Category: Archive

Posted on

Human Resources Departments in Top Companies Spend Less Per Employee

The human resources functions that are “world class” spend less per employee each year than the average company, according to The Hackett Group.

 
Hackett says that the human resources divisions of companies it defines as “world class”–the top 25 percent of companies among the thousands Hackett studies–spend $1,390 per employee annually, 27 percent less than median companies. They also have 11 human resources professionals on staff for every 1,000 employees, compared to 16 at other companies, and their labor costs are 31 percent less. Their spending for outsourcing and technology also is about 8 percent less than median companies.
 
These top-performing companies pick and choose what they outsource. They’ve been spending 55 percent less than median companies, for example, on outsourcing staffing and development, largely because hiring has not been a hot spot in recent years, says Hackett HR Program Manager Patty Miller. That usage might rise as hiring need rises, she says. On the other hand, world-class companies spend 25 percent more than median companies on outsourcing total rewards–a category that includes health and welfare, pension and saving and compensation administration.
 
Miller says the research shows that technology and outsourcing–often touted as silver bullets for human resources cost containment–are not really the answer. Process simplification, however, might be. The world-class companies have 69 percent fewer health and welfare plans per 1,000 employees served and 46 percent fewer compensation plans. This allows companies to hire fewer human resources employees and run processes more efficiently. “There’s this misconception that to cut costs in HR you eliminate staff and replace them with technology and outsourcing support,” Miller says. “But the numbers simply don’t bear this out.”
 
World-class companies also have 61 percent fewer voluntary terminations.

Posted on

Dear Workforce What Are the Audit Requirements for 529 Plans

Dear Wary:



First, a reminder/disclaimer that this article is intended to provide useful information, but shouldn’t be construed as legal advice or a legal opinion.

With that out of the way: Officially known as the Section 529 College Savings Plan, this program is not subject to provisions of the federal Employee Retirement Income Security Act of 1974 (ERISA). There are no participation requirements, plan documents, summary plan descriptions, Form 5500 filings or discrimination tests. Employers have no fiduciary responsibility for the plan, nor any tax-reporting obligation.

Because they aren’t governed by ERISA regulations, 529 plans also have no audit requirements. That does not mean, however, that some element of audit or compliance won’t be instituted in the future.

Employees expect the company to monitor the plan’s performance, especially if it is an employer-sponsored plan. This requires periodic assessment and an investment of time and money.

About 529 plans
Many companies are considering offering 529 plans to their employees. These plans aren’t new, but they’re getting increased attention, thanks largely to the Economic Growth and Tax Relief Reconciliation Act of 2001. This federal law created additional tax benefits and greater portability among state programs.

Surrounded by economic uncertainty and escalating benefit costs, employers want to provide benefits that support financial security without draining their budgets. On an ongoing basis, a 529 plan is relatively inexpensive. An employer only has to set up a payroll deduction and periodically assess the plan’s performance. However, there may be significant up-front costs for choosing an investment fund, educating employees and communication.

Fund selection
Select an investment-funds manager that demonstrates due diligence. All 50 states, as well as the District of Columbia, sponsor 529 plans. These plans have the same features and are treated identically by federal tax laws, but vary regarding state income taxes, contribution limits, penalties, out-of-state issues, fund performance and other matters.

Selection costs could be significant, depending on the analysis required. For example, if your employees live in several different states, you’ll need to research the tax benefits each state offers.

If an employer selects one state plan, chances are good that employees living in that state will enjoy tax savings not experienced by employees who don’t live there. Also, plan designs differ from state to state. In New York State, for example, a student must be in the plan for three years before distributions can be made. This type of plan probably won’t work for employees whose children are already in college.

Communication
Ensure the program’s success by providing employees with adequate education andcommunication. Without those important elements, you’ll wind up supporting a program for a small percentage of employees. Communication can be costly. It might include newsletters, brochures and information sessions. Your investment manager also should have excellent communication materials.

SOURCE: Annamaria Azzara, Principal, Buck Consultants Inc., New York, New York, July 11, 2003.

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.

Ask a Question
 Dear Workforce Newsletter
Posted on

Civil Wars Over Recruiting Technology

It’s not unusual for human resources and IT to draw battle lines before coming to understand the key issues involved in choosing, implementing and operating a recruiting system. Ed Newman, president and founder of the Newman Group, a consulting firm in Phoenixville, Pennsylvania, says that organizations that think through the process up front are far more likely to avoid future casualties and carnage. His recommendations include:



    Analyzing business needs. According to Newman, company size and industry aren’t the primary factors. “There’s no single system that is right for everyone. Two Fortune 500 companies can have entirely different needs.” Typically, fast-growing organizations require more dynamic systems, such as best of breed offerings. Companies with fewer hiring spikes and more static processes generally benefit from an ERP approach.


    Understanding the alternatives. ERP systems plug directly into foundation data and require little or no integration. However, ERP platform upgrades are expensive and time-consuming. Best of breed systems, on the other hand, are more flexible and nimble, but demand considerable IT resources to connect to back-end foundation data. Only through careful analysis and an understanding of the pros and cons is it possible to develop a strategy.


