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If You Outsource, Remember This…

For many human resource departments, reacting to rapid changes in the economyand keeping up with technology have become full-time jobs. Then there are suchadded issues as the global shortage of qualified workers. It isn’t difficult tosee why outsourcing has started to make a lot of sense.


    Yet what makes sense to HR management doesn’t always resonate with employees,and employee buy-in is essential to the success of any outsourcing arrangement.When Bank of America decided to form an alliance with Exult, Inc., an agreementthat included a significant outsourcing component, Bank of America employeeswere taken aback.


    Mary Lou Cagle, business transformation and benefits executive for the bank,says there was a lot of anxiety. “We spent 45 days talking with associates,some individually and some in small groups. We explained the Exult businessmodel and talked to them about the kind of alliance we were creating. Whenemployees saw that Exult-not Bank of America-would make the investments intechnology necessary to streamline their HR jobs and enable Web processes, theyoverwhelmingly accepted the change.


    “We’ve had 100 percent of our senior leadership and 97 percent of ourassociates accept the offer to go to Exult,” Cagle says. “We worked atit.”


    That buy-in is crucial, says Joan Caruso, managing director of The AyersGroup, a human resource consulting firm in New York City. Once you decide tooutsource HR functions-whether it’s all or part of your functionality-you givethat department some stretch. “Especially when you’re being asked to domore with fewer people,” she says.


    Andy Kindler, a partner at Oak Consulting in Lisle, Illinois, whichspecializes in outsourcing senior HR functions for small companies, saysoutsourcing done wrong isn’t always a money saver and, worse, can cause problemsinternally. “I’ve seen it where outsourcing is not good for employeerelations, and actually created problems because the service provider could onlyprovide answers that appear on their computer screen,” he says. If you’reconsidering outsourcing HR, Caruso and Kindler suggest keeping the followingpoints in mind:

  • If possible, keep the employee relations functions in-house. Then employeesknow that if they have an issue of concern, there’s a live human being in thecompany they can consult.

  • Use technology. The Bank of America/Exult deal utilizes the Web and othertechnology, allowing employees to self-serve many HR tasks. It’s a way toeliminate administrative work and give employees more control.

  • Delegate but don’t abdicate. The exporting of tasks can get so far removedthat information doesn’t come back into the company. You can delegate theresponsibility for certain functions, but you have to hang on to accountability.”There is something to be said for touching the work that allows you tostay on top of what’s going on,” Caruso says. “When you farm this outand have someone else do the job, they still need to report in to you.”

  • Put a regular reporting system in place and establish what you need to knowimmediately, and what can wait. “Don’t assume the outsourced company knowswhat to report — they don’t know what your threshold is for strange ornormal,” Caruso says.

  • Assume responsibility for all HR functions, even those you’re outsourcing.“When I coach, executives often recall giving tasks away and that’sit,” Caruso says. “When something goes wrong, they are quick to pointtheir finger at the outside company. But it should be just like outsourcingpayroll. If your employees aren’t getting paid, someone’s head internally isgoing to be on the block.”

Workforce, April 2001, p. 52SubscribeNow!

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How the B of A_Exult Deal Came Together

When Bank of America signed its 10-year contract with e-HR process managementcompany Exult, they began what some in the industry are calling the “nextlevel” of outsourcing. Although the two companies insist it’s a strategicalliance, outsourcing of many basic HR functions is a key component.”Whether you call it an alliance, partnership, or outsourcing, there’s aninordinately large amount of positioning,” says Richard Bell, an analystwith TowerGroup in Needham, Massachusetts.


Here’s how the deal was structured:

  1. Outsourcing. The bank will outsource to Exult all the business processesrelating to human resources, such as payroll, accounts payable, and benefits.Other functions being handled by Exult are information technology, delivery ofHR services, and a call center for human resource and benefits information.

  2. Bank of America will handle policy design and strategy and compliance.Personnel managers and executives remaining at the bank will be the point ofcontact for employees with questions or problems. The bank has retained thesemanagers to help employees in person or on the phone.

  3. Portal partners. Exult is taking a variety of HR processes and puttingthem on the Web, so that Bank of America employees can handle a number ofadministrative functions online. The portal is also a revenue source for bothcompanies. Anyone logging on to the site will see Bank of America products andservices advertised, from commercial credit cards to consumer loans. And forBank of America clients looking to outsource certain administrative functions,Exult’s services are also advertised.

  4. Assets for equity. Bank of America already had a high-performing workforcein Charlotte, North Carolina, when it finalized the deal with Exult. Because ofthat, Exult-a company looking to grow and establish an East Coast base-took overthe Charlotte facility and 675 former Bank of America employees.

  5. Equity. In return for the instant infrastructure, Bank of America receivedwarrants for Exult stock valued at about $50 million instead of cash.

