IT turnover has improved dramatically, according to a study by the META Group. Here’s a look at turnover rates from 2001 to 2003. Note that in 2003, 31 percent of companies had turnover of 5 percent or less, while in 2001, only 2 percent did.
| 2003 | 2002 | 2001 | |
| No Turnover | 8% | – | – |
| <5% | 31% | 12% | 2% |
| 6%-10% | 32% | 54% | 28% |
| 11%-20% | 16% | 23% | 58% |
| >20% | 7% | 2% | 12% |
Source: META Group’s 2003 IT Staffing and Compensation Guide Executive Summary.
Infuriated IBM employees are still fuming over the company’s May 1999conversion from a traditional pension plan to a cash balance plan. Kathi Cooper,a business controls adviser, was so incensed that she filed a federal lawsuitalleging age discrimination. “They reduced our benefits to give them to theyounger workers–that’s age discrimination,” she says. Janet Krueger, wholeft IBM after the conversion, thought she could retire with a comfortablepension, but her plans evaporated after she saw her opening account balance inthe cash balance plan. “It doesn’t take a rocket scientist to figure outthat an account balance equal to less than one year’s salary would nottranslate into an annuity equal to one-third my salary in 8 to 10 years,”Krueger says.
Cash balance plans exploded on the pension scene in the late 1980s, when Bankof Boston unveiled a brash new plan combining the attributes of a pension planand a 401(k) plan. Benefits are expressed as “accounts” and credited withcontributions and interest annually, but the employer remains on the hook forall contributions. Companies rushed to adopt these new plans that allowemployees to better “see” their benefits. But cash balance plans became thecenter of a storm of controversy when some companies reduced future benefitaccruals as part of the conversion.
The squall began in 1999, when the Wall Street Journal began reporting on thereduction of employees’ expected pensions–sometimes by more than 50 percentafter conversion. After IBM announced its conversion, thousands of IBM workersflooded the media and Congress with stories of promised benefits that were beingstripped away. The computer giant got a reputation as the poster-child for badcash balance conversions, says David Certner, director of federal affairs forAARP in Washington, D.C. IBM won’t comment on the incident.
The plans are still dogged by controversy. The Treasury Department and IRSrecently withdrew controversial proposed regulations on age discrimination inthe plans, and are seeking comment until July 27 on how to write new rules.
Despite all that, many companies–including FedEx andDelta–either haverecently announced plans that they are converting or are looking closely at thepossibility of doing so. In a recent Deloitte & Touche survey, 43 percent ofrespondents indicated that they are considering changes to their defined benefitplans. Twenty-eight percent indicated that they are thinking about converting toa cash account (i.e., cash balance) type of formula.
Proponents of cash balance plans argue that today’s mobile workforce has noappreciation for a plan designed to provide significant benefits only after 20or 30 years. Traditional “final average pay” plans are generally uselessrecruitment tools for younger workers, and equally as bad for inducingunmotivated older workers to move on. “Cash balance plans are very appealingto employers because they are easy for employees to understand and appreciateand they also work better in a total compensation approach,” says KarenSalinaro, a consultant with Towers Perrin in New York.
Defined benefit plans are also complex to run and have high administrativecosts, including steep Pension Benefit Guaranty Corporation premiums. Employersview cash balance plans as a way to get some return on their investment–acritical issue in an economic climate where once wildly overfunded plans haveturned into bottomless money pits. “With traditional plans, a lot of employersare saying, ‘We’re spending a lot of money on a plan that employees don’tunderstand and don’t appreciate,’” says Larry Sher, director of researchat Buck Consultants in New York. “It’s hard for employees to appreciate afinal average pay plan because the only way they can begin to evaluate what thebenefit is worth at any point in their career and how it will change over timeis to hire an actuary to do the calculations for them. The average employeecannot do the computations on his own.”
Cash balance plans also can save companies a lot of money. Effective June 30,2003, Delta, for example, will change its retirement plan for non-pilot U.S.employees from a traditional defined benefit plan to a cash balance plan. Theairline says that the new plan structure is expected to reduce the company’sexpenses significantly this year, and by about $500 million in the next fiveyears. “As Delta works to recover from the current financial crisis, thecompany must act to control the high and rapidly growing cost of retirementbenefits while protecting the interests of Delta people,” says Bob Colman,executive vice president, human resources. “Unless these steps are taken,Delta’s retirement expenses would increase at an unsustainable rate. The newcash balance program is competitive with programs at other leading companiesinside and outside our industry. It also is more flexible and more portable thanthe current plan.”
Though cash balance plans have been lampooned in some media as greedycorporate cash grabs, the reality is that the plans don’t save most companiesmuch money. According to a 2000 Watson Wyatt study, the average employer costsavings was just 1.4 percent–not 20 to 50 percent–after simultaneousenhancements to 401(k) plans are factored in.
If the decision is made to convert, then strong and effective employeecommunication is essential, experts say. “If there’s a good communicationprogram, it’s less likely that employees will feel disenfranchised and sue,”Sher says. Negative publicity has led to plaintiffs’ filing class-actionlawsuits. IBM, Xerox, Bank of America, Georgia-Pacific, AT&T, and Onan foundthemselves embroiled in litigation over their cash balance plan conversions. Nowcompanies take steps to keep employees happy. “We took into consideration thelessons learned from those who came before us. We did not want to fall into thecategory of those who did not do it right or did not treat employees right, butwe needed to do this to be competitive,” says Sandra Munoz, manager ofcommunications at FedEx.
Experts agree that a cash balance plan conversion should not be used to hideor disguise a reduction in benefits. “Most negative press regarding cashbalance plans has been related to situations where the value of benefits hasbeen cut back and there has not been an adequate explanation or rationale forwhy it was done,” says Suzanne McAndrew, a principal with Towers Perrin in NewYork. If a decision is made to reduce benefits, then it is important to be openwith employees about the reduction in future retirement benefits, Sher andMcAndrew say. “If you either have to reduce what you are spending on yourdefined benefit program or feel it’s appropriate to redistribute the benefitdollars to a broader portion of your workforce, then be honest about it andexplain why,” Sher says.
And if benefits are cut, it is important that management is not seen asgaining from it. “The problem is that employees have been watching their owncompensation and benefits being reduced, while they see the CEO’s compensationand benefits package skyrocket through the roof,” says Karen Friedman,director of policy strategy for the Pension Rights Center in Washington D.C. “It’sa transfer of wealth within the company off the backs of working people to thepockets of senior management.” It is particularly galling to employees, shesays, that pension-plan surpluses are used to inflate the bottom line ofconsolidated financials and that senior executives’ incomes go up as pensionbenefits for the rank and file go down. “By reducing employees’ benefits,they were reducing liabilities under the pension plan and were able to recordlarger pension income on balance sheets, which added to the company profits andincreased CEO compensation,” Friedman says. “CEO compensation went upbecause they reduced the pensions of their older workers.” Cooper adds: “Cashbalance plan conversions are nothing more than a grab from the rank and file tosenior executives. IBM executives are using vapor profits from the pension trustso that they can reward themselves millions more in bonuses.”
