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Open Enrollment Is a Non-Issue, Thanks to Self-Service

 
Name: WellPoint Health Networks Inc.
Location: Thousand Oaks, California
Business: Health-care company
Employees: 17,000

When Chuck Moore was hired several years ago to upgrade WellPoint’s HRmanagement system, administration of even basic employee documents at thecompany was a significant problem. The HR staff received up to 2,000 faxes amonth that required some amount of data entry, but because everyone in thedepartment hated dealing with the paperwork, entering the data was “the lowestpriority, to be done at the end of the day,” Moore says. Consequently,critical documents piled up in HR in-baskets, delaying filing and frustratingemployees, who logged up to 14,000 calls per month to the company’s humanresources call center. “At that time, a six-week turnaround to complete a payincrease was considered good, and errors in all of the data were common,”Moore says.

    The company initially implemented PeopleSoft 7.5 to centralize the HRdatabases, then upgraded to 8.0 in 2001 to take advantage of the new version’sself-service features. PeopleSoft 8.0 allows employees to see benefits options,update personal information, and view their pay history and 401(k) data onlineat any time. Managers can administer employee change information, such as payincreases and title changes, and complete employee reviews without sending hardcopies to the HR department to be entered into the system.


    WellPoint went live with the new version in August, with considerablesuccess. Employees started using it almost immediately with little training orencouragement, Moore says. As of November 2002, the self-service system hadtracked 17,000 separate users for the year, and managers had initiated anaverage of 300 promotions and 40 salary changes per month online.


    “Now when data is entered in the self-service system, it’s done byemployees and the information is updated immediately.” That means, forexample, that a payroll increase shows up on the employee’s next paycheck–notsix weeks later.


    As a result, costs have been reduced dramatically and quality has improvedimmensely, Moore says. Within months of going live, paper flow to the HRdepartment almost disappeared. In 2001 they received 63,000 separate pieces ofpaper; by November 2002 they had received fewer than 1,100 documents for theyear, most of them via e-mail.


    But the most obvious example of the success of the self-service system wasthe ease with which the company completed its open enrollment in 2002. In thepast, WellPoint outsourced open enrollment to a vendor, which required months ofplanning and resulted in many errors and mishaps. Moore’s team used to beginplanning for open enrollment eight months before the event, working with thevendor to design documents and establish the process. “It was a huge task thatcost a lot of money and took an enormous amount of time,” he says.


    However, since the installation of self-service, “open enrollment hasbecome a non-event,” Moore says. In 2002, forms and benefits information wereavailable online, and employees were e-mailed reminders to complete theirenrollment by the end of October. “On the last day of enrollment, more than2,000 people made changes and there were no breakdowns,” he says. And heestimates that the reduction in man-hours, paper costs, and errors saved thecompany $400,000.


    Except for monitoring the number of enrollment submissions and fieldingcalls, the HR team wasn’t involved at all, Moore says. “It trivialized theenrollment process, which means we can apply our resources to other projectssuch as improving recruiting efforts and reducing turnover.”


    It has also changed the makeup of WellPoint’s HR team. “We don’t relyon administrative assistants anymore,” Moore says. “Our focus now is onemployee relationship management.”


Workforce, January 2003, p. 61 — Subscribe Now!

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What Worked and What Didn’t with Employee Survey Programs

Integrating a survey with organizational transformation
    An international high-technology firm with operations in more than 60countries positioned the survey process as an integral element of itsorganizational transformation. Survey branding was integrated with the company’songoing change initiatives and made use of distinctive art and tag linesassociated with this process. The survey results were summarized to provideindex scores for each of the company’s corporate values. Response rates werehigher than targeted, and survey results were used to refine and support changeinitiatives.


The survey census day
    A retail banking organization had been conducting employee surveys for morethan 10 years, but response rates had sharply declined. An extensive process forpre-survey communication was developed and included posters, Q&A documents,and regular countdown messages through team briefings and company newsletters. A”survey census” day was scheduled to provide a focal point, but thedata-collection window extended over two and a half weeks. The bank achieved asignificant increase in the survey response rate and had one of the highestrates observed for retail banking.


