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Outsourcing Get Over It

President Bush had a lot on his agenda during his recent visit to India and Pakistan–including letting everyone know exactly where he stands on the issue of outsourcing American jobs overseas.


    “People do lose jobs as a result of globalization, and it’s painful for those who do lose jobs,” Bush told a group at the India School of Business in Hyderabad. “But the fundamental question is, how does a government or society react to that?


    “And it is basically one of two ways. One is to say losing jobs is painful, therefore let’s throw up protectionist walls. And the other is to say losing jobs is painful, so let’s make sure people are educated so they can … fill the jobs of the 21st century.”


    Outsourcing is one of those emotional issues that Americans have a hard time dealing with rationally. Many jobs that were traditionally handled by Americans are now going to places like India, where they can be done a lot more cheaply.


    “This is about how to redesign the supply chain,” Girsh Paranjpe, president of Wipro Ltd., told The Wall Street Journal. Wipro is one of India’s biggest outsourcing companies and recently picked up some additional American business as part of a $7.5 billion computer services contract with General Motors.


    The Journal also pointed out the huge cost differential between India and the U.S. that is fueling the outsourcing boom. For example, a telephone operator makes less than $1 an hour in India and $12 an hour in the U.S. A medical transcriptionist makes $2 an hour in India and about $14 an hour in the U.S. And, an experienced systems analyst in India makes just $11,000 a year, versus $53,000 a year in the U.S.


    Wipro president Paranjpe is right; the outsourcing boom is simply evidence that the global supply chain is changing, evolving and becoming much more efficient. Just as Wal-Mart was able to gain a huge cost advantage by leveraging technology in building its supply chain, so too are other American companies finding that there are big financial savings to be had by outsourcing jobs overseas.


    But the runaway outflow of American jobs to places like India may not be as bad as you think. A recent editorial in The New York Times pointed to a study by the Association for Computing Machinery, an American trade group, that says there are more jobs in information technology today in the U.S. than at the height of the dot-com boom. And, the report added, although 2 percent to 3 percent of American jobs in IT migrate to other countries each year, new jobs are being created here in the U.S. that more than make up for the loss.


    The bigger problem, the report said, was that interest in computer science is falling among American college students. The IT and computer sector is booming, despite the fact that there are fewer and fewer students going into the field.


    This is what President Bush means when he says that Americans need to be educated so they can fill the jobs of the 21st century. But Americans are falling behind in educating themselves for those kinds of jobs. India graduated some 200,000 engineers from college in 2004. China graduated 500,000. The U.S. turned out just 70,000 engineering graduates, according to a report titled “Rising Above the Gathering Storm,” by an advisory panel of the National Academies.


    Like it or not, globalization is here to stay, and the outflow of jobs to places like India is just another adjustment being made in the global supply chain. Americans like the lower prices for goods and services that globalization brings, but they balk at the cost–the outflow of jobs.


    America needs to get over its angst about outsourcing. We can continue to gnash our teeth and complain about the jobs being lost to lower-cost workers overseas, or we can focus on training and getting our workforce better prepared for the jobs that will be left here in the U.S.


    President Bush is right. We may not want to hear what he is saying, but we should be prepared for the consequences if we don’t.


Workforce Management, March 13, 2006, p. 58 — Subscribe Now!

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English-only not Always Best Course in Language Programs

As schoolchildren around the world strive to master English in pursuit of their place in the global economy, conducting business in any other language seems almost passé.


    E-mail, teleconferencing, instant messaging–all drive the need for employees to master more than a pidgin version of English. “We do a lot of conference calls,” says Olga Corpion, senior director of human resources for Ingram Micro’s Latin American regional office. “English is the language that can really join us together, whether we are communicating with someone in Mexico or Brazil.”


    Speaking the same language can foster camaraderie and customer service and help cultivate talented Spanish-speaking employees, Corpion says. Most important, it can boost productivity. After a 12-month stint studying with Internet-based language training company GlobalEnglish, employees at Ingram Micro’s Latin American office reported saving an average of 4.5 hours per week, thanks to better English.


    But the growing Hispanic market–both as employees and customers–makes an English-only language approach far from a slam-dunk. By 2050, Hispanic residents are projected to compose nearly one-fourth of the U.S. population, compared with 12.6 percent in 2000, according to census figures. Encouraging two-way communication, with native English speakers picking up some Spanish, recognizes the business realities of that demographic shift, advocates say.


    Which approach should business take? It depends upon the company’s demographic profile, including the location of its employees, its corporate headquarters and its hard-won customers.


    Idealism shouldn’t trump a company’s most pressing business needs, says Paul Wild, director of Customized and Workplace Training, part of Portland Community College in Oregon. “Sure, it would be optimal if everyone spoke English,” says Wild, who works with companies to develop language and other training programs. “But that’s not reality. So then do you compromise things like safety based on some sort of principal?”


    Up to 12 percent of employees of grocery chain H-E-B in some regions of Texas, including Houston and along the U.S.-Mexico border, have limited English proficiency, says Marilyn Goodwin, senior manager of partner learning and development at H-E-B. Last year, the San Antonio-based company offered an English training course called Sed de Saber (Thirst for Knowledge) to 35 employees. After 12 weeks, there was a 28 percent increase in English proficiency–numbers that translate to increased confidence in the grocery store aisles, according to Goodwin. “They really feel like they can interact with customers better and interact with co-workers better,” she says.


    H-E-B officials plan to expand use of the Sed de Saber tutorial, which uses a portable computerized system to teach 500 job-related words and 340 phrases. But officials at the grocery company also are eagerly waiting for Newport Beach, California-based Retention Education, the company that sells Sed de Saber, to roll out a Spanish training version this year. Providing management a working knowledge of Spanish could improve employee training and customer service, says Ceciliamarie White, training coordinator for H-E-B’s Central Market stores. “Those managers could speak to our (Spanish-speaking) customers,” she says. “But right now, they run around and try to get a bilingual-speaking person.”