    Assessing IT capabilities. The best recruiting application in the world is useless if IT cannot support it. “Most ERP packages allow some customization. A few best-of-breed vendors allow changes, but many do not support significant customization,” Newman says. Likewise, an 18-month implementation for an ERP application isn’t unusual and can put so much pressure on some IT departments that they come apart at the seams.


    Developing an upgrade path. It’s essential to understand where the recruiting application takes your company and what strategic and IT resources will be required in the future. If your company decides to go with a hosted-services model in the future, is this possible? If greater customization is required in the future, is this an option?


    Knowing the vendor and structuring a solid service-level agreement. Newman believes that it’s essential to examine the vendor’s customer-service record, its financial viability and the type of service-level agreement it offers. “There’s nothing worse than coping with unanticipated problems,” he explains. “If you analyze your organization, understand the marketplace and structure the right deal, you’re far more likely to succeed.”


Workforce Management, June 2004, p. 64 —Subscribe Now!

Posted on

India’s Latest Import Turnover

About one in three employees in India’s outsourcing companies quit within one year of getting the job, according to Dow Jones Newswires in New Delhi.
 
In response to the job-hopping, salaries in India’s $3.6 billion outsourcing industry are on the rise. Some companies, according to Dow Jones, are also finding themselves short on staff and are being forced to have poorly trained employees answer the thousands of customer-service calls pouring in from U.S. consumers.

“The quality issue has to be addressed,” says Nandan Nilekani, the CEO of Infosys, one of the larger companies in India. “The kind of increased scrutiny which we have got in the global media means that even a small quality issue can have much bigger resonance.”


Arun Seth is Managing Director of BT Worldwide, a British company that has outsourced some of its back-office operations to India. Seth tells Dow Jones, “As a result of higher attrition and growing salaries, there are big concerns over the competitiveness of the Indian outsourcing industry.”


For more information, see “A Call-Center Scam Prompts Greater Scrutiny.”


Posted on

Dear Workforce How Do We Prevent Division Presidents from Undercutting HR

Dear Miffed:



My first emotional reaction: fire the division president. This sounds radical, but it would sure send a message. Of course, the supervisor would quit, but she may quit anyway.

As far as preventing other employees from trying the same tactic, there isn’t any way to do this. The question is how successful they would be.

Now, to my more logical reaction. What have we learned here about how engaged the human resources staff is with senior executives? In this company, it’s obvious that the official did not have a high enough regard for human resources, and didn’t know the right way to handle these situations, which is to consult the chief human resources officer.

It would be easy to point a finger and snicker at this one, but couldn’t this happen in your company? If you say no, are you sure?

Conventional wisdom says you shouldn’t “buy” loyalty if someone is ready to leave, and permitting an employee to brag about a deal without being disciplined is foolish.

SOURCE: Roger E. Herman, certified speaking professional and certified management consultant,The Herman Group, Greensboro, North Carolina, co-author of How to Become an Employer of Choice and Impending Crisis: Too Many Jobs, Too Few People, July 22, 2003.

LEARN MORE: Please read ourHR’s Role Must Be Expanded in the Boardroom.

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.

Ask a Question
 Dear Workforce Newsletter
Posted on

Creative Sommelier Training Generates Great Profits for a Disney Restaurant

With a cellar that holds more than 1,000 kinds of wine, many rare and priced at over $1,000 a bottle, the Disneyland Resort’s Napa Rose restaurant has a wide enough selection to overwhelm even a savvy wine drinker. Its award-winning wine list features 400 wines at any given time, 60 of them served by the glass, and the menu changes at least twice a week so that all the wines in the cellar can be presented. And the 260-seat establishment is uncorking big profits.



    In fact, wine sales are so high that they consistently account for an impressive 30 percent of total restaurant sales, a figure that general manager Michael Jordan attributes to more than just good product. While Disney won’t provide specific figures, Jordan says that the restaurant seats between 200 and 300 guests each night. Given a Zagat average per-person check of $57, that means the Napa Rose pulls in between $11,400 and $17,100 a night during its operating hours of 5:30 to 10 p.m. At 30 percent of total sales, wine alone could account for more than $1,000 an hour.


    It wasn’t always this way. While Jordan won’t say specifically how much wine sales have improved since the restaurant opened in 2001, he does say that the change has been tremendous. And the key, he thinks, is a well-trained staff, one that not only knows which Chardonnay to recommend with an appetizer of sautéed hand-harvested diver scallops accented with fresh vanilla, but also can recommend several choices, rare and less rare, within a customer’s price range and then explain the choice. This knowledge, and the confidence that comes with it, he says, drives wine sales at each table and also builds rapport with customers, who are then more inclined to come back.


    John Hanson, a Napa Rose headwaiter who has been with the restaurant since it opened, attests that sommelier training has had a dramatic impact on both revenue and customer relations. He says that in the past three years, the average per-person check has increased from $50 to almost $70 and that most of the difference is in wine sales. Some nights wine sales account for over 50 percent of total sales at the restaurant. “Taking the training definitely increases your check average,” Hanson says. “You will make more money if you take it.” Tips are up as well for waiters who know their stuff, he says, because guests are more satisfied.


