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Sony’s Cross-cultural Training Aims to Foster Workplace Zen

Even before Sony Corp. picked the Welsh-born head of U.S. operations, Howard Stringer, to replace chairman and CEO Nobuyuki Idei, the Tokyo-based electronics titan was encouraging its staff to cooperate with foreigners.


    When employees from different countries clash at Sony’s offices around the world, consultants who have cultural expertise often coach the opposing sides to overcome their misunderstandings. At subsidiaries such as Sony Corp. of America, new hires have been taking classes on how to interact with people from other cultures.


    Addressing the misunderstandings that can arise increases “productivity in the workplace,” says Naomi Sato, director of human resources at New York-headquartered Sony Corp. of America.


    Sony used the training for a team of about 35 people at a manufacturing plant in San Diego. The staff, which hailed from places as varied as Japan, Paraguay, Russia and the United States, wanted to speed up production of flat-screen TVs.


    Sometimes the Americans didn’t get it when the Japanese indirectly said no, so they’d go ahead on a plan before realizing that some co-workers weren’t participating. Or a Japanese staffer might wait for an American boss to come back and help do test runs on products, misunderstanding the expectation to do the job alone.


    The group met with David Eaton, chief executive of Eaton Consulting Group in Boston. They discussed the problems together and agreed on solutions that would work for both sides, such as writing down their directions and responses to one another for more clarity.


“That guy is being a jerk”
    Sometimes the cross-cultural trainers help to defuse hostilities. An American employee at Sony Ericsson in North Carolina said last October that he might quit because his Japanese supervisor expected him to work 16 hours a day.


    Joe Wray, a vice president of human resources at Sony’s joint venture with Swedish mobile operator Ericsson AB, contacted Japan Intercultural Consulting in Chicago. Wray says he already had some understanding about the different attitudes that Japanese and U.S. employees have about work, but using a consultant to explain them legitimized his own observations for the staff.


    The coach spent a day with the Japanese supervisor at his offices in North Carolina’s Research Triangle Park, highlighting key cultural differences such as the way dual-income families in America must juggle their work and homemaking time.


    “A lot of times people say, ‘That guy is being a jerk’ or not trying hard, but if you have the cultural background you can realize it’s not them being bad. They’re just doing typical things,” says Rochelle Kopp, managing principal of Japan Intercultural Consulting.


    One day of cross-cultural training at her firm can cost about $2,100 and might involve 15 to 30 employees. Japan Intercultural Consulting says that it has provided on average about 30 to 40 days per year of sessions to Sony, which has used the company’s services since 1996.


    Sony’s training managers in the United Kingdom started creating an employee survey in recent months that will measure the success of cross-cultural training programs; they expect to have their first results from that project by this fall. Sony Corp. of America declined to say how it evaluates its programs in the United States.


    Rochelle Kopp founded Japan Intercultural Consulting in 1994 after she learned about Japan as a U.S. employee at the Tokyo headquarters of the financial services firm Yasuda Trust and Banking. She hires cross-cultural trainers who have bilingual skills and experience in intercultural environments. Most have worked at both American and Japanese firms.


    U.S. students at the introductory seminars find out that if they stick their chopsticks upright in their food at business lunches, it’ll look like death to the Japanese, who put chopsticks into the rice bowl offerings that they leave on their loved ones’ graves. Managers discover that some Japanese will say, ‘That would be a bit difficult’ to mean ‘It’s impossible.’ ” Americans get tips on how to use visuals at meetings that nonnative English speakers can easily grasp.


    Mack Araki, vice president of corporate communications at Sony Corp. of America in New York, said the classes helped him accept the American style of meeting. The Japanese tend not to speak until the other person finishes talking, he says, but Araki learned in class how to jump in an out of a conversation with an American.


    In classes for multicultural teams, sometimes the teacher puts the Japanese and U.S. students into separate rooms, where they list the challenges and rewards of working with one another before meeting again to discuss. “The validation of the positive things that everyone brings to the party was very eye-opening, even for people that had been here doing this for 20 years,” says Debby Swanson, director of strategic learning and leadership development at Sony Electronics Inc. in San Diego.

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Corporate Crunch

In early 2001, then-Unilever co-chairman Antony Burgmans visited one of the global conglomerate’s recent acquisitions, Ben & Jerry’s Homemade Inc. in South Burlington, Vermont. To his puzzlement, the Dutch business leader found the ice cream company’s employees wearing togas.  “He wasn’t familiar with the movie ‘Animal House,’ ” notes Chrystie Heimert, Ben & Jerry’s “public e-lations” director. “Apparently, they didn’t wander the halls dressed like that at Unilever.”


    In keeping with tradition, Ben & Jerry’s employees weren’t about to let their new owner’s visit pre-empt an office costume party.


    Five years later, visiting executives from Unilever, a British- and Dutch-based global giant headquartered in London and Rotterdam with 230,000 employees in 100 countries, have learned to expect togas–or pajamas, or Mardi Gras beads–from Ben & Jerry’s 520 employees.


    “We couldn’t mess with that,” says Sharyn Kolstad, human resources director for Unilever’s North American ice cream operations, which also include the Good Humor, Breyers and Klondike brands.


    Ben and Jerry’s unconventional, anti-big-business values had, after all, emerged as the company’s biggest brand asset.