Mastering English
    Increased productivity is one of the primary reasons why companies invest in English training, says Deepak Desai, president of Brisbane, California-based GlobalEnglish. If companies primarily work in one language, “they will save a significant amount of time,” he says. “Companies are much more cohesive in the way they communicate internally.” And English, he says bluntly, has become the language of global business.


    In 2003, General Electric hired GlobalEnglish to teach its employees in China more English, in an effort to speed up their handling of e-mail. One employee reported that within a four-year period ending in 2003, the number of e-mails she received each day in English jumped from 30 to more than 200. “Even a small improvement in their ability to decipher e-mail would have a huge productivity improvement for their company,” Desai says.


    Nine months of training paid off, with GE employees reporting that they were saving more than 3.5 hours a week on average. According to a GlobalEnglish analysis of 4,147 users worldwide, nine to 10 months of online language training saves an average of 2.32 hours per week.


    The focus of GlobalEnglish is international, with 95 percent of users living outside the United States. GlobalEnglish officials won’t provide exact numbers, citing competitive reasons, but they say Hispanic and Asian users are most common, with Asian users outnumbering Spanish speakers by 19 percent. Spanish-speaking users, though, have increased 122 percent from 2002 to 2005, outpacing growth of 113 percent for Asian users.


    At the Ingram Micro’s Latin American regional office in Miami, nearly all of the employees speak Spanish, says Corpion, the office’s senior director of human resources. But communications with other offices of the global technology distributor, which has its headquarters in Santa Ana, California, are conducted in English, including e-mails and contact with the human resources office, she says.


    To date, 240 employees in the Latin American office have studied with GlobalEnglish. Nearly all of them–95 percent–felt that English was required or important for their job, according to a GlobalEnglish analysis of 58 of those employees.


“Every one of our customers has asked us to teach their managers and their front crew people, such as waiters, to speak Spanish.”
–Dave Henninger, Retention Education

    The business payoff, Corpion says, has been clear in everything from improved customer service in tech support to more participation in conference calls.


    For companies with most of their employees in the United States, demographics are still driving a need for English training. Of the nearly 47 million Americans who speak a language other than English at home, 28 million of them speak Spanish, according to U.S. Department of Labor analysis of 2000 census data. Of those, only half–14.3 million–say they can speak English very well.


    Sed de Saber results show that teaching English to Spanish speakers can reduce turnover by 83 percent and boost career opportunities, says Dave Henninger, a senior vice president with Retention Education. One-third of the participants who complete the program are promoted or are eligible for a job promotion, Henninger says. “This is a way to slow down turnover,” he says. “You give people some hope. It’s a message that ‘I have confidence in you.’ “


    At Dallas-based Brinker International, more than 750 employees are studying English through Sed de Saber, says Jose Gomez, senior director of diversity at the restaurant company, which owns the Chili’s and Romano’s Macaroni Grill chains, among others. About 30 percent of Brinker’s 110,000 employees are Hispanic, and a “substantial number” have limited English skills, Gomez says. The hope is that talented long-term employees will thrive professionally with better English. “We want them to move up in the ranks,” Gomez says. “They are going to be some of our future leaders.”


The two-way bridge
    Retention Education, which shipped its first Sed de Saber tutorial in 2005, has quickly learned that language training runs along a two-way street. “Every one of our customers has asked us to teach their managers and their front crew people, such as waiters, to speak Spanish,” Henninger says.


    “If you get the entire company speaking English, it’s better off for everybody,” Henninger says. “At the same time, you are always going to have some Spanish-speaking employees. You are going to have some recent immigrants who want to eat at Denny’s. If I were a manager, I would want to speak with them, to welcome them.”


    For some companies, it may be even more valuable to teach managers some Spanish first before focusing on their employees’ English-speaking skills, says Eli Portnoy, founder of LatinoHire.com, which links Spanish speakers with jobs. After picking up some English, an entry-level employee may find another job, Portnoy says. Plus, Spanish speakers will naturally slip back into their native language when possible, creating a cultural split with management. “But if management learns Spanish, they can also communicate and you can have less of an issue in terms of a cultural divide,” Portnoy says.


    In the end, companies decide to teach managers and employees Spanish to address immediate concerns, from customer service to safety, says Wild, the Portland training program director. Along the way there can be other payoffs, including team building and a better cultural understanding, he says. “There is almost a sense of a shared burden,” he says. “We also have found that it makes supervisors more sympathetic to what it’s like to learn a new language.”


    Goodwin, with H-E-B, is quick to stress that language education efforts at her company will never interfere with employee safety and other job-related needs. “We want people to learn English,” she says. “But we still want them to be able to do their job. And if that means giving them materials in Spanish, that’s what we’ll do.”


    Still, it’s clear from the H-E-B’s experience that employees are hungry for language help. At one Central Market, employees formed their own independent study group to build on the English they were already learning, White says. Meanwhile, the waiting list for Spanish training is growing, with a total of 20 supervisors and managers volunteering at just two stores.


    As the face of American business changes, the biggest potential risk may be ignoring the language schisms that can divide a company’s workers and undercut their long-term productivity.


Workforce Management, February 27, 2006, pp. 38-40 — Subscribe Now!

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Hidden Hierarchies

Next to its lack of job titles, W.L. Gore & Associates is most famous in the business world for its flat, nonhierarchical organizational structure and use of small, self-managed teams. But other American companies over the years have tried to institute flat hierarchies and utilize self-managed teams as well, with varying degrees of success.


