Sizing Up the FMLA
Tips for Motivating a Low-wage Workforce
Workforce’s March 1997 survey on human resources professionals’ thoughts about motivating a minimum-wage workforce, revealed that 62 percent of respondents say they have a problem retaining minimum wage workers strictly because of pay. Sixty-nine percent said they motivate such employees to better performance with incentives, such as bonuses, prizes or promotions. Finally, 53 percent said they’ve had to give benefits to minimum-wage workers because they were unable to retain them with pay alone.
So how do you keep a low-wage or minimum-wage workforce happy and productive? Here are three tips from Tony Bryant, human resources associate of Irving Tanning Co., a producer of fine leather products based in Hartland, Maine:
- Connect workers to the big picture. It’s easy to become discouraged when you can’t see your impact on the final product. When you can see that your hard work is valuable, it makes you feel good.
- Involve workers in decisions that affect their jobs. When making changes in policies and benefits, ask the workers their opinions. They’re the ones who have to live with the decisions, so involve them in the process.
- Encourage personal growth. Educational benefits, training and internal promotions are good for both workers and their organizations.
- Treat people well, and with respect.
- Make the work environment a fun place to work. Burger King restaurant employees usually celebrate birthdays, anniversaries and recognize outstanding performance with a party. Some store employees organize softball teams and bowling leagues. Encourage activities that bring unity and teamwork.
- Offer flexible schedules.
- Offer bonuses. Burger King offers an anniversary bonus to employees for completing each year of service. The amount escalates with the employees’ years of service.
- Offer benefits. Burger King offers a benefit program for full-time employees at its company-owned restaurants (3 percent are company-owned) who average 30 hours of work a week. The plan includes health care after six months of service and dental care after five years.
- Offer management opportunities, and communicate the opportunities clearly and often.
Workforce, August 1998, Vol. 77, No. 8, p. 57.
What Goes Down When Minimum Wages Go Up
October 1, 1996 was an eventful day. Not only did Teamsters chief Ron Carey file a $30 million libel suit against James P. Hoffa, but New Hampshire Natural Heritage Inventory scientists announced they’d found New England’s oldest living tree at 562 years old. And FedEx workers debated their newly styled uniforms.
But perhaps the most widely felt news event of the day for human resources and employment professionals was the federal wage increase which jumped from $4.25 to $4.75 — the first wage jump in five years. Then, only 11 months later on September 1, 1997, federal law required employers to increase wages again 40 cents to $5.15 as the second of a two-part increase. The latest increase marked the 25th such augmentation since the minimum wage was instituted in 1938 at 25 cents an hour.
Obviously, the ten million employees who are paid minimum wages appreciated the raise. But in 1997, $5.15 was still half of the country’s average hourly wage according to the U.S. Labor Department. That’s why arguments abound among politicians, employers and employees nationwide about minimum wage not being a living wage. Yet, “if you look at the hearings up on Capitol Hill, the average employer or employer groups resist increases in minimum wage because they say they can’t afford to pay a higher rate,” says Douglas McCabe, a professor at Georgetown University School of Business in Washington, D.C. who specializes in human resources issues.
But what real effects, if any, has the recent two-step wage hike had on employers’ HR practices? A new framework puts a fresh perspective on the issue.
Study suggests four effects.
A new study by the Washington D.C.-based Economic Policy Institute (EPI) reveals several effects created by the minimum wage hikes. The EPI is a nonprofit, nonpartisan think tank that produces research on the economy. The organization was founded in 1986 by economic policy experts, including Lester Thurow and Robert Reich. According to their survey, “Making Work Pay: The Impact of the 1996-97 Minimum Wage Increase,” there are four usual effects on employers and HR practices when a mandated minimum wage increase comes down the pike.
Jared Bernstein, a labor economist with the EPI who co-authored the study with John Schmitt, says: “When the minimum wage increases, the impact typically has to be felt somewhere. Every action has a reaction in the labor market.”
Bernstein says the four most common effects on employers are: 1) changes in employment, such as cutting or adding jobs or changing the number of hours employees work; 2) changes in prices — producers push price increases of products that are low-wage labor intensive; 3) absorption of the increase through production practices and operating more efficiently; 4) redistributing profits to wages so that profit margins fall at the expense of labor costs.
How the hikes have affected employment practices and prices.
The EPI’s research suggests that the first category — cutting jobs or work hours — is not the primary effect on U.S. employers. “You certainly can find cases like that,” says Bernstein, “just like you can find cases that go the other way.”
He emphasizes that EPI’s study averaged out many employer experiences, and incorporated a tremendous amount of research, including many experiments and analyses, and still found a zero effect on employment gains and losses. “Some employers had to cut back their workforces, but others had to add workers. It’s not a simple employment story, either in terms of jobs or hours,” he says. In fact, none of the company representatives interviewed for this story mentioned having to cut employees or hours.
However, several employers have had to raise their prices — confirming the second point in EPI’s study findings. For example, John Mickle, who owns and operates two Baskin Robbins ice cream stores in Southern California, one in Costa Mesa and the other in La Mirada, says he didn’t raise prices after the recent federal wage increases in 1996 and 1997.
Yet there’s been a third hike for California employers on March 1 when the state-mandated minimum wage rose to $5.75. That means California’s minimum went from $4.25 to $5.75 in about a year and a half. “I took the hit completely the first [two] times, but this last time I raised prices,” says Mickle, who employs 11 people at minimum wage in one store and 16 in the other. “That’s how things work. If your costs go up, you’re going to have to pass some of that along to the customer. You don’t pass all of it along. But you have to pass some of it along — that’s basically how I try to offset it.”
