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Adecco Trains Through the Downturn

Withering economic conditions may once again pose a threat to employee learning and development. In an effort to slash discretionary spending, nearly half of U.S. firms plan to cut their training budgets in 2009, according to a November report by professional services firm Towers Perrin.

But while many companies see only crises ahead, Adecco Group North America is taking a more optimistic view. It sees the current financial turmoil as a prime opportunity to beef up the skills of its 6,000 permanent employees and position itself to “catch the first wave” of new business when conditions improve, says Rich Thompson, the Melville, New York-based staffing firm’s vice president of training and staff development. (The training is not intended for Adecco’s contingency staff that it finds for its corporate clients.)


Adecco Group North America is part of Adecco SA, a Fortune 500 company with headquarters in Zurich, Switzerland. It bills itself as the largest supplier of temporary workers in the world. Overall, the Swiss company generated revenue of $33 billion in 2007. In addition to the 6,000 people directly employed by the North American operation, it has about 120,000 temporary workers, and accounts for roughly 15 percent of the company’s revenue overall.


The global staffing company is feeling the impact of the financial crisis that is spreading like a virus to other sectors. Adecco’s revenue in the U.S. and Canada declined 8 percent, the company said in a financial report in November. But rather than curtailing development programs, Adecco North America is going ahead with a plan launched in 2006 that requires every new employee to complete a customized online learning program.


The intention is to centralize learning across Adecco’s 1,200 North American branches, which previously was “at best ad hoc, cost-prohibitive and inconsistent,” Thompson says. In addition, he says the on-demand system enables employees to learn in their offices during the workday when it is convenient for them.


Newly hired Adecco employees are expected to complete at least one or two courses per day during their first 90 days, and completing the program is a prerequisite to taking more advanced exercises.


Employees are lining up behind the mandate. Since its inception, Adecco says the number of courses completed online soared from 78 in 2006 to nearly 60,000 thus far in 2008.


That number includes courses taken by longtime Adecco employees, although Thompson attributes most of the uptick to newer employees. He says 86 percent of newcomers thus far have fulfilled all the requirements of their individual learning agendas.


“We know those people hear the same message in the same way,” Thompson says.


The company took its existing classroom material and broke it into bite-size chunks that employees could complete online in about 15 minutes. It uses a learning management system created by GeoLearning Inc. in West Des Moines, Iowa.


Adecco-specific learning requirements are divided according to geographic region, lines of business or job function. For example, the skills expected of recruiters who place financial professionals are different from those who recruit and place clerical or support staff.


Adecco hasn’t eliminated instructor-led classes. Instead, the company uses them as a reward. Only employees who fully complete their online learning requirements are eligible to participate in Adecco’s instructor-led “High-Impact Training” courses.


The arrangement not only helps cut back on airfare, lodging and related travel expenses, but also lets Adecco classroom instructors focus on strategy and execution, Thompson says.


Each class participant is given a coaching guide that outlines specific steps they need to take to be successful in their job. Classes revolve not around lectures, but instead thrust learners into group settings and role-playing exercises that foster teamwork and communication. “We’re using the classroom now for building confidence, not for introducing content,” Thompson says.


Nearly one-third of corporate training in the U.S. occurs online, and the percentage will grow as companies hasten to further reduce costs, says Josh Bersin, whose Oakland, California, research firm, Bersin & Associates, tracks trends in corporate training.


Large companies in particular are turning to e-learning to get more bang for their training dollar, Bersin says.


“The content-development process forces companies to think about their core competency models ahead of time, instead of just having an instructor stand up and start talking,” Bersin says.


Some of Adecco’s newcomers are farther along the development path than others. Jacqueline Chen joined the company in 2007 as vice president of public relations and communications and had previously represented Adecco when the company was a client of a PR firm for which she worked.


As part of the required corporate training, Chen has completed courses in diversity training and preventing sexual harassment. More significantly, Chen is among a select group of human resources professionals at Adecco to receive specialized training pertaining to an “internal reorganization.”


“It helped me understand why we’re making the changes, in layman’s terms and not corporate-speak. It also helped me understand how I could potentially play a role in ensuring the success of these changes,” Chen says.


In developing her personal learning agenda, Chen is considering courses to strengthen her grasp of business and financial knowledge.


