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The Changing HR Profession

For those interested in a career in human resources, first the bad news. During the next decade, experts say, the sort of corporate job that many HR professionals have today may cease to exist.


    Academics, HR consultants and executives at major outsourcing firms describe a future in which the continued growth of outsourcing, advances in information technology, and bottom-line pressures may lead to the demise of the traditional HR generalist who handles everything ranging from benefits programs to recruiting.


    “In the old days, companies had delivery boys who scooted around with packages,” explains David Creelman, chief executive of Creelman Research, a Toronto-based HR consulting firm. “Today all those jobs have disappeared because of Federal Express. We’re rapidly approaching the point where HR will be like that, where companies will use outside vendors for all but the strategic level of tasks.”


    But there’s good news too. There still will be a place for HR professionals–but often that place is going to be on the outside rather than in-house, working for an outsourcer or an IT vendor. The remaining HR jobs inside companies usually will be for HR strategists, focused on finding ways to leverage the company’s human capital to improve business results. And with globalization proceeding at a breakneck pace, both in-house and outside HR professionals will have to deal with corporate workforces scattered even more widely around the globe than they are today.


    “There are going to be tremendous opportunities out there in HR,” says John Gibson, senior vice president for operations at Convergys Employee Care, a Cincinnati-based global HR outsourcing firm. “But what HR professionals will be doing on a daily basis is going to be very different from what they do today.”


    To get those jobs of the future, prospective HR specialists will need a much broader set of skills, background and experience than their predecessors have had. A degree from an HR program at a major university undoubtedly will still be a plus for entry-level applicants. But that won’t be enough, according to Peter Weddle, an HR consultant and publisher of Weddle’s Guides, a print guide to 40,000 online job boards.


    “If you’re just taking HR courses, there’s a danger that you’re going to be rooted in the old way of thinking,” Weddle says. “You may have an easier time getting in today, but you’re training for a corporate job that may be outsourced two or three years down the line. What you really need to do is adopt more of a business-school, leadership mentality. Take a broader range of business courses. You need to understand how companies make money, and then focus on how HR facilitates that. You’ve got to aim for a kind of job that is going to be harder to get, but in the long term there’s going to be a lot more security. You’ve got to be ready to compete for a more powerful and influential position in the company.”


    Convergys’ Gibson says: “Look for opportunities for international exposure, because that’s going to be increasingly crucial. There are some very respected university HR programs in other countries, and if you have an opportunity to study at one of them, that’s an asset.”


    But both in the U.S. and abroad, university HR programs themselves are likely to evolve to fit the new realities, predicts Kathryn Kelly, president of ExcellerateHRO, a Plano, Texas-based outsourcing firm. “In the future, we may see HRO providers partnering with universities to develop programs around HR outsourcing, to be offered through HR as well as the IT curriculum,” she says.


    New HR professionals who land those entry-level jobs at HR outsourcing firms, however, will find themselves learning the HR trade in an environment very different from traditional corporate HR.


    “Outsourcing firms are looking for a very different skill set,” says Ed Jensen, an Atlanta-based partner in the human performance consulting practice of Accenture, a global HR outsourcing firm.


    “They’re less focused on your certification in payroll or benefits administration, and more on your customer relationship skills,” Jensen says. “After all, you’re not hidden away in the back office—you’re right up front, in a job where you’re supposed to be creating revenue, dealing with people. You really have to be able to focus on the business side, and be able to justify the worth of what you’re doing, because somebody else is paying for it. You’ve got to have good communication skills, so you can explain all that to the clients. And you’re going to have to learn now to do this for multiple clients at the same time.”


    Convergys’ Gibson agrees. “To work for us, not only do you need to have the broad HR generalist skills, but also business acumen, financial skills, the ability to collaborate with clients,” he says.


    As their market continues to expand, outsourcing firms are filling their staffing needs by hiring HR professionals away from companies. But during the next decade, that pattern is likely to reverse.


    “We’re already at the point where big companies are outsourcing two-thirds to three-fourths of their HR functions, and it’s not difficult to foresee that in five to 10 years, basically every company will have done that,” Jensen explains. “That’s going to change the way that people break into the field, because the entry-level jobs will be at the outsourcing companies who actually provide the HR services. What I think you may start seeing is the same pattern that now exists in accounting and finance, where people generally come out of school and go to work for an outside firm. Then, after they’ve developed themselves for a few years, they begin to move over into a company’s finance department. That eventually may be how it works for HR, as well.”


    As those young HR professionals gradually migrate from outsourcers to the companies they formerly served, they’re likely to find a very different corporate environment from what exists today. For one thing, many companies may no longer even have an HR department.


