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Elder-Care Issues Shake the Workplace

There’s no mystery to it. It’s the way we all respond to aging. We denythat it’s going to happen — to us or to our loved ones. We dismiss the needto talk about it, so we remain private and isolated.


And that’s exactly how we respond to elder-care issues in the workplace. Noone talks about it, no one plans for it, and no one wants it to happen.


But the numbers won’t let us remain complacent for long. Within the nextfive years, 37 percent of U.S. workers will be more concerned about caring foran elderly relative than a child. Already, the disruption to employees’ livescan be devastating. While those with child-care woes may occasionally come towork late or leave early, those responsible for adult care may not be able toget to work at all because these situations are so difficult to anticipate andmanage.


“Elder care is already a big issue and a problem that will growdramatically in the coming decades,” says Diane Piktialis, vice presidentat Boston-based Ceridian Performance Partners, a leading employee-benefits firm.”One of the problems is that it isn’t the kind of issue employees talkabout much in the workplace. As a society, we don’t plan for aging. And aslong as our parents are healthy, we deny that we’re ever going to face theproblem, so they take on crisis proportions.”


It’s important for HR to understand employees’ needs, and provideresources to help them through these painful times. With the right planning andresources in place, employees will be better prepared to handle elder-careresponsibilities.


No one plans for these crises. Indeed, lost productivity due to elder-careresponsibilities costs companies over $11.4 billion per year, according to TheConference Board, a company based in New York City. In fact, the University ofPennsylvania calculated the loss to business at a whopping $33 billion — forAlzheimer’s Disease alone. It’s a problem that will only become more severe.Today, there are more than 40 million Americans over the age of 65, and thosenumbers will increase dramatically by 2010, as American baby boomers (bornbetween the years of 1946 and 1962) reach 65 years old, according to theAmerican Association of Retired People.


Anguish causes loss of productivity
Elder care can have more devastating effects than child care on an employee’sability to contribute fully. Employers are aware of that, with 94 percent ofthem believing that the impact of caregiving will be increasingly important overthe next five years, according to The Conference Board’s study, “Jugglingthe Demands of Dependent Care.” Despite that, only 30 percent offer anyelder-care programs (according to Work/Life Benefits, an Orange County,California-based consulting firm).


The concerns are different than child care; the issues are more complicated.Interruptions for aging parents are more sudden, more stressful and moreemergency-driven. Child-care interruptions, even if they’re emergencies, maynot have the same impact. “It’s the difference between the babysitter notbeing available, and your parent having a stroke,” points out DeborahParkinson, research associate for The Conference Board, and author of TheConference Board’s report. Moreover, there are such different elder-careneeds, ranging from simply having to help parents with the groceries, toactively helping them recover from a serious illness.


One Tuscon, Arizona-based employee shares her story:


I was working for General Dynamics (which is now Raytheon, a Missile SystemsCompany based in Tucson, Arizona). I had a newborn baby, a 10-year-old daughterand a 13-year-old stepdaughter when my father-in-law died and my mother-in-lawplunged into a dark depression. The incident kicked off what was later diagnosedas Alzheimer’s disease. It was 1985, and she came to live with us.


During the first year, she was going to an adult day-care center in theopposite direction of work. I would wake up at 4:30 so I could be at work by7:30 a.m.


There were days after the disease progressed when I had to feed her and batheher. In the morning, I’d get her ready, and lots of times, she would tear offher diaper and get back into her pajamas, and we’d have to start all overagain. I was a nervous wreck by the time I got to work. It would take me over anhour just to settle down and stop thinking about it.


At that time, General Dynamics didn’t offer any dependent-care services toemployees. Services existed that we never knew about. I spent lots of timetrying to ferret out what was available.


Elder care is not like child care. Your situation can change from day to day,and you don’t know what to expect. We got no guidance and we made seriousfinancial mistakes. I spent a lot of time on the phone during work hours becausethat’s when the agencies are open. Then I had to take a day off work to gether enrolled in the new place. I had to spend more time off work to meet withsocial services people just to get information.


There came a point when I became clinically depressed.


Anne Serra
Segment Administrator
Work and Family Strategies
Raytheon Missile Systems Co. Tucson, Arizona


Anne Serra’s emotional state and loss of productivity are not unusualcharacteristics of the onset of elder care. What is unusual is her response. Atthe time of these personal events, she was corporate manager of specialprojects, charged with investigating employee needs. Elder care became one ofthem. Her anguish taught her firsthand the advantages of being prepared for anypossibility. Her pain showed her that elder-care programs are critical.


Instead of succumbing to depression, Serra turned her energy towarddeveloping programs for her employee population. Now, as segment adviser forwork and family strategies at Raytheon, she’s in charge of programs thataffect 40,000 individuals. She says, “I focus on education because younever know what things are going to pop up. If you’re prepared, you won’thave to make a decision in a crisis that will haunt you for years.”


Raytheon offers a wide range of programs now: resources and referrals(R&R) through Westport, Connecticut-based Dependent Care Connections (DCC),a seminar series, and a videotaped seminar series for people who can’t attendthe seminars. The R&R helped Serra create a family resource library thatincludes books, videos and other resources on diseases that affect the aged,care giving, finances and myriad other areas. Serra also started the Elder-CareAgency Fair, where agencies from around the community talk to employees aboutthe services they provide.


According to DCC, the cost for running an elder-care program depends on thecompany size and the services provided. For example, a program that includesresource kits, a resource library, and dependent-care fairs, can run as low as$1 to $2 per employee per month.


Though Serra doesn’t have to be convinced, she tracks figures for return oninvestment (ROI) for the referral program. In 1997, Raytheon had 12 percent useof the service, which saved the company more than $300,000 because employees whoused these services enhanced their productivity and were less distracted. (Andthat doesn’t take into account the ROI of enhanced recruitment or saving moneyby averting attrition.)


“If I’d had a service like the agencies we have in place now,”says Serra, “I wouldn’t have made so many mistakes. We would have had allher papers in order when we came in the first time instead of having to comeback countless times because we didn’t have this or that. We would have knownwhat to expect. It would have made my life so much easier.”


Services enhance employee empowerment
To complicate the elder-care situation further, our society is mobile andmany children don’t live near their parents. Seven million Americans providecare to someone whom lives at least one hour away, according to the NationalCouncil on Aging. Care giving, whether from near or far, can be exhausting andoverwhelming. Organizations that decipher their employees’ needs and provideservices to help their employees address these crucial issues enable workers tobe active on their own behalf and tackle the situation when it hits them.


An East Coast executive explains how she got support:


In November 1996, my father was found wandering outside one morning. He waseventually diagnosed with Alzheimer’s. My parents and three sisters live inBuffalo, but everyone (including my mother) works. (I have two young childrenand a husband who is a lawyer and works long hours.) We wanted to keep [father]at home and care for him there. It was very emotional, and I didn’t want toaccept the situation.


We didn’t know very much about the disease. The doctors had told my momthat she should begin to think about looking at their situation for long-termneeds, in case he needed to go into a nursing home at some point. They said theydidn’t need it yet, but that she should start to prepare and maybe contact alawyer to be sure everything was in order.


It’s hard to see your parents with any form of illness. It’s difficult toaccept that they’re getting older, so I spent a lot of time trying to figureout what I could do. How could I help? Since I live in New Jersey, I had tofigure out what I could do to help from a distance.


I knew that we had a resource-and-referral service at Coach [through New YorkCity-based Harris Rothenberg, International], and they were able to give me someof the information I needed. I told them about our situation, and they providedme with information about support groups, attorneys, what type of information Ishould be going to an attorney for, and what else our family could do to copewith the disease. They would also follow up and contact me to see if there wasanything else they could do, and to be sure the information they sent me wassatisfactory. I had one contact person, so whenever I had questions, I wouldcall and ask that person.


