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Why Online Learners Drop Out

Creating an online orientation course for new hires seemed like a great ideafor GE Capital. Employees could be brought up to speed quickly and economically,leading to big gains in productivity. There was just one problem. Even thoughthe course was supposed to be a requirement, only about half the participantsactually finished it.


    Welcome to the problem a lot of people in the e-learning industry don’t liketo talk about — high dropout rates for online courses. There are no nationalstatistics, but a recent report in the Chronicle for Higher Education found thatinstitutions report dropout rates ranging from 20 to 50 percent for distancelearners. And administrators of online courses concur dropout rates are often 10to 20 percentage points higher in distance offerings than in their face-to-facecounterparts.


    In 1999, IHEP, the Institute for Higher Education Policy, did a comprehensivereview of the research on the effectiveness of distance learning. It foundevidence of higher dropout rates for distance learners, but concluded, “Theresearch does not adequately explain why the dropout rates of distance learnersare higher.”


    But experts in the industry have no shortages of theories, some backed by newresearch. Corporate University Xchange, an education and research-consultingfirm, recently studied corporate e-learners who’ve taken both asynchronous andsynchronous courses offered either by their companies or external vendors. Thee-learners were asked what they wanted from their courses. Their wish list:Credentials as an outcome — college credit or a certificate, an activecorrespondence with an online facilitator who has frequent virtual office hours,24/7 technical support, and the ability to start a course anytime.


Reasonsfor High Dropout Rates


  • Students don’t have enoughtime
  • Lack of management oversight
  • Lack of motivation
  • Problems with technology
  • Lack of student support
  • Individual learningpreferences
  • Poorly designed course
  • Substandard/inexperiencedinstructors

    These corporate e-learners said their top reason for dropping a course waslack of time. Many had trouble completing courses from their desktops because offrequent distractions from co-workers. Some said they could only access thecourses through the company’s intranet, so they couldn’t finish theirassignments from home.


Laissez Faire management hurts
    E-learning guru Elliot Masie of the Masie Center believes another big reasoncorporate e-learners drop out is lack of managerial oversight. When someone issent to a classroom-based course, a manager generally has to sign off on it. ButMasie says online courses can fall below a manager’s radar.


    That’s what GE Capital thinks happened to many of its new employees takingits online orientation course. When the company discovered only half of its newhires completed the five to ten hour course; it launched a Six Sigma study (astatistical quality control analysis) to determine the difference between thosewho finished the course and those who didn’t.


    Mike Markovits, who manages GE Capital’s Center for Learning andOrganizational Excellence, says the difference had nothing to do with technologyor instructional design. Markovits says, “It all had to do how with howmuch motivation the employees got from management.”


    The study found finishing the course was dependent on whether managers gavereinforcement on attendance, how important employees were made to feel, andwhether employee progress in the course was tracked.


    Markovits says GE Capital made several changes in the program as a result ofthe study. Managers received kits to help them explain the importance of thecourse to employees. And GE Capital put together a much better tracking processand trained managers in it. Markovits says they’re now studying whether thechanges will improve the course completion rate.


Motivation from within
    Corporate e-learning is particularly susceptible to high dropout rates. Astudent who voluntarily enrolls in an online course because she’s hoping anadvanced degree will land her a better job is a much different learner thansomeone who is told to take an online course at work. If a corporate e-learnerisn’t internally motivated, a company will have to step in.


    Corporate e-learners also face the same challenges all online students dealwith. Some of the major reasons given for dropping online courses are fairlyobvious: technology problems, lack of support, poorly designed courses, andinexperienced or incompetent instructors. Individual learning preferences alsocome into play.


    But in just a short time, e-learning providers have learned a great dealabout how to meet those challenges. At the Penn State World Campus, the onlinecourse completion rate for Fall 2000 was 95%, up from 80% in Spring of 1998.Jean McGrath, the Director of Student Services for World Campus DistanceEducation, says completion rates have typically not been a problem, probablybecause most students are highly motivated.


    McGrath says few students take classes for mere self-improvement; most do itto improve their situation in the job market. Most World Campus courses areasynchronous-only (no live instruction), leading toward a degree orcertification. Most students enroll individually, although many companies payfor employee tuition.


Realistic expectations
    McGrath attributes the improving completion rate to managing studentexpectations up front, better course design, and instructors getting better withprofessional development and experience. Penn State used to advertise that adegree was “just a click away,” which underestimated the rigor of PennState’s online courses. Those courses required much work as traditional classes– about ten to twelve hours a week. New students can also prepare for theirfirst online course by taking World Campus101.


    McGrath says students also benefit from high interactivity with faculty andamong each other. Classes vary in the types of communication, with heavy use ofbulletin board discussions and e-mails. The instructor monitors participationand e-mails students who aren’t contributing. McGrath says instructors are keyto the success of the World Campus. “You can have best course out there,but if you don’t have instructors working with students, people will dropout,” she says.


    UCLA is also proud of its completion rate for online courses. It’s now at 85to 89%, compared to 50-60% in 1996. UCLA’s e-learners enroll via corporationsand individually. Like Penn State, most courses are asynchronous-only andrigorous, requiring ten to twelve hours of work weekly.


    UCLA also has high interactivity between students and instructors, but KathyMcGuire, the Director of Distance Learning, says the biggest reason forimproving completion rates is what she calls their “concierge service”– course managers who act as a student resource for questions. They notice ifstudents are going into the course and send reminders if they can’t find them –acting as “canaries in the mine.”


    Course managers handle technical issues themselves and may refer coursecontent questions to instructors. If a question is about an instructor, it’sreferred to an administrator. McGuire says it doesn’t work for instructors to dothis kind of handholding because they want to get to content. “The only wayyou can get an online venue to work is if it’s seamless and transparent for boththe instructor and the student,” McGuire says.


    UCLA also has an extensive, five to six week training program for onlineinstructors. No one can teach online unless they’ve participated in it. And eventhough there are course managers, McGuire says instructors generally log on fiveto seven times a week, several times a day, to respond to students’ threadeddiscussions. She says students can’t sleep in the back of an online class.


