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January 20, 2006June 29, 2023

Expanded EAPs Lend a Hand to Employers Bottom Lines

When Ford Motor Co. launched its employee assistance program in 1976, its primary objective was straightforward: combating alcohol abuse in the workplace. The company, aware that some 40 percent of industrial fatalities are linked to substance abuse, joined forces with the United Auto Workers to introduce the incentive.

The EAP was very basic, modeled after a traditional Alcoholics Anonymous 12-step program to treat substance abuse.

Leap forward 30 years, and Ford’s EAP is virtually unrecognizable. The core mission–helping workers improve their lives and retain employment–remains firmly intact, but the support that employees receive is much more sophisticated and comprehensive, says Tom Kindree, Ford’s human resource associate of labor affairs.

Today, most of the company’s 122,877 workers in North America can access support for a wide spectrum of issues–ranging from finding day care for children to planning for the purchase of a new home.

Like Ford, many large companies are giving their EAPs significant makeovers–going far beyond treating alcohol abuse and into helping employees cope with other burgeoning pressures, such as caring for elderly parents, which is swiftly becoming one of the most sought-after EAP benefits.

The role of EAP providers is also changing. Many companies are recognizing the value of involving them in tactical matters, such as the workforce side of mergers and acquisitions or corporate restructuring. The strategic importance of having a healthy workforce cannot be understated, says Dr. Jeffrey P. Kahn, CEO of WorkPsych Associates and clinical associate professor of psychiatry at Cornell University’s Weill Medical College in Manhattan.

The combined indirect financial toll that depression and anxiety have on businesses is estimated to be $146.2 billion per year. Meanwhile, stress-related physical and mental illnesses can cost companies as much as $7,500 per worker in absenteeism and lowered productivity each year, according to the Department of Labor. Even long-standing workplace issues like substance abuse continue to wreak havoc. Employees who use drugs take three times as many sick days as other workers and are five times more likely to file a workers’ compensation claim, putting further strain on already exorbitant costs of providing health care benefits, the National Institute on Drug Abuse reports.

The role that EAPs play in attenuating these potentially disruptive issues is difficult to assess because companies zealously guard results of their programs from the public eye. EAP providers, however, contend that their services are a critical component in lowering the cost of health care and in bolstering productivity. EAPs can reduce absenteeism and tardiness by 10 percent and potentially boost productivity by as much as 25 percent, says Dr. John Maynard, CEO at the Employee Assistance Program Association, a trade organization.

Companies are investing in these programs because they are seeing some results. “Ford’s program pays dividends not only in terms of doing something that is good for our workers but also in maintaining solid productivity rates,” Kindree says.

Changing with the times
The increasing popularity of EAPs has heightened expectations for more innovative, multitiered support. Tools for helping employees handle legal and financial affairs, considered cutting-edge just a few years ago, are no longer enough to keep clients satisfied, says Bill Bowler, senior vice president of client services at Employee Services Inc., an EAP provider in Wellsville, New York.

One way in which EAP providers are stepping up to this challenge is by launching more sophisticated online tools, such as chat rooms, Web demos, videos and, in some cases, even coaching. Another unfolding trend is to integrate EAP services with work and life programs, creating a one-stop solution for helping workers cope with complex personal matters.

But the biggest movement in the EAP arena today is the shift toward designing services that help employees manage senior care. SEI, which serves 850,000 employees from a diverse pool of large and small-sized companies, now ranks senior care issues as its third most frequent type of consultation–trailing behind marital problems, the most prevalent consultation, and substance abuse. This is a huge leap, considering that senior care was ranked 17th just two years ago. And given the graying of America, this trend will likely continue for many years to come.

“One of the biggest challenges for employers over the next 10 to 15 years will be handling the issues associated with the aging baby boomers,” says Richard Chaifetz, chairman and CEO of Chicago-based ComPsych Corp. EAP providers are responding to demand by launching services aimed at an aging workforce.

SEI and ComPsych both provide support relating to senior care, ranging from nutritional advice to helping secure reliable supervision. Ceridian has launched a Web-based counseling and training tool, Medicare Interactive, which was created for employee caregivers and mature workers to enhance their understanding of Medicare coverage and eligibility. “EAPs reflect what is happening in society,” says Katie Borkowski, professional services director at the Employee Assistance Program Association.

In addition to devising novel, innovative support tools for workers, EAP providers are increasingly lending a strategic helping hand to companies. They often provide workforce-related guidance on tactical matters, including mergers and acquisitions, company restructurings and even coping with disasters like Hurricane Katrina.

Beckman Coulter, a manufacturer of biomedical testing tools and systems in Fullerton, California, is relying on its EAP provider to aid with its ongoing restructuring plan. One of the first steps that the company took to help employees affected by the first round of layoffs was to send EAP counselors to key sites.

“Going through a restructuring process can be very traumatizing,” says Cathy Bailey, benefits consultant at Beckman Coulter. Going forward, the 7,400 employees who are covered by the EAP will have ongoing access to counseling services, both online and in person.

Some hurdles remain
In spite of their popularity and increased visibility, EAPs are up against some major challenges. Usage rates hover around 5 percent to 7 percent, Borkowski says. The programs aren’t meant to have 100 percent or even 80 percent usage rates, but these figures are nevertheless low and could indicate that many workers are not taking full advantage of the benefit.

One explanation for the low usage may be that EAPs are having a tough time shedding their image as a program for treating alcohol abuse. “Some workers may think, ‘I don’t have a drinking problem, so I won’t attend the EAP meeting,’ ” Bowler says. Another reason for low usage rates could be lack of awareness of services. EAP programs can get lost in the clutter of what are often intricate benefits packages.

Bowler suggests making EAP information meetings mandatory for employees, both to dispel myths about the nature of the programs and to raise awareness about their existence. But even when EAP benefits enjoy a high level of understanding and awareness, there are other hurdles.

Geriann Shaw, human resource benefits manager at Atmel Corp., a maker of advanced semiconductors in San Jose, California, is not concerned about usage rates at her company. They are five times the national average. She is, however, puzzled over how the EAP is being used. The program, which covers 2,500 workers, has much lower usage among minorities than Caucasians.

Atmel’s usage patterns are anything but unusual, as research indicates that minorities generally are less likely to use these programs. African Americans and other minorities tend to shy away from seeking help because of social stigmas, Maynard says.

Reaching workers
There are great incentives for employers to improve usage rates of EAP services. Besides being a good device for improving employee retention and recruiting new hires, EAPs offer a highly visible tool for promoting goodwill in the workforce–at an average annual cost of only $18 to $30 per employee.

