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Are You Ready for the ADA Amendments Act of 2008

Anyone reading the recently passed ADA Amendments Act might be tempted to ask, who isn’t covered? Created with the intent to restore the protections that were originally laid out in the Americans with Disabilities Act of 1990, but which have been steadily eroded since by the courts, the new amendments are so expansive and cover so many individuals and impairments, they might as well be called the “Americans Accommodation Act.”


Kidding aside, employers need to be aware that the standard for what is classified as a disability has been altered significantly. There could be an initial wave of litigation aimed at companies to test the new boundaries of the amendments, so it’s critical that employers are prompt and thorough in managing employment processes and are fully educated on the new compliance requirements. The ADA Amendments Act becomes effective January 1, 2009. Previously under the ADA, individuals were denied protection if their condition could be treated with medication or was in remission. A main change under the ADA Amendments Act is that an impairment now qualifies as a disability if, when active, it would substantially limit a major life activity, such as hearing, walking or communicating.


In 1990, Congress targeted private employers with a directive to eliminate discrimination against qualified individuals with disabilities, after recognizing the fact that individuals with physical and mental disabilities were unfairly being denied private sector employment because of prejudice and antiquated societal barriers, even though they were qualified to perform their essential job functions. The enactment of the ADA essentially expanded to the private sector the protections that were first created by the Rehabilitation Act in 1973, which applied to federal employment and programs that were funded or operated by federal agencies or contractors.


Over the years, the broad definition of disability as set by the ADA in 1990 has been considerably narrowed by various court rulings. Specifically, the Supreme Court’s rulings in Sutton v. United Air Lines, Inc. (1999) and its companion cases significantly narrowed the scope of protection allowed under the ADA by ruling that measures that lessen a person’s impairment, such as medications, should be weighed in determining whether an impairment substantially limits a major life activity.


The intended scope of protection was further limited by the Supreme Court’s decision in Toyota Motor Manufacturing, Kentucky, Inc. v. Williams (2002), which interpreted the term “substantially limits” to require a more significant degree of limitation. In addition, the current Equal Employment Opportunity Commission’s ADA regulations define the term “substantially limits” as “significantly restricted,” which is too high a standard to be consistent with Congressional intent, according to the ADA Amendments Act. As a result of these Supreme Court cases and the EEOC regulations, individuals with a variety of substantially limiting impairments that were intended to be covered by the ADA were denied its protections.


A new standard
 Thus we have the ADA Amendments Act of 2008, which is intended to restore the original intent and broad scope of the ADA, and, in the process, reject the Supreme Court’s decisions and EEOC regulations that have improperly narrowed the scope of its protections. A key nuance for human resource professionals is that under the ADA Amendments Act, workers now will be presumed to meet their initial burden of proving that they have a disability, and the scrutiny will shift from determining whether an individual is “disabled” to whether the employer covered by the ADA met its legal obligations. Whether an individual’s impairment qualifies as a disability will not receive extensive analysis.


With the goal to “restore the ADA to it original purpose,” the ADA Amendments Act takes these noteworthy actions, which human resource professionals should note. The act:


  • Outlines boundaries for the definition of “disability,” including:
    a. The term “disability” shall be interpreted in favor of broad coverage of individuals.
    b. An impairment that substantially limits one major life activity does not need to limit other major life activities.
    c. An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.
    d. The determination of whether an impairment substantially limits a major life activity shall be made without regard to specified measures that work to lessen an impairment—excluding ordinary eyeglasses or contact lenses
     
  • Specifically identifies “major life activities” as including but not limited to: caring for oneself; performing manual tasks; seeing; hearing; eating; sleeping; walking; standing; lifting; bending; speaking; breathing; learning; reading; concentrating; thinking; communicating; and working.
     
  • Includes within the definition of “major life activity” the “operation of major bodily functions.” This includes, without limitation: functions of the immune system; normal cell growth; and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions.
     
  • Defines the standard for being “regarded as disabled” as: “establishing that the individual has been subjected to action prohibited under the [ADA Amendments Act] because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity.”
     
  • Provides that employers do not need to reasonably accommodate “regarded as” cases, and says that “regarded as” cases cannot arise out of an impairment that is “transitory and minor.” A “transitory” impairment is defined as having an actual or expected duration of less than six months.
     
  • Purposefully remains silent on any requirement of permanency to meet the definition of “disability.” The ADA Amendments Act only excludes “transitory or minor” impairments from the definition of “regarded as” disabled. It does not provide similar limitation to the definition of a “disability.” It should be presumed, therefore, that transitory impairments that substantially limit a major life activity constitute disabilities under the ADA Amendments Act.
     