Employee advocates are already screaming foul over Delta’s plannedconversion. The company may be looking to save money on the retirement plan forits rank and file, but it’s spending the savings on its senior management’sretirement plans. The company set up special retirement trusts for its top 33executives to protect their non-qualified retirement benefits from the risk ofbankruptcy. These executives will have their pension benefits fully funded by2004, and will also be reimbursed for the taxes they will incur as a result.Delta chief executive officer Leo Mullen’s trust got $8.24 million for theyear ended 2002 alone.
Sher agrees that the negative backlash against cash balance plans is relatedto employees’ perception that senior management enriched themselves atemployees’ expense. “If you do have to cut benefits, and management isinsulating itself from the cutbacks, then this will not work,” he notes.Companies must review senior executives’ entire compensation package beforeconversion to see if there is any increase in income on financial statementsresulting from the conversion that can affect senior executives’ pay orbonuses, Towers Perrin consultant Salinaro says.
Much of the controversy is also the result of a company’s failure to giveadequate transition provisions. “The real issue, and why there has been suchan uproar from employees, is not the plan design itself but the conversion,”Certner says. Traditional plans provide minimal benefits at the beginning of acareer and extremely high benefits at the end. “So if you put in 10 or 15years at the lower benefit levels and the formula is changed so that there areno longer those high benefit accruals, you won’t be happy,” he says.
Employee advocates say conversions with “wear-away” periods areparticularly troublesome. This happens when opening balances in cash balanceaccounts are set below benefits accrued under the traditional plan. Becauseaccrued benefits cannot be reduced, older employees receive no new meaningfulbenefit accruals under the cash balance plan until their account balance exceedstheir frozen accrued benefit under the traditional pension plan. “This kind ofsituation where an older worker essentially ‘runs in place’ for years isexactly what the age-discrimination laws for pensions were enacted to address,”Certner says.
To combat this issue, companies should carefully review various transitionstrategies, Sher says. One approach offers employees the right to choose betweenthe old and the new plan formulas for a limited period. Memphis-based FedEx isgiving the 137,000 workers covered by its corporate pension plan the option toeither stay under the old plan formula or change to the new cash balance planformula. Employees will have to make their decisions between June 2 and August29 of this year.
But this approach can cause problems down the line. “What happens in thefuture when an employee stays longer than he thought he would and discovers thathe has $200,000 less because he chose the cash balance formula as opposed to thefinal average pay plan?” asks Joyce Meyer, a principal with Gardner Carton& Douglas, a law firm based in Chicago with a nationally recognized practicein employee benefits.
Some companies have given all current employees the right to have benefitscalculated under both formulas on retirement and get the greater of the two.This is the approach that Eastman Kodak used when it converted to a cash balanceplan, and the only one that employee advocates such as Friedman believe is just.But while offering choice is seen as being fair to all employees, Salinaro says,it is the most expensive and difficult to administer on a long-term basis.
Delta is giving employees a seven-year transition period. Individualsemployed on June 30, 2003, can have their benefits calculated under both plansand choose whichever is greater if they retire before June 30, 2010. Employeeshired after June 30, 2003, will be eligible for the cash balance benefit only.As a result of this transition, current employees who retire within the nextseven years will see no adverse impact on their retirement-income benefit, saysDelta spokesperson John Kennedy. Delta employees who qualify for a subsidizedearly-retirement benefit in the next seven years can lock in that benefit on theday it vests and then get cash balance plan benefits afterwards. That means theywill earn more in pension benefits than they would have under the old plan.
Meyer says that employees must understand that further changes to the planare possible–including termination or freezing of benefits. To head offpotential lawsuits, she says that the fact that actual benefits can besignificantly different from what the models show should be explained. It alsomust be made clear to employees that they have no guarantee of futureemployment.
Federal Express is freezing its traditional defined benefit plan accruals asof May 31, 2003, although salary increases will continue to be used to determinebenefits. If an employee opts to move into the cash balance formula, then newbenefits will be accrued in that format as of June 1, 2003. Employees who chooseto remain under the old formula will have their benefits computed as if therehad been no conversion. FedEx is offering this option as a way of attracting newemployees, but knows it must be fair to long-term employees, Munoz says. To helpemployees choose, last February the company started an extensive six-montheducation campaign. “We will be giving employees a lot of information,including online tools, so that they have the information they need to maketheir choice,” Munoz says.
She believes that while younger, more mobile employees will see the benefitsof moving to the cash balance plan formula, many of FedEx’s older employeesmay be better off as well. The company’s current plan takes into account only25 years of service in computing benefits, she explains. So if an employee hasclose to or more than 25 years of service, she can switch to the cash balanceplan formula and walk away with more than she would have under the traditionalplan.
But the success of a conversion can be outside the control of any humanresources manager. “If employees do not trust management and think thateverything you do is to enrich management, then it doesn’t matter what you do,”Sher says. Some employees may never come on board for any type of cash balanceplan conversion that reduces benefits in any way because of past managementdecisions. “The reality is that baby boomers are getting ready to retire, andcompanies don’t want to let go of the money in the pension plans,” Coopersays, “because that will make operating profits look bad and they won’t gettheir big bonuses.” Given the glut of boomers nearing retirement, she saysthat companies are realizing that they will have to pay millions out of theirpension plans. But cash balance plan conversions are purposely designed to holdon to the money to make corporate bottom lines look better, she says. “Theydon’t want to sit down and write checks, and with a cash balance planconversion, they don’t have to let go of the money.”
Workforce, May 2003, pp.40-43 — Subscribe Now!
Cari M. Dominguez is unlikely to inspire fear. First there’s the winningsmile. She looks every bit the cheerful soccer mom that she is, and not at allthe fire-breathing federal regulator one would expect of the head of the EqualEmployment Opportunity Commission.
But appearances and perceptions are important. And her image is very much onher mind as she heads off to meet with 250 human resources executives andbusiness leaders at a conference in Palm Springs. Her task is to reach out tothe business community, and to dispel the stereotype of herself as EEOC’s topcop. “Somebody said to me they were expecting the chair of the commission tobe an angry person. That she’d be angry and mad at the world,” theCuban-born executive says. She laughs at the thought. “That’s just not me.”
As she moves through the day, the conference provides constant reminders ofthe edgy world that the EEOC occupies enforcing civil-rights andjob-discrimination laws. Here in the conference hall of a resort hotel, job talktakes on the language of war. “Vital weapons for your employment-law arsenal,”one seminar advertises. Another warns of the “Perfect Storm,” a movie-titlemetaphor conjuring up legal threats with images of towering waves andhurricane-force winds powerful enough to swamp any corporate ship. There areeven warnings that human resources executives could face prison time, the resultof the recent Sarbanes-Oxley legislation, designed to cut down on white-collarcrime and improper accounting practices. At one of the briefings, Towers Perrinconsultant Paula Todd tells a room packed to overflowing, “Yes, you as HRdirector could go to jail.” The executives collectively snap to attention.
