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Limited-Benefits Plans Poised for Expansion, Greater Debate

Limited-benefit health plans have been around for almost two decades, but they have mostly remained on the fringes, with barely a million enrollees throughout the U.S. But two recent watershed events–Aetna’s acquisition of Strategic Resource Co., one of the pioneers of limited-benefit health plans, and a groundbreaking insurance initiative sponsored by the HR Policy Association–could bring these low-cost insurance products out of the shadows.

   “Limited-benefit health plans gained instant credibility when Aetna got into the game last year and have gathered even more momentum with the HR Policy Association’s program,” says Ben Rozum, senior vice president of sales at Phoenix-based Star HRG, one of the largest providers of limited-benefit medical plans in the country. He predicts the industry will experience double-digit rates of growth in the years to come.

   The expansion of limited-benefit health plans, which cover routine medical visits but not catastrophic health events, is being met with heated debate.

   “There are two ways of looking at limited-benefit health plans,” says John McDonough, executive director of Healthcare for All, a Boston-based grass-roots organization. “If they are being put in place where there was nothing before, then one could argue that there is an improvement, but if they are being rolled out to substitute comprehensive insurance, then there is a significant step backwards.”

   Until recently, these plans have been offered predominantly to contract employees and part-time workers. But as they generate media buzz and more employers feel financial pressures, they are beginning to trickle into the mainstream workforce as well.

   A burgeoning number of companies are supplanting conventional health insurance with limited-benefit plans, including Ratner Cos., the owner of several hair salon chains. The company, which employs about 13,000 people, decided to replace its HMO policy with a limited-benefit health program to stem dramatic cost increases, says Candice Mendenhall, senior vice president of human resources. Ratner pays the insurance premiums, but since limited-benefit programs have fixed expenses, the company has an easier time planning its budget.

Double-edged sword
   Enrollees in limited-benefit plans pay low premiums, sometimes as little as $28 per month, Rozum says. By contrast, the monthly premiums for traditional health plans run about $307, according to the Kaiser Family Foundation.

   There is, however, a significant catch to limited-benefit plans: If enrollees suffer a catastrophic medical event, they are financially on their own. These programs have low liability caps, usually maxing out at $10,000. Limited-benefit health plans are designed primarily for routine doctor consultations, typically covering no more than 10 visits per year.

   In spite of those risks to employees, companies are finding the plans attractive. Unlike conventional employer-sponsored programs and some consumer-driven health care products, limited-benefit health plans are not generally subsidized by companies. And even though employees bear all of the costs, companies can reap the benefits of bolstering employee recruitment and retention because, technically, they are offering an insurance program.

   Workers in high-turnover industries where benefits are scant, such as restaurants and retail, may be more open to accepting these plans. Limited-benefit health products may also appeal to employees who do not have health insurance at all–such as through a spouse or parent. Finally, faced with the option of losing all coverage because their employers can’t afford to extend insurance anymore, employees might see a limited-benefit plan as something that’s better than nothing.

Currently, there are more than 45 million uninsured individuals in the U.S. “Limited-benefit health plans provide peace of mind for those people who fall through the cracks.”
–Ben Rozum, Star HRG
   However, there are segments of the workforce in which limited-benefit health programs could meet intense resistance–particularly among white-collar professionals or employees in high income brackets. “These plans are not a competitive benefit for companies trying to attract lawyers, for instance,” says Helen Darling, president of the Washington, D.C.-based National Business Group on Health.

Limited success
   Companies will have a tricky time getting large numbers of workers to buy into limited-benefit plans, regardless of employee type or industry.

   “If given the option, people gravitate to what they are familiar with. They tend to want access to the ‘real thing,’ ” says John Gabel, vice president at the Center for Studying Health System Change in Washington, D.C. Employees are very likely to respond to these plans with a healthy dose of confusion and skepticism. Unless there’s a comprehensive information campaign and hands-on support, expansion of the plans could stall.

   State governments have learned this lesson the tough way. None of the 30 states that have rolled out low-cost, bare-bones coverage–roughly resembling limited-benefit health plans–to uninsured individuals has been successful. Experts attribute their low participation rates in part to a lack of awareness and understanding about the programs among potential participants.