    Sun Microsystems Inc. also found out how crucial interactivity can be in thesuccess of a course. Company studies show only 25% of employees finish learningcontent that’s strictly self-paced. But 75% finish when given similarassignments and access to tutors through e-mail, phone or threaded discussions.


    The challenge of getting students to complete online classes is also a majorfocus for us at NYUonline, the first for-profit e-learning subsidiary of a majorAmerican university, New York University. Last summer, NYUonline conductedpilots with corporate learners; purposely making sure participants weren’toffered any incentives for completing the course. Some e-learners took only astand-alone, nine-hour asynchronous course; while others were also offered livesessions in addition to the self-paced course.


The power of live sessions
    NYUonline found that e-learners who took only the asynchronous course weremuch less likely to complete it than e-learners who also participated in livesessions. And the kind of session made a difference as well. Two-thirds of thelearners who discussed topics covered in the self-paced portion of the course(high-integration sessions) finished the course, a much higher rate than thosewho discussed general topics during the live sessions (low-integrationsessions).


    NYUonline also found that more than half of the e-learners who participatedin the high-integration live events were sufficiently motivated to take theoptional final examination and receive a grade for the course. In the grouptaking the low-integration live events, just over ten percent risked taking afinal exam.


    David Hawthorne, senior vice president of learning environments for NYUonline,hypothesizes that not only do live events lead to a higher rate of completion,but those who participate in highly-integrated live events are far moreconfident of their knowledge — that is, more willing to use the knowledge insituations where they might be judged. “If you want people to actuallychange their behavior as the result of learning, you must do more than transferknowledge,” Hawthorne says. “You must also build their confidence touse the new knowledge. “


    NYUonline asked the participants in its pilot study what incentives theythought would make a difference in helping them to complete an online class. Theonly incentive they all agreed would help is personal feedback from theinstructor. Hawthorne agrees that a personal connection is the most importantfactor in boosting completion rates. He says it’s a powerful motivator when aninstructor tells a student, “You’re really getting this.”


    This kind of research has helped NYUonline develop best practices to ensurehigh completion rates for the corporate e-learner. Some are no-brainers; awell-designed course, an experienced and engaging instructor, a high level oftechnical support, and a detailed pre-course orientation. But the two areas thatappear to be most critical are high interactivity and managerial oversight.


    The best kind of interactivity not only creates a sense of community forparticipants; it also stimulates learning through discussing ideas andpracticing skills. Blending highly integrated live sessions with an asynchronouscourse may well be the gold standard when in comes to keeping e-learnersmotivated and involved. NYUonline’s research shows that providing a one-hourlive session for every four hours of self-paced study appears to be a highlyeffective mix.


The social factor
    Studying in cyberspace can be lonely and isolating. Bringing people togetherfor live discussions not only results in learning during the actual synchronoussessions, but makes it much more likely students will persevere through theself-paced portions of the course. Students in NYUonline’s pilots admitted livesessions could be inconvenient, but were well worth the effort.


    Nearly all the NYUonline students who completed the course said the livesessions provided an emotional lift. Hawthorne says the emotional connectionbetween instructor and student may be even more important for online coursesthan in the classroom. Hawthorne says there is always personal recognition foran online student, which may not be the case for many classroom students. Andonline instructor must learn a student’s name, which is very satisfying to mostpeople.


    But it’s not always possible to deliver synchronous, live sessions. So, if acourse is to be entirely self-paced, it’s important to build asynchronous formsof interactivity such as e-mail and threaded discussions on bulletin boards.Tutors, or course facilitators, can be a more cost-efficient way to provideinteractivity than having an instructor do it all. Student-to-studentinteractivity is also a powerful aid to learning. In online MBA programs, teamsare often seen as more valuable to learners than interaction with faculty.


    To make interactivity between students and instructors cost-effective,instructors need to work at more efficient ways to respond to students thanpersonal e-mails. Some instructors develop an online database of responses tofrequently asked questions. Others use automatic e-mail response systems thattell students their question or assignment has arrived, with an estimatedresponse time. One instructor of an introductory computer class says hiscompletion rates jumped from 62 to 90 percent when he switched to a moreinteractive Internet program that allowed him to hold regular chats and organizee-mail messages more efficiently.


    More advanced software can also help instructors track student progress. Aprogram called Archipelago allows instructors to see when students log on andoff the course and how much time they spend on each assignment. Instructors ortutors can pinpoint potential dropouts and send them e-mails.


    Simple strategies include answering individual questions for the entire classon a bulletin board or requesting the class respond to a question, whichleverages the power of group interaction. Instructors can even set up phonetrees so students get to know each other.


    But even a highly interactive course with a great instructor can go by thewayside if a company fails to provide sufficient oversight and incentives. Toooften, companies dump courses on their employees and then wonder why they don’tfinish them. Or they expect an external vendor to run everything, but thatdoesn’t work since their employees don’t report to the e-learning provider.Company managers must supervise e-learning the way any other importantinitiative must be managed.


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Think Twice You Do Want a Higher Minimum Wage

Would you think I’m nuts if I told you that a minimum-wage increase this summercould be good for your business? Probably. After all, opposition to the wage floorhas been the linchpin of 63 years of HR and business lobbying. The minimum wage’sexistence has led directly or indirectly to an entire industry of powerful lobbyinggroups that many of you are involved in — the National Federation of IndependentBusiness, the U.S. Chamber of Commerce, the National Retail Federation, and soon.


    These groups believe the minimum wage is the devil’s evil twin. Philosophically,it represents everything they oppose. Businesspeople believe that governmentshouldn’t set a company’s wages. On top of that, they argue that the wage floorcosts jobs, not just at McDonald’s and Kmart, but also for those without minimum-wageemployees, because the whole wage scale is ratcheted up when entry-level wagesrise artificially.


    Republicans in Washington understand the laws of economics (if the price of laborgoes up, you will be able to afford less of it), and therefore agree with thebusiness lobbyists. So do most sane economists.