The survey champion network
    A major retailer conducted a company-wide survey that was administered by thecentral HR function. Questionnaires were shipped to stores and deposited,unannounced, in employee break rooms. Return rates were predictably low. For thenext survey, a champion network was created, with representation from employeesand middle management. Regular meetings were held to organize administration andprovide mutual support. An employee representative was appointed for each storeto assist in administration and to encourage employees to respond. The returnrates were greater than expected and increased by 15 percentage points over theprevious year.


Improving the fit with culture
    An organization with manufacturing operations in the United States and Europeconducted its first company-wide survey using a standard “cultural audit.”However, employees complained that the instrument didn’t seem to “fit” thecompany or adequately address the issues of greatest concern. Participationrates were low. A new survey was designed using input from employee focus groupsthat better reflected the culture of the company. The new survey achieved asignificantly higher response rate, and the survey follow-up actions wereuniversally viewed as more effective.


Demonstrating senior management commitment
    A corporate bank had established a company-wide objective to improve employeemorale and to become an “employer of choice.” Despite an extendeddata-collection window, survey response rates were disappointing and anecdotalevidence indicated that employees had become skeptical about the follow-upprocess.


For its next survey, the bank limited the number of issues for follow-upaction and assigned an executive sponsor to each area. These areas werecommunicated to employees along with the name and photograph of the executivesponsor. For the subsequent survey, return rates increased significantly andemployees indicated that they were more confident that follow-up actions wouldbe taken.


The dangers of a false deadline
    A U.S. manufacturing company with international operations wanted to presentsurvey results at a senior management conference that was scheduled in twomonths’ time. That allowed just eight weeks to design, translate, andadminister the survey in more than 30 countries. Local management had littleinvolvement in developing the survey process and was instructed to “make surethe questionnaires are administered and returned on time.”


For many countries, the timing was impractical, with data collectionscheduled during periods of peak sales activity or plant-maintenance shutdowns.Somewhat draconian methods were introduced to induce participation, but themajority of employees did not respond. Few actions were taken in response tosurvey results. In a subsequent survey, planning was begun eight months prior toadministration and a survey-coordinator network was established. Roles andresponsibilities were agreed on, and follow-up expectations were communicated tomanagers. Response rates improved.


An appeal to charity
   A UK retail bank wished to increase survey response rates and offered acharitable donation for each completed questionnaire. Simultaneously with thiscompany-wide survey, a second survey was conducted with a sample of employees–butwith no promise of a charitable donation. The response rates were identical forboth surveys. The company continued to support charities, but concluded thatoffering a charitable donation as an incentive did not affect response rates.


Linking survey results to bonus
    An insurance company linked bonuses for employees and managers to balancedscorecard objectives, one of which was “people satisfaction,” as measured inthe employee survey. In other words, bonuses were based, in part, on howfavorably employees responded to the survey questions. Return rates wereacceptable but low. Written responses to open-ended questions indicated thatemployees felt pressured to report high levels of morale. The bonus linkage wasdropped from subsequent surveys, and much to the surprise of management, returnrates and satisfaction levels increased.


Timing is everything
    An international accounting firm believed that two weeks was a sufficientamount of time for data collection. They also believed that response rates wouldbe unaffected by fluctuations in the business cycle. Data collection wasscheduled to immediately follow the income tax filing deadline. After two weeksof administration, the response rate was abysmally low, and data collection hadto be extended for an additional four weeks. Subsequent surveys were scheduledto avoid the tax season.


Starting a dialogue
    A specialty chemical company with operations in more than 30 countries wasdisappointed with the level of participation in its first company-wide survey.Management was convinced that future response rates could be improved by takingaction on the current survey results and by monitoring the effectiveness offollow-up. Each company location was required to prepare regular reports onfollow-up actions.


    Adopting the title of the survey, these reports became known as “Dialogue”reports. The Dialogue reports were communicated to regional management andbecame a regular part of the briefing packs that were routinely prepared forvisits by the company’s executive team. As hoped, the response ratessignificantly increased for subsequent surveys.


Workforce Online, February 2003 — Register Now!

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Boomerang Clients Network size, convenience and service differentiates VSP from the competition

Six years ago when purse strings were tightened at the Merced City School District in California, Ellen Kraft, Risk Management Technician, was forced to look at the district’s ancillary lines. Responsible for 1,200 employees at some 20 different sites, Kraft wanted to be certain that the school district was getting the most for their money when it came to vision care. With assurances that a competitor’s vision plan would offer “almost” the same level of benefits as VSP, at a lower price point, Kraft decided to switch.


