Category: Archive

The number of people in the U.S. workforce with employer-sponsored health insurance dropped between 2000 and 2004, according to a study based on census data and published this week by the nonpartisan Employee Benefit Research Institute.

A weak economy, an increased reliance on part-time workers and a rise in the cost of health insurance contributed to the overall decline in the percentage of people under age 65 who received employer health care coverage from 66.8 percent in 2000 to 62.4 percent in 2004.

Health insurance coverage rates declined for both part-time and full-time employees, though a full-time worker was three times more likely to have health insurance. The percentage of covered full-time employees ages 18 to 64 dropped to 61.5 percent in 2004 from 64.4 percent in 2000. The percentage of part-time workers without health insurance dropped to 18.6 percent from 19.6 percent.

“When you shift workers from full-time to part-time work, because the part-timers are less likely to have coverage, that exacerbates the rate of coverage falling across the board,” says Paul Fronstin, a senior research associate at the institute.

Nearly all large employers offer full-time employees health coverage. Large companies with 500 or more people, however, increased their reliance on part-time workers between 2000 and 2004, adding to the overall drop in coverage. The trend is unusual because the percentage of part-time workers tends to decrease as businesses get larger.

Analysts believe that large companies relied more heavily on part-time workers because unemployment rates were high, something that will change as the labor market tightens.

“Part of the increase of part-time workers is a productivity thing,” says Bob Goldberg, director of the Center for Medicine in the Public Interest, a health policy think tank that favors consumer-based health initiatives. “It’s a way of not having to pay other kinds of fringe benefits; there is a lot of cost shifting going on.”

The distribution of part-time workers varied across industries. Manufacturing and service industries were the most likely to use part-time workers, whereas the number of part-time workers declined by 3 percent in the wholesale and retail industries, according to the report.

As the economy improves and the unemployment rate declines, competition for workers will likely increase full-time employment rates. In March, the unemployment rate was 4.7 percent, down from 5 percent at the end of the fourth quarter.

“Unemployment is now getting down to a level that employers, in order to retain more workers, will let them work more hours,” Fronstin says.

Small businesses, however, will continue to struggle to provide health insurance for their workers, Fronstin says.

“The costs of health insurance are still going up. They’re just going up slower,” Fronstin says.

Dear Computing:



There’s no rule of thumb that companies follow in determining what to budget for training. According to a 2002 report by the American Society of Training and Development, which surveyed more than 375 major corporations, companies spend 1 percent to 3 percent of their total payroll on training. On a per-person basis, the average spent on training is more than $700 per year. At leading-edge companies, that figure doubles to more than $1,400 per employee per year. Viewed as a percentage of profits, training budgets represent 5 percent to 20 percent of total corporate profits.

Our research indicates that U.S. companies will spend about $60 billion on learning initiatives in 2005.

According to a report by the Society for Human Resource Management, training budgets should include:

• Trainer salaries paid to internal training staff members
  
• Seminars and conferences
  
• Hardware, such as audiovisual equipment, computers, copiers, etc.
  
• Off-the-shelf materials, including prepackaged materials in any format for e-learning (such as books or manuals)
  
• Custom materials tailored to meet a designated training program
  
• Facilities and overhead, such as costs for leasing a classroom/building
  
• Outside services provided by outside consultants.
  

Another ASTD study indicates that, on average, companies spend nearly 21 percent of all training expenditures on outsourcing.

Two trends will reshape the training function. Both deserve your consideration as you budget. First, the outsourcing of learning activities will increase. Of the $60 billion expenditure noted above, about 65 percent will be allocated to outside vendors. Second, e-learning will become an even bigger element for delivering training. In 2000, expenditures in the U.S. on e-learning totaled about $2 billion, according to International Data Corp. The estimate for 2005 is $18 billion.

Most important, make sure you design a program that can immediately link training initiatives to specific corporate objectives. A 2002 study by Knowledge Asset Management and ASTD found a clear relationship between training expenditures per employee and company financial performance. Companies with above-average training investments posted a cumulative five-year return of 137 percent, compared with 55 percent for organizations with average or below-average spending on training.

Indeed, never has training been as important to companies as it is now. As you seek to convince your top management of this, be aware of the implications. With heightened training comes increased accountability and an expectance of innovation and the ability tomeasure training’s impact. You need to be able to address that part of the equation too.

SOURCE: Tom Casey and Carey Guggenheim,Buck Consultants,, June 6, 2005.

