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Perfecting Performance Management

Upon joining LPL Financial as head of human capital, Denise Abood found that people were confused about the link between performance and pay. Employees felt that the existing system was arbitrary, subjective and inconsistent. In her drive toward increased employee engagement, Abood listens carefully to what LPL’s employees have to say.

“We have made significant progress in the past eight or nine months in creating venues to get employee input,” she says, citing focus groups, town hall meetings and a company intranet that allows for interactive Q&A. The company’s first employee engagement survey, conducted in 2007, uncovered the confusion around pay and performance.

“LPL Financial has always been a very entrepreneurial organization,” says Sheila Hunter, director of human resources. “We had been investing our time in creating systems and leveraging results, but the survey made us realize that we needed a structure for compensation and bonuses.”

Furthermore, the new human resources organization wanted to be relevant to its business partners, says Jodi Gold, senior vice president of organizational development and training. “Working with the survey results, we had to create a system that showed a link between tenure and engagement, and allowed users to apply consistent measurement.”

LPL worked with Hewitt Associates to create a new performance management system. This meant going back to square one, laying the groundwork by defining goals and competencies for each position, then creating a system that is customized and tailored to LPL. Goals are fluid, and roll up to the enterprise level. The weighting of the ratings—75 percent goals to 25 percent competencies—is a manifestation of LPL’s keen focus on results.

“The breakdown keeps the emphasis on achievement, but also shows that we do care how you get there, and that you’re not leaving a trail of bodies in your wake,” Hunter says. New people management goals were incorporated for all managers, including staffing, retention, development and appraisals. All of the elements were then combined into one easy-to-use tool.

More than 700 managers were trained on using the tool in August and September. Fifteen HR business partners received train-the-trainer instruction, then went out nationwide, conducting classroom-based training sessions to groups of 30 to 35 managers. The training consisted of three main parts: a PowerPoint presentation explaining the new system and its reason for being; a workshop on goal setting and goal writing; and hands-on exercises with the new tool. Participants are intended to practice and get comfortable with it through December, then begin using it to implement 2009 goals in January.

“We have gotten great feedback from managers, saying, ‘We needed this,’ ” Gold says.

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The Balancing Act

As LPL Financial’s head of human capital, Denise Abood is responsible for everything that relates to the company’s relationship with its 3,000 employees—training and organizational development, human resources, compensation and benefits, even real estate and facilities. This comprehensive approach, bringing together all of the hard and soft elements that shape the employment contract, is typical Abood.


    She will tell you up front that she’s a Libra, astrologically driven by the sign of the scales, and an eternal optimist. She says she is “completely passionate about people,” and has crafted a career path that combines balance sheets with work/life balance and other employee engagement touchstones. At LPL since January 2007, Abood has forged her own job description with an intense focus on improving—and lengthening—the company’s relationships with its employees.


Focusing on development and retention
    LPL Financial is one of the nation’s leading financial services companies and largest independent broker-dealer. The company has experienced double-digit growth for the past 15 years, and now employs nearly 3,000 people in its core business serving independent financial advisors. Such rapid growth has generated a new commitment to employee training, development, and retention.


    There have been significant challenges to overcome. As recently as two years ago, LPL’s employee attrition rates were hovering around 25 percent. As it grew and acquired other companies, including UVEST Financial Services, its business model became more complex, requiring more from its employees. Yet, because of turnover and rapid hiring, more than half of the employees were new to the company at any given time. Many were being thrust into management and leadership roles for which they were unprepared. More than 50 percent work on the front line, as phone representatives or processors, forging crucial customer relationships.


    Abood was chief financial officer of UVEST and point person for the due-diligence process during the acquisition. This gave her a close look at the acquiring company and its leadership, and helped her decide to accept LPL’s job offer.


    The role was created for her. She was given a blank slate to create her own job description, driven by an overarching goal: LPL had been very focused on its external business, and needed to turn its focus inward. It needed to show that it recognized employees as a valuable asset, but 53 percent of the workforce had been there less than a year.


    “For me, it was a real opportunity to combine my passion for people with my business and financial expertise … an opportunity to run an internal business that brings the interpersonal and the financial together and watch it grow,” Abood says.


    Abood earned her bachelor of arts degree in business administration from Wittenberg University in Springfield, Ohio. She had served previously as chief financial officer for the TIG Insurance Co. commercial division, chief operating officer at PricewaterhouseCoopers Financial Solutions, and head of the technology business office at Wachovia.