Jail for human resources people? Not if Cari Dominguez can help it. She’sthe first EEOC chief with a workforce-management background, and she’s on theroad to sell a kinder, gentler, more proactive image of the EEOC. What’s more,she’s attacking the job with the tenacity of someone who has been trying tosmash glass ceilings holding down women and minorities for most of her life.
As she approaches the end of her second year as the EEOC’s top cop, anassessment of her record reveals that she has made notable progress in speedingup the settlement of cases. But it is her outreach program that likely willestablish her legacy. Her message: Corporations should wise up and do the rightthing. And she wants to deliver the idea as a partner, not an adversary.Critics, however, wonder if she’s moving too close to employers, compromisingher role as prosecutor. And employers appear wary of the message she is bringingthem.
Referring to the way that many businesses view the EEOC, Southern Californiaattorney Eric Sohlgren of the law firm of Payne & Fears–a name thatunderstandably has become fodder for Jay Leno jokes–offers this summation. “Ourclients generally are going to be reluctant to call the EEOC for advice.”
The agency’s chief is undaunted. “I know what you’re thinking,”Dominguez tells the executives at the outset of her keynote address, going for alaugh. “Gee, whiz, it’s the job police.” Her green eyes sparkle as theypeer out at the audience, her sensible short brown hair and soft St. Johnbusiness suit a marked contrast to the harsh, often adversarial world of theEEOC.
Much progress made
If the goal of the EEOC is to eliminate workforce discrimination, thenDominguez, a Republican appointed by President George W. Bush, knows she needshelp. Decades after the agency was created to enforce the Civil Rights Act of1964, a record number of charges are being filed against employers.African-Americans still file the largest number of discrimination charges. Butworkers filing sexual-harassment charges, Muslims targeted by bigots after the9/11 attacks, and white males complaining of reverse discrimination are alsostanding up and demanding employer accountability.
During the 2002 budget year, the EEOC under Dominguez took in 84,442 newallegations of discrimination–a 4.5 percent increase over the previous year.Attacking a traditional problem area–disposing of its case backlog–the EEOCresolved 95,222 cases in the same year, a 12-month increase of 6 percent.Businesses paid out $310.5 million in settlements and awards to injured workerslast year.
All of this has been accomplished despite a series of internal stresses tothe EEOC. Until Congress stepped in, the agency had faced a budget crisis thatthreatened a temporary layoff of all of its nearly 2,800 employees without payfor up to 18 days. A budget-augmentation bill ended the crisis last month. Evenso, there is a hiring freeze. Until recently, the agency has been operating withvacancies in two of its five commission seats. There have been only twocommission meetings since Dominguez took over in the summer of 2001. Thepermanent job of general counsel, a presidential appointment, still remainsunfilled.
David Grinberg, a spokesman, says the commission vacancies have had noimpact on its performance. “We are operating at the most efficient level inhistory,” he says. Vacancies, he adds, are not uncommon on the EEOC. “Itcertainly doesn’t hinder the work of the commission.”
Despite the success in dealing with the EEOC’s backlog, the internalproblems have given the impression to some that the EEOC is not one of the Bushadministration’s priorities. Attorney Gabrielle Martin, president of the National Council ofEEOC Locals No. 216, which represents 950 EEOC employees, contends, “CariDominguez is very, very concerned about being responsive to the president’smanagement agenda.” That, to Martin, means slowing down EEOC business,outsourcing work, and restructuring the agency in a way that she fears will notbe favorable to workers.
The source of some of Martin’s concern is a study by the National Academyof Public Administration commissioned by Dominguez. One of its recommendationsis to establish a national call center so people can make charges over thephone, rather than go into an office. Another proposal urges the agency to makebetter use of the Internet and to close some of its 51 field offices, whererents are rising rapidly. The study also says that the EEOC is operating withoutdated 20th-century technology.
Though change is in the air, Martin complains that Dominguez is telegraphingfew of her moves. “It’s like being in a dark cave,” she says. “You haveno idea what it will be like coming out, but you have this feeling in the pit ofyour stomach that it won’t be good.”
Dominguez, meanwhile, presses forward with her initiative to reach out tobusiness leaders as well as critics.
Referring to her boss’s style, Joan Ehrlich, a congressional liaison andthe EEOC’s acting communications director, says it’s a top-down approach.”It is directed primarily at top management personnel, urging them to beproactive in maintaining a workforce free of discrimination. We will litigate ifwe have to, but we can’t be everywhere all the time. We need to get CEOs onboard.”
A pilot program is under way in Pennsylvania in which discrimination chargesfiled with the EEOC are referred back to an employer’s in-housedispute-resolution program. The program, involving Fortune 500 companies, isstrictly voluntary. If a dispute is not resolved satisfactorily, then the EEOCwill process the charge in the traditional manner. The program addresses one ofcorporate America’s criticisms of the EEOC–its glacial speed. The businessworld wants to see discrimination cases, which can seem to drag on forever,resolved quickly.
The push to rapidly resolve cases “is a subject of concern,” says HilaryShelton, director of the NAACP’s Washington Bureau. “The responsibility andcharge of the EEOC is to be fair to business, but to be an advocate foremployees.” He fears that legitimate complaints may get overlooked in therush.
The 54-year-old Dominguez, a woman with highly developed political skills,takes the observations in stride. “Anything we do, we get good and badreactions,” she says. “Some groups say you are overreaching, some groups sayyou are not reaching far enough. You hope you are somewhere in the middle.”
Using a carrot-and-stick approach
When she was appointed EEOC chief midway through 2001, Dominguez brought withher a solid background of government work. She had served as assistant secretaryof labor under President George H.W. Bush–with added experience in the privatesector as a human resources executive and consultant. She is the firstnon-attorney and human resources executive to serve as chair of the EEOC, andthat gives her instant credibility with the business sector.
She says the reaction she got at one company is typical. “I asked them, ‘Whenyou received a call that the chair of the EEOC wanted to meet with you, what wasyour response?’ They said they were panic-stricken. Terrified. They wondered,‘Do we return the call? Do we give it to our lawyer?’ So I realized that theneedle was way over here,” she says with a sweep of her arm, indicating thatthe reaction was off the chart. She says the EEOC won’t back off its role asenforcer of civil-rights law, but adds, “Day in, day out, you need to havemore interaction with the people who actually do the hiring and the firing andgive the promotions and cash awards. I don’t want them to see us as a cop. Iwant them to see us as a workplace partner.”
| Dominguez is convinced she can wield both a carrot and a stick inher relationships with business. |
For now, Dominguez is convinced she can wield both a carrot and a stick inher relationships with business. To see her in action is to see the qualitiesthat propelled her to the top and made her one of the most influential Latinasin the country. She has the easy style of someone who has spent much of her worklife in the fishbowl of government service.