    Rated by Zagat as Orange County’s best restaurant in 2002, the Napa Rose is located in Disney’s Grand California Hotel in Anaheim, California. In creating it, Disney sought to break the traditional mold of fine-dining wine service, which relegates wine and food pairing to the realm of just one staff wine expert, or sommelier. “Under that method, customers have to wait their turn,” says Jose Barragan, the operations manager for hotel restaurants at the Disneyland Resort. “We felt that was not good enough. We wanted a seamless approach to service, and when you say, ‘Let me go get the sommelier for you,’ that’s not about seamless service. For us, that’s underdelivering.”


    So Jordan, a certified wine instructor, created an intensive training program that ensures that even the busboys know when to suggest the rare Trousseau Gris and what goes best with the oak-roasted shrimp in basil-saffron cream. The results have been overwhelmingly positive for the bottom line. “We’ve had a tremendous increase in wine sales since we began the training,” Jordan says. “In the beginning they were good, but not this good.” In fact, according to Tom Miner, a principal at Chicago food service consulting firm Technomic, wine sales’ percentage of total sales at Napa Rose is four to five times the average for a “sit-down” restaurant, and the training most likely has something to do with it.


    “Wine training for wait staff is extremely valuable,” Miner says. “If guests don’t understand which wine to get, they’ll spend in the low range, but many are willing to spend more if they know what they’re getting. If you give staff training and the ability to speak with authority and make the right selection, sales will go up automatically.”


    Thirty-five of the 80 staff members at Napa Rose have been trained and certified in basic sommelier knowledge, as well as 54 other employees (called “cast members” in the Disney tradition) from throughout the resort. The sommelier training is not new to Disney. The Walt Disney World Resort in Orlando claims more than 300 sommeliers. What is new is the intensive in-house training that Jordan offers in Anaheim, which goes beyond the basics. Jordan’s class meets for two hours once a week for six months and culminates with a two-day level-one class and a test administered by the Napa, California-based American chapter of the Court of Master Sommeliers, the international body that has been certifying restaurant sommeliers since 1969. The court recognizes three levels of sommelier: one, two and master, a level achieved by only 60 Americans. Jordan, who is one of two level-two sommeliers at Napa Rose, plans to take the master’s test this fall.


“It’s fundamental knowledge, but it’s more than most people know. And it breeds enthusiasm and confidence, which then translates to increased profits, higher customer satisfaction and employee retention.”

    The course is so comprehensive that in October, Jordan’s last class achieved a 100 percent pass rate on the test, a feat that the court’s worldwide president, Fred Dame, says almost never occurs. Jordan’s syllabus is a laundry list of technical wine topics ranging from food and wine pairing to wine-making chemistry, history and geography. The course also covers cocktails, beer, bottled water and cigars. “It’s fundamental knowledge,” Dame says, “but it’s more than most people know. And it breeds enthusiasm and confidence, which then translates to increased profits, higher customer satisfaction and employee retention.”


    Disney employees don’t pay for this knowledge. Although the company won’t comment on money spent for training, according to the Court of Master Sommeliers, Disney picks up the tab for the courses and exams it sponsors. At $450 for level one and $895 for level two, the cost to test and certify the 89 employees who have qualified at the Disneyland resort would have been more than $48,000, not counting the six months of free classes offered by Jordan himself. “It’s been a great business decision to educate the team,” Barragan says. “We invest, and we get our money back and more in the quality of service, in customer loyalty and in cast member loyalty.” He says that out of 92 employees who have taken Jordan’s training, only three have left the company in the last three years.


    “A direct result of the course is that the guests trust me more,” says another headwaiter, Mickey Sato. The restaurant attracts wine aficionados, and Hanson says that being able to discuss the wines intelligently with the guests helps to build a clientele, which contributes to increased sales. This expertise also adds to the efficiency of the restaurant as a whole. “The pace can move along faster,” Sato says. “If someone wants a recommendation, I don’t have to go get someone else. I can help you immediately.”


    Wine consultant and Master Sommelier Ronn Wiegand is a former wine columnist for the San Francisco Chronicle and the publisher of Restaurant Wine, a newsletter for wine professionals. He says that while he applauds the dedication and motivation shown by Napa Rose staff in wine training, calling 35 staff members “sommeliers” is misleading. True sommeliers, he says, are dedicated only to the wine program, and their tasks include stocking the wine cellar and creating wine lists in addition to making recommendations and serving. What Napa Rose has, he says, is “a bunch of waiters and busboys who have taken classes and achieved minor expertise.” Wiegand says that any restaurant could train their staff similarly and that many have servers as well trained or more so than Napa Rose. The difference, he says, is that they don’t have the certification to show for it. Yet he admits that Napa Rose’s wine sales are impressive. “It’s an above-average performance,” Wiegand says. “They are doing an excellent job.”


    The success of the training has been so dramatic, as seen through booming wine sales and enthusiastic customer feedback (Jordan says that despite its location in a hotel, 30 percent of Napa Rose’s customers are local), that Disney will continue to expand the program to other areas of the company. Jordan has given his course, complete with the culminating Court of Master Sommeliers class and exam, to 14 Disney Cruise Lines employees, as well as 13 staff members from the Anaheim resort’s Golden Vine Winery. The Golden Vine, which has a restaurant, demonstration vineyard and tasting room, was opened in 2001 in partnership with the Robert Mondavi Winery. (Mondavi eight months later downgraded its role to sponsorship, citing ongoing operational losses due to reduced consumer spending on travel and entertainment. Now Disney operates the venue.) Last month Jordan began a new course with 40 participants, and Barragan says that every table-service restaurant in the resort is represented. Dame says that another Disney cruise-ship training and test are on his schedule for the coming months.