I put together a checklist of things that we needed to do, and I sent e-mailsto my sisters and brother about what was left to do. I felt as if I was able tohelp my family learn about the disease and begin to cope with it — even thoughI wasn’t living there.


Cherena Walker
President
James/Walker International
(an executive search firm)
Passaic Park, New Jersey


Cherena Walker was one of the lucky ones. Her former company (where she wasdirector of recruiting and diversity), Coach Leatherware, is a division ofChicago-based Sara Lee Corporation, a recognized leader in the area of dependentcare, and a company listed on the Working Mother “100 Best Companies forWorking Mothers” list. Sara Lee is a decentralized organization thatincludes more than 30 other brands such as Playtex, Hanes, and Hillshire Farm.The company attempts to offer its divisions best practices companywide.


Each division conducts a needs assessment to determine the specificrequirements of its group and then tries to implement it. On an ongoing basis,all the divisions do opinion surveys, which incorporate many questions relatedto work and family and other diversity topics. This is one way they can assessthe specific needs of the locations.


For example, one division in North Carolina has put together its owncompendium of community resources for elder care because its population hasexpressed that need. On the other hand, Sara Lee’s corporate office indowntown Chicago provides sick child care because its constituents haveexpressed the need for that. Most divisions have referral services, but withdifferent emphases. “These initiatives are driven from the top — from theChairman,” says Laurie David, executive director, management planning anddevelopment for Sara Lee Corporation. “They are part of empowering theworkforce and allowing them to balance work and family life. It allows people tobe able to contribute at their maximum talent level.”


Flexibility and manager support lessen employees’ struggles
Again, because most people think of their parents as vital people — and theones who took care of them — they aren’t prepared for the reality of takingcare of them. Yet the average amount of time devoted to care giving by thesealready-employed individuals is about 20 hours a week. This is apparent inemployee survey after employee survey, in which individuals request flexiblehours for elder-care issues and supervisory training that helps managers allowemployees to take advantage of the flexibility.


The Family and Medical Leave Act of 1993 (FMLA) is meant to provide somerelief, but allows only 12 weeks per calendar year of unpaid leave for care ofan immediate family member (parent child or spouse) with a serious healthcondition.


An Arizona supervisor talks about the importance of a supportive manager:


My mother has been living by herself since my father died in 1987. Then shehad a stroke that left her with some impairments. I’m an only child, so there’sno one else to deal with this.


When she was released from the hospital, I contacted ourresource-and-referral provider [Tempe, Arizona-based Summa Associates].Theyhelped me set up meals-on-wheels as well as in-home care. Everything had beenfine until recently, when her when problems became more severe. She got sick andwas dizzy all the time. It became clear to me that she shouldn’t live alone.


Summa Associates gave me the names of five nursing facilities. They also toldme where I could take her for a full evaluation of her needs. I moved my motherinto one of the homes because the people were very good. Unfortunately, mymother bolted after two weeks and refused to stay there any longer. She wouldn’tlisten to me, or anyone else.


I would find one situation that seemed to work and then after a little whileit would become unacceptable for my mother.


I was lucky because my supervisor was understanding. He is an only son whohad dealt with a sick parent for a while. He understood when I said that Ineeded to take care of something; that I was taking advantage of the city’sflexible policies to help me minimize the time I was going to have to be awayfrom work.


Mel Ruska
City of Mesa, Arizona
Operations Supervisor for Mesa Community Conference Center


Clearly, manager support is important. To ensure that, managers need trainingto see the bottom-line value of providing employees with flexibility andservices to meet their needs. If you talk with people who have elder-careresponsibilities, you see that what really helps is the flexibility in theirschedules, whether it’s so they can wait at home until the home aide arrives,or whether it’s to be able to drop off the parent at an adult day-careprogram. Extending flexibility to encompass these duties is very important.


It’s also helpful if managers can recognize when an employee is strugglingwith an elder-care problem. If employees won’t bring it up, managers can helpalleviate some of the stress by opening up discussion about some of thework-related behavior they might have noticed. This could be decreasedproductivity, absenteeism, an increased need for personal time off, etc. A feworganizations are considering formal training, but most do it informally,encouraging managers about the benefits.


Helping employees be aware of flex-time reduces unexpected absences and lostproductivity. “Any time you get into the dependent-care arena, managementsays, ‘Tell me about the bottom line — what am I going to get out of it,’”says Jody Topping, employee-benefits supervisor for the City of Mesa.”Studies have shown that when you offer these types of programs, youremployees are more productive and happier.”


Topping’s experience at the City of Mesa underscores that statement. Theexistence of these programs — and supervisors’ acceptance of them — allowflexibility so people can attend to critical family responsibilities during thework day, which makes for a happier, more productive employee. Indeed, the Cityhas a very low turnover rate of 3 percent.


Communication assures use of programs
While flexibility may be the most far-reaching single initiative anorganization can provide, other activities are also important — such as lettingemployees know what information is available, having people come into theworkplace to speak about elder-care options, offering phone consultations withgerontologists, or surveying employees to find out what they think their needswill be in the future. However, these support tools are only helpful ifemployees know assistance is available.


A Michigan-based bank employee talks about finding in-home care:


My grandfather passed away two years ago, so my parents took my grandmotherin. She’s 84. We kept her for two years at my parents’ house. They bothwork, and I work and have children, and nobody understood her disease [Alzheimer’s].I didn’t know what to do. I have seen my parents falling apart, and it wasn’thelping Grandma that they couldn’t handle her situation.


I had received information about my company’s resource-and-referralprogram, and called them for help. They helped me follow up on all kinds ofthings, like what to look for if you have a private person come in, and how tointerview them. Now we have someone who comes into the home and takes care ofher during the day, while my parents are working. There were all types ofoptions to choose from. The company also has a service that showed what kind ofbenefits my insurance offers to help toward this. It sent a list of differentgroups I could choose from, and how much the insurance covered on each group.


My grandmother will have to go into a nursing home very soon. She reallyneeds to be watched. Some days she is as normal as you and I — other days aremore difficult. On several occasions, she got up and put a coffee filter in thetoaster and caught it on fire. She does things like that right out of the blue.


I got involved [with my grandmother’s care] because I knew services wereavailable through my company. Something had to be done, and nobody was doinganything, so I had to take that step. I had to look out for my parents. I didn’tknow where else to turn. My parents were going through a nightmare.


Donna Fulgenti
Savings Counselor
Standard Federal Bank
(subsidiary of ABN AMRO Group)

Troy, Michigan


Donna Fulgenti is certainly not alone. Elder care has become amultigenerational concern. “I tell all of my managers when we talk aboutwork/life issues and flexibility, ‘If you don’t think elder-care issues aregoing to affect you, think again,’” says Kathy Short, vice president anddirector of work/life programs for Chicago-based ABN AMRO Group. She’s theindividual who oversees the programs Fulgenti uses. “Your employees aregoing to have to deal with these issues. They don’t believe they’re evergoing to be responsible for elder care. They’re in major denial. [When ourparents die,] we hope they’ll die in their sleep. But the likelihood is greatthat we will all have some level of elder care to do.”


Ask Short and she’ll tell you that communication of programs is uppermoston her mind. She and her associates create formal and informal communicationopportunities. She also writes a bimonthly newsletter in which they highlightsuccess stories of flexible work arrangements and DCC, the company’sresource-and-referral agency. They discuss current research, discounts atchildcare centers, and other important information regarding work/life balance.


In addition, they request employees to send them e-mail questions regardingany work/life issue. The bank also rents out Great America Amusement Park once ayear as a work/life-marketing day, where they distribute wallet-sized cards ofthe resource-and-referral provider as well as their EAP.


“It’s really so much of raising awareness,” Short says. “Itis more than just a nice thing to do, it is a business issue.”


