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Time-Clock Blunder Proves Expensive for Carolina Firm

A New Hanover, North Carolina, firm will pay $1.3 million to 3,661 current and former employees because of a problem with the company’s time clock.


The Wilmington Star-News reports that employees will receive varying amounts, with an average of $300.


Time clocks at New Hanover Regional Hospital were programmed incorrectly during the summer of 2001. Employees who punched the clock 15 minutes early at the start of their shifts or 15 minutes after their shifts ended weren’t paid for the extra hours worked.


The hospital corrected the error, according to the Star-News, but owes employees back pay. The hospital has audited 7,000 records of hourly employees who worked at the hospital during the period in question. It has also tried to figure out a $2,500 difference between the U.S. Department of Labor ‘s figures and the hospital’s figures–though if the hospital erred in the audit, it apparently did so on the side of the employees.

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Smoking Bans May Cause Employees to Quit the Habit

A new study suggests that workplace smoking bans are causing employees to cut back on the habit, rather than just finding other places to smoke.


The University of Toronto’s Ontario Tobacco Research Unit finds that in workplaces with smoking bans, 18 percent of employees smoke at least once a day–and puff up on about 15 cigarettes. In companies without a ban, 40 percent of employees smoke, and average about 20 cigarettes.


“A lot of people assume smokers in smoke-free workplaces compensate for being without cigarettes while at work by smoking more at lunch, during breaks or after work–but overall they don’t,” says the University of Toronto’s Thomas Stephens. “People are more likely to cut down or to give up cigarettes.”


The University of Toronto surveyed adults between ages 20 and 64. The results were “controlled,” so that they weren’t influenced by such factors as stress, depression or attempts to quit smoking.


More information is available online, including case studies in managing health costs; a workplace-wellness checklist; as well as information from an attorney on smoking bans.

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The Cash-Balance Battle Grinds On

Give round one to Kathi Cooper. She’s the IBM employee whose lawsuit over the computer giant’s conversion to a cash-balance plan helped transform the plans from one of the most popular kinds of corporate pensions into one of the most controversial, and contentious.



    In late September, IBM agreed to a partial settlement of the class-action suit, saying it would take a $320 million charge against third-quarter earnings to end all but two claims. IBM also agreed to a $1.4 billion cap for any additional liabilities it might be held responsible for, bringing to $1.7 billion the total liability the company could face in the matter.


    But the fight is not over. IBM is still contesting claims at the heart of Cooper’s 1999 suit that the formula it used to convert to a cash-balance plan discriminated against older workers in violation of federal pension laws. In July 2003, a U.S. District Court judge ruled in favor of Cooper and 140,000 IBM employees. IBM is appealing that ruling to the 7th U.S. Circuit Court of Appeals. A verdict could be more than two years away.


    The immediate impact of the IBM settlement on other cash-balance lawsuits appears minimal, but an appellate court ruling could have long-term repercussions for the industry, pension experts and others say.


    Approximately 40 percent of assets in single-employer, non-union defined-benefit plans in the United States are held by cash-balance or similar plans, according to Mercer Human Resource Consulting, which advises companies on pension matters. Since lawsuits such as Cooper’s that challenge the validity of cash-balance plans began appearing in the late 1990s, many companies have frozen their contributions or moved to defined-contribution plans. Some have chosen to stop funding pensions altogether.


    If an appeals court in the IBM case lets the lower court’s ruling stand, it could have a further chilling effect, says Ethan Kra, chief retirement actuary with Mercer Human Resource Consulting in New York. “It would be devastating, and would lead to massive plan termination,” Kra says.


    That’s not true, says Cooper, 54, a 25-year IBM veteran who’s become an active pension reformer since filing her suit, traveling to Washington, D.C., to lobby for fair treatment for older workers and retirees. “They’ve said the entire pension scheme of America could be affected, that everyone will go bankrupt. That’s the phoniest spin they created.”


    Meanwhile, other cash-balance suits are ongoing. AT&T spokesman Andy Backover wouldn’t comment on a pending suit brought by managers in 1998 over the company’s conversion to a cash-balance plan. Similarly, CIGNA retirees sued in 2001 over the company’s conversion to a cash-balance plan, claiming age discrimination. The suit is pending, and a company spokesman wouldn’t comment. Stephen Bruce, an attorney for plaintiffs in the CIGNA suit, says that while an appellate court ruling on IBM’s case wouldn’t set a precedent for the CIGNA matter, it could still have an impact. “They’d listen to what was decided,” Bruce says.


    Even before IBM’s case is resolved, federal lawmakers are expected to pick up next year where they left off earlier this year in drafting new pension guidelines. “I would be shocked if we get through next year without legislation,” Kra says.


Workforce Management, November 2004, p. 24 — Subscribe Now!

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Diversity on the Menu

The midday fog spills over the hills like soapsuds and on past a Denny’s restaurant in a shopping mall near San Francisco.



    Inside, the booths are retro-’50s style, the benches covered in orange plastic with cloth backs adorned in vaguely Aztec patterns. Rachelle Hood, chief diversity officer of Denny’s Corp., sits in a booth, part of the daily lunch rush that includes patrons and workers of every imaginable color and nationality.


    The irony of the scene is not lost on her. In 1991, just a few miles south at a Denny’s in San Jose, a group of 18 African-American students who had stopped for a late-night snack were told they would have to pay a cover charge and prepay for their meals.


    They launched a discrimination suit and were soon joined by dozens and then hundreds of other African-Americans around the country who complained of unequal, shoddy and sometimes rough treatment by the company.


    The U.S. Justice Department investigated what would become the largest such case at the time under the public accommodations section of the 1964 Civil Rights Act.


    Denny’s, which is headquartered in Spartanburg, South Carolina, settled the lawsuits in 1994 for $54 million. But the incident generated such bad publicity that the chain became tagged as one of the most racist companies in America.


    What a difference a decade makes. Under Hood’s direction, the company spent millions on diversity initiatives that brought legions of new minority managers, franchisees and suppliers into a company run almost exclusively by white males. She was the nation’s first diversity officer to report directly to the CEO.