    “Walt Disney puts its money where their faith is,” Jordan says. “They have faith that this is a good, positive thing, and it’s an investment that’s really well made. I think this program will grow and grow. We’ll train 40 people a year until we run out of people. Then maybe we’ll start educating guests.”


Workforce Management, June 2004, pp. 91-94 — Subscribe Now!

Posted on

Top Dollar The 10 Highest Paid Human Resources Leaders

C all it subtraction by addition. Leo J. Taylor, executive vice president for human resources at Pulte Homes, says that when the leading home-building firm reaches $20 billion in annual revenues–still some years away–he hopes to have pared his workforce-management staff from 30 down to 20. “I want one HR professional for every $1 billion in revenue,” Taylor declares. And if that sounds brash, well, brash pays.



    Taylor has used his aggressive, in-your-face style of management to become one of the 10 highest-paid human resources executives in the United States in an analysis of just-released 2003 proxy statements compiled for Workforce Management by Aon Consulting’s eComp Database. He ranks third and earned nearly $4.2 million in cash, bonus, stock and other compensation. While personal style is key to Taylor’s success, it also helps that he works for a hot company. Pulte Homes, like some other companies on the list, had a banner year in 2003, pushing up the value of Taylor’s stock. Shares of Pulte Homes jumped from $50 at the beginning of 2003 to $93 by the end of the year and then split 2 for 1 in January. Pulte’s earnings before interest, taxes and amortization were nearly $1 billion during that period.


    Paul McBride, senior vice president for human resources and corporate initiatives at Black & Decker Corp., is No. 1 on Aon’s list of the highest-paid workforce managers in a computer analysis of 5,097 proxy statements filed by publicly traded companies between January 1 and April 30. He earned $6.2 million in total compensation, which included salary, bonus, stock options and long-term incentive payments. McBride took over his new post in a reorganization completed this year. He replaced Leonard Strom, who retired as the senior vice president of human resources after a long career.


    Dennis Donovan, a much-honored human resources chief at The Home Depot Inc., was No. 2, pulling in more than $5.4 million in total compensation. Donovan, a fellow in the National Academy of Human Resources, joined The Home Depot in 2001. Others in the top 10, in descending order, are Taylor; William Roskin, senior vice president of human resources and administration for Viacom Inc., just over $3.9 million; Brent Stanley, the now-former senior vice president, human resources, for PG&E Corp., $3.4 million; Bruce Johnson, senior vice president, human resources, for The Timberland Co., $3 million;Robert Foreman, vice president, human resources, at SPX Corp., more than $2.9 million; Brian Brooks, executive vice president and chief human resources officer, Interpublic Group of Companies Inc., $2.6 million; Jeffrey Smith, now-retired chief human resources officer, general counsel and secretary, Cincinnati Bell Inc., $2.2 million; andJohn W. Holleran, senior vice president of human resources and general counsel, Boise Cascade Corp., $2.19 million.


Beauty contests
    Compensation-based proxy-season beauty contests are usually reserved for CEOs. But focusing the same spotlight on human resources executives provides an interesting view of a profession in flux. As workforce leaders push their way from backroom administration to the boardroom, one obvious impact on the profession is the creation of more millionaires. But the proxy results–which list only the five highest-paid corporate officers in each public company–also show that human resources executives still have a long way to go before they share top billing with COOs, CFOs and chief legal officers.


    In its analysis of 5,097 proxy statements, Aon found that only 172 human resources executives were listed as one of the top five officers in their companies, a rate of 3.3 percent. A separate study recently released by Towers Perrin surveyed a narrower base of 519 publicly traded companies. It put the low percentage in context by comparing human resources leaders to other senior corporate officers. When it did that, Towers found that human resources executives showed up on the short list in only 5 percent of the firms. In contrast, chief financial officers were listed among the top five in 76 percent of the companies and chief legal officers in 38 percent. Other studies show increasing numbers of workforce executives penetrating the top levels of management. As low as those percentages are, a few years ago only 2 percent of human resources executives were being listed in proxy statements, so some observers, like consultant Joe Vocino of Mercer Human Resource Consulting, see improvement.


    In yet another study of this year’s proxy statements, Mercer counted only 24 human resources executives among the five highest-paid corporate executives at 350 of the largest public companies it surveyed. Still, that is nearly twice as many as the 13 who showed up in a similar survey in 1999. The median salary for these 24 executives was just under $1.1 million. Compensation came in much higher for human resources executives among the group in the 75th percentile–nearly $2 million.


    Vocino, a senior compensation consultant, thinks there has been a dramatic change in the past 5 or 10 years. “You are seeing HR being valued much, much more in organizations,” he says. “More and more, we are seeing HR right at the CEO’s side at the time of strategic decisions, acquisitions and divestitures.”


    Outside issues will continue to push human resources executives into the top rank, Vocino says. That’s because they are in the thick of matters such as increased shareholder scrutiny of top compensation levels, class-action lawsuits by unhappy employees and a growing appreciation of the competitive importance attached to attracting and retaining a highly productive workforce. These all can have a big impact on profits, and executives who can walk through those minefields are highly prized, Vocino says.