LEARN MORE:Discuss training issues online.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Dear Pressure Is Mounting:
The immediate challenge is to prepare your workforce for a marathon, not a sprint. To ensure that your organization is ready for the challenge, and to sustain productivity along with team morale, consider five basic steps before ramping up.
1. Use workshops to help employees vent. Start running workshops that allow participants to acknowledge and vent about the past year’s trials as well as present and future uncertainties and anxieties. Such hands-on and how-to programs facilitate problem-solving and allow people to let go of the past while building motivation and morale. These workshops are especially effective when all levels of the department or multiple departments in a division or in the organization participate.
2. Don’t tackle everything at once. These workshops not only identify stress and transitional barriers, they also help you broadly formulate problem-solving objectives and action plans. Appoint a post-workshop committee, composed of differing personnel levels and department representatives, to set priorities. Resist trying to tackle too many problems at once. Target three or four key action items with objectives and specific timelines, then determine who is responsible and accountable.
3. Build organization-wide teams. Outside experts can also help departments and teams integrate and implement workshop ideas and strategies. Depending on the nature of the working relationships between departments, cross-sectional team building may be wise.
4. Build/restore trust. If there’s considerable mistrust or a breakdown in communication between employees and managers, consider having your CEO, head of human resources or safety director conduct monthly meetings with a broad segment of employees and frontline supervisors. Hopefully, this will aid in healing any breaches of trust. Such a forum may also be useful for bringing new employees into the organizational culture.
5. Prevent burnout. When ramping up, it might seem like you have no recourse but for employees to work overtime and/or on weekends for an undefined period of time. In the long run, however, this invites burnout, excessive operational errors, dysfunction, conflict and perhaps even sabotage. Set a ceiling on the number of overtime hours your employees can work. Come up with a rotational system that fairly and wisely distributes the overtime and weekend work.
SOURCE: Mark Gorkin, the Stress Doc, Washington, June 13, 2005.
LEARN MORE:Employees Are Close to the Breaking Point
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Patrick Smith, COO of Alarm One Inc., isn’t apologetic about how he handled the shocking people management crisis involving “team-building” spankings at his now disgraced home security firm.

The behavior was wrong, and he stopped it. Speaking by phone this week from his office in Anaheim, California, the beleaguered executive said that in hindsight, he’d communicate a few things more specifically about “do’s and don’ts” to employees, but he wouldn’t change much else.

“Swatting is not camaraderie building,” he noted. “You have to understand the sales mentality. Sales guys are just that way.”

The real problems involving the sales team took place more than two years ago, he said. That’s when he heard a complaint from an employee about a woman on the sales team who was hit with a paddle. With the help of the HR director, he personally launched an investigation into employee reports of humiliation–by telephone and e-mail.

That inquiry, and the cultural values that supported it–including “camaraderie building” practices where sales team members were encouraged to compete and the losers were forced to eat baby food, wear diapers and endure public spankings with a rival alarm company’s yard signs–has cost the company dearly in dollars.

And its reputation is in the diaper pail.

On April 28, a jury in Fresno, where Alarm One has a facility, awarded former employee Janet Orlando $1.7 million. The jury found that she was subjected to sexual harassment and sexual battery at meetings where sales teams competed.

Katherine Hart, a Fresno attorney who represented the defendants, said during a phone interview on the day of the verdict that employee conduct at the security company was “reprehensible, but the intent was not to be malicious or sadistic.

“It was young people acting juvenile and engaging in juvenile behavior,” Hart noted. “They didn’t have much supervision and the company promoted salespeople without enough training. One woman (a plaintiff in an earlier case against Alarm One) was bruised (with a metal paddle). It was meant playfully–slaps on the butt. Then catcalls. It escalated.”

Before dismissing Smith and other company executives at the firm as smarmy or stupid or both, look straight into the mirror, leading human resources professionals say. Some version of the extreme spanking case could be happening at your company.

There are lessons you can and must take away from the case no matter how extreme it is, says Atlanta attorney Stephen Paskoff, who spoke about the consequences of allowing bad employee behavior and what to do about it in a keynote speech at a Society for Human Resource Management conference last month.

“People say, ‘Oh, that could never happen at our company,’ ” Paskoff says. “I ask, ‘What makes them think this couldn’t happen?’ “

It’s a question Mark Keppler, professor of human resources management at California State University, Fresno, understands. He served as an expert witness in the civil suit, and estimates that he has spent at least 30 hours studying transcripts and other case documents.