    An irrepressible optimist, Hood has used her position of authority to guide Denny’s through a remarkable turnaround.


    Women and minorities today make up half of Denny’s eight-member board of directors, and 45 percent of the 11-member senior management team. Minority owners hold 45 percent of Denny’s franchised restaurants.


    Denny’s has also recovered ground with minority customers. A 1996 company survey found that only a third of African-Americans gave Denny’s good marks on measures such as respectful service; today, satisfaction totals from African-Americans range from the mid-70s to more than 80 percent.


    About half of African-Americans linked Denny’s with discrimination in 1996; that has been whittled down to 14 percent today, and the company anticipates reaching 10 percent soon.


    The change has been so swift and complete that by 1998, the company came in second on Fortune’s list of the 50 best companies in America for minorities. In 2000, the company was No. 1.


    “What happened at Denny’s was a sea change,” says Elizabeth A. Sanders, a current member of Denny’s corporate board.


    The tale of Denny’s diversity turnaround is a textbook example of how fast and far a company can progress with an aggressive strategy and strong leadership. But it also demonstrates the limits of what diversity can deliver. Denny’s may have conquered its discrimination demons, but it has yet to figure out how its diversified workforce can increase profits.


    Denny’s is the nation’s largest family-style full-service restaurant chain, a company with more than 1,600 restaurants, $2.2 billion in annual revenue chainwide and 70,000 employees, including those who work at more than 1,000 franchises.


    Groaning under hundreds of millions in debt and myriad operational problems, the company has been losing money for years. Although the losses have finally begun to decline and the company has begun reducing its debt, Denny’s still reported a net loss of $11.6 million for the first half of 2004.


    For advocates of diversity who argue that effective diversity programs produce profits, the Denny’s experience seems to provide contrary evidence.


    Company president and CEO Nelson Marchioli, who took over the job in 2001 and remains a strong proponent of diversity, says he has never been able to quantify the financial benefits from the millions of dollars and years of effort invested.


    “If you think diversity is going to sell one more pancake, you’re crazy,” Marchioli declares.


Supporters and skeptics
    An effective diversity effort can prevent costly discrimination lawsuits, help a company understand and reach its market and improve a company’s image. But diversity can’t substitute for basic business execution, he says.


“The beauty of the Denny’s program is that it is not a program, it is not an initiative. It is a project, a holistic approach to organizational change. We have institutionalized it.
When you begin to see diversity factored into all the lines, everybody has a piece of the rock.”


    Marchioli points out that when the discrimination complaints against the company first surfaced in the early 1990s, Denny’s weekly customer count was about 5,500 per store. Today it is 1,000 to 1,200 fewer.


    “As we were making these incredible strides in diversity, guess who was still having a declining guest count?” he notes.


    He says that Denny’s continues to invest in diversity because “it is the right thing to do,” and because it helps the company understand and serve its diverse national customer base, which should make it easier for the company to attract customers.


    But Denny’s still has to do a better job of executing its business strategy to succeed.


    Financial analysts tend to agree with Marchioli. Ken Bann, an analyst with Jefferies and Co. who covers Denny’s, says the fact that its losses are lower this year than last year and its same-store sales, a key indicator of performance, are improving shows that Denny’s may finally be perking up.


    But, he adds, “it would be pretty difficult to say that diversity produces x amount of sales or earnings. You can’t say that gee, because they have this [diversity] program, sales have grown this amount over what they would have been.”


    Hood argues that part of the reason it has taken so long for Denny’s to fix its operational problems is that the company had to devote so much energy to resolving its diversity problem and getting past the costly discrimination lawsuits.


    “The diversity issues had taken the company to its knees,” Hood says. “The first thing we needed to do was get us out of the pit of a company that discriminates. The brand was badly broken, so it took a while.”


    Hood points out that effective diversity programs ultimately can bring other benefits, particularly in terms of employee relations and customer service.


    Todd Campbell, diversity manager for the Society for Human Resource Management, says being good at diversity and also good at operations should put a company ahead of competition that understands only operations.


    “In an inclusive organization where employees feel valued, they tend to perform better,” Campbell says. “Employee satisfaction equals customer loyalty, which equals profitability.”


    Diversity proponents like Campbell have obviously been winning out over skeptics in the corporate arena. Prodded by the threat of discrimination lawsuits and the lure of potential benefits like those Campbell touts, companies across the country have embraced diversity programs. Denny’s crash course in the subject a decade ago remains one of the best examples of how diversity can be rapidly and effectively injected into a large organization long resistant to change.


    Hood, who previously served as vice president of human resources development and diversity at Burger King, was hired by Denny’s in 1995. She promptly found herself facing a torrent of ill will.


    “I had never had a job with more hate mail–from every group,” Hood recalls of her early days at Denny’s. “I had no clue about the depth of the issues. I wonder if, had I known more, I would have come.”


    The approach Hood used was fairly unusual at the time. Instead of working through a human resources department, as would have been typical for most diversity officials at the time, she operated from a position of authority equal to that of division heads. She used that authority to coax and push diversity initiatives throughout the organization in a hurry.


    “What we did was very different from what all the other companies were doing at the time,” Hood says.


    Other companies had diversity training similar to Denny’s, but few made participation as widespread. Denny’s made all employees–from senior executives to dishwashers–attend classes. These ranged from a quick session for line workers that taught the basics of equality and respect for heritage to two-day courses for store managers that included details about diversity in hiring and the basics of antidiscrimination law.


    Hood, who had launched diversity training at Burger King, got the company to hire more than 100 diversity trainers. From 1995 to 2000, when Denny’s won its first-place position on the Fortune list, the company spent $3 million annually on diversity training.


    Hood counseled the company’s marketing arm on how to target advertising to minorities and hunted up advertising agencies that specialized in that field. Previously, the company had done no targeted marketing.


