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A new study argues that companies should figure out ways to work with independent professionals, who are happier and better compensated than their traditional counterparts.

The report, from staffing and executive search firm Hudson Highland Group, also finds that so-called “IPros” are more likely to value their workplace autonomy. According to the study, while 86 percent of independent professionals worked full-time at corporations before they became independent, it has been seven years since the typical IPro held a corporate job.

“Smart employers are not only focusing on their full-time employees, but developing strategies to relate to and manage highly skilled professionals who are not under their direct control,” Jon Chait, chief executive of Hudson Highland Group, said in a statement.

Independent professionals point to a lack of benefits, such as health insurance and paid vacation, and inconsistencies in their workload as their main problems, according to the study. It surveyed more than 2,100 well-educated and highly paid workers in the United States, Europe and Australia.

The U.S. workforce is increasingly made up of independent contractors, some of whom are professionals. According to the U.S. Labor Department, there were 10.3 million independent contractors in February 2005, accounting for 7.4 percent of total employment. That figure is up from 6.4 percent in February 2001. Of the 10.3 million independent contractors this past February, 18.4 percent were in “professional and related occupations.”

Hudson’s conclusion about relatively happy IPros echoes Labor Department research on independent contractors in the U.S published earlier this year. The vast majority of independent contractors–82 percent–preferred their work arrangement to a traditional job, the Labor Department said.

—Ed Frauenheim

With defined-benefit pensions collapsing at a steady pace, one ailing industry is partially bucking the trend. In negotiations with unions, airlines are putting many employees into multiemployer plans, a form of the defined-benefit arrangement.

Bankrupt Northwest Airlines is the latest example. Two unions have agreed with the carrier’s proposal to replace the company’s faltering pension plan with the International Association of Machinists National Pension Fund.

The International Association of Machinists fund is supported by 1,700 contributing employers and has $6 billion in net assets. It serves more than 68,000 retirees and beneficiaries. Proponents say it has remained strong because companies are compelled to make contributions each month and the fund is managed by an independent board.

Northwest’s agreement, covering 7,695 clerical, office, fleet and passenger service employees, was accepted on March 7. Two other unions represented by the machinists rejected the company offer, which also included wage and job cuts and health care benefit reductions.

Other airlines that have put employees into the machinists’ plan include United, Aloha and US Airways. At Continental, union employees have the option of going into the machinists’ plan now or later if the airline freezes its pension.

Northwest wouldn’t comment on union negotiations, and United didn’t respond to an interview request. The practical effect of airlines taking the multiemployer option is the same as making a consistent and predictable payment into a direct-contribution pension plan, except that the money is going into the International Association of Machinists fund.

The union boasts that its plan is holding down the fort for defined benefits. Northwest, like most airlines, is putting pensions behind it. It is pursuing a long-term strategy of establishing a 401(k) retirement program for its employees.

“The only defined-benefit plans left in the airline industry will be our multiemployer plan,” says Joe Tiberi, spokes­man for the International Association of Machinists and Aerospace Workers. “Com­pany-sponsored pension plans are going to become extinct.”

But before defined-benefit plans fade away, airlines are seeking a provision in pension reform legislation that would give them 20 years to pay off unfunded pension liabilities. Other companies would get seven years under pension bills that are being melded by House and Senate negotiators on Capitol Hill. Only the Senate measure offers airline relief.

The issue is both propelling and complicating the talks. “The urgency is coming from the airlines,” says Janice Gregory, senior vice president of the ERISA Industry Committee. “They need something and they need it now.”

Northwest wants more time to pay off its $3.7 billion pension liability. “We continue to aggressively pursue passage of this legislation,” says Kurt Ebenhoch, director of media relations for the airline.

Pension bill negotiators also are grappling with proposed changes for underfunded multiemployer plans. Although the machinists stress that their plan is sound, some multiemployer plans have run into the same problem as their single-employer counterparts—promising more than they can deliver.

When that happens, the House would allow remedies that opponents say would deprive many laborers of early retirement benefits they already have earned.