  • Prohibits employment discrimination against a qualified individual due to the type of their disability, as opposed to prohibiting employment discrimination against a qualified individual due to the mere existence of a disability.
     
  • Prohibits the use of qualification standards, employment tests or other selection criteria based on an individual’s uncorrected vision unless those standard criteria are directly related to the position and are necessary for the job.

Among other critical points to be aware of, this new legislation states that nothing in the act alters the standards for determining eligibility for benefits under state workers’ compensation laws or under state and federal disability benefit programs. Nothing alters the requirement to make reasonable modifications in policies or procedures, unless such modifications would fundamentally alter the nature of the goods, services, facilities or accommodations involved. And nothing provides the basis for a claim by an individual without a disability that the individual was subject to discrimination because of the individual’s lack of disability.


The next steps for employers
So, what does this all mean to employers? That’s the big question, and we will not truly know the answer until various agencies, including the EEOC, the U.S. Attorney General’s Office and the Department of Transportation, issue regulations providing more guidance.
In the meantime, it is best for employers to take a cautious approach by following these seven steps to compliance with the ADA Amendments Act:


1. Assume all employees are perfectly healthy. Never assume any employee has an impairment of any type. This will prevent employers from making the mistake of determining that an employee has a disability, regardless of whether the regarded disability limits a major life activity. Avoid that trap by presuming nothing.


2. When an employee comes to you claiming an impairment, assume that the impairment does in fact qualify as a disability under the ADA Amendments Act. To reiterate a key point: In determining whether an employer had unlawfully discriminated against a qualified individual with a disability, there will be little scrutiny or analysis of whether the claimed impairment qualifies as a disability. Moreover, the ADA Amendments Act’s all-expansive list of what qualifies as a “major life activity” leaves little doubt that practically any impairment will be deemed a disability. The employer will be safer to assume from the outset that an impairment qualifies as a disability than trying to argue later that it does not.


3. Make all reasonable attempts to accommodate an employee’s impairment. The only instance in which an employer will not have to reasonably accommodate a disability is if the accommodation would create an “undue hardship.” Numerous factors can constitute an undue hardship, but the bottom line is that unless the reasonable accommodation is so burdensome or expensive that it will completely change the nature of the business or the ability to provide services, the employer will have to provide a reasonable accommodation.


4. Review and revise all of your job descriptions. An employer’s defense against an ADA Amendments Act claim is likely to rest on whether the disabled employee was “qualified” to perform the essential functions of his or her job. Thus, employers will be better able to prove what the essential functions of the job are, and that the employee is not qualified, if the employer has detailed and current job descriptions for each position.


5. HR and managers should start training now about the ADA Amendments Act. The act imposes so many changes to the ADA and the cases interpreting the ADA over the past 10 years that employers need to act as if they are starting from scratch. HR should treat the ADA Amendments Act as an entirely new law. Both HR and managers should immediately be trained about its requirements.


6. Implement new disability policies, or modify existing ones. It’s very likely that most employers’ disability policies will need to be updated based upon the act. Employers should make changes to those current policies or implement entirely new policies as soon as possible.


7. HR and managers should update their training as regulations are issued and as the courts interpret the ADA Amendments Act. The impact of the ADA Amendments Act will not be static; its effects are going to continue to unfold over time. By staying up to date and knowledgeable about these changes, organizations will be able to avoid unintentionally violating the vastly expanded provisions of the new act.

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New Wal-Mart Chief Could Get Big Raise

In an unexpected move, Wal-Mart Stores appointed Michael Duke to serve as its new president and chief executive—a position that could make him one of the country’s highest-paid executives.


Duke, who has headed up Wal-Mart’s international division, will replace Lee Scott early next year as the company’s top executive. Scott is retiring at the end of January after nine years as president and CEO, but he will hold on to his role as chairman of Wal-Mart’s executive committee.


That means that Duke is in line for a substantial bump in pay. Last year, he earned $13.3 million in total compensation, about one-third of the $31.5 million that Scott took home.


Wal-Mart has not yet disclosed a new employment agreement for Duke, who had a base salary of $975,000 last year. But the company did reveal in an 8-K filing Friday, November 21, that once Scott begins to serve solely as chairman, his base salary will be reduced to $1.1 million annually, down from the $1.4 million he earned for the company’s fiscal year ended January 31.


