.

Stressful times

For many HR managers, this is the first time they have had to conduct multiple rounds of layoffs within months, experts say.

“In the past a company would cut a large number of people and be done with it,” says Ilene Gochman, practice director, organization effectiveness at Watson Wyatt Worldwide. “But today, it’s chunks at a time.”

Forty-eight percent of respondents to Workforce Management‘s HR Anxiety Survey say they have conducted three or more rounds of layoffs in the past 18 months. Forty percent say they expect another round of layoffs by the end of the year, while 26 percent say they are certain there would be another round.

The survey also found that 66 percent are worried about losing their own jobs, while 7 percent had already lost their jobs.

“Everyone is concerned about their jobs right now,” says Shirley Babbitt, HR manager at Eugene, Oregon-based Lanz Cabinets. “We are dependent on people remodeling or building new homes, and that’s just not happening.”

Not surprisingly, 73 percent of respondents say they are somewhat stressed, depressed or anxious as a result of having to conduct layoffs, while 11 percent say they are extremely so. Fifty percent have experienced some sleeplessness, while 17 percent say they have experienced frequent to extreme sleeplessness.

Twenty-three percent of respondents say they have occasionally used a substance to cope with anxiety, while 7 percent say they are frequently doing so.

“I am definitely drinking more, and I started smoking again after quitting for two years,” says a 30-year-old HR manager at a New York-based professional services firm that has conducted four rounds of layoffs since August. Almost half of the HR managers surveyed (49 percent) say their increased anxiety has affected job performance.

“Definitely for a while I wasn’t as engaged in my job,” says a vice president of HR at a financial services company who participated in the survey.

After laying off 2,000 people within four months, the HR executive says it was difficult to get excited about the job. “I have thought of changing industries or being a stay-at-home mom,” she says.

Many HR managers find themselves emotionally distancing themselves from their employees.

“You almost don’t want to get too close to them because it hurts worse when they have to leave,” says Laura Rhode, HR director at Bonita Springs, Florida-based Sunshine Ace Hardware Stores. (Rhode did not participate in the survey.)

Emotional distancing is a common trait among managers who conduct layoffs, according to the University of Puget Sound study. In interviews for that study, managers who had conducted layoffs were more likely to report increased distancing behavior than those managers who had not been involved in layoffs.

And even if HR managers aren’t distancing themselves from employees, some are finding that employees are distancing themselves from HR.

Twenty-five percent of respondents say that employees have treated them differently since the layoffs at their companies.

One survey respondent refers to a lack of trust from employees who view HR “as the enemy.” Another respondent says employees use terms like “Angel of Death” and “Grim Reaper” when HR walks into a room.

Reaching out

Despite suffering from sleeplessness and anxiety, very few HR professionals are reaching out to professionals for support, including their employee assistance programs.

Only 9 percent of respondents say they have reached out to professionals, such as their EAP, for assistance.

“It’s a little distressing that they aren’t reaching out to EAPs, because if the HR person doesn’t have confidence in the EAP, then you have to wonder about the average employee,” Gochman says. “But it could also be that the HR person feels that this is part of their job and they should have the strength to deal with it.”

Instead of reaching out to professionals, several HR managers said in interviews that they were reaching out to other HR professionals within and outside the company.

“I have reached out to some of my HR friends at other companies and they have been incredibly helpful,” says Babbitt of Lanz Cabinets, which laid off 27 people in May. “We are really leaning on each other right now to make sure we are doing the right thing and to support each other.”

Some respondents said in interviews that they would love the ability to join a formal support network on this issue, but recognize that it could be a touchy subject. “Everyone recognizes that layoffs occur, but once you put together a formal network of HR managers to support each other, it will scare the crap out of folks,” said one recruiting manager at a global law firm.

The most common way that employers try to prepare HR for conducting layoffs is through training. Sixty percent of respondents say they received training or materials to help them conduct layoffs. Ninety-nine percent of those respondents say the training they received was helpful.

While training can help, HR professionals say the best way to alleviate some of the anxiety associated with conducting layoffs is to make sure they understand the business strategy behind them.