“Unless Congress addresses these issues in the right way, they’ll be cutting the promised benefits of millions of employees and retirees,” says Karen Friedman, policy director for the Pension Rights Center.

—Mark Schoeff Jr.

Dear Aiming High:



Six Sigma is a methodology that focuses on understanding and meeting customers’ needs by using a variety of tools, especially statistical analyses, to drive performance metrics. Although its roots are in manufacturing, there’s no reason you can’t adopt Six Sigma for your service environment.

You could use Six Sigma to tackle a variety of strategic human resources projects, such as:

• Lowering turnover
  
• Paring prescription drug costs
  
• Reducing injuries at work
  
• Improving recruiting time-to-fill
  

Six Sigma methodologies include a project plan known as DMAIC that is used to improve business processes within human resources. DMAIC is an acronym that describes the basic steps you take:

Define — Identify the problem

Measure — Establish metrics to quantify

Analyze — Figure out what the metrics tell you

Improve — Craft a solution based on your analysis

Control — Find a way to sustain improvements

Let’s take an example. Say you want to reverse a trend of high turnover. You would:

Define the problem: reducing unwanted turnover.

Measure: identify key measurements underlying turnover.

Analyze: understand key factors and trends that create turnover.

Improve: identify and execute a plan to address those factors.

Control: implement controls to lower turnover on an ongoing basis.

Historically, human resources professionals have helped with the heavy training requirements when their organizations adopt Six Sigma, either in whole or in part. So expect to play a pivotal role in equipping your workforce. Aside from training, other issues you may need to address include: setting rewards and recognition for project teams; staffing those teams geared toward improving your business processes, and instilling Six Sigma methodology as a staple of your workplace culture.

If you’re like most human resources professionals, you initially might be uncomfortable with the statistical aspect of Six Sigma. Yet it enables you to get beyond merely measuring HR activities and focus on strategic goals. When integrated with your human resource management practices, Six Sigma should help you improve service levels and efficiency. For your customers, few things are more highly prized.

SOURCE: Scott Weston is a certified Six Sigma black belt and principal ofFalcon Strategic Group, San Francisco, June 3, 2005.

LEARN MORE:Building Frameworks for Six Sigma Success

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 A Little Too Casual:



Your company can improve morale by strengthening performance appraisals. In turn, performance appraisals strengthen retention by giving employees meaningful, constructive feedback that helps them develop their career skills.

To design your “starter” performance evaluation process, determine the competencies required of employees at all levels (such as initiative or accountability for results or continual improvement). Be sure that those competencies are relevant to your company’s mission. If your company is in the software development business and requires creativity, include creativity as a competency. For a call center, customer focus or customer service is critical. Use the competencies to form the basis of the performance evaluation questionnaire.

Start with a simple rating scale (e.g., meets expectations, exceeds expectations, does not meet expectations). When providing feedback, always offer specific examples of times when the employee exhibited the behavior being described.

If an employee shows a need to improve, specify the performance you want the employee to exhibit. Remember to seek ideas from the employee as to how this performance might be achieved. Employees often quit because supervisors fail to establish a “performance partnership” with them. Employees should feel like their manager is there to help them as a coach, and not feel like their manager is an old-school disciplinarian.

When providing feedback to employees, remind them how their actions serve to advance the organization’s goals and mission. Feedback also involves coaching employees on job skills and tasks (the “what” of performance) as well as on behavior (the “how” of performance).

Also remember to provide feedback between annual and midyear evaluations. Frequent, informal feedback often has a greater impact than formal evaluations.

SOURCE: Patsy Svare, the Chatfield Group, May 31, 2005.

LEARN MORE: 87 other items onperformance appraisals, including several sample appraisals.

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.

Event: The 2006 World Health Care Congress

April 17-19, 2006, at the Marriott Wardman Park Hotel, Washington, D.C.

What: A deep plunge into the issues of rising health care costs and what businesses, insurance companies, doctors, hospitals and others can do to address what has become one of the most pressing national—and international—economic issues.