That’s why companies are going to great lengths to enhance understanding and awareness of EAPs. Ford, for example, changed the name of its EAP benefits to “employee support services program.” Not only is the new name free of any negative connotations, but it also denotes the comprehensive nature and complexity of the benefit.

Giant Industries, a marketer and refiner of oil products, is introducing its EAP this month. The Scottsdale, Arizona, company is raising awareness about the new program through its annual benefits meetings and is distributing written material to educate the 1,700 workers about the new service, says Delbert Tingey, director of benefits management. The company also is training management to learn how to use the program and disperse information to its workers.

The key is to maintain an ongoing dialogue with workers and to educate them on the services that are available to them, Ford’s Kindree says. Ford believes its enhanced EAP benefits are not only key in attracting talent, but are also beneficial in achieving employee satisfaction and retention. “Workers will bring issues from their home when they walk through the doors,” he says. “Our goal is to help them resolve their issues because if we let them fester, productivity will undoubtedly take a hit.”

Workforce Management, January 16, 2006, pp. 46-47 — Subscribe Now!

January 20, 2006July 10, 2018

Five Questions for Hayward Bell

Hayward Bell
Chief diversity officer, Raytheon

Hayward Bell joined Raytheon in January 2005 as its first chief diversity officer. Having worked as a diversity officer for the past eight years, Bell has seen how companies’ challenges have evolved from identifying the basic differences associated with race and gender to having a greater understanding of cultural differences that occur in the workplace. Bell recently spoke with Workforce Management staff writer Jessica Marquez.

Workforce Management: Why did Raytheon decide to create a chief diversity officer position?

Hayward Bell: The position had been a rotational position within the human resources department, but the company decided that they needed a professional practitioner in the role to take it in a new direction. I think the company realized that diversity is not one thing you do, but rather it’s a journey. As you learn, you become more thoughtful about what the policies should be.

WM: Why is diversity important to the company? How does it connect to the business strategy?

Bell: Raytheon has established itself as a progressive company, and our approach to diversity establishes that we are not like many of our competitors. We recently added transgender and transsexual employees to our equal opportunity policy, and our CEO did not even flinch at this. That is one of things that we are doing to create a culture of inclusion.

WM: What are Raytheon’s diversity challenges?

Bell: With 80,000 employees, I think the ongoing challenge is informing and educating people. This challenge is going to vary by where you are in the journey. For more progressive companies, I think the challenge is working to address all kinds of differences beyond the basic race and gender issues.

WM: What are you working on to address these challenges?

Bell: We have employee resource groups and we do things in the community such as help kids from different backgrounds with their math and science skills. We also have internal diversity councils that are looking at various ways that we can highlight diversity.

WM: As you mentioned, you recently added transgender and transsexual employees to your equal opportunity policy. What were the company’s concerns about making such a move?

Bell: The concerns were the typical ones. Some of the questions that people had were around “Don’t we have that covered already?” Other concerns were because people didn’t understand what the policy would mean. Sometimes there are concerns about adding this kind of policy because people think it now means that they have to provide more coverage for these employees. Largely most of the concerns are around lack of understanding.

Workforce Management, January 16, 2006, p. 9 — Subscribe Now!

January 20, 2006July 10, 2018

An Open Letter to Everyone

In late November, Larry LeSueur, vice president of culture integration at US Airways, sent a letter out to all employees seeking their input on what the newly merged company should do to succeed. LeSueur says he’ll be answering the e-mails himself, or directing them to the local managers if there is something that needs to be addressed right away. The plan is to take the data, find trends among the employee responses and eventually use what they learn in day-to-day operations. Here is the text of the letter to employees:

We need to hear from you. Everyone talks about how we need to “change our culture,” yet it is going to take each of us participating in this effort to create a great airline. With your input, we will develop a direction for US Airways that ensures our future success and a strong, positive culture. Here are some questions to consider, but please use your own voice, cover the topics that are important to you and be as brief or as detailed as you choose:

How do we ensure our employees feel valued and engaged?
How do we best communicate with you?
How do we ensure a successful integration of the two airlines? In other words, what will success look like to you?
How do we ensure our customers consider US Airways a leader in customer service?
What do you expect from your senior leadership (director and officer level)?
What do you expect from your local leadership (supervisors, managers)?

Lastly, what do you expect from your peers, both in your department and in other departments?

January 20, 2006July 10, 2018

Tangle of Unions is a Challenge

Two different headquarters. Two different frequent-flier programs. Four different hubs. Hundreds of different destinations and hundreds of different aircraft. Dealing with all these complex issues will be a breeze for the newly merged US Airways and America West compared with dealing with the multitude of union groups now under the merged carrier’s umbrella.

When US Airways and America West made their merger official in September, their employees were covered by 18 union groups and 18 contracts with different expiration dates and issues. Not to mention the many union presidents, vice presidents, chairmen and others representing the conglomeration of labor groups.

“The task is challenging for our employees as they have to wait while the various unions work out several items,” says Larry LeSueur, US Airways’ vice president of culture integration. “As a result, there is a level of the unknown, which we wish our employees didn’t have to experience. However, in the near term these issues will get worked out.”

Since mergers in the airline industry are nothing new, there’s a typical union representation playbook when two companies merge. If a job classification at America West and US Airways was covered by the same national union but had separate locals, contracts and regional governance, the two groups eventually will come under the same contract. At US Airways, the pilots at both companies are all part of the National Airline Pilots Association, the flight attendants come under the Association of Flight Attendants, and the dispatchers are covered by the Transport Workers Union. In these cases, the two groups will typically maintain their local governance but operate as one entity when it comes to contract negotiations.

For example, the pilots group had 1,888 employees at America West governed by a separate “master executive council” and covered by a contract that was up for renewal this year, and has 2,957 US Airways pilots whose contract expires in 2009. As a result of the merger, says US Airways pilot group spokesman Jack Stephan, the pilot union representatives from both carriers are negotiating with the company together but still maintain separate operations until details regarding worker seniority are hammered out and a new contract is signed with US Airways. Eventually, the two employee groups will be combined, but Stephan won’t speculate on a time frame.

In the case of employees doing similar jobs at both carriers but being represented by two different national unions, the melding of union representation will be a bit stickier. At the time of the merger, 852 mechanics at America West were represented by the International Brotherhood of Teamsters, while US Airways’ nearly 4,000 mechanics, stock clerks and maintenance training crew were covered by the International Association of Machinists and Aerospace Workers. In cases such as this, the National Mediation Board typically steps in to help mediate any disputes regarding who will represent whom.

