Category: Archive

The White House hopes the old dogs at General Motors can learn new tricks.

Steven Rattner, head of President Barack Obama’s auto task force, says changing GM’s bureaucratic culture is critical to reinvigorating the bankrupt automaker.

“Addressing cultural issues is just as fundamental to our assignment as addressing the balance sheet or financing,” he said in published reports.

But GM lifers dominate the company’s senior management. Of the automaker’s 12 executives with a rank of group vice president or above, only three have been with GM less than 20 years.

Take the two men most responsible for GM’s future cars and trucks: Tom Stephens, vice chairman for global product development, and John Smith, group vice president for global product planning. Each has spent 40 years at GM.

On June 12, purchasing boss Bo Andersson left GM. He was a relative newcomer, having joined in 1987. Change may come as others follow him out the door.

“We will lean out the management structure so that it will allow us to make faster decisions,” GM chief financial officer Ray Young said. He declined to say how many will leave, but said, “We will eliminate layers of management.”

Filed by James B. Treece and David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Companies can be found liable for discrimination against disabled people under state civil rights law even if the discrimination is unintentional, the California Supreme Court said in a decision issued Thursday, June 11.

The case involved Kenneth Munson, who has a physical disability that requires the use of a wheelchair, according to the decision in Kenneth Munson v. Del Taco Inc.

Munson charged that when he visited a San Bernardino, California, restaurant operated by Lake Forest, California-based Del Taco Inc., he “encountered architectural barriers that denied him legally required access to the parking area and rest rooms,” according to the opinion.

Munson sued the company under the federal Americans with Disabilities Act and California’s Unruh Civil Rights Act. The 9th U.S. Circuit Court of Appeals in San Francisco asked the state Supreme Court to consider the case.

The court agreed with Munson in its unanimous decision that under the state law, a plaintiff “may obtain statutory damages on proof of an ADA access violation without the need to demonstrate additionally that the discrimination was intentional.”

After a federal district court ruling that had granted partial summary judgment in favor of Munson, the parties had agreed Munson would receive $12,000 in damages under the state law, pending an appeal.

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

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InGenesis Medical Staffing, a San Antonio-based health care staffing firm, was awarded 12 U.S. Army health care staffing contracts through its InGenesis Arora joint venture, the company announced.

The contracts are part of a total award valued at $1.27 billion.

The Army Medical Command Health Care Acquisition Activity Center informed InGenesis of the award this week.

InGenesis will supply nurses, physicians and allied health care professionals to Army facilities in the Northern, Pacific, Southern and Western regions specified in the contracts. These areas include Army medical sites in all 50 states as well as Puerto Rico and South Korea.

InGenesis will compete with other contract winners to place staff over the five years of the contracts, but it’s the only company located west of the Mississippi to receive all 12 contracts allowing it to compete to place nurses, doctors and allied professionals in all regions.

“What makes it so unique for us is we will be able to, and be honored to, compete on all 12 of the contracts,” said InGenesis president and CEO Veronica Edwards.

—Staffing Industry Analysts

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The World Health Organization has declared the H1N1 flu a pandemic because of its expanding global reach, but the virus’s mild intensity means many employers with pandemic plans are probably content to wait and see.

“We’re watching the situation, but not doing anything different than what we’ve been doing,” said Delia Vetter, director of benefits for Boston-area-based technology firm EMC. “Our plan is designed to be able to respond to the recommendations of the WHO and the CDC.”

Vetter said the company plans to communicate about the pandemic declaration with its approximately 40,000 employees worldwide and ask them to take basic precautions against spreading illness.

The World Health Organization declared the outbreak to be a pandemic, the first declaration in 41 years, because of the flu’s easy human-to-human spread. As of Thursday, June 11, officials have confirmed nearly 28,774 cases of H1N1, commonly known as swine flu, in 74 countries.

“The world is now at the start of the 2009 influenza pandemic,” said Margaret Chan, director-general of the World Health Organization in a statement to the media.

The 144 deaths attributed to the strain, far fewer than the hundreds of thousands killed each year globally by seasonal flu, are the result of its moderate severity, health officials said. The U.S. accounts for 13,217 cases and 27 deaths; in Mexico, where the strain was first discovered, 6,241 cases and 108 deaths have been reported.