   The HR Policy Association–which is based in Washington, D.C., and includes high-profile employers like General Electric, IBM, Sears Holdings and Avon Products–is experiencing difficulties as well. It rolled out its program in mid-December, with the collaboration of UnitedHealth Group, Cigna and Humana. Under the program, limited-benefit health plans are offered to contract and part-time workers who lack insurance coverage. So far, 10 companies are actively participating in the coalition. Only 5,726 out of 909,000 eligible workers have signed up for the limited-benefit health programs being offered. The second phase of the program will be introduced in July, at which time more companies will be able to join.

   One reason for the low participation rates could be because up to 85 percent of employees in this pool already have coverage through other sources, such as an insured spouse, says Marisa Milton, spokeswoman for the association. Another potential reason for the lack of participation is the inherent difficulty in targeting and reaching this segment of the workforce, given their irregular work schedules.

   The HR Policy Association is analyzing data about its program and how it is being used. “We are looking to get better information so that we can target people better and meet their needs,” Milton says.

   One way to shed light on best practices may be to take a look at how Avon is handling its limited-benefit program. The company boasts 4,000, or 70 percent, of the total number of enrollees in the HR Policy Association’s program. Avon attributes its success to the multiple channels that it can use to connect with its sales representatives, a force of 500,000.

   The company is using targeted mail, e-mail, monthly meetings, posters and 800 numbers to raise awareness and educate representatives about the program, according to Michele Schneider, director of U.S. benefits. One key factor in its success is that all of Avon’s workforce is connected via e-mail. “This is a very powerful and consistent way to reach people,” Schneider says.

Not consumer plans
   There are those who worry that the initiative could be the beginning of a disturbing new trend. “I hope that the endeavors of the HR Policy Association won’t be used as a subterfuge to ultimately shift the cost of health care benefits onto the mainstream workforce,” McDonough says. Critics of limited-benefit health plans say that these programs would only help employers treat the symptoms of exorbitant health costs without addressing the root causes.

   Experts say that limited-benefit health plans do not foster careful and thoughtful consideration about health care planning among consumers. “Because they get the benefits upfront, there is no incentive for them to shop around for quality or value,” says Alexander Domaszewicz, consumer-driven health care expert at Mercer Human Resource Consulting in San Diego.

   Unlike consumer-driven plans, limited-benefit health programs do not have a purported agenda of creating informed consumers–individuals who have access to informational tools that allow them to make educated decisions, such as determining appropriateness of type of doctor.

   Health care experts stress the importance in differentiating limited-benefit health plans from consumer-driven plans. In contrast to limited plans, consumer-driven products provide coverage for big-ticket medical expenses, leaving enrollees to pick up the tab for routine care.

   But proponents of limited-benefit health plans say that, regardless of their drawbacks, they are one of the few ways for a large chunk of the population to access health care. Currently, there are more than 45 million uninsured individuals in the U.S. About one-third of those are eligible for Medicare and another third qualify for Medicaid, but the last third has no safety net, Rozum says. “Limited-benefit health plans provide peace of mind for those people who fall through the cracks,” he says.

   Proponents argue that limited-benefit health plans can help companies to reduce exorbitant health benefit prices. Employers have been pummeled with average cost increases of 12.4 percent for health care benefits over the past four years and are scrambling for ways tame costs.

   “There is no question the current system has its flaws.” Darling says. “The key for companies is finding a balance that is financially sensible without compromising the well-being of workers.”

Workforce Management, March 13, 2006, pp. 42-44 — Subscribe Now!

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High Court Sides with Plaintiffs in Pair of Cases

Even though two recent Supreme Court decisions on employment law were uncontroversial and unanimous, the fact that the justices ruled in favor of discrimination plaintiffs contradicts the rightward turn many expected from a court reshaped by President Bush.


“The Supreme Court on employment cases has not followed the stereotypical conservative (and) liberal lines,” says Tyler Brown, managing partner in the Washington, D.C., region for em­ploy­ment law firm Jackson Lewis. “They have done a fairly bipartisan job of calling things as they see them.”


The first case dealt with a racial discrimination matter. In its ruling, the high court demonstrated that it knows what it doesn’t like when it comes to defining employment discrimination. But the justices declined to provide a clearer statement of what the standard should be.