As an immigrant confronted by language barriers, cultural differences, andfinancial struggles when her family moved her from Havana to the United Statesas a 12-year-old, Dominguez knows what it’s like to fight for a seat at thebig boys’ table. When she talks about maintaining a level playing field forall workers, she speaks as a daughter who watched both parents fight their ownworkplace battles. Her father, an accountant in Cuba, was forced to work as abusboy and at other manual-labor jobs when he was a new immigrant. Early in hercareer, Dominguez recalls, she interceded after her mother complained of beingpassed over for promotion at her hospital job.
“My mother had a very thick accent,” Dominguez says. “And so she wouldtrain people who would be promoted. She kept training people and she would bepassed over. I had to write a letter and say, ‘You know, there is somethingwrong with this picture. For what she does, do you have to have perfectinflection?’” Her mother got a raise.
Both of her parents are now dead, but family life and religion still playprominent roles in her life. She dotes on her husband, Alberto, a top humanrelations executive with American Express, and two school-age sons, Adam andJason. She finds making time for her boys a challenge, but one she happilyassumes. “I don’t miss any of their ballgames, be it soccer, basketball,whatever,” she says. She still gets up early and makes lunch for her youngerson, then drives from her suburban Gaithersburg, Maryland, home to her office inWashington. Once she’s in the city, a driver takes her to appointments, butshe has few of the trappings of the rich and powerful.
“She is not the kind of person who operates behind a closed door. You don’thave to go through layers of people to see her,” says Ehrlich, aself-described liberal Democrat who nonetheless has been given a high-profilejob by Dominguez.
At 14, Dominguez got a job cleaning dorms and restrooms and performing otherhousekeeping work at Columbia Union College, affiliated with the Seventh-dayAdventist Church, of which she is an active member. She is a founding member ofan Adventist school.
Growing up in an immigrant household influenced her work in several ways, shesays. “I learned that two of the most important things we have are freedom andopportunity. Freedom of expression, freedom of religion, freedom to compete inthe workplace, on a level playing field.” As an insulin-dependent diabetic,Dominguez is also sensitive to problems of the disabled. (Coincidentally, theEEOC recently filed charges against an employer for firing a diabetic employeewho gave himself an insulin shot while at work.)
Her road to a public-service career began at American University, aWashington, D.C., college with tough academic standards. Aiming for a career inthe foreign service, she earned a master’s degree in international relations.Instead, she took a job with the Labor Department, then landed with the Bank ofAmerica in San Francisco, where she held various human resources positions,responsible for succession planning, executive staffing, and diversityinitiatives. She considered the bank’s hiring and promotion policiesprogressive, but realized that women in some categories could go only so farbefore they hit a glass ceiling.
“If it was so bad at a progressive company, I wondered what it was likeelsewhere,” she says. So she set about to change that, and did it with sucheffectiveness that then Labor Secretary Elizabeth Dole recruited her during theearlier Bush administration. She was the architect of the Labor Department’sGlass Ceiling Initiative in the early 1990s, a campaign designed to removeinvisible barriers from the workplace and known for slogans like “the ‘fair-hairedboy’ in your organization might be a woman.”
During the Clinton administration, Dominguez went back to the private sector,ran her own management consulting firm, Dominguez & Associates, in Maryland,and held top management positions at two executive search firms, Spencer Stuartand Heidrick & Struggles. Given her background, she knew that when Bushappointed her to a five-year term to run the EEOC, she faced a full plate ofchallenges–dealing with thousands of new charges every year; contentiousplaintiff’s attorneys on one side, lawyers for employers on the other; andCivil Service culture within the agency. For now, she seems to be breaking downwalls.
“When she says she’s interested in the views of interested parties andstakeholders, she really means that,” says Deborah Greenfield, a top AFL-CIOlawyer. “When we feel we have something important to discuss with her, shelistens to us and thinks carefully about what we’ve said. It’s not justwindow dressing with her. It’s listening and incorporating divergentviewpoints.”
Dennis J. Garritan, head of human resources for The Witan Group, says he hadcome hating to do business with the EEOC because it was run by lawyers. “Yougo to the barber, you get a haircut; you have an attorney running the EEOC, youget litigation. That’s what they do. That’s the way they deal with theworld,” Garritan says. “Cari is a businessperson. She is an HR person. She’sone of us.”
Workforce, May 2003, pp. 26-32 — Subscribe Now!
Can your company refuse to rehire former alcohol and substance abusers afterthey’ve been terminated? The U.S. Supreme Court has agreed to hear a case thatmay determine just that. The Ninth Circuit Court of Appeals ruled last year thatrecovered addicts can be considered disabled under the Americans withDisabilities Act, and therefore be protected against discrimination, prohibitingemployers from using their past substance abuse as a reason not to hire. TheSupreme Court will decide whether the ruling stands or isoverturned. Peter Susser, a partner in the Washington, D.C., office of LittlerMendelson, discusses the details and possible impact of Raytheon Company v.Hernandez.
Workforce, May 2003, pp. 70-71 — Subscribe Now!
Listed below are 1) each of Caterpillar’s values and the company’sdescription of what they mean, and 2) the company’s seven key leadershipresponsibilities and an explanation of each.
Trust–We believe everyone embracing the values of the division will do whatis best for the customer, each other, and the enterprise.
Acts consistently to reinforce our values.
Expects people to perform their mission and be accountable.
Demonstrates openness and honesty in business relationships.
Eliminates the fear of breaking away from familiar ways of thinking andacting.
Shares information freely in all directions, both good news and bad news.
Does not look for or assume motives beyond those stated by others.
Respects and honors matters of confidentiality.
Mutual Respect–We treat everyone with dignity and courtesy.
Makes everyone feel important and able to make a contribution.
Listens without interruption when someone is speaking.
Makes no distinction based on position.
Accepts or gives apologies when appropriate.
Recognizes the uniqueness of individuals.
Teamwork–We recognize the potential for teams to produce superior resultsover what team members could achieve as individuals.
Believes that teaming is the balanced involvement of all relevant functions.
Aligns personal work and team activities to optimize contribution to thedivision.
Accepts and supports team decisions after individual views have beenexpressed.
Resolves disagreements within and between work teams by doing what is bestfor the enterprise.
Contributes to the success of others by helping others solve problems, meetdeadlines, and work effectively.
Openly shares relevant information.
Empowerment–We believe people must work in an environment where they feelenabled to make decisions that contribute to customer satisfaction andperformance of the division.
Defines the boundaries of accountability and freedom to act, but remainsflexible to meet changing business needs.
Balances decision-making authority and responsibility.
Drives decision-making authority and responsibility to the lowest level ofcompetency.