Confirms EPI’s Bernstein: “We saw some prices increase when the minimum was raised, but the increases tend to be small.” He points to the booming economy with its low inflation rate, even with the two last wage hikes. He adds that price increases were nil, even in markets that employ lots of low-wage workers.
One reason for the small impact is the minimum wage lags 30 percent behind its 1990 level in terms of its buying power. “So there’s room for the minimum wage to increase without putting price pressures on employers,” he explains. “It’s not that big a deal, especially in this economy, for an employer to pay $5.15 an hour. In many localities, many employers are already paying way above that.”
Ten states already had minimum wages higher than $4.75 before the federal law was changed. And the previous federal minimum wage of $4.25 had become almost irrelevant in metropolitan areas, where fast-food chains had long been paying a starting wage of $5 or more.
Other employers such as Miami-based Burger King Corp. whose workforce comprises primarily low-wage workers, aren’t affected directly by federal or state-mandated pay increases. “Basically, we pay the prevailing wage that’s competitive within the marketplace,” says Laura Parsons, director of field HR for all of Burger King’s U.S. locations. “That [wage] can vary across the country. In some markets, we have a starting paycheck of $7.00 an hour. In other markets, because of supply and demand, our wage might be lower — it might even be minimum wage — but in this economy, there are few places that are starting [people] at minimum wage.”
Because competition for workers in the lower wage bracket is so fierce, service-based companies like Seattle-based Starbucks Coffee Co. also starts workers at higher-than-minimum rates. In Oak Park, Illinois, for example, Starbucks workers start at $6.55 an hour.
Beyond employment changes and price increases, the other two factors that EPI’s study suggest do factor heavily into the HR arena when wages go up.
How the wage hike affected efficiency gains and redistribution of profits to wages.
Looking back to the EPI’s four-point model, efficiency gains are the third biggest effect employers experience with a minimum wage hike.
Bernstein explains that although a wage means operations are more costly, it forces employers to figure out ways to operate more efficiently and get a more productive hour of work — for that extra 90 cents. And since the low-wage labor market is characterized by high turnover, high vacancy rates and other inefficiencies, the increased wage helps lower some of those inefficiency problems by lowering vacancy rates, turnover and training costs and seems to be one of the ways employers absorb this increase, according to EPI’s study.
And focusing on the study’s fourth point, employers often redistribute profits to pay for the hike in wages. Bernstein says this is usually a temporary shift. “It doesn’t last long because other factors kick in, particularly the efficiency gains, and also because the minimum wage is falling in real terms from the day it’s legislated,” he says.
The EPI’s findings aren’t much comfort to one employer who says the recent federal wage increase actually cost him his business. “I sold my business largely because profitability wasn’t going to be there,” says Rick “Mouse” Glenn, who owned a Lamppost Pizza parlor in Huntington Beach, California, until December. He sold it three months before the second wage hike went into effect.
Glenn says that when his payroll went up with the first federal wage hike, payroll increases came right out of profits. When your business has a close profit margin like his did, it makes for a tight race. “I would’ve needed another day of sales a month just to meet the jump in payroll costs — and it wasn’t going to happen.”
While Glenn believes the minimum wage increase was a fair thing for workers, he maintains it was difficult for a smaller firm which had 30 workers, with 90 percent making minimum wage. “When you’re forced to give a 21 percent increase in 18 months, you’ll see a lot of small businesses fold,” he says.
On the other side of the minimum wage coin, some businesses have been relatively unaffected. “For us, the fiscal impact has been minimal,” says one human resources manager at a non-profit organization in Southern California, who wished not to be identified. Her organization employs 800 employees, and 300 to 500 temporary employees each month. Most of the temporary workers the organization employs are minimum wage earners.
However, other employers note another big effect of the minimum-wage hike — a ripple effect on wages across the board. For example, because the lowest paid workers got a raise at Glenn’s pizza business, he had to give his higher-paid workers raises, also, to be equitable.
And while companies like Burger King already pay higher-than-minimum wages to most entry-level workers, federal or state-mandated increases cause prevailing wage rates to increase. Parsons explains: “Because if you have a minimum-wage increase to $5.50 an hour, for example, suddenly the competitive wage on the street goes up 50 cents an hour, too. So that prevailing wage goes up, which actually drives up our labor costs.” This scenario may happen again in the near future because of another proposed minimum-wage increase. But it may have global, not just national, implications.
Global profitability and competitiveness may be affected.
There’s currently talk of another hike to the federal minimum wage. Senator Ted Kennedy (D-Mass) now proposes raising the minimum wage again by more than 50 percent over the next five years, to $7.25 an hour. Many employers aren’t looking forward to giving more mandated raises, should the legislation pass. And it may even affect global competition.
“The [last] minimum wage raise didn’t affect HR practices at my organization too much, since we pay above the local average,” says Tony Bryant, HR associate at Irving Tanning Co., a producer of fine leather products based in Hartland, Maine. “However, if the minimum [wage] goes up again so soon after it was raised, I foresee problems.”
Bryant says his firm employs 600 people in a small town where it’s difficult to find applicants. Because Irving’s management team offers a higher wage, the company has an edge over other local employers. “If the minimum wage goes up a great deal, then our attractiveness goes down, and so does our ability to maintain employment levels,” adds Bryant. “We could try to maintain a relative distance from the new minimum rate, but it would make our efforts to keep benefits costs down close to impossible.” As a firm that competes globally, he also says increases in wages are costs it’s foreign competitors don’t have, putting Irving at a disadvantage.
He may be right. For example, an April 26 article in the Los Angeles Times about the apparel business says there’s been a sharp increase in the number of Southern California apparel businesses that are shifting production work to Mexico primarily because of the recent minimum wage hikes and other competitive pressures. By moving production to Mexico, firms say they can cut labor costs by at least half and save at least 35 percent in total production costs, even with the additional charges for freight, and insurance on shipments. Although many firms have scrambled to set up shops in other countries because of comparatively high American labor costs, they certainly face other barriers to profitability by doing so. But that’s a debate with no clear winners or losers.