Her advice: “Be ready to talk about how it helps the organization andthe individual, and keep talking about it. People are afraid to talk about it.So the company should talk about it, then write articles about it. Offerprograms and let people know it’s OK if you have the situation. Tell us so wecan help you.”


Workforce, October 1999, Vol. 78, No. 10, pp. 58-67— Subscribenow!

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Elder-Care Options

Fortunately, in response to the rapidly growing problem of elder care, avariety of options are available through local agencies and privateorganizations. Gone are the days of nursing homes for all but the most seriouslyimpaired. HR should know the alternatives.

  • Resource and referral services (offered through employers) providethorough education to callers about options, finances, legal issues, as wellas names of screened agencies and providers.
  • Home health care providers offer skilled help in the home.
  • As an employer, you may be able to offer a reduced rent at selected seniorhousing communities.
  • Assisted living complexes are apartments for healthy seniors who needmoderate assistance.
  • Continuing-care retirement communities (CCRCs) can provide a variety oflevels of aid to elderly.

Some organizations even employ geriatric-care managers, who supervise thecaregiver’s situation if he or she is too far away. It’s all simply a matterof discovering elder-care options, and then assessing which ones work best.


Workforce, October 1999, Vol. 78, No. 10, p. 61— Subscribenow!

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Merger Due Diligence The Devil in the Details

If there’s one thing that Daniel Jones has learned from more than two decades of working in human resources, it’s that mergers and acquisitions are a fact of life. At some point, probably sooner rather than later, a company will find itself eyeing another enterprise-desperately trying to make sense of physical assets, intellectual property, legalities, pay, benefits and culture. “In today’s business environment, mergers and acquisitions are essential. The difficult part is ensuring that you know what you’re getting into upfront,” he states.


Jones, the director of human resources for Steelcase Inc., a Grand Rapids, Michigan, manufacturer of office furniture, speaks from experience. Over the last three years, the company has acquired eight other firms. Some have added manufacturing capability, others have pumped up the Steelcase product line. All have added to the bottom line. Today, Steelcase tallies fiscal 1999 net sales of over $3 billion. It operates 50 manufacturing plants, with over 20,000 employees in 15 countries.


In every instance, human resources was heavily involved in the upfront due diligence. While financial analysts, attorneys and MBAs were scrutinizing details and poring over spreadsheets, Jones and other key individuals in HR were taking a close look at myriad other factors that could make or break the deal. Armed with a checklist, they studied benefits, compensation, pay, OSHA and ERISA records, employee handbooks, HR technology and a whole lot more. “The more you know, the better you can structure the deal,” says Jones.


Unfortunately, Steelcase is an exception rather than the rule. Although most companies that engage in a merger or acquisition take due diligence seriously, human resources is often left out of the loop. Or it’s asked to jump into the fray only after senior management has made an announcement-at which point it’s often too late to provide strategic consulting. “HR has a critical role in due diligence-both from the benefits and compensation side and the cultural side,” explains Deborah Rochelle, a senior merger and acquisition consultant for Watson Wyatt Worldwide. “Successful companies examine leadership models, recruiting, and what makes the organizations different or similar-as well as specific benefits and legal issues.”


Planning makes all the difference.
It’s no simple task. Due diligence can involve long checklists, and combine hard logic with intuition. As Jones puts it: “It’s an ongoing learning process. It’s necessary to constantly tweak and adjust thinking to reflect changing business conditions and greater knowledge about how to conduct due diligence.” Adds Mark N. Clemente, president of Glen Rock, New Jersey-based M&A consulting firm Clemente, Greenspan & Company, and author of the self-published book, Empowering Human Resources in the Merger and Acquisition Process (1999): “Ultimately, many mergers fail because of human resources-related issues, such as culture clash. A company that embarks on a merger or acquisition without early and direct input from HR is living extremely dangerously.”


In fact, the numbers speak volumes. According to Thompson Financial Securities Data, based in Boston, worldwide M&A activity through August 1999 hit nearly $1.6 trillion, a 12.7 percent increase over the same period a year earlier. Meanwhile, various studies have found that a staggering 50 to 75 percent of all merging companies fail to retain their book value two years after stepping to the altar, and many others are torpedoed by ongoing culture clash and an erosion of top talent. “Many CEOs gloss over softer HR issues, including potential cultural problems, only to realize later that they’ve made a huge mistake,” says Mitchell Lee Marks, a San Francisco-based management consultant who has worked on more than 60 mergers over the last 15 years.


Marks, co-author of Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions and Alliances (Jossey-Bass, 1998), believes that the biggest problem is getting top human resources professionals to plan ahead and provide strategic input. “The most successful companies have HR on the due diligence team, and the most successful HR departments prepare ahead of time by creating checklists, contingency plans and knowing who will handle specific tasks as soon as an announcement is made.”


That’s certainly the situation at Steelcase. Over the years, Jones has created an entire plan of action. When senior management contacts him about a potential acquisition, he has a 30-plus page checklist ready and a team of human resources experts prepared to examine specific factors or data. When he doesn’t have the expertise in-house, he uses outside consultants. Moreover, Jones works closely with the company’s CEO to identify potential takeover targets, and analyze the cultural fit upfront. And when discussions begin, he’s ready to step in and begin interviewing key managers at the other company.


At Cooper Industries, a Houston-based manufacturer of electrical products, tools and hardware with 28,100 employees and $3.6 billion in 1998 sales, M&A activity is a regular part of the picture. The company typically pulls the trigger on 10 to 15 deals a year, acquiring both public and private companies. George Moriarty, assistant director of pension design, typically spends several days poring over records, with the assistance of a detailed checklist. Among other things, he examines day-to-day business costs and looks for potential liability, especially related to retiree medical benefits, severance pay obligations and employment contracts for executives. When the deal involves an overseas acquisition, he often spends hours interviewing senior executives of the targeted firm.


Many failed mergers aren’t a result of inept management or inadequate due diligence. More often, chronic problems occur because the two organizations haven’t determined whether they have compatible cultures.


The entire due diligence process usually takes a week to 10 days, though complex deals can require three or four weeks of analysis. Cooper Industries uses anywhere from 7 to 20 people, depending on the complexity of the due diligence. Moriarty is one of three or four HR professionals who focus on different aspects of the deal. He says, “The idea is to understand exactly what you are buying. It’s rare to spot something that kills the deal, but it isn’t uncommon to uncover some information that leads to a re-valuing of the deal.” Moreover, the due diligence can identify personnel who are crucial to the transaction. That allows Cooper Industries to enter long-term contracts with key executives and others, or lower the value of the deal based on the possibility that these individuals might leave for another company.


According to Watson Wyatt’s Rochelle, HR due diligence must encompass people, programs, plans, policies and processes. The financial and legal side of the equation must focus on pay, defined benefits such as 401(k) plans, health insurance, vacation policies, immigration standards and more. These factors usually aren’t enough to derail a deal, but they can affect the pricing and subsequent human resources strategy. “Often, hidden pitfalls and liabilities exist. If a company conducts the proper due diligence, it’s possible to address the issues effectively and avoid many serious problems,” she argues.


In one case, a company found itself saddled with a $1-million expense after the deal closed, simply because it hadn’t bothered to adequately check the other’s firm’s 401(k) plan for government compliance, notes Rochelle. Other companies have discovered, only after the ink is dry on a deal, that the acquired company hasn’t fully complied with EEOC requirements or immigration law. The latter can be extremely serious, resulting in fines and the loss of workers. That makes an I-9 audit essential, according to Katie Shan, an analyst in the Chicago office of labor law firm Baker & McKenzie.


Information uncovered during due diligence can also help an organization devise a highly focused compensation and communications strategy. A 1999 survey conducted by Watson Wyatt found that retention of key talent is a critical concern for 76 percent of companies involved in a merger. Yet because productivity, performance and morale almost always take a nosedive during a merger, the threat of losing the organization’s superstars is very real. Then, instead of realizing the anticipated synergy of uniting two organizations, management finds itself desperately trying to avoid entropy.