    Eileen Shapiro–president of the Hillcrest Group, a Cambridge, Massachusetts, consulting firm, and author of the book Fad Surfing in the Boardroom: Managing in the Age of Instant Answers–is skeptical about whether those concepts ever work as well in reality as they do in theory.


    “I’ve been inside a lot of companies that espouse flat organizational structures and self-management,” she says. “But when you really start looking at how things actually work, you find that there is in fact a hierarchy–one that is not explicit.”


    Companies that espouse flattened hierarchies and self-managed teams, Shapiro says, often are headed by charismatic founders who either impose a subtle, unspoken hierarchy or allow one to develop. In Shapiro’s book, she cites the example of her former employer, consulting firm McKinsey & Co., where co-founder Marvin Bower coined the term “nonhierarchical meritocracy.” In actuality, Shapiro writes, the firm had an unofficial hierarchy of three to six levels, “each with progressively more scope and control–and each with progressively higher billing rates.”


    The existence of a shadow hierarchy didn’t make McKinsey less effective as an organization, Shapiro writes. Instead, “it simply meant that this firm had a hierarchy, just like every other organization that I’ve ever seen.”


    A company that didn’t fare so well in its experiments with flat organizational structure and self-managed teams, Shapiro says, was Digital Equipment Corp., a powerhouse in the mainframe computer era of the 1970s and ’80s. DEC produced or popularized many technological innovations, from networking to the first comprehensive Internet search engine. “DEC invented things that could have been the whole S&P 500,” Shapiro says. “But they had a phenomenal ability to see around corners and then to miss those opportunities.”


    In place of a conventional corporate hierarchy, DEC had a matrix team structure in which workers in engineering, marketing and other departments also served on teams organized around product lines, according to a 1994 Fortune article. That structure made DEC vulnerable to struggles between team and departmental leaders.


    “But the real problem, looking from the outside, was that self-managing really came down to one person,” Shapiro says. “The company founder, Ken Olsen, was the one who controlled everything.”


    After DEC suffered big losses in the early 1990s, Olsen left and the company abandoned the matrix team structure. But the company never regained its footing, and eventually was acquired by Compaq in 1998.


    “The reality is that people do organize around rules and rewards and punishments,” Shapiro says. “In the worst cases, it’s a more unfair system than one with clear rules and boundaries. It doesn’t necessarily benefit the best people, but rather the most politically adept people, the ones who speak the language of the open system, the no-hierarchy or whatever the buzzwords are.”


Workforce Management, February 27, 2006, p. 24 — Subscribe Now!

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Indian Firms Tap Benefits, Brand in Talent Battle

College graduates in India are experiencing heady days reminiscent of the gilded dot-com era in the U.S. a decade ago.


    Indian 22-year-olds who hold college degrees and speak good English are easily finding entry-level jobs in the booming business outsourcing industry, where salaries are around $300 a month. In India this is enough purchasing power to buy a Hero Honda motorcycle or hire a maid who cooks. Of course, with employers clamoring for an edge in the hiring spree, employees need neither.


    In major tech hubs like Delhi, for example, where the outsourcing industry is located about 15 miles outside the city center, companies are offering their employees shuttle buses to work. Others are adding cafeterias and recreation rooms.


    “These are the tools that are not extremely high-cost in India and are being used to provide benefit and retain talent,” says Soumen Basu, executive chairman for Manpower India, whose clients include blue chip companies such as IBM and Motorola.


    The competition for good employees in the entry-level outsourcing work­force–and the desire to keep them–has challenged employers to offer incentives to reduce turnover, which averages more than 40 percent, Basu says.


    Attrition is perhaps the most significant challenge facing employers in India’s tech industry as it grows 30 percent annually and is expected to employ 1 million people by 2008, according to Nasscom, an Indian tech policy research group.


    Companies are also competing with prestige.


“The No. 1 recruitment tool is brand,” Basu says. “People want to work for the IBMs and Microsofts as opposed to an Indian name.” Often, he says, that is as important as salaries and benefits.


    As a way to distinguish its brand, Man­power, for example, offers 4,000 courses and programs for the ambitious entry-level customer service agent, from letter writing to certification in software and database management. An e-mail sent between executives at business outsourcing company Progeon, a subsidiary of IT consultant Infosys, and obtained by Workforce Management talks about using IBM, Microsoft, Sony and 3M as models for how to “create employer branding–influencing an employee’s ‘choice to join in.’ ”


    To remain competitive, Progeon offers shuttle buses, food courts, health care, gyms and special employee shops offering discounts on brand names. Progeon even has a “chief fun officer to promote fun and work–games, quizzes, puzzles, celebrations and team huddles are all part of a Progeonite’s work day,” according to the e-mail.


    This might sound like dot-com foolery, but every little edge counts.


    Microsoft, Oracle and Cisco all declined requests for interviews for this article, as did Reuters, which has recently begun outsourcing some of its editorial work. An editor at Reuters in charge of hiring, who spoke on condition of anony­mity, explained why companies are guarding their retention plans like state secrets.


    “It’s no secret that for all of us here –in whatever industry–the biggest challenges are the rate at which demand is growing for Indian knowledge workers, resulting in a rapid rise in salaries, and making sure you distinguish your brand in the marketplace so that you can attract and retain the best.”


    Focusing on benefits has also enabled companies to keep salaries, which still remain a relative bargain, from spiraling out of control, says Dave Jensen, a spokes­man for Genpact, one of India’s largest business outsourcing companies. “If you have a 20 percent increase in salary, that still amounts to the equivalent of a 3 percent to 5 percent increase in the United States.”


    As a result, the boom seems likely to continue. Genpact, which has 15,000 of its 19,000 employees worldwide in India, hires 800 to 1,000 employees a month across India by using storefronts in smaller cities, such as Jaipur, three hours from Delhi and Calcutta, like army recruiting stations. Likewise, recruiting firms like Manpower plan on expanding their presence from nine cities currently to 29 cities within the next three years.