    All of that places senior workforce managers like Leo Taylor and others on the list in a very small fraternity, and underscores the value of human-capital management to a company such as Pulte. “The people who do make that list of five are obviously pretty special people in their organizations,” says Brian Dunn, head of Aon’s global compensation practice. “These are not people simply expressing the desires of the people really running the companies. These are people at the strategy table running the companies.”


    As increasing numbers of human resources executives push their way onto the top rung of corporate executives, it’s clear from the fate of two of those on the top-10 list that they face some of the perils usually reserved for CEOs. At PG&E, Stanley got caught up in a public fight over what were described as lavish compensation packages awarded to top executives of the utility while its main subsidiary was in bankruptcy.


“These executives are highly compensated, but they are also subject to a lot of the same things their bosses are subject to. The days of getting a job like this and having it for 20 years are over.”

    During Stanley’s tenure, PG&E won workforce honors, including being named among Fortune magazine’s 50 Best Companies for providing opportunities to minority employees. But the last stages of his career at PG&E coincided with a controversy over what critics called lavish golden parachutes granted to senior executives at a time when the company was losing money. A proxy proposal to require shareholder votes on pay packages that exceed 200 percent of the executive’s base salary plus bonus was offered up–and rejected–at the company’s annual meeting in March after receiving support from the California Public Employees Retirement System, among other organizations. Stanley, whose retirement became official on June 1, was replaced a month before the meeting by Russell Jackson, the previous human resources chief at the parent company’s Pacific Gas and Electric Co. subsidiary.


    At Cincinnati Bell, Smith, an attorney, received a golden parachute as a result of a merger agreement between the telephone company and Broadwing Inc., where he was chief legal and administrative officer. Smith agreed to serve as a consultant to the CEO after he left the company at the end of 2003. Brian G. Keating, a 25-year veteran of Cincinnati Bell, replaced him. “These executives are highly compensated, but they are also subject to a lot of the same things their bosses are subject to,” Aon’s Dunn says. “The days of getting a job like this and having it for 20 years are over.”


    Pulling names from proxy lists to judge a corporate executive’s worth has built-in flaws. Total compensation tends to push up executives at successful companies because stock values are a major part of compensation. Executives at companies that are restructuring or going through hard times may be left off top-earner lists even though their value may be highest as they guide their organizations through tough transitions. “Those privileged enough to be working for companies doing well show up well,” says Timberland’s Johnson, No. 6 on the list, who has spent his entire 25-year career in human resources. “It doesn’t mean that other human resources professionals aren’t making similar and more important contributions at companies going through restructuring and downsizing.”


    The database pulled out only executives who had human resources in their titles. So it’s possible that highly paid executives responsible for human resources in their companies were overlooked because they were listed by more generic titles. For example, Thomas Cody, vice chairman of Federated Department Stores, who earned $1.5 million in salary and bonus and cashed in nearly $1 million in stock options in 2003, is in charge of human resources at Federated but does not list that in his title.


Man’s world
    Looking at other common characteristics of this elite group of highly compensated human resources executives, it is clear that they move a lot, jumping from one senior management position to another. This is not a stay at home, put in 30 years and get a gold watch group. Several have had tenures of only a year or two. More than half have graduate or law degrees. Five of the 10 worked for either General Electric Co. or PepsiCo and its Frito-Lay division. The showing affirms the companies’ reputation for turning out top human resources stars. At these levels, it’s also a man’s world. Only one woman, LaNette S. Zimmerman, executive vice president for human resources and communications at NiSource Inc., was listed in Aon’s top 25 in total compensation. The Society for Human Resource Management says 70 percent of its 180,000 members are women.


    Among the newest faces in the group are Pulte Homes’ Taylor and Timberland’s Johnson. Both are in their 40s, and each made his company’s list of top-five earners for the first time. Both climbed the conventional workforce-management ladder, taking on new jobs and bigger responsibilities with different companies.


    Johnson, 47, went into human resources straight out of Middlebury College in Vermont, where he studied history. He has held senior corporate jobs where he has been responsible for labor relations, staffing, compensation and benefits, training, diversity, organizational development and security. Johnson represents what some see as a new breed of human resources leader, one who exemplifies many of the qualities that are found in top executives. He has a strong sense of the bottom line, and yet takes a fresh approach to his role.


    Timberland, he says, promotes community involvement for employees, who are given 40 hours of paid time off for community service in their first year, with paid sabbatical programs of up to six months after three years. “We believe the skills you develop in the community are the same types of skills that work in a corporate setting,” he says. He is a man who speaks with a sense of purpose that goes beyond the nuts-and-bolts functions of human resources, an executive who shows up for work in blue jeans, a button-down oxford shirt and boat shoes. All from Timberland, of course.


    As for his own success, he says that support from senior management is key. “The management team has a predisposition to say yes to HR initiatives,” he notes. “I am not in a culture designed to say no.”


    For Taylor, holding down a top human resources job requires moving into an action-oriented role. He is responsible for traditional human resources programs such as comp and benefits, but he doesn’t define his job narrowly. Neither does Richard Dugas Jr., Pulte’s chief executive officer and president. Dugas took over the company last year, and soon promoted Taylor to serve as a key strategic adviser with responsibilities in all areas of the company’s business.