The Economic Policy Institute’s study on the effects of the recent minimum wage hikes on HR practices seems to shed new light on an otherwise politically charged and complex issue. While some employers’ experiences may differ from the study, at least it provides a framework from which to consider the HR effects when the next minimum wage increase comes along. And it will come along. Be prepared with options.
Workforce, August 1998, Vol. 77, No. 8, pp. 54-59.
How to Hire Locally
Recruiting that first group of local employees for your overseas operation is no small task. Lance Richards knows. “In the startup phase you’re creating a culture,” he says. “You’re building the business. And in some cases like mine, you literally walk into an empty hotel room, turn the lights on and say, ‘Hmmm. Where do you go buy stuff?’”
Richards, now based in Irving, Texas, helped GTE staff 1,400 positions in new locations in 16 cities of China. Whether your recruiting responsibilities are similar or on a smaller scale, the process can be daunting. Fortunately, there are a growing number of resources out there. International search firms, online job boards and contingent staffing companies offer a wide range of services that will help you build a competitive international workforce.
Executive recruiters span the globe.
Several recruiting firms have formed strategic alliances with local search firms around the world. Others have been undergoing the global expansion process just like your business: acquiring local companies or starting up operations in foreign markets. In either case you benefit by tapping into the networks they have been working to build.
MRI is one example. Vince Webb, vice president of international marketing in Cleveland, Ohio, says, “IBM knows how to hire people in France. Many small software companies, however, have never done this before. They were working with us to find talented people here in the U.S., and it was just a natural evolution for us to say, ‘Well, gee, instead of referring them to competitors, can we help them ourselves?’” So MRI formed partnerships with like organizations in Europe and Asia. Now its clients can work with the U.S.-based recruiting firm they’re familiar with and count on it to coordinate searches with overseas companies.
This indirect connection to an established search firm in the location gives you the advantage of having a partner that understands the local customs. Karen Bloomfield, manager of field office marketing for MRI, says, “Many countries have very different employment laws than we have. And there’s a lot of cultural differences that affect your ability to hire in those countries.” She adds, “In China, for example, where there’s a great candidate shortage, that’s extremely important. You can lose viable candidates easily by not knowing the right way to approach them.”
Running into legal difficulties might be the worst case scenario, but obviously another costly problem is hiring the wrong person. And when you have zero experience with a particular culture, a service provider that has been working in the environment for several years can help you guard against this mistake.
Kerry Moynihan, Tysons Corner, Virginia-based vice president of Korn/Ferry International’s advanced technology practice, says this is especially important when hiring local nationals in emerging markets where the talent pool isn’t as well developed as here in the States. “A common error Americans make — we’ve seen it in our own hiring as we’ve opened offices — is we think that just because people speak five or six languages and have a doctorate in a technical discipline such as engineering, then they’re brilliant. But that doesn’t mean they really get it when it comes to business because they just don’t have the training. They don’t have the background.” Coming from a different culture, they aren’t automatically going to understand the ins and outs of Western business practices.
Something else to keep in mind: Looks can be deceiving, because perception is based on cultural biases. Moynihan explains, “Americans want to get things done quickly. They parachute somebody in and get him or her set up. Then if that person is choosing a local [executive], they choose somebody who has nice manners, speaks English well and with whom he or she is immediately comfortable. That usually isn’t the best person for the local marketplace. It may be the guy in the corner who doesn’t look as good and only speaks Arabic or Russian or Czech.” After one or two false starts, the hiring manager learns the lesson. But with a local partner you may have a better chance of making the right choice in the beginning.
Sometimes a service provider or other local contact can warn you that a local hire may not be the way to go. In some parts of Latin America, for example, the labor shortage has driven the cost of local managers as high as the compensation packages of executives two levels above them in the hiring organization. You might learn it’s actually cheaper to send in an expat. It’s valuable advice such as this that you should be seeking from your local contacts.
Resources for recruiting online.
I know what you’re thinking: There must be an online solution. The Web, after all, is a global medium. You’re absolutely right. Other than language barriers, which can be overcome, the Internet has no boundaries.
This is something U.S. businesses advertising domestic jobs have known for some time. Barb Ruess, marketing director for Indianapolis-based E-span says, “People have been posting jobs from all over the world pretty much as long as we’ve been around simply because we draw an audience from everywhere.” She adds, “It’s funny, we’ll even have companies that will post a job opening for here in the States and then will complain because they’re getting so many resumes from people who don’t live here.”
Some companies have started to take advantage of this fact to facilitate the recruiting process for their overseas operations. Ruess explains, “We do have a number of sites — Lotus comes to mind as well as Intel — that have divisions all over the world. And they place openings on their site for all of their positions.”
Of course there are limitations to this strategy — which the Net will outgrow eventually. Bruce Skillings, executive vice president for Career Mosaic in Palo Alto, explains one drawback: “The fact still remains that the Internet is a very popular tool here in the States, but it’s in its very infancy in other parts of the world.” Highly educated technical individuals are the first to plug in, in any culture. Then eventually, as a market matures, the demographics shift to include postings for a wider variety of skill sets, including those of waiters and retail clerks. Rest assured, it won’t be long before things even out. Think how far we’ve already come when, as Skillings reminds us, “The Web is only four years old.”
Of course service providers are looking for ways to make your job easier, so you can expect significant advances in the near future. For example, Career Mosaic is launching country-specific sites all over the world. With sites for Canada, the United Kingdom, France, Singapore, Korea, Japan and Australia, and more to come in the next 12 months, this job board recognizes there are cultural differences between countries, and one site does not fit all.