    From 1995 to 2000, Denny’s redirected 14 percent to 15 percent of its marketing budget to campaigns aimed at minority customers. The company spent as much as $14 million in one year on the effort.


    Denny’s had no minority suppliers or contractors in 1995. Hood pushed its buyers to dole out business to minority-owned companies and hunted up contacts to help advance the effort. As a result, between 1995 and 2000, Denny’s spent $616 million with minority suppliers.


    Denny’s had never directed charitable contributions to minority-related organizations. That changed in 1995, when the company gave $1.3 million to civil- and human-rights causes. And recruitment of college graduates, which had been aimed largely at top national business schools, was revised to include smaller, less well-known schools that more minorities attended, particularly historically black colleges.


    Similar strategies were employed to boost minority representation in franchises, supply contractors and management. Hood recalls sitting down with various company managers in those early days and hammering out goals. Just about every department and division in the company drew up diversity strategies and plans to carry them out.


Managers adopt diversity
    John Relman, a Washington, D.C., attorney on one of the discrimination lawsuits, recalls that Hood was an effective diversity advocate who was easy to work with despite the contentious nature of the lawsuits. Relman represented six African-American U.S. Secret Service agents who had sued after they went to a Denny’s in Virginia for breakfast and were denied service for an hour while white agents seated nearby got their meals.


    “My experience working with Ray was an extremely positive one,” Relman says. “She is tremendously energetic, very open to new and different ideas, and very fast to implement new ideas.”


    What made managers stick to their goals was partly Hood’s hectoring. But managers also knew that failure meant dealing with then-CEO Jim Adamson, who made it clear that diversifying Denny’s was one of his top goals and that Hood had his unstinting support.


    He revised management bonuses for the first few years of Hood’s tenure, tying 25 percent to meeting diversity goals. Hood had instituted sophisticated tracking of diversity results, and Adamson relied on that data to make his management bonus awards.


    “What made her work so vital to our success was that before she came, we had no consistent way of tracking our workforce,” Adamson wrote in his book, The Denny’s Story: How a Company in Crisis Resurrected Its Good Name.


    Once the diversity initiative got under way, it developed its own momentum as managers adopted diversity as an essential component of their jobs. Denny’s ended up surpassing the diversity goals in the consent decree.


    One of the surprising aspects of what Hood accomplished is how few resources she used. Hood’s office today (she moved from Spartanburg to Memphis to be near an airport with better connections to accommodate her frequent trips) is set up essentially as it was a decade ago.


She has two staff members and an annual budget of about $1 million, plus another million in corporate charitable donations that she doles out to minority and human-rights causes.


    The small size of her staff and budget was intentional, Hood says. Her aim was to avoid creating a large bureaucracy that would carry out all diversity tasks. She wanted to push responsibility for diversity through the entire Denny’s organization, and one way to ensure that it happened was to keep her own office from building an organization capable of doing all the diversity work.


    “The beauty of the Denny’s program is that it is not a program, it is not an initiative,” Hood says. “It is a project, a holistic approach to organizational change. We have institutionalized it. When you begin to see diversity factored into all the lines, everybody has a piece of the rock.”


    The result of Hood’s efforts was that Denny’s went from diversity laggard to leader. Other companies took notice. In recent years, she says, she has advised more than 100 companies on diversity issues.


    Many of the strategies that Hood pursued at Denny’s are now considered essential to a diversity effort. A special report by The Diversity Officer, published by Diversity Best Practices of Washington, D.C., lists most of the techniques adopted by Denny’s as key elements in a successful corporate diversity operation.


    Denny’s continues to show up on lists of top companies for minorities and women, an indication that it has maintained its determined focus on diversity. Marchioli says that despite his doubts about the direct financial gains of diversity, he has no intention of backing off.


    “The reason she reports to me,” Marchioli says, “is that people have to understand that this is important. When Ray speaks, as sweet and as nice as she is, she speaks with authority. I think the reason why Denny’s has been so successful in getting over its past is that Ray has been able to have the support from the CEO–uncompromising, unquestionable support.”


    Despite the focus on diversity and its awards, Denny’s still hasn’t won back some minority customers.


    Shawn Coker, assistant vice president of diversity for Tyson Foods, acknowledges that Denny’s is a recognized leader in corporate diversity. But Coker, who is African-American, says he can’t bring himself to forgive Denny’s for its past transgressions.


    “My hat’s off to Denny’s in terms of the work they have done and the progress they have made,” Coker says. “But I can tell you, to this day I rarely go to Denny’s.”


    Hood sees hard cases like Coker not as a lost cause but rather as an opportunity. If she can just push the right button, she may be able to get him to reconsider.


    “I’m always a glass-is-half-full person,” she says. “Just a dreamer and believer.”


Workforce Management, November 2004, p. 41-45 — Subscribe Now!

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Sailing Into a Worker Shortage

The current situation at the ports of Los Angeles and Long Beach, the third-largest port complex in the world, might be described as “stagnant waters.” Some days, more than 83 vessels–an armada larger than most of the world’s navies–wait for their cargo to be unloaded. What’s more, emptying each of those ships is taking six to eight days, twice as long as normal.



    The reasons for the delays are complex. But experts say that some of the traffic jam can be traced to poor workforce planning and the strained relationship between port management and longshoremen. In essence, this is a story about the difficulty of balancing labor costs and efficiency in a highly volatile industry.


    The port experienced a similar jam during and after an 11-day lockout of dockworkers in 2002, which was held over issues of productivity and laborsaving technology. The union wanted additional full-time workers, who earn $105,000 to $167,122 a year in salary, plus $45,000 in benefits. The port, in contrast, preferred to use more “casuals,” part-time workers who make $20.66 an hour without benefits. The casuals provide more flexibility in adjusting the labor force to the amount of work, but lack the skills and experience of full-timers.


    “Now it appears the union may have been right in arguing they needed more full-time workers,” says Richard Greenwald, an assistant professor at the U.S. Merchant Marine Academy in Kings Point, New York. But he concedes that the answer wasn’t so obvious at the time. After 9/11, traffic at the port slowed significantly. But thanks to upswings in the economy, the port’s traffic increased dramatically in June, well before its usual busy season, which normally starts around Labor Day, when holiday merchandise arrives. There were other problems as well. New security regulations have slowed the movement of cargo through the port. The deteriorating railway system that feeds into the port has also caused delays.


    The short-term fix was a lottery, held in August, in which the ports and the International Longshore and Warehouse Union agreed to hire 3,000 people for new casual positions. These workers can be brought on at a rate of 35 to 50 a day, after they’ve taken basic safety training, learned to drive tractors and passed drug and alcohol tests.


    “Perhaps the port management shouldn’t have taken such an adversarial position and assumed the unions were whining about needing more workers,” Greenwald says. “However, if they had hired more full-timers and the port volume hadn’t increased, we’d be criticizing them for the high cost and inefficiency of having those additional workers.”


Workforce Management, November 2004, p. 26 — Subscribe Now!

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Full Speed Ahead

As the doors heave shut and the elevator begins its ascent to the human resources department of the Los Angeles Unified School District, a smart-looking young woman in her 20s smiles just a little nervously and strikes up a conversation.



    “Are you going in for an interview, too?” she asks a stranger. “I hear L.A. Unified is a great district to work for. They really back up their teachers, give them a lot of support. From what I hear, they treat you really well. Way better than most districts.”


    Her enthusiasm is palpable. Clearly, she wants to work for LAUSD in particular and would feel privileged to be hired.


    Talk about a turnaround. From the grunt’s-eye view, within fairly recent memory the district had a less than stellar reputation among prospective recruits. Its hiring process was cumbersome and discouraging to applicants: long lines, surly attendants, misplaced records, endless shuttling back and forth between at least two locations, a jungle of red tape and, all in all, an infuriating hall of mirrors. It was not a user-friendly institution, and the school system suffered enormously because of it.


    But in a breathtakingly short time, the recruitment and hiring process has changed dramatically. The district was previously known as an employer of last resort, but in a brief two years, it has metamorphosed into a desirable employer. At the same time, it has saved taxpayers $10 million by reducing staff, eliminating redundant programs and improving employee efficiency through automation.


    And much of the credit goes to retired Navy Capt. Deborah Hirsh.


Problem child to role model
    When Hirsh became LAUSD’s chief human resources officer two years ago, she inherited a system that by any measure was seriously fractured. Her task was daunting. LAUSD is the second-largest school district in the country, with 80,000 full-time employees, 100,000 employees in total and a budget this school year of $5.5 billion.


   Within its domain are 806 schools and more than 740,000 students. There are 36,000 full-time teachers, 6,000 substitutes and 2,000 administrators. What’s more, the No Child Left Behind Act had recently upped the ante considerably. The legislation requires that all teachers be designated as “Highly Qualified,” which is defined as either having a valid teaching credential or holding a bachelor’s degree with subject-matter “expertise,” as demonstrated by passing a subject-matter test.


    When Hirsh took the helm, only 83 percent of teachers (including teaching interns) were ranked as highly qualified. The stats for new hires were even worse: only 67 percent of annual new hires were highly qualified. In hard numbers, this meant that 30,000 out of 36,000 teachers made the mark.


    Today, it’s a dramatically different story. Ninety-eight percent of teachers are highly qualified, and 95 percent of all new hires either possess a full credential or have passed their subject test and are participating in an internship program that allows them to earn a credential while they teach.


    Hirsh accomplished this salvage job with a combination of upgrading recruiting techniques and enrolling existing teachers in appropriate training and educational programs to bring their credentials up to snuff. In fairly short order, the district went from being, as Hirsh and others put it, the state of California’s “problem child” to a role model for other districts in the state.


    At the time Hirsh, 50, was recruited to join the district by Korn Ferry International in 2002, a sea change was in the works. Former Colorado Governor Roy Romer had been appointed LAUSD superintendent a year earlier, and he swiftly embarked on a shake-up of a well-entrenched educational culture.


    Romer, a well-known political maverick and father of seven, took a characteristically unconventional approach to shaking up the district. He took aim at the district’s long-standing policy that non-educational administrative positions should be filled by educators.


    Classroom experience was considered essential for any advancement, and that applied to human resources, too. The policy was well intentioned but ineffectual. Romer targeted professionals who’d excelled in their own areas of expertise, and he has displayed an obvious appreciation for military experience.


    In addition to Hirsh, Romer brought in two other retired military officers: Megan Klee, chief information officer, a retired U.S. Navy captain; and James McConnell, chief facilities officer, a retired captain with the U.S. Navy’s civil engineer corps.


    At first blush, a military background might seem to be a double-edged sword in the realm of human resources. After all, military commanders have at their disposal a power of coercion not available to civilian bosses. But Hirsh was an anomaly.


    “I never was your authoritarian type,” Hirsh says. “With the Myers-Briggs Type Indicator, a widely used psychological-assessment system, I tested pretty much the opposite of the standard military officer profile. I’m an extrovert, I use intuition a lot, I feel and I have an emotional sense. And I’m a ‘perceiver’–whatever that means,” she adds with a laugh.


    “I’ve always been different,” she continues. To ascend in the military, she says, you have to “see the bigger picture,” which is the exact opposite of what’s expected of those working their way through the lower ranks. “My first few years in the military were rocky, but when I became a more senior officer, my ability to see the big picture worked well because I could go into an organization and improve it.


    “I liked to get into the hearts of people and get them pulling in the same direction. I just knew when I came here it was going to be the same thing.”


    Military experience runs in her immediate family–to a point–and now so does education. Her husband, Michael Hirsh, is a retired Marine Corps lieutenant colonel who recently went to work for LAUSD in the facilities division. (Her two children, however, have taken different courses: son Greg is an aspiring filmmaker, and her 16-year-old daughter, Hallee, has been an actress since age 3. She portrayed Tom Hanks’s 8-year-old aunt in You’ve Got Mail and currently plays Mattie Grace Johnson on the television series JAG.)


    Hirsh, who spent most of her 26-year military career in recruitment, is an ardent believer in the military as a top-notch training ground for leadership. Its “up or out” system has built into it an undeniable “survival of the fittest” factor. Each job is progressively more responsible and involves the leadership of ever-increasing numbers of subordinates.


    What’s more, those on an upward trajectory, such as Hirsh, are repeatedly thrust into unfamiliar situations with the expectation that they will bring order to a realm in which they have little or no primary experience. The assumption is that if a leader is first-rate, the ability to be resourceful and to solve problems will follow.


“If you’re a leader in the making, you’re going to be thrown into situations that are completely out of your area of expertise. Then, if you’re successful once or twice, you develop an innate confidence. You learn to figure out what the core mission is and work from there.”


    “If you’re a leader in the making, you’re going to be thrown into situations that are completely out of your area of expertise,” Hirsh says. “Then, if you’re successful once or twice, you develop an innate confidence. You learn to figure out what the core mission is and work from there.”


    Hirsh cites an added bonus for employers that hire former military people: “We’re a bargain,” she says. “We come at a much more affordable price tag since our salaries are easier to match than what most people coming from public and private sectors were making.”


The 70 percent solution
    Predictably, the introduction of non-educators into the LAUSD system raised a few hackles. “Educators in general have a strong bias toward consensus management, which is often dysfunctional,” says Tim Buresh, the district’s COO and Hirsh’s immediate boss. “But there’s a time for consensus and there’s a time for moving people around. It’s taken time for people to recognize the value of the latter because around here, if you hadn’t participated in the classroom, the attitude was, ‘How can you understand what’s really going on?’ “


    What Hirsh brings to the table is leadership, a tribute to her military background, Buresh says. “Deb’s focus was on client service, and that’s certainly the most visible change we’ve made,” he notes. “Making that change has been profound and very difficult. To maintain that commitment to change really requires an optimist, which Deb certainly is.


    “The fact that Deb wasn’t an educator really rankled a lot of people,” Buresh adds. “But the superintendent’s strategy was to inject new blood into the system.”


    The first time Hirsh heard about working for LAUSD was during a phone call from a headhunter. “My first reaction was ‘no way,’ ” Hirsh recalls. “I didn’t want to go back into the public sector. But I started thinking about it, and I realized I needed to go after something big and challenging.


    “Then, two days before my interview, the district sent me a huge report, 300 pages, that just laid out all the problems. So I went in with a really good understanding of what was ahead of me.”


    Hirsh began her tenure in the district’s human resources department with 400 employees. Counter to most reasonable expectations, she didn’t ask for extra funding, though she did insist on handpicking an able lieutenant. That was her former boss, Roger Buschmann, now deputy chief human resources officer. He’s a former naval commodore who’d also been the deputy superintendent at the Naval Postgraduate School in Monterey, California, where Hirsh was the director of human resources for two years before her move to Los Angeles.


    Buschmann doesn’t mind the inversion in rank a bit. “Deb is the visionary, and I’m there to implement her vision,” he says. “She’s very bright and very smart. She’s a great believer in the 70 percent solution, which means if you wait until you’ve got 100 percent of the solution, you’re never going to move forward.”


    In fact, Hirsh further defied convention by whittling down her staff from 400 to 300 while still managing to improve efficiency and productivity. This and other cost cutting measures such as automation have saved the district more than $10 million thus far, a very conservative estimate, she says, that is derived from the superintendent’s final 2004 budget.


    Her motto: necessity is the mother of invention. She put this into practice by insisting on a modest $65,000 investment in technology that has paid off in spades. Previously, the application process was cumbersome and fraught with delays that were discouraging to prospective hires. Now an online application system from SearchSoft makes it possible for applicants to receive responses within 24 hours, and the best and brightest are promptly called in for interviews.


    Hirsh, who is responsible for an annual human resources budget of $30 million, marshaled computer hobbyists from the human resources staff to help with applicant tracking and other technological issues. She is a firm believer that, given the opportunity, workers sincerely want to be useful.


    Previously, the district received 35,000 paper applications a year, many of which were lost or went unacknowledged. Applicants might wait months for a response, and by that time many of the best had gone elsewhere.


    “Once our recruiters had the proper technology and tools, they approached their work with a new enthusiasm,” she says. “Before, their frustration level was a drag on the process.”


    To that end, Hirsh made a case study of 12 recruiters, quantifying how many interviews they conducted vs. the number of teachers actually hired after the interview process.


    “At first there was a lot of fear and mistrust at this level of accountability,” she says, noting that her inspiration came from former New York Mayor Rudolph Giuliani’s success in reducing crime by providing individual police precincts with comparative data on their performance. “But they got over it very quickly because suddenly they had a tool to measure themselves by,” Hirsh continues. “They could see themselves as compared to their peers. Those struggling could look to successful recruiters for guidance.”


    She also switched the hiring process from seasonal recruiting to year-round recruiting, offering contracts to budding teachers in advance of their actual employment, thereby smoothing an onerous seasonal hump in the rush to fill positions. While the district’s retention rate is now an impressive 67 percent after five years, as compared to 50 percent at other large school districts, 3,000 to 4,000 new hires must still be made annually.


    Hirsh acknowledges that her efforts were buoyed by external factors. “I’ve got to give some credit to the economy,” she says. “There were a lot of districts that suddenly weren’t hiring, so that gave me a boost right in the beginning. We were depending a lot on mid career changers, and we got quite a few of them.


    “Math and science teachers are the hardest to get,” Hirsh adds. “But I knew as a professional recruiter that if you ask a desired recruit why they accepted a job, the first thing they’ll tell you is, ‘They really wanted me.’ So you call them immediately and roll out the red carpet. You really treat them well, and that gets them off to a good start.”


Nurturing leaders
Another area where Hirsh’s military background played an important role was her instinct to zero in on school principals. “When I looked into the role of the principal, I realized that the best had all the qualities of a successful commanding officer,” she says. “But we have to hone our ability to identify the ones with the most potential and get them onto an appropriate career path so they’ll be ready to take on the role as principal of a big high school. It’s a monster of a job, and there needs to be a set career path, and that’s one of the things we’re working on.”


    LAUSD board member Marlene Canter, chairwoman of the human resources committee, says Hirsh’s skill at reorganization is her biggest triumph. Job applicants are no longer caught up in a cobweb of papers and people. “We’re also able to keep the people we want and attract the best,” Canter notes. “By far her best quality is her can-do, enthusiastic attitude.”


    Part of that means staying focused on the big picture. “I so much want human resources departments–not just here, but everywhere–to be about much more than just bringing in personnel,” Hirsh says. “I want us to be a central player in the whole organization. I want people to be engaged in their work, to feel good about what they do.


    “How do you create that situation? That’s the real challenge.”


Workforce Management, November 2004, pp. 54-58 — Subscribe Now!

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Recognizing the Unsung Heroes

A few weeks ago, Elizabeth Kousidis found a message on her voice mail from Bob Catell, the chairman and CEO of KeySpan Corp., where she works as an administrative assistant in sales and marketing. “He told me I was one of the company’s unsung heroes,” she says. “He even called me Betty, which is what everyone around here calls me. I was so surprised and happy.”



    Kousidis isn’t the first person at KeySpan to be singled out for such praise. In fact, Catell has been delivering messages of appreciation nearly every week for the last four years to employees who have been recognized–anonymously–by their managers for a job well done. His personal thumbs-up is not the only way that good work is acknowledged at the fifth-largest distributor of natural gas in the United States, but it reflects a corporate culture that is finding new ways to say thank-you to those who probably don’t hear it enough.


A Culture in Transition
    In 1998, Brooklyn Union Gas, a New York City-based utility company of which Catell was president, merged with Long Island Lighting Co. to become KeySpan and went from 3,000 employees to 8,000 almost overnight. Two subsequent acquisitions pushed the largely unionized workforce above 10,000. No longer protected by a regulated environment and dealing with significant growth, KeySpan faced some daunting challenges.


    Catell has spent his entire professional career with Brooklyn Union and KeySpan, starting as a junior engineer in 1958. He anticipated the changes brought by deregulation and began positioning the utility as a more entrepreneurial business several years before KeySpan’s genesis as a new company. He also realized that the Brooklyn Union culture needed a major overhaul, and when the merger took place with Long Island Lighting Co., he knew it was “time to form the KeySpan culture, a single company that is performance-oriented.”


    Catell’s efforts were documented in a book by Kenny Moore (co-authored with Catell and business journalist Glenn Rifkin) called The CEO and the Monk, which tells the story of the company’s renewal during its years of growth and transition. Moore also happens to be KeySpan’s corporate ombudsman; he started in the human resources department more than 20 years ago, after 15 years in a monastic community. It was Moore who officiated at “the funeral,” a company-wide event that marked the passing of Brooklyn Union, but Catell who validated it by opening the ceremony. Catell’s presence, says Moore, was an important turning point for the company.


    “It made him vulnerable and public,” says Moore, “a real human being. He was essentially saying, ‘Join us in this new direction.’ ”


    That new direction, it turns out, fine-tuned the company’s basic approach to employee recognition, but also generated some unusual add-ons that set KeySpan apart from other companies.


Everyone’s a Hero
    In pre-deregulation days, says Catell, KeySpan used traditional recognition and compensation plans, relying mostly on salary “and some modest incentive programs.” Those rewards, adds Moore, “were operationally driven, tied to output and budgets and customer retention.” The imminence of deregulation spawned incentive-compensation programs for senior management.


    “It was about creating accountability and a risk/reward environment,” Moore says.


    Then came the mergers and the organizational challenges of growth, integration and new marketplace realities. Moore’s perspective began to shift. “I spent a lot of time with employees who cared a lot more for the company than their paychecks seemed to warrant. I reasoned that passion had something to do with it.”


    Moore shared his impressions with Catell, urging the CEO to help him find ways to keep that emotional buy-in alive as the company adjusted to a new world. Catell was receptive, “the funeral” was held, and the boss started spending more time on the shop floor. A short time later came the attacks on the World Trade Center, an epochal event that confirmed Moore’s belief that employee recognition should be “broader and deeper” than the quid-pro-quo approach that typifies most American businesses.


    “9/11 made heroes of everyone,” he recalls. At KeySpan, “I wanted to start rewarding people for who they are, not for what they do. I looked for ways to recognize employees in good times and bad, for things seen and unseen. Everyone is deserving at some point.”


    One of Moore’s first initiatives was actually inspired by a children’s book, Somebody Loves You, Mr. Hatch, in which a deeply doubting protagonist ultimately realizes that people care about him. “What would happen if Mr. Hatch showed up in corporate America?” Moore asked himself. He then sent flowers to two unsuspecting employees, one of them a manager. Their delighted responses encouraged him to continue, as he does to this day, despite the doubts of a colleague who felt that the gesture “did not acknowledge a specific behavior. ‘Your flowers don’t discriminate!’” Moore recalls her saying.


    Which is exactly his point. Bouquet recipients may not have stood out in a particular high-profile project, but they were still members of the team, working in the shadow of more visible accomplishments by others but indispensable to the company’s success.


    This “unsung hero” aspect of recognition has been integrated into monthly Break Bread dinners, hosted by Catell and Moore and attended by as many as 10 middle managers for an evening of no-pressure shop talk. Selected guests represent a cross section of KeySpan’s workforce: organizationally, functionally, by gender and so on. Dinners rotate through the company’s three regional offices and are held at local eating establishments.


    “We do it in a social setting with no real agenda,” says Catell. “Everything is off the record and free-flowing.” Managers are assured that there will be no retribution for anything said.


    Mark de Yoanna, manager of strategic planning, attended one such dinner in April and came away with a stronger sense of who his boss is, a positive feeling about his own particular role and how it fits in with the company’s mission, and a better sense of the roles and personalities of his colleagues, most of whom he hadn’t met before. “It’s a rare thing to sit down with the guy at the helm,” he says.