    How Unilever, whose products include food, home and personal care products, made a successful union with Ben & Jerry’s is a rare story in the highly charged world of mergers and acquisitions. Researchers Mitchell Lee Marks and Philip Mirvis have found that only about 15 percent of corporate mergers achieve their financial objectives, and about half result in culture clashes.


    When Unilever acquired Ben & Jerry’s in 2000 for $326 million, employees and loyal fans feared for the maker of Cherry Garcia and Peace Pops. But instead of melding into another faceless subsidiary–the fate of many acquired companies–Kolstad notes that this integration “has been different in every respect.”


    At Ben & Jerry’s, employees haven’t lost the company’s values of social consciousness and iconoclastic ways they worked so hard to build. Unilever valued not just Ben & Jerry’s share of the gourmet ice cream market, but also its eccentric ambiance.


    As a result, Unilever allowed its acquisition to retain its distinctive identity, while the Vermont company worked to improve its focus on the bottom line.


    So far it seems to be a success. At the time of the merger, Ben and Jerry’s had $237 million in sales and earnings of $3.4 million. Under Unilever ownership from 2001 to 2004, the company increased its global sales by 37 percent, tripled its operating margins and expanded into 13 new countries.


    Though there has been pain from consolidation and downsizing, much of what Kolstad calls “the magic” of Ben & Jerry’s corporate identity has been preserved.


Not the usual acquisition
    Amy Lyman, founder and president of the San Francisco-based Great Place to Work Institute, says that too often new owners eradicate the old corporate culture. She cites the example of Fel-Pro, an automobile gasket maker in Skokie, Illinois, that once won national awards for its family-friendly workplace.


    The company was acquired in 1998 by Federal Mogul, a Southfield, Michigan, auto parts conglomerate, which soon cut out many of the benefits of the acquired company–from its daycare center to the $1,000 savings bonds and baby shoes once given to employees’ children.


    “Employees think, ‘We had some great things here. Why aren’t they looking at them?’ ” she says. “It’s as if everything they’ve accomplished is diminished.”


    M&A study author Mirvis, a psychologist and associate at Boston College’s Center for Corporate Responsibility, says: “Usually, you have the big company saying to the small one, ‘You can pretty much continue to run your own shop–except that we’re cutting your costs, reviewing your marketing plan and approving personnel decisions.’ That sucks the life out of an organization.”


    But Ben & Jerry’s largely has escaped that fate, says Mirvis, a consultant for the Vermont company in the 1980s and more recently for Unilever’s Asian food business. “It may not be quite the off-the-wall organization it once was, but it’s still light-years away from the typical business.”


    It’s hard to imagine a company less suited for integration. Founded in 1978 by Ben Cohen and Jerry Greenfield, who took a correspondence course on ice cream making and set up shop in an old gas station, Ben & Jerry’s became known for both its high-calorie confections and its unabashed left-leaning activism.


    The company donated 7.5 percent of its pretax revenue to various causes, used environmentally friendly unbleached cardboard in its pint containers, paid extra money to small family dairy farms to help keep them solvent and worked to create jobs in low-income areas.


In many mergers, “employees think, ‘We had some great things here. Why aren’t they looking at them?’ It’s as if everything they’ve accomplished is diminished.”
–Amy Lyman, founder and president, Great Place to Work Institute

    “The Ben & Jerry’s culture was one of the great strengths of the business,” says Fred “Chico” Lager, who was CEO from 1988-91 and was on the board of directors until 1996. “We took a lot of pride in the alternative way we did things, and that’s what enabled us to compete with larger organizations that had more resources.”


    Ben & Jerry’s won’t reveal its voluntary turnover rate, but human resources director Susan Williams says it’s significantly lower than U.S. workers’ average of about 15 percent.


    Employees don’t just fall in love with Vermont’s small-town folksiness. At most companies, engagement is closely tied to a person’s own job satisfaction, Mirvis says. At Ben & Jerry’s, in contrast, surveys have shown that the degree of passion for the company’s social mission was most important.


    Williams says the company’s workers also value a workplace culture that flouts corporate conventions–an environment in which policies often grow out of what employees already are doing.


    “We had a nap room for years, but the idea just sort of faded away for a while,” Williams says. “Then one day somebody said, ‘Remember when we used to have a nap room?’ One of the employees set it up again in a conference room.”


    But Ben & Jerry’s also struggled with a lack of structure. In a 1994 internal survey, for example, only 29 percent of employees felt that the business ran smoothly, and just half said their supervisors were good at planning and gave them adequate feedback.


    “Ben & Jerry’s was on a trajectory toward becoming more organized, with more analysis and less inspiration,” Mirvis says. “The merger only added to that.”


Complementary flavors
    When co-founder Cohen told The Wall Street Journal in 2000 that “quirky brands don’t usually do well as part of large conglomerates,” he probably echoed the fears of many in the company. But Unilever’s offer was too lucrative for shareholders to turn down. Fortunately for Ben & Jerry’s, Unilever–which is the world’s biggest ice cream maker–isn’t the most conventional outfit, either.


    Formed from a 1930 merger between British and Dutch companies, until recently it maintained dual chairmen in both countries. Unilever didn’t want to change Ben & Jerry’s culture radically.


    “I think everyone realized from Day One that we were not buying a typical business,” Kolstad says. “If we wanted the brand to continue to grow and be vibrant, we’d have to maintain the culture that made them what they are.”