To be sure, the business world is littered with the debris of failed human resources strategies during mergers. When one Northern California bank acquired another several years ago, senior management was pleased with the acquisition and thought it had everything on track, says Rochelle. However, eight weeks after the merger took place, the company had lost 75 percent of its key managers. The culprit? “They did not pay attention to how to hold onto the managers. They never considered retention bonuses or other processes that would help ensure positive results,” she states.


Remember the importance of culture.
Financial and legal considerations, however crucial, are only part of the process. Many organizations have discovered-sometimes only after it is too late-that cultural issues can determine whether a deal sizzles or fizzles. According to Marks, many failed mergers aren’t a result of inept management or inadequate due diligence. More often, chronic problems occur because the two organizations haven’t determined whether they have compatible cultures, or how to work out differences if the cultures don’t align. What’s more, senior executives often do not regard cultural differences as important.


Cultural differences can manifest themselves in the way people dress, communicate, use e-mail, make decisions and more. Too often, says Marks, the two companies butt heads and condemn the other’s way of doing business. They might view the other organization as too bureaucratic or simply incompetent. Eventually, one side wins. “Their way is adopted in the combined organization, leaving the other side feeling like losers,” he explains. The irony in all this is that such diversity can benefit the new organization, but only if it is fully harnessed. And that must begin in the due-diligence process.


Although many companies claim that a deal is a “merger of equals,” Rochelle believes the term is a misnomer. “There is no such thing,” she states. “In any acquisition or merger, there always is a dominant company and a subordinate company. One of the organizations will emerge as the one that runs the show, and imposes its culture on the other. However, the most successful companies make concessions and combine the strengths of both companies to develop a new organization.”


Developing a cultural audit tool and detailed checklist can guide organizations through the due diligence process. These allow the organization to evaluate the things that are most important, including what senior management’s vision is for the combined organization, how the leadership styles differ, how executives interpret terms such as “customer satisfaction” and “competitive performance,” and the types of general policies each company has in place. For example, an Internet start-up might allow employees to bring their dogs to work and decorate cubicles, while a more button-down culture might forbid all personal items in a workspace. One organization might discuss matters politely at meetings and online, while another relies on a more combative approach.


Clemente believes that success usually results when HR uses “discreet, measurable and quantifiable analysis that can be combined with the proverbial ‘gut’ feel.” Interviews with senior managers-and a representative sampling of the rank and file-can also help an acquiring company understand the mindset of the other organization. If the takeover is hostile, then third-party interviews and public information, including SEC filings, can prove useful. The end result, he says, should be a “portrait” of the other company and its culture. “Once you have something to benchmark against and take action from, it’s possible to adjust compensation, benefits, communications and other methods to address the specific needs of the deal.”


Take a look at the big picture.
In a worse-case scenario, culture clash can unglue a deal before it’s finalized. However, a more common approach to dealing with cultural incompatibilities is to develop strategies, and ultimately programs, to address cultural integration. That might include signing a long-term employment contract with key executives before the merger is complete or establishing a task force to combine the best practices of both companies.


That’s exactly the tack taken by Abitibi-Price, a Toronto-based paper manufacturer, when it announced a merger with Stone Consolidated of Montreal in early 1997. At the time, CEO Ron Oberlander of Abitibi recognized that industry consolidation was inevitable, and that his firm could benefit by a merger. However, with dozens of potential partners, he felt that he had to ensure a solid culture fit before moving ahead with the deal. For companies that passed his firm’s strategic and financial requirements, cultural fit would be used as the criteria to decide the deal.


Oberlander brought the firm’s senior vice president of HR, Jean Claude Casavant into the process as an internal consultant. After creating an evaluation system dubbed Merging Cultures Evaluation Index (MCEI), they sent a questionnaire to potential suitors, tabulated the results and generated rankings for various firms. That served as the basis for the merger with Stone Consolidated. Despite their presence in cities that speak different languages (English and French), it became clear that the combined organization would produce financial gains and that the cultures could be melded together effectively. Today, the combined entity, Abitibi Consolidated has become the world’s largest newsprint producer, generating over $2.15 billion in sales during 1998.


Like most successful merging companies, Abitibi developed a contingency plan early on. The fact that HR was part of the strategy meant it could examine the deal in total rather than the sum of the parts, says Marks, who coached the CEOs and served as a consultant. “There’s a hard side and soft side to mergers,” he says. “HR has to understand both parts of the equation. It must be proactive and not reactive for [all parties] to succeed.”


A wake-up call? Perhaps. Especially if you consider many companies still don’t use HR effectively during the due-diligence process. Concludes Rochelle: “The merger and acquisition frenzy isn’t likely to abate anytime soon. Regardless of the industry or circumstances, human resources must be prepared to provide the level of due diligence necessary to ensure that a deal can work, and that it is valued fairly. The HR department that is prepared to act can become a strategic participant in the process rather than a spectator.”


Workforce, October 1999, Vol. 78, No. 10, pp. 68-74.

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CFOs Divided Over Value of Counteroffers

Robert Half International, of Menlo Park, CA, surveyed 1,400 chief financial officers (CFOs) last December and found that 56% would likely use counteroffers to persuade good employees to stay, while 42% would not.


CFOs were asked: “How likely is it that you would make a counteroffer if a good employee announced that he or she was considering a job offer from another firm?” Their responses:


Very likely

18%

Somewhat likely

38%

Somewhat unlikely

21%

Very unlikely

21%

Don’t know/no answer

   2%

 

100%

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How to Document a Behavior-Based Structured Interview

Executives, managers, and supervisors have good reason to protect themselves against potential charges of discrimination in hiring. Most plaintiffs to date are successful in such suits, and court awards regularly run into the hundreds of thousands of dollars, especially when legal fees are included.


If a hiring discrimination suit is brought against your company, the court will insist on knowing the following information. These items are “must-haves” for documentation of the interview process:


  1. Document the job analysis process. How is the job defined? How did you determine the specific behaviors necessary for performing the job successfully?
  2. Document the process by which questions were created. Who participated in their creation? Why were these people deemed competent to create the questions? How does each question asked in the interview relate to a behavior necessary for performing the job? In what ways do the number, type, and arrangement of questions reflect the proportionate importance of particular behaviors necessary to perform the job?
  3. Document the system by which applicant responses were scored. What is the system? Who created anchoring responses? How do these anchoring responses relate to real levels of success among those actually performing the job? How were raw scores handled statistically? What weighting, if any, was used in the analysis of scores?
  4. Document the process of interviewing candidates. How did applicants find out about the job? What were the criteria for choosing those applicants who were invited for interviews? Where and when were interviews conducted? Who served as interviewers? What are their qualifications, especially in relation to the job at hand? How were questions delivered? How were responses noted? How long did interviews last? How did different interviews compare in time, content of questions, and method of evaluation?
  5. Document applicant responses and scores. Notes taken by interviewers must be easily interpretable in reconstructing the approximate content of an applicant’s response.
  6. Document the specific process by which one applicant was chosen over others. What factors were involved? What was the weighting of those factors?
  7. Document the validity of the interview process. Does the process in fact predict job performance?

This kind of documentation may seem burdensome to managers but is nonetheless important. Certainly the work involved in “doing interviewing right” compares favorably, when facing suit, to the more dangerous course of trying to construct or fabricate a legally defensible hiring procedure after the fact. And why do disappointed job applicants sue? You name it: allegations of age discrimination, bias against ethnicity, preference for one gender over the other, violations of the Americans with Disabilities Act, and so forth. A small office is no less vulnerable than a huge company as the target of such suits.