    “It used to be that there were HR generalists who would do a lot of administration, some technology, and hope to get a little strategy in,” consultant Creelman says. “What you’re going to see in the future, in midsized and larger companies, is that these will be different career tracks, with increasingly different skills. Possibly, those functions may even be scattered across different parts of the company.”


    Though administration largely will be the province of outsourcers, Ben Dattner, a New York University professor and organizational effectiveness consultant, thinks it will also create the need for a new type of in-house position–the HR executive who is skilled at managing the efforts of outside services vendors.


    “In the future, you’re going to have outsourcing firms, consultants, all these different planes buzzing around,” Dattner says. “On the inside, there’s going to be a need for somebody who will be the equivalent of an air traffic controller, somebody who can develop a coherent HR strategy around all these outside resources and manage them.”


    Creelman agrees. “I think the generation of people coming into companies from outsourcing firms will better understand how to maximize the value that companies get from outsourcers,” he says. “Right now, mostly what we see is a one-off model, in which each outsourcing contract has its own unique elements. But with their background, these new HR people will be able to make outsourcing relationships much more standardized, so that they’ll be able to benchmark much more in terms of costs. They’ll make the whole process much more sophisticated.”


    Creelman says he sees technology management as another emerging opportunity for HR professionals.


    “HR technology already is a big deal, and it’s going to be an even bigger deal in the future,” Creelman says. “But there aren’t nearly enough people who are skilled at all the aspects of making it work, from selecting the right vendors to understanding how to roll out HR technology inside an organization and get the buy-in.”


    For the HR professional of the future, Creelman believes, project management skills will become as important as understanding the nuances of benefit plans.


    Experts agree that the in-house HR positions will focus increasingly on finding ways to serve the company’s business strategy.


    “There’s a limit to how far you can go with outsourcing,” Accenture’s Jensen explains. “Tasks such as developing an overall talent strategy that helps the firm to meet its business goals–it’s going to be hard to outsource that. These things are maybe 5 to 10 percent of the traditional corporate HR function, but in the future, they’re going to be magnified in importance.”


    HR professionals who got their start in outsourcing firms will be well prepared for strategic roles in companies, Creelman says, because in addition to HR knowledge, they’ll also have been exposed to the operating side of a business.


    “Frankly, HR departments historically have been very insular,” he says. “They’ve usually been composed of people who’ve been with the company in HR for a long time, if not their whole careers. But in the future, they’ll be mixing that up, with folks coming in from the outsourcers, plus people they bring in from other parts of the business. I think they’re going to bring a lot of energy and new ideas to HR.”

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The HR Profession

Listening to HR’s Critics
Rather than relishing a seat at the table, HR must transform from top to bottom and learn to act solely as a business-impact function.


HR’s New Opportunity: Removing Barriers to Productivity
Identifying and removing roadblocks to productivity produces real results immediately. And it makes HR look proactive.


The Data Sleuth
Peter Fasolo has made it his business to dig into turnover statistics and satisfaction surveys to discover why top performers leave. Hint: Money isn’t everything.


Capturing the State of Human Resources in an Annual Report
Human resources annual reports can reveal trends, illuminate plans for the future and be used for persuasive purposes with line managers. But they are far from universal.


Jac Fitz-enz, Metrics Maverick
In 1978–in this publication–Jac Fitz-enz proposed a radical, anti-establishment idea. Human resources activities and their impact on the bottom line could–and should–be measured. The reaction was apathy, disagreement and disbelief. Now, after arguing the importance of measurement and accountability for three decades, Fitz-enz is acknowledged as the father of workforce management metrics, and the accolades bring a pleasant satisfaction.


Strategic Human Resources Actions
Being strategic is sort of like the weather–everybody talks about it, but nobody does anything about it. Here, San Francisco State University professor John Sullivan gives some examples of actions that he says have proven to be strategic.


The Right Kind of Human Resources Talent
For too long, says the University of Connecticut’s Dennis Lee, the human resources function has settled for less than optimal candidates. He suggests new selection criteria for hiring the talent necessary to build a strategic human resources function.


Human Resources’ Goals Work Best When They’re Tied to Company Success
People talk about aligning corporate, departmental and employee goals, but not many actually do it. There are companies, however, that have concrete methods to manage and measure the performance that makes lofty goals a reality.


Seven Steps Before Strategy
In the rush to get a seat at the corporate table, some HR professionals skip the basics. That ruins HR’s credibility and holds it back. Here’s what you must do before you can strategize.


The Changing HR Profession
Academics, HR consultants and executives at major outsourcing firms describe a future in which the growth of outsourcing, advances in information technology and bottom-line pressures may lead to the demise of the traditional HR generalist.


The 30 Highest-paid HR Leaders Their Stock Is Rising
With increased regulation placing greater demands on workforce executives, companies are showing their appreciation through richer compensation that often includes valuable awards of restricted shares.