    Democrats, on the other hand, note that — adjusted for inflation — the $5.15minimum wage is far below what it was in the 1960s. The minimum wage has variedfrom a maximum of 76 percent of the poverty level in 1968 to only about 50 percentof the poverty level now. This comes at a time when CEOs get $37 million for quitting.


    Democrats also argue that $5.15 is so paltry that a person who’s supporting herselfon $10,300 a year (what you earn working full-time at the minimum) isn’t goingto be able to eat in your restaurants and shop in your stores. And if she’s supportinga family — fuhgeddaboutit.


    Most voters agree with the Democrats. The President and Congress want to get re-elected,so they’re going to have to vote to raise the wage floor. The final vote couldbe counted this summer, and would likely increase the minimum by $1 to $6.15,over the course of a year or two. In allowing the minimum wage raise to go through, the Republicansdon’t want to alienate their supporters — businesses.


    Ahhhh. That’s the kicker. The Republicans will add loads of sweeteners to thebill to help you to swallow the bitter minimum-wage potion. If you lobby yourrepresentatives, the final mix could include gazillions of dollars for labor-relatedtax cuts, and long-sought-after changes to labor laws.


    Does this theory that the minimum wage will become a Christmas tree full of HRgifts sound like a cynical and convoluted idea that may or may not be true inthe real world? Think again, because I’m more positive than a Robert Downey Jr.drug test.


    A Washington lobbyist, after calling the Republican leadership (Senators TrentLott of Mississippi and Don Nickles of Oklahoma), tells me that Congress mightbe willing to include such goodies as changes to overtime rules, which would makemore salespeople exempt. They also might make the changes to the bonus rules thatmany of you have been fighting for. This would allow employers to pay bonusesto hourly employees without the pay increasing the employee’s wages, thus triggeringbig overtime costs.


    Your senator may even be willing to throw in a clarification of the definitionof the infamous “serious health condition” in the Family and MedicalLeave Act. Can’t hurt to ask.


    The last minimum-wage increase, which boosted the wage floor from $4.25 in 1996to $5.15 in 1997, arrived with a bubbly pool of cash to offset employers’ pain.Like $21 billion worth. And that was under a Democratic president.


    “Typically, what’s happened in the past is that the tax cuts have been muchgreater than what’s needed to offset any potential impact of a minimum-wage increase,”says Molly Rowley, an aide to Democratic Senate leader Tom Daschle.


    Those tax cuts probably will happen again, and you’ll be the beneficiary.


    On June 24, 1938, the night before President Franklin Roosevelt signed the firstminimum-wage bill — 25 cents an hour — he held one of his fireside chats. “Donot let any calamity-howling executive with an income of $1,000 a day . . . tellyou . . . that a wage of $11 a week is going to have a disastrous effect on allAmerican industry,” he declared.


    Roosevelt’s rhetoric may have been a bit inflammatory, but his message still holdstrue.

Other columns by Todd Raphael:
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How Virtual Teams Bring Real Savings

Companies that use virtual teams say they save money, result in more productive and effective use of workers’ time, and ultimately generate better products because of the collaborative nature of the teams. Though data is hard to come by, HR managers whose firms have virtual teams say there is no question about the value.


   Nortel Networks has a vast voice and video network to connect its teams. In 2000, the company held 44,000 hours of video conferencing in their 240 video-conference facilities and held 17,000 teleconferences per month. Though they don’t have any specific cost-savings figures, company officials are quick to say that virtual teams save a tremendous amount of money.


Virtual teams allow employees to be fast and competitive in disseminating information. In addition, they reduce travel expenses. “There’s a phenomenal cost savings for people not having to meet face-to-face,” says HR director Pratt, whose IS department has studied travel savings. Travel is expensive not only in airfare and hotels but also in lost work time. Cutting travel budgets is a matter of cost savings and efficiency. Pratt suggests the following ways to gauge specific business needs:

  1. Assess the work that has to be accomplished. Is it just information sharing? Is it creative brainstorming? Is it work that teams have to build relationships or develop new skills? This information helps you to determine the type of electronic approach you will use. Teleconferencing, for example, can be used for brainstorming so people can introduce new ideas and conduct open exchanges. If the need is for information sharing, a company may want to add some sort of meeting manager so that team members can view and manipulate charts on a screen. If the need is to dispense information to a mass audience, a Webcast might be used.

  2. Identify the interpersonal relationships. Ask questions such as: Who needs to be on the team? Where do they work, and what are their relationships? If they already know each other, teleconference and Meeting Manager work fine. If they don’t, a video conference might be helpful.

  3. Consider the cost. It isn’t cost-effective to buy a whole video conference system if you’re going to use it only a few times a year. Build phone relationships instead. Because technology is so expensive, conduct a cost-benefit analysis.

Workforce, June 2001, p. 62 — Subscribe Now!

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Avnets Longer Vacation Benefits Increase Satisfaction

Avnet, Inc., a leading global distributor of electronic components and computer products, conducted a review of its U.S. vacation policy after determining that it we were not market competitive.


Our existing policy offered a maximum of two weeks off. To compensate for the small number of vacation weeks offered, annual carryover was allowed with unlimited accrual. Also, the provisions in its paid time-off program provided for community and family time off and predetermined amounts of yearly sick days. Combined with higher-than-market pay levels, these provisions were seen as benefits that made up for the limited vacation offered. After assessing the negative effect that the slender vacation program was having on recruiting and retention, the need for an adjustment became evident.


Avnet decided to fatten the vacation benefit by providing a third week of vacation after five years of service and a fourth week after ten years. It also significantly improved its accrual methodology. It was changed from annually in retrospect on an employee’s anniversary date to accruing vacation on a current basis from the employee’s date of hire. Accruals are now recorded during every bi-weekly payroll cycle, making vacation available earlier and more frequently.


Along with the increase in weeks offered came the need to control accrual amounts. Vacation carryover was capped at two times annual vacation accrual. After viewing the liability that would build on the balance sheets, this was later reduced to one and a half times the annual vacation accrual. Considering some employees had accrued numerous weeks of vacation under the previous plan, employees were given a one-year grace period to use up the vacation time that exceeded the new accrual cap. The total improvement to the benefit was implemented over the course of two years.