Two unions at the combined company helped make the process easier late last year. The Communications Workers of America and the Teamsters agreed to jointly represent the nearly 9,000 passenger service workers and reservation agents.

The union quandary could continue for months and even years as union leaders jockey for control. But Bill Adams, a labor consultant with Adams, Nash, Haskell & Sheridan, a firm in Fort Wright, Kentucky, stresses that US Airways managers should keep focused on contract negotiations and make it clear to union officials that the ball is in their court to come up with compromises everyone can accept.

“Union members know what’s going on in the airline industry and how it’s being decimated, so they should be malleable,” he says. “But employers have to have a good story to tell. They have to be honest. You don’t put two organizations together without some anticipation of cost cutting.”

Workforce Management, January 16, 2006, p. 28 — Subscribe Now!

January 18, 2006July 10, 2018

Ford Offers Tuition to Laid-off Workers

Ford’s recent move to pay tuition to workers laid off from two of its plants is likely to prompt General Motors, Delphi and DaimlerChrysler to follow in its footsteps as the companies prepare for intense negotiations with the United Auto Workers.

Under the program, workers at Ford’s Edison, New Jersey, plant, which closed in 2004, and the 1,500 workers who were laid off in December after Ford closed its Avon Lake, Ohio, plant, can receive up to $15,000 a year toward school as long as they go full time. They also will receive full medical benefits and half of their usual hourly salary.

Marcey Evans, a Ford spokeswoman, says she did not know how many workers would accept the tuition assistance or whether the company would offer it to all 1,100 workers in the company’s Guaranteed Employee Numbers Program, more commonly known as a job bank, which provides laid-off workers with full salary and benefits.

Such job banks have become increasingly costly for the Big Three automakers as layoffs increase. That’s why Ford’s move right now makes sense.

“This is going to be a huge negotiation point for the Big Three in 2007 when the UAW contracts expire,” says Sean McAlinden, a director in the economics business group at the Center for Automotive Research in Ann Arbor, Michigan.

McAlinden estimates that job banks cost about $130,000 per worker. That adds up, considering that GM has 5,300 workers in its pool. Delphi has 4,000, and DaimlerChrysler has 2,300. Ford’s numbers are expected to rise dramatically, given that it plans to announce layoffs of as many as 25,000 workers on January 23.

At the Automotive News World Congress this month, UAW president Ron Gettelfinger said that he does not believe that “it’s time to change” the jobs banks, but observers predict he might not get his way.

“If I was a Ford worker who had been laid off, I would take the tuition, because it is very likely that these job banks are going away,” says Jim Gillette, director of supplier analysis at CSM Worldwide.

Evans concedes that the program will make it easier for Ford to manage its pool of idled workers, but would not say that the company made the move to ease negotiations with the UAW next year. “We did this to benefit the employee,” she says.

GM plans to take a close look at Ford’s program before deciding whether it would make a similar move, says Stefan Weinmann, a GM spokesman. Delphi has no plans to follow Ford’s lead currently, says Lindsey Williams, a Delphi spokesman. DaimlerChrysler has no plans to offer a similar program, says company spokesman David Elshoff.

Being the first to offer a tuition program may make negotiations easier with the UAW next year because it is a gesture of good will, says Arthur Wheaton, an industry education specialist at Cornell University’s School of Industrial and Labor Relations. “Unions are more willing to negotiate innovative contracts with someone they trust,” he says.

—Jessica Marquez

January 13, 2006July 10, 2018

Software Products Aim to Streamline Succession Planning

Ken Nardoni isn’t alone in thinking that succession-planning software can be an expensive dud. But his view is a bit surprising given that Nardoni is vice president of sales for Pilat HR Solutions, one of several companies pitching such software.

Nardoni argues that companies buying succession-planning applications are doomed to fail if they don’t take a close look at the way they go about tasks such as nominating possible replacements to key roles, figuring out what data to use in decision-making and ensuring that succession plans are carried out.

“We really think process is the really important piece,” Nardoni says. “Technology is the easy part.”

Against a backdrop of rising turnover of chief executives and fears of a coming talent shortage, large companies in recent years have been upgrading succession-planning programs. In the past, these sometimes were little more than annual executive replacement plans done on paper. Now, a number of software companies offer applications designed to make succession planning more effective and widespread in an organization.

Some observers are skeptical that software products by themselves will aid a company’s succession-management efforts. But as organizations seek to expand their succession-management programs to include midlevel leaders and not just top executives, computerized systems with databases are crucial, says Jim Holincheck, an analyst at research firm Gartner.

“It’s a significant difference to track 20,000 employees versus 100 people,” he says.

Succession-planning software typically allows companies to do such things as assess the risk that various leaders may leave the company, list possible replacements for managers and document the strengths and credentials of up-and-coming employees.

Besides managing succession and career development plans for more employees, software products in this field have other benefits, advocates say. These include more up-to-date information than paper-based plans done once a year and an improved ability to search for candidates from within a company.

Such searching is appreciated at health insurance giant WellPoint, which uses succession-planning software from Pilat to keep tabs on some 1,400 employees. Jean Hopper, WellPoint vice president of talent management and organization development, says Pilat’s system allows for fine-grain queries–say, for people willing to work in the Northeast who have a master’s degree and a background in finance. In essence, this feature lets WellPoint seek out passive job candidates internally. “Most associates aren’t looking at the job opportunities,” Hopper says. “They’re busy doing their jobs.”

It’s possible to install succession-planning software on a company’s internal computers or “rent” it over the Internet, where it can be accessed through a Web browser and pass code.

Nardoni says large clients can expect to pay $150,000 to $300,000 for the installation of high-end, competency-based succession-planning systems from Pilat. Such clients then would face annual software maintenance costs of about $25,000 to $40,000. Smaller organizations–those doing succession management for fewer than 150 executives–can have access to Web-based systems from Pilat for “a few thousand dollars a month,” he says.

A number of companies offer software for succession management, including industry titan SAP as well as smaller players such as Los Angeles-based Cornerstone OnDemand, Morristown, New Jersey-based Sapien and San Mateo, California-based SuccessFactors.

SuccessFactors says its succession-planning product can be made more powerful by combining it with software modules for managing performance reviews and compensation decisions. That integration gives supervisors the ability to delve into and compare employees’ track records when considering promotions, says Rob Bernshteyn, senior director of product marketing at the company.