Your Wonderful, Terrible HR Life
There’s almost nothing you haven’t handled: the twice-fired employee, fashion tips for transvestites, and a confrontation with the snake woman.


A Stress Survival Guide for HR Professionals
Survival strategies for dealing with crises; ever-changing technologies; multiple roles, privacy requirements, and more.


Commentary: Human Resource Management–At the Table, or Under It?
In order for the HR function to maximize its impact on the organization, HR-related issues and HR executives need to be “at the table.” The question is whether HR has “made it” yet: Is HR at the table, or under it? If it’s under the table, is it holding up the table, or hiding?


Jobs Disappear When Work Becomes More Important
It’s becoming more and more apparent that traditional job descriptions are too rigid for today’s evolving workplace. HR must reinvent employment structure as work roles become less defined.
 

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Wal-Mart Takes Low-Deductible Plan Off Shelf for New Workers

A week after announcing a plan to make prescription drugs more affordable for Wal-Mart customers and employees, the retail giant confirmed Wednesday (September 27) its plan to eliminate its lowest-deductible health plan for new employees.


Beginning January 1, new Wal-Mart employees eligible for health plans will see their lowest-deductible plan rise to $1,000 annually from $350. Wal-Mart employees can expect to pay lower premiums of $11 to $23 a month if enrolled in this plan.


New employees are eligible for health insurance after six months of full-time work or after 12 months for those who work less than 34 hours a week. Wal-Mart, which called the new benefits package a matter of “streamlining,” will continue to offer a high-deductible plan with a health savings accounts for those who have been eligible for health care benefits for a year. In areas where an HMO is available, new hires would have the HMO plan as a third option, Wal-Mart spokesman Dan Fogleman says.


Wal-Mart has attempted to repair its sullied image as an employer that is generous to customers but stingy to employees. To do so, the company earlier this year cut by half, to 12 months, the waiting period for part time employees to become eligible for health insurance. Last week, it announced that consumers will pay $4 per prescription for 291 different generic drugs.


The plan changes were first disclosed by WakeupWalmart.com, a critic of the Bentonville, Arkansas, company’s health care benefits. A spokesman for WakeupWalmart.com, Chris Kofinis, says the limited offering will force employees with high health care costs to choose a plan in which they would face larger out-of-pocket costs. For an associate making $10.11 an hour, the $5,000 out-of-pocket limit could eat up close to 30 percent of that person’s $17,874 annual salary.


Kofinis says the company is shifting more of the cost of health care to its sickest workers and their dependents.


“Here you have a company that is setting a terrible health care precedent that other companies will want to follow,” Kofinis says.


Fogleman says the change, which he calls a matter of “streamlining,” came about because most workers who enrolled in the plan with the lowest deductible of $350, opting to pay as much as $1,040 annually in premiums, never met their deductible.


“Over half of our associates did not meet their annual deductible, which means they were paying for insurance coverage they weren’t using,” Fogleman says.


The low-premium, high-deductible plan, known as the value plan, includes three doctors visits and three prescription fills with a co-pay and is available to more than 40% of Wal-Mart workers in America for $11 a month.


“We are doing all we can to make sure our plans are accessible and affordable,” Fogleman says.


Wal-Mart also plans to increase this year its “spousal surcharge”, a levy that is becoming increasingly popular among employers who want to save money on dependent health care. The surcharge at Wal-Mart will cost $1,800 and will be assessed if a spouse who has health care benefits through their current employer chooses instead to enroll under Wal-Mart’s plan.


Wal-Mart is the world’s largest private employer, with 1.3 million employees. It is the second-largest provider of health care benefits, covering about 1 million people, trailing only GM. Wal-Mart CEO Lee Scott has spoken openly about the need to reduce health care costs.


—Jeremy Smerd


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The Motivation Show 2006–Business Solutions That Motivate People

Event: The Motivation Show 2006–Business Solutions That Motivate People
Date: September 26-28, 2006, McCormick Place South, Chicago

What: The Motivation Show touts itself as “the world’s largest exhibition of motivational products and services.” It features nearly 2,000 exhibitors of incentive and recognition programs, promotional and branded products, gift cards, and motivational destinations and attractions. In addition, the show has a number of educational seminars and paid workshops on how to create more effective, measurable programs to get the most out of relationships with customers, channel partners, salespeople, employees, vendors and shareholders.


Conference info: For more about the Motivation Show, go towww.motivationshow.com.


Conference Notes, Day 2–Wednesday September 27, 2006

Dr. Bob on motivating and incentives: Dr. Bob Nelson, author of a number of books on motivating workers including “1001 Ways to Reward Employees,” had two well-attended seminars on the second day of the Motivation Show. Nelson, who is frequently quoted in Workforce Management, had one session on recognizing and motivating employees, and another on the hows and whys of rewards.