    The employee reaction after the switch was far from positive. According to Kraft, the district experienced difficulties with plan providers, customer service was poor and the volume of complaints was considerable. Soon after, Kraft realized the change was not worth it. “We were so used to the exceptional service from VSP. It’s very hard to duplicate that. The members were so dissatisfied and it takes a lot of time to handle employee complaints. I ended up spending a large portion of my time handling employee complaints.”


    Kraft is emphatic that the cost savings was not worth the hassle. “If the price had been a third or a quarter of VSP’s cost, it still wouldn’t have been worth it to switch carriers. I’ve learned a hard lesson, that you get what you pay for.”


International Network Services, Inc.
    Another “boomerang” client, Santa Clara, California based International Network Services, Inc. (INS), a leading vendor-independent provider of global network consulting and security services, became a VSP client in 1998, but switched to another vision carrier after being acquired by Lucent Technologies, Inc. With the switch came a dramatic change for INS employees. Julie Threet, INS’s Director of Compensation and Benefits acknowledges “after the switch, vision became one of the biggest employee issues.”


    Their new vision benefit had a large chain component, and Threet says her employees missed VSP’s large doctor network and member service features. “Our engineers travel all the time based on their assignment and can’t be constricted by chains. They are technical and want to know they can go to a Web site and find a doctor they can see in the city they are in. They want their spouse to have the same experience at home.”


    With the heavy chain emphasis of the new benefit, Threet and her employees were also concerned about the quality of the care they were receiving. “We didn’t like going to the same place to have our eyes checked where we buy laundry detergent.”


    By the time INS was spun-off in 2002, Threet says “VSP was the first plan we knew we wanted to re-instate.”


    Both employees and benefit administrators at INS applauded the change back to VSP. “Based on my experience with VSP, we’ve never had an issue with cost, administration or employee satisfaction. The last thing I want my engineers doing, is tracking down a claim issue instead of billing clients. That is how we generate revenue. Any time the employee spends worrying about their benefits, is valuable time away from their work. With VSP, I don’t have to worry about it.”


“Based on my experience with VSP, we’ve never had an issue with cost, administration or employee satisfaction.”–INS Director of Compensation and Benefits, Julie Threet


Workforce, July 2003, p. 65 — Subscribe Now!

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Quality Program Begins With Hiring

 
Name: American Residential Services
Location: Memphis, Tennessee
Business: Heating, venting, plumbing, air conditioning, and electricity service company
Employees: 7,000

When American Residential Services started its Six Sigma quality-improvement process, one of the first issues it targeted was turnover among the company’s 4,000 service technicians. In 2000 its turnover was 70 to 80 percent—not bad for the industry but unacceptable in the eyes of the ARS executive team, says Robert Beckmann, vice president and Six Sigma Black Belt, whose sole job at ARS is to implement Six Sigma projects. “One of our primary objectives with Six Sigma is to put greater focus on employee development. That begins with hiring,” he says. “We needed to do a better job selecting people.”

    To reduce the number of bad hires and to get a better overall understanding of the quality of applicants, Beckmann implemented a Wonderlic pre-employment assessment test for service technicians. At first, hiring managers were worried that the test would cut off their supply of labor, he says. But when they saw the results of the pilot project, which tracked assessment scores at two service centers, their fears were quelled. Only 10 to 13 percent of applicants scored below 70, which is the test’s “be careful number,” Beckmann says. “It eliminated applicants with the least likelihood to succeed, but it didn’t prevent managers from filling job openings.”


    Beckmann sees that 13 percent elimination as a significant cost-savings for the company. He estimates that each lost technician costs $5,500 to $7,000 and believes that before the test, all of those techs would have been hired on the spot. Except for drug and criminal-background screening, the company didn’t have a detailed interview process. “If they had a license, we got them on a truck,” he says.


    With the success of the pilot program, Beckmann rolled out the tests to the rest of the company’s 70 service centers in January 2002. Now, whenever technicians fill out an application, they also complete the 90-question test, which rates their reliability, customer-service aptitude, and retention likelihood. Managers fax the test to Wonderlic and are e-mailed the results in minutes, allowing them to determine on the spot whether to continue the interview process.