The Web-based product also will send an automatic alert when a key position suddenly becomes vulnerable. This could occur when an executive notes in the system that an employee is likely to leave the company soon and the people designated as possible successors to that post aren’t immediately ready to assume it, have just taken other jobs in the company or have left themselves.

About 20 percent of SuccessFactors’ 300 customers use its succession-planning software. But interest in the product is growing, Bernshteyn says. Of those companies thinking about becoming SuccessFactors customers, 25 percent are keen on succession planning, he says.

Auto parts and services chain Pep Boys is convinced it made a sound investment when it began using software from SuccessFactors about a year ago, says Liviu Dedes, the firm’s director for training and organizational development. The software was part of a broader succession-management overhaul, which included a set of 84 round-table discussions throughout the country on employees’ potential.

According to Dedes, SuccessFactors’ software helped the company overcome problems it discovered when it reorganized its business in 2004. The chain, with some 20,000 employees and nearly 600 stores throughout the country and in Puerto Rico, wanted to double the number of area directors to 84 in a period of two months. It was a “very painful” event thanks to internal and external talent pools that were “shallow,” Dedes recalls. For one thing, he says, Pep Boys’ paper-based system made it hard to notice quality candidates even in neighboring areas. The company also had inconsistent measures of people’s potential.

SuccessFactors’ software, which Pep Boys accesses over the Web, has helped the company standardize its employee reviews around a set of competencies and also made it much easier to see the aspirations and abilities of some 2,000 managers throughout the company, Dedes says.

In its first year, the software cost Pep Boys about $180,000, including implementation fees. The cost will drop in the second year to about $130,000. Given that external hires cost Pep Boys about $20,000 each, while internal hires cost roughly $10,000, Liviu is confident the SuccessFactors technology will pay for itself in its second year.

Far from being a bust, succession-planning software served as a catalyst for the company to reflect on and improve its approach to succession management, Dedes says. “It was a great opportunity to rethink ourselves and revise the process we were using,” he says.

January 13, 2006July 10, 2018

A Leader in Name Only

Never let it be said that Ken Lay didn’t try to rally the troops and use his personal willpower to motivate the workforce.

Just before Christmas, the former Enron chairman and CEO gave an impassioned speech that was described by The Houston Chronicle as “a call to arms to Enron employees to defend the honor of the company and Lay himself.” He called on Enron people to “stand up now–and prove that Enron was a real company, a substantial company, an honest company, a company that had a vision and values.”

This is what a leader does best: use the power of his or her position, the bully pulpit, to set a vision that drives others to take action and help move the business ahead.

Unfortunately for Enron, there is no longer a business to move ahead. Once one of the 10 largest companies in America, Enron collapsed from a huge business and accounting scandal in 2001. Thousands of employees not only lost their jobs but also had savings and pensions wiped out when the company went bust. And Ken Lay faces conspiracy and fraud charges for his alleged role in the Enron scandal that could put him in prison for the rest of his life.

Lay’s pre-Christmas speech wasn’t about motivating his former employees. It was a self-centered attempt to publicly frame his defense strategy and maybe even lobby the jurors who will be sitting in judgment when his case goes to trial later this month.

He’s entitled to that under our system of justice, of course, but it made one wonder: Where was this rallying cry from Ken Lay when it still mattered, when Enron was still a going concern?

It’s debatable that anyone, much less Ken Lay, could have fixed Enron, but it doesn’t get past the truism that strong leaders can use the power of their positions and personal persuasion to motivate people and point them the right way.

And, there’s something else a leader can do to send a strong and powerful message to the workforce: lead by example.

For instance, when Jan Carlzon was CEO of SAS Airlines, he reinforced the notion that quality service was a key to the company’s strategy (and ultimate success) by flying coach instead of first class, giving up his seat to wait-listed customers. His personal example sent a powerful message to the workforce that even the CEO was willing to accept responsibility to do the right thing and help the business achieve its goals.

Alas, this is a lesson Ken Lay seems immune to. He’s never really taken any responsibility for Enron’s collapse, blaming the company’s problems on the illegal conduct of a few key employees, overzealous prosecutors and public hysteria that drove the stock from a high of $90 down to about 25 cents.

“This is what I call the Elmer Fudd defense–that I went to work every day and was paid $6 million a year and had a Ph.D in economics, and somehow, despite all of this, I didn’t know anything that was going on. It’s laughable,” attorney Bill Lerach told the CBS news program 60 Minutes. Lerach has been involved in the investor lawsuit against Ken Lay and the company as well as its bankers and accountants.

“What was he doing in his office? Reading comic books? The man was CEO of the company,” Lerach says. “He had an obligation to be informed about what was going on in that business every day in every way. And he utterly failed to do it.”

That’s the real lesson of Ken Lay. Executives can lead a workforce by personal willpower and rallying the troops. Or, they can lead by example–either for the good, the not so good, or the very bad.

Ken Lay has set an example of how not to lead, and no impassioned speeches can change that. Now it’s up to 12 good citizens of Houston to pass judgment on him, his leadership, his vision and his values.

Workforce Management, January 16, 2006, p. 46 — Subscribe Now!

January 13, 2006June 29, 2023

Succession Progression

Angela Braly might still be writing legal briefs if it weren’t for the succession-planning program at insurance giant WellPoint Inc.

In 1999, she was the top attorney at a company that was later bought by WellPoint. But she had bigger ambitions. Braly now serves as executive vice president, general counsel and chief public affairs officer for Wellpoint. She reports directly to CEO Larry Glasscock.

“I credit my success to the succession-planning process,” Braly says of a program that includes computer software for tracking some 1,400 internal candidates as well as daylong conversations among executives about talent.

WellPoint, an Indianapolis-based firm with more than 42,000 employees, is one of many big companies making succession planning a higher priority and a catalyst for broader talent development. Companies increasingly recognize that preparing for high-level turnover and grooming new leaders are crucial, in part because business conditions in many fields are growing more turbulent.

The company, formed out of the 2004 merger between Anthem and WellPoint Health Networks, faces challenges such as hard-to-predict changes in health care regulations, potentially costly lawsuits and declining public sentiment toward health insurance companies. In this tough climate, it has outlined an ambitious five-year plan for making health care more affordable and becoming the most trusted partner in the field for consumers.

As Braly sees it, the same program that helped her achieve personal goals is vital to keeping a steady bead on the company’s overall aims. Succession planning and strategic planning “go hand in hand,” she says.

