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There are 30 months that Carrie Pierce would really rather forget. Unfortunately, she can’t. Pierce was the victim of an employment relationship that went terribly wrong — turning from commitment into condemnation. Although she can now joke that she may need therapy to help her put the whole experience into perspective, it’s no laughing matter. While it’s hard to believe that such loyalty lapses are happening in today’s workplace, Pierce’s story provides insight into how employee commitment can quickly sour when the wrong ingredients are poured into the workforce mix.

Pierce had worked in the film industry for years as an independent aesthetician doing makeup, including special-effects makeup. She had owned her own business for several years and consulted with many firms when she was recruited by a cutting-edge, start-up skin-care company (which shall remain nameless at Pierce’s request) that was based in Japan, but had a couple of U.S. divisions. The firm had several thousand employees between its overseas and American locations.

Pierce was first hired as a consultant, bringing all her experience as a makeup artist to bear in letting the firm in on the pulse of the skin-care and makeup industry. Initially, she helped the company design packaging, ran test formulations and consulted on price points. From there, she became the company’s director of education, teaching the growing company’s internal and field employees about the company’s products, customer service techniques and basic company philosophy, and also wrote training manuals.

Later, she was promoted to vice president of sales and marketing, but also handled all the employee-relations issues — even though she had no formal HR title. It was expected that she keep all her old duties, even though she was given executive responsibilities, as well. “When I first started, and even to the point I was promoted to vice president, I was very pleased [with the company],” says Pierce. “At the beginning, they seemed to understand what I was bringing to the company and I saw a great deal of potential. But as I went on, it became clear to me that many people were very unhappy. I’ve never met so many discontented people in my whole life.” One of the biggest reasons, she says, is that the president of her division was a conniving, crooked, underhanded man. “When I finally left, several other people also left and a whole division of the company just collapsed because of this one man’s mismanagement,” she says. Pierce explains that the president, and most of those directly below him, had questionable, often unethical, ways of doing business.

Outwardly, it seemed like the perks and benefits were good. She admits she got a big salary and great benefits. But as time went on, she discovered that another executive in the same position at the firm’s sister company was earning $60,000 more a year than she did — and was doing less than she was. Pierce describes how she brought in several national accounts and designed a marketing plan that went gangbusters — none of which her counterpart did. “I think the attitude was so bad in the company because most people assumed she was sleeping with the boss,” says Pierce. “And everyone talked about it. It’s kind of like a Clinton thing.”

On a management level, the president was completely disorganized and was loyal to whoever was in front of him at any given time, then he’d turn on them behind their backs. He’d keep “dead wood” around because he was afraid to fire people, even though everyone knew who the non-performers were, and resented them.

All the while, Pierce couldn’t believe she found herself in the middle of such a predicament. “It knocked the wind out of my sails for many, many months afterward,” says Pierce. “I don’t know that I’ll ever approach work the same way. It was such a foul, negative environment.”

Pierce now writes industry-related articles in the beauty business and also writes children’s books. “I guess I went from a high-falutin’ power structure to wanting to just sit and draw pictures,” she adds. “I want something cuddly and fluffy in my life.”

The moral of the story is: There’s no substitute for ethical, visionary leadership. Like attracts like. Companies that don’t shape up will see employees shipping out.

Workforce, November 1998, Vol. 77, No. 11, pp. 47.

Under the new employee-commitment deal, it’s becoming increasingly important to employ the right people from the start. Who you pick to work for your company — and who picks you — matters more than ever because, like a marriage, basic compatibility is the basis for commitment. Employers aren’t the only ones who care about the employee investment. Employees increasingly are looking at who their team members are, how you develop and train them, and what opportunities you provide them.

Workers look at the other guy’s skills.
According to the 1998 America @ Work (SM) study conducted by Aon Consulting Worldwide Inc., an HR consulting firm based in Chicago, two of the three best predictors of employee commitment include the extent to which employees believe their co-workers are receiving adequate training, and employees’ perceptions of how well their co-workers’ skills are keeping pace with job demands. On average, respondents to Aon’s survey believe that about 40 percent of their co-workers have skill levels that fall short of what their jobs require. These results are generally consistent among workers with varying lengths of service and in organizations of different sizes. Workers in medium-sized organizations appear to be the most concerned with the adequacy of co-worker skills. Why are workers so concerned about what their peers are doing? The fast pace of work and workplace change has increased the demand for skills faster than the labor market can deliver.

“The reason that translates into importance for selection and assessment is that people want to work on a winning team. And if they believe the HR team is choosing and hiring people who don’t have the skills or attitudes the team needs, people are going to think about going elsewhere to work,” says David L. Stum, president of The Loyalty Institute (TM), an Aon Consulting Worldwide division based in Ann Arbor, Michigan. Even still, employees are generally more committed to their individual team, their boss and their projects than they are to the bigger organization. With the complexity of most organizations these days, workers latch on to the people they see and work with every day. “My director left the company, so there was no real reason to stay,” says one employee anonymously. And another adds: “I am loyal to the people I work with and don’t want to let them down. Changing management and reorganizing groups lowers my loyalty and my performance.”