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Avoiding the Money Game

Are you looking for something more effective than a counteroffer to keep your top talent from walking out the door? If so, you might want to evaluate how well your company is doing when it comes to satisfying employee needs in some very critical areas. The following are questions that pinpoint reasons why an employee may leave—things that a pay increase can’t alleviate. How would your employees rate your performance in the following areas?


Competitive Total Compensation
How competitive are your pay practices? When was the last time you reviewed your pay levels against the market? Are your bonus or incentive compensation practices in line with your competitors? Do you recognize and reward employee contributions to business results? Do you offer benefits and perks that make your employees think twice before leaving?


Opportunities for Advancement
Do you promote from within or do you fill the majority of new positions from outside the company? Do you have any formal or informal succession planning or “fast tracking” for top performers? Do you provide professional growth and learning opportunities for employees?


Management Style
What’s the management style in the areas that are are experiencing the most turnover? Do employees feel they have a voice and are recognized for their contribution, or do they work for micro-managers who don’t encourage independence or initiative? (Few things send good employees looking for new jobs faster than bad managers!)


Operating Environment
Does your company use contract employees to augment staffing needs and address fluctuations in business? If so, you may be loosing regular staff in areas where contractors are working side-by-side with regular employees, yet earning twice as much money without the pressure and headaches that often accompany office politics and regular employment.


Employee Involvement
Do you involve employees in the design and implementation of various business systems or programs that impact them? Does your culture and values system encourage open communication and employee input? Do you ever conduct employee interviews or focus groups (before the exit interview!) to identify critical employee issues and gain understanding of your company from the employee perspective? If so, do you act on input and/or suggestions from employees?


Workforce, October 1999, Vol. 78, No. 10, p. 54.


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Mergers Don’t Do Well Handling People Issues

Right Management Consultants, based in Philadelphia, asked senior executives in 179 organizations to rank their success in a Merger or Acquisition on a scale from one to five.


The following results show the percentage of people who had clear success doing the item referenced. Clear success is understood in this case to mean the execs marked a four or a five, indicating they were “very successful” or “extremely successful.” in doing the item listed.





SOURCE: Right Management Consultants, Philadelphia, 1999.

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The One Right Way

There’s an old saying, “There are many ways to skin a cat.” I doubt that anyone ever brought the cat into that discussion. Nevertheless, the theme is that there are many ways to solve a problem. That’s flat out wrong, if the operative term is SOLVE.


If the objective is to paper over the problem, delay the consequences of the problem, convince someone that there is no problem, reduce the heat caused by the problem, or shunt the problem aside while attending to other things, then there surely are lots of ways to deal with problems. Every married man knows what I am talking about.


When his beloved points out some deficiency in their abode, his first response is that he will take care of it. A week later when the lack of action compels the spouse to bring it up again, he might suggest that “its not a big deal.” In subsequent reincarnations of the request for action he might say he has something more important to deal with, he needs a special tool to fix it, suggest that it looks good just the way it is, etc. Finally, his wife either demands action, or she gives up and hires a handyman. Nonsolving is a fine art among married men.


Rationalization
The reason that people would argue with my premise is that, for their own reasons, they don’t want to solve the problem. I’ve always believed that if you truly want to do something, you can do it. Barring physical or mental incapacity, you can accomplish just about anything you set out to do, if you’re willing to pay the price to achieve it. Excuses abound about why we can’t do something. They run the gamut from, “my mother didn’t breast feed me,” to “my boss hates me.” The inescapable fact is that Alibi Al & Alice don’t want to take responsibility for their lives. It is easier to blame their lack of courage or determination on someone else.


It’s the same way in organizations. We ignore what we don’t want to deal with, or make a list of excuses, or try some partial solutions. For the truly creative procrastinator, the alternatives are endless. However, if the objective is to actually solve the problem by changing structures, facilities, processes or people so thoroughly that the problem never comes up again, then there is only one right (effective) way to do it.


Problem Solvers and The Others
Over my 40 years in business, I’ve developed a set of people and organizational categories using a building as a metaphor. In the basement are the real losers. These are the people who can’t keep a job and the companies that go bankrupt.


On the ground floor are the walking dead. These zombies lurch along, barely surviving, never putting two periods of successful performance back to back. The next flight up are the steady but unspectacular performers. These folks and companies are the cogs in the great economic machine. In the middle floors we find the treasures, people and organizations for which we can be proud and thankful. They don’t lead their profession or industry very often, but they do occasionally have their 15 minutes of fame.


At the top, in the penthouse, are the stars. These are the leaders, the benchmarks, the world class performers. Do you want to know what takes them to the top? They practice the one right way to solve problems.


When I tell you the secret, you’re going to be terribly disappointed, if you reside anywhere between the basement and the upper middle floors. The reason is, you don’t want to pay the price to solve the problem. You just want to avoid it, cover it up, or make excuses for it. Nevertheless, here is the secret. . . the lesson learned over four decades of watching the leaders outperform all others:


Comprehension
Stars don’t act until they understand the problem. Yes, truly, fully comprehend what they are facing. You say it must be more than that? It can’t be that simple because you understand your problems, right? Not if you are not among the leaders.


Everyone but the stars see only part of their problem. That is what keeps them from being stars. Most of the time they see only the symptoms. One of the marvelous capabilities of human beings is selective perception. We’re able to isolate from the cacophony that deafens us only those things we want to hear or see. Men are especially good at this. When sent to find something by our wives we often come back and say, “It isn’t there.” At this point the exasperated spouse goes there and points it out. To which we say, “Wow, I didn’t even see it.” We didn’t see it because we weren’t focused and committed to finding it. So it is in business. We don’t see problems that we aren’t motivated to see.


Let me explain what SEEING means. In any situation there are a myriad of factors and forces. In organizations there are people, processes, facilities, structures, and policies all interacting at the visible and invisible level. Unless we are committed to solving the real problem, we sense only the items that are suitable for our purpose. The simple problems are not an issue. I’m talking about the strategic issues that separate the leaders from the pack. At this level there is only one right way, and it has four stages:


  1. Context
    The stars begin by stepping outside the problem and asking themselves, “What are we trying to accomplish in this company, division or department? Are we trying to decrease operating expense so as to reduce our breakeven point? Are we seeking competitive advantage through better quality? Are we trying to retain customers by providing exceptional service?” The reason for starting outside is that if there is no clear goal, how can there be a barrier to reaching it? There must be a context within which action can be taken.


  2. Identification
    After they are absolutely clear on what the ultimate enterprise goal is, then they can begin to identify and dissect the barriers. This is done by viewing them from all angles.

    Nature:


    what is the apparent problem and is this the symptom or the cause?


    Time:


    when does/did it occur?


    Place:


    where does it show up


    People:


    who is touched by it?


    Motivation:


    why is it happening?


    Severity:


    how important is it?



    They catalog the individual and collective actions that seem to underlie the problem. But that is not the end. We’re only halfway there.


  3. Patterns
    The third step is to look for relationships among the factors and forces. This takes practice and experience. This is the sixth sense of the “old-timers” who can feel when something is wrong before the gauges show it. So, what are the patterns of causation? Is it a single cause and effect, or is there a chain that starts somewhere out of sight? The stars trace the interactions back as far as they can to find the source. Finally, they arrive at the point where they can try to solve the problem.


  4. The Solution
    With the data they have accumulated and their growing comprehension, they may be able now to solve the problem. Sometimes they find they need outside expertise to help them isolate special types of factors and trace the relationships. Either way they are able to make the problem go away for good. They know it is gone when the expected performance ratios reappear at the unit and corporate level.

A Recent Example
The company is growing along with the booming economy. The problem is that staffing can’t find enough people to fill jobs. Is the answer as simple as put on more recruiters or double the advertising budget? At this point, answering yes to either of those questions would most likely deliver a temporary solution at a high cost.