Employees, he says, leave a job primarily because they don’t feel recognized for what they are doing. Nelson gave numerous examples of the power of recognition (formally, informally and day to day) and said that “recognition can’t be optional”–it must be ongoing, consistent, spontaneous and sincere.

If you ever get a chance to hear Bob Nelson at a conference or seminar, do it. He has an important message that more managers and leaders need to hear.

Sessions I wish I could have attended: One of the frustrations of this show is that the seminars are scheduled four or five at a time. This means you have to pick one even though there may be another one that looks equally promising.

Here are a few of the ones I wish I could have attended:


  • “The Effects of Employee Satisfaction on Company Financial Performance”


  • “Attracting, Motivating and Keeping the Most Loyal, Productive and Talented People”


  • “The Secret Language of Influence”


  • “The Future of HR Management”


  • “The Economics & Advantage of Employee Engagement”

    –John Hollon


Conference notes, Day 1–Tuesday, September 26, 2006


First-timer shock: First-timers to the Motivation Show (like me) get a little bit overwhelmed by the sheer number of vendors in the exhibit hall touting gift cards, food goodies, and all manner of motivational gifts for companies to give to employees doing a good job. All of them are giving out free samples, drinks, food or goodies of some kind, but it is far less frenzied than, say, the mad scramble for swag at SHRM’s annual conference.


The show organizers say there are at least 1,800 exhibitors in the main hall, and a good third of those are from travel destinations–Hawaii, Mexico, Jamaica, Aruba–travel packagers, hotels, convention bureaus and trade councils, airlines, cruise lines and destination management companies. Which makes you wonder: Who is getting sent to all of these places? I can count the number of people I’ve known who have gotten a reward trip on the fingers of one hand, but clearly, a lot of people must be getting a lot of trips somewhere. And, some of the places touting themselves here are headscratchers. For instance, the Zagreb Tourist Board? I’m sure Croatia is lovely, but as an incentive gift for an employee doing a good job? I’m guessing that Aruba would be a little more motivational.


One other thing: At first glance, one would think that this show is just about hawking incentive goodies, but the hidden secret of the Motivation Show is that there are a number of free seminars going on and many of them seem informative and compelling. For example, “The Effects of Employee Satisfaction on Company Financial Performance” and “Driving Performance Through People” are pretty meaty topics for a show like this, and from the number of people I saw in the seminar sessions, many of them were well-attended.


Employee engagement, again: You can’t go to any workforce-related conference anymore without getting bombarded by talk about how to drive more employee engagement, and Mike Ryan of the Madison Performance Group put on two different sessions dealing with this topic. The one I attended (“The Role Employee Engagement Plays in Driving Adoption and Utilization of New Business Practices”) was focused on the role more highly engaged employees can play in driving change.


Ryan admitted that employee engagement was “the flavor of the year” and being talked to death at conferences, but he made a compelling case for why it is important, showing that the intangible value in most American businesses was 85 percent in 2005, up from 30 percent in 1930. This intangible value, he noted, is primarily the human capital in a business, and more engaged human capital increases the intangible value.


He also defined employee engagement a little better than I’ve heard in the past, saying it is defined by two key principles:


  1. That the employee believe what they do is appreciated by the business or organization.


  2. That the employee believes in the mission and values of the organization, and more importantly, embraces them.


In other words, “It’s not just about hands, but it’s about heart and mind,” Ryan said. “It’s about mind-set, and engaged employee thinks a lot more about the common good of the company. They think more like a CEO.”


So long, baby boomers: The best-attended seminar of Day 1 was on “Rewards & Recognition: Solutions That Work,” presented by Razor Sufeman and Jason Fisher, CEO and director of marketing, respectively, at ILoveRewards.com. This was clearly a hot topic with a good three times more people than at any other seminar.


The focus of the presentation, however, was only on Gen X and Gen Y employees and how to motivate and reward them. If you wanted to find out how to motivate a baby boomer or older worker, well, tough luck. The presenters clearly felt that there’s no reason to try to motivate boomers, which was a little disconcerting if you’re in that age group. It’s hard to tell if this was a sign of the times and things to come, or just an odd blip in a conference schedule, but these guys from ILoveRewards.com were clearly tone deaf when it came to talking about strategies to motivate the entire workforce.
–John Hollon



 

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Smoothing Business-Cycle Surges With RPO

A sudden change in production requirements in September 2005 forced pharmaceutical giant GlaxoSmithKline to issue new goals for its global manufacturing facility in Ontario, Canada. The 250,000-square-foot plant adjacent to the company’s Canadian headquarters in Mississauga fell under a mandate to triple manufacturing volumes immediately.