Work in progress
Succession planning at larger companies has gotten a shot in the arm in just the past few years, says human resources consultant Jim Walker. Firms have been transforming what in many cases were annual executive replacement plans done on paper into comprehensive leadership development programs that reach down into the ranks of middle managers, often with the aid of computer software.

“It’s more a talent review,” Walker says. “It’s not so much filling the job as it is about reviewing the leadership talent and helping it progress.”

Still, there’s room for improvement. Lack of sound succession planning for CEOs in particular amounts to a “crisis,” consultant Ram Charan argued in a 2005 Harvard Business Review story.

Recent research supports his view. In a 2003 study of succession management involving more than 270 organizations worldwide, the Corporate Leadership Council, a research firm, found that nearly 90 percent of the participants said succession management was “a top corporate priority for 2003.” But just 6 percent said they were confident the systems they have in place “will do the job to build top-flight executive teams.”

And according to a survey of 20 CEOs at large companies conducted by the authors of a recent Harvard Business Review article, almost half had no succession plans whatsoever for vice presidents and above.

Board members and CEOs tend to avoid the issue of succession planning, says Jeff Cohn, one of the authors of the Harvard Business Review article and managing partner at New York-based consulting firm Bench Strength Advisors.

“It can be a tender subject for even a skilled board to bring up,” Cohn says. CEOs “don’t like to plan for their retirement.”

Charan points the finger at the amount of time boards have been spending on governance and fiduciary duties. “A packed agenda is the chief culprit,” he writes.

Some companies, though, are putting succession management higher on the corporate agenda. For years, General Electric and IBM stood out as the standard bearers for smart leadership planning and development. Now such practices are proliferating. Energy utility Southern Co., for example, has juiced up its succession planning by identifying and grooming “high-potential” internal talent. In 2006, the company is moving its annual succession planning process from the end of the year–where it can get short shrift amid performance reviews and other tasks–to the spring.

“It’s more a talent review,” Walker says. “It’s not so much filling the job as it is about reviewing the leadership talent and helping it progress.”
–Jim Walker, HR consultant

And auto parts and services chain Pep Boys revved up its succession planning about a year ago with a software service that helps the company standardize performance reviews and share talent across divisions. The software, from provider SuccessFactors, cost about $180,000 in its first year. But in the coming year, Pep Boys expects the figure to drop to $130,000 and for the technology to pay for itself through more hiring from within. External hires cost Pep Boys about $20,000 each, while internal hires cost about half as much.

The expense of hiring external candidates, combined with increased turnover in the corner suites, is helping to fuel the new focus on succession management. What’s more, a recent study from consulting firm Booz Allen Hamilton concludes that “over their entire tenures, CEOs appointed from the inside tend to outperform outsiders” when it comes to returns to shareholders.

Succession planning also has become a bigger deal because of anxiety about baby boomers leaving the workforce. At Southern Co., 50 percent to 60 percent of the leaders are eligible to retire in the next five to seven years. A decade ago, that number was closer to 20 percent. “Our business challenge has been to identify who is the next generation of leaders,” says Jim Greene, the company’s director of talent development.

Planning from the top
Company boards and officers should take planning for the future of the executive management team seriously and set the tone for a process that filters down to supervisors throughout the organization, says Bench Strength Advisors’ Cohn.

Another key to smart succession planning, experts say, is an integrated program tied to a company’s overall strategy. Ad-hoc approaches to succession management or leadership development–such as unfocused executive training–can add little value.

Installing software without taking a hard look at internal succession processes can be a wasted effort. On the other hand, companies seeking to extend succession planning to the mid-manager ranks all but require a computerized system with a database, Walker says. In the past, organizations may have wanted to track their lower leaders and create wise career development plans, he says, but with today’s software “they actually do it.”

WellPoint officials point to software from Pilat HR Solutions as one of the strengths of their program. Before the merger, Anthem lacked such a software system. That meant limited visibility for rising stars, says Judy Wade, who came from Anthem and is now WellPoint’s director for executive development and succession planning. “It was really hard for one of our executives in the Northeast to know who the really talented people in the Midwest were,” she says.

WellPoint asks its managers at the director level and above to enter into the Web-based system such data as educational background, what jobs they’d like a shot at and whether they’d be willing to move to various parts of the country. Supervisors of director-level and higher positions are asked to assess their direct reports’ potential and approve career development plans. They also consider each individual’s risk of leaving and the likely impact of their departure.

Armed with such information, the company holds what it calls “talent calibration sessions” that focus on planning for departures as well as the development of up-and-coming leaders. The annual sessions start with CEO Larry Glasscock and his executive leadership team. Results from that review are reported to the board of directors. The sessions–which can last a day or more–then cascade down through four levels of management.

Key to these discussions is candid talk about the company’s talent, which includes managers contesting ratings given by their peers. “You need honesty,” says Jean Hopper, vice president of talent management and organization development at WellPoint. “Garbage in, garbage out in this system.”

WellPoint declines to provide details about the overall cost of its succession-planning program or the return on that investment. But the company cites an incident four years ago in which two top-level executive posts were filled internally thanks to the system. The company then “backfilled” each resulting vacancy with internal candidates, and used its succession-planning process to fill the cascading set of openings going down five management levels beneath the president. In part by avoiding external recruiting fees, WellPoint estimates it saved $1 million.

The program isn’t perfect. About 15 percent of the company’s managers did not complete their online tasks in 2005, though Hopper expects the figure to get closer to the 99.8 percent compliance rate of WellPoint managers before the merger. In addition, Braly says the company can do more to allow people to win promotions without having to leave their home regions.

Maintaining strategic focus
WellPoint’s succession planning and talent development likely will be tested in the coming years. The company, whose divisions include Blue Cross of California as well as dental and vision units, faces competition from rivals such as Aetna and Cigna. The health care field continues to be plagued by lawsuits. And ever louder calls for more government action on health care could lead to a dramatic business disruption for insurers like WellPoint.

What’s more, even as it seeks to win the trust of health care consumers, the company is part of an industry viewed with increasing skepticism. In a Harris Interactive study published in 2005, just 40 percent of U.S. adults said health insurance companies do a good job of serving their consumers. That’s up four percentage points from 2004 but a far cry from the 55 percent that said the industry was doing a good job in 1997.

WellPoint’s succession-planning process is key to keeping it focused amid tumultuous business conditions, Braly says. She also sees a positive side effect to the succession-planning program. Talent-review discussions foster better teamwork overall, she says, because managers build trust as they share frank comments.