On February 21, the Supreme Court vacated a ruling by the 11th Circuit Court of Appeals in Atlanta that had rejected a lawsuit brought by two African-American men against Tyson Foods. The plaintiffs, Anthony Ash and John Hithon, alleged that Tyson passed them over for promotion because of their race, elevating instead less qualified white men.


The Supreme Court disagreed with the standard the appeals court used to determine that the plaintiffs had insufficient evidence. A discriminatory-hiring decision can be proved by comparing candidates’ backgrounds only when “the disparity in qualifications is so apparent as virtually to jump off the page and slap you in the face, ” the appeals court stated.


The Supreme Court wrote that the language was “unhelpful and imprecise as an elaboration of the standard for inferring pretext from superior qualifications.”


“It suffices to say here that some formulation other than the test the Court of Appeals articulated in this case would better ensure that trial courts reach consistent results,” the court wrote.


The ruling was a setback for employers, according to a lawyer who represents them in discrimination cases in the lower court’s region. “From a defense standpoint, that was the best phraseology out there,” says Glenn Patton, a partner at Alston & Bird in Atlanta.


Although the Supreme Court found that the 11th Circuit had erred, the justices missed an opportunity to define how big the difference in qualifications must be to support a discrimination suit, according to an expert.


“I wish they had given at least some guidance to the lower courts on what the standard is,” says Charles Craver, the Freda H. Alverson professor of law at George Washington University. “Now employers are going to have to act at their peril with respect to knowing exactly when you think someone is more qualified and whether that will be enough to defend a discrimination case.”


In another recent unanimous decision, the Supreme Court rejected a lower court’s decision to throw out a case that was won by a former waitress who alleged that she was sexually harassed while working at a New Orleans restaurant.


The restaurant asserted, following the verdict, that it had fewer than 15 employees and so did not qualify as an employer under Title VII of the Civil Rights Act of 1964. The appellate court agreed and nullified the jury’s decision.


But the Supreme Court said the motion was made too late and that the definition of an employer is related to the plaintiff’s claim, rather than being a jurisdictional matter.


—Mark Schoeff Jr.

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Bush Voucher Plan Threatens Career Centers

Concerned that too many Americans lack basic computer skills, Microsoft late last month made a $3.5 million donation to the U.S. Department of Labor to bolster technology training.


But the one-stop career centers that are the intended recipients of the gift may be targeted for shutdown. That’s according to critics of a Bush administration proposal to put more federal training dollars into the hands of workers seeking to find or change jobs.


Over the course of two years, Micro­soft will send cash and software to nine one-stop centers around the country that administer federal training programs.


Pamela Passman, Microsoft vice president of global corporate affairs, says the company’s partnership with the Labor Department will “help job seekers obtain the IT skills that every working person in America needs to participate in a global knowledge economy.”


The company also is providing a digital literacy curriculum designed to teach the fundamentals of the Internet, word processing, databases, spreadsheets, Web design and digital media to adults who have had little exposure to computers. In the process, Microsoft may be connecting itself to potential future hires and customers.


While Microsoft targets one-stop facilities, the future of those centers is in some doubt. As part of its fiscal year 2007 budget, the Bush administration is proposing $3.4 billion for “career advancement accounts.” The initiative would allocate $3,000 in federal training funds directly to workers each year for two years, potentially obviating their need to use one-stop centers.


Under the administration plan, states would receive a training block grant, 75 percent of which would have to be spent on career accounts. Another 22 percent could be allocated for employment services. Although employment and training programs are slated for a $620 million cut, administration officials say that the career accounts will reduce bureaucratic waste and enable the government to train about 800,000 workers annually, up from about 200,000 currently.


The career account approach will privatize the U.S. training system and put one-stop centers out of business, center advocates say.


“All of that is a smokescreen for the president to find a lot of room in the budget for tax cuts,” says Stephanie Powers, CEO of the National Association of Workforce Boards. “We’ll end up wasting money. It’s hard for people to self-manage their careers.”


Both Democrats and Republicans in Congress have given the accounts a chilly reception. “They have not done a good enough job of justifying why they want to create a new program,” says John Scofield, communications director for California Rep. Jerry Lewis, the Republican chairman of the House Appropriations Committee.


A Labor Department official says that career accounts can exist in harmony with one-stop centers. The centers “would continue to have a significant funding stream to support (their) ongoing activities,” says Steven Law, deputy labor secretary. “We want to free up money for direct training services for specific career needs.”