    “In my opinion, the HR role has a connotation of key benefits manager. We view it differently at Pulte,” Dugas says. “We have 11,000 people working for us, and Leo has as good a knowledge of who they are as anyone in the company. He understands the company inside and out, how we make our money, what the pitfalls are. With him, it’s not about the x’s and o’s of pay programs and benefits.”


    Dugas then reels off programs that Taylor has developed at Pulte, such as a mentor program called Top Gun. Pulte hires about 3,000 people a year, and executives called Top Guns are assigned “to evaluate the rookies” so they hit the ground running. “When you have that many people coming into the company each year, there is an awful lot of integration work that has to happen,” Dugas says.


    Another of Taylor’s programs involves training emerging leaders. Pulte has more than 45 divisions, each headed by a president and a vice president. Top performers below the rank of president are identified, then are thrust into a job with a president’s responsibilities. They receive 6 to 12 months’ training in the line of fire. “In the past we would promote our best vice president and say good luck at being a president,” Dugas says. That approach had about a 50 percent success rate, Dugas says, a figure he hopes to greatly improve with the new program.


    Taylor relishes these high-profile responsibilities. He breaks down human resources executives into three groups: the cop, who focuses on policies and procedures; the caretaker, who maintains the status quo; and the catalyst, who challenges the status quo. He identifies with the third type, and insists that his staff of 30 human resources professionals also constantly challenge conventional wisdom. “I don’t want myself or my folks to be a traditionalist, a cop,” he says. Taylor’s plan to reduce the number of people on his staff from 30 to 20 does not mean he is less committed to traditional management responsibilities. What he wants is to transfer training and development programs to line managers, who he believes are best placed to do it. That would leave the human resources staff to “provide guidance and counseling throughout the organization,” he says.


    Taylor says that too many in the field of human resources migrate to the cop role. But with CEOs demanding more and more contributions to profits from their workforce leaders, Taylor says, “the profession is going to be forced to change.” When that day comes, expect an increasing number of human resources professionals to join Taylor’s elite group of handsomely paid top executives.


Workforce Management, June 2004, pp. 43-50 — Subscribe Now!


Short bios of the highest-paid human resources leaders
 

Career History/Education

Paul McBride joined Black & Decker in 1999 and has held current office since March 2004. His past portfolios include executive vice president and president of the power tools and accessories group. McBride has prior experience with General Electric Co., where he was employed in 1978 as vice president and general manager of the global silicones business. He is based at the corporate headquarters in Towson, Maryland. And has a bachelor’s degree in economics from Trinity College.

Dennis Donovan joined Home Depot in April 2001, and is responsible for human resources, learning, corporate communication and diversity. His resume includes stint as senior vice president of human resources at Raytheon Co., and chief of human resources for the power systems business at General Electric Co. Donovan is a Fellow of the National Academy of Human Resources. He earned his bachelors degree in industrial relations and an MBA from the University of Massachusetts, and a law degree from Western New England College School of Law.

Leo J. Taylor joined Pulte in 1994 as vice president of human resources for one of their divisions. Taylor is responsible for long-term strategic objectives as well as compensation, training and development and staffing associated with the day-to-day operations. Previously served as vice president of employee relations for Aetna Life and Casualty, was group manager of corporate human resources for Frito-Lay and has held other offices within Frito-Lay. Based at headquarters in Bloomfield Hills, Michigan. Taylor has a master’s in industrial and labor relations from West Virginia University.

William Roskin’s responsibilities include Viacom’s worldwide human resources policies and programs, the development and management of the company’s labor policies and overall administration. He is also responsible for managing Viacom’s facilities and real estate throughout the world. Before joining Viacom in 1988, Roskin held senior executive positions at Coleco Industries, Inc. and Warner Communications. He has a business administration degree from City College of New York and law degrees from St. John’s University and New York University.

Brent Stanley served as senior vice president of human resource until his retirement in April shortly before the company’s annual meeting. Appointed in 1997, Stanley was responsible for the corporation’s human resources strategic direction in the areas of compensation, benefits, and management development. He has worked for nearly 30 years in a variety of senior human resources positions, including senior vice president of human resources for The Gap Inc., headquartered in San Francisco. Stanley earned bachelor’s degree in political science from the University of Iowa.

Bruce Johnson took this position in June 2003. He comes in with 25 years of experience in the human resources field and is responsible for developing and implementing all human resources strategies and programs into company’s worldwide operations. This is Johnson’s second go round with Timberland. He left the company in 2002 to take a position as vice president-human resources with DuPont Textile and Interiors. The company is headquartered in Stratham, New Hampshire. Johnson has a bachelor’s in history from Middlebury College.

Robert Foreman joined the company in 1999. Prior to that, Foreman spent 14 years at PepsiCo, part of which he served as vice president, human resources for Frito-Lay International. Foreman has a bachelor’s in political science from State University of New York.

Brian Brooks was a employee benefits and compensation consultant at Hewitt Associates, 1980-83, and spent the rest of the 1980s with Towers Perrin, where he became a partner and specialized in executive compensation. He earned his economics degree at the University of Wisconsin Madison and law degree at Vanderbilt University School of Law.