    Meeting the mandate meant hiring 240 new employees, including highly skilled specialists, on short notice. In the past, Frank Newman, HR director for the GSK Ontario plant, had used an SAP system and recruiters imported from other GSK sites to handle hiring surges, but the new needs were far larger and more urgent.


    The quantity of new hires GSK required was not the only problem.


    “We have to have people with superb training,” Newman says. “This is a burning platform. We produce life-saving drugs. The quality is absolutely critical. The last thing we would ever want to see is a recall.”


    The plant produces more than 100 medicines, including drugs for HIV/AIDS, Parkinson’s, epilepsy, diabetes, cancer and cardiovascular disease.


    Based in the United Kingdom, GSK pulls in $40 billion a year from facilities in 116 countries with 110,000 employees, including $1 billion a year from its Canadian export-oriented facilities. Like most pharmaceutical firms, it increasingly faces sudden hiring surges and workforce deployment changes generated by new research findings and mercurial government regulations.


    Beyond pharmaceuticals and other high-tech sectors, steady recruiting has succumbed to the same business pressures that have redefined the time frames for all other aspects of workforce management. Not only has staffing become even more sensitive to business and budget cycles, but companies are increasingly engaged in just-in-time hiring to keep staffing lean and responsive to shifting business needs.


    Just-in-time hiring has long been a standard for low-skill positions, but the 2001 recession pushed the technique deeper into organizations. High-tech and life sciences companies burned by overstaffing turned to lean hiring for both low- and high-skill jobs. This approach entails far more careful long-term planning and developing and maintaining a candidate network–arduous tasks–and creates a perfect opening for outsourcing the recruitment process.


RPO relief
   Newman viewed RPO as a possible solution to the hiring push and an opportunity to revamp the entire recruiting process.


    “Too many companies are locked into a HR hiring process that caters to hiring managers,” he notes. “We wanted to have a robust process with less customization.”


    To meet the new demand at GSK and re-engineer the process, Newman looked for a company that could literally drop in and handle the whole piece. He turned to Hudson Talent Solutions, part of the Hudson Highland Group, a global staffing and talent management firm with more than $1.4 billion in annual revenue and 3,800 employees in 20 countries.


    Newman sat down with John Hancock, Hudson’s senior business director, to negotiate the two-year agreement.


    “I met with Frank for a detailed risk analysis,” Hancock recalls. “We identified the risks and determined who would wear them.”


    Hudson took on sourcing, screening, administration, internal recruiting, Web site management, managing the interview methodology, building tests and creating assessment centers. Its first step was to create a screening methodology that was far more detailed than GSK’s model.


    GSK retained responsibility for the starting salary negotiations, but Hudson agreed to brief candidates to ensure that they were in the right salary range and had appropriate expectations.


    “Then we took the ball back to conduct reference checks, security screening, put out the offer letters and arrange the start dates,” Hancock says.


    GSK handled the onboarding process. About 30 percent of Hudson’s full-scale RPO contracts leave induction with the client company, but Hancock notes that including the RPO provider in the onboarding process is becoming more common.


    Hudson and GSK kicked off the campaign to fill the 240 jobs with full-page ad in the Toronto Star announcing the open positions. The ad generated 18,000 online applications, which would have drowned Newman and his HR staff of three.


    Hudson harvested the applications, put them through electronic screening, followed up with phone screening, and sent the finalist applications to GSK’s hiring managers. Newman and his team conducted the interviews and set the terms of employment for the new hires.


Scale and strength
   Hudson filled the 240 positions in a matter of months, and is now filling 100 more new openings for GSK. All of the 240 new hires have completed their three-month probation, and only two–less than 1 percent–were dismissed. Annual performance reviews will track the quality of the hires brought in through the RPO arrangement; Newman and Hancock will make any refinements necessary to create optimal results.


    “Our recruiters are co-located to maintain a cultural fit with GSK,” Hancock says. “They have reworked the process so that it delivers both quantity and quality with the greatest efficiency.”


    “Moving to RPO requires change management in both the client firm and in the RPO provider,” Hancock notes. “We have to construct an integrated approach. Without the right process for RPO, it can become a project without an outcome.”


    Newman says that his HR managers are “thrilled” with RPO, but it took two to three months to coach the hiring managers through the new arrangement and help them establish a relationship with Hudson. Hudson recruiters now work directly with the GSK hiring managers.


    Hancock notes that bringing hiring managers on board is a critical part of any successful RPO arrangement.


    “One of the most important parts of the GSK job was ensuring that hiring managers were equipped with the tools and training they need to make timely and effective decisions so they don’t become a bottleneck,” he says.


    Hudson’s RPO unit can leverage both its own specialized recruiting resources and other Hudson divisions to meet large-scale projects. Hudson now has more than 20 full-service RPO arrangements and another 50 to 60 project-basis RPO deals. The company signed its first full-service RPO deal in 1996, and that arrangement is still in operation.