CVS/Pharmacy is a proponent of the one-stop centers. The company turned to them to fill 113 of 280 jobs related to the opening of eight stores in Minnesota in fall 2004. “I became a believer at that point,” says Brian Miller, CVS district sales manager. “Industry can work with government and it can be successful.”


—Mark Schoeff Jr.

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Useful Information on Workplace Violence and Strategies for Prevention and Response

The monograph was produced by the FBI in conjunction with experts from law enforcement, academia, private industry, labor, mental health and other organizations. It is aimed at prevention, intervention and critical incident response. In conjunction with the Department of Justice, the report also makes legislative and research recommendations. Download Acrobat format versions of the FBI’s report, “Workplace Violence: Issues in Response” (80 pages).

    This guideline presents practical definitions of workplace violence and a classification of the relationship between perpetrators and victims. It outlines prevention strategies and procedures for detecting, investigating, and following up on threats or violent incidents that take place in the workplace. Download “Workplace Violence Prevention and Response Guideline,” from ASIS International, an association of security professionals (53 pages).

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Radioshack Gaffe Show Need to Screen Current Employees

The recent admission by former RadioShack CEO David Edmondson that he inflated his educational credentials shows that it’s just as crucial for companies to screen current employees as it is for new hires.


Edmondson, who resigned last month, joined the Fort Worth, Texas, company in 1994 as vice president of mar­keting for the retail division of Tandy Corp., RadioShack’s predecessor company. The employer did a background check at the time of hiring, but did not check academic credentials.


The real mistake that RadioShack made was failing to do another background check on Edmondson before it promoted him to CEO, says Joseph McCool, senior contributing editor at ExecuNet, an online resource for recruiters. “Like many employers, RadioShack only incorporated the background check into its recruiting, but not its talent management process,” he says.


Over the past 10 years, an increasing number of employers have begun to conduct background checks before bringing employees on board. Ninety-six percent of human resources managers conduct background checks of some kind, up from 66 percent in 1996, according to the Society for Human Resource Management.


But very few employers do this on an ongoing basis with current employees, which means that even those companies that have started screening new hires may have a number of mid- and top-level managers who were never screened, attorneys say.


This is particularly an issue given that a recent survey conducted by ResumeDoctor.com, a résumé consulting company in Burlington, Vermont, indicates that 42.7 percent of résumés have significant inaccuracies.


“Companies, particularly those that are publicly traded, would be wise to do a thorough screening of employees before they are promoted to executive positions,” says Brad Fredericks, co-founder of ResumeDoctor.com.


Many employers are hesitant to screen current employees for fear of finding something wrong, says Garry Mathiason, an employment law attorney and the chair of the compliance and litigation group at Littler Mendelson in San Francisco.


“If you have an employee who has been doing a great job for the last 10 years and then you find they fibbed on their résumé, you have a dilemma,” he says. “On one hand the company may have a policy to terminate employees who lie on their résumés, but then again, you don’t want to lose 50 percent of your top performers.”


Also, employers resist screening current employees for fear of affecting employee morale, says Mike Sullivan, a principal at the law firm of Goldberg Kohn Bell Black Rosenbloom & Moritz in Chicago. “They don’t want to seem like Big Brother,” he says.


At the very least, public companies should be able to show that they do screen employees before promoting them to top positions, Sullivan says. “What frustrates shareholders most is if it looks like the company dropped the ball,” he says.


RadioShack seems to have taken that message to heart. On its corporate Web site, this note appears when a user clicks on a corporate biography link: “We are currently updating and validating all of the biographical information for each of our senior executives. Please check back soon to receive this information.”


—Jessica Marquez

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Manpower Survey Finds U.S. Employers Will Continue Hiring

A third of U.S. employers show no signs of slowing their hiring pace in the second quarter of 2006, according to the latest quarterly Manpower Employment Outlook Survey.

Of the 16,000 U.S. employers surveyed, 30 percent predict increased hiring for the second quarter of 2006, while 6 percent expect reducing payrolls. Fifty-eight percent report no change in hiring plans, and 6 percent haven’t made staffing decisions for the quarter.

While employers in most industry sector plan few changes in hiring, mining is experiencing its highest need for workers in the past 25 years fueled by a surge in demand for coal, according to the survey.