Jeffery Smith recently retired from his post as chief human resources officer, general counsel and secretary. He came to the telephone company from Broadwing Inc, and left after completing the merger agreement between Cincinnati Bell and Broadwing at the end of 2003. He has been replaced by Brian G. Keating, vice president of human resources and administration, and a 25-year veteran of Cincinatti Bell. The company is headquartered in Cincinnati.

John W. Holleran is holding this position since 1996. From 1991-1996, he served as vice president and general counsel. He began at Boise in 1979. The firm is headquartered in Boise, Idaho.

Sources: Compensation: Aon Consulting eComp Database. Biography: Workforce Management

Clarification: Workforce Management apologizes for any mistaken impressions that may have resulted from reporting about the retirement of Brent Stanley, the former senior vice president of human resources at PG&E Corp. His retirement was not related to controversies over pay levels for top executives in the company, according to PG&E. “There is no question about the facts. He retired voluntarily, and there were no other issues involved except that Brent and his wife wanted to retire,” said Leslie Everett, a PG&E Corp. vice president.

Workforce Management, June 2004, p. 45 —Subscribe Now!

Posted on

Workforce Management June 2004

Dangerous business
By Sheila Anne Feeney
It might seem tough to recruit employees to work 16-hour days that begin with the donning of flak jacket. But offer salaries of $20,000 a month and it’s easy to find people with the right job skills. Then comes the hard part: deciding if they have the right stuff for work in a war zone.

Top dollar
By Douglas P. Shuit
The 10 highest-paid human resource leaders in U.S. public companies work in industries ranging from manufacturing to retail to advertising. Their multi-million dollar compensation packages show that workforce executives are indeed gaining elite corporate status–they are among the five highest-paid officers in their companies. But the profession still has a long way to go before it shares top billing with CEOs and CFOs.

Hiring without limits
By Joe Mullich
At IBM, disabled workers contribute millions to the bottom line, and provide a crucial point of view for a company that makes and sells technology for people with disabilities. “We consider diversity strategic to our organization,” says Jim Sinocchi, director of diversity communications or IBM, who is a paraplegic. “We don’t hire people who are disabled just because it’s a nice thing to do. We do it because it’s the right thing to do from a business standpoint.”

System failure
By Sam Greengard
Human resources leaders, IT and top management are often at odds when it comes to choosing a recruitment-management system. While human resources may view functionality, speed and performance as key factors, the IT department is more likely to regard compatibility, ease of integration and its ability to support the application as the most significant issues. Top executives often prefer to leverage a company’s existing enterprise technology investments. Unless a strong business case can be made for a best-of-breed system, cost and compatibility usually win out.

Between the Lines
The 401(k) gamble
The plans are based on choices. And at every turn, employees make the wrong ones.
   Reactions From Readers
Letters on tuition reimbursement, leadership and productivity.

In This Corner
The life cycle of a “twofer”
It’s all too easy for an internal investigation into harassment or discrimination to become an opportunity for retaliation. And voila–two legal claims instead of one.

Legal Briefings
The cost of intentional misrepresentation to an employee: $555,666.

Data Bank
The global imperative

The class of 2004
Recent grads aren’t looking for lavish perks. They’d be amazed just to land a job. Also: Fallout from gay marriage in Massachusetts. Higher medical-claims cost are coming. A human-resources coalition takes on the issue of uninsured workers.
  
 

Pension Benefits
From panacea to pariah
In the wake of a court ruling and a lack of legislation, companies are bypassing cash-balance plans, once seen as an answer to traditional pensions.		  

Contingent Staffing
Companies demand vetted temps
Facing the risk of property and identity theft, some companies insist that their staffing agencies run background checks on temporary workers–and pay for it.
  

Health-Care Benefits
Weighing the costs of bariatric surgery
Although gastric-bypass procedures and other bariatric surgeries to combat obesity are popular, they’re also costly. Employers and insurers balk at picking up the tab.
  

Training
A taste of greater profits for a Disney restaurant
A creative sommelier-training program for servers at the high-end Napa Rose restaurant has resulted in higher dinner tabs. The tips are better, too.
  

Outsourcing
A call-center scam prompts greater security
International fraud, customer dissatisfaction and a sense of lack of control have pushed companies to step up oversight at outsourced overseas call centers.
  

Human Resources Management
A tool for analysis
Human resources annual reports can reveal trends, illuminate plans for the future and be used for persuasive purposed with line managers. But they are far from universal.
  

 
May  2004

April  2003
March  2003
If you’re not currently receiving Workforce Management magazine, click here to request a FREE trial issue today!

 


Posted on

A View from an Executive Search Firm “Talent Is the Name of the Game”

Hal Johnson has a view from the inside. As an executive-search consultant from the recruiting firm Heidrick & Struggles International, he confers with companies searching for CEOs, senior vice presidents and other human resources leaders.



    Johnson, who maintains offices in Denver and New York, is the practice managing partner of the Chief Human Resources Officer practice of Heidrick & Struggles. Prior to heading executive searches, he spent 18 years in senior human resources positions at INA Corp. (which includes CIGNA Corp.), Federated Department Stores Inc. and the Travelers Cos.


    Workforce Management recently asked him for his take on the state of human resources.


How is workforce management perceived by CEOs?
    I don’t like “workforce” as a term. It’s not a workforce issue as much as a talent-management issue–how can we find, retain, grow and reward talent? Most CEOs want human resources to focus on those issues and build human resources plans, programs and vision around talent.