    To show its support for Ben & Jerry’s social mission, Unilever committed at least $1.1 million a year to charitable causes selected by the employees. It also made a $5 million one-time grant to the Ben & Jerry’s Foundation, a separate entity that continues to fund causes such as nonviolence training for protest groups.


    Unilever aroused some anxiety in November 2000 when it appointed Yves Couette, a veteran Unilever executive who previously had been posted in Mexico and India, as the new CEO. (Cohen publicly supported another candidate, longtime company director Pierre Ferrari.)


    But it was six months before Couette reported for work, and that gave employees time to prepare. When he arrived in January 2001, the workforce was ready for him, Williams says. They greeted the French native in berets and dark glasses and played Edith Piaf songs on the public-address system.


    In the company cafeteria, they built a replica of the Eiffel Tower from pint packages of Ben & Jerry’s ice cream. Behind the frivolity, there was an implicit message.


    “The challenge for us in the merger was to keep being who we were,” Williams says. “So we had to turn up the volume, to let them experience us.”


    That sentiment also came across when Couette sent Ben & Jerry’s employees off to a daylong meeting at a local hotel, where they went through the standard Unilever exercise of creating a “brand key.” The goal was to identify the essence of the company brand and how marketing should flow from it. Ben & Jerry’s workforce returned from an off-site meeting and presented Couette with a brand key called “Joy for the Belly and Soul,” illustrated by a diagram in the shape of an ice cream cone.


    “We were Ben & Jerry-izing their process,” Heimert says. “And to add to it, when Yves would walk around the office everybody would have the ice cream cone posted on their wall. At other companies, they probably put it in a drawer. That drove home how passionate everyone is here.”


    Couette said in 2002 that when he first heard about the deal with Ben & Jerry’s, “My first reaction was, they are out of their minds.”


    But he had no intention of fixing what wasn’t broken. He quickly established rapport with the workforce, coming to the office in casual attire and volunteering to mix the mulch at a company-sponsored project to build a local playground.


“It may not be quite off-the-wall organization it once was, but it’s still light-years away from the typical business.”
–Philip Mirvis, psychologist and associate at Boston College’s Center for Corporate Responsibility

    Pretty soon he was even emulating Cohen’s anti-corporate rhetoric, envisioning Ben and Jerry’s as “a grain of sand in the eye of Unilever.” Instead of trying to change Ben & Jerry’s organizational style and processes, Williams says, Unilever simply provided clearer structure. The CEO organized leaders of marketing, finance, human resources and public relations into a committee that mimicked the old informal hallway meetings.


    The company whimsically held a contest to come up with the committee’s tongue-in-cheek name–Managers of Mission, or “Mom,” as everyone now calls it.


    Unilever also allowed Ben & Jerry’s to pick which parts of the parent company’s human resources policies it wanted to adopt, Kolstad says. When Ben & Jerry’s did implement a Unilever program, it was free to modify it. In the case of Unilever’s standard global development evaluation for employees, for example, Ben & Jerry’s shortened the document and added the company’s social mission as one of the performance goals.


    “Unilever had a good process, but we needed to make it ours,” Williams says.


Improving the bottom line
    When Couette arrived, Heimert says that “100 people wanted to know if Unilever would maintain Ben & Jerry’s social activism. Another 50 asked about maintaining the product quality. I don’t think anybody asked about the third leg of the stool, which is making money.”


    Obviously, that had to change, but Unilever used persuasion rather than coercion. The new CEO argued that the best way to spread Ben & Jerry’s enlightened ethic throughout the business world was to make the company successful.


    Changing mind-sets wasn’t easy. The workforce, though skilled at making quality ice cream and creative at marketing it, wasn’t up to speed on boring stuff such as corporate finance. When the Burlington Free Press once noted that nobody below CEO level knew how much profit the company made on a pint of ice cream, it was taking a bit of poetic license, but not that much.


    Williams decided to give employees a remedial course in financial fundamentals. To make it fun, she hired a consultant who taught accounting and finance to employees by having them operate a lemonade stand.


    But unlike other bottom-line-conscious companies, Unilever didn’t require Ben & Jerry’s to quantify the dollars-and-cents impact of its human resources policies. Instead, Williams says, once management decides a program is needed, the only charge is to deliver it within budget.


    “I can’t say that because everyone took the lemonade-stand training we’re showing a 2 percent improvement on our profits,” Williams says. “But I don’t need to. We measure return by whether or not the company achieves its overall goals.”


    Ben & Jerry’s transition to Unilever hasn’t been pain-free, Williams says. In October 2002, the company eliminated 52 jobs, mostly at headquarters, as Unilever’s North American ice cream division consolidated some support operations. The company also announced that it would close two facilities and shift operations to a third plant that was being expanded, with a net loss of 69 jobs.


    But Unilever gave Ben & Jerry’s considerable leeway to soften the blow. The manufacturing workers, for example, were given a year’s notice and offered positions at other locations. The company sold one of its plants to another ice cream maker, which hired some employees who hadn’t wanted to move.


Learning from each other
    In late 2004, Couette returned to Unilever, where he now heads the beverage division in Rotterdam. His replacement as “chief euphoria officer,” Walt Freese, so far has made no major changes. (Freese joined Ben & Jerry’s in 2001 and was chief marketing officer from 2001-2004.)