With examples like Braly, WellPoint’s succession-planning and career development efforts also have earned high marks from advocates for women’s advancement in corporations. For the past two years, the National Association for Female Executives has ranked the company in the top 10 firms for executive women. In 2005, it applauded WellPoint as being among the firms where the board of directors reviews succession planning with an eye toward gender equity.

Without effective succession planning, potential leaders like Braly can be overlooked, and end up leaving. Long-term plans are less likely to be realized. Done well, however, succession planning saves money, furthers strategic goals and builds a firm’s reputation as a great place to work, Cohn says.

Barbara Lewis, director of training and consultancy at the Institute for Personality and Ability Testing in Savoy, Illinois, says companies often expect leaders to sweep in and save the day even though research shows that companies succeed when a CEO has others to lean on and learn from. That’s what helps companies avoid falling prey to what she calls the myth of the hero CEO.

Leadership is rarely a solo ride.

Workforce Management, January 16, 2006, pp. 31-34 — Subscribe Now!

January 13, 2006June 29, 2023

2 Faces of AARP

Here’s a good day for an American company: AARP singles it out. The company is recognized as an “employer of choice,” one that treats its age 50-plus workforce well. There’s a glossy, professionally produced event, speeches and kudos all around.

Here’s a bad day for an American company: AARP singles it out. This time, the attention comes in the form of an AARP-instigated lawsuit. There are depositions, oral arguments and, potentially, a multimillion-dollar price tag for tampering with the 50-plus workforce’s retirement benefits.

Once, AARP mostly flew below corporate radar. That’s when it was the American Association for Retired Persons, and so, by definition, it had nothing to do with anyone’s employees.

Now, however, AARP has banished “retired” from its name, going simply by its former acronym. It is perhaps best known as the political behemoth that stopped private Social Security accounts cold. And it has increasing clout on workplace issues. The senior lobby has been a driving force behind lawsuits brought by older employees who allege that they suffered financial losses when companies converted from traditional defined-benefit pension systems to cash-balance plans. It also is in court fighting to equalize pre-65 and post-65 retiree health benefits.

AARP chief executive William Novelli won’t cast his organization as business’ best buddy, or its worst enemy. Its loyalty is to its 36 million members, and its commitment is to ensuring that their current, former or would-be employers treat them right.

“We think of ourselves as a catalyst,” he says. “The social contract between employer and employee is changing. With that come two messages. One is, be fair. The second message is for boomers: Save your money.”

When fairness means that AARP will give companies a hand in employing older workers, the message is easy to swallow. Today’s staffing challenges mean that businesses of all kinds increasingly turn to experienced employees with strong work ethics. And so companies clamor to partner with AARP on efforts to encourage workers older than 50 to keep working.

When the “be fair” message is delivered via legal action, it’s a different story. Lawsuits pose the danger of making retirement programs profoundly more expensive. In 2005, IBM settled a cash-balance case by agreeing to pay $300 million to the class-action plaintiffs. Its liability may rise to $1.4 billion if it loses an appeal on another part of the suit.

If AARP prevails in its drive against cash-balance conversions, it will deny companies the flexibility to change benefit systems to cope with global competition and workforce demands, observers say.

“You’re not allowing companies to design programs that would best fit their needs and the needs of their workers,” says Lawrence Sher, director of retirement policy at Buck Consultants in New York. “It would straitjacket employers and force them into a corner. What’s at jeopardy is jobs and company survival.”

Worker expectations
AARP’s ultimate goal, says Lynn Dudley, vice president of the American Benefits Council, which represents about 250 large companies, is to inculcate an entitlement mentality in which people demand all the benefits they are expecting from age 50 until retirement, even if they haven’t earned them yet.

“AARP’s interest is in vesting the expectations of the older worker,” she says. “If you go down the road of vesting people’s expectations, it’s hard to know where to stop.”

“The social contract between employer and employee is changing. With that come two messages. One is, be fair. The second message is for boomers: Save your money.”
–William Novelli, chief executive, AARP

David Certner, director of federal affairs for AARP, says that the organization is standing up for older workers who have based career decisions on companies’ benefit promises. “We’re trying to meet people’s reasonable expectations,” he says.

AARP has the power to meet those expectations by influencing both social policy and U.S. business performance through its huge constituency of baby boomers. Not only are they the people most likely to vote, but employers must persuade them to remain in the workforce as the U.S. population ages and the labor market tightens.

Although it is an ally of companies that are trying to fill jobs with older workers, AARP also hews to its traditional role of protecting every penny of senior benefits. That means it pushes back when President Bush advocates investing some Social Security funds in the stock market. In the private sector, AARP takes companies to court when it perceives that they’re not living up to promises made to employees decades ago.

In a Pennsylvania age discrimination case, AARP itself is the plaintiff, arguing that employers must provide the same level of health coverage for retirees over the age of 65 as they do for those who are younger than 65. Businesses offer more generous retirement packages to pre-65 retirees because the smaller post-65 benefit is wrapped around Medicare. AARP asserts that the practice amounts to age discrimination.

In September, U.S. District Judge Anita Brody reversed an earlier decision and found that the Equal Employment Opportunity Commission can authorize employers to give differing benefits to retirees without violating the Age Discrimination in Employment Act. The ruling, based on a recent Supreme Court case, is likely to be appealed by AARP.

Unrealistic goals?
Employer groups warn that companies will resist a mandate to take on increased health care costs and will drop retiree benefits altogether, hurting AARP’s constituency. The pro-business Employment Policy Foundation estimates that employers would have to pay $1,500 more per Medicare-eligible retiree if AARP wins.

“AARP’s position is simply incoherent,” says Mark Ugoretz, president of the ERISA Industry Committee, which represents large companies. “AARP members should question why AARP is taking this position against their interests.”

The feeling is consistent across the business community. “It’s not a realistic position in the real world of increasing health care costs,” says Robert Costagliola, former labor and employment counsel at the National Chamber Litigation Center.

AARP maintains that the Pennsylvania court has misinterpreted the Supreme Court ruling and that the EEOC has overstepped its bounds. “We don’t believe you can have different benefits for retirees over and under 65,” Novelli says.

When a fix for the retiree health care benefit was put into Medicare reform legislation in 2003, AARP objected, and it was removed. The lobby’s support for the bill was crucial. “I don’t think the prescription drug benefit would have gone through without AARP, ” says Jane Marie Mulvey, director of economic studies at the American College of Pathologists.