Since making the improvements in the vacation schedule and accrual methodology, Avnet has noted two discernable employee satisfaction trends. In the past, candidates receiving offers of employment frequently either complained about or negotiated individual exceptions to the vacation policy. These requests have become far more infrequent since the policy changes.


Avnet also conducts an annual employee satisfaction survey. One of the survey questions asks employees, “Do the benefits available meet current needs?” Responses to this question consistently scored among the five lowest posed.


Although some other benefit improvements have been noted, the score on this question from the March 2001 survey improved significantly and is now just slightly under the overall average survey score. Additionally, the last question in the survey asks, “What does Avnet need to do to meet your definition of a best-in-class employer?” Many of the employees have remarked very favorably about vacation policy improvements.

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Managing Virtual Teams

Dale Pratt doesn’t share an office with her team members. She’s not even in thesame building or zip code. Pratt, director of HR for Nortel Networks Corporation,works at company headquarters in Ontario, Canada. But as a member of a virtualteam, she has colleagues as far away as Europe and China.


    The company creates Internet technologies, and has 80,000 employees locatedin 150 countries. It is one of the dramatically increasing number of organizationsnow conducting business 24 hours a day, seven days a week with people on differentcontinents and in different time zones. As businesses become more interconnectedand more global, they must learn to make faster and smarter strategic decisions,and to take advantage of technological advancements.


    “We have to work in real time across the globe, really fast, and our employeeshave to be where our customers are,” Pratt says. “For us, workingwith our virtual team is the same as other companies where people might sittogether under a centralized roof. We simply use different tools to do our jobevery day.”


    Virtual teams may be composed of full-time or part-time employees. They mighthave a global reach, or involve combinations of local telecommuting membersand more traditional in-house workers. A senior executive might be on one planningcommittee for a product release, for example, another for identifying minorityvendors, another to study relocating a plant, and another to evaluate softwaretracking. He may deal with key players who not only are out of the country butalso are working for another company, or perhaps as suppliers who are on thevirtual team to add information and technical support.


    Virtual teams offer tremendous opportunities, and tribulations. Electroniccommunication allows companies to recruit talent without the constraints oflocation, and to offer more scheduling flexibility such as telecommuting andworking at home offices. It also creates the potential for follow-the-sun, 24-hourworkdays and the ability to maintain close contact with customers throughoutthe world.


    On the other hand, it is difficult to manage people who must work collaborativelyand interactively but may not ever actually lay eyes on one another. The complexitiesand subtleties of dealing with widely different personalities, cultures, andlanguages make communication far more difficult among virtual team members.


    These new challenges require diverse management skills, such as the abilityto determine the best technology to facilitate communication, and the abilityto engender trust and productivity among team members even when there is nodirect supervision. Companies that have successful virtual teams have managerswho understand the unique characteristics of electronic communication. Theyare able to create a sense of communal experience so that interaction yieldscreativity and knowledge sharing. They are aware of the arsenal of tools attheir disposal and have learned to use the appropriate technology to communicateand collaborate so that individual team members feel connected to one another.

Tips for Successful
Virtual Teams

  1. Select people who are self-starters, strong communicators, and have other good virtual-team skills.

  2. Keep projects task-focused so team members will be able to gauge their progress and know if they are on target.

  3. Keep team interactions upbeat and action-oriented.

  4. Standardize common protocols.

  5. Create clear goals.

  6. Celebrate reaching targets.

  7. Create shared space — a virtual water cooler — where people can interact beyond the scope of work.

  8. Identify barriers to collaboration that you want to overcome.

  9. Identify what people should do when a crisis occurs. Whom should they contact? What is that decision-making hierarchy?

The proper technology for communication
    Managers of virtual teams have a huge array of technology tools at their disposalto create an integrated collaborative environment. The trick is to know whatto use and when to use it. “The more you can interact by voice, text, andaudio, the more you’re able to overcome the barriers of time, distance, andculture,” says Waldir Arevoelo, research analyst at Gartner, Inc., in Stamford,Connecticut.


    A thorough understanding of e-mail, teleconferencing, and videoconferencingis vital. Knowledge of other tools such as Webcasts, meeting managers, whiteboards, bulletin boards, and data sharing helps managers develop digital environmentsthat foster ingenuity and innovation.


    At Nortel, Pratt trained her virtual team of 60 finance and legal employeeson deal-making skills. Since they were located throughout the world, Pratt chosean assortment of technology tools. One was a group meeting technology, MeetingManager. Virtual participants were on individual PCs and also on a teleconferenceline, so they could talk and listen to one another. She prepared charts thatteam members could view on their screens, and provided an electronic white boardfor random ideas and scribbling.


    The meeting took place — in real time — from team members’ desktops at theirvarious locations around the world. The meeting had been scheduled on the company’sintranet calendar, and participants were invited by e-mail. Pratt secured chartsfrom the meeting presenters and uploaded them onto the company’s Meeting Manager,which allowed for group viewing.


    As chairman, she was able to control the order of the meeting and the viewingof the charts. Participants posted questions on the white board, which Prattcould see. She was then able to address or answer the questions on the computerscreen, or pose and take questions on the phone.


     Nortel Networks relies heavily on Meeting Manager, Web Meeting, and teleconferencing.When visual cues are especially important, the company uses videoconferencing,Webcasts for mass audience viewing, and very regular updates on the company’sintranet so that everyone on the team has the same information. “Thereare as many applications with technology as there are creative minds,”she says.


    It is, of course, a daunting task to communicate with people who have nevermet each other but have to share information constantly. New York-based Deloitte& Touche LLP faces this conundrum all the time. The company has 90,000 employeesin 130 countries, and its far-flung clients need virtual work teams so thataccurate information is available to everyone at all times.


    To address the issue of globally shared data, the firm created a Web-basedtracking system that enables anyone anywhere in the world to check the statusof company projects. The system operates like a file that contains all policydocuments necessary to serve the clients, including appropriate practice toolsthat were developed at different locations around the world. If, for example,there is a tax decision that affects a specific region or client, it is putin the system.


