Category: Archive

Motorola Inc. will cut 3,000 jobs, or about 5 percent of its workforce, co-CEO Greg Brown told Crain’s Chicago Business on Thursday, October 30, after the company reported earnings.

News of the layoffs comes as Schaumburg, Illinois, based-Motorola tries to trim $800 million in costs next year, including $600 million from its money-losing phone business.

About 2,000 of the job cuts will come from its mobile-devices business, which continues to see sales shrink. Its market share slipped below 9 percent in the third quarter, Strategy Analytics said, and Motorola fell to No. 4 behind Sony Ericsson, Samsung Electronics and Nokia Oyj in worldwide mobile phone sales. Motorola had been No. 2 until a year ago.

Motorola also announced that it was delaying the planned breakup of the company because of credit-market turmoil and a decision to overhaul its phone lineup that would cause the slumping business to shrink even more.

The company had been expecting to split itself into two public companies by next October. It offered no new target date but says it still plans to pursue a spinoff.

Thursday, the company reported a net loss of $397 million, or 18 cents a share, compared with a profit of $40 million, or 3 cents a share, in the year-earlier quarter. The latest quarter included charges of 23 cents a share for items such as asset impairments and business reorganization. Revenue fell 15 percent, to $7.48 billion.

Motorola’s stock closed down 27 cents, or almost 5 percent, at $5.19 Thursday.

Sanjay Jha, who joined Motorola as CEO of its handset business in August, has decided to simplify the company’s expensive and unwieldy product strategy by slashing the number of software and chip families in the company’s phones.

Brown said that he and Jha made the decision to delay the breakup of the company, but it was approved by the board of directors. However, he says there was no discussion of abandoning the spinoff, which some analysts have suggested.

“It was more about timing,” said Brown, adding that investors he’s spoken with have supported the delay.

“Investors realize importance of stability and cash and earnings,” Brown said. “The overall sentiment from investors is one of pragmatism and understanding.”

It will be hard to spin off the handset division as long as it’s losing money, and Jha declined to predict when the division will stop losing money.

Jha said the company would cut the number of software platforms by half to just three: Microsoft’s Windows, the new Google-led Android system and P2K, which Motorola developed several years ago. And it plans to use chips from Qualcomm and Texas Instruments and move away from its former in-house chip unit, Freescale Semiconductor.

As part of the software changes, the company will open a development center in Seattle, likely shifting some jobs out of state.

The streamlining was widely expected and has been advocated by analysts for years. But it will further delay Motorola’s recovery and cause it to fall further behind competitors.

The company’s market share will continue to slide because the company will have to scrap several new phones that were supposed to hit the market in 2009.

The company says its phone shipments will decline in the fourth quarter, which usually produces an increase because of holiday spending. Underscoring the company’s competitive disadvantage, Motorola won’t have any new smart phones, the hottest part of the market, on store shelves until the second half of 2009 to compete with Apple’s iPhone and a host of other new products.

Filed by John Pletz of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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

Fusion, business software giant Oracle’s project to blend the best of its various product lines into a new set of applications, once was the buzz of the industry.

But now, nearly four years after Oracle unveiled its Fusion plan for HR and other applications, the effort is met more with murmurs than shouts.

Oracle’s schedule for Fusion applications appears to have slipped, and it’s still not clear when a full set of human resources Fusion products will be released. But Oracle has dodged any large-scale revolt from its customers conceringthe Fusion confusion, in part by focusing on improvements to its existing Oracle E-Business Suite and PeopleSoft products.

In addition, many organizations are still figuring out how to make their HR operations more strategic, which limits their ability to consume a lot of advanced capabilities in HR software, says Christa Degnan Manning, analyst at AMR Research. At the same time, she says, the late arrival of full-blown Fusion helps Oracle sell its existing products for a longer period as well as pitch the few Fusion applications that are coming online, such as a tool for managing job candidates.

Deemphasizing Fusion, in other words, may be smart for Oracle.

“It’s potentially in their best interest to have a slow, gradual rollout of Fusion,” she says.