    Under that first contract, Hudson cut time to hire from 26 weeks down to three weeks.


    “We are completely wedded to the organization’s workforce planning, which is a difficult and complex task with no good standardized set of tools,” Hancock says. “Workforce planning hinges on expert analysis, which the RPO provider can bring to the organization. The real value in long-term, full-scale RPO is that the provider creates intellectual capital for the client and hands it over.”


    GSK did not track time to hire before the RPO arrangement, but Newman believes that recruiting speed has improved significantly. Hudson now provides GSK with a number of efficiency metrics.


    “Frank now knows exactly how many days it will take to fill any position,” Hancock says.


    Cost-reduction information is proprietary under the GSK contract.


    “But RPO costs can’t even be compared with the cost of using outside recruiters,” Hancock notes.


    Experts estimate RPO cost savings at 20 percent to 50 percent, but all agree that the largest value lies in the provider’s ability to restructure the recruiting process.


    “At this point, I consider RPO to be a best practice,” Newman says. “We’re a Six Sigma company and we take innovation very seriously. It’s part of my job to develop and evaluate best practices and communicate them to other GSK divisions.”


    GSK is now exploring RPO arrangements for two additional divisions, with a decision expected by late spring 2007.


    “The surge in RPO stems from an interesting dynamic in the overall search for talent in North America,” Hancock says. “Organizations have had to be far more diligent in how they scope talent needs over the next five years and how they decide to meet those needs.”


    Hancock believes that employers in North America will continue to see increasing competitiveness for talent. Because of the Internet, access is no longer a problem, but addressing both volume and quality is the new challenge.


    “Constructing the screening methodology, which requires expertise, is central to making the right hires,” he notes.


    “There are always people who want to work for a company like GSK or PricewaterhouseCoopers, for example, and we see plenty of mobility,” Hancock says. “There are tens of thousands of applicants, but only 2 percent are the right people because the level of specialization that organizations require and the expectations that organizations have are so high. Companies are looking for exceptional people who can fulfill longer-term growth goals.”


    Hancock reports that large-scale full-service RPO is growing more slowly than project-based arrangements.


    “There is a larger risk in full-service RPO, and some of the deals have not operated as they were supposed to,” he says.


    Some companies are testing RPO by moving from short-term project-based arrangements into long-term agreements.


    Like a growing number of HR executives, Newman is an RPO convert.


    “HR’s job here is to build great teams,” he says. “Before our RPO arrangement, recruiting was the biggest consumer of HR time. Now HR has become the sponsor of recruitment. We’ve moved from processing résumés to talent assessment and development. RPO allows us to add a whole new dimension to HR.”

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Chicago Big-Box Law Rejected; Proponents Look to Election

When Chicago Mayor Richard M. Daley killed an ordinance that would mandate wage levels at large local retailers and had his veto upheld by the largely Democratic City Council in early September, it marked a victory for businesses like Wal-Mart and Target.


But community groups that pushed the measure vow to keep fighting as the city moves toward municipal elections in February. Their determination should send a signal to corporations that are in the cross hairs, according to one expert.


“We’re still in the first or second inning with this,” says Mike Flynn, legislative director at the Employment Policies Institute, a Washington, D.C., think tank that studies entry-level employment. “Business still thinks it is about the wage rather than recognizing that it is a political movement.”


On September 11, Daley scuttled an ordinance that would require large retailers to pay their employees $10 an hour and provide fringe benefits of at least $3 per hour by 2010. Daley, who exercised his first veto in 17 years, argued such a law would drive stores to the suburbs.


The ordinance passed the council 35-14 on July 26. But a veto override, which would have required 34 votes, fell short by three votes September 13.


While anti-Wal-Mart sentiment is quiescent on Capitol Hill, unions are targeting state legislatures and city councils to promote health care and wage standards for a company that has resisted organized labor.


“They’re trying to do through government mandate what they can’t do in the marketplace,” Flynn says.


Working at the local level helps galvanize the movement. “If you want the policy, you go to Washington,” he says. “If you want the politics, you focus on the cities and the neighborhoods.”


The proponents of the so-called big-box wage ordinance, heartened by the close council vote, say their message is resonating.


Now they have their sights set on February, when the City Council and Daley are up for re-election. Daley, whose administration has been stung by scandal allegations, may face his biggest challenge since being elected in April 1989. One of his potential foes, Democratic U.S. Rep. Jesse Jackson Jr., has come out in favor of the wage ordinance.


“It’s going to be a defining issue in these local campaigns,” says Ken Snyder, coordinator of the Grassroots Collaborative, a group of 35 organizations backing the wage ordinance.