    “One of the virtues of these Web-based systems is that the informationis always available for anyone,” says Lou Mitas, partner in charge of EastRegion International Assignment Services. “The work may be done in NewYork and a question may arise in Sydney or Hong Kong. The question gets postedon the Web and gets answered quickly. The answer resides on the Web and is availablefor everyone, so the question only needs to be asked once.


    “If, for example, we’re having problems in Kuala Lumpur and a client callsme asking for the status, I can look it up from my office or from my bedroom.I will be able to know the status of any project at any time.”


    Still, Mitas knows that technology cannot replace relationships. There mustbe face-to-face interactions and live phone conversations, too. At Deloitte& Touche, practice leaders and client service partners meet in person severaltimes a year at conferences to assure understanding, establish new goals, andfurther develop relationships.


Understanding the needs of the team
    Effective managers of virtual teams understand critical non-technological skills.”Trust is a very important component of virtual teams,” says LynnNewman, an associate professor of organizational studies at the California Schoolof Professional Psychology in Los Angeles. “Managers have to trust thatpeople will perform when they’re away from direct supervision. Individual teammembers need to develop trust across different media, such as e-mail and telephone,which may be difficult to do.”


    One of the reasons developing trust is so crucial is that teams are formedto create knowledge. Problems often arise when people work across cultures andhave different perceptions of projects. They have to be able to trust each otherand the leader if they are going to get the job done effectively.


    Developing a productive virtual team begins with selecting the right people.A successful team member is self-motivated and doesn’t need a lot of detailedinstructions or structure. Ideally, he or she is a strong communicator, a qualitythat helps counter-balance the anonymous nature of technology. In addition,Newman recommends people who are adaptable, technically self-sufficient, andresults-oriented.


Creating a sense of shared space
    Teams need tools — as well as leaders — to create shared knowledge or sharedvision. When a team has a meeting, whether a teleconference, videoconference,or face-to-face encounter, the leader must be explicit about goals. “Peoplemay have gone off on tangents, and it is at this point that the facilitatorkeeps the team aligned in terms of the goals and continues to recognize theknowledge sharing,” Newman says. Knowledge creation is building a new productor process around information people already have.


    “When people are creating knowledge, keeping people up-to-date on wherethe group is at the moment is key. You need shared understanding of how farthey’ve come and what the group knows as a whole.”


    Managers should set up regular virtual meetings to share expectations and de-briefings.It is their task to frame the team’s objectives so members clearly understandtheir roles. They emphasize the consequences of team decisions, and provideongoing monitoring and honest feedback about how the team is doing.


    Andy Esparza, vice president of human resources/operations at Dell Computer,says that using shared information between his virtual team members saves enormousamounts of time. His global team uses software called HR Direct, an intranet-basedtool that allows him to stay connected with other managers on his team. Usingshared data on compensation programs for Dell’s 40,000 employees worldwide,the team is now able to create reports in 30 days for the senior executive teamon tools and compensation program design such as base pay, stock options, bonuses,and profit sharing. The process used to take two months.


    One of the other advantages of the system is the sense of shared space. Whilethe virtual team managers are the point people at various locations around theworld, they have access to the same material whether they’re at corporate headquartersin Texas or at a manufacturing facility in Malaysia.


    Virtual teams offer an opportunity to work with the best talent throughoutan organization. But to accomplish this, managers must actively work to createa sense of connectedness and shared space, to use technology effectively, andto know when to forgo technology for personal communication.


Workforce, June 2001, pp. 60-64 — Subscribe Now!

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Vacation An Untapped Recruiting and Retention Tool

Paid time off programs (including vacation) are cornerstone benefits that areeasy to overlook.


    These programs often appear to employees, potential hires and employers asgivens. However, in the current business environment, they should be examinedas potential tools for employers to use in boosting recruiting and retentionefforts especially when budgets and bottom lines are being carefully scrutinized.Further, studies have found that given a choice between more time off or moremoney, roughly half of those polled would select time off.


    Although vacation programs may seem simple to design and administer, there’smore to consider than the number of weeks to offer based on length of service.Employers must think about accrual methods, ease of administration, communications,employee demographics and economic conditions. Following is a brief discussionof these issues:


Designing a vacation policy
    Employers should consider several issues in selecting a vacation accrual methodology:

  • Prospective or retrospective and frequency –Vacation can be earnedeither in advance or at the end of a selected period of time and is typicallyaccrued monthly, quarterly or annually. Prospective accrual allows employeesto take vacation in advance and assumes that they will remain employed fora certain amount of time. Retrospective accrual credits vacation to employeesafter they have completed a specified service requirement. For example,if an employer uses a prospective monthly accrual offering one day of vacationper month, then the employee could take 12 days of vacation at some pointduring his or her first year. If this were instead a retrospective annualplan, at the one-year anniversary, the employee would receive the 12 daysearned in the prior year.

  • Rolling or static — Vacation accrual can be calculated either ona rolling basis (each employee accrues vacation based on his or her individualdate of hire) or on a static basis (as of a certain date, say January 1,vacation accrual is established for all employees). Some employers designhybrid plans that which combine the features of rolling and static accrual.

  • Tenure, level, or merit — Employers must decide how to scale vacationtime. For example, how long an employee has been at the company, what hisor her job level is, and how good the employee is at the job (merit). Alot of companies use length of service; some use job level. Until now, almostnone have used merit as a basis for accrual. However, some employers arereviewing their philosophies around offering expanded vacation to rewardtop performers.

  • Use it, lose it or save it — Employers must decide whether unusedvacation days can be accumulated (moved forward into a future year) and,if so, for how long they can be saved. They must also consider whether ornot to pay employees for unused days. Employers may also want to think aboutestablishing “community banks” to which employees can donate unusedtime that may be used by others with unusual needs for time off (for example,to care for a critically ill family member or to be used by an employeewho must undergo time-consuming medical treatment).

Administering a vacation policy
    Administration requires special attention to the design elements just discussed.One consideration is the availability of systems support. Is there a computersystem? Or, is vacation accrual still being done on a manual basis? If an employerdoes not have adequate systems support, then the vacation accrual policy maybe well designed but cannot be practically used.