Hiring plans are also bright internationally. The survey found positive second-quarter hiring plans in 23 of 24 countries and territories surveyed. Japanese and German employers reported their most optimistic staffing plans since the survey began in these countries in the second quarter of 2003. Japan, India, Taiwan, Peru, New Zealand and Hong Kong reported the strongest overall second-quarter hiring plans. Italian employers reported a negative hiring outlook for the quarter.

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Workforce Management March 13, 2006

 
The 2006Optimas Awards
 
The awards recognize workforce management that improves business results. The 2006 winners’ stories show a simple rule in action: best workforce wins.

 
SAP’s Technology Test Subject
 By Ed Frauenheim
As people chief at SAP, Claus Heinrich provides real-world insight into the company’s products. His greater task is helping preserve SAP’s culture amid global expansion.

The Last Word
Outsourcing: Get Over It
Outsourcing is here to stay
   In the Mail
Offended by a ‘Union Buster’
Readers comment on union language, workplace violence

 
Helping Workers With Retirement
Fidelity’s Abigail Johnson urges employers to adopt auto-enrollment. Last Stop?: Federally funded one-stop career centers might be targeted for shutdown. Unicru Offers a Slacker Detector: The software company says its latest tool sniffs out quitters and troublemakers. Data Bank: Why CFOs are fed up with HR. Hot List: Top employment law firms. And more.
  
 

Recruitment
Beyond banking on the brand
Big-name firms like McDonald’s and American Express find they have to do more to sell themselves in order to attract the right job candidates		  

Health Care Costs
 The limit of ‘limited benefit’
Supporters say the low-cost limited-benefit programs can help extend coverage to more workers. But critics worry that they will supplant comprehensive plans.
  

High-Tech or Basic?
The skills that employers need
Washington’s focus on increasing the ranks of scientists doesn’t always address an immediate need: people who grasp high school math and can communicate well.
 

Staffing
 Niche staffing to the rescue
Suppliers can help employers find unusual expertise or uncover candidates when the supply of workers with unique skill sets dries up.
  

 

February 27,  2006

February 13,  2006

January 30,  2006
If you’re not currently receivingWorkforce Management magazine, click here to request a FREE trial issue today!

 


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When Brand Alone isn’t Enough

It’s not often that you find a head of human resources on his hands and knees scrubbing the bathroom floors of his company’s restaurants. But two years ago, that’s exactly what Rich Floersch, executive vice president of worldwide human resources at Mc- Donald’s, was doing.

   After just a few days on the job, Floersch decided to spend two weeks working at a McDonald’s in Darien, Illinois, to find out what makes a good store manager or restaurant worker.

   For McDonald’s, the exercise was crucial. After posting straight quarterly gains over its 47-year history, in the fourth quarter of 2002 the company saw its first loss—$344 million.

   In reaction to the decline, McDonald’s management brought former CEO Jim Cantalupo out of retirement to run the business. Within a year, Cantalupo announced a revitalization plan that would focus on people development, among other things, and hired Floersch to lead the charge in this arena.

   Big-name companies like McDonald’s traditionally could rely on their brands to attract good job candidates. But as the war for talent heightens, these companies recognize that they need to do more. As a result, firms with strong and names are revamping their recruiting initiatives to focus more on communicating to prospects the key aspects of their corporate cultures that they believe will attract the best candidates.

   So far the new recruiting approach seems to be working. McDonald’s has seen its turnover decrease consecutively for the past three years, Floersch says. Now it is below the industry average, which hovers around 130 percent for restaurant staff and 42 percent for managers, according to People Report of Addison, Texas.

Employment branding
   After working at a restaurant and interviewing 50 senior managers and 120 human resources staff members, Floersch sat down with his team to figure out what message McDonald’s should convey as part of its recruiting effort.

   The company wanted a contemporary message that would really speak to its corporate culture, he says. One fact that really struck Floersch about McDonald’s was that 40 percent of its top 50 executives started out working at the restaurants. “This was really not a message that we had communicated before,” he says.

   Floersch and his team made sure that all of their recruiters emphasized at job fairs and recruiting events the skills that people could get by working at McDonald’s. “We wanted to instill pride in our employees and get them to think about the skills they are learning,” he says.