Snyder says that when Wal-Mart and other big retailers pay low wages, they’re essentially making the government pick up health care and living expenses for their employees. “The reality is, they’re getting massive taxpayer subsidies,” he says.


A Chicago employment lawyer disputes that assessment.


“You don’t see Wal-Mart employees complaining about what they have,” says Jim Hendricks, a partner at Fisher & Phillips. “If they wanted to organize, they would. It’s not that difficult.”


Hendricks praised Daley, saying the mayor has his finger on the pulse of the neighborhoods. “There are people in the city who are crying for these jobs,” he says. “I applaud what he did.”


Companies don’t clap when wage floors are instituted, but they usually aren’t hurt either, according to Flynn. But people entering the workforce are set back, he says.


Flynn cited an EPI-commissioned study of a Santa Fe, New Mexico, living-wage ordinance that found that the city’s unemployment rate increased by 16 percent following the law’s passage. “Every one of those jobs lost was held by someone with a high school education or less,” he says.


—Mark Schoeff Jr.

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U.S. Health Care Quality Scores Poorly in New Report

Employers who pay for health care are not getting their money’s worth and universal coverage and participation is the best way to improve both the quality and cost of the system, according to a report released Wednesday by the Commonwealth Fund.


The health care scorecard released by the New York-based think tank rated 37 measures of American health care on a scale of 1 to 100, with 100 being best. Though American health care is the most expensive per capita in the world, it underperforms its peers by a wide margin.


The health care system fares poorly in its ability to promote healthy and productive lives, scoring a 67. The quality of care also is below average, rating a 71. Poor care for blood pressure and diabetes treatments result in an estimated 20,000 to 40,000 preventable deaths at a cost of $1 billion to $2 billion in avoidable medical costs.


The need for better quality controls was brought home during the past week in Indianapolis, where three premature babies died at Methodist hospital because they were administered an incorrect dosage of a blood-thinning drug.


A spokesman for the hospital, Jon Mills, says the fees for hospital services will not be passed on to the insurer or employer in light of the preventable deaths.


What the health care system lacks in quality it also lacks in efficiency, as the U.S. scored 51 out of 100 on efficiency measures. The fund’s report said that as a share of total health care cost, insurance administration totaled three times more than countries with the most efficient insurance system.


The report said improvement will require a focus on health care quality, not simply cost reduction. The fund also said that chronic illness, which composes a majority of health care costs, should be remedied with a system designed to encourage the management of chronic illness. This is especially important as the population ages.


Attempts to reward doctors for giving patients the right care, following guidelines for certain chronic conditions, are coming to the market. Last week, a collaboration of health care experts announced the launch of Prometheus Payment Inc., a nonprofit payment system that is designed to reimburse doctors for following guidelines for caring for certain cancers; chronic illness such as diabetes, hypertension and depression; interventional cardiology; joint replacement; and routine and preventive care.


Prometheus is intended to minimize a physician’s financial incentive to prescribe unnecessary tests and procedures. It is also aimed at discouraging “capitation,” which pays doctors on a per-patient basis and encourages doctors to spend little time and effort on patient care.


—Jeremy Smerd


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Taking Time to Think The Irony of Bill Gates’ Legacy

Bill Gates is one of the principal architects of the “information revolution,” developing products that have transformed the way we conduct our personal and professional lives by giving us instant and immediate access to the people and information we interact with at home and at work.


    That said, one of his key approaches to management, and one of the underlying reasons for his overall success, is his ability to take some time to step away from the immediate and focus on the longer term during a ritual he calls “Think Week.”


    Since the 1980s, Gates has gone into seclusion twice a year and devoted seven straight days to reading white papers from associates, pondering solutions to company challenges and, most important, thinking in an uncluttered environment. It is ironic that the man who has played such a major role in catapulting the rest of us into an age of nonstop access recognizes the value of being away from the rigors and distractions of the office in order to have uninterrupted time to look at the bigger picture.


    Today’s “on-demand” culture enmeshes us in the quick fix, the executive summary and instantaneous feedback. Technological advancements such as the Internet, e-mail, PDAs, Blackberries and cell phones that have improved our efficiency in doing business have at the same time resulted in a 24-hour business cycle and information overload. As the dissemination of information has become quicker and easier, we are all faced with a greater number of decisions accompanied by accelerated turn-around times.


    But in the race to deal with the minute-to-minute, the longer term can suffer. Many successful CEOs have found that pausing periodically for a breath of fresh air and a broader perspective is critical to effective leadership in business. Big thoughts, reinvention and career growth come not only from embracing all the benefits of technology, but also from finding the time away from the office and daily pressures. The challenge of finding this balance, even if it is for only a short period of time each quarter or year, can be daunting to people, especially during critical stages of their careers when they may need it the most.


    Business schools have long recognized the need to provide an oasis where executives can develop important strategic ideas and grow their own leadership skills. And corporations such as Novartis International AG have for many years made it a priority to send executives at various levels of management to participate in executive education programs. Here they step outside their daily experience for a period of time to engage with peers, often representing other industries, organizations and cultures, and to look broadly and in depth at ideas, approaches and issues that are shaping business around the world.


    Looking back on his own experience at Harvard Business School, Novartis chairman and CEO Dan Vasella said that “the stimulating learning experience I had in executive education enhanced my desire for lifelong learning—a concept that has had a strong rejuvenating impact on me personally and a positive effect on my company’s competitiveness.”


    My research has shown that, beyond a formal classroom experience, executives can try the “Stop, Look and Listen” approach for re-energizing their thought process immediately:


  • Stop.
    For a designated period of time, process less information than usual. Since the typical executive has to make decisions about a range of topics, breadth can predominate over depth. Commit yourself to taking a long weekend or even a week without answering your Blackberry, so that you can focus more on topics you want to know more about and understand better.
     
  • Look.
    Put yourself in new surroundings. Take a class, rent a secluded cottage or take a walk on the beach to extend your view beyond the confines of your office.
     
  • Listen.
    For at least a few times during the year, get out of your peer group of usual contacts–your management team, advisors, directors–and listen carefully to some fresh voices. For example, commit to subscribing to a local speaker series so that you can listen to people in fields outside your expertise.

    Time to grow and reflect should not be a luxury in today’s business environment. While a “Think Week” may be a challenge to schedule, it is imperative for executives to make the commitment to career-long learning, growth and strategic thinking in order to remain optimally competent, creative, inspired and, ultimately, successful. Inform your colleagues, your employees and your board. Don’t forget to schedule it in your PDA. Then go for it. Time is a more important commodity than ever; don’t let the tyranny of today’s technologies take it away.

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Wal-Mart to Sell Generic Drugs at a Discount

Wal-Mart announced today that it will sell some generic drugs for $4 per 30-day prescription to employees and customers, including people without health insurance, at the company’s pharmacies.


Wal-Mart, based in Bentonville, Arkansas, says it will launch the program at its 65 stores in the Tampa, Florida, area and expand it to all stores statewide beginning in January, and to as many states as possible next year.


“This will help all of our customers and all of our associates from all walks of life,” says Bill Simon, an executive vice president. “Associates” are Wal-Mart employees.


Whether this move will benefit employers footing the bill, however, appears unlikely. Any savings will be indirect.


Coming from the largest retailer in the world, the effort could pressure other chain pharmacies to lower the prices of similar prescription drugs, creating market competition that could help wean patients off expensive brand-name drugs.


“Wal-Mart is a smart organization and they are not going to depend on more conventional health care organizations that have been raking purchasers over the coals” to create a more robust market for consumers, says Brian Klepper, president of the Center for Practical Health Reform.


Such an occurrence would coincide with the expiration of a bevy of patents on brand-name drugs that is ushering a wave of generic drugs onto the market that could also lower costs and increase the use of generic drugs.


“This is going to help employers somewhat,” says Paul Ginsburg, president of the Center for Studying Health System Change. “To the degree that employees are going to pay less for generic prescriptions will help employers move more of their employees to generic drugs.”


The way the program will work is simple. The drugs will cost $4 per prescription for those with or without health insurance. Employers could conceivably save money if their employers choose not to file insurance information with Wal-Mart. Simon said the company would not bill health plans for the difference between normal co-pays, which range from $10 to $50, and the $4 that Wal-Mart charges.


The list of 291 generic drugs offered for $4 includes antibiotics like Amoxycillin and drugs for chronic illnesses such as asthma (Albuterol), high blood pressure (Lisinopril) and diabetes (Metformin). The savings for uninsured customers normally forced to pay the average retail price could be as high as 67 percent, Simon says. The 291 drugs represent one of every five prescriptions Wal-Mart fills.


The move will likely to take political pressure off of Wal-Mart to make its health plans more widely available to its employees since those without insurance pay the same for certain drugs as those who are covered. Cheaper drugs could bring more customers to Wal-Mart’s in-store clinics that treat basic illnesses.


Simon says Wal-Mart was not in discussions with manufacturers to get lower prices on the drugs. The company said it could deliver reduced prices cost-effectively by increasing sales volume and by employing the highly efficient technical and logistics infrastructure it uses to sell other items at deep discounts.


“We are geared up to deal with a significant volume increase,” Simon told reporters during a conference call. “We expect a lot of folks will be interested in this program.”


Wal-Mart CEO Lee Scott, who has long criticized the inefficiency of health care markets, hinted earlier this year that he would like to harness Wal-Mart’s efficiency to help bring down health care costs for consumers.


—Jeremy Smerd