In addition, Scott will no longer be eligible to participate in the company’s incentive plan for executives, according to the filing.


Scott apparently decided to retire now because the retailer is on firm footing. In a memo to Wal-Mart workers, chairman Rob Walton said that for a CEO transition, “the right time is now, a time of strength and momentum for our company.”


Wal-Mart’s earnings increased about 10 percent in the third quarter, making it one of the few companies to exceed expectations during the period.


Filed by Mark Bruno of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Goldman Execs Pressure Peers

When Goldman Sachs Group CEO Lloyd Blankfein and CFO David Viniar—along with five other top officers at the firm—announced last week that they’ll give up their bonuses for this year, their gesture may have marked the beginning of a $1 billion swing in pay at major financial institutions.


Goldman’s top brass will earn just their annual base salaries this year, which, at around $600,000 each, would register as little more than a rounding error on their typical total-compensation packages.


It also means that the seven executives as a group will be taking home nearly $320 million less than they did last year, when Goldman generated record revenue and earnings and the rest of the financial services world was still deemed to be on firm footing.


Goldman has paid its executives more than any other financial institution in recent years—by a wide margin. Since going public in 1999, its top tier has received roughly $1.1 billion in bonuses and incentives.


The move to forgo bonuses this year—a period in which Goldman’s earnings have dropped substantially, its share price has plunged 70 percent and its capital infusion from the federal government has totaled $10 billion—has set the stage for other financial behemoths that have suffered similar or worse fates to follow suit.


Nine of the largest financial institutions (including Goldman) paid their top executives a combined $1 billion in total compensation last year, according to a Financial Week analysis of the proxy filings of Bank of America, Bank of New York Mellon, Citigroup, JPMorgan, Merrill Lynch, Morgan Stanley, State Street and Wells Fargo. (These were the first nine financial institutions to receive a combined $125 billion in capital last month from the Treasury Department as part of the Troubled Asset Relief Program.) Roughly 98 percent of this $1 billion in pay was handed out to the top executives at these firms in the form of bonuses and other incentive awards last year.


Even before Goldman’s leadership volunteered to give up their bonuses, it was clearly shaping up to be a miserable year for bonuses in the financial services industry.


“But now, Goldman’s move has put enormous pressure on its peers to accept nothing but a base salary this year as well,” said David Schmidt, of compensation consultancy James F. Reda & Associates. “They’ve set the standard—and everyone else will fall in line.”


Already, overseas banks Barclays and UBS have followed Goldman’s lead and announced last week they would forfeit any bonuses this year.


UBS also noted it will overhaul its executive compensation model next year. Bonuses will not be paid to UBS executives right away but will be held in escrow, a move that would allow the company to claw back pay after it has been awarded.


In the U.S., pressure has been mounting, particularly on Citigroup and insurer American International Group, to make a similar move. New York state Attorney General Andrew Cuomo, for one, publicly called out executives at both companies last week after Goldman’s revelation.


“After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share of these difficult economic times,” Cuomo asserted after Citigroup announced November 17 that it would eliminate about 52,000 jobs. “It would send the wrong message for Citigroup’s top brass to collect bonuses while investors, taxpayers, and now Citigroup’s own employees suffer.”


At Citigroup, which received $25 billion in capital from the Treasury last month, top executives received nearly $65 million in bonuses and stock awards last year, according to its 2008 proxy filing.


AIG, which lost $25 billion in the third quarter and has needed $150 billion in financing from the Treasury, dished up roughly $28 million in bonuses and incentive payments to its top officers last year, according to its proxy filing.


It’s unclear what executives at these and other financial companies would be entitled to if they do end up collecting bonuses this year, but certainly it would be a fraction of what they took home in 2007.


In Goldman’s case, top executives turned down year-end payouts that could have amounted to more than $50 million combined, according to a Financial Week analysis of Goldman proxy filings and annual reports since 1999.


Goldman has never awarded its executive officers bonuses that totaled less than 1.3 percent of earnings since it became a publicly traded company, according to the analysis.


The lowest total level of annual bonuses that Goldman has awarded its officers: $43.8 million in 2002, when the company generated $3.3 billion in earnings on $14 billion in revenue, virtually unchanged from its 2001 earnings number.


So far this year, Goldman has reported $23.8 billion in net revenue and $4.4 billion in pretax earnings through the first nine months of the fiscal year that ends November 28.


It is widely expected to post a loss for the fourth quarter—its first loss since going public. But Goldman’s top tier still could have lined up for bonuses totaling $57.2 million, if the year-end payouts were based on the historically low 1.3 percent-of-earnings benchmark.


“This could just be a one-time gesture, given the economic climate and the [political] circumstances surrounding a number of banks and financial institutions,” said Jim Allen, senior policy analyst at the CFA Institute. “But there’s a chance it could be reflective of a new compensation model at financial firms, one that takes a longer-term view and is essentially risk-based. That would be much more significant.”


Filed by Mark Bruno of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Financial Services in the Eye of the Storm

With industry-altering force, the economic crisis has taken an immediate toll on financial services firms. But while fear and panic may whipsaw the markets, the crisis brings with it a real opportunity—a chance for these troubled firms to fundamentally alter their human-capital management models for long-term advantage.


    Indeed, unlike many other career choices, financial services careers have been all about pay, especially in the investment banking sector. But attraction and retention can no longer be so compensation-centric. As other industries are making clear, attracting talent to financial services needs to be about the total employment value proposition— including training opportunities, career development and flexible working arrangements. These are important levers for companies to use as they walk a fine line of delivering shareholder value while retaining and engaging a talented workforce in an affordable and sustainable way.


    Financial services firms need to identify and retain their best performers and structure their incentive compensation and broader talent management programs to appeal to this population. Career progression and training and development opportunities should be part of the conversation firms have with employees and recruits. Companies will have to be more transparent, not just about compensation, but also about their total vision and the career opportunities they offer.


    Additionally, there are four key areas of potential change in how incentive plans are structured and administered:


  • Greater differentiation of top performers.


  • Longer time horizons for incentive payouts tied to performance.


  • Increased emphasis on risk management and metrics.


  • Incentive payouts based on real earnings rather than on mark-to-market valuations.


    The trend in financial services firms is to strengthen performance management programs to better differentiate strong from average or weak performers. Any available bonus money should go to the top performers. However, if employees receive a reduced bonus, they shouldn’t necessarily interpret that as a directive to look for another job.


    Similarly, companies can no longer afford to provide incentive guarantees to executives without corresponding performance guarantees. Firms that want to better align pay with performance and retain top performers should consider placing less emphasis on annual results and bonuses and more on rewarding performance over a longer period of time. Historically, mandatory bonus deferrals have been linked to service-based vesting, but there should also be a performance component that takes into consideration the profitability of the business generated over time.


The third area of change involves stronger performance metrics around risk management. For example, rather than funding bonus pools based on a percentage of revenue, firms should focus on profitability, after accounting for the cost of capital adjusted to reflect the level of risk incurred in the business. Managing risk with metrics and multiyear periods will help ensure companies are compensating people for sustained, realized performance.


    Finally, the other major design issue that’s highly relevant right now is market-to-market valuations of illiquid securities. Executives have been compensated based on market values that are not actually achieved. Companies should reconsider compensation based only on amounts that have been realized.


The market volatility challenge
    While these strategic design changes make sense, there’s no avoiding the fact that financial services firms are especially affected by the market volatility we see on a daily basis. And the big challenge with market volatility lies in setting performance targets.


    If we agree it will be nearly impossible to predict future performance now or even next year, companies should consider a combination of year-end assessments of key performance indicators (absolute performance) with relative performance comparisons against peers. There needs to be a balance between delivering real profit and sustainable organizational results and acknowledging the challenging reality of today’s market environment.


    How can financial services firms manage some of that volatility? It’s a matter of minimizing incentive guarantees, building in multiyear views of performance, and doing away with direct-drive formulaic incentives and purely discretionary incentives. Achieving balance between clear performance metrics and a discretionary interpretation of results is key.


    In the short term, though, there are likely to be staff cuts for overall affordability and a net reduction in compensation. Firms aren’t likely to cut base pay, and some may even use base pay as a way of balancing the risk in the overall compensation package. But we’ll likely see reduced overall payouts where there are performance issues and a reduction in current cash bonuses with an increase in deferrals. Companies will be moving toward measuring performance over a longer time frame, tying payouts to both service and performance.


Employee communication
    Employees, of course, are most concerned about what this shakeout will mean for them. Direct, clear and timely communication from senior management will help employees move past paralyzing uncertainty to a point where they can be productive and even motivated to effect a positive outcome. Companies should reinforce the overall position of the firm, the value of its offerings and its plans for the future in simple, direct language. It’s important to tell employees what the firm is doing to address the current situation without sugarcoating or hiding the facts. This crisis is not likely to be a short-term cycle, and companies should be clear with employees about what it will take to get through the months ahead.


    The sense of urgency can be overwhelming, but it’s important for corporate leaders to take a step back and apply good diagnostic tools to understand where their human capital priorities should be. A Band-Aid remedy, such as reductions in staff, might stop the bleeding today, but the problems most likely will require major surgery to ensure long-term success.


    The bottom line is that firms need to identify high performers and make retaining them a priority. And they also need to motivate the general workforce. Proven diagnostic tools, such as internal labor market analyses and business impact modeling can help firms identify which human capital levers to pull to get the necessary results while minimizing further damage. If ever there was a time to be thoughtful and focused, it’s now. Decisions made in this time of crisis will have long-lasting effects on financial services companies’ greatest asset: key talent—the talent they’ll rely on for future success.

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More New Yorkers Join Ranks of Unemployed

In a sign the job market in the Big Apple is deteriorating, 70,000 New Yorkers received unemployment benefits in October, a 5 percent increase over the month before and the most in more than four years.


Compared with a year ago, the number of people on unemployment in October rose by nearly 20,000, or 37 percent, the sharpest year-over-year increase since May 2002, the New York State Department of Labor said Thursday, November 20.


On the heels of massive layoffs announced by Citigroup this week, the Labor Department’s monthly report brought little in the way of good news. The unemployment rate in October did decrease by 0.1 percent, to 5.7 percent, but economists said that slight drop was statistically insignificant.


The city lost 7,000 private-sector jobs in October, the largest one-month loss in the recent downturn, according to a seasonal adjustment of Labor Department data by Eastern Consolidated.


While the depth of losses in any one industry was not significant, the pain was spread around the city economy.


Health services, retail trade, manufacturing, construction, banking and employment services all saw losses.


“The loss of jobs in November clearly indicates that New York City has entered a recession,” said Barbara Byrne Denham, chief economist at Eastern Consolidated. “The anecdotal evidence had been overwhelmingly indicative of a recession these past few months, and now the numbers are finally starting to support the anecdotes.”


Surprisingly, the city lost only 700 securities jobs last month, despite announcements that indicate massive layoffs. Economists theorize that many laid-off Wall Street workers are still being carried on payrolls because of severance packages.


“What we’re expecting to see is a snowballing in securities, and we haven’t seen it yet,” said Marcia Van Wagner, the city’s deputy comptroller for budget.


Information technology cutbacks resulted in 600 jobs being shed from the computer systems sector. As many as 165,000 jobs could be lost in the city over the next two years as the financial crisis spreads beyond Wall Street, according to a forecast by comptroller William Thompson.


The city continued to post over-the-year job gains, growing at a rate of 0.2 percent, while the state and the nation lost jobs. Educational and health services continued to lead the way, with gains also seen in leisure and hospitality.


But the rate of growth slowed from 0.6 percent in September and weakness in key sectors is a portent of trouble on the horizon, said James Brown, a Department of Labor economist.


“It’s dwindling fast,” he said. “You’d expect big growth in retail, leisure and hospitality, but they have been unusually weak. That’s a sign that we’re going to have a poor Christmas season.”


Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Study Spending on HR Technology to Hold Steady

The bottom isn’t falling out of the HR technology market, according to a recent survey from the International Association for Human Resources Information Management professional group.


Forty-two percent of the nearly 210 respondents reported that their human resources information technology budgets will remain the same in 2009 as in 2008, the association said in a release Friday, November 21. Another 21 percent of participants said budgets will increase by an average of 23 percent, while 37 percent said their budgets will decrease by a median of 15 percent.


“For companies in a good financial and cash position, they should take this opportunity to extend their market share and make long-term investments,” John Greer, senior vice president for HR and Development at Smart Financial Credit Union and incoming chair of IHRIM, said during a Web conference event Nov. 19. “Those without as much cash are waiting to see what happens. There is still a lot of uncertainty right now.”


The HR software market has been among the fastest-growing corners of the business software world as organizations seek to maximize the value of their people and prepare for any labor shortages. Talent management applications—which refer to tools for key HR tasks such as recruiting and employee performance management—have been particularly hot.


But there’s evidence HR software vendors are facing tougher going. This month, Kenexa said its third-quarter net income slipped by 24 percent to $5.4 million. Kenexa chief executive Rudy Karsan also said that during the last several weeks of the quarter, “the business environment deteriorated further and caused customers to pause as they evaluated how the changing economic climate would impact their business.”