“We manage a database that’s multilingual. So, if a company wishes to publish in native languages, we can do that,” Skillings explains. But he says many U.S. companies choose to run their ads in English, because they’re searching for fluent English speakers.
Help from contingent staffing service providers.
Another group you’ve worked with in the past on the domestic side and should try turning to for help globally is contingent staffing organizations. Many have had an international presence for years, and some of the U.S.-based firms actually do more business overseas than they do here in the States.
Gary Peck, president of the commercial staffing group of Interim Services Inc. based in Ft. Lauderdale, Florida, says, “If you go back even as recently as three or four years ago, it was relatively uncommon to have someone in the States say, ‘We know you take care of us in many locations here in America, but we also need some help overseas. Do you know anyone who can help us?’ That’s evolved to the client who says, ‘We need help overseas, and we’d like you to replicate your service model over there.’”
Peck explains companies in Western Europe actually use staffing services with a greater frequency than those in the States. “That’s been true for a while,” he says. “In almost every country — whether it’s easy to hire or fire, or difficult to hire or fire — it’s almost always more expensive to employ because of legislated benefits.”
So in some parts of the world avoiding these costs by contracting workers through a staffing organization is something to consider. This would require you to identify and define core and noncore jobs. Noncore jobs could be manufacturing positions or administrative functions that you would farm out to a service provider, leaving the provider to wrestle with the day-to-day issues including compensation and benefits. Peck says, “By allowing a company like Interim to manage those kinds of jobs, we think we can actually drive higher productivity and higher retention rates.”
In case you were wondering about temp-to-perm as a hiring strategy, Peck explains this isn’t yet a widely practiced service outside of North America. He says, “The European market in particular is three to five years behind the U.S. market in terms of development or sophistication.” Peck continues, “They all use a lot of staff, but how they buy, why they buy and what they’re looking for is reminiscent of the U.S. three or four years ago.” So temp-to-perm and onsite vendoring haven’t yet been embraced. But that may change as more U.S. companies request these services.
Peck adds, “We anticipate significant growth overseas. It’s still a relatively small portion of our revenue. But we continue to see the market there accelerating in its development and following very much of a curve like the U.S. has.”
In cases in which a U.S.-based provider does service the overseas location, you benefit from having a single point of contact and a consistent and familiar way to monitor progress with your recruiting efforts. And that’s something that’s going to be increasingly important to you as your business continues to expand globally.
Global Workforce, July 1998, Vol. 3, No. 4, pp. 19-23.
Selecting Global Assignees
The success of your entire overseas venture may rest in the hands of one expatriate employee and his or her family. So how do you make sure you send the candidate most likely to live up to the challenge? This was the question on the minds of three readers who recently posted discussion threads on the topic in the Global HR Forumon Workforce Online. Responding to their inquiries, we asked an authority on the subject to share her perspective. Here she outlines a strategic approach to expatriate selection. She includes an overview of how assessment tools can aid the process.
Dr. Paula Caligiuri from Rutgers University in Piscataway, New Jersey, researcher on the topic of managing global assignees, says:
Selecting global assignees is both a critical and frustrating topic for global HR professionals. Most human resources professionals agree that not all employees sent on global assignments will succeed. Some will flourish, while others, unfortunately, will fail. Seasoned global HR professionals may pride themselves on the fact that they can predict the outcome of an assignment — after just a few interactions with a prospective assignee. They have developed the sixth sense for selecting global assignees.
Despite the sixth sense that these HR professionals may have, the unfortunate reality is that most are unable to stop a risky global assignment from moving forward. Frequently, an assignee is chosen within the business unit based only on the person’s technical or managerial skills. HR has little involvement, except to process the appropriate paperwork. This typical scenario is both myopic and deleterious for organizations valuing the strategic management of their human talent worldwide.
Appropriately, this scenario is beginning to change in many multinational organizations as global HR is becoming more integrated into the overall global business strategy. In fact, research suggests that your involvement in the global assignment process is related to better bottom line success. As a function, global HR is becoming more involved in the strategy and practice of managing the global assignment process.
Many global human resources professionals have started their strategic roles with improvements on the global assignee selection process. The process outlined below is a description of what global HR professionals in these strategic multinational organizations are doing to select their international assignees.
The most effective process for selecting global assignees involves four distinct phases:
- Self-selection
- Creating a candidate pool
- Technical skills assessment
- Making a mutual decision.
Phase One: Allow for self-selection.
Employees who may be on the track for a future global assignment should begin the decision-making process about a year or more before a position becomes available. (The way companies identify this group will vary.) In this self-selection phase, employees introspectively question whether they are right for a global assignment, if their spouses and children would be interested in relocating internationally, if this is the best time for them professionally, and so on.
The greatest criticism of self-selection is that candidates and their spouses will not be honest. I have found this criticism is unfounded given that most people are very honest with themselves — if they know that the information is private and confidential. People would rather learn for themselves that they may not have what it takes for a global assignment, rather than go through formal company-initiated testing — a process they are likely to fake to save themselves the embarrassment of failing the test.
Given that the consequences of being unsuccessful on a global assignment are high, people will seek out information that helps them predict the likelihood of their success living in another country. During self-selection, your employees and their families can be honest with themselves without fearing negative repercussions from the organization and without the pressure of having to make a quick decision.
Self-selection instruments such as The SAGE (Self-Assessment for Global Endeavors) and The SAGE for Spouses (both by Caligiuri & Associates in Edison, New Jersey) can help employees and their families through the decision-making process. Some organizations, such as Plano, Texas-based EDS, have made a self-selection instrument generally available on their company’s intranet to encourage self-assessment among those who may not have previously considered a global assignment.