“Alarm One was out of control–and they never got it,” Keppler says. “It was only after a woman was hospitalized for being hit with a metal sign that the spankings stopped.

“Everything they did was wrong,” he continues. “They had inconsistent policies. Their employees were relatively young–most were 18 to 22–and the company had insufficient policies and insufficient training. The human resources department declined to take a complaint from an employee seriously.”

Alarm One’s human resources director at the time has since left the company and is now working for a financial firm in Southern California. She hasn’t returned several phone messages.

Keppler says the investigation conducted by Alarm One was woefully inadequate, involving phone calls and e-mails when the situation required a far more personal, hands-on, comprehensive investigation.

“Lesson 1: If you have a problem in a remote location, you must go there,” he says.

The Fresno professor likens the atmosphere at Alarm One to a strip club: Language included comments such as “Bend over, baby” and “You’ve been a bad girl.” He says a very bad situation was seriously compounded by very bad policies–such as “specifying that employees could go to only a few upper-level managers with problems.

“Lesson 2: The company needed a policy to allow people to come forward,” Keppler continues. “Lesson 3: Do a serious investigation, or the plaintiff’s attorney will do it for you. Lesson 4: If you have a problem, you better make sure your answer will sound good on 60 Minutes.”

Though Alarm One didn’t deny that the spankings and other humiliating tactics took place, Smith says he doesn’t agree with the verdict and calls the victim “an opportunist” because she has a past history of workplace problems and has been arrested for shoplifting.

“If I’d do anything differently, I’d go into more detail with employees and more do’s and don’ts,” Smith says. “We were lacking in specific examples like why you shouldn’t do things like throw water bottles (in team-building exercises). You don’t do it because you don’t have their permission to do it.”

No, Paskoff says flatly. “You don’t do it because it is wrong. Companies must have a few core values that people recognize and just know ‘We don’t do that here.’ “

And that’s a key problem, Paskoff notes, because a company’s essential commitment to good behavior must go far beyond sending a memo, or trotting out an ethics code or mission statement, or allowing different rules of behavior for different subgroups in an organization.

“It’s not bringing in an expert on behavior and being done with it,” Paskoff says. “Leaders have to be able to talk about behavior, and to say, ‘We do this because this is who we are.’ HR focuses on law and regulations, and not on culture–though they say they do. The emphasis must be on corporate citizenship, not Title VII or tort laws.”

Paskoff, president and founder of Employment Learning Innovations Inc. in Atlanta, says that human resources leaders must communicate to all employees that sexual and racial jokes and banter are unacceptable–not for the rank and file, not for leaders, not in sales meetings, corner offices or golf courses.

“You say, ‘If a workplace issue doesn’t look or feel right to you (any employee), tell us. If something isn’t right, don’t cover it up and lie.’

“Someone at Alarm One should have known they were expected to speak up.”

At a recent corporate ethics event, Paskoff says he heard a comment–as well as other similar concerns–that exemplifies the reason no one in human resources should pass the spanking case off as completely bizarre or incomprehensible.

Like others at the event, an HR executive said, ” ‘We have all of the systems, but I’m still scared to death,’ ” Paskoff recalls. “The trouble is, they have all the processes in place and those processes are not attached to daily behavior.”

Despite headlines and the magnitude of the company’s mess, Smith says “everyone” at the company is happy and the work environment is very good. Alarm One–which had 400 employees at its peak in 2002–now has only 50 employees because of changes in the industry, Smith says. It is currently developing a new strategic plan for building the company.

“We still do accounts, but we just don’t do them with salespeople anymore,” he says.

Though Alarm One is a private firm that won’t reveal specific financial information, the embattled COO does admit that “business isn’t growing.”

“Yes, that is correct,” he says. “Business is good, but it could be better since the Janet Orlando case.”

Defense attorney Hart says the case is “an example of what happens when top management isn’t in touch at the grass-roots level. “The managers must have been out of touch. If they’d acted more like the CEO at Costco (Jim Sinegal), who personally visits every store, this never would have happened.”

Orlando’s attorney, Nicholas “Butch” Wagner, sums it up this way: “They (the defense) used three common tactics: 1. Blame the victim. 2. Circle the management wagons. 3. Deny, deny, deny.

“It cost the company $3 million,” the Fresno lawyer estimates. “Alarm One exhibited very poor post-harassment behavior. The people who made the decisions for the company are worse than the (sales) people who made the conduct.”