“Too many companies leave HR in this 100 percent HR role and don’t let them understand the business,” says Evans, the retired Allied Waste HR executive. “The more they can help them understand the business strategy, the easier it is for HR—particularly more junior HR professionals—to do these kinds of things.”

Giving HR the chance to reduce the number of layoffs or come up with alternatives can also help alleviate their stress and give them more of a sense of control.

For example, at Sunshine Ace Hardware Stores, Rhode suggested brainstorming with employees about ways to avoid layoffs. Together, the workforce of 340 employees came up with the idea of cutting back everyone’s hours, which helped the company avoid layoffs.

Similarly at Lanz Cabinets, the company’s president, Brent Lanz, is trying to see to it that all 27 people who were laid off in May will be able to return to their jobs after the summer, Babbitt says. “He is out there beating the streets for sales,” she says. “It definitely made it easier to deliver the news knowing that.”

Employers also can help HR managers get through these difficult times by focusing them on rebuilding the company’s culture post-layoffs, Watson Wyatt’s Gochman says.

“Companies want to get HR focused on the people who are staying and how can they get the business to turn around,” Gochman says. “It gives HR more of a sense of control and helps them be proactive.”

The good news for HR is that many understand that as difficult as these times are, they will pass. Only 19 percent of survey respondents say they believe that their current anxiety will have long-term effects on their job performance.

“The layoffs will stop at some point, and then HR can focus on rebuilding,” Gochman says. “The things that brought HR joy will come back.”

Workforce Management, June 22, 2009, p. 18-23 — Subscribe Now!

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Over HR Is It Time to Get Out

Allen Stone is ready to leave HR.


Years of playing the hatchet man during layoffs with little influence on how companies downsize have him fed up with the field. In this recession, the Ludington, Michigan, resident laid off about 200 people at the mining company he worked for as an HR director, before getting a pink slip himself in January. Now the 40-year veteran of the profession is remaking himself as a consultant.


“We’re being used a lot,” Stone, 61, says of HR practitioners. “It’s been a lot of trying to clean up, in companies that have been mismanaged.”


Stone is not alone. Laying people off in this recession has caused a significant portion of HR professionals to consider exiting the field, according to Workforce Management’s HR Anxiety Survey. The study asked whether HR professionals’ experiences in conducting layoffs had prompted them to think about changing careers or moving to a different, non-HR role in their company. Most said no, but 37 percent answered affirmatively. Just over a quarter of the respondents acknowledged “some thought” about changing careers or roles, while an additional 9 percent said they’d given “serious consideration” to a switch. Three percent said they had begun the process of changing their career or role.


Leaving a profession typically signals dissatisfaction with more than merely one’s job or boss, says John Boudreau, management professor at the University of Southern California. He says HR practitioners’ musings about moving out of the field could have to do with perceptions that HR is regressing to a reactive, delivery-oriented role, rather than rising to a more strategic stature.


“The layoff question may be a microcosm of that question of whether the field is advancing,” Boudreau says. Fred Foulkes, management professor at Boston University, says he’s not surprised a substantial number of HR professionals are thinking about leaving their jobs. HR practitioners are being asked to execute layoffs even though they may favor alternative cost-trimming steps such as furloughs or pay cuts, he says. “Some of them are doing things they don’t necessarily agree with,” Foulkes says.


One HR official with 20 years in the field used to view layoffs in a hopeful light. Speaking on condition of anonymity, she said she could see the cuts as good for people losing jobs—she figured new doors would open for them. But in the past decade, layoffs have lost their luster for her.


“I’ve become much more cynical over the years,” she says. “It’s the easy way to reduce costs quickly.”


The official recently left an organization as an HR director. During her last year there, she estimates she spent 70 percent of her time laying off employees.


Although she just started a new HR director job at a technology company in Texas, she’s not sure how long she’ll stay.


“The prevailing theme when you look at my résumé is, I’ve laid off people,” she says. “I’m really, really looking at getting out of the profession.”