    In addition to supporting the transaction of vacation, actual accrual and anyassociated financial liability must be tracked by the company’s systems. Forsome employers, these liability issues may require adjusting accrual design.Employers should consult with their financial and legal advisors about vacationaccrual liabilities and any potential impact on a company’s balance sheet.


Communicating the vacation policy
    In addition to the necessary documentation in employee handbooks and policymanuals, manager training and employee awareness are necessary to ensure thatvacation policies are understood. Employers make a considerable investment inproviding paid time off and will want to get appropriate perceived value fromemployees. This can be achieved through a carefully communicated explanationof vacation time.


Demographic and economic issues
    Although the unemployment rate has been increasing over the past few months,it has remained below 5% for the past three years, a period of unusually lowunemployment. Prior to 1997, the last time the unemployment rate dipped below5% was 1970, according to the Bureau of Labor Statistics. In light of potentialemployment and economic shifts, human resources professionals should reviewtheir staffing and recruiting needs. They should re-examine both traditionaland innovative benefits to ensure that all offerings fit their company’s currentstrategic plan.


    When considering how vacation-plan design fits with a company’s strategy, employersmust be mindful of the demographics included in their employee base, as wellas those existent within the potential workforce. One of the most importantdemographics to heed as Baby Boomers begin to retire is the succeeding (andmuch smaller) generation, dubbed “Generation X.”


    Currently, there are 56 million Gen-Xers included in the 136 million-personworkforce in the United States. Gen-Xers represents 42% of the workforce.


    Gen-Xers have become demanding in what they want and will accept from potentialemployers — especially when it comes to work/life balance. Companies that donot provide time for their outside needs may not retain skilled employees fromthis generation. Find out what your Gen-X (and other) employees want in theirvacation policy, and tailor that policy accordingly.


    For example, you may considerintroducing additional types of time off, such as forcommunity/volunteering, education pursuits, or child and eldercare needs. You also may consider (while being careful with labor laws) allowing fractional use of time off, rather than whole days. Lastly, you may want to look at combining time-off into a larger discretionary bank that employees can draw from without specifying the reason for the need.


    If the economy continues to slow, layoffs will become more common. It is thenreasonable to assume that the hunt for talent will not be as challenging asit was during the past several years. Although this may be true for some positions,expectations are that skilled candidates for mid-level and senior positionswill continue to be in high demand. These positions typically require experiencedcandidates who have been active in the workforce for a considerable length oftime.


    These mid-career hires pose a unique problem for employers. In order to becompetitive, companies must make attempts to match what the candidate was givenby former employers. This has typically been accomplished on a case-by-casebasis. If an interested employer is to successfully recruit a candidate whohas become accustomed to a particular number of vacation weeks, then matchingthat number is essential.


Planning guidelines and policy reviews
    When determining vacation plan design and thinking about which method of accrualto use, it’s important to keep it as simple as possible. It is not possibleto appease every demographic segment with a customized accrual method withouthaving an administrative nightmare. Before implementing an adjusted accrualmethod, it would be wise to conduct a benchmark study to determine the use ofvariable vacation accruals among market competitors.


    There are two constituents to consider when reviewing a vacation policy — thecompany, and the employees. Arguably, they are one and the same, but to focuson one without thought of the other would compromise the successful impact ofthe plan.


    Today’s employees are more aware of what benefits are offered by competing companiesthan ever before. Therefore, it is essential for employers to pose such questionsas:

  • Is the current vacation program competitive? Within the respective industry?Geographic location?

  • Is the program responsive to the various demographics of our employees?Is the program flexible enough to meet the needs of future demographics?

    Equally important in the review process are company interests. The company needsto address feasibility issues, such as:

  • What are the costs associated with potential program changes? If the projectedcosts are higher than those of the current program, might the discrepancybe reconciled by a potential reduction in turnover?

  • Are possible changes compliant with federal and local legal requirementsfor both exempt and nonexempt employees?

    With careful consideration and an organized approach, adjusting vacation accrualscan play a powerful part in a company’s recruitment and retention efforts. Inthe past, employees were content to work for an employer offering little morethan pay and job security. Potential and existing employees today have a solideducation, demands for competitive compensation and benefits, and growing concernsover their work/life balance.

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Costs, Risks and Values in HRMS Security

A successful security strategy is a compromise between several competingcosts, values and risks. Costs are relatively easy to balance because they aredirectly comparable numbers. High initial implementation costs may be offset bylower maintenance and administration costs.


    Risks and values are somewhat more difficult to precisely quantify inmonetary terms and may come down to the judgment of management and HRprofessionals. The following are some of the costs, values and risks you shouldconsider.

Implementation Costs
These are the initial costs of planning, projectmanagement, hardware, packaged software, development tools, consulting,maintenance support, contract labor, internal development resources, validationand initial data loading from the first day of the project through the first dayof production operation. These costs vary widely with the size of theorganization, performance objectives and the authentication and access controlchoices made.
 
Cost of Maintenance
These are the software licensing, software and hardwaremaintenance and system support costs required to keep the system in operation onan ongoing basis. These costs also vary widely with the size of theorganization, the performance objectives and the authentication and accesscontrol choices made.
 
Cost of Administration 
These costs are those personnel costs for HR and ISprofessionals who maintain the security system. If the integrity of personneland access control data is in question, reliable execution of access controlrules is not possible.
 
Risk of Improperly Granted Access 
This is the financial and business lossexposure to the corporation of confidential information falling into the wronghands. Some areas to consider are business losses by exposure of operationalinformation to competitors, employee morale, productivity, personnel costsrelated to improper release of compensation information and litigation costsfrom the improper release and use of confidential personnel information.
 
Risk of Improperly Denied Access 
Nothing is more frustrating than beingdenied access to information you need to properly do your job. Improperly deniedaccess can prevent: a product from shipping; a customer service representativefrom satisfying a customer; an HR representative from taking care of acomplaint; or, an employee from accessing his own benefits information. Thepossible costs here are from business losses and decreased workforce morale andproductivity.
 