— Janet Wiscombe

Some companies ask whether having a diverse workforce is good for business. At Marriott, where six of every 10 workers are minorities, the company begins with the premise that diversity is good, then asks how to effectively manage its eclectic workforce.

Or, as Adam Malamut, a senior director of human research at Marriott, says in a tone worthy of a nuclear physicist, “How can we harness that energy to create an experience that is memorable for our guests?”

To answer that question, Marriott has partnered with George Washington University to launch an exhaustive three-year investigation into how differences in race, ethnicity and gender affect the ways workers relate to one another. It will explore whether those differences create tension and dissatisfaction in the workplace—problems that may eventually lead to turnover or unhappy customers.

The research into “relational demography,” funded by a $263,000 grant from the National Science Foundation, is unique because it is the largest study of its kind.

Lynn Offermann, a professor of industrial and organizational psychology at George Washington University, will lead a research team that will gather data from 40,000 employees at Marriott hotels throughout the United States. That is more than a quarter of its worldwide total of 143,000 workers. Researchers will analyze the data to see what makes employees tick in diverse work environments.

Offermann will explore a host of sensitive issues that workers face in order to answer questions like: Is the experience of a white person in a predominantly black work unit similar to that of a black person in a white work unit, or likewise, in a Hispanic or Asian work unit? There is some evidence to suggest that a white male might react more negatively than others to being a minority in a work unit because white men have historically been in the majority and have held most leadership positions. This hypothesis is based on research that suggests men tend to react more negatively in female-dominated work environments compared with women in male-dominated work environments, Offermann says.

“We’ve seen gender issues explored, but we don’t know whether that will hold with race,” Offermann says.

The study will build on gender research done by Harvard Business School’s Rosabeth Kanter, a best-selling author who wrote Men and Women of the Corporation, and work done by Anne Tsui, a professor at the W.P. Carey School of Business at Arizona State University. Tsui says the long-term study is valuable because it is “rare in diversity research.”

Eventually Offermann, along with Malamut, a co-principal investigator and former student of Offermann’s, will take their research to Marriott hotels where staff diversity has led to profitability and low turnover. They’ll see firsthand what is working there. They believe that if employees strongly identify with the company and their work unit, their individual differences will seem less significant.

Marriott says it has already collected some data that suggests hotels where associates are happy are 10 percent more profitable than similarly staffed hotels where satisfaction is not as great. Those numbers led the company to believe it had stumbled onto a hypothesis that this study will try to pin down.

“It’s not enough to chase demographic diversity,” says David Rodriquez, executive vice president for lodging and human resources for the hotelier. “You also have to be very concerned about the inclusive environment you are building.”

Given the demographic shifts in large urban markets, where traditional minorities will soon become numerical majorities, companies will no longer have to “chase” diversity. Diversity will be a fact of life.

“We want to be able to tell organizations what to do in order to successfully manage diversity, because diversity is where it’s at,” Offermann says.

—Jeremy Smerd

Corporate leaders at Cardinal Health have decided that the company’s competitive advantage lies in its people. As a result, it’s concentrating human resources efforts on finding and developing talent while outsourcing administrative functions.

Cardinal announced this month that it has signed an end-to-end contract with ExcellerateHRO, which is jointly owned by EDS and Towers Perrin. This is ExcellerateHRO’s first end-to-end deal. A provider of health care products, services and technologies, Cardinal ranks 19th on the Fortune 500. It has 55,000 employees, 42 percent of whom live outside the United States.

Don Moseley, vice president for HR transformation at Cardinal, introduced the partnership in a presentation at a Conference Board meeting in New York. The company is based in Dublin, Ohio.

Cardinal and ExcellerateHRO have declined to reveal the size of the deal, and Cardinal will only say that it is a multiyear contract. But if it is a true end-to-end outsourcing contract, involving several human resources processes, analysts who asked not to be named estimate its value at $300 million to $400 million. Cardinal also declined to say which specific functions will be outsourced or how many Cardinal HR staffers will lose their jobs.

Moseley emphasized that the 250 human resources professionals who will remain at Cardinal will work in areas intended to influence business strategy and the bottom line—talent management, organizational effectiveness and total rewards.

“We weren’t having to find ways to get to the table,” Moseley says. “The business was demanding it. We’ve invested a lot of money in our remaining organization so that they have the ability to function in that atmosphere.”