Workforce Management, June 22, 2009, p. 20 — Subscribe Now!

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About the HR Anxiety Survey

Workforce Management surveyed 372 HR professionals who are registered users of the Workforce Management Web site and who work at organizations of 100 or more employees where layoffs have been conducted in the past 18 months. Forty-three percent of the respondents work at organizations of 5,000 or more employees. A third of respondents are at organizations of 1,000 to 4,999 workers. Ten percent are at organizations with 100 to 999 employees. Thirty-seven percent of the respondents have the title of HR manager; 30 percent are HR directors. The balance of respondents have other HR titles, such as vice president of HR, chief human resource officer or HR generalist. The survey responses were collected from May 26 through June 3.

Workforce Management, June 22, 2009, p. 19 — Subscribe Now!

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HR Professionals Believe the Layoffs Arent Over

Despite indications that unemployment has bottomed out, more than half of HR professionals say their organizations will conduct more layoffs by the end of the year, according to Workforce Management’s HR Anxiety Survey.


According to the survey, which was conducted from May 27 through June 3, 40 percent of the 356 HR professionals answering the question said they think their companies might have another round of layoffs by year-end. Twenty-six percent said they were certain that there would be more layoffs.


These responses seem to contradict recent data that indicate that unemployment has bottomed out. The Conference Board’s Employment Trends Index for May showed a 0.2 percent uptick from April. The moderation indicates that “the decline in job losses is real and signals that the worst is over,” says Gad Levanon, senior economist at the Conference Board. The index is based on a number of factors, including the number of job openings; initial claims of unemployment insurance; and the percentage of respondents who say they are having difficulty finding jobs.


The fact that such data seem to conflict with HR managers’ perceptions might not necessarily be a contradiction, Levanon says.


“We will still see job losses in the second half of 2009, but they are going to be more moderate than what we have seen in the first half of the year,” he says. “There were 349,000 job losses as of May 2009, compared to an average of over 600,000 for the six months before that.”


Recent data released by Mercer supports the notion that while layoffs may still be in the offing for the remainder of the year, the number of jobs being slashed is decreasing. While 58 percent of employers surveyed by Mercer say they plan cuts to their workforce this year, only 5 percent plan deep cuts (more than 10 percent of their workforces).


“I think at most organizations there is a recognition that we aren’t at the bottom yet, but we are near the bottom,” says Steve Gross, global leader of broad-based performance rewards consulting at Mercer. “A lot of my clients who were hunkering down three to four months ago are now starting to talk about plans for 2010.”


Also, many companies are laying off low- or poor-performing employees in an effort to take advantage of the number of talented people out of work right now, says Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School.“This is an opportunity to up-skill their labor,” he says.


Gross agrees that this is likely to be the case, particularly at smaller companies that can’t afford to have poor performers.


“Every company has 5 percent that they wish weren’t there,” Gross says. “I think most of those people are gone now.”

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SHRM Members Tap Local Chapters for Support, HQ for Information

HHR practitioners stressed out by delivering bad news during layoffs aren’t likely to contact the industry’s national organization for emotional support.


Rather than serving as a massive employee assistance program, the Society for Human Resource Management is providing professional guidance to help manage the economic downturn.


“Our members are coming to us for those tactical, regulatory, legal data points so that they can advise their executive management,” says China Miner Gorman, SHRM chief operating officer.


Yet SHRM also is hearing about individual pain that comes from losing a job or having to deliver the bad news when others are downsized. Those stories, however, are conveyed at 600 local SHRM chapters during monthly lunches or dinners.


At a recent meeting of SHRM of Greater Tucson in Arizona, participants spoke about layoff rounds at their companies, according to Judith Burgard, president-elect of the organization. Others mentioned job openings at their firms.


It was a sort of employment exchange that could help HR managers point displaced workers in the direction of a job. At another meeting, the group shared ideas about novel ways to avoid layoffs.


The Tucson SHRM chapter also revived a program to help members who have lost their jobs, while it continues to offer skills training that will keep them competitive in an increasingly brutal labor market.