    Only when the hiring boom slows will attrition rates come down. By then, Basu says, those college graduates looking to move into the management ranks will be forced to go back to school to earn the advanced degrees required by most Western companies. When that happens, the young Indian workforce will look much like their counterparts in the U.S. did when the dot-com era went from boom to bust: They’ll go back to school for their MBA.


Workforce Management, February 27, 2006, p. 6 — Subscribe Now!

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Paperless Route for Recruiting

Two years ago, senior management at Continental Airlines announced that the company would have to turn to international markets to survive. Executives out­lined a plan to expand on five continents–immediately.


    Within two months, the company moved from an antiquated, labor-intensive domestic recruiting process to a global Web-enabled and paperless approach that allows it to staff any location worldwide with half the number of recruiters and at half the cost of the old system. Continental launched 10 new international destinations in 2005 and used the new technology to recruit 3,200 new hires for locations ranging from Argentina to India.


    More than one-fourth of all employees of U.S.-based multinationals now work outside the United States, and that portion is growing far more rapidly than the domestic workforce. With many industries facing the same globalization imperative that has hit the U.S. airlines, the recruiting function must be prepared to staff new destinations with unprecedented speed.


    Within the past few years, Web-enabled systems have created the potential to source the global workforce with the same flexibility and technological sophistication that multinational companies use to source other materials and components. A major prerequisite for this achievement is the consolidation of information so that workforce planning and recruiting decisions can occur on an international scale.


Instant gratification
    When the mandate to expand globally came down, Continental was swimming in the paper generated by an inefficient recruiting process. Under the old system, the airline advertised jobs in U.S. newspapers and then flew recruiters out to do open calls for hundreds of candidates at hotels in major cities.


    “We had nine full-time employees just scanning in paper résumés or cleaning electronic résumés,” recalls Kimberly Paul, manager of global recruiting. With the mandate to expand internationally, Continental faced the decision of expanding recruiting departments in each territory or adopting a Web-based approach. “The directive came from corporate that we had to go paperless,” she says.


    Continental tapped iCIMS’ iRecruiter to create a Web-based operation so that candidates and recruiters could access the system from any of Continental’s international flight destinations while still maintaining the company’s unique screening and interviewing procedures. “We started fresh and did not migrate old information,” Paul says. “We rolled the system out first for the United States and then went global, all within two months and in a very seamless process.”


    Continental no longer uses any newspaper advertising in the United States, and very little elsewhere. Successful U.S. candidates are flown into Houston or Newark, New Jersey, for interviews with a recruiting staff that no longer travels. “I’m not a technical expert, but I was able to train our recruiters onto iRecruiter in a matter of hours,” Paul says. “They love the system.” Now Continental handles 80,000 applications a year with an exceptionally lean staff.


    When Continental enters a new international destination, it does a full launch with announcements in the local media about the start of service. “This drives people to the Web site, where we have posted the open positions,” Paul says. “Résumés arrive electronically in Houston, and we e-mail the candidates information for on-site interviews.”


    In July 2005, Continental posted 30 positions to staff the new location in Delhi, India, and received thousands of applications.


Full-strength screening
    One of the biggest advantages of the Web-based system is the automatic screening process that culls unqualified candidates before they proceed to the application. Continental’s flight attendant candidates, for example, move through 41 questions before the formal application. New screening enhancements will be added in 2006.


    Using the Web-based system is a prescreening process in itself and has generated significant quality-of-hire improvements, Paul says. “When we installed iRecruiter, we had some resistance from hiring managers with line positions or entry-level openings,” she says. “They believed that candidates for dining services and ramp jobs, for example, would not have sufficient access to or knowledge of computers to use the system. We told them that the entire company runs on computers and we want a candidate pool that reflects that.”


    The hiring managers pushed back, but the company moved ahead with posting all positions on the Web site, including relatively low-skill jobs. Despite the hiring managers’ initial concerns, large numbers of applications roll in for every job.


   “The quality of hire is now so much better because managers don’t have to do basic training and hand-holding for employees who need to use online employee services or who may need to use computers at some point on the job,” Paul says. “Even ramp agents, who have a primarily physically demanding job, may need some computer skills.”


Staged approach
    Colin Day, president and CEO of iCIMS, which produces iRecruiter, recommends that companies take a staged approach to installing a global system. “Part of the process of moving to a global recruiting system is overcoming perceptions about the difficulty of recruiting in different languages and complying with local laws and EEO regulations,” he says. “Companies have questions about the speed of the system and whether local recruiters will be needed.”


    Few companies do a full global rollout right from the start. Instead, they run a U.S. pilot program and then extend it. “Companies commonly take a regional approach, setting up career centers in specific locations and then moving on to the next,” Day says. “We believe in doing it in steps. The solutions are relatively simple, but they may seem complex to the client.”


    Once the decision has been made to go global, the timeframe for a full implementation may be as brief as a few weeks, or several months for the more complicated models. “Continental moved very efficiently,” Day says. “It was really a process of looking at the markets it wanted to attack, which was a function of the routes that it was winning. Then we set up career centers for those markets, with local job openings and applications. It was all very fast.”


    Significant cost savings come from bringing recruiting into a central location and eliminating the need for local recruiters. Continental’s global hiring is centralized at its Houston headquarters. “The automated global system is far more efficient and allows companies to keep a much leaner staff than they would if they attempted to roll out a global campaign with recruiters,” Day says. “Domestically, companies have been able to cut staff by 50 percent, and the same applies globally. You’re on the same platform and using the same method, but just expanding out.”