    Sheila Hunter, senior vice president of human resources, worked with Abood at PwC and joined LPL in order to work with her again. “Denise has a management style that combines linear thinking with vision,” Hunter says. “Her CFO background helps the human capital organization with ‘street cred’ within the business.”


    Abood agrees, and says she leverages that advantage: “My background brings credibility that opens people’s ears; people listen to my perspective.”


    Jodi Gold worked as an external consultant to LPL for 12 years before signing on last year as senior vice president of organizational development and training.


    “The last couple of years have not been typical,” she says. “The company is now making an overall commitment to its employees in general. Leadership is working to understand the relationship between employee training and development, employee satisfaction and business success, and as such has made a big investment in the human capital group.”


Broad strokes
   Under Abood’s leadership, Hunter and Gold have been working to develop an infrastructure to support and guide LPL’s employees through the career relationship. In the training area, the focus is on developing mandatory, brand-related training in values and actions, such as onboarding, communications and harassment prevention; customer service skills and financial knowledge; and management and leadership development. Whereas previously five to 10 people had worked in human capital, Abood now supervises a staff of 100. Their capabilities are supplemented by the judicious use of external consultants.


    “This is a totally new function,” Gold says. “We are focused on the broad strokes, using internal people to work on the basics, and bringing in external consultants to partner with them. In order to determine the need, we ask ourselves, ‘How long is the training need? What is the driver? Does the training require specialized expertise? Do we need external perspective or credibility in order to sell something new within the organization?’ ”


    Gold and Hunter are jointly responsible for onboarding. “Previously, new employees faced baptism by fire hose, and were left to sink or swim,” Hunter jokes. “Now we give them a boat and a map.” The new onboarding program includes detailed background on the business and its channels and organizational charts for every area; responsibility is shared between the employee and his or her manager.


    The organization has also focused on creating career-path guides for various functions, beginning with the compliance area. The guides illustrate the many facets of each job and illustrate possible lateral and promotion paths.


    “That’s been an education for people in and of itself,” says Abood, who reports that all training and development efforts are driven by a new focus on performance management. “We had a very subjective system before. You do have to have a meaningful structure, but we want to provide guardrails, not bureaucracy.” Some 700 people within LPL recently received training on performance management.


    “We’re just getting people to understand talent management and succession planning,” Gold says. “The company has always used people on a project basis; now we’re engaging in conversations about long-term needs.” Next steps include a reworked compensation structure that aligns pay with performance. Through her leadership, Abood enables these initiatives, ensures their funding and educates other company leaders as to their importance. Having come up through the financial ranks, she has done some learning of her own.


    “I have learned that training and development are extremely critical. Employees must be trained and must understand their career paths. Organizational development is a massive responsibility: How will we lead and motivate our people? How do we prepare for the future? How do we think strategically? I didn’t realize how quickly you can impact that curve,” she says.


    Abood never leaves her financial training behind, however. “I torture people with financial questions, and am very aware of ROI issues. But I believe that there is so much power in information if we look at data in a certain way.”


    She admits that “human capital” is an impersonal term.


    “I would change it if I could,” she says. “When we were creating this position, I researched titles online, and that’s what the big companies were using.”


    Although it’s now a big company, LPL Financial still thinks like a small one in many ways. Abood makes frequent references to “Mark and Esther”—that’s Mark Casady, chairman and CEO, and Esther Stearns, president and COO.


    “LPL feels like a family business; and its culture has enabled my position and my ability to be effective. We are very focused on cultural integration, and I am a living, breathing example of Mark and Esther’s commitment to people,” Abood says.


    She wants to share that good fortune: “I always want to be in touch with and positively affecting our employees’ psyches and their profitability,” she says, describing herself as a “high-energy” manager who delegates well, doesn’t micromanage, and will volunteer for anything—which is how she ended up with payroll and mail services on her plate.


    Hunter thinks it’s a good thing: “Corporate facilities, office locations, look and feel, building amenities—all of those things have an effect on our culture,” she says.


    In the near future, Abood plans to do pulse surveys of employees. She wants to know more about how they view LPL’s progress—but she knows things are on the upswing.


    “I feel way better now than I did a year and a half ago,” she says.

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As Workforce Ages, Employers Might Face Higher Disability Costs

Falling on an icy sidewalk while shoveling snow could result in bruises and a day or two off work for people in their 20s. Experts say those same events could result in major injuries and significant sick leave for older workers.