Seeks and shares information with others on decisions that affect them.
Provides opportunities for employees to develop new skills, expertise, andperspective.
Understands how individual work impacts the division’s success.
Develops the capability of others through active mentoring and coaching.
Risk Taking–We accept and encourage informed risk taking.
Nutures risk taking in the workplace.
Recognizes failures associated with reasonable risk taking should not bepunished but used as an opportunity for improvement to the underlying processes.
Demonstrates the courage to speak freely and challenges the status quo tostimulate change and make decisions to move us forward.
Challenges prescribed methods and procedures to better serve the customer.
Recognizes the real risk to business success lies in not challenging andimproving processes.
Offers recognition for informed risk taking.
Sense of Urgency–We recognize time as competitive advantage.
Places a high priority on time. Delivers work on time to both internal andexternal customers.
Works to reduce time required to perform assigned tasks. Removes needlesssteps.
Errs in the direction of moving too fast rather than moving too slow.
Acts quickly to accomplish our goals and meet our commitments.
Assesses the situation and acts accordingly.
Responds to questions and issues immediately or as soon as appropriateinformation is collected.
Continuous Improvement–We recognize everything we do as a process that canbe eliminated, simplified, or improved.
Asks “How can it be improved?” rather than “Does it need to beimproved?”
Recognizes the value of change for improvement.
Focuses on problem prevention rather than problem resolution.
Evaluates changing technology and optimizes its use.
Recognizes redundancy and waste must be eliminated.
Eliminates unneeded processes (practices/systems) without concern for impacton specific job assignments.
Accepts self-development as a process that needs continuous improvement.
Recognizes processes as the key to performance improvement.
Makes decisions based on need or opportunity, not precedent.
Commitment–We deliver what we promise to each other and to our customers.
Recognizes action rather than rhetoric as the true measure of commitment.
Promises only what can be delivered.
Demonstrates personal commitment to continued learning and upgrading ofskills.
Communicates the impact of change to base assumptions used to makecommitments.
Accepts obligation to continuous improvement.
Customer Satisfaction–We delight our internal and external customers byexceeding their expectations.
Listens to customers.
Actively solicits input from customers for important decisions. Alwaysassumes the customer has something to contribute.
Always asks, “How can I better serve the customer?”
Responds with urgency to customers’ feedback, including both complaints andsuggestions.
Delights the customer with quality and service that exceeds competition.Increases customer loyalty to our products by always providing support.
Effectively represents the interests of the customers. Is willing to “go tobat” for customers.
Seven key leadership responsibilities and how we carry them out in a mannerthat supports our common values.
1. Develop people to their fullest capacity
I have a clear vision of what constitutes growth for the people I serve.
I work with employees to create written development plans.
I help employees master the skills they need to succeed on the job.
I give people freedom to handle work their own way.
I take time to show employees new ways of doing work.
I delegate assignments to help people stretch or broaden their skills.
I accept mistakes as part of the development process and help people avoidrepeating mistakes in the future.
I discuss career goals with each employee.
I provide honest, realistic answers to career questions and never makepromises I cannot keep.
I help people understand the skill requirements and selection criteria forother jobs.
I encourage employees to take advantage of internal and external educationand training opportunities.
I encourage people to make lateral moves to broaden their knowledge of theorganization.
I reward and celebrate developmental achievements.
I set an example for others by visibly pursuing a self-development plan.
2. Foster a positive work environment
I encourage people to have fun at work.
3. Adjust leadership style to meet the needs of those whom we serve
I understand the four basic leadership styles: directing, coaching,supporting, and delegating.
I assess the competency level of each employee on my team.
I assess the commitment level of each employee on my team.
I use different leadership styles with different people.
I use different leadership styles with the same person, depending on theircompetency and commitment to a given task.
I change leadership styles as an employee’s or team’s competency andcommitment levels change.
4. Build and support committed and effective teams
I understand the goals of our company, our division, and our work group, andI have communicated them clearly to employees.
I appreciate the unique background, skills, and perspective each employeecontributes to the team.
I use the collective talent and expertise of the people on my team.
I help all employees understand their respective roles on our team.
I remind employees of our team goals.
I explain how our team’s results affect the entire division.
I work at building positive relationships among team members.
I encourage open communication on the team.
I encourage team members to share responsibility for team leadership.
I praise individual and team accomplishments and celebrate successes.
I share responsibility for winning and losing.
I support my team whether we are winning or losing.
I discourage behavior that weakens team morale and performance.
I encourage employees to serve on multifunctional teams.
I set an example for others by serving on multifunctional teams.
5. Empower others to serve internal and external customers
I keep people informed about the issues that affect the work group.
I solicit input from employees on decisions that affect them.
I provide as much information as I can about the work group, the division,and the company.
I explain how every individual’s work affects the organization’s success.
I challenge people to learn continuously.
I ask for ideas and advice.
I remove roadblocks.
I provide appropriate resources to get a job done.
I expect and encourage people to manage their own responsibilities and findtheir own solutions.
I trust people to make good decisions without my help.
I accept and support team decisions that are not made the way I would havemade them.
I allow people to fail, but assure that the failure is not devastating to theperson or the organization.
I provide adequate and appropriate training.
6. Provide feedback that helps people grow
Developmental feedback
I work with every employee to create a development plan.
I give positive feedback when employees show developmental progress.
I modify employees’ development plans as they reach their goals.
I give developmental feedback and performance appraisals at separate times.
I give developmental feedback more than once a year.
I ask for employee input in my personal development plan.
I say something positive to every employee in my group every day
I identify attitudes or behaviors that I would like to perpetuate.
I look for opportunities to reward behavior and performance consistent withOur Common Values.
I strive to reinforce positive behavior immediately after it happens.
I praise employees for specific behaviors or achievements.
I give positive reinforcement for everyday work effort–not just exceptionalperformances.
Disciplinary feedback
I apply discipline consistently.
I meet privately with employees to discuss problems.
I try to resolve problems before they enter the formal disciplinary process.
I explain to employees what constitutes reasonable performance and behavior.
I tell employees why expected levels of performance and behavior areessential to our team.
I let people know when their performance or behavior is not meetingexpectations.
I explain what needs to be done to bring performance or behavior toacceptable levels.
I try to get employees to accept responsibility for changing their behavior.
I seek the employee’s agreement to resolve the problem.
I work with the employee to create an action plan for resolving the problem.
I clearly state the consequences of failing to meet expectations.
7. Pursue self-development
I have a written plan for self-development.
I discuss personal developmental issues with coworkers at all levels of theorganization.
I meet regularly with my supervisor to talk about developmental opportunitiesand progress.
I seek out new responsibilities and new approaches to problem solving.
I take advantage of internal and external education and training activities.
I accept lateral moves and cross-training assignments.
I use the 360-Degree Values Feedback Process to guide my development plans.
I take advantage of the Division Leadership Upward Feedback Process.