Risk of Litigation Exposure 
Personnel information is, by its very nature,private and confidential. It is the responsibility of HR professionals tosafeguard employee privacy by controlling access to personnel information. Abreakdown in this area and the resulting misuse of this information can exposean organization to significant litigation expenses and monetary damages.
 
Value of Improved Access to Information 
Information can empower people. Thevalue of this may be difficult to quantify in dollars, but improvingin-formation access makes employees more productive and generally increases jobperformance and satisfaction. Employees are happier and more motivated when theyfeel they have been given the best tools to perform their jobs. These effectsmay be cumulative and, in some cases, can transform an organization.
 
Value of Court-Tested Non-Refutability 
Even with the best security, thereare cases where employees attempt to misuse their privileges. Personnel actions,because of their impact on employees’ careers and the possible financialincentives for misuse, sometimes lead to litigation. The investigation of whathappened and who is responsible requires a reliable audit trail for personneltransactions and strong authentication to tie the audit log to the correctusers.

None of this has much value if it is so easily countermanded that it can’tstand up to courtroom scrutiny. The stronger the authentication the better.Digital certificates are currently considered a best practice and have legalprecedent to support their proper use for authentication and digital signing.

By Robert H. Fortenberry, Information System Consultants. From IHRIM’s”e-Work Architect: How HR Leads the Way Using theInternet.”

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Employee Referrals Save Time, Save Money, Deliver Quality

When employee-referral programs make the news, it’s usually because thecompanies involved have paid a big bounty for a hire. Earlier this year, SRAInternational, a Fairfax, Virginia, systems integrator, awarded an employee a$50,000 grand prize in its annual employee-referral lottery. And in 2000,Blackstone Technology Group, a San Francisco-based IT company, picked up the tabfor a referring employee’s BMW, the prize in a company raffle.


    For any HR person who has concluded that it takes big bucks to create asuccessful referral program, here’s the real news: the programs’ value lies intheir economy and ability to not only attract good job candidates but also showgoodwill and commitment to the employee making the referral.


Why institute a referral program?
    The programs are valuable for four reasons, according to “EmployeeReferral Programs: Optimizing Your Most Effective Recruiting Tool,” a June2000 white paper by Angami Systems, a referral-technology company that has beenacquired by Hire.com.

  • Low cost per hire. Referral programs cost $500 for exempt employees and$70 for non-exempt, versus $2,884 and $726 for print advertising, and evenmore for agencies and executive recruiting firms, according to the 2000Employment Management Association’s cost-per-hire survey.

  • High-quality hires. Employees are unlikely to recommend people who theythink are unqualified or unreliable.

  • Decreased time in hiring. Employees are selling the company to the peoplethey refer. Interviewers, including people in HR, can spend their timeevaluating a candidate’s background and qualifications. Employees also tendto recommend people who they know are ready to make a job change, which alsospeeds the hiring process.

  • An opportunity to strengthen the bond with existing employees. Referralprograms acknowledge and reinforce the company’s commitment to rewarding theindividual for helping the company.

    Additionally, an Ohio State University study shows that employees hiredthrough referrals have a retention rate that’s 25 percent higher than that ofemployees hired through other methods.


What motivates employee referrals?
    A recent survey of employees in a dozen industries by Referral Networks, aNew York City-based company that markets a Web-based application to helpcompanies create and manage employee-referral programs, gives some insight intowhat it costs to get employees interested in making referrals.


    The news is good: five-figure bounties are not what drives the process.


    Forty-two percent of the 2,300 employees surveyed by Referral Networks saidthey referred because they want to help a friend find a good job. Twenty-fourpercent said they wanted to help the company. Another 24 percent said they weremotivated by a reward, according to the survey.


    More good news: employees don’t even expect a lot of money for makingreferrals. In the Referral Networks survey, 85 percent of the respondents saidthey’d be motivated by a reward of $1,000 or less. Thirty-two percent of thosesaid they’d be happy with a sum between $100 and $400. Interestingly, 24 percentof the companies in the survey were apparently overpaying, offering $1,500 ormore as a reward.


    Meanwhile, two-thirds of the respondents told Referral Networks that they’dbe happy to receive such non-cash awards as airline tickets to U.S.destinations, weekend getaways, two extra vacation days, or a piece ofelectronic equipment.


    Computer hardware giant Intel Corp. uses a combination of monetary andnon-monetary incentives, says Erin Gorsline, program manager, Intel e-Staffing.In addition to a cash reward for referrals, the company also offers a raffle forthose employees who’ve made referrals. Last year, the prize was a choice betweena $1,000 travel voucher or a home entertainment system.


    “We like to give folks choices,” Gorsline says, “and we’vedefinitely seen increases in the number of quality résumés submitted sincewe’ve begun the process.” Gorsline said 50 percent of the company’s newhires have come from referrals.


    John Sullivan, head of the Human Management Program at San Francisco StateUniversity and an expert in referral programs, agrees that “mix andmatch” programs like this are effective because the enthusiasm for aprogram dies down after a year or so. Giving away something big every six monthsgoes a long way toward revitalizing interest, he says.


    Unifi Network, a division of PricewaterhouseCoopers, uses non-monetaryincentives in its referral program. But “money gets people’s attentionfaster,” says Tom Casey, a partner in charge of the talent managementpractice.


    From its research, Referral Networks concludes that the programs are not”a game of dollars,” says Catherine Drogin, the company’s vicepresident of marketing. “You don’t have to offer more than $1,000. We don’trecommend taking it away if you’re offering more than that, but if you’rethinking that a higher reward is better, it’s not. We recommend that you takethe money and put it into promoting your program. Spend it on driving awareness,so that the employees don’t have the excuse of ‘Oh, I didn’t know we had aprogram.’” Typically, Drogin says, only about 5 percent of a company’semployees participate in the referral program. With best practices, she says,the number can be raised to 25 or 30 percent.