Other organizations, such as Wilton, Connecticut-based Deloitte and Touche LLP, give the self-selection instrument to targeted employees. Then human resources is available for follow-up discussion meetings after the employees have taken the instrument. In either case, the purpose is for HR to provide information and assist in the decision-making process — without evaluating the candidates’ potential.
Phase Two: Create a pool of candidates
After the self-selection process, employees should have the option of putting themselves in a candidate pool. You can organize this candidate pool in an electronic database. Each multinational organization may organize the database differently, depending on its staffing needs. Some examples of employee information for the database include: the year the employee is available to go, the languages the employee speaks, the countries the employee prefers and the jobs for which the employee is qualified.
HR, in this phase, creates and manages the database. It’s imperative that you include all possible candidates who may be considered for a global assignment in the database.
Phase Three: Assess candidates’ technical skills
Once the business unit has identified a position, you should scan the database for all possible candidates for a given global assignment. This short list is forwarded to the department requesting the assignment. It’s now the job of the sending manager to assess each candidate on technical and managerial readiness relative to the needs of the assignment.
You can offer guidance in phase three to help the sending manager identify the knowledge, skills, abilities and experience needed to perform a given job. In this phase, the job requirements of the global assignment should be the focus.
If a global assignment is for director of production in China, for example, assess candidates on their records as production managers, not on their cultural skills or competencies to operate in China. (The exception to this would be if a position had been analyzed for the necessary global competencies. It has been my experience that this is done very rarely.
Phase Four: Make a mutual decision.
In this final phase, the sending manager has identified one person as an acceptable candidate based on his or her technical or managerial readiness. You know the candidate family is willing to accept the assignment because it has placed itself in the candidate pool. At this point, an assignee has been tentatively “selected.”
To offer a realistic preview to these tentative global assignees, organizations have matched repatriate families with the selected families. The purpose is for the repatriate families to share experiences and difficulties.
As a caution, the repatriate families doing the previews should be chosen carefully. Find repatriates who had positive experiences but who are also realistic about the challenges of the assignment. If possible, match families with children of similar ages.
An honest discussion between repatriates and future assignees gives the assignees more information and an additional opportunity to deselect if they feel that a global assignment is not right for them. Often, these meetings are encouraging and supportive — strengthening a family’s commitment to the assignment.
Some organizations, such as Brampton, Ontario-based Northern Telecom, conduct a more thorough assessment of the selected assignee and his or her family, in an attempt to ensure their assignees’ success. Some consulting organizations, such as Thornhill, Ontario-based FGI Global Relocation Services, conduct a pre-departure family assessment. The relocating family and a family counselor determine what, if any, accommodations the family may need to be successful in the host country. Then human resources works through the counselor to provide the family any necessary accommodations detected in the assessment process. This is a very proactive strategy.
Post-selection preparation.
Many consulting organizations offer thorough cross-cultural preparation to prospective global assignees and their families. These cultural preparation programs, while falling under the heading of training, sometimes uncover specific cultural concerns. From an assessment standpoint, HR can use this knowledge to prevent a potential problem when the family is on assignment.
In the extreme cases, a family realizes that its decision to accept the assignment was a mistake. Employees may, even this late into the process, deselect. As with Phase One, I recommend that the decision to refuse an assignment in this phase be made by the assignee and not by the organization. Fortunately, for organizations going through the first three phases, a deselection at this stage is a very infrequent occurrence.
In conclusion, there are three themes in this global assignee selection process.
The first is to plant the seed as early as possible. You will get the best possible candidates when you cast a large net and engage individuals’ decision-making processes long before a position becomes available.
The second theme is to involve the family from the very beginning. A global assignment will disrupt the lives of every family member — and each member will influence the assignment positively or negatively.
The third theme is to allow for deselection at every phase. Traditional selection methods simply do not work for global assignments — unless a thorough job analysis is conducted for each assignment.
The decision needs to be mutual among the employee, his or her organization, and his or her family. Organizations should convey to their employees that a global assignment is not right for everyone.
Global Workforce, July 1998, Vol. 3, No. 4, pp. 28-30.
Redesigning the Company at Donna Karan
Facing a challenge is one thing. Meeting it head-on is another. In 1997, New York City-based Donna Karan International experienced disappointing profits. As a young, fast-growing company, it had not always built its organization in the most profitable, efficient manner. Executives were forced to reevaluate the company’s core operating groups’ functions and relationships. Its new three-year strategic plan included a major downsizing driven by the reduction of the number of divisions from 13 to six. Donna Karan also streamlined the company’s senior management structure and made each of the six divisions fully integrated operating units.
Below, HR vice president Christina Nichols discusses how her department is helping employees impact efficiency, cost savings—and raise company morale.
What factors drove the recent downsizing and restructuring at Donna Karan International Inc.?
We’re a very young company that has experienced tremendous rapid growth. When you grow very quickly, you don’t always grow in the most profitable and efficient manner. So we made a difficult decision: to stop, evaluate what we’ve done and readjust where necessary.
Which employees were the most impacted and why?
It’s interesting. I’ve been with the company for almost six years and have been through a few other “downsizing” efforts. Typically there had been a target percentage to be cut in each division. This time around, however, the downsizing was driven by actual restructuring within divisions in an effort to impact efficiency and cost savings.
Another significant impact on the restructuring was our entrance into strategic alliances with other companies. This included the licensing of the company’s beauty business to The Estee Lauder Companies Inc., DKNYjeanswear and activewear products to Liz Claiborne and DKNY Kids to Espirit de Corp. The employees impacted were from all levels of our population.
What were the HR implications?