Decision-making process
    Installing a global Web-enabled recruiting system entails company-specific considerations. First, the company must determine whether the site will be multilingual or English only. “Continental decided to keep the entire system in English because it needed employees, particularly flight attendants, who could speak English,” Day says. “Companies can also choose to go with the local languages in the front end or candidate-facing parts, including the career center, the job listings, the screening questions and the application, but remain in English for the back end.”


    Also, companies can set up local-language career centers that incorporate local equal employment opportunity policies. “The information may come in local languages, but then it resides within a system where the field names may be in English,” Day says. “Some companies chose to segment, so that recruiters can log in to user groups that reflect their territory, and then open up the parameters to search outside their territory if needed.”


    Companies must also decide whether they want a centralized or decentralized system. Centralization means that they do all hiring, including international, through one location. A decentralized system puts local recruiters on the ground and requires a larger staff. “We are sometimes shocked to see some very large organizations running with an extremely lean HR staff, and relatively small organizations with a huge recruiting staff,” Day says. The only industry-based trend he reports is in retail, where companies commonly install a decentralized system to accommodate point-of-sale hiring.


    Data-protection considerations continue to preoccupy some organizations, but perhaps unnecessarily so. “We have to work with companies to help them achieve a level of comfort with data-protection laws such as Europe’s safe harbor provisions,” Day says. The provisions, approved in 2000, allow U.S. companies to simply certify that they provide “adequate” privacy protections as defined by the EU directive on data protection.


    “It’s as big an issue as companies want to make it,” Day says. “In reality, there’s a lot of bark but not as much bite as you might think. The core is that you have to show that you have a strong and consistent security policy for your data center and that the policy is published and available to the customer base.”


    EEO concerns have moved to the forefront. Applicant tracking systems have made it easier to track EEO data, so there’s more pressure to perform up to standards. “And because it is now possible to track EEO data on every candidate, enforcement has stepped up,” Day notes. “The United States remains one of the most difficult locations in terms of the reporting procedures.”


    Web-enabled systems allow companies to track source effectiveness, time to hire, cost per hire and customized effectiveness measures. “Companies can decide how to advertise for positions and then test different sources and see immediate results for each source,” Day says. “The systems track employee performance, so quality of hire can be tracked against expectations. Companies are right on the cusp of adding detailed quality-of-hire metrics.”


    Some companies that have turned to Web-enabled global recruiting are staffing locally for their international locations. Others are sourcing from a global talent pool. “We expect to see more of the second model in the future,” Day says. “We’re just beginning to tap into the power of these global talent systems. To be able to search your global database for candidates who have expressed an interest in working in a specific location is an amazing resource.”


    Continental plans to launch six new international destinations in the first quarter of 2006 and will hire 3,500 new employees during the year. This next stage of global growth will be fully supported by a recruiting system that links Houston to candidates in Sweden or South Africa with equal ease and low costs.


Workforce Management, February 27, 2006, pp. 34-37 — Subscribe Now!

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Study Sees Link Between Morale and Stock Price

A corporation that’s filled with happy, motivated employees isn’t just a pleasant place to work; it’s also likely to be more profitable.


Stock prices of 11 high-morale companies increased an average of 19.4 percent in 2005, outpacing the 8 percent rise attained by competitors in their industry, according to a recent study by Sirota Survey Intelligence. Conversely, the stocks of 13 companies with medium or low morale increased only 10 percent, or 9 percentage points less than their peers.


Intuit, Bank of America, American Express, Barron’s magazine and the Mayo Clinic were among the high-morale companies in the survey.


“The success of an organization is dependent upon the competence of senior management and the morale of the workforce,” says David Sirota, founder and chairman emeritus of the research firm that bears his name.


In the study, a company was defined as having high morale if more than 70 percent of its employees expressed overall job satisfaction. At medium- and low-morale companies, the figure was below 70 percent. In Sirota’s formula, high morale results when employees are treated fairly, they’re proud of what they do and they have camaraderie with their colleagues.


Most employees start off with an affinity for their employer or else they wouldn’t have agreed to work for the company in the first place. But after they walk through the door, the relationship too often breaks down, Sirota says.


Problems occur when companies practice “transactional management,” in which employees are paid but not nurtured, Sirota says. Motivation also declines when employers fail to recognize achievement, treat employees “like children or criminals” or fail to give them the resources they need to do their jobs.


“It’s not ‘How do you motivate people?’ It’s ‘How do you keep management from destroying the workforce?’ ” Sirota says. “The lack of loyalty one sees now (from employees) is due to the lack of loyalty by management. If you treat people as if they’re part of the solution and not part of the problem, you get tremendous results.”


Achieving high morale, though, is not just the responsibility of the employer, says Michael Warech, U.S. organization effectiveness practice leader at Watson Wyatt.


Company leaders and employees must determine the firm’s “value pro­position,” which could center on offering challenging work, education and training opportunities or autonomy. The employee must be willing to contribute as much to the equation as the employer does.


“Good companies understand it can’t be a one-way street,” Warech says. “They make sure their employees know that they have to have a little skin in the game. This isn’t about how the big company is going to make you happy.”


A Watson Wyatt study last year indicated that a company with highly engaged employees typically achieves a financial performance four times better than a company with poor employee attitudes.


While the effects of morale are consistent, so are its characteristics. The factors that make employees happy transcend culture, age, sex and ethnicity, Sirota says. So don’t try to delineate the differing work attitudes of baby boomers and Generations X and Y.


“That’s all malarkey,” Sirota says. “That’s a confusion of tastes with basic goals.”


—Mark Schoeff Jr.

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Building on Brand to Attract Top Employees

Google is hardly a brand in search of recognition. The company reportedly gets thousands of résumés a month, but that didn’t stop it from taking out a full-page help-wanted ad in The New York Times on Halloween. The “scary smart” ad, as it has come to be known, is only one of the dozens of ways that Google brands itself as a great place to work.