Why employees don’t refer, and how to get them involved
    The top three responses for not referring, according to the survey byReferral Networks:

78 percent: Don’t know anyone suitable for the positions


42 percent: Afraid the referral will reflect badly on them if the candidate doesn’t work out


21 percent: Process is too much of a hassle

    On the surface, the first reason seems to have nothing to do with referralprograms or their incentives. But this response actually gets at what Sullivansees as a flaw in many referral programs: they assume that employees know how tofind job candidates. Some employees are “meeters,” and have bigpersonal networks. For other employees, Sullivan recommends that HR provideinformation (via meetings, or the company’s intranet) on how to:

  • Find referrals through e-mails and listservers

  • Work a convention to identify and build relationships with potential referrals

  • Find names first, and then build relationships

  • Assess the potential of a contact

    The next reason, fear of bad fallout if a candidate doesn’t work out, mightsound like a drawback, but it isn’t, Drogin says.


    “This is a big positive for companies. It says that the employees aredoing the first level of screening. Unlike job boards and classified ads, wherethere’s a huge influx of résumés and HR managers have to weed out the 85 or 90percent that aren’t appropriate, this 42 percent says that while employees mighttalk to 10 people, they’ll only recommend one. That’s why these programswork.”


    That’s been the experience at Unifi, where the reward for referrals isparceled out in two installments: one-third immediately and two-thirds when thenew recruit has finished one year. The result has been that employees don’trefer someone who is not capable of lasting out the year, or would likely leavein six months. The employee who made the referral also sticks around for a year– a great side-benefit when retention rates are low nationwide.


    For those who think the program is a hassle, there are easy fixes, accordingto those who run referral programs. The most popular is automating the programby putting it on the corporate intranet, as Intel has done. The referral site isaccessible to all employees and has the guidelines and eligibility requirementsfor the employee-referral program, along with listings of prize winners. Jobcandidates can submit their résumés electronically to the site, and recruitersand hiring managers have instant access.


    Intranets don’t necessarily solve every issue, Drogin says. In some cases, acompany’s intranet merely holds a referral form that the employee downloads andfills out. Some companies ask that the referring employee fill out half the formand pass it on to the applicant. She fills out the other half and attaches arésumé. Then the material comes back through an external scanning source andinto the company’s applicant-tracking system — a tedious route, to be sure.


    A smoother approach (and one that Referral Networks provides) is to allowemployees to see the jobs that are available and, with one click, send theinformation to several friends who might be potential candidates. The candidatescan respond to the job site directly.


    The benefit, Drogin says, is that the employee spends a minimal amount oftime in the process, and lets the friend decide, by reading about the job andits criteria for hiring, if it’s right for him. “It takes a huge burden offthe HR managers.”


The need for speed
    Whether a company uses an intranet, a Web service, or some other system,rapid response is vital. If candidates don’t hear from the company right away,they assume that nothing is happening, Sullivan says. The employees who make thereferrals may refrain from doing so in the future if they find their friendsgetting strung along or ignored. That undermines your entire program.


    At Agilent, the Hewlett-Packard spinoff company where Sullivan was arecruiting consultant, a referred candidate would receive a phone call from acompany representative within 24 hours of applying. In addition, the referringemployee would receive a personal e-mail and a phone call. Both persons would bekept abreast of where things stood in the hiring process.


    “You have to get the hiring managers to understand that, through thisprocess, you get A+ quality résumés that have to get acted on rapidly.”


Workforce, June 2001, pp. 67-72 —  SubscribeNow!

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Table of Contents June 2001

Your wonderful (and terrible) HR life, learning management reports, virtual teams, and HR for spies — all in the June issue of Workforce! Subscribe Now!

Features
It’sthe Best of Jobs, It’s the Worst of Jobs. It’s Life in HR.
A Day in the Life of HR: Your stories, andtwo tales of HR that fits — and shapes — company culture.
 
YourWonderful, Terrible HR Life
You’ve handled it all, from crazedcomputers to fashion counseling for transvestites.
By Janet Wiscombe
 
Mediationand Mindfulness at Sounds True
At this recording company, HR balances alofty mission with a worldly bottom line.
By Shari Caudron
 
Secretsand Strategy at Kroll
When your investigation firm’s work readslike a spy novel, you can’t do HR by the book.
By Patrick J. Kiger
 
WhatLearning Management Reports Do For You
Systems that track progress and ROI canmake even a skeptical CEO see training’s value.
By Todd Raphael
 
ManagingVirtual Teams
Technology and people skills createeffective teams that might never actually “meet.”
By Charlene Marmer Solomon
 
EmployeeReferral Saves Time, Saves Money, Delivers Quality
It doesn’t take big bonuses to getemployees to refer high-quality job candidates. Here’s what doeswork.
By Carroll Lachnit
 

Special Advertising Section
LeaderSummit Series:
HR Tech Trends
Industry leaders discuss technologies thatbring the cutting edge to HR and training.

Departments
Between theLines
HR and the bell of mindfulness.
 
Mailbox
What makes workers happy?
TheBuzz
A controversial child-care study’s message for HR •Retreat from business casual •Raw Data: Electronic incentivebackfires •Well Done: Hiring social outcasts
 
On theContrary
In Sin City, Shari Caudron decries gaucheextravagance while finishing off a $300 meal. Contradiction can be a goodthing, she says.
 
What Works
A kindergarten teaches Tom Terez why somuch of management focuses on control, instead of on curiosity andcreativity.
 
Interview
Secretary of Labor Elaine Chao talks about how herdepartment will approach ergonomics, the tech challenge, and otherworkplace issues of the 21st century.
 
DearWorkforce:
HR expertise on swing-shift child care,performance appraisals that wow workers, paperless attendance and thebenefits of employee empowerment.
 
LegalInsight
The Supreme Court weighs in on mandatoryarbitration •Sorting out a claim of bias •The continuing duty to accommodateunder the ADA.
 
Small,Medium, Large
Well-designed incentive, recognition, and rewardprograms make business of all sizes more successful. Here’s the evidence,from a small contractor supply house, to the largest steel producer in theU.S.
 
Think Twice
You won’t believe it at first, but ToddRaphael thinks you and your business will cheer if Congress raises theminimum wage.