The key question is at the corporate level, not in the staffing department. We went back to Stage 1 and applied those questions to the situation. What is the company trying to achieve? To answer that HR had to talk to senior executives in finance, marketing, production, service and maybe other functions. (Don’t be surprised if they can’t give you sharp answers. There are zombies, cogs, treasurers and stars in those groups as well. But if you are persistent and insightful you will eventually learn the company’s goals.)


After learning where the company was going HR looked not only at staffing, but at employee relations and development to find out if they were part of the solution or part of the problem. They looked outside of HR to see how managers and supervisors are aiding or inhibiting the march to the corporate goal.


Here is where the who, what, where, when, why and how questions came in. After you have the factors then you can look at the pattern of forces among them. What is driving what? At last, if you have persevered, you will know how to solve the problem


You may find as we did in this case that the issue was retention. If they were able to improve retention the staffing problem would all but disappear. They would be saving a lot of money and days of everyone’s time. If they had just tried to hire more people all they would have accomplished was a budget overrun and a dissatisfied managerial clientele.


The Choice
I’m not going to tell you what to do, it is your life and your career. But one thing I will tell you with all the strength in my rapidly aging body: If you want to solve the big problems you can, but you have to be willing to commit yourself to the one right way.



Other columns by Jac Fitz-enz:


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Temp Workers Want a Better Deal

Take a quick look at most companies today, and you’ll likely see aworkforce that’s comprised of a growing number of temporary employees. Infact, a closer look will reveal that many of these workers are filling positionsof increasing responsibility and importance.


The old image of temporary laborers who were brought in for a brief stint tocomplete menial, low-skilled tasks has been replaced by highly skilledprofessionals who are managing some of the most critical and complex projectsfor months on end. This shifting workplace trend, one that places core businessfunctions in the hands of temporary employees, seemed to happen almostovernight.


And just at the time when organizations are most in need of supplementaryskills and services, temp workers are digging in their heels and demandingimproved conditions and better on-the-job treatment.


Some temps are mad as hell
Many temporary-industry analysts believe what’s beginning to emerge is acollective voice that in some ways suggests that temps are mad as hell and aren’tgoing to take it anymore. “It” being what the growing rank oftemporary employees believes is second-class status in a two-tiered system thatplaces them at the bottom. And anyone who’s been following the Microsoft case(see “Supreme Court Decisions Require ADA Revision,” Workforce, August1999) knows that it’s getting more difficult (and more risky) for companies toturn a deaf ear to the rumblings of temp workers who complain about substandardtreatment and a caste system they label unfair.


And before you dismiss what might appear to be the petty whining of atransient group of nomads, consider this: The U.S. Bureau of Labor Statisticsestimates there were more than 2.9 million people employed as temps in 1998, andthey project a whopping 53-percent increase in temp workers by the year 2006.The largest growing segment of temporary workers, according to the NationalAssociation of Temporary Staffing Services (NATSS), based in Alexandria,Virginia, is in the technical and professional sectors, which now make up over11 percent of the temp industry.


And as the temporary workforce grows, unrest among temps could spell nothingbut trouble for HR and their organizations. Yes, the level of contentment amongthis group is important indeed, particularly when you consider that these arethe folks developing your software, managing your financials, doling out legaladvice and interfacing with your most important assets: your regular workforceand your customers.


So why are temps so unhappy? It would seem they should be clicking theirheels in celebration. After all, there’s more work available for them, theirpay levels are increasing, and they’ve got all that flexibility — what’sthe gripe? “This whole concept of flexibility is a joke,” says CynthiaHunter-Shupe, an administrative professional in Damascus, Maryland, who’s beenworking as a temp since 1987. Shupe says that although many people are drawn totemp work so they can enjoy more flexibility in their work life, her experiencehas been that, in reality, temps are allowed very little flexibility while onassignment. But that’s just one of the many issues that exist for temporaryworkers, she says. She also cites the lack of benefits, lack of communicationand feedback while on assignment, inaccurate job descriptions and other issuesas fuel for the fire of discontent among temp workers.


Shupe says she has worked on hundreds of assignments, and claims that whilepay and benefits have gotten better since the late 1980s, when she first startedtemping, she believes companies can and should do more to improve workingconditions for temporary employees. Shupe feels so strongly about the issue,that in addition to working as a career temp, she’s formed a consultingcompany, Shupe Contingent Services LLC, that sponsors Contingent.com,a Web site designed to help temp workers and client companies improve thesuccess of alternative staffing relationships. Hers is just one of severaltemp-related Web sites that have cropped up in recent months.


Though Shupe’s site is geared toward addressing the issues of temporaryworkers and client companies through training and research, other sites providea venting mechanism for temps who are frustrated with their working conditions.


Temp 24-7, for example, encouragestemps to log on and “share the pain.” Included in their menu is TempTales of Terror, Gripe of the Week and Temp Term of the Week. (One writer sharedhis definition of the aptitude test given by temp agencies as a “battery oftests designed to evaluate the temp’s ‘propensity towards subservience,’‘overworkability’ and ‘likelihood of suing.’”) A temp fromIndianapolis shares his “gripe” when he describes how a five-minutetrip to the restroom prompted his supervisor to send in another co-worker tocheck on him.


Temps’ issues are getting more visibility
But temps aren’t the only ones acknowledging the shortfalls of temp life.Even the Department of Labor (DOL) in their publication, Occupational OutlookQuarterly (Spring 1999), cites the disadvantages of temp work, stating thatalthough temp firms are increasing their benefit provisions to their workers inhigh-demand occupations, “many other workers go without health insurance,paid leave and pension plans.” The report also highlights other drawbacks:


“Temporary workers often receive limited feedback on theiraccomplishments because they often move on after completing a project; they don’tenjoy the satisfaction of seeing the long-term effects of their efforts. Inaddition, temporary workers may be treated as company outsiders and may be shutout of meetings and social functions. Some permanent employees view temporaryworkers as an obstruction to raises, commissions or overtime pay, or resentthose who receive higher pay rates.”


A Washington, D.C.-based think-tank known as the 2030 Center released areport written by Labor economist Helene Jorgensen, Ph.D., that outlines alabor-law reform that would improve working conditions for temps. The reportclaims temp workers are “less likely to have employer-provided healthinsurance and pension coverage,” and states that “they are furtherdisadvantaged because they are not covered by health and safety regulations attheir workplace (the client company), and often would not qualify for workers’compensation in case of an on-the-job injury.”


Jorgensen, who is also a 2030 Center senior policy fellow, doesn’taltogether dismiss the benefits of temporary work arrangements, but she doesdenounce the use and abuse of long-term temp workers known as “permatemps.”This is a label that describes temporary workers who are kept on assignment atone company for months and sometimes years at a time.


According to Jorgensen, many companies use permatemps to eliminate positionswithin a company and reduce costs. The temp worker is believed to get the shortend of the stick because the client company (who is not viewed as the”employer” — the temp agency is considered the legal employer), doesn’thave the same obligations to the temp worker as their full-time”regular” staff. Although these permatemps are difficult todistinguish from the regular staff, they aren’t entitled to company benefits,and Jorgensen claims they’re even denied the protection of certain labor laws.


Labor laws protect temps, too
Bernard Frechtman, an Indianapolis, Indiana-based attorney and author of”Tempnapping” (Twin Pleasures Publishing, 1997) specializes in thestaffing industry. He disagrees with Jorgensen’s claims, and says that anyonewho believes state and federal labor laws don’t apply to employees on tempassignments is seriously misinformed. Frechtman says the courts view thetemporary agency and the client company as “co-employers,” which givesworkers legal recourse against both parties. And if a company fails to apply thesame legal guidelines to both their regular and temporary workers, and the tempservice doesn’t take action, both parties will likely be held liable.