    “The fact of the matter is, older workers have higher incidence [of injuries] and slower recovery,” says Carol Tavella, Devon, Pennsylvania-based senior manager with SMART Business Advisory & Consulting.


    For employers, that means more time until that worker returns to the job, less productivity and, eventually, higher disability costs, experts say.


    In a 2006 study, the U.S. Bureau of Labor Statistics found that the median number of days off work for all workers suffering injuries or illnesses was seven; for workers 55 to 64 years old, the figure jumped to 12 days; for workers 65 and older, the median time off was 15 days.


    For the most part, such absences would fall under short-term disability, which generally picks up where paid sick leave expires and can typically cover workers for three to six months.


    Tom Klett, a Stamford, Connecticut-based senior consultant with Watson Wyatt Worldwide, says that despite concerns from companies regarding absenteeism among older workers, most of these experienced employees will avoid short-term leave whenever possible for fear of losing their job.


    “People want to hold on to their jobs, especially in this economy,” Klett says.


    This, in turn, keeps workers on the job when they haven’t fully recovered from minor injuries and may result in major injuries later on, he says.


    “Here’s where the concerns are manifesting, in longer-term disability,” Klett says.


    As for long-term disability, or disability that lasts anywhere from a year to until an employee reaches retirement age, statistics show spikes in those figures for older workers.


    For example, the Social Security Administration said 67 percent of Social Security Disability Insurance awardees in December 2007 were 50 or older. The government’s SSDI program is available to those who have been deemed disabled for at least a year or who have been diagnosed as permanently disabled. This program, often tapped by disabled workers to supplement their long-term disability income, is notorious for its backlog of applicants and its tough standards. Nevertheless, the demand for SSDI is growing, says Dan Allsup, a director with Allsup Inc., a Belleville, Illinois-based firm that assists disabled workers in collecting benefits.


    Experts say employer-based disability—a benefit to which about 30 percent of workers have access, according to Social Security Administration estimates—is also expected to grow considerably as the workforce ages.


    “I can see how employers are looking at this when dealing with older generations of workers,” Tavella says. “Individuals are staying in the workforce longer.”


    However, not everyone believes an increase in disability claims is an issue about aging. Helen Darling, president of the Washington-based National Business Group on Health, says an increasing number of workers, regardless of age, are becoming more susceptible to injuries because of the health of the current population.


    “This is much more a function of health than age,” says Darling, who cited the example of a healthy 55-year-old worker versus an obese 25-year-old employee. “We cannot assume that older workers are less productive and more prone to injury than younger workers.”


    For employers that are trying to gauge their potential exposures, Paul Botkin, a Dallas-based senior VP at Aon Consulting, points to predictive data analytics. These programs aim to collect data from an employer’s workforce, such as health assessments and risk factors, and use that same data to create programs to keep the company’s workforce strong and healthy.


    “Employers want to predict which population [of employees] … is likely to suffer injuries,” Botkin says. “Employers want to look at the data and see what they can do to encourage employees to be more proactive.”


    While many employers already gather data about their employees, by way of health assessments and questionnaires, and may even have wellness programs, older workers in particular might benefit from gym memberships to keep them fit and strong. Companies could pay all or part of the gym membership cost, he says.


    “What you can do is say to people that there are some things you can do to avoid injuries, like stretching, strength training and physical therapy,” Botkin says. “What you want is an employer to help promote a physically healthy population” regardless of age.


    Watson Wyatt’s Klett says companies see wellness as the ticket to not only maintaining a healthy workforce, but also zeroing in on their own disabled workers.


    “When employers reach the point where [a worker] is out [on long-term disability], companies often do everything they can and give employees all the services they need to get them back,” he says.

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Around the World, Jellies Are Spreading

As workers arrive at Nancy Hoffmann’s loft in New York’s Chelsea neighborhood, they are asked to take off their shoes and put their business cards in a bowl on the table.


    Hoffmann, who runs an online branding company called TomatoDesign.net, offers up coffee. Doughnuts are supplied by Heather Quinlan, a telecommuting producer for Discovery Science Channel’s Web site.


    On one side of the room, freelance programmer Ken Smith works on software to enhance GPS technology. On the other is Tony Bacigalupo, a telecommuting project manager at Desktop Solutions Software, a Hauppauge, New York-based Web design company, who catches up on his e-mail while chatting with Quinlan about her site.


    This is the world of Jelly, a new type of casual co-working that thousands of workers participate in worldwide.