IHRIM’s survey involved HR leaders, primarily from North America. It covered HR IT as well as other talent investment issues.


Thirty percent of respondents plan to spend the most on software purchases in 2009, followed by outsourced services, staffing and development at 20 percent each. Companies making software investments will spend the most on onboarding tools (28 percent) and benefits management products (25 percent), and less on core HR management systems (12 percent), the survey says.


Forty percent of those surveyed plan to make the largest budget cuts in training and professional development.


Greer argued that slashing development budgets is shortsighted and counseled against drastic job cuts.


“Companies are likely to lose their competitive advantage if they cut development budgets,” he said. “I am hopeful that companies do not make dramatic headcount reductions until they have a better feel of where economy is going.”


—Ed Frauenheim


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Its Not All About Becoming a Manager

I was waiting backstage to be introduced at a conference where I was speaking on how to develop high-potential employees when my cell phone rang. It was Robert, whom I had promoted about two months before to manage the production aspects of our company’s marketing department. He sounded unusually upset.

“Listen, I’m sorry to bother you now,” he said. “I know you’re halfway across the country. But I have to quit. I can’t take this anymore. I’ve been worrying myself sick about running this department. And I just can’t take it anymore. It’s too much. I can’t sleep. I’m getting an ulcer. And it’s just not worth it. I enjoy producing top-quality work, but I can’t stand holding other people up to a standard that they don’t seem to want to step up to. I don’t want to hold people’s feet to the fire. I’m tired of checking up on their work, and correcting them on things they should have gotten right without my looking over their shoulder. I just can’t take it anymore.”


Finally, he paused. And I said, “Robert, just hold on. I’ll be back tomorrow. Take the rest of the day off. We’ll have lunch together and talk this through. Just do me a favor and wait until then before you hand in your resignation. We can work this through.”


He said, definitively, “We’re not going to work this through. I don’t want to manage people. I just took this promotion because I figured it was the only way to move up in this company. But I can’t take it. And if that’s the only way I can get a promotion, then I’m not cut out for this company.”


“I hear you,” I repeated several times. “I understand what you’re saying, Robert.” Then I paused and said, “I’m being introduced to speak at this conference. But do me a favor and hang in there. We’ll talk it through tomorrow. And I assure you, it’ll all work out.”


On the flight back, after my speech, I thought about what I was going to say to Robert.


High potential, but not management potential
When we had lunch the next day, I essentially told Robert that I had thought long and hard about what he had said. And I realized he was right. I wished he had talked with me more about what he was going through, as I might have been able to help him. But I knew he was at the end of his rope and that I wasn’t going to ask him to hold on to that rope any longer. Management was not something he was interested in. I got it. I wished it were, I told him, because he was an exemplary employee. He was somebody I wanted others to learn from. And he had been promoted because we wanted to send a clear message that he was the kind of individual who was recognized and rewarded at our company.


Still, I understood that managing other people was turning his stomach inside out and upside down, that he wasn’t cut out for it. I assured him that he was extremely valuable to our company. We wanted him to stay. And, in recognition of having given management a shot, I told him he could keep his new title as a director. I knew that was important to him.


I told him that we were making an exception on his behalf. And that he had, in fact, taught me something that I would carry with me: There should be many ways for a valuable employee to be promoted besides channeling them into management positions.


Robert taught me that it is vital for a company to develop high-potential employees, whether or not we are looking for the next manager. Too often organizations only develop and reward those who want to manage people. I learned that there is enormous value in helping every high-potential employee develop to his or her full capacity, whether a management role is in their sights or not.


It is customary for top performers to be identified as “high potential,” then placed on the fast track to management. This is considered the ultimate compliment, sending a strong message to them that they are on the right track.


But what if that employee is not cut out for managing others? Is managing others the only way to get ahead? If someone can’t manage others, is that the end of the road?


All too often, we end up testing the mettle of exemplary employees by giving them stretch assignments that they are not equipped to handle. Then what happens?


If our top performer tries to manage others but it doesn’t work out, he is in a no-win situation. He loses face. He digs in, giving it his all, but he doesn’t know how to succeed. That’s because succeeding at managing others is completely different from succeeding by doing your best.


People like Robert know how to dig in and perform at their highest level. But they don’t know how to get others to do the same. And it drives them crazy. So they become frustrated. Disenchanted. Completely lost. And by the time they realize that taking the promotion was a bad move, their only option is to leave the organization. How can they stay? This is the first time they’ve failed. And they’ve failed in such a public demonstration.


More often than not, this is an enormous loss, both for the top-performing individual and for the organization. But it doesn’t have to be.


Another path to take
 By identifying our top performers and publicly letting them know that they are extremely valuable to us, we can reward the performance we seek and give individuals the opportunity to continue to grow with our companies as individual contributors or as managers, depending upon their desires and talents.


What I am advocating is that, as managers, we need to honestly assess the potential of our top performers, and then coach them to develop their careers—not just to fulfill our needs.


Managing others should not be the only path of career development for top performers. Rather, they should have choices, based upon their inherent strengths and motivations.


If they are cut out to manage others and if they genuinely feel energized by helping others exceed their expectations, then that is an ultimate win for the individual and the organization.


Equally important, though, is to provide career advancement for top performers who want to continually hone their own skills, but who have no interest in managing others.


As managers, it is often said that one of our primary jobs is to develop future managers. I would add to that. By concentrating only on developing future managers, we are, in fact, sending the wrong message to our top performers.


Instead, we owe it to them, and to our organizations, to develop alternate career paths for talented individuals whom we want to stay and grow with our company. For some, managing others might be the best of all worlds. For others, it would be the worst of all possible choices.


As managers, our job is to develop the potential of all top performers, wherever those paths may lead. Our coaching should provide options for their continued growth and, ultimately, the growth of our organizations.


Our goal should be for our top performers to learn about themselves. Some may be ready to manage others. Some may be ready to manage projects. Some may be ready to tackle new challenges as individual contributors. Our message needs to be that all of our top performers are extremely valuable to us. And they all have places in our organizations, where they can continually grow.

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NLRB Issues Memo on Mitigating Back-Pay

The National Labor Relations Board on October 3 reaffirmed that when litigating whether illegally discharged workers conducted a reasonable search for work, an employer must demonstrate that substantially equivalent jobs were available in the relevant geographic area.

    In 2007, the NLRB for the first time placed on its general counsel the burden of rebutting an employer’s evidence that the worker failed to mitigate back-pay damages, by producing competent evidence that the employee took reasonable steps to seek those jobs. St. George Warehouse, 351 N.L.R.B. No. 42, 183 LRRM 1235 (2007); 196 DLR A-6 (10/11/07).

   The NLRB general counsel’s office last month explained that its attorneys bear the initial burden of proving the amount of gross back pay the worker would have earned had he or she not been illegally discharged. The employer then has the opportunity to prove an affirmative defense to reduce the amount of back pay owed, which includes arguing that the worker did not make reasonable efforts to mitigate damages by finding interim work. The general counsel explained that its attorneys should be prepared to rebut the employer’s evidence by showing that “differences in specifics, such as location, type of work, rate of pay and other working conditions may demonstrate that the employer’s proffered evidence does not establish that the jobs were substantially equivalent.” Guideline Memorandum Concerning St. George Warehouse, Office of Gen. Counsel, GC 09-01 (10/3/08).

    Impact: Employers retain the ultimate burden of proof in showing a lack of diligence on the employee’s part in looking for work. To prove an employee’s failure to mitigate back-pay damages, an employer must show that substantially equivalent jobs were available in the relevant geographic area during the relevant period. When conducting an investigation regarding the availability of jobs, employers are encouraged to obtain data from the Labor Department’s Bureau of Labor Statistics and to interview state and local government officials about the availability of employment for those with similar skills and experience.


Workforce Management, November 3, 2008, p. 8 — Subscribe Now!

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Changing Hearts and (Anxious) Minds

During these days of economic anxiety, employees at insurance firm BlueCross BlueShield of Tennessee may be a bit calmer than the average American worker, thanks to a stress-reduction program launched four years ago.

    The 4,500-employee firm has trained about a fifth of its workforce in the HeartMath system, an approach using biofeedback technology to help people calm their minds.


    Sharon Gilley, BlueCross Blue­Shield’s manager of organizational development, says the training is helping the firm’s employees make sound decisions even as workers nationwide face worries about reduced retirement accounts, higher costs of living and fears of a protracted global recession.


    “They sleep better, they feel better, they’re less irritated,” she says. “That tells me that they’re thinking better.”


    The financial crisis of the past few months has ratcheted up economic anxiety among American workers to severe levels, experts say. A recent poll by employee assistance program provider ComPsych found that 92 percent of employees say financial worries are keeping them up at night. Such stress can affect businesses in the form of employee health problems, retention troubles and decreased productivity.


    BlueCross BlueShield of Tennessee is helping employees cope in a number of ways. CEO Vicky Gregg, for example, reassured workers in an October e-mail that the private, not-for-profit company is financially strong. The firm also gives employees access to massage therapy, an employee assistance program and personal health advocates who can address stress.


    And it is continuing the program from HeartMath, a Boulder Creek, California-based company that sells stress-relief tools to individuals and organizations. HeartMath’s system uses software and a heart monitor to help people learn to change their heart rhythm pattern and create physiological “coherence” in the body. Stress leads to an irregular, jagged pattern. But when people shift to a more positive emotional state, HeartMath says, the heart rhythm pattern becomes smoother and coherent.


“[Employees] sleep better, they feel better, they’re less irritated. That tells me that they’re thinking better.”
—Sharon Gilley, manager of organizational development,
BlueCross BlueShield of Tennessee

    HeartMath CEO Bruce Cryer likens the benefits of the system to the way a healthy body builds resistance to catching a cold. Stress management, he says, “is trainable.”


    BlueCross BlueShield of Tennessee has invested about $200,000 in the HeartMath system and has trained about 1,000 employees, including claims and customer service staff. According to BlueCross BlueShield’s initial projections, 1,000 employees practicing stress management would save the firm about $440,000 annually in reduced health care costs.


    Gilley says her organization plans to conduct a claims-data study to check on the actual health savings. Meanwhile, other results are promising. Last year, 311 employees were trained in the HeartMath system. In the wake of the training, the portion of those workers reporting that they were exhausted dropped from 35 percent to 17 percent. The share saying that they were anxious slipped from 22 percent to 9 percent.


    The stress-reduction program is not just helpful for today’s economic crisis, Gilley says. “Heart­Math tools give anyone under any specific stressors effective ways to deal with stress in the moment,” she says. “With regular practice, this is a benefit in all kinds of life’s stress.”


Workforce Management, November 17, 2008, p. 18 — Subscribe Now!

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Looking for the Exit on Wall Street

Stress levels have gone from bad to worse on Wall Street. And if firms don’t do something to address the situation, they risk losing their remaining talent, according to a study by the Hidden Brain Drain Task Force, a consortium of 39 companies focused on retaining and recruiting women and minorities.

    The study, which is based on interviews with 200 Wall Street employees from February through July, found that 64 percent of workers were considering leaving their jobs because of stress. Twenty-four percent said they were looking for another job as a result of stress. Forty-nine percent of respondents cited unpredictability as the main source of their stress, up from 7 percent who gave that reason a year ago.


    “People went into these jobs with the understanding that they would work long hours under a lot of performance pressure,” says Sylvia Ann Hewlett, an economist and president of the Center for Work-Life Policy, the New York-based think tank that conducted the study. “But now, not only are they working much harder, but their salaries are down and their bonus is going to be slashed.”


    And that situation has only gotten worse since the study was conducted. “I recently spoke to one participant in the study who told me that his level of stress was a five out of 10 when we did this; now it’s a 10,” Hewlett says.


    Workers on Wall Street are paying the price for these stress levels, the study shows. Sixty-six percent said they weren’t getting enough sleep, up from 48 percent a year ago. Thirty percent said they needed a drink at the end of the day to relax, up from 23 percent a year ago.


    To come up with an action plan to address these findings, the members of the Hidden Brain Drain Task Force held a series of brainstorming sessions in March and June. Many of the firms’ ideas centered on communication.


    Failing to communicate about the status of the company, no matter how bleak, was a key mistake that a few firms made in the past few months, Hewlett says.


    “Firms thought that if they didn’t know what their future held that they should just shut up,” Hewlett says. “But having your boss share honestly about how things look and what could happen makes people feel like they are part of a team and a bit more in control.”


    Creating this kind of “no-spin zone” is a key way that companies can retain employees and keep them engaged, Hewlett says.


    Other ways that firms can do this is by offering career advancement opportunities that might not be connected to a pay raise as well as offering flextime or the ability to go to the gym at odd hours, she says.


    “Even just taking the team out for a drink after work can be enormously valued,” she says.


    Wall Street firms that are doing nothing to retain talent because they think their people have nowhere to go may be in for a rude awakening, Hewlett says.


    “We know that there is a lot of poaching of talent going on there,” she says. “The firms that are relatively well off are seeing this as an opportunity to cherry-pick talent.”


Workforce Management, November 17, 2008, p. 21 — Subscribe Now!