    While Ben & Jerry’s did go through downsizing, its integration with its corporate parent also has created opportunities.


    Jobs at Ben & Jerry’s are now posted throughout the Unilever corporate empire. That gives the Vermont company access to a larger global pool of talent than it ever had as an independent. Ben & Jerry’s staffers can find out about career opportunities at other Unilever companies–though few seem to want to move.


    Meanwhile, the two companies are continuing to learn about each other.


    “I went to a corporate communications meeting in Paris, and they were surprised when I wasn’t wearing a tie-dyed T-shirt and Birkenstocks,” Heimert says. “Of course, when we go out, we dress a little more conventionally than when we’re at the office.”


    And the togas are left behind.


Workforce Management, April 2005, pp. 32-38 — Subscribe Now!

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Restaurant Workers in the Drive-Thru Lane

The better the economy, the harder it’s going to be for restaurant chains to hang on to workers.



    That’s one conclusion restaurant industry researchers are reaching as they assess the impact of rising consumer confidence and other positive economic trends on the nation’s $476 billion food service business.


    When times were tough, quick-service–better known as fast food–and other restaurants had an easier time holding on to employees, says Teresa Siriani, president of People Report, a Dallas restaurant industry HR benchmarker. Once the economy picked up and jobs in other industries became available again, restaurant workers started to leave, Siriani says. “We’ve been telling (clients) not to be too fat and happy, not to be complacent because no more people are leaving,” she says. “Now with an election behind us, the economy is doing a nice recovery, and people are feeling bolder and will move.”


    Siriani’s observations are based on People Report’s just-published 2004 Survey of Unit Level Employment Practices, which collects data from the research firm’s 75 companies–members as well as non-members. Collectively, they represent $24 billion in annual sales.


    The findings are similar to those from the National Restaurant Association, which in its 2005 industry forecast sees labor shortages at a sizable portion of restaurant operators. More than half of quick-service restaurants and two out of five table-service restaurants said labor shortages were having a negative impact on business, according to a separate NRA survey released in October.


    According to the NRA’s 2005 forecast, restaurant operators are doing a number of things to hang on to workers longer, including spending more on training, providing English-language training for foreign-born workers and finding ways to bring down the cost of providing health care benefits.


    Restaurants will need to address labor issues if they want to fulfill projected growth in the industry, which currently employs 12.2 million people, or about 9 percent of all U.S. workers. Over the next 10 years, that number is expected to reach 14 million, according to the NRA.


    Chains whose management, from general managers on down, do a good job of treating midlevel and hourly workers as individuals will do the best at keeping people, Siriani says. That could mean regularly asking someone how employees are doing, taking someone’s family or school needs into consideration when scheduling work hours, or providing extra training before and after someone’s hired, Siriani says. She cited Applebee’s andJamba Juice as two chains that already do some of those things exceptionally well. (Also see articles onJack in the Box andSteak n Shake).


    To keep their workforces from walking out the door, restaurants also need to know where their compensation and benefits stand in relation to their competition, Siriani says. But it takes more than money for employees to stay put, he says. Companies with high employee retention rates promote teamwork by encouraging employees to jointly participate in community outreach, whether it’s a service project or chamber of commerce event.


    Leading-edge restaurants regularly survey employees and act on the results, which makes workers feel like they’re being heard, Siriani says. They also spend more time on orientation and classroom training, and have more diverse workforces, both in hourly and management ranks.

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US Airways Ups Staffing as Skies Begin to Clear

Running a bankrupt airline is difficult; running one poorly, more so. But management at US Airways, the Arlington, Virginia-based carrier with more than 25,000 employees, appears to have had a moment of clarity in its struggle to transform itself from a cash sieve to a viable competitor with the likes of Southwest Airlines.



    In part, management was chastened by what CEO Bruce Lakefield called an “operational meltdown” in Philadelphia over the course of several days in December. Normal operations ceased when the numbers of working baggage handlers and flight attendants dipped below what was necessary to keep the airline running. Among the results: 405 canceled flights, more than 560,000 passengers disrupted, 72,000 claims for lost bags, and an answer rate of less than 50 percent at its customer call centers.


    Although initial reports from the carrier hinted not so subtly at organized “sickouts” on the part of aggrieved employees, an inquiry by the Department of Transportation’s inspector general found that airline management hadn’t planned its holiday staffing schedule with enough care. The fact that the 2004 holiday travel period was the busiest in five years didn’t help. The airline itself increased its scheduled departures by 12 percent compared with 2003, but the number of flight attendants dipped by 5 percent over the same period. “We let our customers down,” airline spokes-man David Castelveter says.


    To avoid a recurrence, the airline is hiring new workers and regularly hosting job fairs in Philadelphia, Washington, D.C., and Charlotte, North Carolina, to attract baggage handlers and customer service agents. Thus far, the company has made offers for more than 1,000 positions, not only to replace positions left open by attrition but also to gear up for better times.


    “The threat of liquidation is gone,” Castelveter says. “Our employees feel like we’re on the comeback trail.”


    It may be that customers share that sentiment. Company figures indicate improved performance. For the first two months of the year, revenue passenger miles, a key industry measure of the number of miles traveled by a paying passenger, rose by 5 percent over the previous year. Investors stepped up in February as the company landed $125 million in funding, and in March the carrier reached a conditional deal for the same amount–notable because the financiers are other airlines. Other figures, though equally important to the airline’s destiny, tell a different story.


    Less than a month after the Philadelphia incident, management secured $353 million in concessions from its unionized workers, bringing the total value of those savings to just over $1 billion in the airline’s ongoing transformation plan. “I think it scared the hell out of their labor,” Aaron Gellman, professor of management and strategy at Northwestern University’s Kellogg School of Management, says of the possible outcome of the stoppage–namely liquidation. Mechanics and fleet service employees ratified the January round of cuts by margins of just over 60 percent.


    Flight attendants are not among new hires for the company. “All airlines downsized after 9/11,” says Mike Flores, local council president for US Airways flight attendants in Charlotte. “Now we take contractual concessions that allegedly make us more efficient: We have fewer heads and the number of flights is increasing.”


    Gellman says management would be wise to boost spending on things customers will notice. According to J.D. Power and Associates’ 2005 Airline Satisfaction Index, US Airways ranks eighth in a field of 11 carriers.


    If everything comes together, US Airways plans to emerge from bankruptcy this summer. One thing certain to be a drag on the carrier’s performance: rising fuel prices. In his weekly recorded message to the company March 11, Bruce Lakefield said that if oil prices remain around $54 per barrel, fuel will be the airline’s No. 1 cost in 2005, taking over the spot that labor holds.


Workforce Management, April 2005, p. 18 — Subscribe Now!

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Performance-management Plans Going Unmeasured

Companies are measuring performance, but they’re not measuring the success or failure of their measurements.

It’s ironic, says Hewitt Associates, which found that 30 percent of companies don’t measure the success of their performance management programs at all. Hewitt’s study included 129 U.S. companies with median revenues of $2.5 billion.


Despite not measuring the success of the programs, 66 percent of companies rely on their performance plans to make pay-increase decisions. Another 47 percent use the plans to make bonus decisions.


Bob Campbell, senior consultant at Hewitt, says that when companies do track the results of their efforts, it’s usually to gauge employee satisfaction, or simply to determine if the paperwork is getting done on time.


Marc Nicolet, CFO and human resources director at the Children’s Cabinet in Reno, Nevada, says that while companies may not be actively measuring the success of their performance plans, it may be happening indirectly.


For one thing, he says, “most private companies directly tie compensation and bonuses to their success,” and the amount of bonuses provided are a good measure of whether the plans are working. On top of that, he says, most performance plans are built around company goals, and if a company is doing well, it’s an indication that the performance-management system is functioning as intended. “I’m a huge believer that the forces of capitalism and survival of the fittest will reward those companies that are doing it right,” he says.


Lastly, Nicolet says, if good employees don’t feel that they’re being rewarded for their efforts, they’ll eventually walk. “Top superstar performers are going to go where top superstar rewards are,” he says.

Nicolet adds that it’s important that a company’s culture bring out employees’ best skills and knowledge, rather than stifling it. For example, he says, “If you’ve got a real control freak at the top, he or she is not going to let people spread their wings and do what they’re good at because (the leader) is not good at delegating.”

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New .Jobs Internet Address Could Help Recruiting Budgets


An April decision by the agency that regulates Internet-address suffixes–the dot-coms, dot-orgs and other designations at the end of Web site names–could translate into millions in savings for corporate recruiters and change the sourcing landscape as profoundly as the launch of Monster did a decade ago.


The agency approved a request by the Society for Human Resource Management to create a new Internet extension for companies to use to post their jobs. The new extension would allow Internet addresses to end in the suffix “jobs”–Starbucks.jobs, Intel.jobs, Ford.jobs and so on. This would be in addition to the Web site address a company already has–Starbucks.com, Intel.com and Ford.com.


What makes this new naming much more than just a geek curiosity is its potential to reduce–or, some people say, eliminate entirely–the need to pay to post a job listing. For the time being, the fortunes of Monster and its competitors including CareerBuilder and HotJobs are unlikely to be affected. In the long run, the new extension could mean that jobs are posted only to corporate sites, with companies relying on brand advertising and search engines to drive applicant traffic.


Far-fetched? Not really. Sites like SimplyHired.com, WorkZoo.com and Indeed.com are already aggregating millions of listings from hundreds of job boards and making them accessible in a single search. This gives a free Craigslist posting the same visibility as a $300 Monster listing. As the dot-jobs designation comes into wide use, it will be easier for these sites to collect the listings: It’s less work to go to Intel.jobs than it is to comb through Intel’s main Web site trying to find the Intel job listings.


One recruiting expert predicts that the new naming system will change the recruitment landscape, giving job-seekers more control over the search and application process than they have previously had.


“This gives job-seekers their own customized, personalized job board,” says Gerry Crispin of CareerXroads. “It will give them exactly what they want. It could very easily take the (commercial) job boards out of the picture if they don’t figure out how to work with it.”


Mark Mahaney, a financial analyst with American Technology Research who follows the recruitment sector, is skeptical of the short-term impact but says that if job-seekers turn in sizable numbers to the search engines such as WorkZoo.com, it would force change upon the commercial job boards.