NATSS also confirms that temporary workers are protected under U.S.employment laws, including the civil rights laws, worksite safety requirements,minimum wage and overtime provisions. They’re also protected by laws relatedto collective bargaining, workers’ compensation, unemployment insurance, theAmericans With Disabilities Act (ADA), and after working 1250 hours a year, thefamily and medical leave law (FMLA), basically any law that protects a”regular” employee.


Ed Lenz, senior vice president and general counsel of NATSS, adds that theindustry as a whole is investing more dollars in temp training and benefits.Lenz also says that temp wages are on the increase and that it’s a”seller’s market for sellers of skills. We’re currently in the processof surveying our membership in an effort to measure the rate of increase intemporary worker wages in the past six months.” Lenz says the most recentNATSS survey data from 1997 indicate that temporary-employee pay rates have beenrising at an even higher rate than the workforce in general, which [according toDepartment of Labor statistics] he cites as having increased 5.6 percent overthe past three years for all workers (inflation-adjusted).


What happens to be at the heart of most temp-advocate issues is the permatemppractice raised in Jorgensen’s report. This is the exact issue that gotMicrosoft into hot water when they kept large numbers of temporary employees onassignment for long periods of time (sometimes years), had control overday-to-day management activities and treated them like full-time workers inevery regard with the exception of compensation and benefits. This, according tofederal appeals court, by definition qualified them as “regularemployees” eligible to participate in Microsoft’s stock-purchase plan andother benefits, a ruling that could cost the software giant tens of millions ofdollars.


In fact, some of Microsoft’s temps have in recent months launched what’sknown as the Washington Alliance of Technology Workers (WashTech), aCommunications Workers of America (CWA) affiliate that’s trying to organizemore than 10,000 permatemps. Most of the members were hired through tempagencies, and work as long as a year without a break on Microsoft’s Redmond,Washington, campus. Many involved with the alliance are potential plaintiffs inthe class-action litigation against Microsoft. One of their goals is to pushthrough a bill to study Washington state’s growing contingent workforce andtheir working conditions — a bill that, if approved, could trigger similarefforts by other temporary workers who may be contemplating the possibility oforganizing their collective bargaining efforts.


The Microsoft case is one of several that’s being closely watched by NATSS,and by companies using temporary employees as part of their overall staffingstrategy. However, Lenz feels the coverage of the Microsoft case has beenskewed. “Media coverage of the Microsoft case has largely been negative,one-sided and, frankly, misleading.” He claims the case isn’trepresentative of a typical staffing arrangement because many of the workerswere initially classified as “independent contractors” and thenshifted to the payroll of staffing firms after the IRS reclassified them asMicrosoft employees. Lenz says that customers should be able to avoid Microsoft’s”fate” if they limit their contacts with the assigned employees to theextent necessary to ensure that the job gets done, and “leave just abouteverything else to the staffing firm so it can fulfill its role asemployer.”


Microsoft case could make companies overly cautious
Oddly enough, to Lenz’ point, the suit filed against Microsoft and theresulting publicity may initially lead to practices that further segregate tempworkers from other employees on the job, something that may potentially add totheir second-class status. Ginger Thaxton, president of Creative ManagementConsultants based in Pompano Beach, Florida, specializes in the temp-staffingindustry. Thaxton helps clients maximize their temporary-staffing resources, andsays all eyes are on the Microsoft case.


Thaxton says she’s very concerned about the potential rippling affect ofthe case. “Companies can’t let the ‘Microsoft cloud’ affect theirrelationship with temporary employees. There’s a lot of fear out there rightnow, and if companies pull back and become so cautious with temp workers thatthey further exclude them from activities, this will only create more of a castesystem.”


Advice on managing temps is mixed
What should companies do to stay out of trouble without alienating theirtemporary workers? Thaxton believes companies should treat temporary workerslike regular staff if the assignments are kept relatively short-term in length(6 months or less). “You have to treat temps fairly. That means includingthem in social activities, checking on their work and giving them feedback ontheir performance. Otherwise, they’ll feel unimportant.”


Lenz, however, feels otherwise. “Integrating assigned employees into thecustomer’s corporate culture by including them in company social activitiesand other functions increases the likelihood that they’ll be considered thecustomer’s employees.” Lenz also says customers should avoid recruiting,making wage and benefit decisions and providing training (other thanworksite-specific safety training). Does Lenz believe these decisions will maketemporary workers feel second class?


“Probably not. Most temporary workers report high satisfaction withtheir job experience, and since most work for very short periods of time, theabsence of strong attachments with the customer’s workforce is unlikely to beof great concern.” Lenz further supports his point by citing BLS reportsthat indicate 34 percent of temporary employees now prefer temporary work totraditional employment — up, from 26 percent two years ago.


Darlene Kennedy, director of human resources for Oakley Inc., the FoothillRanch, California-based manufacturer of sporting accessories, agrees more withThaxton’s advice. She strongly believes in treating temporary employees likeregular staff — including them in social events, managing their performance andcreating a collaborative environment. “We try to do the right thing bymaking the temporary workforce feel like they’re just as important as everyoneelse. They contribute as much to our operations as our regular workers, and ifyou start treating them like outsiders it creates an “us-versus-them”environment, and that doesn’t work here — teamwork is too important.”


Kennedy uses a large number of temporary workers to support their operation,one that’s subject to seasonal highs and lows. During certain times of theyear, Oakley’s temporary staff can balloon up to 500 temps — almost 30percent of their entire workforce. Kennedy say she tries to convert hernon-seasonal temps to regular employee status after 90 days, and she tries tokeep track of how long temps have been on assignment. Otherwise, she doesn’tworry too much about the potential legal backlash of treating everyone the same.


Managing a blended workforce and keeping workers happy is a complicated job,one that will only grow in complexity as the workforce continues to change. AndHR professionals like Kennedy need to keep their eye on two balls — one is thelegal exposure that goes hand-in-hand with using temporary workers, and theother is supporting an environment that fosters collaboration and high workperformance for all employees. Kennedy subscribes to a philosophy that helpsguide her actions. “Someone once told me that when you only focus on thelegal issues, and only focus on your exposure, you forget the risk that comeswith dividing and separating the workforce. You have to keep both in mind.”Kennedy seems to do a good job of managing this delicate balance.


Workforce, October 1999, Vol. 78, No. 10, pp. 44-50— Subscribenow!

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Counteroffer or Counterproductive

East Coast advertising sales rep Lisa Kramer had absolutely no idea her supervisor at the Santa Ana, California, office of Advanstar Communications would make a counteroffer when she announced back in February her intention to leave for another publishing company virtually down the street. She had become disillusioned for various reasons, not the least of which was management’s shortsightedness in refusing to increase her salary to reflect her four years with the company. “We had just changed the name of our magazine. Saleswise it was tough, and I wasn’t happy with the way things were going, especially when they started hiring new people with less experience for more money,” Kramer says. “I wanted out of all the negativity.”


But Advanstar group publisher Michael Forcillo wanted her to stay with the organization. Although he was happy for Kramer that someone else had recognized her talents, he quickly realized it would cost his company more money to replace her than to retain her with a modest salary increase. “As a manager, you do what you can to keep turnover low,” he explains. “In truth, Lisa’s compensation package hadn’t kept pace with her performance, and I was concerned about our ability to replace her in such a tight labor market.”


So he offered her a 21-percent increase “above and beyond” the competitive offer.


And Kramer accepted. “When Advanstar made me the counteroffer, I still hadn’t let go of my emotions, and I hadn’t signed anything with the other company,” she says. “So I decided to stay, expecting things to get better.”


Roni Arnold is Advanstar’s manager of corporate recruiting and human resources. She says there’s no policy at her company regarding counteroffers, only that each business unit operates within its own budget. “It’s up to each manager to decide how he or she wants to handle a situation. If an employee is truly looking elsewhere for more money, and that’s the main reason for her wanting to leave, then a counteroffer makes sense when you consider the high cost of turnover. However, I’m not convinced most employees look for another job simply because they want more money. Oftentimes, there are other underlying issues that money just won’t fix.”