Reprinted from courtesy of Caterpillar Inc. Also with permissionfrom….AndDignity For All: Unlocking Greatness with Values-Based Leadership, Despain, J.and J.B. Converse, 2003. Upper Saddle River, NJ: Financial Times PrenticeHall.
Workforce Online, May 2003 — Register Now!
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It’s early morning, a time when the office is quiet and you can get somework done. And it’s good that you’re alone. Your screams, as you finishrunning the numbers and realize that your company’s health-care benefits arerising at 18 percent a year, would scare your team. Health-care costs aren’tjust nibbling at your company’s profitability. They are eating it like afour-course meal.
And so, in the moments when you wonder whether the company can survive year after year of hikes like that, you might think the unthinkable:What if you dropped health-care benefits? In this job market, would employeesreally risk quitting?
But you don’t want to be an Ebenezer Scrooge, a Uriah Heep, or some otherDickensian stereotype, so you won’t do that. People would quit, of course. Andthey’d tell their friends just what a Heep you are. Your company’sreputation would plummet.
So you’ll do what most employers do. You’ll drive hard bargains with yourproviders. You’ll explain the situation to employees, who will act likegrown-ups and shoulder higher premiums, deductibles, and co-pays. Maybe you’lltake the plunge into consumer-driven health care. And life will go on–challenging,but manageable.
That’s what happens at lucky companies, and to lucky employees. Aconsumer-advocacy group, Families USA, says that 75 million Americans under age65 lacked health insurance for all or part of a two-year period, 2001-2002.Another revelation: 70 percent of those people had jobs, or were the children ofan employed parent.
Were their employers Scrooges? Probably not. Nearly two-thirds of the workinguninsured are employed by businesses with fewer than 99 employees. Maybe some ofthose bosses were once able to provide coverage. But as the economy slid and aspremiums climbed, many had to make a fateful choice: the company’s survival orhealth coverage for employees.
If your organization is a larger one, you have some insulation from such achoice. But maybe not for too much longer. In a recent survey, 48 percent oflarger companies said they are having “significant” problems keeping up withthe cost of health-insurance premiums. And while only 4 percent of the businessleaders said they would drop health-care coverage entirely, companies arestruggling for ways to control costs.
Some will not replace employees who resign. Others will hold off on plantexpansion, or R&D on a new product. Others will feel they have no choice butto raise premiums for employees one more time. And that will be one time toomany. Some low-wage workers, forced to choose between health-care premiums andrent or a car payment, will go bare.
Decisions like that add up to fewer jobs, stagnant companies, and arrestedinnovation. The human toll is even more tragic. The worker without coverageskips a colonoscopy–he can’t afford it now. The cancer that would have beendetected and treated grows unchecked. And a father and husband is dead at 45.
That might make you want to scream. Instead, do this: Visit CoverTheUninsuredWeek.org, and learn how your company can join a coalition thatruns the political gamut from the U.S. Chamber of Commerce to the AFL-CIO. Thecoalition doesn’t endorse one route to solving the problem of the uninsured,but it invites you to join a national discussion that can lead to practicalsolutions. Let’s do it–before it’s too late for our companies and ouremployees.
Workforce, April 2003, p. 10 — Subscribe Now!
Step right up, ladies and gentlemen, for the latest in diversity goods. Howabout a game of Diversity Bingo, or perhaps a camp shirt with a diversity logo?Consider buying a box of diversity lapel pins as a reminder to employees tospend time “honoring differences” or experiencing an “inclusionbreakthrough.” Be prepared to break out a Diversity Tool Kit–“a completetraining-program-in-a-box”–or perhaps a corporate fable such as A Peacock inthe Land of Penguins, or a copy of the video From Sex to Religion … andEverything in Between.
The multibillion-dollar diversity industry is thriving in corporate America.But before you spend another dime on your diversity program, carefully considerthis conclusion reached by Thomas A. Kochan, one of the most respected humanresources management scholars in the country: “The diversity industry is builton sand,” he declares. “The business case rhetoric for diversity is simplynaïve and overdone. There are no strong positive or negative effects of genderor racial diversity on business performance.”
Kochan, a professor of management at MIT’s Sloan School of Management,bases his conclusions on a recently completed five-year study of the impact ofdiversity on business results. The investigation involved a detailed examinationof large firms with well-deserved reputations for their long-standing commitmentto building a diverse workforce and managing diversity effectively. It built ona growing body of research that raises painful questions for companies that pourmoney into diversity programs, and for the diversity industry that supplies themwith a dazzling array of diversity products.
At a time when charges of racial harassment are way up, and racialdiscrimination class-action lawsuits are enjoying a renaissance, diversityprograms are flourishing. Organizations appoint diversity officers. They hirediversity consultants, coaches, and trainers. They adopt diversity scorecards,benchmarks, and best practices, and send executives to diversity conferences andleadership academies. But despite the astonishing number of products andservices–ranging from the worthy to the banal–one item is in very shortsupply: hard metrics for measuring performance results or the return ondiversity spending.
For years, the industry has claimed that diversity programs yield higherperformance and greater productivity, but the evidence offered is largelyanecdotal or based on limited data collected through questionable methods. Thelink to the bottom line, an entrenched part of diversity rhetoric, remainslargely undocumented. Of the 20 large corporations with well-establisheddiversity programs that Kochan initially contacted for his study, none had everconducted a systematic examination of the effects of their diversity efforts onbottom-line performance measures.
“Some companies have completed limited studies at a divisional level, butthere are no formal reports with valid and scientifically determined numbers,”says Michael C. Hyter, president and CEO of J. Howard & Associates, a largediversity consultancy in Boston. “Organizations like having the flexibility ofnot being put in a box about whether this does or doesn’t work. Too often,they are given a lot of credit for their efforts anyway.”
| “Diversity can enhance business performance, but only if the proper training is in place and the climate and culture support it.” |
If there is little evidence on performance results, there’s even lessindication of effectiveness in the aggregate compliance data. Although mostdiversity programs trace their roots to compliance efforts and, in some cases,the struggle against racism, the number of job-discrimination charges filed withthe Equal Employment Opportunity Commission, including race-based charges, hit aseven-year high in 2002. The recent increase in charges can be linked to therecession–work-related lawsuits typically rise during economic downturns–butthere was no evidence of improved compliance before the recession hit. Many companies that are routinely praised for their diversityprograms–including Coca-Cola and Ford Motor Company–still find themselves incourt fighting epic racial-discrimination lawsuits. Wal-Mart, ranked number oneon Fortune’s prestigious “America’s Most Admired Companies” list for2003, is facing the largest sex-discrimination lawsuit in U.S. history, with asmany as 500,000 plaintiffs. Charges of racial harassment filed with the EEOChave increased fivefold in the past decade.