“Some companies have the methodology for mapping out a career path but then never give any follow-up. Being a human resources company, I imagine that’s not going to be the case here,” Chen says.


Meanwhile, Adecco plans to continue using the classroom not only to practice execution, but also to monitor people’s progress. Students are given surveys before and after completing the class work. The surveys shed light on whether employees are using what they have learned, Thompson says.


Although Thompson declined to be specific, he says the program has exerted a “moderate effect” on Adecco’s overall turnover. “We know if we get people through our program, we have a better chance of retaining them than [those employees] that don’t go through it.”

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Most Employers Exercising Caution on Slashing Jobs

Despite the faltering economy, employers appear to be trying to avoid resorting to knee-jerk layoffs, according to a recent survey conducted exclusively for Workforce Management by Equa­Terra, a Houston-based global management consulting firm.


    The survey was conducted in the first two weeks of October and is based on feedback from 300 HR executives at organizations with 1,000 or more employees. The majority of the respondents represented companies with 3,000 or more employees.


    Eighty-six percent of HR executives surveyed say that their organizations are being affected by the economic environment, but only 34 percent say they are planning layoffs or have recently conducted layoffs. Meanwhile, 58 percent say they are curtailing hiring, while 44 percent say they are cutting back on important HR activities because of the economy.


    The survey’s results seem to indicate that most companies are taking a cautious approach to the economic downturn, says Stan Lepeak, managing director of research with EquaTerra.


    “I think the fact that they are reducing hiring rather than resorting to layoffs shows that there is still a question about how bad things are going to get,” Lepeak says. “They are putting more emphasis on cost avoidance than cost reduction.”


“The fact that they are reducing hiring rather than resorting to layoffs shows that there is still a question about how bad things are going to get.”
—Stan Lepeak, managing director of research, EquaTerra

    Companies may be putting off layoffs until they know what their budgets are going to be for the next year, he says.


    HR executives cited lower employee morale as a major effect of the downturn. Twenty-six percent of respondents say they are dealing with serious morale problems.


    Morale issues came up often in the commentary section, Lepeak says. For example, a number of respondents noted that they were concerned that productivity was suffering because of employees’ fear about their retirement benefits and job security.


    “Workers know that employment stability is most at risk, and it causes a lot of stress,” one respondent wrote. “As a result, productivity is adversely impacted.”


    Only 15 percent of respondents say their companies are cutting employee benefits because of the economy, and just 4 percent say they are cutting retiree benefits.


    Twenty-three percent say the economic downturn is not having a material impact on their organizations.


Workforce Management, November 17, 2008, p. 22 — Subscribe Now!

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Litigation Over Noncompete Pacts Is on the Rise

As many executives are taking extra measures to protect their companies during the economic downturn, employment attorneys are seeing an increase in litigation around trade secrets. Specifically, employers are being more aggressive about suing former employees regarding noncompete agreements, attorneys say.


“In these economic times, companies are taking precautions to protect their business,” said Marguerite Walsh, a shareholder at employment law firm Littler Mendelson. “These lawsuits serve two purposes: One is to salvage a situation, but also it’s to send a message to people at the company.”


In the past, the majority of litigation around noncompetes seen by Walsh has involved key executives or salespeople at the firms. But now, Walsh is seeing more litigation involving junior and midlevel employees. Even in these tough economic times, top-performing employees can be offered positions elsewhere, and companies want to be prepared for that, she said.


“Solid performers may be in a situation where their companies aren’t doing well, but they can go across the street to a more stable company,” Walsh said.


And with mass layoffs in financial services and other sectors, attorneys expect noncompete litigation to continue rising. Noncompete agreements can cover terminated employees.


“It’s going to be very interesting to see what happens to these agreements in the financial services industry over the next couple of months,” said David Landau, who is a partner at WolfBlock and has seen an uptick in trade-secret litigation in the past few months. “These people can’t be prevented from making a living.”


Don Schroeder, a partner in the labor and employment practice of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, said he is seeing a 15 to 20 percent jump in trade secret litigation around noncompete agreements. Specifically, he is seeing a lot of activity in the staffing industry.


He partially attributes the increase to rising temporary hiring activity since many employers are reluctant to bring on permanent workers in the current economy.


“With temporary hires, employers can still be nimble and respond to the fluctuating economy,” he said.


Because the industry is still growing, staffing companies are becoming more protective of their customer lists, he said.


“The well-established players want to protect their turf in this down economy,” he said.


Employers can save themselves a lot of time and money if they are careful about how they structure their noncompete agreements, attorneys say.


“I am not a fan of cookie-cutter noncompete agreements,” Walsh said. “Every situation is a little different, and so everyone shouldn’t have the same agreement.”


Companies also have to give more thought to making sure employees don’t leave their employment with trade secrets. “It’s not just about collecting former employees’ laptops,” Landau said. “Today, you need to get their cell phone, their PDA and anything that might have company information on it.”


—Jessica Marquez


Workforce Management’s online news feed is now available via Twitter.


 

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Ciscos Global Training Machine

Every year, Cisco trains 600,000 students world­wide in information and communication networking skills through its Networking Academy, a project that began quite fortuitously in 1997 when the company reached out to a single school.


    Since the academy’s inception, more than 2 million students have graduated from 10,000 programs in 165 countries.


    The academy program covers 280 hours of training using a combination of Web-based and instructor-led sessions along with a hands-on lab environment to teach students how to design, build and maintain computer networks. In Central and Eastern Europe alone, 32,000 students have passed the first four semesters that make up the Cisco Certified Networking Associate level. The company now operates 744 academies in the region.


    “The Networking Academy is not a recruitment arm for Cisco,” says Markus Schwertel, academy manager for Cisco’s Central and Eastern European region. “Students can apply for positions with Cisco and many are hired, but the objective is broader. We are not filling the pipeline for the IT sector, but many of the students find jobs in the sector even before they graduate.”


    The scale of the project is different from Cisco’s direct needs, notes Agnieszka Halas, Cisco’s human resources manager for Central and Eastern Europe.


    “But all supply chains in the region are related, and you need people who have IT and networking knowledge in your supply chain and in the economy as a whole,” Halas says. “Cisco also is building its employee brand in the region, and the Networking Academy contributes to this. Our employees demonstrate a pride not only in our products but also in Cisco’s work in the ecosystem it helps create.”


    Imagine the 51,000 Central and Eastern European students who are now enrolled in the academy, Schwertel says.


    “If in the course of their future careers each one builds only one network, that would have a significant impact for Cisco—not today, but in five years or 10 years,” he says. “The academy is not a business line; it’s a not-for-profit enterprise. Part of the mission is to invest in the communities where we do business. This is a long-term global perspective.”


    Cisco is using the academy model to build out its new Entrepreneurship Institute across Central and Eastern Europe, with pilot programs in Turkey, Poland and Hungary. “The Entrepreneurship Institute is the logical next step for using our experience with the Networking Academy to build an ecosystem that includes business skills,” Halas notes. “The managerial skill set is a piece that is missing in the market.”


    One of Cisco’s objectives for the Entrepreneurship Institute is to strengthen the small and midsize business sectors, which represent 60 percent of all business.


    “They are the lifeblood of the region,” Halas says. “The educational system is gearing up to meet the needs of a free-market economy, but there is some lag in building the local labor markets. Larger companies and multinationals can find the needed skills through the inflow of talent and the transfer of knowledge within the company. But small and midsize businesses don’t have this access and must draw from the educational institutions. Their access to business knowledge drives their growth and creates growth opportunities for Cisco.”


Workforce Management, November 17, 2008, p. 30 — Subscribe Now!

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Global Workforce Report Emerging Markets—Looking Beyond Wages

Wages are rising at double-digit rates across much of Central and Eastern Europe, but Cisco Systems is sitting tight, with 16 offices spanning the region.


    “High wage inflation is there, with some pockets in the area more affected than others,” says Agnieszka Halas, Cisco’s human resources manager for Central and Eastern Europe. “But the econo­mies are showing healthy growth, and from a long-term perspective wage inflation does not affect our strategy. It’s not a showstopper.”


    Based in San Jose, California, Cisco generates $40 billion in annual revenue and employs 66,130 workers worldwide, with 28,700 employed outside the U.S. The company moved into Central and Eastern Europe in 1995, when unemployment in the region was high, wages were low and foreign investment was still nascent. Those conditions shifted rapidly in the next de­cade, but Cisco remains committed to being a major presence in the region. This year, it will train 51,000 students in Central and Eastern Europe in information and communications networking skills.