SHRM stands to make a good chunk of change off the project, based on fees paid by companies to reserve a dot-jobs extension. SHRM’s application–and the address agency’s endorsement–puts more restrictions on the dot-jobs name than on any of the others generally available, such as dot-com. For instance, a company can post only its own job openings on a dot-jobs Web site. At Monster.jobs, only jobs with Monster Worldwide could be listed, not listings from Monster clients. Additionally, only human resources professionals will be permitted to be issued a dot-jobs address. Requests for Internet addresses are required to have the name of a specific individual making the application.


The rules permit the designation to be issued only to a member of SHRM or to human resources professionals who either: “(i) possess salaried-level human resource management experience; (ii) are certified by the Human Resource Certification Institute; (iii) are supportive of the SHRM Code of Ethical and Professional Standards in Human Resource Management.”


While the Internet address agency–called the Internet Corporation for Assigned Names and Numbers–has final say over the issuance of addresses, SHRM and Employ Media, the company created to administer the granting of the designation, will handle the applications.


According to the schedule submitted by SHRM, new names will be issued starting in the fall. Companies may be able, however, to start reserving the extension as soon as May or June. The schedule is tentative and the exact start date will be announced later.


—John Zappe



 



 

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Dear Workforce How Do We Identify Positions to Eliminate

Dear Headcounter:



You can make incremental improvements by asking all department heads to create a plan for how they would reduce headcount by 10 percent. In the end, you’ll probably be able to cut 5 percent with this method.

Taking a re-engineering approach gives you a more significant impact. It generates greater results than focusing on one department at a time. Assign an executive–someone not in human resources–to lead the re-engineering effort. The major objective is to eliminate unnecessary work through process redesign, automation and redesigning/reassigning jobs.

This enables you to identify the high-caliber talent you need for higher-level performance. Those who don’t find a fit in the new organization should be provided assistance to find a job outside the organization.

Expect to reduce the amount of administrative and non-value work by 40 to 60 percent, while doubling performance. You most likely won’t need as many people in the end, and will experience cost savings by eliminating waste and achieving outputs that are faster, less costly and more efficient.

To ensure that your efforts generate the desired outcome, consider hiring an experienced consultant with a proven track record to work alongside the executive leading your initiative.

SOURCE: Carl Nielson, principal, The Nielson Group, Dallas, May 5, 2004.

LEARN MORE:87 other articles and tools related to downsizing.

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

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Welcome to the Club

B efore Costco Wholesale Corp. opened a location in suburban Detroit late last year, managers at the warehouse discount club calculated they’d need a staff of 220. Costco typically fills about a third of the jobs at a new store with transfers. At the store in Green Oak Township, Michigan, that left 160 open spots.



    In all, 5,000 people applied.


    “Costco is like the Marine Corps of the retail industry. The elite, the finest,” writes an anonymous RetailWorker.com poster, a former Wal-Mart and Kmart employee. The Web site, run by the International Workers of the World union, is peppered with inquiries from people wanting jobs at the warehouse club.


    The same thing happened in Des Moines, where Costco opened its first Iowa warehouse in December: 180 jobs, 2,600 applications. In Mount Prospect, Illinois, where a Costco opened in October, more than 2,100 people applied for 140 positions.


    They’re not isolated incidents. Since Costco erected its first warehouse 22 years ago, the $48.1 billion-a-year retailer has become an employer of choice, a company that is immediately associated with good benefits and decent pay. Costco workers earn an average of $16.72 an hour, far exceeding the U.S. retail industry average of $10.99 an hour as estimated by the Bureau of Labor Statistics.


    In addition to offering some of the best wages and benefits in the retail industry, Costco rewards employees with bonuses and other incentives. It promotes from within, encourages workers to make suggestions and to air grievances and gives managers autonomy to experiment with their departments or stores to boost sales or shave expenses as they see fit.


    The result: People line up to work there, and once hired, they stay. Annual turnover for full- and part-time hourly workers on the job more than a year is 6 percent, compared with an industry average of 59 percent, according to the National Retail Federation. It’s the same story for executives. The 13member senior management team, headquartered in Issaquah, Washington, an upscale suburb 13 miles southeast of Seattle, has stayed virtually unchanged since its birth in 1983.


    “What they’re doing is creating a competitive advantage through people,” says Fred Martels, president of People Solution Strategies, a St. Louis retail industry consultancy. “It lowers costs and increases productivity.”


    Mike Donaldson, now manager of Costco’s Des Moines location, has been with the company 19 years, first in San Francisco, then Kansas City, Missouri. He says store managers have a friendly rivalry to outperform one another.


    “That’s a big reason we’re so successful,” he says. “We’re trying to be the best. It’s a great company.” Treating employees well is as much as part of the Costco way as the concrete floors and unadorned cinder-block walls of its warehouses and the fresh salmon fillets it sells by the truckload. It’s a philosophy that got Costco in trouble last year with Wall Street analysts who preferred heftier shareholder returns over fatter employee paychecks, a situation that has eased somewhat as the company’s stock price has climbed.


    It’s also made Costco the antithesis of Wal-Mart, which recently launched a $100 million image campaign to battle the perception that it is an unfriendly employer.


    So far, the Costco way is working. While other retail sectors stagnate, the warehouse club niche is booming, and according to industry watchers, Costco accounts for the lion’s share of that growth. Since opening its first warehouse in Seattle in 1983, Costco has grown to 451 locations in the United States and abroad and has seen its workforce mushroom to 110,000–including 83,700 U.S. employees, half of whom work full time.