AARP, whose $878 million annual revenue includes $350 million from royalties like those it will receive by offering its own Medicare drug plan, knows how to flex its muscles.

It has persuaded a number of members of Congress to question cash-balance conversions. “Some of these conversions harm people,” Novelli says. About 1,500 companies sponsor cash-balance plans, covering 8.5 million workers.

As the IBM case has demonstrated, cash-balance lawsuits can be expensive. If firms are required to pay older workers the equivalent of what younger workers will make over the life of the plans, the bill could add up to billions.

“We had historically interfaced with business through litigation,” says Deborah Russell, director of economic security and outreach for AARP.
When it comes to workforce participation issues, however, AARP seeks to be a partner.
–Deborah Russell, AARP

But Certner argues that companies “did know that there were questions and legal issues surrounding these plans.” A recent study by the Government Accountability Office concluded that most workers, regardless of age, would receive greater benefits under a traditional defined-benefit plan than under a cash-balance plan. Workers at 50 who are hurt in a conversion lose about $238 per month, according to the GAO. An AARP survey indicates that companies offered protection to older workers in 23 of the 25 largest cash-balance conversions.

Promoting partnership
The cash-balance fight aside, AARP goes beyond confrontation in its relationship with corporate America. The scowls that executives see when the organization pursues benefits lawsuits are replaced by welcoming smiles when AARP reaches out to help companies recruit workers older than 50, a demographic they must tap as the population ages.

“We had historically interfaced with business through litigation,” says Deborah Russell, director of economic security and outreach for AARP. When it comes to workforce participation issues, however, AARP seeks to be a partner.

Five years ago, Russell implemented a program that annually recognizes the best places to work for people over 50. In 2004, AARP instituted its Featured Employers Program. Both efforts are designed to connect older workers with companies.

“We’re not mandating work,” Russell says. “Our goal is to provide opportunities for our members to work as long as they want to work.”

AARP highlights links to featured employers on its Web site. In November, the organization recognized 2005 winners at a Washington event. New York Life Insurance Co., one of the honorees, depends on older employees to help develop products that appeal to their peers.

“Through the Web site in particular, we’re going to generate a lot of leads for employment candidates,” says New York Life president Fred Sievert. “This relationship, and being a featured employer, is very important to us. It’s going to help strengthen our brand.”

AARP seeks companies where the older-worker message courses through every vein of the organization. Home Depot is an example.

“It was a commitment from Bob Nardelli, CEO of the Home Depot, all the way down to that manager of the Hoboken Home Depot who was going to be accepting applications,” Russell says.

In addition to being named a featured employer, Home Depot has entered into a partnership with AARP that gives the organization a branded presence in the stores and enables its members to receive a 4 percent discount on online purchases of gift cards.

AARP also boosted recruiting efforts for Adecco, an international placement firm in Melville, New York. The company received more than 10,000 hits on its Web site as a result of being named an AARP featured employer.

“There are a lot of myths about older workers that AARP has been successful in busting,” says Victoria Mitchell, who formerly headed corporate relations at Adecco. Among those misperceptions is that they are loath to learn new technologies and are less productive.

The goal for AARP is to keep people like Bill Corporan on the job. A former senior writer at Exxon Mobil, he is now a cashier at Borders. “The single most important thing is the interaction with the public,” he says.

Developing relationships with customers is also what inspires Dale Vernon, 65, a manager for CVS/pharmacy in a Cleveland neighborhood called Slavic Village. Vernon hears Polish, Chinese, Russian and Spanish in his store.

Vernon, who joined CVS in 1997, praises the company for promotion opportunities and feedback. “They reward you and let you know you’re doing a good job,” he says.

CVS has increased its number of 50-plus employees from less than 1 percent in the early 1990s to nearly 18 percent today. As an AARP featured employer, the drugstore chain will be able to mine that part of the workforce even more deeply.

Corporan, 58, the Borders cashier, found his job through a link on the AARP Web site. “It was incredibly simple,” he says.

With testimonials like that, it’s easy to see why companies continue to seek partnerships with the organization. They’re hoping they’ll have more good AARP days–and maybe none of those bad ones.

Workforce Management, January 16, 2006, p. 1, 36-41 — Subscribe Now!

January 6, 2006July 10, 2018

Talent Management Systems Make Inroads With Employers

UPDATE: It took time, but the improvements Pitney Bowes iNC. hoped for in 2006 when it began integrating learning management, performance management and succession planning materialized. And the impact on the $5.3 billion mailing equipment and services provider has been significant. The 90-year-old company led with learning management, then switched its paper-based performance management to a software as a service-based process in 2007 and 2008. The following year, the company phased in vendor Cornerstone OnDemand Inc.’s succession planning module. Today, all three processes tie into the company’s SAP human resources information system, which has made it faster and easier to rate how employees are doing come bonus season, among other things, says Vincent Tuccillo, the company’s director of global human resources information management and solution delivery. Learning management also is connected to Pitney Bowe’s service dispatch system, which allows it to send service technicians with the appropriate training to specific jobs. That’s no small feat given that service calls have become more technology-intense than the screwdriver-and-wrench days of just six years ago, says Jeanette Harrison, the company’s enterprise learning and development vice president. Even small changes have had big payoffs. These days, managers and employees can use digital signatures to sign off on performance appraisals, replacing paper documents that used to take copious amounts of staff time to circulate and file. Says Tuccillo, “It’s leaps and bounds from where we started.”

When Pitney Bowes Inc. reorganized corporate HR in the spring of 2003, learning management, performance management and succession planning moved under the same roof for the first time. It didn’t take long for managers to realize that while they thought about those processes as related, the technology they relied on to track them didn’t. In fact, the assortment of hosted systems they used to perform that work didn’t share databases or even come from the same supplier. The result: a lot of duplicate data but not a lot of shared intelligence.

Coincidentally, the aging technologies were due for an upgrade. After studying their options, officials at the $5.4 billion postage and mailing company decided that instead of upgrading individual pieces, they’d switch to an integrated system that would cover learning, performance management, succession planning and, eventually, knowledge management. Though Pitney Bowes is early into the transition, things look good. “After you make a decision and you’re in implementation, you’re training people, there’s usually a moment of fear that (the software) doesn’t do everything that was promised,” says Larry Israelite, Pitney Bowes’ director of strategic learning. “We’re having the exact opposite feeling. … It’s so easy to use.”