“9/11 made heroes of everyone. I wanted to start rewarding people for who they are, not for what they do.
I looked for ways to recognize employees in good times and bad,
for things seen and unseen.
Everyone is deserving at some point.”


    There have been few surprises at these meetings, Moore says. “It’s rare that we hear something we haven’t heard before [through other channels], but we do look for patterns in the issues raised.”


    At the end of these dinners, Catell asks the managers to write down the name of an unsung hero in their department. He calls each one the next week.


    “I’ve gotten some very interesting reactions,” he says, chuckling. “Usually they don’t believe it’s me.”


A Model Program
   KeySpan’s “unofficial approach” to employee recognition may be somewhat unconventional, but its official approach is a model of best practices. According to Wirthlin Worldwide, a research firm headquartered in McLean, Virginia, the key elements of a successful program are senior management participation, recognition in front of peers and timely delivery of the recognition. A recent Bank of America benchmarking of 118 companies on recognition found that a mix of programs–peer-to-peer, manager-to-employee and company-to-employee–worked best for most companies. KeySpan’s programs do all the above:


  • The CEO Award, given collectively once a year, honors approximately 200 employees selected by their peers for exemplary contributions to corporate goals.


  • The Above & Beyond Award honors managers and employees for exceeding “corporate expectations in support of Department/Division goals and project delivery.”


  • The Pride in Workmanship Award cites employees who exemplify corporate values, personal commitment, site leadership and work support.


  • The People’s Choice Award recognizes both individuals and teams.


  • Successful new ideas, whether they yield qualitative or quantitative results, are given Suggestion Awards.


    Most of the the programs are open to both managers and employees, rely on nominations from peers as well as department heads, and feature gifts and cash awards of up to $5,000.


Still Evolving
    “There are two sides to the reward relationship with employees,” says Elaine Weinstein, senior vice president of human resources and chief diversity officer for KeySpan. “There are overt financial rewards–the hard-dollar side–and intrinsic rewards, those that develop company loyalty.”


    She says that an employee survey would yield some insight on how well the various programs are working at KeySpan, but the company has been distracted by the changes of recent years, and such surveys have been one of the casualties. “We’re getting ready to do one this year,” she says.


    There nevertheless appear to be some indicators of success. KeySpan was named the top gas utility in the latest American Customer Satisfaction Index and was honored with a Brandweek 2004 Customer Loyalty Award. Brand Keys has ranked KeySpan No. 1 in customer loyalty in its “Energy Provider” category for six straight years.


    “Trust me,” Weinstein says, “with dissatisfied employees, you won’t have happy customers at the end of the day.”


Workforce Management, November 2004, pp. 82-84 — Subscribe Now!

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Doing It the Hard Way

Here’s an exercise I have used for some time with general-interest business books that arrive in our office. I flip to the index and look for some key words: employees, human resources, human capital, workforce, people–you get the idea. I frequently find that the book has no reference to anything having to do with the human factor. You’d think that all the products and services we use every day just sprang, fully formed, from the brain of a CEO.



    I didn’t apply the test when I sat down to read a much-discussed new book, Hardball, by George Stalk and Rob Lachenauer. It came with such delicious buzz behind it that I forgot to start at the index.


    Hardball sets forth a manifesto for business: This is a game you play to win, rather than play to merely play. Some of the chapter titles give you an idea of the book’s tone: “Unleash Massive and Overwhelming Force.” “Threaten Your Competitor’s Profit Sanctuaries.” “Take It and Make It Your Own,” and my particular favorite, almost feline in its cunning: “Entice Your Competitor into Retreat.” There is no chapter called “Kill, Crush and Destroy,” but maybe that was tossed out in an early draft.


    Hardball does not advocate illegal methods of getting the upper hand, of course. But it’s so hardball that more than once, the authors caution readers to check with their lawyers for possible anticompetitive or predatory-pricing violations before putting a strategy into play. Nevertheless, the anecdotes, from Frito-Lay versus Eagle Snacks in the war of the “salties” to Federal-Mogul’s “wickedly clever” psyops campaign against competitor JPI, kept me reading. More than once I was moved to try out a rich and triumphant mogul laugh: Bwaa-ha-ha-ha!


    If I had first dipped into the book in my usual way, looking for the workforce-management angles in the index, I would have been disappointed. There’s no reference to human resources there. No mention of the workforce. There is, however, a listing for “people assets, stranded.”


    Stranded assets can be buildings, suppliers, customers or employees that have become “irrelevant or, worse, a drag on competitiveness.” For instance, there are “workers and retirees in the automotive and heavy manufacturing industries who are highly paid and receive significant healthcare and pension benefits.” Hardball companies bite the bullet and eliminate such stranded assets or “re-purpose them,” the authors say. Cold? Yes. And you can see companies employing that strategy every day.


    There are more positive workforce-management themes in the book, too. They’re mostly about engaging employees in the joy–and pain–of competition.


    When management and employees at Batesville Casket Co. tried to ignore quality problems, CEO Bob Irwin put a defective casket in the executive suite so his resistant colleagues could not ignore it. In the “salties” war, Frito-Lay workers developed a “stressed Eagle” logo that workers put on manufacturing equipment and truck doors, as though they were fighter pilots with their kills on display.


    Whirlpool employees got fired up when they watched a documentary featuring “Gail,” an overworked wife and mother. With her in mind, they came up with better products, such as easy-clean cooking surfaces and quieter dishwashers. (Personally, I think what would have most improved Gail’s life would be dumping her unhelpful husband, but that was probably outside the Whirlpool team’s purview.)


    Stalk and Lachenauer say they avoided writing about such “soft” issues as employee empowerment, talent management and corporate culture because their focus is on business strategies that will create or strengthen competitive advantage. Without them, they say, “no amount of customer care or employee motivation will bring a company success or longevity.”