    The publicly traded company opened 23 new stores during its fiscal 2004 year, which ended August 31, and is on track to open 25 more in the current fiscal year.


    The “people first” philosophy comes directly from Costco CEO and president Jim Sinegal, a blunt-spoken retail veteran who has been the company’s alter ego and chief taskmaster from its inception. The 68-year-old executive oversaw Costco’s merger with Price Club a dozen years ago, and since then has shepherded it to become the biggest player in the $101.1 billion warehouse club industry, and America’s sixth-largest retailer.


    Paying good wages is a no-brainer, says Sinegal, a grandfatherly gentleman who looks like former Quaker Oats pitchman Wilford Brimley, favors shirt sleeves over a tie and jacket and wears an ID badge like every other Costco employee.


    His corner office at Costco headquarters is a mess. In keeping with the company’s open-door policy, it’s really more of an alcove with no door or window. The desk is littered with reports; the wall behind is plastered from floor to ceiling with snapshots of family members and store openings. An oversized metal table is stacked with bottles of wine and other merchandise samples.


    “Taking care of your employees and turning inventory faster than your people is good business,” says the peripatetic Sinegal, who’s on the road more often than not. “In the final analysis, that’s what it comes down to. You can have the loftiest goals in the world, but they’re meaningless if you don’t make a profit. If you can’t deliver on the bottom line, you’ll disappear.”


    Costco shows no sign of disappearing. In fiscal 2004, the company’s net profit jumped 22 percent to $882.4 million on a 13 percent increase in revenue to $48.1 billion. That revenue included $47.1 billion in sales and about $1 billion in annual membership fees. In all, Costco has 42.4 million cardholders who pay $45 for a regular membership or $100 for an executive membership that pays them a 2 percent annual rebate on accumulated purchases. Costco’s 1.9 percent net profit is razor thin, typical in the warehouse club business. However, Costco aspires to be the highest-quality, lowest-cost provider of the merchandise it carries, limiting markups to 14 percent over wholesale, or 15 percent for its Kirkland Signature private-label items ranging from coffee to cashmere sweaters. So to maintain or boost net profit margins, Costco has to compensate for low markups with high volume, which means selling–or turning–inventory as fast as possible.


When shoppers walk into Costco, they’re faced with an amalgam of disparate merchandise: home electronics, small appliances, furniture, sports equipment, jewelry, books, fresh, frozen and packaged foods, as well as seasonal items and unexpected products, such as baby grand pianos and caskets.


    That puts the onus on employees to produce, and they do. For fiscal 2003, Costco averaged $379,090 in sales per employee, considerably outstripping worker productivity at the country’s four larger retailers: Wal-Mart, Home Depot, Target and Kroger, the grocery and supercenter chain.


    Shrinkage–merchandise that’s lost, damaged, broken or stolen–is another standard industry indicator of a retailer’s health and employee loyalty. Costco’s shrinkage runs about 0.2 percent of sales per store per year, company officials say. That compares with a retail industry average of 1.65 percent of sales per year, according to the 2003 National Retail Security Survey, the most recent data available.


    However, warehouse stores’ shrinkage rates are “always much lower than (other retail) stores,” says Richard Hollinger, the survey’s director and a criminology professor at the University of Florida.



Fast-paced environment
    When shoppers walk into Costco, they’re faced with an amalgam of disparate merchandise: home electronics, small appliances, furniture, sports equipment, jewelry, books, fresh, frozen and packaged foods, as well as seasonal items and unexpected products, such as baby grand pianos and caskets.


    In a relatively short time, Costco has become one of the country’s top wine purveyors, selling more than $620 million worth last year. During 2004, Costco also filled 18 million prescriptions from its in-house pharmacies, pumped $2.3 billion in gas from its 211 on-site stations and sold 67,000 carats’ worth of diamonds. In January, the company’s six-year-old online division, Costco.com, sold an original Picasso crayon drawing for $39,999.


    Making the sale is priority No. 1. The Costco basic training manual instructs workers to, among other things restock stray items as quickly as possible so as not to lose a sale. Last year, the company added a second worker at every checkout stand, a move that initially increased labor costs but ultimately is helping to boost sales.


    Now if a shopper can’t find the precooked bacon he wanted, the extra checker can get it for him, “and there’s an extra $10 on that sale,” says Judy Vadney, Costco human resources director. The result: an average purchase of $115 to $120.


    The pressure on workers can be extreme. Turnover is highest in the first 180 days. “Not everyone loves to work for Costco,” Vadney says. “It’s hard work. It’s a great place for people who like a lot of activity and energy and go-go-go. It doesn’t take a rocket scientist to do most of the jobs at our locations. What people find difficult is the pace, the intensity.”


    Those who stay are well-compensated. Hourly pay starts at $10 and goes up to $18.03. Hourly workers receive twice-yearly bonuses based on length of service and hours worked. Part-time employees are guaranteed at least 25 hours a week and receive many of the same benefits as full-time workers.


    Eighty-nine percent of Costco workers are eligible for health insurance, and 97 percent of them elect for the plan. After 90 days as an employee, workers are eligible for a 401(k) program. In a year, or after 1,000 hours, Costco matches up to 9 percent of their annual pay. In a new program, employees hired after January 1, 2005, will automatically be enrolled in the 401(k) program and have 3 percent deducted from their pay. Costco employees don’t get merchandise discounts, but they do receive free Costco membership cards.