Cardinal will place human resources “business partners” across the company who will focus on strategic activities while establishing new HR field operations. It also will create transactional centers supported by ExcellerateHRO.

The changes will enable Cardinal to redesign the HR function in one fell swoop, make human resources a more strategic player and increase global HR capabilities, he says.

Cardinal’s new perspective on HR comes in the aftermath of very rapid growth. During the past 10 years, the company’s revenue zoomed from $7.8 billion to $74.91 billion as it took over a collection of health care companies.

Last week, Cardinal announced that the man who oversaw that growth, founder Robert D. Walter, was stepping down as CEO. He will remain board chairman. R. Kerry Clark, most recently vice chairman of the board at Procter & Gamble, is the new president and CEO.

Meanwhile, Cardinal is integrating its disparate pieces and is turning to ExcellerateHRO to consolidate what it has under its HR roof.

“They can help us bring it all together,” Moseley says. “We had no metrics for the HR function.” With ExcellerateHRO, Cardinal will have the analytical tools to make better business decisions, he says.

The thoughtfulness shown those HR workers who are leaving is directed at a wider audience. “What we do to that group will have a residual effect on those who remain,” says Kathryn Kelly, vice president of strategy and growth at ExcellerateHRO.

Whether the strategic focus will increase shareholder value may be an open question for a while. “We haven’t been able to quantify it yet,” Moseley says. “It’s a little bit of faith on the part of senior management.”

—Mark Schoeff Jr.

The country’s chief watchdog on employment discrimination will shift its focus to cases of “systemic” inequality that transcend a single complaint, rather than solely responding to cases brought to its attention by individual plaintiffs.

In unanimous votes at an early April meeting, the Equal Employment Opportunity Commission directed the agency it oversees to increase its investigation and litigation of cases nationwide in which a pattern, practice or policy of alleged discrimination has a broad impact on an industry, profession, company or geographic location.

“We’re fundamentally changing the way we do our work,” says Cari Dominguez, EEOC chairwoman. Although the new initiative requires hiring additional professional staff, the agency has not estimated its cost.

EEOC field offices must formulate plans for a coordinated effort on systemic discrimination, utilizing EEOC expertise from across the country instead of relying exclusively on the field office in the region where a charge is made. Under such an approach, the agency intends to act more like a national law firm.

The agency also seeks to improve internal sharing of statistics used to identify systemic discrimination. For instance, the EEOC wants to link employer data to census information and improve access to research on national and regional economic trends.

“What we’re trying to do is change the culture so that (EEOC) employees will recognize systemic discrimination,” says Commissioner Leslie Silverman, who directed a one-year task force on systemic discrimination.

The EEOC is flexing its muscles to assert its relevance, according to an attorney who defends corporations. “They’re trying to show they’re going to be a viable agency going into the next century,” says Jonathan Greenbaum, an attorney with Nixon Peabody.

The change in focus may result in the EEOC filing more systemic discrimination cases but fewer cases overall, allowing the agency to “more strategically and effectively accomplish its mission,” says Mary Jo O’Neill, regional attorney in the EEOC’s Phoenix office. “We will be getting more benefits for victims and will have more impact based on the ripple effect of the lawsuits.”

Individual plaintiffs won’t necessarily be denied an avenue for justice because they will continue to hire private attorneys and they can turn to state equal employment offices.

A defense lawyer estimates that the EEOC might pursue 150 to 200 cases annually under the new directive, rather than the current 250 to 400. But it will try to make a bigger splash with each one, like it did when it settled a $54 million sexual discrimination case against Morgan Stanley in 2004.

“By being selective in who it sues and what it sues them for, it sets an example for the entire industry,” says Gerald Maatman Jr., senior partner at Seyfarth and Shaw.

Policies that can result in systemic discrimination include requiring employees to be 100 percent recovered from an illness or injury before returning to work, denying them absences during their first year of employment and refusing to hire workers convicted of a felony. Companies “really should look at their written policies and do self audits,” O’Neill says.

Industries most likely to be vulnerable to systemic discrimination include those that tend to recruit and hire minority workers, such as hotels, food service establishments, cleaning companies and construction businesses. The cost of compliance also could increase. Insurance providers may be unwilling to write an employer liability insurance policy for a company whose industry has been identified by the EEOC as having a systemic problem with discrimination, attorney Greenbaum says.

—Mark Schoeff Jr.