Pandemic-preparedness expert Edward Minyard, a partner at Accenture Technology Consulting, said the pandemic declaration has prompted public-sector employers, whose charters generally require them to have a pandemic plan, to review their preparedness plans and conduct preparedness exercises with other public agencies.

Minyard said the WHO’s announcement Thursday has reinforced the notion that the virus, though currently mild, is not going away soon and that employers would do well to be prepared should the flu become more virulent. Employers with plans should review them and make sure a company’s vendors are also prepared.

“In all honesty this announcement is not a surprise,” Minyard said. “The folks tracking this thing won’t do anything differently. Hopefully, though, those who weren’t doing anything will wake up to the need to have a plan in place.”

Many employers, however, are not prepared.

A survey released Tuesday, June 9, by Mercer showed that 40 percent of companies do not have an HR policy in place to deal with health-related emergencies. The swine flu pandemic has motivated more than half of the employers surveyed to create contingency and back-up plans.

Health officials said they expected more fatalities as the flu spreads to less-developed parts of the world, where public health systems are poorer.

“Although the pandemic appears to have moderate severity in comparatively well-off countries, it is prudent to anticipate a bleaker picture as the virus spreads to areas with limited resources, poor health care, and a high prevalence of underlying medical problems,” Chan said.

—Jeremy Smerd

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Non-binding say-on-pay shareholder votes would be required of all public companies under legislation proposed by the Obama administration Wednesday, June 10.

Also, the SEC would oversee corporate compensation committees to ensure their independence, according to a statement Wednesday by Treasury Secretary Timothy F. Geithner.

The legislation is part of broader executive compensation reform that would develop a standard to “reward innovation and prudent risk taking, without creating misaligned incentives,” the statement said.

“I want to be clear on what we are not doing. We are not capping pay. We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive,” Geithner said in the statement.

Principles of the reform outlined by Geithner are:

● Compensation plans should properly measure and reward performance.

● Compensation should be structured to account for the time horizon of risks.

● Compensation practices should be aligned with sound risk management.

● Golden parachutes and supplemental retirement packages should be re-examined to ensure they align the interests of executives and shareholders.

● The process of establishing compensation should promote transparency and accountability in the process of setting compensation.

“This financial crisis had many significant causes, but executive compensation practices were a contributing factor. Incentives for short-term gains overwhelmed the checks and balances meant to mitigate against the risk of excess leverage,” Geithner said in the statement.

Mary L Schapiro, SEC chairman, said in a statement Wednesday that the SEC “is actively considering a package of new proxy disclosure rules that will provide further sunshine on compensation decisions.”

They include how a company and its board manage risks, potential conflicts of interest by compensation consultants, and the experience and qualifications of director nominees to serve on the board and particular board committees.

John D. Heine, SEC spokesman, said a time frame for the SEC to propose the rules wasn’t available.

Filed by Barry B. Burr of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Executive compensation should be decided by company boards, not imposed by legislators or regulators, the Securities Industry and Financial Markets Association said Wednesday, June 10, as it released guidelines for how financial services firms should tie compensation to long-term performance and risk management.

The association called for preserving “the industry’s ability to operate dynamically and help drive economic growth,” and pledged to work with governments globally to achieve compensation fairness, the Washington- and New York-based group said in a statement.

“We can build a better system that aligns compensation with the interests of shareholders, safeguards the financial system and strengthens the economy,” SIFMA president and chief executive Timothy Ryan said in the statement.

The guidelines included four principles: establishing compensation policies consistent with effective risk management, linking compensation to sustainable performance, allowing risk management professionals to be “appropriately independent” and communicating compensation practices to shareholders.

The brokerage industry has come under heavy attack for what are widely viewed as excessive bonuses given to executives of Wall Street firms that have experienced disastrous financial results.

The Obama administration and Congress will consider executive compensation as they take up financial services regulatory reform in the coming months.

The administration is to release its regulatory reform plan June 17.

Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Several proposals lawmakers are considering to reform the health care system could hurt small businesses, witnesses testified before the House Committee on Small Business.

Many in Congress are insisting upon the creation of a mandate that would require employers to sponsor insurance coverage for employees.