Three years on the drawingboard
Oracle first announced plans for Fusion in early 2005, soon after the company acquired rival software maker PeopleSoft and its line of business applications. In 2005, an Oracle official told Workforce Managementi> that heavily used human resource applications including payroll, benefits management and recruiting would be rolled out in 2008.

But more recently, Oracle has been less definite about its plans for Fusion. Oracle declined to answer questions for this story, including a question about when the full set of HR Fusion applications will be released.

One sign of Fusion’s subdued status is Oracle’s Fusion applications Web site . Rather than begin by focusing on attributes of Fusion applications or heralding their arrival, the site’s “overview” starts by discussing the company’s “applications unlimited” program. That’s Oracle’s promises to continue upgrading its current product lines, including the PeopleSoft, Siebel and Oracle E-Business Suite lines.

Jim Holincheck, analyst with research firm Gartner, attended Oracle’s recent OpenWorld user conference in San Francisco and concluded that the complete set of Fusion applications isn’t coming immediately. “There will be no suite of Oracle Fusion Applications delivered in 2008,” Holincheck wrote in a blog item about the conference .

When it first announced the Fusion project, Oracle said the new applications would be built using “open standards.” This refers to technologies designed to make it simpler for different applications to talk to one another. During the past few years, Oracle also has highlighted “Fusion Middleware,” which is a layer of software for tying applications together.

Last year, Oracle officials outlined certain features of the coming Fusion applications. These included “software as a service” readiness—meaning the applications can be delivered over the Internet besides being installed on a customer’s internal computers.

Software as a service is one of the trends that have come on strong in the HR technology arena in recent years.

Another is “Web 2.0,” the idea that social networking and other collaborative, interactive tools first seen in the consumer Internet world ought to be tapped by corporations. Oracle sought to capitalize on that trend with its recent announcement of software dubbed Beehive. Introduced at Oracle’s September OpenWorld event, Beehive aims to let employees team up through electronic workspaces as well as calendar, instant messaging and e-mail tools.

Web 2.0 influence also could be seen at a conference session on Fusion, according to Degnan Manning. She says an Oracle feature called “person gallery” provides an organization-chart view of a company, with visual representations of employees.

The software allows for a description of an employee’s status, such as working at home. Along these lines, consumer instant messaging programs like Yahoo Messenger let users set their status.

In developing its Fusion applications, Degnan Manning says, Oracle seems to be focusing in on managers and employees—who ultimately do the work of an organization. Fusion applications initially may not cover the traditional HR processes.

But, she says, “is what they have compelling? Yes.”

Orancle vulnerable?
Holincheck says Oracle’s less-than-speedy pace with Fusion potentially makes the firm vulnerable to competitors, including Workday.

Workday, led by former PeopleSoft founder Dave Duffield, has produced a set of software-as-a-service business applications designed to give organizations fewer technology hassles and greater business agility.

In addition, the uncertainty around the arrival of Fusion applications makes it harder for Oracle customers to plan for their HR technology, Holincheck says. But customers seem to be more interested in learning about coming versions of PeopleSoft and Oracle E-Business software, he says.

The absence of Fusion applications, he argues, may be more a molehill than a mountain.

“For existing customers, I don’t think it’s terribly frustrating,” Holincheck says.

Jason Corsello, a vice president at consulting firm Knowledge Infusion whose blog is featured on Workforce.com, takes a more critical view.

“Many enterprise clients I have spoken to over the past 3+ years have had a postponement (or ‘do nothing’) strategy in place, anticipating Fusion,” Corsello wrote in a recent blog item. “Thankful for me, I don’t have to make any of these decisions because I don’t own an Oracle application. For many, though, I would argue their Oracle application assets are quickly turning into liabilities because of the undelivered Fusion promise!”

Still, Corsello concedes Oracle’s strategy has been good for the firm.