    Anastasia Pucci, president and founding partner of search firm Carlyle & Conlan, knows firsthand the power of the Google brand, as well as one of its most popular lures for candidates: Google lets its professional staff members devote 20 percent of their workweek to whatever projects interest them. “We talk to a lot of people, and every one of them has heard of Google and the 20 percent time. We have a hard time competing for the younger tech people because of that,” says Pucci, whose firm is based at North Carolina’s Research Triangle Park.


    As the war for talent intensifies, companies are looking for every edge they can get, and branding yourself as a great place to work is a strategy that makes a difference.


    “It isn’t about buying Super Bowl ads,” says Elliot Clark, COO of Kenexa, a recruitment software vendor and talent acquisition and management firm. “It isn’t that you have to have everyone know your brand. It’s that your targets have to know you.”


    It starts with such simple things as responding to applicants who submit résumés. Developing a dialogue with those who show promise, even if a job for them isn’t available now, Clark says, makes a big difference in whether they choose you or your competitor when a position opens up. Call it customer relationship management for job applicants. “The quality of the relationship management has to be planned and executed well,” he adds.


“It isn’t that you have to have everyone know your brand. It’s that your targets have to know you.”
–Elliot Clark, COO of Kenexa

    But surprisingly, there are companies that don’t even acknowledge the résumé, let alone keep the candidate informed about where he or she stands, says Gerry Cris­pin, recruitment consultant and co-founder of CareerXroads.


    Even with 11,500 employees, insurer UnumProvident is barely known outside its headquarters city of Chattanooga, Tennessee, and a few other locations where it has satellite offices. That creates a challenge for recruiters, says Tim O’Connor, senior staffing research specialist.


    Lately, the company has begun experimenting with radio and news­paper ads to drive traffic to its career site. “That’s where people can find out about us,” O’Connor explains. “We’ve made the career site really informative. The idea is to give them a sense of what a great place this is to work.”


    One look at UnumProvident online, and you know it’s not your typical corporate career site. There’s extensive information about the company’s three major corporate centers that includes the climate, cultural activities and ambience. You can meet some of the people who work for UnumProvident and see and hear them talk about their jobs.


    Even without advertising blitzes, there are ways a company can build a brand and identify talent. Jim Williams, vice president of human resources for Dublin, Ohio-based Commercial Vehicle Group, says the company began a mentoring program six years ago with area colleges.


    “They (engineering students) get to see what a manufacturing en­vironment is like, and we get to involve students who get a feel for us,” Williams says. “We’re able to show them that manufacturing is very different from what they might have thought.”


Workforce Management, February 27, 2006, p. 31 — Subscribe Now!

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0603_LexisNexis

There’s one common denominator between volunteer and event-planning organizations around the country: their reliance on people for success.


However, these organizations can’t hire just anyone who’s interested. Federal regulations require that each volunteer clear a criminal background check to protect youth, employees and the public from potentially dangerous individuals.


Although this is a familiar practice for HR departments with mature hiring practices, it often poses a costly and laborious problem for volunteer and event planning organizations.


Here’s why: Organizations that fund the screenings often pay between $10 and $20 per applicant. This may not sound like much, but multiplied by hundreds or thousands of applicants, this fee can place a strain on budgets for large events and further squeeze volunteer groups that already run on a shoestring.


Some organizations try to save money by having each volunteer pay for his own screening, but often end up paying hidden costs. Their overburdened administrators will likely spend countless hours collecting payments, managing paperwork, entering piles of data and ensuring consistency across all applications.


Despite the painful short-term costs, failing to perform proper background checks can have profound long-term effects. If an organization ignores its due diligence with a background check and hires someone with a problem that could have easily been identified, that organization may be liable for negligent hiring and retention practices, which can have stiff legal penalties.


For example, the average jury award for negligent hiring is $800,000 — a hefty fine that would financially devastate most small companies. Plus, any resulting media exposure could be equally destructive to organizations that count on public goodwill.


Another constraint is time. Most volunteer organizations need every individual they can get and typically want them trained and available quickly. This is equally true for event-planning organizations that are ramping up for a specific event and need to ensure adequate staffing.


A Simple, Superior Alternative


Fortunately, organizations that need customized screening tools can rely on a key component from LexisNexis Screening Solutions, called Specialty Screening.


This customizable, online screening tool enables prospective employees, event staff, coaches, mentors and volunteers to visit a customized Web site to request — and pay for (if desired) — their own background check. Once complete, the results are delivered to the hiring organization for review.


For example, the NCAA uses this tool for its summer coaching program. They set up the screening criteria to decide whether it’s a go or no-go — depending on whether they find any results that would inhibit that person from serving or being “hired.”


The Specialty Screening resource solves several key problems for these organizations. By allowing applicants to pay for their own background check, organizations eliminate the need to process numerous payments and follow-up on any payment problems. Plus, it helps groups avoid the hassle of data entry, coordinating permission forms and fund transfers — all of which takes valuable time and focus away from planning their upcoming events.


“Because each site is applicant-driven, organizations can get the information about each individual without having to have the manpower available to do the data entry,” explains Brent Zajac, Specialty Screening Specialist for LexisNexis. “Plus, they are assured that all information reported is in compliance with the Fair Reporting Act.”


Specialty Screening is equally convenient for applicants. The customized site is accessible from anywhere via the web, enabling applicants to access and complete the request form from the comfort of their own homes, library or copy center.


Custom, Co-Branded Screening


Another feature of the Specialty Screening tool is its ability to be customized. Each company can tailor the custom Web site log-in login page with their logo, business information and specific event details. Business information can also be included throughout the site, if desired, and can be changed whenever necessary.


For example, an organization that has multiple locations throughout the country may want one central site where everyone goes for screening. This tool would also specify which background checks are required for each job function — ensuring that the same checks are being done for a potential janitor in California as are being done for a potential janitor in Ohio. This consistency goes a long way toward effective hiring practices and avoiding even the hint of discrimination.