Show info: For more information about the show, click on www.worldcongress.com/events/NW600/index.cfm

Show notes:

Date: Tuesday, April 18, 2006

Buzzword: “Consumer-driven”

Engagement party: Companies lined up to tell stories of how they reduced costs by “engaging the consumer.” Textron reported that three years after switching to a high-deductible health plan, costs are decreasing. Other companies are beginning to offer high-deductible plans, including AT&T and American Express, the latter of which has created a new credit card to integrate health savings accounts and pay for out-of-pocket costs. Lowe’s executives talked about the company’s efforts to create “transparency”—another buzzword—by culling data from doctors nationwide in order to rank them by efficiency, cost and quality.

Changing the subject: UnitedHealth Group CEO William McGuire, embroiled in reports of improper stock-option granting to executives amid missed earnings reports and sagging stocks, chose instead to speak of the power of technology to transform health care. McGuire envisions a future when a “smart card” credit card contains a patient’s medical history.

–Jeremy Smerd

Companies can draw on new empirical data to underscore the importance of designing health benefit programs that combat absenteeism. The study, “How to Present the Business Case for Healthcare Quality to Employers,” finds that the actual cost of health-related absenteeism could be as much as 35 percent higher than conventional estimates.

In fact, expenses associated with absenteeism can run upward of $74 billion annually for U.S. companies, says Mark Pauly, co-author of the study and professor of health care systems at the University of Pennsylvania’s Wharton School.

Researchers derived this figure by taking into account spillover expenses, such as overtime and overstaffing, that companies incur to compensate for the absence of a worker.

What’s more, the study finds that absenteeism takes a heftier toll on knowledge-based industries. Positions where absenteeism is most costly include mechanical engineers, paralegals and motor vehicle salespersons. Knowledge-based positions require more teamwork and foster interdependence, which explains why the absence of a colleague would have a more severe ripple effect, he explains.

Besides shedding light on the indirect costs associated with absenteeism, the study helps companies to gain a clearer understanding of the return on investment that their health benefits programs render.

Companies that do not apply spillover expenses when estimating the financial impact of absenteeism are most likely underestimating the value and merit of health care programs that reduce absences.

The study’s primary call to action is for companies to create health benefit programs that more aggressively tackle absenteeism. The problem is more detrimental than they might think, Pauly says.

–Gina Ruiz

Tolerance in the workplace, also known as co-worker sensitivity, didn’t fare too well in America last year, according to an annual workplace ridicule survey conducted nationwide.

Nasty, rude comments made about others in the workplace over sex, homosexuality, ethnicity and disability were up in 2005 compared with 2004, a recent telephone survey by Boston-based Novations Group found.

The survey also showed that last year, racial slurs in the workplace nearly equaled those tallied in the company’s 2004 survey. Age-related ridicule of older workers also was reported by nearly one-fourth of those surveyed, primarily by workers under 34.

Most of those targeted for ridicule never hear the slurs themselves, says Novations spokesman Phil Ryan. Rather, they tend to be reported by those overhearing them from co-workers.

Men were more likely to report workplace ridicule about women, especially sexually inappropriate comments–41 percent to 29 percent–and slurs targeting gays and lesbians, for which they led reporting by nearly 2-to-1 versus comments about women.

Reports of anti-homosexual comments were more frequent in the West (45 percent) than in the Northeast (34 percent), the North Central U.S (33 percent) and the South (32 percent).

The survey did not collect data identifying the age and sex of the alleged sources of the derogatory comments or what the actual comments were.

“We’re not sure how valid the research is,” Ryan says. “All we know is we get very similar data every year, so we’re doing something right.”

Mirroring the prior three years, sexually related comments last year were the most frequently reported, by one-third of the employees. Their frequency hit 35 percent last year, up from 31 percent in 2004. Reported gay and lesbian bashing rose to 24 percent, up from 20 percent in 2004 but matching 2002 levels.

—Mark Larson

Brent Schlenker is sold on the power of video games to teach, not just entertain. As a learning consultant at computer chip maker Intel, Schlenker says he created a computer game that allowed people with no factory experience to quickly master a 25-step manufacturing process.