    Co-author George Stalk told me that if there had been more space, they would have addressed people management in a hardball setting. In brief, he says, “You make sure nothing on the HR agenda distracts from the strategy agenda.”


    And the hardball workforce agenda is fairly simple: Hire, train, compensate and motivate a team so that it plays to win. If there’s a Hardball II, you could look it up under “people assets, fully engaged.”


Workforce Management, November 2004, p. 10 — Subscribe Now!

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Six Ways To Get Yourself Sued

As an employment lawyer, I have two recurring nightmares.



    In the first, I am at the courthouse to try an employment-discrimination case that I know I cannot lose. I’ve got good facts, good witnesses, good law, and the judge acted as if she liked me at the pretrial conference.


    This is going to be a slam dunk, a piece of cake. As I sit at counsel table, I swivel in my chair to view the potential jury panel. Uh-oh. The jurors include my ex-wife, her parents, several former law partners and the airline ticket agent I yelled at in 1989.


    My client looks on in disbelief as I pull out my checkbook and write a personal check to the plaintiff for the full amount of his claim.


    “This one’s on me,” I tell my client. Then I wake up in a cold sweat. The only way I can get back to sleep is to count–like sheep–the zeros on the check I’ve written.


    My second nightmare is as painful as the first. I dream I am corporate counsel for a large manufacturer. We’re a good company, and profitable, but to compete in today’s economy, we run a pretty tight ship. One morning, the company president calls me.


    “I just got a voice mail from my secretary, Laura. She’s been off work for nearly two months because of her carpal tunnel problems, but now her doctor says she can come back to work for a few hours every day if we redesign her workstation.”


    “Great,” I say. “We’ve missed Laura.”


    “No, we haven’t,” says the president. “Laura was always a pain in the keister, and I haven’t missed her a bit. I like the temporary secretary better. And what I realized while Laura has been gone is that she didn’t work very hard and was overpaid for what she did. She’s just gaming the system,” he continues.


    “I want you to call Laura and tell her we can’t use her. She’s fired. Then we can hire the temp, and Laura can sit home and collect unemployment for a while.”


    I’ve never made it past this point in the dream; I just sit up straight and scream. For an employment lawyer, a return-to-work situation like this is scarier than my other nightmare.


    In real life, these situations occur more frequently than any manager would like to admit. Very recently, a jury in Colorado awarded more than $8 million to a plaintiff who was not allowed to return to work several years after recovering from a brain aneurysm. And the company had to pay the plaintiff’s attorneys’ fees and costs.


    Employers that have been through these return-to-work situations can testify that they are the quicksand of the workplace desert. With no visible solid ground, the slightest misstep can be fatal.


    The array of laws from which “Laura” can choose to sue her employer is vast. Mr. President, consider the following before you hand Laura her final paycheck:


    The Americans With Disabilities Act. The ADA prohibits adverse job action against an employee who is able to perform the essential functions of a job with reasonable accommodation. Depending on the job’s “essential functions,” a redesigned workstation, reduced hours or intermittent leave may constitute a reasonable accommodation.


    If Laura’s requested accommodations are reasonable and won’t break the bank, the president has to back off and let her return to work.


    Family and Medical Leave Act. The FMLA protects employees from an employer’s interference with requested leave and retaliation for exercising FMLA rights. A valid FMLA leave requires the employer to reinstate a returning employee to his previous job.


    Employees who exercise their right to sue for an FMLA violation may also sue the manager who made the decision to terminate them.


    In Laura’s case, the president’s time would be well spent in evaluating her requested return to the workplace in the FMLA context to ensure that Laura’s federally protected FMLA rights are not violated. If Laura’s leave is a valid FMLA leave, she is entitled to her previous job regardless of how poor an employee she was before she took leave.


    Workers’ compensation. Although workers’ compensation laws vary from state to state, there is one constant. If an employee is unable to work because of a workplace injury, he will receive a substantial increase in workers’ compensation benefits.


    This may fall into the “that’s the least of our worries” category in Laura’s situation, but workers’ compensation settlements can result in long-term increases in insurance premiums or significant expenditures for companies that are self-insured.


    Wrongful discharge. In many states, an employee cannot be terminated because she files a workers’ compensation claim. The tort of “retaliatory discharge” allows an employee to recover her lost wages, money damages for humiliation, punitive damages to punish the wayward employer and, in some cases, attorneys’ fees.


    The president’s decision to fire Laura because he believes she is “gaming the system” will give the term “game playing” a whole new meaning for the company coffers, both in dollars spent and in lost time. And chances are that if Laura knows how to “game” the workers’ compensation system, she’s also pretty adept at “gaming” the judicial system as well.


    Breach of implied contract. In some states, an employee has a cause of action against her employer if the employer violates its own internal policies on how employees are to be treated. Employee-handbook policies for workers’ compensation, paid time off, sick leave and other absences can be used effectively against a company at trial, especially if the company violated the policy in terminating an employee who, by policy, had additional time off available.


    Watching a plaintiff’s attorney wave the offending policy under the nose of the human resources director at trial is akin to watching someone–the employer–get beat up with his own stick. The president must remember that he is in a chess game, not a boxing match, and must think carefully before making a move.


    A careful review of the handbook and the company’s policies regarding leave and return to work is definitely in order. Taking the time to comply with company policies is also probably a good idea for the president.


    Written contract. Returning an employee to work may also involve following the terms of a collective-bargaining agreement, a written employment contract, or some other agreement between the employer and the employee.


    The president is smart not to break the terms of any such agreement.


    I know there are others. But listing them would only make my nightmare worse. And explaining each of these laws and the employee’s rights and protections to a company president hell-bent on firing an employee is overwhelming.


    On my best nights, I can get back to sleep by dreaming of giving the under performing employee her job back. It doesn’t matter that she doesn’t do the job very well.


    On my worst nights, I visualize firing Laura, then stare at the ceiling and count, like sheep, the number of days until the statute of limitations runs out for Laura to file her lawsuit.


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.

Workforce Management, November 2004, pp. 16-18 — Subscribe Now!