“No one in the background screening industry offers a product like Specialty Screening,” says Zajac. “Clients have asked for customized background screening sites that can be co-branded with their own logos; they have also wanted a way for applicants to enter their own data. In the past, it would have been too costly for us to do this kind of customization on a client by client basis. With our new Specialty Screening product, however, customization can be accomplished quickly and easily by any client with our online wizard.”


While this feature has tremendous value for event and volunteer organizations, it also appeals to a wide range of large organizations that are trying to simplify the process of performing their own background checks, gain some back-end features, and ensure compliance with the Fair Reporting Act.


“Specialty Screening sites can feature information-gathering capabilities that help organizations with administrative tasks, such as collecting shirt sizes and assessing special skills — like being bilingual — that may affect the individual’s placement among a pool of applicants. This is especially important to small organizations that don’t have a wealth of labor resources to manage these details,” adds Zajac.


The Power of Customization


As one might expect, setting up a Specialty Screening site is simple.


“Organizations simply go to the site and customize this resource for themselves,” explains Zajac. “They can co-brand the site with their logo, if desired, and quickly select the types of checks they want done for each job title. It’s really simple, and can be done in less than an hour, as long as they know what they want.”


With all its time- and labor-saving benefits, this resource has become highly attractive to smaller companies that are interested in increased simplicity and convenience. But they’re not alone. Many larger companies are also interested in having a co-branded site that offers the customized features they want — while ensuring the consistent application of the screening policies across their entire organization.


In addition to national and country criminal checks, companies of all sizes can rely on Specialty Screening tools for verification of identities, education, credentials and even physician licenses.


“Once organizations see what this resource can do, they see the big picture and realize this tool goes way beyond just volunteer and event planners,” says Zajac. “Companies of virtually any size can use this tool.”


“The bottom line is that Specialty Screening helps create safer work environments,” he says. “It allows organizations to show due diligence in their hiring and retention processes — while doing everything they can to create a safe work environment and protect employees, colleagues and children.”


What Customers Are Saying


When organizations consider the speed, simplicity, convenience, cost savings and labor savings made possible by Specialty Screening solutions, they are quick to tout its benefits. Here are a few comments from a few satisfied customers:


  • “We have 33 percent faster turnaround time, and results are more accurate… If you’re looking for a good program to help pre-screen your applicants, give LexisNexis Screening Solutions a look.”
    —Thomas Boyd, VP Surveillance and Investigation, MGM Grand

  • “The most important thing is that this product is a great tool to protect the general public by keeping potential high-risk individuals out of events involving children or events that carry high security risks. We can add a layer of security that for the most part isn’t there today.”
    —Kim M. Kerr, Deputy Director of Security Support for the Salt Lake Organizing Committee for the 2002 Winter Olympics

  • “Using the Specialty Screening site by LexisNexis Screening Solutions has made the process of performing background screening checks on our volunteers so much easier and less intrusive. I believe that the easier it is for people to perform a background check, the more background checks will be done and the safer young people will be.”
    —Rev. Allan K. Brooks, Children, Youth and Young Adult Coordinator for the Greater New Jersey Annual Conference, United Methodist Church

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The State of Recruitment & Staffing Be Aggressive, or Be Gone

Todd Davis recruited for a needle in a haystack. As senior clinician recruitment consultant with California’s largest physician group, Davis sought out doctors and professional staff. He was accustomed to finding nurses with unique specialties and doctors in high-demand fields. But in January he was looking for a computer specialist with a medical degree to fill the job of director of medical informatics with 3,500-employee Health­Care Partners Medical Group.


    “I’m not going to fill this job by posting to a (job) board. I don’t know that you ever could, but not now–not with the competition such as it is,” says Davis, who left the company this month. He found his candidates through the network built by going to two or three events a month, working the phones and tapping employees for their contacts.


    “Unless you are actively working every minute, as a recruiter you’re going to be in trouble,” he says. “Recruiters who wait for the candidates to come in to them aren’t doing their job. In 2006, they aren’t going to be successful.”


    After four years of economic slowdown in the United States, recruiters last year began to feel the pinch for talent as hiring accelerated and the unemployment rate edged down. Last month, the unemployment rate was 4.7 percent.


    Though the rate is still well above the all-time low of 3.8 percent in April 2000, talent shortages are apparent in select skill areas and professions, rather than across the board. At the same time, the oldest of the baby boomers are beginning to retire. While there is still some debate about the predicted labor shortage, no one doubts the need to be competitive and creative in order to find quality candidates.


    Heather Tinguely, recruiting manager for fast-growing software company Inovis, says she just had the busiest December of her eight-year career. “If I waited one or two weeks, the candidate was gone.” Based in Atlanta, Inovis has a large office in the San Francisco Bay Area. “Right now, that is the hardest place to recruit for IT,” she says. “But it’s not that much easier here in Georgia. Companies are recruiting from everywhere.”


    Get used to it, recruitment consultants say. “2006 is the year when it is really going to hit home,” says Gerry Crispin, recruitment consultant and co-founder of CareerXroads. “This isn’t anything new this year–just that some companies are suddenly going to discover there’s a talent shortage when they can’t find the people they need.”


    Employee referral programs, the No. 1 source of hires according to a Society for Human Resource Management poll in November, are getting more attention than ever. Davis says he actively courted the doctors in the company looking for referrals. “Peer referrals are the most powerful recruiting tool,” he says. “When I get a referral in-house I know the candidate is going to have the skills and the interest, because a colleague has already made the contact.”


    Temp-to-hire, already a tool being used by the biggest companies, will gain in popularity as a form of outsourced recruiting.