But even he sees big hurdles that make corporations wary of using the games as a major training tool. For example, Intel recently took part in a learning experiment in the virtual world “Second Life,” but Schlenker couldn’t log on at times thanks to an information technology glitch. “It was hard to get into ‘Second Life’ because of our firewall,” he said recently.

Schlenker was speaking at a conference titled the “Serious Games Summit,” part of a broader game developer gathering in San Jose, California, in late March. A major theme of the summit was that games hold great promise for corporate learning, yet the nascent field faces challenges as perilous as any faced by Tomb Raider Lara Croft.

A small fraction of organizations—most famously the U.S. military—have adopted computer games as a major part of their training strategy, says Tom Hunter, who heads game consulting at business advisory firm Qittitut Consulting. “That’s going to change a lot sometime in the next five years,” he predicts. Hunter is designing a game centered on diagnosing virtual patients to be used for doctors’ continuing education.

Advocates of computer games and simulations for training cite benefits such as people’s willingness to practice and improve a skill because they’re having fun. Backers also tout the ability to safely simulate situations that would be dangerous in the real world, as well as the familiarity of younger workers with games.

What’s more, a three-dimensional computer environment can increase retention, says Philip Rosedale, founder of Linden Lab, which created “Second Life.” More a virtual world than a game with clear objectives, “Second Life” allows people to create animated versions of themselves and do such things as own land, sell services and even dance at a nightclub. “If you’re going to have a meeting in ‘Second Life,’ you’re going to remember it better,” Rosedale said at the conference.

But businesses also may remember investments in “e-learning” made a few years ago that didn’t pan out. Officials in corporate learning departments are wary of taking a risk on games, participants at the summit suggested. “The fear factor’s big,” said Brian Gomez, a consultant for video game technology at defense contractor Northrop Grumman.

Then there are perception issues, including the notion that games are not “serious business.” Another myth to combat is that a $100,000 game teaching workplace skills can rival the sophistication of such popular games as “Grand Theft Auto,” a multimillion-
dollar production, says Jay Wagman, co-founder of QuestG, a consultancy working to create games for leadership development. “We’ve got to manage expecta- tions,” he said.

Despite the challenges, there are hope­ful signs for games winning in the corporate market. “LearnLand,” an experiment in corporate learning held in “Second Life,” attracted the active participation of 60 Fortune 500 companies, including Intel. Sponsored last year by the Masie Center think tank, the project included trial projects in new-employee orientation and peer-to-peer learning. Mark Oehlert, who helped manage Learn­Land, says that even participants from traditionally conservative firms were intrigued by the virtual world’s possibilities, such as the ability to fly. “Don’t underestimate the elasticity of the users’ imagination,” says Oehlert, now an associate with consulting firm Booz Allen Hamilton.

Schlenker, meanwhile, may be able to get into “Second Life” after all. After he spoke at the conference, a “Second Life” representative handed him a business card. “Let’s get your IT thing fixed,” she said.

—Ed Frauenheim

Companies may want to stop throwing money at their top executives, according to a recent survey by executive search firm Korn/Ferry International.

The study finds that only 5 percent of global executives say that inadequate or inconsistent compensation is the main reason they left their last job. Rather, they cite lack of challenges or opportunity for career growth (33 percent) as the top reason they left. Twenty percent of respondents pointed to ineffective leadership, while 17 percent said the attractive job market was why they left their last jobs.

“Executives don’t leave jobs for better money; they leave for better opportunities,” says Jack MacPhail, managing director, Americas, for leadership development solutions at Korn/Ferry.

Four in 10 executives say that in order to retain talent, organizations should do more to empower employees to make decisions. Thirty-two percent say companies should focus more on career development, while 16 percent say organizations that do more to create a better work/life balance would better retain executives.

When asked what is most important when reviewing a job opportunity, 40 percent of executives say the company’s management team. Seventeen percent cite culture as the most important factor, while 16 percent say the company’s reputation is key.

Forty-five percent of executives say that large multinational or national companies are the most appealing companies to work for, while 27 percent prefer stable midsize companies and small fast-growth firms.

Forty-five percent say they would consider a change in industry, a change in job function or a change in location when considering a new opportunity.

—Jessica Marquez