    One year later, the number of those who score poorly on the assessment hovers at 10 to 14 percent for all the centers, he says, and the result of not hiring those people has been dramatic. While the number hasn’t been officially calculated, preliminary data shows that turnover had dropped 20 percent by November of last year. That means they are hiring about 100 fewer service techs per month, which amounts to a savings of about $7 million a year. Beckmann attributes that largely to the test and its impact on the hiring process. “It gives rigor to our entire selection process,” he says. “It makes us take a better look at people and think about the implications of hiring them.”


    And the benefit of the tests touches all of the company’s employees. “Every service team is like a club,” he says. “When there are people in the group who don’t fit, it’s demotivating for the others. Our goal is to have elite teams of technicians who take care of each other and look out for one another.” The test, he says, is the first step in helping them achieve that goal.


Workforce, April 2003, pp. 67-68 — Subscribe Now!

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Choosing the Right Assessment Vendor

Choosing an assessment vendor can be a confusing process. There are literallyhundreds of vendors selling all kinds of products to help you hire employees.The majority of these vendors will assure you that their products are perfectfor your company or can be easily modified to fit your needs. While theappropriate use of assessment tools can provide significant ROI, using the wrongtool can result in substantial losses of time and revenue. The key to ensuringthat you reap the benefits of assessment tools while avoiding the risks is touse a well-planned and thorough vendor-selection process.

    Effective vendor selection requires three basic steps:


Step 1: Create a team and a process
    Unless you are addressing a very simple and straightforward staffing need, itis a good idea to create a formal team and project plan to oversee thedeployment of assessment tools. The functions of this team include determiningassessment tool requirements, researching and gathering information fromvendors, reviewing and evaluating vendor solutions, and outlining processes forongoing use and support of assessment tools once they have been implemented. Theteam should include representatives from the major stakeholder groups that willbe affected by the use of assessment tools.


    In addition to HR, consider including personnel from IT, legal, andoperations. It is also useful to include someone with expertise in assessmentdesign and validation to help provide guidance during the process.


Step 2: Perform a needs analysis
    Before speaking with any vendors, clearly define your reasons for usingassessment tools. Outline specific business issues you wish to address and theoutcomes you expect. Consider operational issues such as where you plan to useassessments, how the assessments will be administered, how you will interpretthe results and handle assessment data, and who will provide ongoing support andtraining for the assessment tools. Define constraints such as budgets, personnelresources, and technology requirements.


    This needs analysis should clearly define what the assessment tools must doin order to be successful. Failure to conduct a good needs analysis will resultin vendors telling you what you need instead of allowing you to be in control ofthe process.


Step 3: Conduct a formal request for proposal (RFP)
    The assessment-tools market is rapidly changing, with new solutions beingintroduced virtually every month. It is always a good idea to get proposals froma range of vendors before deciding on any single solution. The RFP that you sendto vendors should detail the specific business objectives you want to achieve,which jobs you want to support with assessment tools, the number and location ofcandidates, and any technology requirements.


    The RFP should also ask vendors to supply some very specific information thatwill help you select the best one for your needs. The following 10 questions canbe used to evaluate a vendor’s solutions and their ability to help you meetyour goals.


1. What assessment techniques do you provide? It is important to understandthe types of assessments offered by a vendor. Do they sell primarilyqualifications screens, knowledge tests, talent measures, or background checks?Explore which assessments reflect their core capabilities and which ones theyoffer through partnerships or outsourcing. Ensure that the assessments offeredby the vendor align with your business objectives.


2. How do you determine what are the most critical aspects of jobperformance? To provide effective and legally sound assessment tools, a vendormust be able to clearly define the critical factors that influence job success.This process of defining job performance is commonly known as job analysis. Manyvendors will cut corners in this up-front work, so it is important that theyclearly demonstrate the processes they use to develop links between theirassessment tools and job performance.


3. What validity data can you provide for this product? Validity dataprovides the proof that an assessment tool actually predicts job performance.All assessment vendors should have summaries of validity data that are readilyavailable to prospective clients. This data should provide evidence of thetool’s performance on jobs similar to those for which you plan to use it. Lookfor “hard numbers” linked to well-defined measures of performance (e.g.,supervisor ratings, tenure).


    Avoid vendors that rely heavily on vague anecdotal statements about theirtool’s perceived effectiveness and impact. Ask for references from specificclients that you can contact to learn more about the effectiveness of theirassessments.