The restructuring process was draining to say the least! We were working with John Idol, our new CEO, trying to determine what the new structure would look like, trying to compile all the pertinent information for those employees who would be affected, coordinating outplacement services, and trying to coach management through the process. In the end, we managed to pull together as a team to make it happen successfully.
The aftermath of the restructuring process brings with it many new challenges. The employee population is dealing with the shock of losing co-workers, the stress of handling more responsibilities and the uncertainty of their own job security. Responding to these concerns is difficult.
Unfortunately, companies can’t offer anyone job security and yet, it’s one of the most important issues to employees. I believe that deep down people knew this restructuring had to happen in order for the company to prosper, but that doesn’t make it any easier to deal with the day-to-day issues. With the restructuring several months behind us, people are beginning to settle into their new roles and to re-emerge as strong teams.
What has HR learned in the process?
When we went through the restructuring process, we eliminated many jobs because of the decision to license various products. This was a fairly new direction for the company. Forming strategic partnerships with the licensees has been an insightful process. You need to become the expert on the licensee’s business so you can best educate the Donna Karan employees who will transition over [to working with them.] It’s difficult to ensure that employees who transition to the licensee maintain the same level of compensation and benefits. It’s a tough process because it doesn’t end once the employees move over to the licensee’s [work environment]. The role we play in this process already has evolved from working within the existing framework and facilitating the process to championing what’s best for the employees.
Have you developed new programs, incentives or work processes to ensure more teamwork and productivity?
A few months ago the company created several task forces to address our key business issues and to foster stronger teamwork between divisions. We currently have task forces for: human resources; strategic/business planning; creative planning; quality; and manufacturing/sourcing. The task forces have specific agendas and periodically present update reports. They’ve been successful in fostering teamwork.
The Strategic Planning task force has created the company’s first formal strategic business plan. Each division now is responsible for creating its own mission statement, goals and initiatives that will ensure support of and contribution to the company’s strategic plan.
The Human Resources task force has been in the process of creating a corporate values statement. The preliminary work was done in the task force. Divisional meetings were conducted later to review feedback and to ensure people had a sense of ownership over the values. We haven’t formally rolled out the values statement yet, but it’s already starting to have an impact.
Which jobs have required additional training?
The immediate training needs associated with restructuring revolved around management. Before we actually went through the organizational changes, we conducted some brief sessions with the management teams to coach them on how to manage through the change. Frequently, the aftermath can be more difficult to manage than the actual restructure.
How has HR addressed morale?
We began face-to-face meetings with our CEO. That way, our employees can get to know him better and vice versa. We also began conducting regular update meetings with all our division heads.
Can you describe the corporate culture at Donna Karan International Inc.?
Its corporate culture is difficult to characterize. It’s demanding, rigorous and challenging. It’s also entrepreneurial, creative, rewarding, exciting and energetic. It’s an intense and committed environment. The people who work here put in 200 percent of themselves everyday! In a word, it’s passionate.
What has been one of your most recent innovations within Human Resources?
I would say it has been the creation of the team I work with in human resources. This is the most talented group of people I have ever had the fortune of working with ¼ and I’m a believer that you’re only as good as your team.
With all the changes in the company, from the arrival of our new CEO to the restructure, the goals and focus of the human resources department have radically shifted to remain aligned with the company’s direction. We’ve positioned ourselves as strategic business partners with the divisions in the company. We’ve evolved from putting out fires and creating policy to well-rounded business partners.
Workforce, July 1998, Vol. 77, No. 7, pp. 27-28.
Handling Questions of Ethics From Job Candidates
Christopher Norman, sitting before you in your office, seems to be a nice young man. His resume indicates he’s well qualified for the open position in your company and he answered your questions succinctly and with confidence. This is the last of a series of interviews and his references have checked out. You’re about to offer him the job, but before you do, you ask him the standard question you always pose to applicants.
“Chris, I know we’ve tried to answer all your questions about this position and our company. Are there others that have occurred to you throughout the interviewing process that you’d like to ask now?”
In your ten years of interviewing candidates for the company, not one prospective new hire has surprised you with an additional question. Christopher is no different. He accepts your offer and agrees to start in two weeks. That night, however, Christopher surprises his parents by his ambivalent attitude about accepting the new job.
“Dad, I know it’s a good offer, but I feel I missed a chance in the interview to ask the human resources manager some questions that were on my mind. I wasn’t sure if they were appropriate questions to ask, so I didn’t. But I sure wish I knew the answers before I begin work.”
“Well, why don’t you ask me, son,” his father replied. “Maybe I can be a sounding board about whether you should ask some more questions before you start there.”
Ethics statements: guidelines or gospel?
“Okay, Dad. They gave me the company’s ‘Code of Conduct’ book to look at, but it doesn’t tell me if employees can be or have been fired for ethical violations. It’s not clear to me if employees are disciplined for making a wrong decision. For example, are there penalties, who imposes them and do violators get a second chance? My fraternity brother Dave started work at a big company last year and, because he used a discount coupon that one of the software vendors dropped off at the company, he was fired. He just didn’t ask anyone and went out and bought some software for himself with it. He honestly didn’t know he was doing anything wrong.”
Chris’s father agreed that this was a ticklish matter. “Any other questions?”
“Well, I don’t know if the company is serious about some of the things it mentions in its Values Creed. I’m not sure I want to work for a company that has a double standard—one for the executives at the top and one for people at the bottom. My friend Susan is working for a major consumer products company. The company has a rule that says you can’t accept gifts from suppliers, customers or anyone—not even little gifts. But she works in marketing and sees that the company pays for senior executives from its vendors and customers to attend big golf tournaments. The company also sends out thousands of gifts at Christmas to everyone it does business with. That seems like a double standard to her, and to me, too.”
Does culture support values?