   To get the message out to the public, McDonald’s launched a television commercial in September that features people whose first jobs were at its restaurants. The “My First” campaign includes celebrities like Olympic gold medalist Carl Lewis as well as less-well-known people—like Leo Lopez, a franchisee from Florida—talking about how the skills they learned from working at McDonald’s have helped them in life. For example, Lewis learned about the value of teamwork, which came in handy as a relay racer, Floersch says.

    Talking about opportunities rather than just relying on corporate brand in its recruiting has been a turnaround for American Express as well, says Murray Coon, director of recruiting. Five years ago, it would have been enough to talk about the brand and breadth of products at American Express to bring in candidates. But as the market has become more competitive, the company has decided to take a more aggressive approach at communicating the corporate culture.


   Like McDonald’s, American Express in 2002 took a hard look at its business processes, including its recruiting, as part of a companywide effort to become more competitive. Not only was the financial services industry still reeling in the aftermath of 9/11, but American Express was grappling with increased competition and wanted to make sure it was focusing on the right aspects in its recruiting, among other areas, Coon says.

    The company conducted focus groups of its employees worldwide to find out what they valued most about their corporate culture. Through the focus groups, Coon and his team identified eight points that all of the company’s 500 recruiters should touch upon when talking to job candidates: brand, culture, the company’s position within the financial services industry, global opportunities, career path, compensation, training and development, and location.

    “Five years ago, when we went to a career fair we would have talked more about the American Express brand and products, but now we are talking more about these eight areas,” Coon says. “Now it’s more about the industry, the people and the culture.”

   Ultimately, the company’s goal is to appeal to candidates’ emotions, says Joan Gutstein, who has been a recruiter for American Express for 20 years. “We want candidates who, like our card members, aspire for more,” she says.

Finding the right people
   Just getting the right message out there is not enough, Floersch says. McDonald’s also wanted to make sure that the people it hired were the right candidates. To make sure of this, McDonald’s, with the help of Aon, developed an online questionnaire for job candidates in the U.S. The questionnaire asks candidates an array of questions about their work experiences, preferences and how they would respond to certain situations.

   Based on the results, the questionnaire will either prompt a green light to the hiring manager, signaling that the candidate would be a good hire; a yellow light, meaning that the manager should ask more questions; or a red light, meaning not to hire the person.

   “Basically, we are taking the subjectivity out of the store manager’s interview process,” Floersch says.

   McDonald’s has seen good results from the program, he says. “We are seeing that hires that have gone through this system and received the green light are getting higher performance ratings in their jobs and higher salary increases,” Floersch says. The company is discussing introducing the tool internationally.

   To get the right people in the door, American Express is prompting its recruiters to be more aggressive, Coon says. “Instead of a recruiter passively posting jobs on the Web and hoping they get filled, they are now seeking out competitor intelligence and looking to see how they can make a difference in terms of sourcing competition.”

   When Avaya, a Basking Ridge, New Jersey, communications company, was spun off from Lucent Technologies in 2000, it had the dual task of defining its own corporate culture while trying to figure out what to emphasize to job pro­spects, says Doreen Amorosa, director of talent acquisition.

   “We wanted to communicate that we were established but also had the drive and ambition of a startup company,” she says. To make sure that the company appealed to the right type of job prospects, Avaya’s recruiters focus a lot of questions around leadership, no matter what type of position they are looking to fill. “We ask questions around whether the candidate is competent to do the job, but we also ask how good they are at impacting others,” she says.

Establishing metrics
    To gauge the success of Avaya’s recruiting, Amorosa has set goals for how many experienced hires it acquires from competitors. Additionally, the company measures performance of individuals who move internally from one business to another compared with the average performance in that division.

   “Most companies will say their recruitment is successful if they retain the people that they hire,” she says. “We look beyond that and set very specific goals for ourselves.”

    Amorosa won’t comment on specific numbers, but she did say the company is seeing a steady number of candidates come from competitors. The goal of this approach is not to just keep bringing in new people, she says, but to get people who are better than who the company has. “It’s not about retention rates; it’s about bringing in people who can grow the business in a way that someone else isn’t,” Amorosa says.

   It is too early to tell how successful American Express’ new recruiting method is, but the company is keeping a close eye on 15 to 20 different metrics for experienced positions, including how long it takes to fill jobs, how many offers the company makes before a job is filled, and retention rates. For campus hiring, the company is looking at acceptance rates as the key metric, Coon says.