How are sophisticated companies different from the companies that aren’t so progressive?
    When companies come to us, there is a fairly substantial hole to be filled. If it is necessary for them to do a search, it’s because of some new or unplanned activity of the company or, most often, it’s because they don’t have great people on the bench to ensure internal succession.


    Since CEOs are waking up to the implications of this “war for talent,” it is no surprise that they are reaching out to executives at Pepsi and GE to lead their talent initiatives. Of the top 200 human resources jobs, at the largest employers in the country, 30 to 35 are held by a human resources executive who has come out of Pepsi. Pepsi people know how to grow talent.


    A lot of old-time human resources organizations have been focused on the classic old-time “human resources stuff”–comp, benefits, labor, keeping the union out, getting people paid, worrying about this year’s merit budget. Pepsi and GE have always focused the human resources people on talent. You focus everything you do in human resources on attracting, growing and retaining talent. For example, that changes the compensation job. The classic compensation person worries about this year’s merit budget and distributing performance appraisals. The new-breed compensation person says, “How are we going to change organizational behavior with compensation, and what does that do to grow and retain the talent that we have in the company?” [Those are] very different kinds of jobs.


A few companies have great reputations, some have good reputations, but most have just muddled through.

    Sophisticated companies, led by sophisticated CEOs, attract sophisticated human resources leaders who can help the company grow. If you don’t focus everything you do on growing and keeping the best talent in your business, you will lose the war [for talent].


Do some companies have “good” reputations as being progressive in workforce management and others have “bad” reputations?
    A few companies have great reputations, some have good reputations, but most have just muddled through. By that I mean they’ve paid lip service to the question of differentiating performance, differentiating compensation based on performance, differentiating rewards based on performance and leadership, as opposed to aggressively doing whatever they have to do to attract and retain talent. The non-imaginative companies have sort of one-size-fits-all programs and activities designed to keep order in the company, as opposed to those that ferret out, reward and retain the best talent in the company. And those are very different approaches: one’s passive, the other’s aggressive.


    A company can be perceived as having a good reputation because of the quality of the management and what that management does. Look at GE. They’re four deep at every senior leadership position in the company, and they’ve been working like that for 20 years. The CEO spends two weeks a month on the issue of people, succession and leadership. As a result, GE’s performance is superior. Any company regarded as a high-performance company has generally got a high-performance human resources organization.
 


Are companies–when doing CEO searches–more and more looking for people with workforce-management experience, or who have a special interest or viewpoint about talent?
    Talent is the name of the game. Companies want to see what [the prospective CEO] has done. What have they built? What is the quality of groups and teams and organizations left behind? Boards want leaders who can recognize, grow and retain talent.


    There is a growing awareness that it’s the quality of management teams that makes companies great. If I’m filling a new CEO job and I’m on the board, I want to know what this person has done in the last two or three jobs. Has he or she built great teams? What have they accomplished? What have they done? What did they inherit? What did they change? That’s what I’m looking for in a CEO. Most people aren’t hiring CEOs to maintain. They want to grow. They want something different or they want to change the direction of the company or change the mix of the company.


A senior VP of human resources at The Limited, Len Schlesinger, went from senior human resources to an even higher position: vice chairman and chief operating officer. Is this a sign of things to come–human resources professionals recruited to other departments?
    No, this is not a major trend. Hiring human resources people from the line has been done, and it has not been done successfully in most areas. Generally, line people have not been exposed to the science of managing talent, change, vision and values, creation, etc.


There are exceptions. Schlesinger has done a good job. He’s a very strong guy. He was uniquely positioned because he was keyed in as a member of the board of directors. He spent two or three years on the board. He was an adviser, an observer and confidant of the management of the company on the direction of the company. He had a unique, personal, deep experience with the company. He is a very big-picture human resources guy; he doesn’t spend a lot of time worrying about the small stuff.


Are there still sectors of the economy–utilities, perhaps–that really haven’t kept up with the Joneses when it comes to workforce management?
    Historically, there have been sector differences. Utilities have been thought of as stodgy and not very imaginative. With deregulation, all of a sudden they have to think of themselves as marketing companies, market-share companies, advertisers, marketers–they have to get the product to market in a whole different way.


    It’s had an enormous impact on the culture, values and pace of those kinds of companies. And in the better companies, human resources has played a significant role in leading those kinds of changes. A power company in Omaha can be selling power in New England, in a competitive environment, as opposed to a public-utility environment. That is a very dramatic change.


What makes a great human resources leader?
    He/she has to be a businessperson first who understands people and human/organizational behavior. But first he/she has to be a businessperson, coupled with–not secondarily–but coupled with an understanding of human behavior and organizational behavior, and of how workforces are motivated and driven. Just doing “personnel stuff” is a recipe for failure…. Everything you do should be in the context of building, keeping and retaining great talent, and if you’re not doing it on that basis, it’s probably not worth doing.


    Building a day-care center is a wonderful idea, but doing it because it is going to help you retain great talent is the right idea. The human resources person who does it because it’s a “good” thing to do is not going to be very successful. If it helps reduce the potential loss of the great talent you have, then you ought to do it. Then the line organization will pay attention to you.