“But that’s not the only thing,” Christopher said, continuing. “We had a couple of graduates from our business school come back and talk to us about things they didn’t know before they accepted jobs but wanted to warn us about. One was the ‘hidden culture’ or unspoken rules at a company. These aren’t apparent to new hires, but they really influence the values and behavior of the place.”
“Like what, son?”
“Like a culture of silence, for example. Everyone sees what’s going on but no one says anything. Or tolerating a vindictive boss because he or she has the power and the resources to make or break you. Or the fact that a company will make all kinds of promises when it hires you, but you won’t get promoted unless you have a degree in a certain subject or have attended the boss’s alma mater. How do you find these things out before you take the job and end up wasting a lot of time there?
“One of my friends who worked last summer in retailing gave me another ex-ample. Her boss asked her to go to a competitor’s store and write down what they were selling and at what price. My friend felt uncomfortable about it, but she didn’t know whether this was an accepted part of aggressive retailing or if this was unethical. She didn’t have anyone to ask. Nowhere in the company’s code of conduct does it mention what kind of action is appropriate to question and what isn’t.
“We learned in business ethics class that after Northrop got in trouble with the defense department for falsifying test results, its new ethics’ code specifically told employees they had a responsibility to challenge anything they questioned. And it was okay to challenge it over their boss’s heads. I don’t see anything like that in this code.”
“I think that’s important, son. Any-thing else?”
Does ethical behavior outweigh results?
“Well, the HR manager told me we’d all have performance goals that we set with our manager, as well as quarterly appraisals. I understand that. But what I don’t know is how aggressively the company expects employees to act to achieve those goals. Will I get full credit if I try my best to meet the goals or are they really set in stone? I know companies have faced big ethical scandals because their sales representatives lied to customers to make a sale and get the commission, and other companies have bribed suppliers or stretched accounting rules to make their numbers. I don’t intend to do any of that, and if that’s the way people have to act to make their goals in the company, I’m not sure I even want to work there.”
“Chris,” his father said, “I think you have raised enough good questions that you should call the HR manager and make one more appointment before you start working there. If she thinks these are inappropriate questions, then I agree with you—you don’t want to work there.”
What should HR do?
Christopher Norman will make an appointment to get his questions answered, but he’s an unusually thoughtful young man. Not all applicants will take the initiative, and in a time when the competition for outstanding candidates is fierce, human resources representatives may need to double their efforts and anticipate such questions.
While some might argue it’s the applicant’s duty, if not responsibility, to raise questions, it’s more likely that HR managers, experienced at interviewing techniques, will be comfortable addressing ethical concerns. We feel that HR should be proactive about encouraging applicants to think about ethics. For ex-ample, the interviewer might speak to the candidate along these lines:
“Chris, one area that I haven’t heard you raise any questions about is the subject of our company values and practices. I know you have our Code of Conduct book, but I would be remiss if I didn’t take the opportunity to emphasize how important our ethical culture is at this company. It’s something we’re all very proud of and we’ve worked hard to make sure that no employee has a single doubt, question or concern about the way we do business.
“You may not have any questions now, but I can guarantee you will have some in the future when a situation arises on the job or you hear about a problem at another company. Our ethics office is prepared to answer any kind of question and to help you sort out any situation you may be facing. In my experience, most employees do have questions and they’ve found that the ethics office is very responsive about getting back to them if their own supervisor can’t address the issue or isn’t available.
“Meanwhile, as you’re considering our offer, if you have any questions about how we treat employees, or how we meet our goals or anything at all, please feel free to call me. It’s a subject I’m happy to discuss at any time.”
Workforce, July 1998, Vol. 77, No. 7, pp. 85-86.
Working With Indians
Even before the world learned of the nuclear testing a few weeks ago, India has been at center stage in the consciousness of Corporate America. The largest democracy in existence and home of one-sixth of the world’s population, India is an emerging market. Foreign direct investment by U.S. firms is growing, and the Indian labor pool has become a well-regarded source of technical talent in a time when a shortage of skilled labor has dampened recruiting efforts here in the States.
In fact, record low unemployment rates in the United States have inspired American companies to recruit Indian nationals to fill open positions. And many U.S. firms have relocated technical jobs to India. This may be your experience. Or you may simply be interested in learning what to look for when encountering people from another country. Either way, the Indian culture holds some key lessons.
Wide-ranging diversity.
An unrivaled level of diversity exists in India. As Americans we’re fairly sensitive to this issue. But in India it’s more complicated than here in the States.
First there’s the caste system. With four main groups and thousands of subgroups, the caste system still today dictates whether two people may marry and whom a person should socialize with. Although outlawed by the Indian Constitution, the caste system unofficially may lead to uncooperative behavior in the workplace if you’ve asked two people to work together who don’t view themselves as equals. This factor contributes to the trouble some Indian businesses run into with the American management concept of teamwork. Carolyn Ryffel, trainer with Chicago-based Cendant Intercultural, The Bennett Group, says: “I have been told that in the workplace caste issues can be forgotten, but I’m not sure.”
Geographically, religiously and economically, Indians are subdivided into many social groups. The country has 14 official languages and hundreds of unofficial ones. There’s a sense of association among Indians from either the northern part or southern part of the country. Although the majority of the population practices Hinduism, there are also significant numbers of Muslims and Christians. And add to the list the fact that education is highly valued: A person with more education ranks higher than one with less.
So what can you do knowing this? The important thing is to be aware these differences exist. Then learn as much as possible about your Indian partners and employees. Their place in the social hierarchy will color their approach to foreign people and their customs and habits. And if you and your international assignees know what to expect, it will lessen the chance of miscommunication.
Valuing the family and social relationships.