   On top of looking at its turnover rates and quality of hires though its online questionnaire, McDonald’s also looks at its employee commitment surveys, which restaurant workers and store managers take every year.

   The survey asks employees to say how they feel about the company’s offerings in 12 different areas, such as skills development and compensation and benefits. In its 2005 survey, McDonald’s found that the company was up in its commitment ratings for eight categories, flat for four and down in none.

   The company also has seen an increase in the number of workers who take advantage of its training and development programs, dubbed Hamburger University, Floersch says. The number jumped by 45 percent in 2004 and 38 percent for 2005.

    Focusing on training and development and communicating about those programs will continue to be a growing part of recruiting, Floersch says.

    “I really believe that the strongest employment brand that you can have is one where employees say they are proud to work for their companies,” he says. “Our goal is to continue to build that sense of pride.”

Workforce Management, March 13, 2006, p. 1, 39-41 — Subscribe Now!


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Dear Workforce What Tools and Ideas Can Be Implemented to Improve Morale

Dear Lousy Attitudes:



First, contrary to popular belief, you can’t control how people feel. This is an important concept. If you accept and understand it, you let go of the notion that more control and manipulation will result in greater morale. You will begin to see how efforts to boost morale often become the cause of employee cynicism and resignation. Examples include management painting a rosier picture than what currently exists and withholding information about poor results.

Despite that, the environment you create can greatly influence the choices people make in the workplace. Employees, for example, will usually choose greater optimism and commitment to the enterprise in an environment where management treats workers as equals: adults who are trustworthy, dedicated, well-intentioned and capable employees.

Here are a few examples of actions you can take to create a workplace that fosters positive attitudes and choices.

First, always tell it like it is regardless of how negative or positive the message. Don’t try to spin the message or manipulate the reaction. When you communicate, make sure it is the truth, the whole truth and nothing but the truth–something employees can take to the bank.

Second, treat employees like they are yourtop producers and deal with the few disrupters. Don’t manage the entire workforce based on the problems of a few. Clearly communicate what is required and why. Show you trust employees to do the right things by sharing information liberally and empowering them to act.

Next, celebrate success as a group, even if it is a small thing in the beginning. Create understanding of what needs to be accomplished and why employee contributions are so important. Help employees see meaning in what they do each day and acknowledge accomplishments.

Lastly, publicly acknowledge the actions people take to improve work processes and customer service, even if the improvements don’t work out as hoped. Build a supportive, energetic workforce that resists inertia and strives to continuously improve.

SOURCE: Kevin Herring, Ascent Management Consulting, Oro Valley, Arizona, April 27, 2005.

LEARN MORE:Creating a Culture

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.

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EquaTerra-TPI Merger Craters

As Workforce Management first reported Thursday, the merger between outsourcing advisors TPI and EquaTerra has come undone.


“The parties have agreed to go their separate ways as providers of expert advice related to the information technology and business process operations of their clients,” the companies said in a press release Friday.


Sources say the deal fell apart after Monitor Clipper Partners, the Cambridge, Massachusetts-based venture capital firm that funds TPI, decided to back out.


The merger, which was announced last month, would have created a new company, called Veritage. With 600 employees around the globe, Veritage would have provided advice to employers on outsourcing various business processes, including human resources.


The fact that the merger fell through could pave the way for other sourcing advisers to merge with EquaTerra or TPI, says Phil Fersht, an analyst with NelsonHall & Partners, an HRO consulting firm. Possible acquisition candidates could include Gartner or Everest Group, observers say.


“I think existing clients will largely be unaffected,” Fersht says.


The merger breakdown could actually be a good thing for HR BPO buyers because it leaves them with more advisers to choose from, IDC analyst Lisa Rowan says.


“I can see the advantages of having all of that expertise in one place, but on the other hand there is something to be said for having choice,” she says. “It’s similar to the Oracle-PeopleSoft merger.”


How the two companies will proceed may prove to be interesting given that each company has had a close look at the other’s books, says Jason Corsello, an analyst at Yankee Group.


“They now know the intimate details of each other’s businesses,” Corsello says.


But Michel Janssen, president of supplier solutions at Everest Group, says that all the advisers pretty much know each other’s businesses already. “There really is no special sauce here,” he says.


—Jessica Marquez.