    Each week in cities from Melbourne, Australia, to Birmingham, Alabama, workers get together to participate in Jellies, which got their name from jelly beans, according to Amit Gupta, a 25-year-old Web entrepreneur who founded the first Jelly three years ago.


    “We figured that a big part of Jelly was the collaboration and co-creation with people of varied skill sets and backgrounds,” Gupta says. ” ‘Jelly’ felt like it could become a good word to describe that.”


    Unlike traditional co-working spaces, Jellies, which are usually limited to 15 to 20 people, foster brainstorming and creative exchanges, Gupta says.


    Until recently, Jelly participants largely have been freelancers and entrepreneurs, but regulars say there are a growing number of workers who telecommute.


    “Working from home can drive you crazy,” says Bacigalupo, who organizes the New York City Jelly events. The New York listserv for Jelly has 500 people signed up and is growing every day, he says.


    “I would say normally half of the people that come are regulars and half are newcomers,” he says.


    For employers, Jellies could provide a great opportunity to motivate employees who telecommute, says Kathie Lingle, executive director at WorldatWork’s Alliance for Work-Life Progress in Scottsdale, Arizona.


    “Particularly with younger workers, this is a great way to keep them motivated and getting the creative thinking going,” Lingle says.


    Yahoo has recognized the potential of Jellies and in August agreed to sponsor them on a national level.


    “We have found that some of the best ideas come from just talking and surrounding yourself with people from different areas,” says Sean Florio, a director of marketing at Yahoo. Particularly since the majority of Jelly participants are in the technology field, Yahoo thinks it’s a perfect fit.


    As part of the sponsorship, Yahoo will send its own telecommuting employees to Jellies as well as occasionally provide lunches and speakers, Florio says.


    “We definitely are getting the word out to our employees in San Francisco about Jellies,” Florio says. However, the challenge for Yahoo is to support the Jellies without taking them over, he says.


    Employers with telecommuting workers may want to get a handle on whether any of them attend Jellies, since they could be a great recruiting source, observers say.


    Indeed, job offers are common at a Jelly. Smith says he has gotten a few referrals, while Quinlan, a Jelly first-timer, says she is hoping to find some writers to hire.


    But companies should make sure their own talent doesn’t get poached at one of the events, Lingle advises.


    Companies also might want to remind teleworkers attending Jellies about making sure they keep trade secrets to themselves, warns Douglas Wickham, a partner in the Los Angeles office of Littler Mendelson.


    “Collaboration and exchanging ideas is a wonderful thing, but at the same time if your workers are sitting next to a competitor it could be pretty easy for someone to take a peek at their screen,” Wickham says. “Companies need to make sure that telecommuting employees are aware of these issues.”

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Dear Workforce How Can We Use Adult Learning Principles in Our Training?

Dear Learning as You Go:

An absolute for high performance is to ground an organization in solid learning principles and action. Learning is the foundation of success for all organizations. The more structures that organizations have in place for learning, the more they will drive their mission and competitive advantage. When people learn new knowledge, skills, tools and techniques, they leverage their position to achieve goals. The key is that people must apply what they have learned to areas important to them at work.

Most organizations fail miserably at getting people to apply new skills. Typically, employees attend a training event (spending time away from their jobs) only to return once again to face the same pressures and problems they faced earlier. Going away for training does not mean our work goes away. In many ways, applying new knowledge is revolutionary thinking because so many organizations do not have the right system in place to engage short- and long-term skills application.

The field of adult learning was pioneered by Malcolm Knowles in the 1970s. While times have changed, not much has changed with regard to how adults learn. Knowles’ work is based on psychology, which focuses on cognition (they way we think), motivation (the things that get us going) and behaviors (the things we do). In order to ensure a successful learning strategy and execution, there are a number of key adult learning principles that Knowles has identified as being fundamental. In this context, the principles are universal and can be applied for all areas of learning, including those in the technical arena.

Knowles’ Adult Learning Principles
Learning is autonomous and self-directed. People want to feel a sense of independence and practice self-direction in achieving their learning. The implication is that opportunities must be made available for people to get involved in their learning. Instead of lecturing, facilitators must engage people in the learning process. Learners must be active participants, using simulations, case-study analysis, team projects, blended learning and stretch assignments.

It leverages people’s experience and knowledge. Adult learners bring a significant amount of experience and knowledge to the table. They will filter new knowledge and skills through this lens and make judgments accordingly. If information is against what they believe, they will be resistant to change. However, if new insights are aligned to their interests and preferences, they usually will engage in acquiring new skills.