Workforce, April 2001, p. 53SubscribeNow!

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If All Else Fails, Say You’re Sorry

A law recently was passed in Californiathat “legalized” the act of apologizing. It sounds like a crazy LeftCoast idea, but it makes a lot of sense.


    Before the law waspassed, apologizing could be costly; kind words could be turned into anadmission of guilt and responsibility in a court of law. Only time will tell,but I’m betting that this new legislation will turn out to be a reduction oflitigation act, one that will work just as well for drivers involved inaccidents as it will for employers who have gotten into tangles with employees,but it will work only if people can bring themselves to apologize in the firstplace.


    A couple of yearsago, my friend Judy applied for a job as a live-in nanny for a wealthy couple.At that stage in her life, the work seemed beneath her in terms of experienceand job skills, but she could live rent-free, rent out her house at a profit,and still keep an evening job that paid well. She figured she could put aside atleast $20,000 a year, which she planned to put toward an early retirement.


At this point, she’s notwilling to settle for an apology – an apology the couple could have given herfor free.


    The couple was sopleased by her maturity and credentials that they offered her a 30 percent raiseover the advertised salary before she even started, and when she balked at thedismal living quarters they offered, they said they’d make the in-law apartmentbigger and lighter.


    At Judy’s request,they put their agreement, including the dimensions and design of the apartment,into writing. She was ecstatic. It seemed like the kind of deal that alwayshappened to other people – like getting a rent-controlled apartment in New YorkCity or an unbelievably good deal on a low-mileage car.


    She was to startafter school started; they were planning to travel a lot that summer, and theapartment was going to need work. My friend started frantically packing herbelongings, selling and giving things away so her life would fit into thesmaller space, and paying workers to fix up her house for rental. She spent mostof her free time that summer getting ready.


    A couple of weeksbefore her start date, the couple asked her over for a meeting. It was then thatthe wife said that she’d had a “new idea” about the apartment, andthat my friend discovered that construction had barely started. The wife’s newidea involved reducing Judy’s promised living area by about a third, and she haddecided she didn’t want to move any walls or add any windows. The wife expectedJudy to accept a 50 percent cut in pay without a whimper.


    Judy said she’dthink it over. She went home to her completely disrupted house, filled withpacked boxes and painters’ tarps. She knew she couldn’t reduce her belongingsmuch further – she also recognized that she wouldn’t want to work for people whowould treat her so poorly.


    Judy called toexpress her regret and decline the job. (They seemed surprised and a littleoffended that she wouldn’t take what they were offering; they must have thoughtshe was too far along in the moving process to stop.)


    A day later, she satdown and wrote a letter to them outlining, without figures, how much this failedjob opportunity had cost her in terms of time and expense. Basically, it was aplea for an apology.


    A few days later,the envelope she had been waiting for arrived. It was thick, 100 percent cottonbond; she knew immediately who had sent it. Inside was an elegantly letterednote from the wife, saying that she was sad that there had been amiscommunication. That brief note, which not so subtly put the blame back onJudy, sent her into a rage. She fired off a letter asking for compensation forher time and trouble, but they refused. Within a couple of weeks, the coupleheard from Judy’s lawyer.


    Judy had told me atthe time that all she really wanted was an apology. She estimates that thecouple has spent at least five thousand dollars on lawyers, so far. The longerthe case goes on, the angrier she is. At this point, she’s not willing to settlefor an apology – an apology the couple could have given her for free.


    Every business dealswith people, and amongst people there are always going to be misunderstandingsand wrongdoing, whether it is amongst employees, between employees and clients,or even between management and stockholders. Training your employees andyourself to recognize wrongdoing, own up to it, and apologize for it – if donesincerely – could save you a bundle.


    And there’s a sidebenefit. You just might feel richer, as a person, for it.

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Why Women Still Earn Less Than Men

Superficially, it appears that the gap between men’s and women’s incomes hasclosed considerably since the equal rights movement of the 1960s. But has it? Anew report by the Economic Policy Institute hints otherwise.


    Despite decades of activism in the area of women’s rights, and mountains oflegislation against sexual discrimination, women are still earning — on average — 79cents for every dollar earned by men. Statistics provided by the AFL-CIO revealthat, in 65 job categories, female employees do not earn the same or more moneyin any single field. The discrepancies range from the small, $28 a week forbookkeepers and accountants, to the pronounced, $323 a week in the advertisingindustry.


    Critics such as Anita U. Hattiangadi, author of Raising Productivity and RealWages Through Gainsharing (Employment Policy Foundation, 1998), attempt toexplain away pay discrepancies by claiming that figures such as the AFL-CIO’sinclude women who have lost job time and experience due to extended maternityleave. “There is no gender pay gap for full-time workers age 21-35 livingalone, and the gender pay gap is under 3 percent for full-time workers age 21-35without children,” Hattiangadi says.


    The Bureau of Labor Statistics, however, notes that only 5.1 percent of allwomen in the workforce take more than a week off for any reason-includingmaternity leave-beyond regular vacation time. This is not significantly morethan the 3.3 percent of men who do the same, and seems an inadequatejustification for the disparities.


    According to Net Working: Work Patterns and Workforce Policies for the NewMedia Industry (Economic Policy Institute, 2001),female Internet workers in New York City are earning, on average, $10,000less a year than their male counterparts. Rosemary Batt, an assistant professorof human resource studies at Cornell University and a co-author of the study,finds the discrepancy troublesome. “Along gender lines, the new economydoes not seem to be very different from the old economy,” she says.


    Net Working illustrates further flaws. In a usual corollary to thematernity-leave argument, critics such as Hattiangadi have tried tofurther disparage statistics showing gender-based pay disparities byindicating that they’re also skewed by attempts to compare people in differentfields, and of different ages and geographic locations.


    In Net Working, a tight control group of working professionals are examined.They all live in New York City, and most are under the age of 40. The workersare evenly numbered along gender lines, and only half are married and/or havedependents. On average, each professional works 53 hours a week and spends 13.5hours of time in unpaid training.


    The study finds that the women had fewer skills and less access to learningtools and software. Conversely, women have been entering college in greaternumbers than men since 1996, and graduating in roughly equal numbers since theearly 1980s, according to the National Bureau of Labor Statistics. Even thoughgender disparities do not appear in college enrollment or grades, they arecontinuing in the workplace.


    “For the purposes of our study,” Batt says, “we don’t have thecapacity to know why that gap exists.”


Workforce, April 2001, p. 31Subscribe Now!

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Ergonomics Rules

Summary
The Occupational Safety and Health Administration (OSHA) published finalergonomics regulations on November 14, 2000, aimed at reducing musculoskeletaldisorders (MSDs) in the workplace.


The regulation requires employers to determine whether work-related injuriesmeet the specified criteria for MSD injuries. If an MSD injury occurs, employersmust implement a quick fix remedy or a full ergonomics program, depending on thelevel of risk factors on the job as determined by a specified screening tool.


As expected, the final rules contain a number of changes from the proposedregulations published in November 1999.


Among other changes, the final regulations apply to all general industryemployers (instead of focusing on manufacturing and manual handling jobs), set ashorter minimum period during which full pay and benefits must be continuedafter an injury, and provide a two-page checklist for determining whether awork-related MSD triggers required action by the employer.


All covered employers must begin distributing information to employees, andreceive and respond to reports of injuries, by no later than October 14, 2001.


Separately, the National Research Council (NRC) completed its study (January2001), “Musculoskeletal Disorders in the Workplace,” and has concludedthat work-related exposures directly contribute to musculoskeletal disorderssuch as carpal tunnel syndrome, and that some scientific approaches “areeffective when properly implemented.” The report does not directly supportthe approach taken by OSHA in its ergonomics rules, although it says that someelements of the requirements have been successful at alleviating musculoskeletalpain.


Status
Some members of Congress and the business community lobbied to delaypublication of the ergonomics regulations until after the NRC completed itsstudy, but the Clinton Administration issued the regulation in November 2000.


Although labor unions generally praised the regulations, employers, employergroups and insurance companies filed over thirty lawsuits in federal courtschallenging the legality of certain provisions of the regulations. Theergonomics regulations went into effect on January 16, 2001.


However, Republicans in Congress used procedures established in theCongressional Review Act (CRA) to revoke the regulations. Under the CRA, a jointcongressional resolution of disapproval, signed by the president, wouldinvalidate the regulations. The CRA was enacted in 1996 but was neversuccessfully used by Congress. Congress passed a joint resolution of disapprovallargely along party lines.


On March 6, 2001, the Senate approved a joint resolution (S.J. Res. 6) by a56-44 vote to repeal the ergonomics regulations. The House approved the jointresolution the following day by a 223-206 vote. President Bush signed the jointresolution on March 20, 2001, which invalidates the ergonomics regulations andprohibits OSHA from issuing a substantially similar rule in the future.


DOL Secretary Chao convened three national public forums in July 2001 on theissue of ergonomics safety in the workplace and had planned to identify a finalcourse of action by September 2001. However, the DOL decision on ergonomics hasbeen delayed by the September 11 terrorist attacks and the dedication of DOLresources in response to the attacks.


Impact
Organized labor and other employee groups supported the 2000ergonomics proposal, while employers and management groups criticized the ruleas being expensive, vague, and burdensome. Coordinating the 2000 proposal withexisting laws, such as the Americans with Disabilities Act and state workers’compensation statutes, would be challenging and complex.

Although the new OSHA guidelines are voluntary, employers are still subjectto General Duty clause of the Occupational Health and Safety Act, which saysthat employers must keep their workplaces free from recognized serious hazards,including ergonomics hazards.


To Learn More

SOURCE: Hewitt Associates LLC

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Table of Contents April 2001

F

eatures

The Myth of Job Happiness
Despite good salaries, greatperks, and more marketplace power than ever, employee job satisfaction isat a five-year low. HR can change that landscape.
By Shari Caudron
 
Surviving Internet Speed
The Net accelerates business,but sometimes at too great a cost. You can make Internet speed work foryou, instead of working you over.
By Samuel Greengard
 
Discovering Relocation HomeLoans
By putting these specialprograms into place, HR can retain valued employees, and save them time,money, and misery as they settle into a new city.
By Sarah Fister Gale
 
B of A and Big-Time Outsourcing
An alliance between Bank ofAmerica and Exult might signal a trend toward large-scale HR out-sourcing.Success requires intensive planning.
By Eilene Zimmerman
 
Knowing How to Keep Your Bestand Brightest
What’s the key to retention?Training managers to be better at their jobs, and making them accountablefor maintaining low turnover.
By Kevin Dobbs
 

Special Advertising Section

Leader Summit Series:
Recruitment & Staffing
How can HR find and hire thebest people despite an uncertain economy? How can HR keep a company’s besthuman assets? Workforce asked industry leaders, and here theydiscuss powerful strategies you can use — right now.
 

Departments

Between the Lines
Beware of jobs that promise tobe your whole life.
 
Mailbox
University of Phoenix Online and some ofits students speak out.
 
Dear Workforce:
Taming the multitaskingemployee. • Creatinga reward program for “true” leads. •Tracking vacation days.
 
On the Contrary
Picasso, Princess Diana, andShari Caudron’s high-school friend Sue Myra have something in common: theydeveloped very specific reputations. (Shari’s working on hers.)
 
The Buzz
H-1B visa relief. •Surviving the layoff aftermath. •Ergonomic fallout. •401(k) costs.• Why women still earn less than men.
 
S•M•L
Most managers dislike doingperformance appraisals. But an array of software and Web-enabled solutionscan help companies of any size do efficient and fair evaluations.
 
Legal Insight
New rules on who qualifies forhealth insurance. • Anairline is liable for unauthorized Web-site access. •Keeping track of e-mail.
 
Think Twice
Who’s piloting that jetlineryou’re taking today? Todd Raphael thinks someone with experience andwisdom should be in the cockpit. Say, someone over 60.
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Surviving the Layoff Aftermath

When a company implements layoffs, it is essential that its planning andpreparation take the concerns and well-being of the surviving employees intoaccount. Since December, more than 133,000 U.S. employees have been laid off.


    Early response to the needs and concerns of surviving employees is essential,says Ian Doyle, the human resources manager for special projects at Galt GlobalRecruiting. “A ‘do nothing’ policy does more harm than good.”


    Doyle’s concern is that employees who are edgy about their work conditionswill flee if they realize that, apocalyptic news to the contrary, they stillhave other options. Employers tend to assume that business will continue asusual, not realizing that the surviving workers are dealing with the effects ofa reduced staff and also bracing themselves for another round of layoffs thatmay never occur.


    This logic is corroborated in a series of firsthand accounts in Salonmagazine that asks surviving employees how they’re dealing with the dot-comcrash. The magazine presents stories of employees who actually tried to get laidoff, in order to collect unemployment benefits while they sought new work.


    A mismanaged layoff in this environment can result in a vicious circle.Companies downsize to cut costs, but then are quickly forced to make new hiresas surviving employees leave for what they perceive to be more stableenvironments. This turnover feeds a loss of production and lower quality of workthat likely began with the initial layoffs, which triggers another demand fornew hires. Since the cost of a single new hire is generally equivalent to oneyear’s salary, any savings from the layoff are negated.


    As chairwoman of the Department of Management and Organization at SmealCollege of Business Administration at Pennsylvania State University, LindaTreviño studies the impact of layoffs. She agrees with Doyle about theimportance of attending to surviving employees. She says that survivors payclose attention to how the layoff was handled, viewing it as indicative of howthey themselves will likely be treated at a later date.


    As the layoffs are occurring, Treviño says, employees take careful note ofwhat procedures were used to make the layoff decisions, and whether theemployees were treated with respect. Openness, communication, and clarity canmake the difference between a successful layoff and one that seriously damagesthe company.


    The recent wave of layoffs was commonly seen as a reaction to a downturn inconsumer confidence and a rising employment cost index, which increased by 4.1percent while economic growth steadily declined. This was complicated by therapid creation of new jobs in nearly every sector, resulting in a meretwo-tenths of a percent increase in unemployment. The National Bureau of LaborStatistics predicts that 48.9 percent of the newly unemployed workforce willfind work in less than five weeks.


    If layoff survivors see their work environment as being destabilized bychanges, retention will become an issue. Doyle recommends several positiveactions that can be taken to avoid problems and reassure surviving employees atthe time of a layoff. Communicate the state of the company. Tell them what’shappening and why. Forecast whether or not their laid-off coworkers will be rehired, and if so, when. Upgrade training for the survivors wherepossible, and be realistic about redistributing workloads. “Failure to do so isnothing short of negligence.”


Workforce, April 2001, pp.26-28 Subscribe Now!

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Pension Reform

E

conomic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) P.L. 107-16


Summary
    On May 26, Congress approvedthe EGTRRA, and President Bush signed the bill into law on June 7, 2001. Thislaw represents the largest individual tax rate reduction measure passed by Congresssince the Economic Recovery Tax Act of 1981. But in addition to the individualtax rates, the new law also contains more than 50 changes to the rules for employeebenefits, including qualified retirement plans, Section 403(b) tax-sheltered annuities,Section 457 plans, and Individual Retirement Accounts (IRAs). The employee benefitchanges represent the most comprehensive legislation since the Tax Reform Actof 1986. It is important to note, however, that all of the provisions in the newlaw are set to expire in 2011 unless they are extended or made permanent.

    Theemployee benefit changes in the law are similar to legislation thatRepresentativesPortman (R-OH) and Cardin (D-MD) and Senators Grassley (R-IA) and Baucus (D-MT)introduced earlier this year. This group, especially Portmanand Cardin have been working on enactment of these changes for the last severalyears.


    Belowis a very brief summary of some key employee benefit plan changes that weremade in P.L. 107-16.

  • Increases the 401(k),403(b), and 457 deferred compensation plan limits to $11,000 in 2002, andthen increases by $1,000 per year until the limit reaches $15,000 in 2006,indexed thereafter.

  • Increases the consideredcompensation limit to $200,000.

  • Eliminates the Section415(c) 25 percent of annual pay limit.

  • Increases the Section415 defined contribution limit to $40,000.

  • Increases the Section415 defined benefit limit to $160,000.

  • Gradually increasesthe IRA contribution limits to $5,000.

  • Allows employees whoattain age 50 before the end of the plan year to make an additional pre-tax”catch-up” contribution to their 401(k), 403(b), or 457 plans.

  • Allows defined contributionplans to offer a new after-tax Roth 401(k) contribution, similar to a RothIRA, with a tax-exempt payout after the holding period is met.

  • Repeals the maximumexclusion allowance for Section 403(b) plans.

  • Requires an enhancednotice to affected participants if a defined benefit plan or a money purchaseplan is amended to significantly reduce the rate of future benefit accruals,including the elimination of any early retirement benefit or retirement-typesubsidy.

  • Allows rollovers between401(k), 403(b), 457 plans and IRAs.

  • Allows a deductionfor all dividends on ESOP shares that a participant either elects to receivein cash or to reinvest in the qualifying employer securities of a plan.

  • Extends the Section127 exclusion for employer-provided educational reimbursement and expandsit to include graduate education for courses beginning in 2002 and after.

  • Increases the tax exclusionfor employer-paid adoption assistance to $10,000 per child and increasesthe starting point of the income phaseout.

Status
    Although the changes are now law, there will be an effortin Congress to eliminate the sunset provision (December 31, 2010) and make thechanges permanent. Republicans in the House are hoping to try to address itbefore the July 4 recess.


Impact
    There are many changes to the law that will affect retirementplan sponsors. Some are mandatory and some are not, but many of the mandatorychanges are effective as of January 1, 2002 such as the limit increases. Thus,plan sponsors will want to review the changes to the law and determine whatthey need to do to comply with the law changes effective in January. The optionalchanges present new opportunities for both plan sponsors and participants tosave more money for retirement and take advantage of the new flexibility thelaw provides.


To Learn More

  • Viewthis bill by entering the following bill number: HR 1836.

SOURCE: HewittAssociates LLC

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Knowing How to Keep Your Best and Brightest

James Daniels, a hot shot software developer for a small engineering firm insuburban Minneapolis, says he could leave his job today and have offers rollingin by week’s end. “I’ve done it before,” he says. “It’s done allthe time.”


    He’s not just another young workplace egomaniac. The 27-year-old computerexpert simply recognizes his opportunities. It’s an enviable position to be in.But for HR departments, the high demand for skills such as his is a royalheadache. On any list of disturbing workforce problems, today’s shallow laborpool is certainly one of the most troubling.


    Even as the once-roaring economydescends from a pinnacle of prosperity — and some companies have been forced todismiss large numbers of employees in headline-grabbing layoffs — the jobmarket continues to be strong for the well educated and tech-savvy. Given thisreality, skilled workers like Daniels are very much in demand, and enjoy plentyof opportunities to jump ship.


    People are changing jobs in record numbers, a fact that is fueling thehighest turnover rate in 20 years. The Bureau of Labor Statistics reports thatthe typical American worker holds nearly nine different jobs before age 32.Granted, that estimate was compiled last year, when the economy showed no signsof slowing. But don’t be fooled, experts warn. No company, large or small, NewEconomy or faltering economy, is unaffected by an ongoing turnover epidemic.Consider this: 53 percent of U.S. workers surveyed at the beginning of this yearsuspected that at least a mild recession was imminent. Yet, 88 percent felt assecure in their jobs as they did a year ago. A study of 1,000 full-time workerscommissioned by the online recruitment firm Headhunter.net found that 78 percentwould take a new position if the right opportunity came along, and 48 percent ofthose who are employed are looking for new jobs.


    For job hunters, Strong Investments economist Jay Mueller says, “thepillars of support remain in place, and the long-run outlook for the U.S.economy is still favorable.”


    That said, it’s important to note that some degree of turnover is inevitableand can even be positive. It may open doors for promotions and the recruitmentof new talent. Excessive staff losses, however, inevitably prove disruptive andcostly. Employees are expensive to replace, and customer service and companyperformance are hard hit by unexpected staff changes. Much of this is due to themounting importance of industry-specific knowledge that people acquire whilewith a company.


    What’s at the heart of all this? The answer is surprisingly simple.


    While fair compensation and opportunities to advance are always importantfactors, most people decide to leave a company for another reason: bad bosses.In recent interviews with 20,000 workers who just left an employer, the SaratogaInstitute in Santa Clara, California, found that poor supervisory behavior wasthe main reason people quit. A recent Gallup Organization study based on queriesof some 2 million workers at 700 companies found the same results. It’s not somuch opportunities for raises or promotion through the ranks that keep employeeshappy. The length of an employee’s stay is determined largely by hisrelationship with a manager.


    “People do not leave companies. They leave bosses,” says BeverlyKaye, president of training firm Career Systems International in Los Angeles andco-author of Love’Em or Lose ‘Em: Getting Good People to Stay (Berrett-Koehler1999).


    She and other workplace analysts say that companies in need of a retentioninjection must focus on making work interesting and building strong, flexible,attentive managers. They insist that such advice comes from legions ofdissatisfied working Americans. Daniels, the software developer in Minneapolis,is just the kind of example they point to. “I’ve worked at six differentcompanies in six years since college, and every time I left, the last straw hadsomething to do with my boss being completely oblivious to the problems hispeople were having.”


The role of HR


    HR’s role in sorting through this maze, experts advise, is to get managers totake responsibility for retention. That, of course, is much easier said thandone. A labor market low on skilled workers — at least when compared to demandfor the technically astute — has managers so strapped for talent that theyhaven’t the time to worry about recruiting and retention. Most would ratherattack the retention front by increasing salaries or offering the latest perks,from signing bonuses to vacations and concierge services. Those are all finerecruiting tools, observers say, but when it comes to turnover, they are onlystop-gap measures.


    So how can companies retain workers and, by extension, increase productivityand boost the bottom line? Help people feel at home by fostering personalconnections to the company, including customized responsibilities, long-termlearning opportunities, and plenty of informal feedback.


    Accomplishing this almost always begins with line managers.


    “It’s time to hold managers accountable,” says Dick Finnegan, laborconsultant and author of a yet-to-be published book, titled Taming the TurnoverBeast.


    Fortunately, observers of corporate America’s talent struggles — fromFinnegan and Kaye to academics and economists — agree that what employeesreally want is often simple for managers to deliver.


    Take, for example, The Container Store, a Dallas-based retailer that Fortunemagazine designated last year as America’s best workplace, and a winner of Workforce‘s Optimas award for general excellence. It’s practicing what itpreaches when it comes to training and retaining employees. Every first-year,full-time employee gets about 235 hours of training, provided both formally andthrough ongoing interaction with managers, who not only ask what their peopleneed to do their jobs well but also regularly assess how to provide necessaryassistance.


    Guided by what its executive leadership calls a “do-unto-others”business philosophy, The Container Store’s more than 2,000 employees thrive inan environment that ensures open communication throughout the entire company,including regular discussions of store sales, company goals, and expansionplans. Couple that with the extensive training programs — customized bymanagers to meet individual skills and job functions — and team-based incentiveprograms, and it’s easy to understand why turnover here is about 20 percent.That’s a fraction of the turnover at most retail operations, which rangesbetween 80 and 120 percent.


    And The Container Store, which already has dozens of operations locatedacross the country, touts the rewards of a happy workforce. It plans to openthree new locations this year and to capture sales of more than $240 million.