Taken together, these initiatives can soothe frazzled HR professionals.


“That is what the chapter network does informally,” Burgard says. “It’s a very important stress reduction factor.” When she visited the SHRM chapter in Detroit in May, Gorman thought she might encounter frayed nerves and negative attitudes.


“Nothing could be further from the truth,” Gorman says. “They were strong. They were positive. I left inspired by their professionalism [and] the strategic thinking in that room. HR is playing a critical role in leading their community forward as the primary industry that supported that economy for so long is unraveling.”


Breaking bread with peers at local chapters is one of the defining moments of SHRM community, according to Sue Meisinger, former SHRM president and CEO. It’s one of the few places where members can vent because they often find themselves isolated in confidentiality at work.


“Those local relationships built through the chapters are very important during tough economic times,” Meisinger says. “It’s one of the ties that bind.”


Members are likely to turn to SHRM headquarters in Alexandria, Virginia, for advice on conducting layoffs or managing benefits for separated workers.


They can do that through the Knowledge Advisor service that puts them in touch with certified HR experts on topics like reducing headcount without violating federal notice requirements. Or they can e-mail information queries to Express Requests.


This year, more than 47,000 members have used Express Requests and about 24,500 have utilized Knowledge Advisors. Those totals represent 40 and 17 percent increases, respectively, over the same period in 2008.


The SHRM annual conference in New Orleans has been programmed to offer recession-response information with such things as a career transition center.


Workforce Management, June 22, 2009, p. 22 — Subscribe Now!

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House Panel OKs 401(k) Fee Disclosure, Defined-Benefit Plan Funding Relief

Legislation approved Wednesday, June 24, by the House Education and Labor Committee would require improved disclosure of fees and other financial information to 401(k) and other defined-contribution plan participants, as well as provide some modest funding relief for defined-benefit pension plans.


The defined-benefit plan funding relief may be only the first of additional changes, with committee Chairman George Miller, D-California, describing the funding relief provisions as a “work in progress.”


Under the measure, H.R. 2989, approved on a 29-17 vote, service providers would have to disclose to employers all fees assessed against a participant’s account, with those fees broken down into four categories: administrative, investment management, transaction and other fees.


That would change the practice of some service providers, especially mutual funds, that include fees, such as record keeping, in the expense ratio of the investment funds they provide.


The proposal also would mandate quarterly statements be provided to participants that detail contributions, earnings, account balances and all fees taken out of their accounts.


In addition, the measure includes a provision that would effectively require defined-contribution plans to include at least one market index fund as an investment option.


The measure also would delay the effective date of regulations mandated under a 2006 law that toughened funding requirements. Under current law, the rules can be effective as soon as July 1. The amendments to be added to the bill would delay the effective date until January 1, 2010, at the earliest.


Until then, employers could make a good-faith interpretation of the law’s funding requirements.


In addition, employers would be given more flexibility in choosing an interest-rate methodology to value pension plan liabilities in 2009 and 2010.


An amendment proposed by Rep. Brett Guthrie, R-Kentucky, and approved by the committee on a voice vote would require employers to only pay interest on 2008 losses in 2009 and 2010, but the seven-year amortization of losses—set under the 2006 funding reform law—would not begin until 2011.


The funding relief provisions are “good positive changes,” with a possibility that legislators will consider additional relief proposals, said Kyle Brown, an attorney with Watson Wyatt Worldwide in Arlington, Virginia.


On the other hand, more employers would be required to report plan actuarial and financial information to the Pension Benefit Guaranty Corp. Under current law, only plans that are less than 80 percent funded have to report this information to the PBGC.


The legislation would change that requirement so reporting such information would be triggered if plan underfunding exceeded $50 million.


Such a change is needed, according to a committee summary, “since large plans that are more than 80 percent funded can still be underfunded by hundreds of millions of dollars, the PBGC is not getting information on many underfunded plans.”


It isn’t clear yet if the measure will now go straight to the full House or whether the Ways and Means Committee, which also has jurisdiction on pension issues, will take up the bill.



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


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