It is goal-oriented. By nature, most people are goal-oriented. As a result, it is important to pay attention to adult learners and their goals. By structuring learning early on to assess participants’ goals, you will find that people are better able to link learning that is meaningful, exciting and relevant.

Relevancy is important. Adult learners will maximize their new skills acquisition significantly more when they find the learning relevant for them. People need to see how the learning relates to their job, department, goals and organization.

Focus on practicality. If the topics are outside the learner’s comfort level or learning ability, the learning will fail. Take time to ensure the curriculum is structured in such a way to match the audience’s ability to learn and apply principles.

In beginning a new learning program, the principles of adult learning can help guide the structure and curriculum. In addition, it is also important to consider other areas for the program. These include commitment from senior leadership, alignment to business, core competencies, measures of assessment, values integration, coaching and mentoring, external collaborations, learning alumni network, learning accountability and establishing a learning culture.

SOURCE: Dana E. Jarvis, Duquesne University, Pittsburgh, August 28, 2008

LEARN MORE: Regardless of its structure, any corporate learning tends to be more useful when trainers come from business units.

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.

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Union Victory at Boeing Unlikely a Signal of Widespread Labor Gains

The recent victory of the International Association of Machinists and Aerospace Workers in its negotiations with Boeing may seem to be a boon to the labor movement, but observers say it’s an anomaly.


On Monday, October 27, the union and the Seattle-based airplane manufacturer came to a tentative agreement following a seven-week strike.


Under the terms of the agreement, Boeing’s 27,000 union-member employees will receive annual wage increases of 15 percent over the life of the four-year contract. Workers will also receive bonuses totaling at least $8,000 per worker for the first three years.


Health care benefits will remain the same despite Boeing’s attempt to move toward more cost-sharing with employees.


Most significantly, however, the new contract, if approved, will provide Boeing’s workers with greater job security, experts say. Under the agreement, Boeing can use contractors for the delivery of aircraft components to assembly lines, but the union workers will handle those components once they enter the factories and will oversee their delivery to their final destinations.


While this was a significant win for the machinists union, this group of workers is in a very unique position, said David Gregory, professor of law at St. John’s University in Queens, New York.


“These are highly skilled workers doing a critical job for a profitable employer that has huge demand for its product,” he said. “It’s the perfect storm in reverse.”


Despite the favorable situation for the union, its victory should serve as a good sign for the labor movement, said Josh Freeman, a professor of history at City University of New York Graduate Center.


“People will pay attention to the fact that in some circumstances being militant can succeed,” he said.


The most surprising part of the union’s victory was that Boeing held out as long as it did, Gregory said.


If anything, this should be a lesson to companies that acting too aggressively in negotiations can backfire, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Massachusetts.


“Boeing pushed too hard by publicizing its offer and stating that it was final,” he said. “In my opinion, this was a strike that didn’t have to happen.”


Union members are expected to vote on the agreement in the next few days.


—Jessica Marquez


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CDHP Members More Cost-Conscious, Engaged

Members in consumer-driven health plans are more cost-conscious and engaged consumers than enrollees in other plans, a new survey by the Washington-based Blue Cross and Blue Shield Association has found.


The BCBSA 2008 CDHP Member Experience Survey, which was presented Monday, October 20, at the Consumer Driven Healthcare Summit in Washington, found that 72 percent of CDHP members track their health expenses, compared with just 40 percent of their non-CDHP counterparts.


In addition, 38 percent of CDHP members estimate future health expenses, compared with 22 percent of nonmembers; 24 percent of members contacted their insurer to discuss health expenses, compared with 18 percent of nonmembers; 38 percent of members discussed health expenses with their physicians, compared with 27 percent of nonmembers; and 34 percent of members developed a budget for health expenses, compared with 18 percent of nonmembers.


CDHP members are also more engaged in health and wellness, the survey reported. For example, 43 percent of members participated in health screenings, compared with 30 percent of nonmembers. In addition, 25 percent of members reported exercising regularly, compared with 14 percent of nonmembers.


CDHP members with health savings accounts are more likely to access preventive care services than are CDHP members without such accounts or non-CDHP members. For example, 69 percent of HSA-eligible CDHP plan members with HSAs had regular checkups, physicals or preventive health screenings, compared with 64 percent of HSA-eligible CDHP members without HSAs and 62 percent of non-CDHP members.