One comment to his blog argued that Oracle is wise to take it slow with Fusion, in part because of Oracle’s “huge cash cows” of annual software maintenance fees and “a relatively happy, contented” PeopleSoft client base. Corsello responded in part by saying that Oracle is “smart enough to know they have a committed customer base (note I did not mention satisfied)!”

Workforce Management‘s feature article alerts are now available via Twitter

Workforce Management Online, October 2008 — Register Now!

A generation after federal civil rights laws were amended to prohibit pregnancy discrimination—and despite efforts to make the workplace more flexible—having a family can knock women out of jobs and promotions, according to a new study by a Washington advocacy group.

An analysis of Equal Employment Opportunity Commission data from fiscal year 1992 to fiscal year 2007 shows a 65 percent increase in pregnancy discrimination charges, according to a National Partnership for Women and Families study released Wednesday, October 29.

The problem is more acute for racial and ethnic minorities, the study says. From fiscal year 1996 to fiscal year 2005, pregnancy discrimination charges filed by women of color spiked 76 percent.

The survey also reveals that there is no safety in numbers for women. Of the EEOC claims made from 1996 to 2005, 53 percent were from the service, retail and financial services industries, which employ 70 percent of all women.

“As a statistical matter, factors such as the number of women working, the number of working women having children, how long women work while pregnant, and when women return to work after pregnancy have grown at a slower pace than the growth of pregnancy discrimination complaints,” the report says.

The study was issued on the anniversary of the Pregnancy Discrimination Act. Approved in 1978, the act prohibits discrimination on the basis of pregnancy, childbirth or related medical conditions.

Since then, societal biases about the work ethic, skills and commitment of pregnant women have not changed, according to advocates.

“Deeply entrenched attitudes still persist, and we have not been able to eliminate the biases that nurture them,” said Jocelyn Frye, general counsel at the partnership.

More than 50 percent of pregnancy discrimination cases involve unfair dismissal, according to Elizabeth Grossman, a regional attorney in the EEOC’s New York district office.

“It’s just shocking,” she said.

The problem thrives because people don’t have the inhibitions about commenting on pregnancy that they do when it comes to making remarks about race, said Grossman. “The stereotypes are still there, and they remain more unchecked than stereotypes about other groups,” she said.

A 2007 study showed that undergraduates who wore a pregnancy prosthesis and tried to apply for jobs at retail stores were treated harshly, while “pregnant” students who sought help buying a gift were welcomed, according to Eden King, assistant professor of industrial and organization psychology at George Mason University.

“We see these complementary interpersonal punishments and rewards that maintain traditional gender roles,” King said.

Frye recommends a nationwide education campaign to change the workplace atmosphere. She urges companies to explicitly prohibit pregnancy discrimination in their policies.

They also should clearly communicate performance expectations and evaluations. “It eliminates the possibility that pregnancy is the reason motivating any employment decision,” Frye said.

Most companies are trying to keep women in the workforce because it produces positive bottom-line results, according to Rachel Lyons, director of public policy at Business and Professional Women/USA.

“Having family friendly policies is good for business,” Lyons said.

—Mark Schoeff Jr.

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

1. Seasonally adjusted. 2. Cutting 25 percent or 5,000 white-collar jobs; 1,825 factory jobs. Some corporate cuts shown are worldwide and will be made over extended period. Sources: Bureau of Labor Statistics; news reports; Bloomberg (unemployment forecast.)
Click here to return to How This Downturn Stacks Up. Originally published by Advertising Age, a sister publication of Workforce Management. Workforce Management’sonline news feed is now available via Twitter.

The current financial climate isn’t just keeping those on Wall Street busy.

Benefits management departments in recent weeks have been fielding questions and addressing concerns from employees worried about their 401(k)s and other employer-sponsored investment vehicles as the stock market plummeted and continues to show signs of instability.

“Employers are very busy trying to keep an eye on what’s happening,” said Pamela Hess, director of retirement research for consulting firm Hewitt Associates Inc. in Lincolnshire, Illinois. “I think everyone is working a little overtime.”

Hess said some benefits departments have seen as much as a 20 percent increase in call volumes from concerned employees.