The diversity industry and its corporate clients continue to promotediversity programs as a “strategic imperative” that boosts performance byunleashing the creative power of diverse groups. As Xerox Corporation chairmanand CEO Anne M. Mulcahy observes, “Somehow, diversity breeds creativity.”Unfortunately, the “creativity” that some Xerox employees demonstrated wasclearly not what Mulcahy had intended. They fashioned a workplace display ofAfrican-American dolls with nooses around their necks, igniting a lawsuitagainst the company in 2002. EEOC charges against the company in the same yearincluded racial discrimination in promotions and compensation and systematicretaliation.
Xerox launched its first workplace equality efforts almost 40 years ago. Thecompany draws 30 percent of its workforce from racial minorities and winsnumerous awards for its diversity program. Yet it still faces multiplediscrimination lawsuits. The number of racial-harassment cases involving hangman’snooses has exploded in recent years, according to the EEOC, with incidentsreported at dozens of leading companies, including Home Depot, Lockheed Martin,Boeing, Texaco, and Northwest Airlines.
State of the industry
“Diversity has been promoted on thebasis of a very weak construction of the business case and on grounds ofsocial justice, but to be successful, programs must be built on scientificevidence,” Kochan says. Without this evidence, especially in the context ofbudget constraints forced by the economic downturn, diversity programs may comeunder the same scrutiny routinely turned on most business functions.
Hyter believes that an industry shakeout is on the horizon. “Five or 10years from now, there are only going to be a few serious practitioners left–thosewho have demonstrated the ability to help organizations with measurable results,”he says. Kochan believes, however, that the change must begin in human resourcesmanagement. “Consultants sell what they are good at,” he says. “They willshift what they provide when human resources executives become moresophisticated in what they demand.”
Kochan’s study builds on earlier academic research that questions theeffectiveness of diversity-management programs and notes the unwillingness ofmost companies to explore the issue of results. “Meaningful discussions andanalyses do not occur because companies are concerned about legal issues andbecause people simply want to believe that diversity works,” Kochan says. “Thereis a great deal of defensiveness. Even when diversity is managed well, theresults are still mixed. The best organizations can overcome the negativeconsequences of diversity, such as higher turnover and greater conflict in theworkplace, but that still does not mean that there are positive outcomes.”
Luke Visconti, partner and cofounder of DiversityInc, which runs one of thelargest Web sites in the industry, dismisses Kochan’s conclusion. “It defiesgravity and flies in the face of logic,” he says. “I can’t even imaginehow someone could come up with that conclusion unless there was no diversityamong the people doing the study.” (Kochan’s team, in fact, is a diversegroup.) Visconti’s Web site includes extensive resources on diversity, butdoesn’t reference any of the studies that raise questions about results.
Kochan’s team of researchers, supported by Business Opportunities forLeadership Diversity and the Society for Human Resource Management, struggled tofind companies willing to participate in its diversity study. “Althoughextensive academic studies show that there is little evidence to support thebusiness case for diversity, the business community has not embraced theliterature,” Kochan says. “Instead, there have been a lot of superficialanalyses of how diversity works in organizations.
“There are estimates that companies spend $8 billion on diversity trainingannually,” he adds. “Much of this is wasted because it is spent on programsfor awareness and valuing diversity that do not give people the skills theyneed.” Kochan’s study, forthcoming in the Human Resource ManagementJournal,presents findings that have dramatic implications for the kind of diversitytraining that must be provided to achieve performance improvements. Trainingprograms aimed at “valuing diversity” and addressing subtle forms ofdiscrimination and exclusion do not lead to long-term changes in behaviors, thestudy notes. Instead, group members and leaders must be trained to deal withgroup process issues, with a focus on communicating and problem-solving indiverse teams.
Hyter says the diversity industry includes “all types of people who professto be experts in this area and who have a stake in companies’ programs,” butthat no recognized set of credentials or professional certification exists forpractitioners. Diversity consultants are chasing what he estimates to be $400 to$600 million annually in consulting fees alone. Human resources executives oftendon’t demand documented results from outside consultants or in-house diversitystaff because “it’s easier to create activities and get credit for doingsomething than it is to create metrics and measures and hold people accountable,”he says.
Missing metrics
Some companies measure diversity results with recruitment, promotion, orturnover rates, but few look beyond simple head counts to measure the fullfinancial or performance impact of their programs. The difficulty of creatingvalid measures is part of the problem. “There is a connection betweendiversity and financial success, but typical profit-and-loss systems don’tcapture the benefits that diversity creates,” says Laura Liswood, senioradviser to Goldman Sachs on diversity issues and a senior scholar at theUniversity of Maryland’s Academy of Leadership. “A lot of the benefits arenot quantifiable, but it’s also true that we have not devoted the same levelof resources to attempts to quantify diversity results.”
The business community has not pursued the implications of the academicstudies, in part, Kochan says, “because of the traditional breach between thecorporate and academic realms.” Liswood retorts that “the academics might doa better job of marketing their work.”
Kochan acknowledges that quantifying performance results is problematic. “Theneeded data cannot, in most cases, be culled from existing human resources data,”he says. “To create the needed data and analysis, human resources executivesmust run experiments within their organizations. They must invest in efforts totrain departments in group processes, and then follow their performance overtime, comparing the performance of groups that have been trained with that ofgroups that have not, using hard performance measurements based on the goals ofthe unit.” These measurements might be time-to-market, error rates, salesgrowth, or any number of other productivity measures.
The lack of sophisticated metrics for measuring diversity results derives, inpart, from a broader problem. “Human resources metrics in general don’t havethe same analytical power as other business metrics,” Liswood says. Inaddition, diversity programs often center on training, a human resources fieldwhere metrics are particularly weak. According to the American Society forTraining and Development’s 2002 state of the training industry report, onlyone in 10 companies attempts to create results-based evaluations of its trainingprograms.
The business case for diversity that dominates industry claims and corporategoals focuses on three related objectives: to allow organizations to tap talentpools and incorporate new ideas and perspectives from employees of differentbackgrounds; to expand market share; and to ensure legal compliance.
The workplace objective may be simply a function of local labor marketrealities, or it may center on the ability to attract and retain female and minority candidates who will bring fresh viewpoints towork. Market-share objectives target the growing purchasing power of female andminority consumer groups, which many companies believe can be tapped onlythrough an employee population that matches the customer base. Complianceobjectives stress the need to avoid costly discrimination lawsuits and thedamage to reputation that occurs when companies are charged with illegalworkplace practices.
Trivializing racism
One of the consequences of the nonanalytical approach adopted by thediversity industry and accepted by many companies is that the most seriousdiscrimination issues may be trivialized. “Lapel pins and slogans on the wallmay encourage people to think that diversity is just the special of the week,”says Liswood. “Diversity requires real mind-set and cultural change.”
Trivialization also occurs as the number of groups covered by diversityinitiatives expands to include every conceivable cultural minority, far beyondhistorically underrepresented or oppressed groups. “There are practitioners inthis business who push a very broad definition of diversity because they aretrying to appeal to a larger audience to secure their own fate,” Hyter says.