CDHP members with employer-sponsored coverage are much more likely to open HSAs when their employers contribute to the accounts, the BCBSA survey found. Seventy-one percent of members who received some employer contribution either have already opened or plan to open an HSA, compared with 48 percent of CDHP members who did not receive an employer contribution to the accounts.


In 2007, 12.5 million people were enrolled in CDHPs, up 25 percent from 10 million in 2006, according to the American Association of Preferred Provider Organizations. The largest growth was among CDHPs linked to health savings accounts, which in 2007 covered 5 million plan members, up from 3 million in 2006. Enrollment in CDHPs linked to health reimbursement arrangements held steady at 7 million.


The survey, conducted by the BCBSA in August 2008, collected responses from 2,791 individuals ages 18 to 64 enrolled in private health insurance coverage, including BCBS-member CDHPs and non-member CDHPs. Currently 4.4 million BCBS plan members are enrolled in CDHPs, up 50 percent from last year.


To view a webcast of the entire CDHP survey presentation, visit www.bcbs.com/news/bluetvradio/consumerdriven2008.


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


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Workplace Injuries Decline in 2007, Bureau of Labor Statistics Says

The rate of workplace injuries and illnesses in private industry declined for the sixth straight year in 2007, the U.S. Department of Labor’s Bureau of Labor Statistics said Thursday, October 23.


The bureau said the number of nonfatal workplace injuries and illnesses reported by private employers declined from 4.4 cases per 100 workers in 2006 to 4.2 cases in 2007.


Edwin Foulke, assistant secretary of labor for occupational safety and health, and Elaine Chao, secretary of labor, said the decline was largely due to workplace safety education, training and enforcement of guidelines.


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


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Nissan Workers Allowed to Reconsider Buyouts

Nissan North America will give its U.S. factory workers an extra month to reconsider whether they really want to take the automaker’s rich buy-out plan.


A recent statement issued by the company said the mid-November extension was prompted by the alarming economic news of the past several weeks. (Click on “Chrysler” and “General Motors” for related news from the automakers.)


“We realize the uncertain economic climate could result in an employee reconsidering his or her decision,” the statement said. “Because of that, we are extending the consideration period.”


The buyout is offering workers up to $125,000 in hopes of reducing the workforce at two Tennessee factories by about 1,200 people. Nissan’s Smyrna, Tennessee, assembly plant and its Decherd, Tennessee, engine plant employ about 6,600 people, not all of whom are eligible.


The automaker has been tight-lipped about the number of people who have expressed interest in the buyout. One company source said that more than twice as many people as expected—as many as 2,800 employees—initially opted to leave, surprising officials in the United States and Japan.


Steve Parrett, manufacturing spokesman at Nissan’s Nashville headquarters, said he has not heard a specific number and that company officials would not discuss the numbers.


He acknowledged that the program “has been very well received.”


The offer consists of a lump sum payment of $100,000 or $125,000, depending on tenure, plus a year of health coverage and a car purchase discount.


Workers can also opt to accept a buyout in 2009 or 2010, but for a reduced amount of money. According to the recent  statement, employees opting for those later buyouts now have until next year to decide whether to accept.


Filed by by Lindsay Chappell of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Chrysler to Cut 25 Percent of Salaried Workers, 4,300 Jobs

Chrysler plans to cut its salaried workforce by 25 percent starting next month, the company said Friday, October 24.


A Chrysler statement did not identify how many jobs the automaker is eliminating, but spokesman Michael Palese said the cuts will total 25 percent of the company’s salaried workforce.


Chrysler, according to its most recent figures, employs about 17,332 salaried workers, so the cuts could total more than 4,300 jobs.


The cuts will start with voluntary retirements and buyout programs, but will include layoffs by the end of the year. New buyout programs will include “enhanced benefits,” a Chrysler statement said, including cash and new-vehicle vouchers.


The company also told employees it will “cut back on all discretionary and overhead expenses and reduce capital expenditures not connected to major product programs.”


Chrysler owner Cerberus Capital Management LP, according to numerous reports, is in the midst of negotiating a possible sale to General Motors. It also has engaged in discussions with Nissan and Renault about a partnership arrangement, according to the reports.


CEO Bob Nardelli released a statement attributing the job cuts to the fastest contraction ever in auto industry sales.


“These are truly unimaginable times for our industry,” Nardelli’s statement said. “We continue to be in the most difficult economic period most of us can remember.”


“The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate. Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment, and working as a team, we have been right-sizing our organization to become as competitive as possible.”


Filed by Chrissie Thompson and Philip Nussel of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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