    “With the labor market as it is, keeping people happy, keeping them onstaff, that’s crucial,” says Container Store spokeswoman Audrey Keymer.


    The movement’s success stories aren’t limited to industries historicallyplagued by high turnover. Financial-services giant American Express Co. lastyear unveiled a plan to double its cadre of analysts and financial advisers toroughly 20,000 in the coming decade. In the face of such massive growth, HRexperts at the New York-based company, often hailed for its focus on promotingfrom within its own ranks, began training managers how to become mentors toemployees whom the company views as “up-and-comers.” The idea is tobolster the development of prized recruits before they go looking for suchnurturing elsewhere.


    At Autodesk Inc., a San Rafael, California-based software developer, HR andtraining specialists recently designed an online retention workshop to helpabout 300 managers become skillful career advisers. The managers were taught howto discover employees’ personal career goals. With this information, managersand their charges can create a specific development plan — with target dates –that appeals to the company and its workers.


    There is another obvious but effective way to encourage managers to reduceturnover: Tie their compensation to it. Reward them with bonuses for keepingturnover low. Penalize them when attrition soars. It’s a tactic that soundspromising, but it has yet to receive widespread attention. Most managers areweary of agreeing to connect their own pay to the whims of others.


    Nevertheless, more and more companies are recognizing that retention is up tomanagers. This realization is gaining momentum because most retention strategiesare simple and inexpensive to implement.


A matter of survival


    The question today is, will the trend decline before it has a chance to showsome long-term results? Most experts agree that, even though the economy isslowing, there’s ample reason to stay focused on retention.


    A closely watched forecasting gauge, the Blue Chip Economic Indicators, ispredicting that the economy will grow by just 2.6 percent this year. That’s theweakest expected performance in a decade.


    “It’s like a car going 60 miles an hour and then suddenly slowing to 20miles an hour. You haven’t crashed, but you really feel the deceleration,”says Randell Moore, company executive editor.


    But he is quick to balance the assertion by reporting that the overwhelmingmajority of the 50 top economists surveyed by his organization believe that afull-blown recession will be avoided, and the overall job-market will weatherthe current storm.


    Most people are aware that they could lose their jobs at a time of sizablelayoffs at places such as Lucent, General Electric, and DaimlerChrysler. Yet,relatively few people fret over whether they can find new jobs. More areconcerned about keeping pace with technological change and taking advantage ofopportunities in New Economy companies that are still transforming workplaces.


    Sure, people worry about finances and job security. But not in the same waythey did in the 1980s when large numbers of people lost jobs as many Americanindustries reorganized to combat foreign competition. Nor do they worry in a waythat mirrors the early 1990s, when many more employees were bombarded by roundsof downsizing in an effort to create efficient and “lean” workforces.


    Today’s constant turnover is in many ways a reflection of the impatient,freelance spirit common among many young, well-educated members of the140-million-strong labor force.


    For HR specialists and managers, that means one thing: harnessing that spiritremains a major concern and a top priority.


    It isn’t always easy, of course, to convince managers to support newretention programs. Some say they lack the influence to reverse turnover trends.Others believe that it will eat up too much of their time. But if HR can givethem a place to start, nudge them in the right direction, and show them thatkeeping key talent is largely within their control, managers will begin to seegenuine results. By joining forces with their best people and finding themmeaningful work, growth opportunities, and the chance to be part of a team,managers can become better bosses and hold on to their talent.


    It’s an issue of survival that’s not likely to fade away. As advances intechnology make all companies increasingly more equal, staremployees become the all-important tiebreaker. “In most companies nobodymanages turnover,” Finnegan says. “If it’s going to be done, it has tobe the managers who do it. And HR can be the one to show them how.”


Workforce, April 2001, pp. 57-60SubscribeNow!

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Serving Up a New Level of Customer Service at Quebecor

Iat’s a business nightmare. What do you do when an employee’s total lack of customer-service skills results in the loss of hundreds of thousands of dollars? If you’re the head of human resources, you jump in and do something – and fast. That’s what Marc Shapiro, senior vice president of human resources for Quebecor World Inc., did when he made the decision in early 1998 to embark on the largest training initiative ever attempted in the organization.


    After extensive research, a yearlong assessment, and prompting by some sharp suggestions from management experts at New York City-based McKinsey & Co., Shapiro identified strategic, and pressing, business realities. The business climate for the printing industry had changed dramatically within a short time. Competitive advantage was being measured not in months and weeks, but in hours and minutes. The company would no longer be able to compete on price and quality alone.


“We asked ourselves, What’s going to differentiate this company from other companies in the printing market?” Shapiro recalls. “And we decided that customer service was going to be a huge differentiator.” Adds Wanda Breeden, president of Innovative Organizational Concepts Inc., based in Brooksville, Florida, who was hired to help lead the training effort: “We realized during the assessment process that this might be the competitive advantage for the company going forward.”


Based in Montreal, Quebec, Quebecor World Inc. is the world’s largest printing company. It encompasses 160 printing plants located in 14 countries and employs 43,000 people. Quebecor World is part of the $10 billion Quebecor Inc. empire, which also includes Quebecor Media Inc., a media property holder. Publicly traded Quebecor World prints periodicals and books including Time, Sports Illustrated, and Harry Potter and the Goblet of Fire.


For implementing a training program that has helped the firm achieve world-class customer-service skills that have increased customers’ satisfaction, decreased turnaround time and lowered the cost of errors, Workforce Magazine gives Quebecor World its 2001 Optimas Award in the Competitive Advantage category.


The Allstar Customer Service training program was one of the first major courses to be housed under the firm’s newly formed Quebecor World University, which combined and enhanced elements of each of the two merged firms’ former training programs. The classes are closely tied to the firm’s career-development program.


vFrom his office in Dallas, Shapiro explains that Quebecor had invested in other customer-service training initiatives over the years, starting in the 1990s. “Senior management commitment was there previously, but the resources weren’t there to really do the kind of job we wanted to do,” he says of the company’s former customer-service training programs. “So when we refocused, we started taking a look at what we wanted Allstar to improve: customer service.”


Shapiro’s overarching goal for this program, which started in April 1998, was to educate the firm’s customer-service and account representatives from its North American operations in world-class skills. “We were hearing from our customers that our people in the plants were so different that each plant was like a different company. We needed continuity,” says Jerry Tomczik, a customer-service manager at the firm’s facility in St. Cloud, Minnesota.


The program’s objectives and initiatives were set at several levels and included improving understanding of customers’ needs; improving account-management skills; and achieving a high-performance, team-based, customer-oriented culture.


When the firm merged in October 1999 with World Color Press to become Quebecor World, the HR team designed the training to address the additional need to blend those two cultures as well as those of many other acquisitions that had been brought on board in previous years.


In addition to measuring the impact of the training in increased customer satisfaction and cost containment, Shapiro’s HR team also determined that the training:

  • Should be so unique and challenging that everyone would want to go.

  • Ought to involve senior management to reinforce the goals of the training.

  • Should give Quebecor World a unique competitive advantage through world-class service to its customers.

It was a mighty tall order for a single training initiative. However, because other initiatives hadn’t measured up to the challenge, and because customer service was identified as the single most important issue to focus on going forward, Shapiro decided that a higher-level, and more creative, approach was needed.


The HR team designed Allstar to be more like executive training than a boring, sit-down-in-a-cafeteria training session. When a senior manager or president from one of the company’s nine divisions kicks off a session, and outlines goals and expectations of the training investment, participants know the company means business.


“I have been in the training field for years, and this is the first time I’ve had the opportunity to work on such an exciting endeavor that takes all of the buzzwords of training and makes them reality,” Breeden says. “Senior management support? We’ve got it. Return on investment? We can show it. Support the business plan? You bet. And this is the first time I’ve seen group presidents make a training effort such a vital part of their future growth plans.”


Shapiro selected the Lake Forest Graduate School of Management in Chicago to partner with them in designing, conducting, housing, and bringing the program to life. Several weeks separate each three-day session. “We wanted to get people out of the workplace so they could concentrate 100 percent on learning,” Shapiro says.


Program leaders designed the training as three intensive sessions of three days each, during which no more than 25 participants would learn new skills. During one of the sessions, Quebecor employees participate in a team-building cooking exercise. The Team Banquet challenges customer-service representatives to design, prepare, and serve a banquet meal within two hours without any instruction. The team-building exercise makes participants work together to come up with focused solutions in a short time. It has been very effective in both building students’ self-esteem and helping bond the firm’s culture.


There are theatrical presentations of role-play situations between plant and customer partnerships. There’s a low-ropes course during which participants have to climb over a 15-foot wall and navigate other challenges.


During the last session, participants make presentations to senior managers covering what they’ve learned and how they’ll apply it back on the job. Students receive a certificate when they’ve completed the entire program, and people who miss a session don’t get a certificate until they complete it. “We want to make sure the training means something, that it’s an accomplishment,” says Shapiro. About 760 customer-service reps and managers will have completed the training by the end of the year.


An advisory team composed of representatives from all levels within the company helps ensure that training is always relevant and reflects current business trends. It also makes sure that case studies are accurate and reflect the real world of printing. Curriculum is continuously improved to reflect business trends.


Participants evaluate the program immediately after going through it. Alonzo Reese, an account manager for Quebecor World Printing in Dallas says the Allstar training “was incredibly serious, incredibly professional, and incredibly fun. It was the most intense, most fun, most knowledgeable training that I’ve been through in 30 years in this business.”


Workforce, March 2001, pp. 40-41 Subscribe Now!