    Crispin, whose firm recently completed its annual “Source of Hire” report, says the survey’s results show an increase in the number of contingent workers hired as permanent employees. “Temp-to-hire is hot, and continues to be so,” he says.


    That is part of a broader trend toward unbundling outsourced HR services, according to Elliot Clark, COO of Kenexa, an HR software and talent acquisition company. Outsourcing recruiting in particular will be popular with the smaller companies that don’t have the resources to hire specialists, he says. “The war for talent in certain areas is going to be hot,” Clark says. “That will lead more companies to outsource that function.”


    Larger companies will boost their recruiting staff, drawing from the headhunting ranks.


    “I believe that by the end of 2006 you will see a major shift toward hiring more third-party recruiters into corporate recruiting,” says Michael Homula, director of talent acquisition at Quicken Loans. His reasoning is that not many corporate recruiters have experience sourcing in a tight labor market. He and other HR professionals explain that as the economy went south beginning in late 2000, recruiters moved into other HR jobs or were downsized. Those filling the vacancies–entry-level HR jobs at many companies–didn’t so much recruit as sift through the résumés that came in by the hundreds from job board postings.


“2006 is the year when it is really going to hit home. This isn’t anything new this year–just that some companies are suddenly going to discover there’s a talent shortage when they can’t find the people they need.”
–-Gerry Crispin, recruitment consultant and co-founder of CareerXroads.

    The aggressive style of third-party recruiters will take some getting used to, Homula says. “The biggest challenge with this trend,” he notes, “is that corporate HR leaders are not often able to stomach the behaviors and tactics that actually get results, and don’t want to compensate recruiters for what they produce like the third-party world does. … The trend will start in 2006, but most corporations will not figure out how to work with the third-party mind-set until the labor pool shortage causes them pain.”


    Increasingly, companies are recognizing that the quality of hires has a direct bearing on their success, and are beginning to evaluate recruiters on the performance of their hires.


    “Accountability is the major trend I see emerging in 2006,” says Master Burnett, managing director of Dr. John Sullivan & Associates, an HR recruiting consulting firm. For many companies that will mean objectively assessing employee performance, then using that to measure the quality of a recruiter’s hiring.


    How will recruiters find top talent in 2006? By pursuing the passive job seeker.


    “People in staffing are going to have to think like marketing people,” Kenexa’s Clark says. That will mean branding the company, making better use of corporate job sites, networking and trying some of the newer tools, like Jobster and LinkedIn.


    Data mining–not searching résumé databases, but combing through public and private databases–will help build candidate lists and identify those who are most likely to be receptive to a call. Burnett says the best companies use multiple databases to identify and qualify leads.


    “You find someone in Boston who owns a boat, and you’ve got a job where it is possible to go boating all year. That person becomes a potential candidate,” Burnett says.


    Microsoft recruiter Shally Steckerl says recruiters will have two choices: become a sourcer, or become obsolete. “If sales waited around for customers to come in the door, they would starve,” Steckerl says.


    In December, HotJobs held a recruitment round table attended by such leading recruitment professionals as Lou Ad­ler, John Sullivan, Jac Fitz-enz and Peter Weddle. It was titled “The Era of the Active Recruiter.”


    “Good recruiters have known that all along,” Crispin says. “Lazy re­cruiters could get by going through the résumés that came in from Monster or wherever. No more. Do that now and you’ve lost.”


Workforce Management, February 27, 2006, pp. 29-31 — Subscribe Now!

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Record-keeping Regs, Integration Steer Technology

Recruitment technology suppliers see 2006 as the year of the better mousetrap.


    “What you’ll see this year is, for the most part, evolutionary,” says Kevin Marasco, vice president of marketing with Recruitmax. Applicant tracking systems will be enhanced to make recruiters more efficient, extend sourcing into the global market, improve record keeping to comply with new federal regulations and provide better analytical tools to help senior managers track the impact that good hiring has on the company’s bottom line.


    The two most important developments in recruiting technology this year, Marasco predicts, will be compliance with the record-keeping requirements and integration with enterprise human capital systems.


    “There will be more and more innovations in integration,” Marasco says. “Our goal as a tech vendor is to provide a technical platform that can work with all the other systems out there to deliver the performance analytics that companies need to manage the business.”


    His predictions are echoed by Kathy Barton, senior vice president of marketing and product management at Peopleclick. She has declared integration to be the “single greatest trend this year.”


    A major factor driving that is a new rule issued February 6 by the Office of Federal Contract Compliance Programs. The rule defines an Internet applicant for the purpose of compliance with equal employment opportunity rules, and while the regulations apply only to federal contractors, many HR professionals expect them to be extended to all employers before the end of the year.


    “We think this is going to drive a specialization among recruiters,” Barton says. She believes it will create a corps of candidate-sourcing experts who are highly trained in both the federal regulations and in building candidate pools. “This is going to mean better candidate management and better integration with performance management tools,” she says.


    “For every job you hire, there are always two or three people almost as good,” Barton says. “You’ll want them.”


    Top people help improve corporate performance, and how a company sources and hires makes a difference. That’s why Taleo is hearing the call for more analytical data to improve the quality of hires and to prepare for workforce changes.


    “Performance evaluation is a matter of bringing in data from throughout the enterprise,” says David Michaud, vice president of product marketing. For now, Taleo is enhancing its ability to link into other corporate systems, but in time, performance evaluation is “a business we are going to want to get into,” Michaud says.


    iCIMS, meanwhile, is automating the onboarding process and electronically managing what used to be called paperwork, says Adam Feingenbaum, director of marketing and sales. He says all the re­cruitment technology companies are striving to make clients more efficient “so they can spend more time working on what’s going to be the harder and harder job of finding and keeping talent.”


Workforce Management, February 27, 2006, p. 32 — Subscribe Now!