    “Years ago, some companies invested in the Central and Eastern European region for the sole reason of labor-market price advantage, but those days are over,” says Scott Marlowe, general manager for Hay Group, Czech Republic. “Now companies are looking at the price of talent as the third or fourth factor in the investment decision. Instead, they are looking at the markets themselves, the proximity to other markets and the available talent.”


    Higher labor costs are a predictable development as many of the Central and Eastern European economies mature well beyond their original emerging-market status. But strong economic growth and significant talent pools continue to attract companies that are not tied to labor arbitrage.


    Uncertainties touched off by the global financial crisis and high currency valuations and wage inflation may darken the macroeconomic landscape, but savvy multinationals are increasingly taking a broader look at Central and Eastern Europe’s advantages. Improvements in the labor supply, combined with the European Union’s push for true labor mobility, should capture the attention of any human resources executive looking for fresh talent.


Relative advantages
    Despite market maturation, Central and Eastern Europe remains one of the fastest-growing regions in the world, with annual GDP growth averaging 6 percent in 2007 and forecasts calling for 5 percent growth in 2008. Across Central and Eastern Europe, rising employment and skills shortages have been driving up wages since 2004, when 10 nations joined the European Union, which at the time had 15 member countries. “Wage inflation is a challenge for all multinationals in the region,” Halas says.


    In the context of global investment, however, Central and Eastern European wage inflation is still below the rates reported for other markets with attractive labor pools. For the past five years, annual wage inflation has averaged 19 percent in China and 21 percent in Brazil, compared with 5 percent in Mexico and 3 percent in the U.S., according to McKinsey & Co.


    In the service and IT industries, wage growth in Central and Eastern Europe is comparable to or lower than wage increases in alternative emerging markets. Turnover is high, but significantly lower than in comparable markets in China or India.


    The Cisco business profile in Central and Eastern Europe requires two broad skill sets—marketing, sales and business management; and engineering and tech- nical skills. “The company represents a vibrant environment in all areas of business expertise and technology,” Halas says. “If you paint a picture from the talent perspective, Central and Eastern Europe is a young region with a huge inflow of foreign investment,” especially since the EU expansions.


    For managerial and technical talent, demand continues to outstrip supply. Cisco has responded with aggressive training programs aimed at both skill sets. “On the technical side, Cisco is well positioned to get the best people and also has a good track record of building talent in general,” Halas says.


“Like other emerging markets,
Central and Eastern Europe is now experiencing continued labor outflows and some relatively recent inflows from reverse migration.
It’s important to look at demographics of the trend and the skill sets
captured in the outflow.”
—Agnieszka Halas, human resources manager for Central and Eastern Europe, Cisco

    In addition to its Networking Academy, which pulls in potential technical candidates, Cisco is now building entrepreneurial and management training institutes across the region. Cisco also partners with 800 universities across Central and Eastern Europe to build talent and boost growth.


    Throughout Central and Eastern Europe, Cisco operates with local teams. “As you cross borders into different countries or areas, there is a wealth of languages, so we need a local footprint,” Halas says. Regional leaders work from their home countries and communicate through the technology network.


    Cisco is organized into two regions within Central and Eastern Europe. One region encompasses the nations that entered the European Union in 2004, plus Romania and Bulgaria, which joined in 2007, while the second region, which Cisco calls “Europe East,” encompasses the non-EU nations, including Croatia and Turkey. This split reflects business realities within Central and Eastern Europe, where EU membership ensures a level of political and economic stability and market maturation not yet achieved by nonmembers.


    For EU members, accession generated vast changes in state administration and infrastructure and set off a series of privatizations that continue to offer attractive business opportunities. Outside the EU nations, the drive to meet membership requirements has fostered a push for innovation and productivity. Croatia and Turkey, which entered EU accession talks in 2005, have already seen huge jumps in foreign investment.


    Vast amounts of foreign investment within the Central and Eastern European EU member states have deformed their labor markets, Marlowe reports.


    “The multinationals hire large groups of employees in a single job category. This is not normal, organic growth, but abnormal growth,” Marlowe says. “In Prague, for example, a city of 1 million people, a company recently hired on 850 IT professionals. This puts a strain on hiring and distorts salary growth. Multinationals are still implementing here strategies that were thought up somewhere else.


Easing pressures
 The strain on the labor supply and wages may ease as true labor mobility rises.


    “Like other emerging markets, Central and Eastern Europe is now experiencing continued labor outflows and some relatively recent inflows from reverse migration,” Halas says. “It’s important to look at demographics of the trend and the skill sets captured in the outflow. For example, in Poland, most of the emigrants were young and relatively lower-skilled workers who moved to the U.K. and Ireland for work in manufacturing and retail, and this created a challenge in Poland. But it did not create a challenge for Cisco.”


    The outflows that sharpened Central and Eastern European labor shortages are now easing as the global economic slowdown hits Western Europe. The U.K. Home Office reported in August that the number of work-permit applications from Central and Eastern European EU member states had fallen to its lowest level since the 2004 enlargement. The number of applicants from Bulgaria and Romania, the 2007 accession states, also dropped.


    In addition, the European Commission has renewed its commitment to labor mobility with a concerted drive to remove barriers to cross-border flows, which should increase inflows and outflows aligned with actual labor market demands in all member states.


    “At Cisco, we see the ease of mobility as a positive development,” Halas says. “The high-tech sector that Cisco operates in has benefited from increased mobility because we can bring needed skill sets into the region.”


    Apart from the impact of lower outflows and higher inflows set off by the downturn, labor shortages and wage inflation will also ease as export-dependent industries in Central and Eastern Europe trim production.


    “With the financial crisis now, there is a lot of uncertainty, which is moving down into the labor markets,” Marlowe says. “Today, employers are more able to resist pressure from their line managers to constantly hire on more employees, and the line managers are in more of a dialogue with HR about labor supply and demand. Before, HR was simply a recruiting machine even though companies were maturing.”


    Because of the skills shortages, multinationals in the region have struggled to meet employee expectations for advancement. “Employees were used to rapid development and salary growth,” Marlowe says. “The pressure on pay has been tremendous, and the issue was what else the company could offer. Over the past two to three months, the pressure has eased as employees and line managers see the financial uncertainty. It is important to note that these economies have never seen recession.”


    Labor mobility varies highly from culture to culture. In Poland, for example, there is a high level of willingness to relocate abroad, while this willingness is much lower in the Czech Republic.


    “We have seen some inflow from returning immigrants in Central and Eastern Europe, and a higher level of the free movement of labor and mobility within the region,” Marlowe says.


    “It is important to note that in Central and Eastern Europe, especially Central Europe, companies are capital-centric in a geographic sense,” Marlowe says. “Language capabilities, mobility and attitudes toward work are very different in the capital cities. If you are investing outside the capital cities, you will encounter very different cultural realities. If you’ve been to Prague, you haven’t been to the Czech Republic. It’s a different reality.”


Evaluating the markets
    Multinationals operating in Central and Eastern Europe should be prepared for some renewed pressure on wages and prices as the 2004 EU entrants move into the eurozone—that is, the union of EU countries that have adopted the euro as their official currency. Until then, HR executives will have to monitor currency fluctuations across the region, and especially in countries such as the Czech Republic where valuations have been especially high.


    “The koruna is not expected to appreciate much more, but HR executives must conduct their labor-cost due diligence and must look at currency fluctuations, particularly in Poland and Czech Republic,” Marlowe advises. “When these countries move into the eurozone, life will be much easier, but most Central and Eastern European countries will see price increases and some wage inflation with the introduction of the euro.”


    Some wage inflation may occur as comparability occurs with the eurozone, but Marlowe believes that there is a tendency to overestimate the impact of comparability.


    “Within the current EU, there are salary differences and employees understand the differences in purchasing power,” Marlowe says. “Purchasing-power knowledge has also brought managers back into Central and Eastern Europe because they see the advantages. Also, managers have more freedom to develop here. In Western Europe, you make one mistake and you are dead. Here, managers have more freedom to experiment.”


    HR executives who are evaluating Central and Eastern European locations should also be aware of sharp political and economic variations within the region, according to Hylke Sprangers, NorthgateArinso’s vice president of operations for Europe, the Middle East and Africa. NorthgateArinso, headquartered in Hemel Hempstead, England, is a major HR software and services provider with 4,500 employees in 32 countries. In 2005, it opened a regional delivery center for Europe, the Middle East and Africa in Katowice, Poland.


    “For us, the importance of Eastern Europe is twofold,” Sprangers reports. “First, it is a big economic market for our clients that have operations there, and second, we want to benefit from the low-cost talent pool. A lot of our clients are moving into the EU [member countries] of Central and Eastern Europe. For example, Cadbury Schweppes opened a new factory in Poland in 2006 and it already employs a much larger workforce than was originally planned.”


    Sprangers advises HR executives who are evaluating the region to first determine whether the company is considering an EU or non-EU location. “For the countries that belong to the EU, there are data privacy issues, unless the company will only be servicing operations of clients in the United States,” he says. “In addition, there is less economic and political stability in the non-EU nations, especially since the invasion of Georgia.”


    NorthgateArinso has not experienced skill shortages in Poland, but Sprangers notes that Polish workers are very mobile and willing to relocate to other countries for work and international experience. “We now see attrition of 10 percent and rising in our Polish center,” he says. “There is some inflow of returning immigrants, but the outflow is also continuing. This is normal within emerging markets.”


    High wage increases are also entirely normal, Sprangers notes.


    “Central and East­ern Europe is a contender for Asia, especially India, where the shortage of technical talent is acute. In India, wage inflation has been running 15 percent a year for five years and attrition can hit 50 percent. Companies investing in Central and Eastern Europe must make a business plan for five to 10 years.”


Workforce Management, November 17, 2008, p. 29-35 — Subscribe Now!

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Christmas Party Taking a Holiday Amid Downturn

This year, the Grinch may not have stolen Christmas, but he definitely took the Christmas party.

Across the nation, companies are canceling annual end-of-the-year holiday bashes to cut costs, or in some cases just to blend in with the rest of a world that’s too worried about money to feel like a party. The trend is having a ripple effect on caterers and event coordinators who say that calls canceling parties have spiked in the past few weeks.


Two annual holiday-party surveys back up anecdotal evidence that a record number of companies have dropped holiday parties this year—more even than in 2001 after the September 11 terrorist bombings—while others are scaling back how much they spend, what they serve or how many people they invite.


In its survey of 100 companies, outplacement consultant Challenger, Gray & Christmas Inc. found that 23 percent of companies elected not to host a holiday party this year, compared with only 10 percent in 2007. New York executive search firm Battalia Winston Amrop found in its survey of 108 firms that 19 percent will forgo a party this year, the highest percentage in the poll’s 20-year history.


And in a separate study of more than 1,200 executives by Towers Perrin, 58 percent of all organizations polled acknowledge they are somewhat or very likely to scale back this year’s holiday party and other employee events to save money.


“People are scared,” Battalia CEO Dale Winston said. “We do this survey because it’s a way of calibrating the mood of the country, and we’re just not in a celebratory mood.”


Investment banks and financial institutions rocked by the mortgage industry crisis were some of the first to cancel celebrations, including Barclays and Morgan Stanley.


Barclays will sponsor parties for employees’ children at several locations internationally, but it canceled other celebrations. Company executives issued a memo to employees stating that given the upheaval in the financial industry and in light of its Lehman Brothers acquisition, “it is not appropriate for us to do anything that might be seen as inappropriate by any of our stakeholders.”

Publishing, news and entertainment companies dealing with tanking revenues and earnings have put the kibosh on once-lavish celebrations, including Viacom, ABC News and Hearst.


Holiday parties at Viacom were the stuff of legend, but this year, the media conglomerate that owns cable TV networks MTV, VH1, BET and CMT canceled all year-end festivities. Instead, employees will get two extra paid vacation days between December 22 and January 1. Kelly McAndrew, a Viacom corporate communications vice president, wouldn’t discuss whether trading parties for time off will save the company money. McAndrew said only, “This is what we think is right for our company at this time.”


The celebratory downsizing doesn’t end with finance and media companies. Enterprise Rent-A-Car, hit with a triple whammy of credit, energy and auto industry woes, put the brakes on the year-end party it normally hosts for 2,000 St. Louis corporate headquarters employees and their spouses on a weekend night at a downtown hotel. After 200 corporate staff members were laid off in late October, having a party just didn’t seem right, said Ned Maniscalco, an Enterprise spokesman.


Adidas Group also canceled annual holiday parties at multiple locations internationally as part of broader cost-cutting measures that include a hiring freeze and less business travel. The Germany-based global sportswear giant did its partying earlier in the year, with a picnic for 1,000 employees and their families June 7 to kick off the Euro 2008 soccer championship and a two-day, all- expense-paid trip to the Summer Olympics in Beijing for 1,000 Chinese employees, said Anne Putz, a corporate spokeswoman.


As companies rein in party spending, it’s affecting caterers, hotels and event planners at what is typically the biggest party season of the year. At Tavern on the Green, the historic restaurant and banquet facility in New York’s Central Park, clients are postponing, cutting out luxuries such as seafood displays, or canceling altogether, including one longtime client that canceled a party for 1,000. In years past, the facility would have been booked solid for December. This year, “We have some holes we’d love to fill,” said spokeswoman Shelley Clark.


Even companies that aren’t in bad shape are forgoing extravagant affairs. Nobody wants to be the next American International Group, which was excoriated for sending executives to an opulent spa retreat days after receiving a federal bailout.


“If the company is laying off people, celebrating in some over-the-top way would be insane,” said John Challenger, CEO at Challenger, Gray & Christmas. It’s appropriate, however, to bring employees together in some fashion to thank them for their hard work and long hours, he said.


—Michelle V. Rafter


Workforce Management’s online news feed is now available via Twitter.


 

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Pension Group Urges Congress to Protect Plan Participants

The Pension Rights Center wants Congress to change federal pension laws to protect participants in single-employer defined-benefit plans in response to asset declines caused by the financial crisis.


“As Congress considers new actions to address the economic crisis—by rescuing financial institutions, bailing out the auto industry, and aiding homeowners who face foreclosure—we urge you to also address the equally important issue of erosion in retirement financial security,” said a letter sent to congressional leaders.


The organization urged Congress to block funding relief to plans that have frozen benefits and to make relief contingent on an employer’s promise to not freeze plans for five years after the period of funding relief.


The letter also called for extending the amortization period for funding unfunded liabilities to 10 years from seven and reinstating a pre-Pension Protection Act rule for companies facing bankruptcy to make the effective date the day the company terminates the plan, not the date the employer files for bankruptcy protection. The current system allows bankrupt plan providers to “retroactively strip employees of benefits” when the bankruptcy filing date precedes the termination of the plan by several years. 

The center also wants to ensure that deferred compensation for management and high-paid employees be frozen along with any DB plan freezes.


Filed by Timothy Inklebarger of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.


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Mercer Asks for DB Sponsor Relief

Lawmakers and the Department of Treasury were urged to provide relief to sponsors of defined-benefit plans during this time of extreme volatility without weakening funding improvements that have been achieved through the Pension Protection Act of 2006, in a letter and report sent by Mercer to Treasury Secretary Henry M. Paulson.


In the letter, Brian Duperreault, president and CEO of Marsh & McLennan Cos., Mercer’s parent company, made three recommendations to Paulson.


First, funding rules should limit the annual increase or decrease in the company’s contributions to a specified percentage of the total plan liabilities. The Treasury could do this with its existing authority by granting funding waivers to companies whose contributions would increase beyond this threshold, Duperreault wrote. Second, the Treasury should support legislation to delay for one year the requirement for plans less than 60 percent funded to be frozen. Third, the Treasury should propose legislation that would relax lump-sum benefit restrictions.


Company executives are concerned about the increases in contribution requirements for defined-benefit pension plans, Duperreault wrote.


These increases are the result of recent market declines and “will impose significant unanticipated cash demands on businesses when capital is limited, credit markets are unusually tight, and the overall business climate challenging,” Duperreault wrote. “Increased pension contributions compete with other needs for cash and, in the current situation, could result in limiting plan sponsors’ growth strategies, let alone managing through the current situation.”


Filed by Jennifer Byrd of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.


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TOOL Myths About the ADA

The U.S. Department of Labor’s Office of Disability Employment Policy details some of the myths that some employers may believe about the 18-year-old federal law that helps protect the rights of people with disabilities. Contrary to what some might believe, the ADA does not force employers to hire unqualified workers with disabilities. And the law doesn’t mean that those with disabilities can’t be fired. They can be, under certain conditions. (For more details about the scope of the law, other government agencies that have ADA responsibilities, and more, visit www.ada.gov.)