In fact, some human resources managers have found that individuals who accept counteroffers usually leave the company within the first six months, either on their own accord or because the fundamental reasons for leaving in the first place haven’t changed.


Passive retention strategy?
Depending on whom you talk to, a counteroffer either sweetens or poisons the whirlpool of emotions between employee and employer. At best, a counteroffer induces an employee to stay after announcing intention to leave. It may involve more money, but increasingly it involves such benefits as flex-time, more vacation time and/or telecommuting. Success, then, is easily determined by whether both parties walk away with a recommitment to each other. It’s the passive retention strategy of the ’90s, says one HR professional. And mostly because it’s easier for an employer to give a little than to conduct an exhaustive, expensive search for new talent.


But while counteroffers on the surface may appear to be a win-win situation for both employee and employer, there are downsides: (1) Many times, an employee is simply playing one company against the other for a new, sweeter deal; (2) What you gain over here with a counteroffer may cause resentment and low morale over there with another employee who also wants more money and better benefits; and (3) Counteroffers wreak havoc with internal pay structures.


The extent to which a counteroffer becomes counterproductive depends largely on whether you’re just throwing money at staff to solve existing problems, or whether you’re engendering loyalty, interest and commitment to the company and its objectives. “I’ve seen it go both ways,” says Arnold with Advanstar. “We’ve had some employees who have accepted counteroffers and remained here for years, and others who have accepted counteroffers and left after six months. Managers should be in tune enough with each employee’s commitment to the company so that this type of thing doesn’t come as a big surprise.”


HR managers need to remind themselves and their managers that counteroffers can be risky business, and they should take a deep breath and review whether this candidate is valuable enough to the organization.


As recently as two years ago, Cisco Systems Inc. rarely made counteroffers if one of its 20,000-plus employees gave notice. But today, as the battle for workers remains fierce, the San Jose, California-based computer-networking company is rethinking its strategy. “When key talent is being courted by the competition, you want to make sure your people are tight in the saddle,” says Norm Snell, the company’s director of global compensation. “That doesn’t mean we make a counteroffer to every employee who wants more money. But if they’re critical to the long-term success of this company, we try to educate them about what they’re leaving on the table. We’ve found that in many cases, an employee doesn’t always think about things such as future assignments, benefits, options grants and bonuses.”


Within the last year, Snell claims he has made a handful of successful counteroffers simply because he “increased their awareness about the benefits of working here, and the possible pitfalls about working there,” he says. “It’s not a money issue, in most cases. It’s lack of challenge, disinterest in job. If you don’t change these underlying issues, it’s going to be revisited again and again, and you’ll end up with a less than positive situation for both employee and employer.”


Defects from the ranks.
Whether you should or shouldn’t make someone a counteroffer depends first and foremost on whether a defection in the ranks will create a problem for those who remain behind. Counteroffers are common when a company’s operating with a reduced staff and during a time when the labor market favors employees. Otherwise, most human resources experts say it’s best to make counteroffers on a case-by-case basis. Is this employee a truly valued member of the team? Does he or she possess knowledge or skills that would be hard to replace? Does his or her past performance warrant the additional compensation? Will this employee recommit his or herself to the organization?


A 1998 survey of 1,400 chief financial officers points out a rift between those who believe in counteroffers and those who don’t. Conducted by the financial staffing firm Robert Half International Inc., in Menlo Park, California, 56 percent of respondents said they would probably use counteroffers to keep valued workers, but many of those CFO’s believe counteroffers rarely work. “We’ve seen an increase in counteroffers over the last several years, mostly because it’s becoming more difficult to attract and retain employees,” says Lynn Taylor, vice president and director of research for Robert Half International. “Companies these days can’t afford a series of good employees leaving.”


According to Robert Half International, human resources managers need to remind themselves and their managers that counteroffers can be risky business, and they should take a deep breath and review whether this candidate or that candidate is valuable enough to the organization by considering the following:


  • The employee’s state of mind. If an employee is dissatisfied and ready to leave anyway, it’s doubtful more money will make a difference.


  • Financial factors. Trying to match your competitor’s compensation package could upset your organization’s entire salary structure, and send the wrong message to employees that this is a great way to boost your take-home pay.


  • The impact on morale. In some cases, employees who accept a counteroffer may be perceived—rightly or wrongly—as disloyal to the company. As a result, the bonds of credibility that keep your operation running smoothly may be severely challenged.

The best time to make a counteroffer is at the point of resignation, says Charlie Dawson, director of alliance teams for Raymond Karsan & Associates, and author of “The Complete Guide to Technical Recruiting” (Management Advantage, 1998). If the employee accepts, present your package as a raise or bonus that was inevitable anyway, and assure him or her that there’s no ill will. Conduct an impromptu employee satisfaction survey to determine if there’s a problem across the board with all employees. Discuss the issues that prompted the employee to consider leaving in the first place, then develop a plan to begin addressing those issues at work—even if a resolution isn’t possible. And educate everyone in your company about why making a decision based on money is oftentimes not the best reason to make a job change.


“I would even encourage managers to caution employees about a sales pitch they may be getting from another company,” says Dawson. “Employees need to know the grass isn’t always greener on the other side. Talk openly with them about the other offer and why they’re thinking about leaving. If nothing else, it’s important information for the next time you try to keep an employee from changing jobs.”


Steven Mitchell Sack is a New York City-based labor/employment attorney, and author of “Getting Fired” (Warner Books, 1999). He says HRmanagers can discuss a counteroffer verbally, but always commit it to writing so there’s no room for misinterpretation. “As long as you clearly specify that the counteroffer does not imply job security,” he says, “you can fire the employee on a second’s notice if it shouldn’t work out.” He also recommends the following: (1) Never make a counteroffer you don’t intend to honor because if the person accepts, you will have legally bound your company to the terms of the verbal contract, provided it can be proved the offer itself was sufficiently clear; and (2) Make sure the counteroffer is consistent with the company’s budget and polices—otherwise it may appear as though you’re favoring one person over another, and that could lead to charges of discrimination. For example, you wouldn’t want to offer more money to a man than a woman in the same position, or more money to younger workers than older workers.


Should you decide to let the employee pursue another job, take time to conduct an exit interview so you can learn more about ways you might prevent additional staff from defecting. It might also be a good time to see if your company’s salary structure is still competitive. According to Valerie Williams, principal and practice leader for Pasadena, California-based Strategic Pay Partners, salary ranges should be reviewed every year but in order for them to be based on competitive job data, “a market analysis of benchmark jobs should be conducted ever two to three years.” And remember that while you may be losing a valued and productive employee, you also now have the opportunity to fully reassess the position’s responsibilities and restructure it before you fill it again.


Bullish about business?
Two months after Advanstar’s East Coast sales rep Lisa Kramer accepted her company’s counteroffer, she started looking for another job. “Management told me there’d be changes, but things just got worse,” she says. So in June she went to work as a sales rep for the San Francisco office of internet.com, an e-business and Internet technology network. “It’s as if I got two raises within six months: the counteroffer from my old company, and the new offer from my new company. And all I ever wanted from the beginning was to be treated fairly and with respect.”


As it turns out, Advanstar group publisher Michael Forcillo, the manager who made Kramer the initial counteroffer, also is no longer with the company. He’s now president of the Internet division for the Santa Barbara-based ACEPlanet.com, a technology-based education company for children. “I’ve found that counteroffers are successful in retaining employees only when the company is bullish about its business prospects,” says Forcillo. “In other cases, making a counteroffer just prolongs the inevitable.”


Workforce, October 1999, Vol. 78, No. 10, pp. 52-56.