The right fit saves time and money.
“Getting the right fit is crucial for the employer and the employee,” says Jim Krefft, a senior vice president for Six Sigma Qualtec, a consulting firm based in Scottsdale, Arizona. Job fit is the degree to which the candidate’s cognitive abilities, interests and personality dynamics fit those required by the position.

“When the fit’s right, it’s energizing.” On the flip side, when the fit’s wrong, it’s costly. Says Krefft: “We’ve got a financial-services client who says if it makes a hire [that doesn’t work out], the total cost for the first year is $1.5 million.” That’s a big-bucks boo-boo by any standards. And these types of big financial losses are confirmed by the Santa Clara, California-based Saratoga Institute, a human capital performance research organization, which has done studies that show a company loses about $1 million with every 10 professional and managerial employees who leave the organization.

For HR, the old paradigm of hiring 20 people with the hope that the best five work out is gone. It’s too expensive, and employers don’t have time for it. “As we move more into an environment where information and service are the dominant products in the marketplace, the human asset is all the more critical,” adds Krefft. “It’s often what’s between the ears of a firm’s deal-makers that enables the enterprise to succeed.” Krefft quips that he has one client who says their assets walk out the door and go home every day. For an increasing number of employers, that’s no joke.

That’s why employers have to get smarter upfront about what their goals are and the kinds of people, skills, competencies and behaviors they need to fulfill those goals. Don’t make a bad hire, then try to fix it later. “One thing that hasn’t changed is that you still aren’t going to make a silk purse out of a sow’s ear,” observes Krefft.

First, learn how to hire the right people.
Finding people who fit your organization is a complex task. It pertains to selecting those people who resonate with you on values, vision and mission, those who are competent to work in the jobs and roles you have available now (or ones you may create in the future), those who want to work within the scope of their highest potential and those who have the ability to learn quickly.

According to Krefft, being able to find people who fit starts with retooling your recruiting and hiring process. Human resources professionals have to clearly define what’s required for success in your organization, then have a selection and interview process that precisely determines that you know the right person when you see him or her. Krefft strongly suggests using a competency-based selection process.

One process that Krefft frequently uses draws on empirical data from an organization’s past performance, strategic direction and core business processes, then distinctly outlines what a successful performer looks like for your company. Then through behavioral interviewing, you can sift through candidates to find a perfect match. Behavioral interviewing is the format of getting people to tell you stories about their work history and how they behaved in a variety of situations. Instead of the traditional approach (“If you were a tree, what kind of tree would you be?”), the behavioral approach illuminates abilities and experiences that give you a holistic picture of how an individual works (“Tell me a story about how you succeeded on a given project”).

Of course, using new procedures such as these causes a chain reaction. Supervisors and managers all the way up and down the organizational line need to learn how to use the new system. “It’s an enormous investment,” says Krefft.

Development opportunities are the new brass ring for workers.
According to Perry Christensen, former director of work/life programs at Whitehouse Station, New Jersey-based pharmaceutical giant Merck & Co Inc., the firm’s managers are no longer judged by number ratings, but “on whether or not they’re utilizing their workers in the best way, and whether they’re developing their people.” Developing people is the new mandate for employers. It’s a no-brainer; if people are now the most important asset of an organization, the more they know and the better their skills are, the better their output will be. But the cry for development is also largely being driven by employees under the new employee relationship.

According to Boston-based Towers Perrin’s “1997 Workplace Index” study, employees want more of a “shared destiny.” Towers Perrin is an international management consulting firm that tracked the attitudes of 3,300 employees in 1995 and 2,500 employees in 1997 who were working in U.S. companies with at least 500 employees. The shared destiny means development opportunities and skill building for many different workers.

This is already the case in several industries, especially those that depend on young, highly skilled professional and technical employees, such as information technology experts. Many workers in these fields wouldn’t dream of staying with one firm for a lifetime. Says Gary Beisaw, director of ShopLink Inc., a personal services company in Westwood, Massachusetts: “In this tight job market, loyalty has taken a back seat as people are more opportunistic. People are more short-term focused.”

However, workers do insist on sharing in the success they help create for their companies while they’re employed there, such as equity ownership, a stimulating work environment, availability of “hot” projects and skill-enhancement opportunities. For example, Intel Corp. based in Santa Clara, California, spends an impressive 6 percent of its total payroll — $160 million last year — on its in-house university, and all senior managers must do a teaching stint there every quarter.