Ann Ferrante, formerly an international HR professional with New York City-based AT&T, has written her Ph.D. dissertation to answer the question: “Are American management practices transferable and can they be implemented in the Indian work context?” In the process of conducting her research, Ferrante found that Indians have two core social values: 1) a close connection to their families and 2) a high regard for their social relationships and status in society. Ferrante says, “Those are absolutely paramount — above and beyond work and the meaning of work.” She explains this is important to keep in mind because it has an impact on what motivates your Indian colleagues.
The result? Indians work to support their families and to improve their status economically and socially. They don’t tend to work to fulfill career goals, to meet corporate objectives or for personal recognition. This can render pay-for-performance management strategies ineffective.
Whatever will be, will be.
Perhaps one of the fundamental differences between the Indian and American cultures is our two perspectives on the issue of control. As Americans we have a tendency to believe that we can make anything happen — including the American dream — if we work hard enough. We install air conditioners to control temperature. We build dams to control water. We design our own career tracks and manage our progress. We believe we can fix things, solve problems and beat impossible odds.
But Indians have a different outlook. The influence of the Hindu and Muslim religions gives them what some might consider a fatalistic perspective. Ryffel gives an example. If you’re an Indian, “you can commit to a social event — you can commit to a deadline — but always in the back of your mind is the thought that it’ll be nice if it happens, but I can’t totally control this.”
The result may be what Americans would see as a lack of initiative when it comes to wrapping up the final details of a project. Ferrante says you may see that your Indian colleagues are eager to dive in and pull together the first 80 percent of a job. But then when it comes to handling the straggling details, they may view them as unpredictable variables not worth worrying about. This outlook can make cultures that tend to drive to closure a bit crazy.
A high-context culture.
Differences in communication styles can be tricky, even when you recognize them. Consider critical feedback. You’ve heard of the sandwich approach? This is the Western way of delivering bad news: first a compliment, then the critical feedback, then another positive statement. Compared to some cultures this is a fairly indirect strategy.
But Indians prefer a far more indirect approach. This means your Indian colleagues are likely to deliver criticism in a form too subtle for Americans to notice. And in the case of a serious matter, they may involve a third party in order to protect the relationship between the giver and receiver. Not surprisingly, delivering criticism is likely to be a more lengthy process than your expats are used to.
Overall these differences may sound exaggerated if you have experience working with Indians who have been educated in one of India’s business schools where Western management practices are part of the curriculum. But it’s likely that even then you’ll observe signs of cultural variances.
And remember: Americans derive a good deal of their self-identity from their jobs. So the last thing you want to do is send a team of American assignees planning to be successful with the same programs that won them praise in the States. It could demotivate everyone involved. Setting expectations through cross-cultural training — on both sides of the ocean — will ensure positive results.
Global Workforce, July 1998, Vol. 3, No. 4, pp.10-11.
Focus and Flexibility Prudential’s Rewards and Recognition Program in Action
Under Deborah Gingher, vice president, HR policy & strategy, the Prudential Insurance Company of America has a healthy mix of formal recognition and flexible on-the-spot rewards. The Newark, New Jersey-based company tailors its formal recognition by department so that managers can avoid what Gingher calls the vague “you’re doing a hell of a job” approach. The tighter focus ensures employees know exactly what the company expects of them, she says.
Customer-nominated awards are given out quarterly, and Gingher promotes both the nomination and reward process in company newsletters and e-mails. Typically, Gingher spells out what the award recognizes. For instance, in HR’s case, the ACES award celebrates HR professionals who excel in “the four roles an excellent HR function must fulfill in support of the company’s objectives: Administrative expert, change agent, employee champion and strategic partner.” [For more information on each of these four HR roles, please visit www. workforceonline.com/win/index.html] Gingher follows the explanation with a description of each winner and his or her exact efforts. “Using the winners as examples gives everyone a true-life idea of what we’re looking for,” she says.
A new Customer Focus Award recognizes employees who “take the initiative, [go] beyond their job requirements and act as motivators, leaders and innovators on behalf of our customers.” A cross-section of operations and systems employees make up the quarterly selection committee. Winners receive a $300 “night on the town,” recognition [at] events, a crystal award memento and eligibility for a “Best of the Best” award—$1,000 in Prudential mutual funds.
Just as important as the formal recognition, says Gingher, is allowing managers the flexibility to offer informal goodies. Teams who’ve completed a project early or under budget, for instance, may find themselves treated to a Broadway show, spot cash or dinners. One division head, who’s active in the Make-A-Wish Foundation, gives donations to the group in the name of excellent employees, and gives out a special Make-A-Wish teddy bear in recognition. “I like the idea of tying recognition to a non-profit,” says Gingher. “People go crazy to get these teddy bears. Employees not only know they’re appreciated, but that they’re making a little boy or girl happy.”
Workforce, July 1998, Vol. 77, No. 7, p. 34.
Consider E-mail as Permanent
What you probably don’t know about e-mail is that it’s permanent—it really can’t be deleted in the traditional sense. Several copies of your e-mail are usually stored or archived within the system and may be found if needed or looked for.
Consider your business e-mail as being sent to a company bulletin board. And your message or documents can be stored for years on back-up disks and tapes.
To prevent yourself from doing anything that can hurt you or your organization, consider these helpful hints:
- E-mail should always be considered public, not private. Don’t ever write anything you wouldn’t want everyone in your office to see.
- When replying to someone’s message, check the list of recipients before you respond. Oftentimes, e-mail is automatically copied to a pre-programmed distribution list. Your messages can be forwarded without your knowledge.
- If a message you’ve received is personal or even informal, let the sender know you’ll be forwarding his or her message before you pass it along to someone else.
SOURCE: American Media Inc., West Des Moines, Iowa
Workforce, July 1998, Vol. 77, No. 7, p. 38.