    Entrepreneurial thinking is encouraged. Employees who come up with money-saving ideas that the company institutes can earn up to 150 shares of Costco stock. Store managers are free to experiment with what they stock and how they display it. In return, they receive rewards based on performance, including bonuses and stock options.


    Options fell out of favor at some companies after new accounting rules stipulated that they be expensed. Costco still grants them and hasn’t cut the number of nonhourly employees eligible to get them, even though options decreased pretax income by 1 percent in fiscal 2002, the last year the company broke out that data.


    Of 2,000 nonhourly management employees eligible for options in fiscal 2004, about half were the beneficiaries of the 8 million options the company issued. “Senior management’s philosophy historically has been having some skin in the game is positive,” Richard Galanti, Costco’s chief financial officer, told Workforce Management in September.



“We can do better”
    Despite generally positive employee relations, there are some trouble spots. Costco has about 14,000 union workers in California and four other states, the vast majority inherited through the Price Club merger. Contract negotiations mostly have been amicable, but “they’re not union-friendly,” says Rome Aloise, a union representative for the Teamsters, which represents Costco’s union workers. “They’re just as bad as any other employer trying to prevent people from joining the union.”


“Not everyone loves to work for Costco. It’s hard work. It’s a great place for people who like a lot of activity and energy and go-go-go. It doesn’t take a rocket scientist to do most of the jobs at our locations. What people find difficult is the pace, the intensity.”
–Judy Vadney, Costco human
resources director


    Also, because store managers have so much autonomy, “if you have a store manager that allows favoritism or hires more within one ethnic group, they may never hear about it at the corporate office,” Aloise says.


    True to its entrepreneurial roots, Costco promotes from within. Officials claim that about 90 percent of management jobs are filled in-house. Except for some white-collar specialty jobs, such as in legal and accounting, most managers work their way up from the warehouse floor. Vadney, the human resources director, was a Costco store manager in Olympia and Tumwater, Washington, before taking a corporate job.


    But just who gets those top jobs has been called into question. In August, an assistant warehouse manager in Colorado filed a sex discrimination lawsuit against Costco claiming that she and other women have been denied promotions. Costco has no job posting or application process for manager and assistant manager jobs, which acts as “an invisible glass ceiling” for women, says Brad Seligman, executive director of the Impact Fund, the nonprofit group representing the plaintiff.


    Seligman, who is also representing Wal-Mart workers in a suit against that company, is seeking class-action status for the Costco suit, claiming that the number of women eligible for management jobs at Costco could be as high as 650. The suit is pending, and a hearing on the class status is expected in the fall.


    Sinegal maintains that Costco hasn’t done anything wrong, and that it won’t settle. At the same time, he admits that the presence of women in manager and assistant manager jobs is low–16.2 percent and 17 percent, respectively.


    “We don’t let ourselves off the hook on that,” he says. “We think we can do better. We know we can do better.”


    Costco’s labor and benefit costs are high, roughly 70 percent of its operating expenses, so the company offsets that by cutting out other common retail niceties. The company doesn’t advertise on TV or radio or in newspapers. It doesn’t take Visa or MasterCard, so the company doesn’t have to pay those transaction fees.


    Hours are shorter than the typical grocery store or supercenter to cut down on overhead such as lights and other utilities and labor. Warehouses are plain concrete boxes with merchandise stacked on pallets.


    Costco also is low-budget when it comes to hiring. The company doesn’t retain outside recruiters, and the human resources staff does no hiring. That’s left to regional managers and warehouse managers, who put up tents on site when a new warehouse is being built to take applications and buy help-wanted ads in local papers.


    However, Costco recently began to post openings on its corporate Web site, integrating automated recruitment and hiring software from outside vendor Unicru.


    Local managers hold interviews in ballrooms, generally hiring one of every 15 people they interview.


    All new warehouse employees go through a four-hour training session and are paired with a mentor. New workers go on a “scavenger hunt” for information on their location, their fellow employees, customers and Costco in general–data they have to turn in to a supervisor within the first 30 days on the job.


    Before a new warehouse opens, the staff attends a four-hour orientation conducted by a regional manager on Costco’s mission, ethics and customer relations. Training emphasizes treating customers with kid gloves.


    “Most employees don’t understand that those membership dollars are really vital to how we operate,” Vadney says.


    If current trends continue, Costco managers could be holding a lot more of those orientation meetings in coming years. The number of warehouse clubs in the United States and internationally could comfortably double before the sector is saturated, says Michael Clayman, publisher of Warehouse Club Focus, an industry newsletter.


    One reason: Companies such as Costco and Wal-Mart’s Sam’s Club division are going into smaller markets, cities of 200,000 that previously weren’t thought to be able to support the type of store that brings in $115 million a year in sales, Clayman says.


    Sinegal has no problem imagining a time 10 years from now when Costco runs 900 warehouses, twice as many as it has today. He also has no problem seeing himself running the company for the foreseeable future.


    “I have no plans to retire,” he says. “I feel very good, very healthy, and will continue as long as the board is satisfied with me.” And if warehouse club trends and employee-friendly policies continue, it’s a safe bet that Sinegal can look forward to seeing hundreds of job applicants enthusiastically lined up at new stores.


Workforce Management, April 2005, pp. 40-46 — Subscribe Now!