Barrie Christman, vice president of the individual investor segment at Principal Financial Group in Des Moines, Iowa, said call volume at the 401(k), mutual fund, retirement and investor provider’s call center has increased by 50 percent compared with normal volumes.

The increase in calls, though, doesn’t necessarily correlate with the number of people deciding to move their money or cease investing in their retirement accounts, Hess said: “In times like these we do see some movement, but by and large, people are staying the course.”

In September, the most recent period for which figures are available, she said about 1 percent of the assets in plans Hewitt tracks experienced changes. She said employees moved $900 million in assets from equities into fixed-income accounts. Nearly two-thirds of those assets were moved into stable-value funds, while the rest were shifted to bonds and money market investments.

Michael Pikelny, employee benefits manager for Hartmarx Corp. in Chicago, and Jack Towarnicky, associate vice president for benefits planning at Nationwide Insurance in Columbus, Ohio, said calls from concerned employees to either their benefits departments or their investment plan administrators have increased, but not by overwhelming amounts.

Towarnicky said employees seem most concerned about whether their money is safe. Pikelny said employees commonly call to find out whether the financial plan administrator is stable and what happens to their money if the plan administrator goes out of business. Employees also want to know if their investments are well diversified, according to the mutual fund firms.

Once their questions have been answered, so far, few people have changed their investments, firms said. However, Pikelny said, some employees have cut back on the amounts they are contributing to their accounts.

A spokeswoman for investment management company Vanguard Group in Valley Forge, Pennsylvania, said it was still too early in the financial downturn to tell if workers would continue to resist pulling their money out of the market entirely or transfer their money into different investment options.

While most employees are not making significant changes to their investments, Hess said, more calls inevitably result in more transactions and more activity. According to a report released by AARP in early October, 13 percent of Americans 45 and older are prematurely withdrawing funds from their 401(k)s, IRAs or other investments to cover day-to-day expenses.

“Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older,” which surveyed 1,628 workers 45 and older, also found that because of economic changes over the past 12 months, 20 percent of respondents have stopped contributing to a 401(k), IRA or other retirement account. Additionally, the report concluded 65 percent of respondents will delay retirement and work longer should the economy not improve significantly.

Bill McClain, a Seattle-based principal for human resources consulting firm Mercer, said that although some people will move their investments to the most conservative funds, he doesn’t foresee a rush to invest in stable-value accounts. Most people will probably stay the course with their current investment vehicles, he said.

“I don’t think it’s going to be a wholesale movement,” he said. “The power of inertia is still pretty powerful.”

Preventing employees from making rash decisions about their investments requires a robust and timely communication plan from the employer or the plan sponsor, or both, experts said. Sam Templeton, a communications consultant for Watson Wyatt Worldwide in Seattle, said that to keep up with the ever-changing news in the markets, employers should respond quickly, communicating through intranets, e-mail and HR contacts or managers, rather than through printed brochures.

“The situation is so fluid, it’s somewhat of a challenge,” Templeton said. “It’s keeping benefits departments quite busy. They need to get information out very quickly.”

Employers should reassure employees of the safeguards and protections on their investment accounts, reiterate the importance of diversifying investments and encourage employees to review their investments, but discourage them from panicking, he said.

Towarnicky said the Nationwide benefits department has increased communication regarding investment portfolios to its employees, particularly through e-mail and the company’s HR portal.

The company is reminding employees that retirement saving requires long-term—not short-term—thinking, and that that the company matches contributions and is encouraging them to continue saving, he said. Nationwide directs all other specific financial questions to its investment administrator.

Hartmarx, for the most part, is simply directing employees to its mutual fund provider, Vanguard, for information, Pikelny said. The firm is offering webinars and has a plethora of information on its Web site that typically answers any concerns, he said.

It’s critical that employers are careful to not offer financial advice for which they could be held liable, Hess said. She said employers should simply make sure employees understand the resources available to guide them through turbulent times.

“It’s a fine line employers have to walk,” she said. “They want to give out information to reassure employees, but they don’t want to overwhelm them and tell them what to do.”