4. Do you have evidence regarding the legal defensibility of this tool? Youhave a right to know if a vendor’s product has ever been challenged in court.It is also important to determine if the tool displays adverse impact (i.e.,members of certain protected classes do not perform as well on it as members ofthe majority group).


5. How much consulting and customization is required to get your systemconfigured for our organization, and how much time will this take? Some systemsare built so that they can be used “off the shelf” with very littlecustomization, while others require more time and effort to configure. In mostcases, taking time to create a customized system offers advantages in accuracyof prediction and higher levels of legal defensibility. However, it alsoincreases development costs.


6. What delivery methods are available? Paper and pencil, telephone, and theInternet are the three main ways to deliver assessment tools to applicants. Manycompanies offer all three options, but differ widely in their level of expertisewith each method. The technology around telephone and Internet screening can bea major source of problems, but it can also offer significant benefits incomparison to paper-and-pencil delivery methods. It is a good idea to askvendors for specific examples of using similar technology to deliver theirassessment tools.


7. How easy will the results be for recruiters and HR personnel to interpret?You want a system that provides high-level results that are easy for non-expertsto understand but also allow in-depth information for the purposes ofdocumentation and more detailed investigation. Some assessments can even be usedfor both candidate evaluation and development of newly hired employees.


8. Does the system consider the needs and feelings of the test taker? Theexperience of applicants is a critical factor in defining the success of anassessment tool. Upsetting applicants is bad recruiting and can lead to legalaction. What steps has the vendor taken to ensure that candidates will perceiveits tools to be job relevant and culturally unbiased?


9. How is the system priced? It is important to clearly understand the feeschedule as it relates to the manner in which you plan to use the test. Askvendors to outline up-front fees for system design and configuration, as well asongoing usage fees.


10. What ongoing support will you receive? What services does the vendorprovide to ensure the ongoing effectiveness of its assessment tools? Does itprovide quarterly or semi-annual reviews of the performance of its assessmenttools, including EEOC summaries? What sort of ongoing customer and help-desksupport is offered? You want to look for vendors that will provide activeongoing support and will not simply disappear after you have bought their tools.


    You should also consider the financial and personnel stability of thecompany. Some assessment companies depend heavily on the expertise of one or twokey individuals. Try to find out if this is the case, and ask what transitionplans the companies have in place should these individuals leave.


    In general, the RFP process should be approached as a dialogue, not aninterrogation. Most assessment vendors are ready and willing to respond toformal RFPs. However, be respectful of the time it requires to respond to yourquestions, and do not ask for solutions that you are not serious aboutimplementing. It is also helpful to let vendors know in advance about what sortof budget constraints you have. It will save both parties a lot of time, and youmay be pleasantly surprised by the alternative solutions they will propose.


Workforce Online, December 2002 — Register Now!

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2002

The Workforce Optimas Awards are a celebration of the power of human resources management. Annually, Workforce recognizes HR programs that have made their businesses better. The winners are selected in 10 categories: General Excellence, Competitive Advantage, Financial Impact, Global Outlook, Innovation, Managing Change, Partnership, Quality of Life, Service, and Vision. The winning programs are profiled in the March issue of Workforce magazine with additional information provided at Workforce online.


It is with great pleasure that Workforce celebrates the winners of Optimas Awards 2002:


 

General Excellence:
Competitive Advantage:
Financial Impact:
Global Outlook:
Deloitte Touche Tohmatsu
HR at Deloitte Touche Tohmatsu revamped an international career development program, added assessment tools, and then marketed the program to candidates and executives.


Innovation:
Province of New Brunswick
The province of New Brunswick breathed new life into a dying economy by creating 20,000 new technology jobs and trained residents for them.


Managing Change:
Partnership:
Quality of Life:
Service:
Vision:
Acxiom Corporation
At Acxiom there are no fancy titles. Everyone’s office is the same size, and nobody worries about going through the proper channels. The results? Phenomenal growth and a contented workforce.

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Nelson’s Ten Commandments of Recognition

Bob Nelson believes that today’s workforce may be more motivated by apersonal thank-you than a pay raise. He shares his top 10 ways (in order ofpriority) to motivate employees:

1. Personally thank employees for doing a good job. Thank them face-to-face,in writing, or both. Do it early, often, and sincerely.