But such efforts aren’t cheap. Gardena, California-based Nissan Motors Co.’s vice president of communications, Jerry Florence, says the cost to hire, train, develop, increase and expand the skill of Nissan employees is in the ballpark of $1 million — but it’s what people want these days. Because the new employment deal comes with the mutual understanding that workers aren’t going to be tied to a firm for life, they’re more involved in driving their own career development. They want to be marketable wherever they go.

As Arian Ward, leader of collaboration, knowledge and learning for Hughes Space and Communications Co. based in El Segundo, California, puts it: “Help people learn to keep one foot in the future and one foot in the present.”

HR’s role is to support teamwork and employee development.
HR’s role in this area involves moving away from what Dave Ulrich, business professor at the University of Michigan in Ann Arbor, calls “the transactional role” — the cops and clerks — and transforming into the enabling force around the creation of the optimal human performance system. Employees increasingly are looking to their employers to create and uphold a learning environment in which teams can be the best they can be — supplied with the right people, the right development and the right career opportunities.

“What’s making people stay these days is having interesting work in a nurturing, pleasant environment,” says Mark Meltzer, a senior VP and National Practice Leader for the Executive Compensation Practice at The Segal Company, an HR consulting firm based in New York City. “It’s all motivated by people figuring out ways to enhance themselves in terms of them getting more pay, making themselves more valuable to the company, and getting training and mentoring.”

Employees are now looking at companies to meet developmental needs. But it’s a big issue for companies, too. A survey conducted last year called “Dream Team — Learning From Success” by the Scarsdale, New York-based Work in America Institute Inc., found that 95 percent of the respondents — from nearly 100 of the most innovative companies in America — gave the highest priority to “teamwork,” creating and sustaining team-based organizations. Teamwork ranked ahead of such critical issues as compensation, organizational change, performance management, training, labor-management relations, and recruitment and retention strategies.

The challenge for HR and your organization is to provide a learning and development environment that meets both the organization’s needs — and employees’ demands.

Workforce, November 1998, Vol. 77, No. 11, pp. 50-52.

To hear Mike Agase talk about loyalty at his firm, you’d think he was talking about his extended family, not his workforce. Agase, the HR manager for D.A. Stuart, a 130-year-old, German-owned, specialty chemical firm based in Warrenville, Illinois, says loyalty at his company is high — more than 50 percent of their 250 U.S. employees have worked there more than 10 years. Some boast tenures of 20 years or more. That’s pretty intense devotion in today’s noncommittal business world.

Although the organization already has high loyalty, its management team is continuously revamping things to keep that commitment strong and has made some very conscious decisions around staffing, development and culture — and its HR mission in relation to those areas — that have resulted in both long-term and short-term successes. For example, over the past couple of years, the company has focused on retention, not just recruitment, and has reduced its turnover rate by 50 percent from 15 percent to 7 percent. “The way we’ve done that is we’ve really made a great effort to treat people with tremendous respect,” says Agase. “We take a genuine interest in the people who work for us.” And that company interest ranges from the professional to the personal.

On the development side, the firm encourages employees — many of whom are chemists and scientists — to direct their own careers, and get company help to do so. “We find out what people want to do, and try to find ways to develop them to do those things,” says Agase.

Along the communication line, he says the company has recently started paying more attention to communicating better. Senior managers realized people need more information about the big picture. “Now we’re educating our employees more each day on what we do, how we do it and what we need to do to be as successful as we can,” Agase explains. “And they need to [know] this isn’t just a place to come to work, but it’s a place to come to succeed.”

The HR team has built a feedback and evaluation system — beyond the performance review — in which employees provide feedback after each project or each work cycle about how the project or process went. They talk about what went wrong, what went right and the changes they’d suggest making to help the process go more smoothly the next time. “In the teaming environments we get involved in, we need feedback to constantly tweak and improve what we’re trying to do,” says Stuart. “And we need them to evaluate how our business vision is going.”

And they’re communicating better with workers one-on-one. Their people needed to know that their contributions do make a difference. Managers are encouraged to sit with workers at least 15 minutes each week to have meaningful dialogue. “It’s a lost art,” says Agase. “People want to know if they’re doing a good job. They need to know they’re special and that their efforts are appreciated.” This strategy has painted a portrait of employee satisfaction. Proof of that came two years ago when the firm moved its headquarters to a new $6 million facility 20 miles from where it used to be. All but one employee decided to stay with the firm after the move.

So, how does D.A. Stuart compete with the Amocos and Chevrons of the world for talent — and keep them? “I really believe our advantage is that we’re a family,” says Agase, realizing it sounds like a cliche. He adds that it all starts at the top: “My boss, Jim Castle, president and CEO, is a very people-oriented person and cares deeply about the employees of this company and their families. And we don’t just say we care. We prove it.”

Workforce, November 1998, Vol. 77, No. 11, p. 38.