Filed by Kristin Gunderson Hunt of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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

Dear Reliable Info Needed:

My experience is that running a quick-and-dirty survey will give you quick-and-dirty results. Employees will give you what they want (or what they think they want) instead of what the organization needs. When time is tight and supervisors are pushing them to “get the job done,” only the brave and underutilized employees wind up attending. An all-too-common gripe is: “We organized what employees asked for, but then nobody turned up.”

If this approach has worked for you in the past—or you have lots of idle money looking for a change of hands—then use the employee survey approach. Another approach that will get to the real needs, however, is to sit down with supervisors and managers (individually or in a group meeting) to identify the burning skill deficiencies that are holding your organization back.

To structure the discussion, spend time discussing (1) current operational issues and (2) future strategic directions. You should end up with a list of needs in one or more of the following areas:

• Management, leadership and supervision skills.
  
• Soft skills, such as communication and conflict resolution.
  
• Regulatory compliance, such as environment, health and safety.
  
• HR processes, such as performance management.
  
• Business skills, such as strategy, planning and process improvement.
  
• Technical line and staff skills, such as telephone etiquette and inventory management.
  

You can make sure that training fills a real need by getting together with managers and engaging in a two-way dialogue. Surveying employees or their managers is one-way communication, and the time they spend on the survey will be the quick five minutes available between other more “important” jobs.

SOURCE: Les Allan, Business Performance, Melbourne, Australia, July 22, 2008

LEARN MORE: The Workforce.com archive contains tips and other information on how to analyze training needs, including tying training to business goals.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question

Dear Workforce Newsletter

American Express has unveiled a broad restructuring aimed at saving the financial services company more than $1.8 billion next year, with the bulk of the savings coming from cutting investment in technology and distribution.

Specifically, officials said Thursday, October 30, that the company would scale back its investments in technology, marketing, business development and its rewards program by roughly $1 billion next year, areas that appear to account for a portion of the company’s largest current expenses.

For the nine months ended September 30, American Express reported collective expenses of about $5.7 billion in its marketing, promotion, rewards and card-member services, according to its third-quarter filing. That’s up roughly 10 percent over the first nine months of 2007, and makes up about 40 percent of the company’s total $14.1 billion in expenses so far this year. Overall, total costs at American Express are up 8 percent this year over the first three quarters of 2007.

The cuts will “put us in a position to ramp up spending as economic conditions improve so that we can take advantage of the substantial opportunities that will be available to us over the medium to long term,” Kenneth Chenault, chairman and CEO, said in a statement.

American Express, which announced in July that it was prepping for this restructuring, will also cut its workforce by roughly 7,000 employees, or 10 percent, officials said Thursday. While they stated that the cuts would occur across various business units, positions that are “primarily focusing on management and other positions that do not interact directly with customers” will be most affected by the reductions. Likewise, management officials who are retained will have their salary increase suspended next year, and the company will also put a freeze on hiring plans for any available positions. In total, all of these moves aim to save American Express roughly $700 million next year.

American Express will also reduce its spending by $125 million on consulting and professional services, travel and entertainment, and general overhead. Professional-services expenses were $1.7 billion for the first nine months of the year, up 8 percent for the same period in 2007.

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

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

Many people give little thought to the possibility of an accident—and disability—happening to them. But accidents or illnesses that force workers into disability do happen. Millions of people in the U.S. are receiving Social Security disability benefits—many of them younger than 50. Employers who want to provide information to their workforces about disabilities, their causes and prevention may find it useful to link from their intranets to the Council for Disability Awareness. The site has useful information, as well as links to resources such as the American Heart Association, the Social Security Administration and DisabilityInfo.gov.

The Pension Benefit Guaranty Corp. lost $4.1 billion, or 6.5 percent, on its investments in fiscal 2008 ended September 30, director Charles E.F. Millard testified Friday, October 24.

The PBGC had total assets of $68.4 billion at the end of the previous fiscal year, according to written testimony Millard submitted.