“The idea that an employer mandate will increase coverage is illusory, because new rules will not change financial realities for small businesses,” said James Wordsworth, an owner of several small businesses who testified on behalf of the U.S. Chamber of Commerce.

Health care coverage costs for entrepreneurs are 74 percent higher than in 2001, said Rep. Nydia Velazquez, D-New York, who chairs the House small business panel and is co-sponsor of a bill that aims to rein in health care expenses for small businesses.

John Nicholson, another small-business owner who testified on behalf of the National Federation of Independent Business, agreed that mandates would adversely affect small employers by raising payroll costs, eroding competitive positions and increasing startup costs.

He and other witnesses also denounced a public health insurance option.

When considering policies that would expand the government’s role in health care, “Ask yourself: Do you want a program that has the responsiveness of the U.S. Postal Service, the heart of the IRS and the cost inefficiency of the Pentagon?” Nicholson asked.

Filed by Jennifer Lubell of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The global recession is taking a toll on workers on both sides of the Atlantic.

British employees are spending more time at work practicing so-called “presenteeism” as they worry about their jobs during the recession, a new survey concludes.

The survey of 2,247 workers by the Lancaster University Center for Organizational Health and Wellbeing in Lancaster, England, found that 66 percent of employees are working more hours because of worries about job security, and 42 percent said feelings of insecurity regarding their jobs have increased in recent months.

Presenteeism is when employees become more conscientious about being present on the job but are not necessarily more productive.

The survey also gave some clues as to employees’ attitude about their jobs.

Forty-five percent agreed it is best to “play it safe at work and keep my head down.” Forty-one percent of respondents said they have a negative attitude at work.

“Presenteeism may make the employee feel more secure because he or she is putting the hours in, but there is no evidence that consistent long hours result in increased productivity,” Cary Cooper, professor of organizational psychology and health at Lancaster University, said in a statement.

The health and well-being center, which launched in mid-May, said 71 percent of female employees reported spending more time at work versus 61 percent of male employees, suggesting that women may feel more vulnerable about their jobs than men, the survey concludes.

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

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Shareholders should be given more power to bring lawsuits against companies for paying excessive compensation to executives, the chairman of the House subcommittee that has jurisdiction over securities matters said Tuesday, June 2.

“We probably have to re-examine the capacity of shareholders to bring lawsuits,” said Rep. Paul Kanjorski, D-Pennsylvania, who is chairman of the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises.

“It doesn’t sound good. Nobody likes litigation, but in reality, that does get attention of boards and managers,” he said in a talk in Washington sponsored by the American Constitution Society for Law and Policy of Washington and the Institutional Educational Foundation of Cambridge, Massachusetts.

Kanjorski also suggested that shareholders be given more say in the election of corporate directors.

Replacing an entire board of directors is extremely difficult, he said. New methods need to be found to incorporate “better democratic principles into corporations,” Kanjorski said.

He also called for examining new ways of handling debates about compensation at shareholder meetings and within boards of directors, and said a requirement that public corporations respond to questions from shareholders should be considered.

However, Kanjorski made it clear that he thinks Congress should be cautious when considering ways to rein in executive compensation.

“It’s not easily handled,” he said.

“We should be very careful in determining whether or not the Congress or some other public institution should establish the rules of compensation in our society,” Kanjorski said.

Executive compensation is “not the most important thing in the world,” in terms of business and economic health, he argued.

“It’s more important that we create and use this atmosphere to rethink the laws that govern American and world business institutions,” including the rights of shareholders, Kanjorski said.

Corporate compensation and bonuses are determined primarily by boards of directors and shareholders.

“Now what we’re getting very close to is deciding, because of the hot temper of the moment on salaries and bonuses, whether or not we want to extract that decision-making process from where it presently lies and put it somewhere else,” Kanjorski said.

Congress is not well-equipped to determine executive or other types of compensation, he said, warning that such power could quickly expand to encompass government power to determine many other salaries.

“That law will apply eventually to you or will cause a precedent for us to further extend ourselves into everyone’s life,” Kanjorski said.
The House Financial Service Committee is tentatively scheduled to hold a hearing on executive compensation issues June 11.

Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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