As Pitney Bowes goes, others are following. At a small but growing number of companies, stand-alone learning management systems are giving way to integrated software suites that produce a shared pool of employee data usable in multiple learning and HR functions. Using these systems, HR managers can, for example, assess which skills and training a new hire needs; sign them up for live or online classes; check test scores; create training and other job goals for performance reviews and monitor whether they’re being met; and, finally, evaluate if and when the employee is ready for a promotion.

Some suppliers have taken to calling these integrated suites “human capital management systems,” but some observers say that title is too broad. HR training and development consultant Josh Bersin prefers the term “talent management systems,” saying it better describes the employee development side of the HR business that the software suites address.

Whatever you call it, the change toward more integrated learning and performance management is being driven by a surging economy, technological advances and supplier competition, according to company executives, vendors and industry analysts. As the U.S. economy improves, companies are adding jobs and looking for better, more efficient ways to maximize the talents of the people they hire. Improvements in Web-based technology and Web-based offerings mean systems are easy to use and cheaper to buy than upgrading old hardware. In some cases, companies don’t have to host or maintain the software themselves.

The biggest motivator, however, could be that companies finally have realized that learning and performance are related–and they are acting accordingly. Before, organizational boundaries existed, “but now they see a lot of interdependencies and are restructuring HR departments accordingly,” says Lois Webster, CEO of LearnShare, a learning technology solutions provider run by a 36-company consortium.

‘The LMS market is dead’
Use of talent management systems is by no means widespread. While a handful of early adopters, like Pitney Bowes, are embracing integrated suites, a good portion of American industry is just now buying enterprise-wide learning management systems.

According to consultant Bersin, principal of Bersin & Associates in Oakland, California, 55 percent to 65 percent of U.S. companies use some type of enterprise-wide learning management system. As first-time buyers enter the market and others upgrade existing learning management systems to include talent management, LMS sales in the United States should grow 16 percent a year through 2008, to $755 million, according to research firm IDC in Framingham, Massachusetts.

Corporate interest in talent management systems is unifying what until now have been autonomous segments of a larger learning infrastructure industry. In the learning management industry, a spate of mergers and acquisitions over the past two years has trimmed the number of players to 70, analysts estimate. That’s still an overwhelming assortment for companies to choose from.

To set themselves apart, vendors are adding a talent management suite to their mainline LMS products through in-house development, acquisition or product alliances. It’s become so critical to expand that Peter McStravick, a senior research analyst with IDC’s learning services group, says one vendor recently told him, ” ‘The LMS market is dead. You can’t survive in the LMS business or e-learning as a pure play.’ “

It’s no surprise, then, that vendors are taking action. SumTotal, for example, offers a talent management suite based on its LMS and performance management software from SuccessFactor. The product of the merger of Click2Learn and Docent in 2004, SumTotal recently acquired another LMS vendor, Pathlore, to strengthen its customer base and balance sheet, making it one of the largest stand-alone LMS vendors in the business. Saba, another leading stand-alone LMS vendor, is acquiring Centra Software, a maker of virtual-classroom software, to round out its online learning and talent management systems capabilities. The deal is expected to close in January.

Another vendor, Plateau Systems, introduced a homegrown talent management suite in April 2005 and has since signed contracts with the U.S. Department of Transportation, NASA and British Columbia Hydro.

One of the first into the talent management business was Cornerstone OnDemand, which first introduced an ASP-only integrated human capital management suite in 2000 and changed its name from CyberU in May to reflect its changing business.

One of the newest entrants is LearnShare, which in the summer of 2005 began selling an ASP-based learning management system with competency and other talent management components to all comers; previously, the organization had marketed its LMS and e-learning technology only to the 36-member corporate consortium that operates it.

As LMS vendors broaden their product lines, it has prodded suppliers of stand-alone performance management systems to do likewise. According to analysts, the performance management industry looks a lot like the learning management industry did five years ago: lots of young companies with more good ideas than funds to capitalize them. The smart ones will add learning management and other modules to their product lineups or risk being bought out, says Bersin, the learning analyst. “It all started (in 2004), and it will accelerate” in 2006, he says.

Tech giants in the wings
Major HR technology players Oracle and SAP have learning or talent management, but aren’t market leaders. PeopleSoft, for example, was a major competitor in the LMS market and was developing a talent management suite, but that work has been on hold since the company was acquired by Oracle, which is updating its own LMS, analysts and competitors say. “That gives us a window to run while those larger entities are busy with” other things, says Paul Sparta, Plateau Systems’ chairman and CEO.

But don’t count the big guys out yet. As larger corporations consider adopting enterprise-wide learning management or talent management systems, they may want the kind of customer support and financial assurance a major supplier can offer, some analysts believe. Oracle and SAP–and possibly IBM–are bound to get more serious about the market eventually, and when that happens, it could cause even more consolidation among LMS vendors, analysts predict.

For its talent management suite, Pitney Bowes signed a five-year deal with Cornerstone OnDemand to replace separate hosted solutions for learning and performance management for the Stamford, Connecticut, company’s 33,000 employees. From RFI to going live with the first phase of the project, the process has taken more than a year. But Israelite, Pitney Bowes’ strategic learning director, says that’s to be expected given the number of processes being designed and transferred. “It’s the planning you have to do before you write the code,” he says.

Israelite won’t disclose how much he’s spending to upgrade except to say the new system didn’t cost any more than the technologies it’s replacing. Cornerstone customers sign three-year contracts, with a small setup fee and monthly charges based on headcount and modules used, says Adam Miller, Cornerstone’s founder and CEO.

Typically, fees for LMS licenses run $20 to $100 per employee for an initial setup and an additional 15 percent to 20 percent of that annually for support, according to Bersin, the learning industry consultant. Fees for performance management systems are the same or a little more, he says. Fees for integrated talent management systems should run a little higher as well, he says. “If it’s $50 per employee for LMS and $50 per employee for performance management, it’ll be $75 per employee for talent management because (vendors) will discount,” Bersin says.

For some companies, higher fees translate into savings. One Cornerstone client, a major staffing agency, used talent management systems to improve productivity, reduce turnover and increase sales, which the company expects will translate into an annual gain of $20 million, Miller says.

According to some industry watchers, the current integration trend won’t end with learning management, performance management and succession planning. Managers see a range of workforce management collaboration that could be included, such as recruiting and onboarding, says Sparta, Plateau Systems’ CEO. “There are a lot more synergies to come,” he says. “It’s an integrated continuum of not just classic HR, of how do we pay people and give them their benefits, but of how do we improve how we’re managing people in the workforce today.”

Michelle Rafter is a Workforce Management contributing editor. Comment below or email editors@workforce.com.