Microsoft’s diversity program, for example, now includes “employeerelations groups” for single parents, dads, Singaporean, Malaysian, Hellenic,and Brazilian employees, and one for those with attention deficit disorder. “Companiesrun a very high risk of allowing the broader definition of diversity to lead tothe neglect of certain groups,” Hyter says. “This hits a critical and rawnerve, and it’s a valid point.”
Patricia Pope, CEO of Pope & Associates, a diversity-management firm inCincinnati, adds that “there’s been this desire to get away from race andgender issues because they are so uncomfortable. It’s often easier forcompanies to tackle other differences, such as diversity of thought or diversityof birth order.”
Several studies, including Kochan’s, have found that companies generallyare more successful in managing diversity with respect to gender issues thanracial and ethnic issues. The empirical studies indicate that racial and ethnicdiversity may, in fact, have a negative impact on business performance unlessspecific forms of analysis, training, and monitoring are in place. If leftunattended or mismanaged, diversity is likely to produce miscommunication,unresolved conflict, higher turnover, and lower performance.
Truth or consequences
The current economic downturn may prompt greater scrutiny of diversityspending and a growing demand for documented results. Hyter says that some ofhis clients are “becoming much more aggressive about measuring the return ontheir investment in diversity training and consulting.” He also believes thatin-house staffing for corporate diversity programs is changing. “You can tellby the number of people with P&L responsibilities who are being tapped tomanage diversity efforts, as opposed to people with just human resourcesbackgrounds.”
With little evidence of improved business performance, financial results, oraccountability, there is much work to be done, Kochan says. “Diversity canenhance business performance, but only if the proper training is in place andthe climate and culture support it. If companies can’t do this, they will losethe opportunity that diversity represents. There could be backward movement, andthe negative consequences of diversity could predominate.”
The industry’s singular focus on success stories, and corporate reluctanceto track and report results, makes it difficult to determine if diversity programs have fulfilledtheir objectives. Kochan’s research indicates that they haven’t. R.Roosevelt Thomas Jr., CEO of R. Thomas Consulting and Training, Inc., a largediversity consultancy in Decatur, Georgia, says that companies may succeed in”building a pipeline of people with all kinds of demographic characteristics”but then fail at dealing with different behaviors.
Building diversity programs on bedrock instead of sand begins withrecognizing “that there is virtually no evidence to support the simpleassertion that diversity is inevitably good or bad for business,” Kochan says.
“Unable to link HR practices to business performance, HR practitioners willbe limited in what they can learn about how to manage diversity effectively, andtheir claims for diversity as a strategic imperative warranting financialinvestment will be weakened accordingly,” Kochan says. The first step inlaying the new foundation, he says, is adopting “a far more analyticalapproach.” And dropping the hype.
Workforce, April 2003, pp. 28-32 — Subscribe Now!
I was in New York last week with my friend Ray, who works for a multinationalfinancial services firm. He and his coworkers from around the country hadgathered in the city for a week to review marketing plans and revenue goals.Which they did. But during the meetings, the Pooh-Bahs in his division alsocryptically mentioned the possibility of a division-wide restructuring.Something they called a “re-org.”
After the second day of meetings, I returned to the Embassy Suites to findRay sitting on the couch, staring into space, his shirt rumpled and untucked.
This worried me. Ray is never rumpled. I asked if he was okay.
“What do they mean by re-org?” he asked, still staring straight ahead.”I’ll tell you what they mean. They mean job cuts. I think I’m okay–butmaybe not. Maybe I’m not okay. Do you think I’m okay?” He didn’t waitfor an answer.
“I should’ve talked more during the meeting today,” he said. “Ishould’ve gone to the dinner last night. I should’ve worn black shoes. Ilooked too casual.”
I told him I thought layoffs were rarely decided on the basis of shoe color.
“YOU don’t know these people,” he shouted, as red blotches bloomedacross his neck. “I just don’t understand why they’re doing this.”
Ray crossed his arms over his chest and began rocking back and forth, clearlyon the edge of a gale-force panic attack. I tiptoed from the room and shut thedoor. From down the hallway, I could hear him repeating the phrase “re-org,re-org, re-org” like a stuck 45 on a diner jukebox.
At the time, I felt that Ray’s behavior was a tad extreme. After all, hiscompany’s restructuring was far from certain–and besides, no one knew whatit would entail. But the next day I went to an exhibit on Albert Einstein at theAmerican Museum of Natural History and experienced, firsthand, the panic andconjecture that come from not knowing how to interpret information. Physics willdo that to you.
The exhibit started off well enough. I entered the hushed museum and learnedabout Einstein as a young boy. I reviewed a copy of his report card, whichrefutes the myth that he was not a motivated child. I saw a replica of thecompass that launched Einstein’s fascination with the forces of nature. And,in something that belongs in the “who knew?” category, I read one of themany love letters he wrote to one of his many mistresses. Apparently, Einsteinwas a hottie in his day, a babe-magnet with a large romantic appetite.
But then, as I began to read about Einstein’s theories, my sunny enjoymentof the day disappeared behind a dark cloud of ignorance.
I read about his general theory of relativity, which overturned the classicNewtonian view of gravity, which said that apples never fall far from the tree,or some such thing.
I read about the imaginary gravity of projected black holes, which helps toexplain why SUVs plow into sinkholes on rainy days.
I learned about Einstein’s search for a grand unified theory that wouldexplain everything about everything, including, I presume, why Michael Jacksonthinks he’s Peter Pan.
See, the more I read about Einstein’s work, the less I understood it. Andthe less I understood it, the more I felt compelled to fill in the gaps with myown interpretation. Even though I listened to the curator’s talk, and watcheda film narrated by Alan Alda, and reviewed the 72 handwritten pages that make upEinstein’s theory of relativity, I couldn’t grasp what his theories reallymeant.
I started to get agitated and speed through the exhibit. Gravitational warps?The space-time continuum? Yeah, yeah, whatever.
By the time I hit the gift shop at the end of the exhibit, I had a massiveheadache caused, no doubt, by an unprecedented cerebral failure. I sped past thewall of books on Einstein and picked up a souvenir writing pen. Ahhhh. This wassomething I could understand. So simple. So elegant. I held it to my chest untilmy breathing returned to normal.
And when it did, I thought about my friend Ray and his company’s re-org. Ibegan to understand his panic over the proposed restructuring. He didn’tunderstand why it was necessary. He didn’t understand how it could affect him.He didn’t understand why he’d been told that information. And in the absenceof all that understanding, he filled in the black holes with his own warped viewof the outcome.
As Einstein might explain it, Ray was suffering from an extreme case ofE=MC2, which I believe means that expectations are driven by managementcommunication–or the lack thereof.
Workforce, April 2003, p. 24 — Subscribe Now!
Other columns byShari:
