Category: Archive

Event: World Business Forum Chicago 2006, June 6-7, 2006 at Navy Pier, Chicago, Illinois

About the WBF: The World Business Forum combines high-level speakers with opportunities for networking with top executives, thinkers, and business decision makers from all sectors of industry. Over 77 percent of attendees are senior executives defined as CEOs, presidents, business owners and general managers. Workforce Management is one of the media sponsors of the forum.

Conference Info: For more information about the World Business Forum go to www.hsm-us.com.

Day 2: Wednesday June 7, 2006

Second-day Speaker Lineup: Author and journalist Malcolm Gladwell (speaking on marketing & innovation), Travelocity CEO Michelle Peluso (women in leadership), management guru, author, and business consultant Kenichi Ohmae (Asia), Neusoft Group founder Dr. Jiren Liu (Asia), former New York Mayor Rudy Giuliani (crisis management), and former U.S. President William Jefferson Clinton (that’s how he bills himself at these events) speaking on peace and global prosperity.

Best Speaker, Day 2: Malcolm Gladwell. A regular on the business speaker circuit, I’ve heard Gladwell speak three times in the past year and he had a different speech each time. This is highly unusual for a business speaker (for instance, Marcus Buckingham gave essentially the same talk in Chicago that I heard him give in April at the Human Resource Planning Society conference). This time, Gladwell’s talk focused on lessons from his first book (The Tipping Point) rather than his most recent book (Blink). Not only did he sneak up on the audience (many were unsure of what to expect from Gladwell and found themselves pleasantly surprised), but he was also the only speaker at the conference that stayed long after his speech and interacted with attendees.

Most Disappointing Speaker, Day 2: Travelocity’s Michelle Peluso. I felt bad for Peluso because she was the only woman on the program and this seemed to be the first time she had ever given a speech to a crowd of this size (around 1,500 business executives). She spoke from the podium (unlike other speakers who walked around the stage as they spoke); had no PowerPoint, slides, or other props, and generally gave a flat and dull speech. I couldn’t help but think: if WBF wants to get more women on the program, why not someone like Carly Fiorina, Meg Whitman, or Madeline Albright? Or better yet, why not all three? Getting better women speakers is something the organizers of the WBF clearly need to work on.

Most Thought Provoking Speaker: Whether you agree with him politically or not, Bill Clinton is a very-thoughtful man with some very interesting things to say. His talk centered on the interdependence between people, nations, and economies in our 21st Century World. And, he made a case for all Americans working and focusing on the shared opportunities, responsibilities, and values that exist among us and among all people of the world. It’s hard to imagine anyone leaving after listening to Bill Clinton and not having a slightly different view of what we need to do to make the world of the future a better place for our children and grandchildren.

–John Hollon

Day 1: Tuesday June 6, 2006

Big Name Speakers: If you want to hear big name speakers talking on a wide array of business and global topics, then a World Business Forum event is for you. Generally held in places like Chicago or New York, the WBF lines up the biggest names in business and politics and gets them to speak on the key issues of the day. It is a tried-and-true formula, but dependent completely on the quality of the speakers.

First day Speaker Lineup: Author and business consultant Marcus Buckingham (speaking on personal development), PricewaterhouseCoopers Chairman Dennis Nally (corporate values and behavior), former Secretary of State Colin Powell (global security), Adobe Systems CEO Bruce Chizen (growth & innovation) and Harvard Business School professor Michael Porter (strategy).

Best Speaker, Day 1: Business professor Michael Porter. Famous for developing the five-forces model of competition, Porter is probably the leading expert in the U.S., if not the world, on business strategy. He talks to a business audience the way he teaches in his classroom at Harvard and his presentation was not only lively and informative, but also tremendously entertaining and thought provoking. Porter throws out a challenge–Does your company have a business strategy? –and then spends 90 minutes demonstrating how many companies don’t.

Most Disappointing Speaker, Day 1: Colin Powell. It’s not that Gen. Powell didn’t have some interesting things to say, but that he spent a lot of time talking about his retirement and other such mundane matters. I heard a number of attendees talking after his talk, and most everyone expected a lot more. As one executive put it, “He’s had such an interesting life. I wish he would have spent more time sharing some of the key experiences from his career and less talking about what he’s done since he left the State Department.”

One Man’s Observation: This is my third WBF conference, and if there is one thing I’ve gleaned from them it is that the best speaker is generally not one of the biggest names on the program. More times than not, the most enlightening and engaging speaker is someone you feel you need to sit through to get to the big-name speaker that was the draw that got you to the event in the first place. You may show up to hear Bill Clinton or Colin Powell, but it is going to be Michael Porter or Malcom Gladwell that really engages you and offers some insight you can take back to the office.

–John Hollon

Call it revenge in the electronic age—you lose my data, I take away your iPod.

In a strange twist to the data breach at the U.S. Department of Veterans Affairs, the theft of personal data for millions of veterans could mean the confiscation of many government workers’ personal music players.

A lawsuit filed by veterans groups Tuesday (June 6) asks a federal court to prevent the VA and its employees from removing “any device capable of storing, containing, or transferring any record or system of records, including … ‘iPods’ and similar devices, from property under VA’s supervision and control until and unless VA demonstrates that adequate information security has been established to the Court’s satisfaction.”

The lawsuit, which accuses the VA of violating laws including the Privacy Act of 1974, also asks for damages of $1,000 for each individual “adversely affected” by the VA’s alleged Privacy Act violations.

The VA did not immediately return a call seeking comment.

The legal tussle, with its iPod overtones, stems from the VA’s admission last month that personal data for as many as 26.5 million veterans, as the agency first said, had been stolen from an employee’s home. The agency said the data included names, Social Security numbers and dates of birth for veterans and some spouses. On June 6, however, the VA revised its previous descriptions of the records involved, and said that the data potentially included information on as many as 2.2 million current military service personnel, including up to 80 percent of the active-duty force.

Identity theft and data privacy have become hot topics recently, with most of the attention focused on consumers. But observers have warned that employee data lapses could explode in employers’ faces, resulting in possible legal violations and damage to company reputations.

Companies that create and back privacy rules can boost morale, says Judith Collins, author of Preventing Identity Theft in Your Business: How to Protect Your Business, Customers, and Employees. “Employees feel a good deal of relief,” she says.

In the case of the VA, it seems possible that some employees will be relieved of their iPods.

—Ed Frauenheim

Vincent K. Snowbarger’s appointment as acting executive director of the Pension Benefit Guaranty Corp. by Labor Secretary Elaine Chao might not hold for long. Pending legislation co-authored by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Sen. Max Baucus, D-Montana, would make the PBGC executive director a presidential appointee requiring Senate approval.

“Even if Mr. Snowbarger’s appointment were made permanent today, if this legislation gets enacted he would go back to interim status and the president would choose the new executive director, and that choice would be voted upon by the Senate,” says a staffer at Baucus’ office who did not wish to be identified.

Snowbarger was appointed Thursday, June 1, to replace Brad Belt, who resigned March 23 and officially left the agency Wednesday. His appointment was first reported Thursday afternoon on Pensions & Investments’ Web site, pionline.com. Snowbarger had been the PBGC’s deputy executive director since November 2004 and served as interim executive director of the agency in February 2004 after Steven Kandarian resigned. Snowbarger was a Republican U.S. representative from Kansas from 1997 to 1999, and was a state representative before that.

David James, a Labor Department spokesman, did not return calls for comment by deadline.

This article first appeared on pionline.com, the Web site of Pensions & Investments, a sister publication of Workforce Management.

Capitol Hill Democrats are trying to block a decision by the Energy Department to reimburse only defined-contribution pension and medical benefits for newly hired contract workers, but it’s unclear whether the agency’s move will have an impact on House-Senate negotiations over pension reform legislation.

Sen. Edward Kennedy, D-Massachusetts, Senate Minority Leader Harry Reid of Nevada and four other senators introduced a bill May 11 to overturn the policy. In late April, the Energy Department said it was trying to “improve the predictability of contractor benefit costs and mitigate the growth of the department’s liabilities for these costs” in a way that is “consistent with market trends.”

In a letter, 10 House Democrats called on President Bush to withdraw the new rule. They also filed their own bill.

“These changes penalize responsible employers who provide their employees with guaranteed retirement benefits and real, affordable health insurance,” wrote Rep. George Miller, D-California, ranking member of the House Education and the Workforce Committee. “The federal government should not be leading a race to the bottom on health and retirement benefits for workers.”

The Energy Department’s policy change comes at a delicate time in House-Senate talks on a final pension bill.

House Majority Leader John Boehner, R-Ohio, hasn’t reviewed the Energy Department policy, but he says it may affect Capitol Hill negotiations. “It is going to be another issue on the table we are going to have to discuss,” he says.

The department’s pension declaration stunned policy experts. “This is a shocking attack on the defined-benefit pension system by the administration,” says Ethan Kra, chief actuary for retirement at Mercer Human Resource Consulting. “This came out of left field with no opportunity for comment. This was just an edict.”

The decision, according to one expert, reflects a bias by President Bush against traditional benefit programs and in favor of personal accounts, such as those he has proposed for Social Security.

“The Bush administration has been quite clear and candid that they don’t care whether employers have defined-benefit plans and that in their view individual plans are better for workers,” says Dallas Salisbury, president and CEO of the Employee Benefit Research Institute. “The question is, is the Defense Department next?”

Even if the agency is acting alone, it is overstepping its bounds, says an expert, who argues that contractors should be free to choose a benefits program as long as it holds down costs.

“I was stunned because it seems to me that there is no justification whatsoever for DOE to dictate to a provider what type of benefits they should be offering,” says Martha Priddy Patterson, a director of Deloitte Consulting in Washington. “Where does this end? Will they not reimburse your medical plan if it covers contraceptives or cosmetic surgery?”

The decision also could have influence outside the Beltway.

“This just further underlines for the private sector, at least while this administration is in power, that they can’t expect to be criticized for getting rid of their defined-benefit plans,” Salisbury says.

—Mark Schoeff Jr.

As summer approaches, many employers are being inundated with employee requests to take vacation days.

To address this, companies often establish formal vacation policies that give senior employees first pick of days or provide vacation on a first-come first-serve basis.

But these tactics may hurt employee morale and defeat the purpose of offering vacation days at all, experts say.

“There are companies that try to be flexible and say to employees, ‘We understand everyone wants to take time off, so let’s work together to enable everyone to do this,’ ” says Tom Klett, a consultant in the Stamford, Connecticut, office of Watson Wyatt Worldwide.

Employers need to be proactive and ask employees early on in the year when they are planning vacation days, says Jerry Glass, a managing partner at F&H Solutions Group, a human resources consulting company.

“Being proactive is important because there are two things that will upset an employee,” he says. “One is if a company tells them they can take a vacation and then says they can’t. The other is not allowing them to take the days when they want to.”

Canceling vacation is a rare occurrence, but if an employer does need to do this, they should reimburse the employee at least partially for any expenses they may have accrued from booking a trip, Glass says.

Many companies take a “Use it or lose it” approach to vacation, which is a way of encouraging employees to plan their vacation time in advance. Under this policy, employees lose their accrued vacation time if they don’t use it all within a calendar year.

But the use-it-or-lose-it policy can also hurt employee morale because employees often want more flexibility, Glass says.

To address this, companies should allow employees to carry over a certain number of days, like up to a week, into the next calendar year or receive compensation for days not taken, he says.

Some states, like California, don’t allow employers to adopt use-it-or-lose-it policies without some carry-over, says Gerald Hathaway, a partner in the New York office of law firm Littler Mendelson. Also, many states mandate that companies clearly communicate to employees their use-it-or-lose-it policies.

“It’s always prudent for employers to have these policies clearly stated in their communications and in their employee handbook,” Hathaway says.

To get the most out of employee productivity and keep employee morale high, which is the point of having vacation policies in the first place, companies should try to be flexible and creative with how they approach vacation, Klett says. For example, some companies have clubs or groups that plan trips for employees.

“There is more guilt associated with vacations today than there ever has been before,” Klett says. “If employers remove that guilt a little bit, it will pay off for them.”

—Jessica Marquez

A sunroom manufacturer must pay $1 million in punitive damages for interfering with the noncompete contract of a competitor’s former employee–part of a $8.6 million judgment a jury in Akron, Ohio, ordered Four Seasons Solar Products to pay to Patio Enclosures Inc.

The Ohio Supreme Court refused to hear Four Seasons’ appeal in late May. The employee, Joe Cheney, had already been ordered to stop working for Four Seasons.

Successful claims of violating a noncompete contract generally do not include punitive damages, but end with an injunction barring the employee from the new job.

“The overarching goal in every case is to stop the employee from hurting the employer,” says Alan Dalinka, an attorney with DLA Piper Rudnick’s Chicago office who has litigated noncompete agreements across the nation.

“In a contract dispute it’s very rare that punitive damages are awarded,” says Stephen Lichtenstein, chairman of the law, taxation and financial planning department at Bentley College in Waltham, Massachusetts.

But the size of the punitive damage award levied against Four Seasons indicates that “in today’s day and age, when there’s a heightened scrutiny of corporate ethics, cases of this sort might have more jury appeal,” says Aretta Bernard, who litigated the case with her partner Ron Kopp of Roetzel & Andress.

Punitive damages for misappropriation of trade secrets are more common. The Akron jury assessed Four Seasons $5 million in punitive damages and $2.6 million in compensatory damages for stealing Patio Enclosures’ business plan for company-owned retail outlets.

An appeals court filing shows that the breakdown of the awards in the trial also includes $20,000 in actual damages in addition to $1 million in punitive damages for tortious interference with (the noncompete) contract. Roetzel & Andress says that in addition, Four Seasons will have to pay “significant sums” for prejudgment and postjudgment interest and attorney fees.

But even though courts may be reluctant to award damages for violating a noncompete contract–California prohibits such contracts–the existence of such a contract may help a company pursue a trade secrets claim, Dalinka says.

“Even if the agreement not to compete may not be enforceable, the act of asking somebody to sign it shows under the Trade Secrets Act that you are taking steps to protect the information,” Dalinka says.

Most states, including Ohio, base their trade secret laws on the federal Uniform Trade Secrets Act, which defines trade secrets and requires that businesses make “efforts that are reasonable under the circumstances to maintain (their) secrecy.”

Noncompete contracts may be unreasonable–and unenforceable–if written too broadly, as everyone is presumed to have the right to work.

“It is a restraint of trade,” Lichtenstein says. “It’s a legal restraint of trade because you’re only restrained in a certain geographical area for a period of time.” Noncompete agreements are common when someone sells or buys a business.

But even in states that recognize noncompete employment contracts, “sometimes those agreements are enforceable and sometimes they are not,” says Arnold Pedowitz, a Manhattan attorney and co-editor of the book Covenants Not to Compete: A State by State Survey.

“Just because an employee has signed an agreement that is clear does not mean that a court will uphold it. In New York, a court will uphold it only if the employee is trading upon secrets or confidential information, or if he is a unique employee … like a Howard Stern,” Pedowitz says.

In the Patio Enclosures case, Cheney had signed a contract promising confidentiality and not to compete.

“Here we seem to have a new company that encouraged a guy to break his noncompete, and compelled him to use his confidential knowledge. The new company was a bad actor,” Pedowitz says.

The Court of Appeals for Ohio’s 9th Judicial Circuit ruled unanimously that Four Seasons “pilfered confidential, trade secret information from (Cheney), all the while holding a job offer in the balance … (and) required (him) to use, and rewarded him with a bonus incentive plan for using, the information he had learned at (Patio Enclosures).”

Cheney had promised not to compete with Patio Enclosures for two years and within 50 miles of one of its outlets, standard language for a noncompete contract. He informed Four Seasons of the contract, but the company hired him anyway.

Patio Enclosures did not sue Four Seasons until it found out the extent of the company’s machinations in the course of suing Cheney.

“The verdict was the result of some very bad facts and some bad decisions by the hierarchy of the company,” Bernard said.

“I give advice to companies around the country,” Pedowitz said, “and when they ask me for advice now, I will refer to this [$8.6 million] judgment. (Companies) have to speak with competent counsel before they get involved in hiring away another company’s employee.”

—Robert Kahn

Wild Oats Markets, Inc., a nationwide chain of natural and organic food markets, currently operates in more than 110 stores in 25 states across the U.S. and British Columbia. The company currently employs more than 8,600 people and adds between 10 and 12 new stores every year.

Growing Pains

The chain’s growing popularity, while great for the company, however, often posed significant challenges for the Human Resources department. This team is required to not only fill all staff positions for new stores, it must also stay on top of normal employee turnover at the existing stores—hiring an average of 675 new employees every month. The department’s goal is simple: to fill open positions with high-quality employees who have cleared all required background screenings — as quickly as possible.

“Every day a store position sits unfilled, the company risks losing customer satisfaction because the store can’t provide the level of customer service that people expect,” says Gloria Fletcher, Regional Loss Prevention Manager. “So it represents a loss of income for our company and a loss of satisfaction for our patrons.”

Upon close evaluation, the company discovered a hiring bottleneck in one critical area: the background screening process. Until three years ago, these background checks were being obtained from a third-party provider, but the process had its share of challenges.

The background checks were fairly expensive and often required as much as five to seven working days to complete a report. The process also required that all applicant data — from every store — be transferred to company headquarters in Boulder, Col., and entered by a single employee. This data entry alone required at least a half-hour per applicant, and the physical transfer of data added another layer of delays, possible confusion and potential errors to an already cumbersome process.

Worse still, the former screening process occasionally netted false reports — erroneously stating that either an innocent applicant had a criminal record, or that someone didn’t have a criminal record who, in fact, did.

Partnering for Success

Because the company’s priority is to protect its assets and provide a safe environment for its staff and customers, Wild Oats was committed to obtaining the most current and correct background screenings possible. Therefore, three years ago, Wild Oats decided to switch to another screening provider — LexisNexis Screening Solutions.

LexisNexis Screening Solutions not only proposed a solution that was more affordable for Wild Oats, it offered a host of benefits that promised to simplify and streamline the company’s entire background screening process.

A Smooth Transition

Once Wild Oats decided to go with a new background-screening provider, it began the complex task of putting the new process in place. Fortunately, this implementation went much smoother than Wild Oats ever expected.

“Switching to LexisNexis was such an easy transition,” explained Fletcher. “We had every store call in to one of four regional conference calls, which provided a full explanation and real-time training on the new system. All the people that were going to use the new system were online, and we were online with them and LexisNexis — all at the same time. Basically, LexisNexis taught everyone how to use the system by phone, and it was absolutely wonderful.”

As a follow-up, LexisNexis helped Wild Oats create a training document that can be used for new users. This can be e-mailed to new users, along with their individual access codes, passwords and a step-by-step process for using the tool.

“We are growing so fast, and LexisNexis Screening Solutions can definitely keep up with us,” said Fletcher. “They can quickly adapt the program to our needs, and can help us add a new store simply with a phone call.”

Faster, Better Background Checks

Once the new process was underway, Wild Oats noticed immediate improvements to the background screening process. Unlike Wild Oats’ previous provider, LexisNexis Screening Solutions reported “clear” background checks directly back to each store — enabling them to continue with the hiring process without further delay.

Plus, each store can enter applicants’ data directly into the LexisNexis system, which initiates the background screening process immediately. This not only creates a more streamlined — and efficient — process, it freed up the resources of Fletcher, who was previously entering the data, so she could focus her attention on more important matters.

“Now, all the stores have to do is enter applicant data right from their system — a process that takes only a few minutes,” said Fletcher. “This was a huge selling feature for LexisNexis Screening Solutions. It takes key managers only about three minutes per applicant, and they love it because the software is so user-friendly.”

Within 48 to 72 hours, the store director, assistant store director or service manager then receives a report back for all cleared applicants, enabling the store to move forward with the hiring process and getting the person on the floor.

Meanwhile, all background check findings that need further investigation are automatically delivered directly to Wild Oats headquarters in Boulder, Colorado, where they can be reviewed by the corporate HR team. Since the bulk of the background checks are clear—and automatically sent to the individual stores—Fletcher can devote more time to addressing legitimate background check issues — such as any criminal activity, warrants or charges, including DUIs, DWIs, and issuance of bad checks.

“Plus, if an applicant wants to contest any items on their background check, they are directed to work with LexisNexis Screening Solutions — not us — for resolution,” added Fletcher. “This takes one more responsibility off our shoulders.”

Customization and Complete Satisfaction

Although LexisNexis background checks are completed in a consistently fast timeframe, Fletcher also touts their quality. “LexisNexis Screening Solutions never sends out background check reports before they are absolutely done,” she says. “Even if I put a rush on a report in order to fill a certain position, the LexisNexis specialist will do his or her best, but refuses to provide a complete report until they’re sure it’s totally right. I feel good about that too.”

When it comes to customer support, Fletcher is equally pleased. LexisNexis Screening Solutions works closely with Wild Oats to customize the software for its individual needs — providing a different menu of background checks for different job titles. For example, Wild Oats obtains one social security number search and one county criminal record search for basic applicants; but for key managers, Wild Oats’ process automatically adds a national criminal search, as well.

“LexisNexis quickly and easily adjusted the software so it would be very quick and user-friendly for the people in our stores,” said Fletcher. “The software includes unique drop-down menus that are unique to our company — and LexisNexis worked with us directly to establish our individual parameters.”

Using Wild Oats’ customized rules, LexisNexis Screening Solutions instantly verifies an applicant’s social security number — thus helping Wild Oats halt the entire application process for invalid numbers and eliminating the expense continuing with more advanced background checks.

By verifying social security numbers, Wild Oats weeds out illegal immigrants and avoids the hefty fines associated with hiring them. If an illegal immigrant applies for a position, the system can recognize the invalid social security number and Wild Oats refers the applicant to the Social Security office for resolution. Typically, the company never hears from the applicant again.

In fact, Wild Oats recently encountered this situation in one of its Florida stores, where five illegal immigrants had applied for store positions using fraudulent social security numbers. Because the LexisNexis background check caught this early, the company turned the applicants away, and thus avoided a potential fine of $10,000 per person — a possible total of $50,000.

Furthermore, Wild Oats always receives personalized service.

“I’m always called back or sent an e-mail reply to my questions immediately,” says Fletcher. “Whether I need a customized report summarizing our average monthly expenditures, or up-to-date information on laws in various states, LexisNexis is always ready to help.”

For example, LexisNexis recently provided Wild Oats with the most current information on which states require DMV permits for company drivers. Because these regulations vary from state to state, LexisNexis Screening Solutions’ comprehensive expertise prevents Wild Oats from having to become an expert in laws from 24 different U.S. states and Canada.

“After the transition to LexisNexis, our store personnel was a lot happier because they were getting their results back so much quicker and they could more rapidly fill their open positions,” said Fletcher. “And our customers are happy because there are enough people on the floor to service their needs.”

In October, DuPont announced a 13-year HR outsourcing deal with Convergys estimated to be worth $1.1 billion, the biggest such deal ever. Convergys will handle all of the HR processes for the company’s 60,000 employees in 70 countries worldwide. Following his speech at HRO World in New York last month, Ernest Lareau, DuPont HR director, portfolio and program management, spoke to Workforce Management staff writer Jessica Marquez.