2. Take the time to meet with and listen to employees–as much as they needor want.


3. Provide specific feedback about performance of the person, the department,and the organization.


4. Strive to create a work environment that is open, trusting, and fun.Encourage new ideas and initiative.


5. Provide information on how the company makes and loses money, upcomingproducts and strategies for competing in the marketplace, and how the personfits into the overall plan.


6. Involve employees in decisions, especially as those decisions affect them.


7. Provide employees with a sense of ownership in their work and workenvironment.


8. Recognize, reward, and promote people according to their performance; dealwith low and marginal performers so that they either improve or leave.


9. Give people a chance to grow and learn new skills; show them how you canhelp them meet their goals within the context of the organization’s goals.Create partnerships with employees.


10. Celebrate successes of the company, of the department, and ofindividuals. Take time for team- and morale-building meetings and activities.

Workforce, April 2003, p. 50 — Subscribe Now!

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Blended Formats Engage all Learners

 
Name: Grant Thornton
Location: Chicago
Type of organization: Global accounting, tax, and business advisory firm
Number of employees: 3,000

When Bob Dean took over as chief learning officer for Grant Thornton two years ago, the company believed in training as a strategic tool for achieving business results. “Daily learning is a key to competitiveness and profit,” Dean says, “and management is focused on building a continuous learning culture.”

The company was already using a learning-management system as a way to handle record-keeping on the Web, but employees needed easier access to training. “We wanted a one-stop shop for learning,” Dean says. So he built Grant Thornton University, a Web-based corporate learning portal. Through GTU, employees can register for any course, whether it’s classroom-based or online, and they now have access to more than 1,000 hours of self-paced training, live Webcasts, and virtual-classroom courses.


But it wasn’t as easy as buying a library of premade courses and throwing them online. Before investing in content, Dean and his team evaluated the needs of end users and built learning paths aimed at every level of the company. His intention was to deliver customized learning solutions to each business unit instead of generalized content for the entire organization. The learning paths are broken down by competencies and skill requirements, and then tied to job performance, he says. So, for example, if an employee receives performance feedback indicating a need for improved teamwork skills, his manager can identify an appropriate team training course for the employee’s position and required competencies, Dean says. “A big part of the learning vision is that managers play an active role in guiding employees toward the right learning opportunities.”


Dean and his team put a lot of thought and effort into choosing not just the right courses but also the right delivery methods for each topic. “We found that the combination of self-paced modules with live virtual-classroom components is critical for learner success,” he says. The self-paced lessons deliver informational content so that the live training can be used for group work, question- and-answer sessions, and case studies. It’s a better use of live training time and enables instructors to cover more content in less time, he says.


The blended model also helped to ease some employees into the new training format. There was a lot of resistance to self-paced training at Grant Thornton, Dean says. It was a foreign way to learn, and employees were skeptical of its value. But the virtual classroom is a more familiar setting, he says. It gives students the opportunity to interact with peers and with course experts who are often high-level executives at the company. “With self-paced training, they can feel all alone,” he says. “But with the combination, they see that the learning model isn’t changing so drastically. It’s comfortable and convenient.”


To introduce GTU to employees and get buy-in from management and staff, Dean uses every opportunity to talk up the project and walk people through the technology. Starting at the top, he invited managers across the firm to participate in virtual kickoff events from their desktops using Centra virtual-classroom technology. “We needed the field managers to be our champions because they are the ones who will get employees to use the learning,” he says.


In the online kickoff sessions he covered the strategic goals of the initiative, showed managers how the technology works, and let them try out sample content. An added benefit of using a virtual classroom to introduce the project was that managers were able to learn about GTU while seeing it in action. “The virtual classroom gets the biggest ‘wow’ factor,” Dean says. “It’s like a talk show delivered to your desktop.”


Workforce, March 2003, p. 60 — Subscribe Now!

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Streamline Benefits on Eight Tracks

Benefit integration helps companies manage employee offerings moreintelligently and comprehensively, but it isn’t a quick benefit-design fix. Tosee if it’s the answer at your company, consider the following advice fromUnumProvident Corporation:

  • Recognize the many factors that contribute to employee productivity. Hiring,training, and rewarding the right people are tools that can boost productivity.After considering your employee population, look at the nature of their absencesto determine which can be prevented. Review scheduled and unscheduled absencesto decide how much employee “lost time” is acceptable. Look at the full costof employee absences, including direct and indirect costs such as replacementworkers and retraining.