He told the House Education and Labor Committee in Washington that he estimated the PBGC’s deficit would decline to $10 billion to $12 billion at the end of fiscal 2008, down from the $14 billion deficit of a year earlier.

Rep. George Miller, D-California, the committee’s chairman, called the hearing over concern that a new Pension Benefit Guaranty Corp. investment policy adopted in February could lead to additional investment losses for the agency. But Millard said the fiscal 2008 losses had resulted from the more conservative agency investment policy that was previously in place.

Under the new policy, 45 percent of the agency’s $55 billion in investible assets will be in equities, 45 percent in fixed income and 10 percent in alternatives, including private equity and real estate. Previously, 75 to 85 percent of assets were in a liability-driven investment strategy, with the remainder in stocks.

“We have not made the shift yet, even though we are preparing to do so,” Millard testified. “The PBGC is actually sounder today than it was 12 months ago.”

 Millard also said he couldn’t guarantee that the new investment policy would be successful, only that it would improve the prospects that the agency would be able to eliminate its budget deficit over time.

 Miller vowed continued scrutiny of the agency’s implementation of the new policy. “I’m not sold on it at this point,” he said.

After the hearing, a committee news release said the Pension Benefit Guaranty Corp. had lost $4.8 billion in equities during fiscal 2008, including a $1.7 billion loss in September alone. A PBGC spokesman said the losses in stocks were partially offset by gains in the PBGC’s fixed-income portfolio.

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

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

It’s open enrollment for millions of employees in the United States. For some, it’s a daunting task, no matter how easy employers try to make it for them. MetLife provides the following suggestions for employees to help them make important health care decisions for themselves and their families. Feel free to incorporate these points into your own open enrollment communications to employees:

    Take time to do your homework: Make sure you thoroughly research which benefits are right for you. The benefits you select for the coming year can have a significant impact on you and your family’s finances, so be sure to spend enough time researching and selecting your benefits. You should plan to spend as much time—if not more—as you would when you research other products and services such as a new computer or a flat-screen TV.

    Read the proverbial “big envelope” and use online tools: Employees who have the information at their disposal to make an informed decision are almost three times more likely to feel confident about their benefits selections. Therefore, it’s important for you to read open enrollment materials from cover to cover. You don’t want to be the person who doesn’t read the fine print only to realize your oversight when you get the bill for that specialist visit. Many companies also encourage workers to read about their benefits offerings online, and some even offer Web-based calculators and tools.

    Plan to make some changes each year: Open enrollment is an opportunity to re-evaluate your options and make changes. Very few people have the same benefits needs year after year. Make sure you consider changes or coverage increases, particularly if you’ve experienced a recent life event, such as getting married, having a baby or purchasing a home.

    Don’t assume that a bumpy economy means you’ll have fewer benefits choices: Over the past few years, employers have expanded the breadth of their benefits offerings significantly—especially when it comes to voluntary benefits, which are paid for by the employee, typically at a significant cost savings due to group rates. To meet the needs of an increasingly diverse workforce (and help retain top talent), many employers add new voluntary offerings each year—and the premiums for many can be paid through payroll deduction. Aging parents? Think about long-term care insurance. Sole breadwinner? Consider disability insurance. Buying a home? Access a legal-services plan. Have a dog? Ponder pet insurance. New apartment? Look into renters insurance.

    A pay raise changes things: If you are fortunate enough to get a salary increase in this challenging economic environment, consider increasing your 401(k) contributions and disability insurance coverage.

    Take advantage of pretax accounts: If your employer offers a flexible spending account for health care expenses or a 401(k) company match, consider this free money. Even if finances are tight, don’t forget your future—would you rather give up your morning latte and manicures, or work into your 80s because you don’t have the savings to retire?

    Ask, ask, ask: If you aren’t satisfied with your benefits or the enrollment process, let your employer know. Ask for the guidance and advice you need. Inquire about the possibility of meeting face to face with your HR department. Employers have an interest in making you happy—86 percent of employers view benefits as an important retention tool.