  • Assess current corporate policies, procedures, rewards, andperformance-management systems. Review the current policies and procedures inregard to return-to-work, leave, and cost-allocation structure.


  • Devise methods to capture data. Use data from payroll, lost-time, and costestimates to get absence patterns and establish integrated programimplementation baselines. Be wary of using “existing data” that may contain”hidden costs” such as FMLA leave and under-reporting of lost-time claims.By examining pre-established baselines and benchmarks, utilizing cost-benefitanalyses, and measuring employee lost-time, you can generate reports to show theCFO your progress and return on investment.


  • Initiate a return-to-work program. Developing an effective return-to-work program–a cost-saving measure essential to the success of any integratedbenefits program–should be an early step.


  • Consider integrating incrementally. Companies should determine which benefitareas should be managed and give priority to those most directly affectingworkplace productivity, such as short-term disability, long-term disability,FMLA, and workers’ compensation. Starting a small pilot within a division orlocation might demonstrate value before broader implementation.


  • Coordinate efforts between the benefits and risk-management departments.These executives should meet regularly to discuss challenges and successes.


  • Determine the needs of the entire corporation. The program must resonate withemployees both operationally and culturally. For example, if your corporateculture empowers employees, ask how they are going to feel about the newstructure, reporting methods, and controls that are often involved withintegrating benefits.


  • Choose a partner that can help every step of the way. Consultants and vendorscan provide useful information or even run your program. They can supplylost-time models to estimate costs, tap benchmark data to establish baselines,and build a case to upper management for benefit integration.


Workforce, December 2002, p. 49 — Subscribe Now!

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Outsider CEOs May Not Be Saviors

After the collapse of several prominent companies, many led by high-pricedoutsider CEOs, some question the assumptions on which executive searches and paypolicies were based in the last decade.

    “It’s now perceived that if a company is doing well, it’s because ofthe CEO, but empirical research shows that who the CEO is doesn’t matter indetermining the performance of a company in terms of long-term stock performanceor financial returns,” says Rakesh Khurana, an assistant professor at HarvardBusiness School and author of Searching for a Corporate Savior: The IrrationalQuest for Charismatic CEOs. It was the “war for talent” mind-set that onlythe right CEO can lead a company to prosperity that drove CEO salaries throughthe roof, he says.


    “There’s no empirical support for the war for talent, and it borders onthe irrational to think that just because someone did well at one organization,they will do well at another,” says Khurana. For example, he says, GE managersrecruited to other companies have generally not delivered on their originalexpectations, although they did very well during their tenures at GE.


    “John Trani went from GE to being CEO of The Stanley Works, and his onlysolution to that company’s many problems was to pursue financial gymnastics byattempting to move the company’s legal headquarters to Bermuda to avoid payingU.S. income taxes,” says Khurana. Gary Wendt went from being CEO of GE CapitalServices to CEO of Conseco, Inc., in June 2000, and by October 2002, Moody’sreported that Conseco was on the edge of bankruptcy. Wendt was removed from hisjob as CEO at that time.


    AT&T, Kodak, Xerox, and Polaroid, says Khurana, all went to the outsideto find “savior CEOs.” But none of these companies fared well. “Theproblems of these companies had nothing to do with the CEO,” he says, “andno matter what messiah they brought in, it was not going to solve thoseunderlying problems.”


    Xerox’s underlying problems had more to do with people sending each othere-mails and not sending each other copies than with its corporate leadership.”AT&T was a formerly regulated monopoly with a declining core market.Michael Armstrong was brought in from Hughes Electronics as CEO, and after $162billion in acquisitions that were later divested, AT&T is still a formerlyregulated monopoly in a declining core market,” he says.


    “Outsider CEOs,” says Khurana, “have actually proven to be quitedestructive to many companies in terms of the pay they expropriated from thefirms they went to and the severance packages they were able to negotiate, whichamounted to ‘heads I win, tails I win.’ ” He says the destruction alsoincluded unnecessarily large layoffs and a lack of investment in people.


    There are exceptions to every rule, including this one about outsiders faringpoorly. Outsider Lou Gerstner is generally credited with reviving IBM, whereasinsider Jacques Nasser’s CEO tenure at Ford is viewed by many on Wall Streetas an abysmal failure.


Workforce Online, January 2002 — Register Now!