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articles & white papers on
Talent Retention Team
Building
& Productivity
http://www.edmontonsun.com
Edmonton Sun - Canada
By LINDA WHITE
February 18, 2006
Part-time
rewards spur trend
Companies committed to meeting the needs of professionals who are willing to
forgo part of their salary in return for reduced hours are reaping the rewards
in increased productivity, talent retention and improved employee relations, a
new study finds.
"It's good news. It's provocative news in a way," says Mary Dean Lee, management
professor at McGill University in Montreal. She completed her research with
labour relations professor Ellen Ernst Kossek of Michigan State University.
While "reduced-load work" has been particularly popular among new moms returning
to work, many others are taking advantage of opportunities to work fewer hours -
including those caring for aging parents and others wanting to further their
education or pursue personal interests.
NO
"GHETTO"
"It's important that (reduced-load work) doesn't get attached just to women
returning to work from (maternity) leave," Lee says. "We don't want there to be
a 'ghetto' for people who work part time at a professional level."
Management-Issues -
London,UK
http://www.management-issues.com
Author: Nic
Paton
Businesses face 'perfect storm' over talent, skills and
older workers
Impending baby boomer
retirements, a widening skills gap and outdated approaches to hiring and
retaining talented workers are combining to produce a "perfect storm" that
threatens long-term business performance, a study has suggested. The global
survey of 1,396 HR professionals by the Irish arm of consultancy Deloitte found
nearly seven out of 10 felt attracting new talent was the greatest threat to
their competitiveness.
This was followed by the inability to retain key
talent (66 per cent) and incoming workers having inadequate skills (34 per
cent). "Deloitte's new research points to an inescapable conclusion: the
widening skills gap is a global phenomenon, particularly among the categories of
key workers who disproportionately drive an organisation's performance," said
Deloitte partner Cormac Hughes.
"This trend will leave behind companies that do
not begin to rethink their approach to talent management," he added. Ireland's
economy is currently operating close to full employment, meaning that talent
shortages are not only a concern for the HR departments in Irish businesses but
are also a top priority for senior management as a whole, said Hughes.
Organisations were offering money, perks and new
challenges in order to attract and retain staff. But such knee-jerk measures
were often ineffective because there was inadequate medium and long term
resource planning, he added. "Rather than fight a futile 'war for talent',
business leaders should 'build talent' by looking within their organisations for
the critical skills, knowledge and attributes required to execute their
company's most important roles, while continuing to seek to attract the best
people," said Hughes.
"Irish companies can avoid sustaining a direct
hit from the looming talent crisis by rethinking and reinventing their talent
management processes into a well-designed talent strategy that drives
productivity and differentiates a company from its competitors," he added. More
than 70 per cent of those surveyed confirmed they were experiencing or expected
to experience a shortage of white-collar workers.
Worryingly, just 13 per cent identified
approaching baby boomer retirement as a concern, despite overwhelming evidence
indicating a large exodus of experienced staff from the labour market in the
next three-five years. "Retirement legislation is under review in some countries
but the current situation sees skilled workers continuing to leave their
profession or trade around late middle age and too few people are joining the
workforce to fill their place," said Hughes.
"Governments are able to partially alleviate the
depth of talent pools through policies on immigration, taxation and education
but their impact is likely to be superficial in the face of global working
population forecasts," he added. The survey found the level of significance
accorded to recruitment and retention of able staff was consistent across every
region surveyed, irrespective of the size of the organisation.
Almost half stated demographic changes and the
impending skills shortage had been discussed at board level and most identified
a clear link between talent management and business performance.
A total of 54 per cent believed talent
management issues would have an impact on their overall organisational
productivity and 40 per cent felt it affected the firm's ability to innovate.
Three out of 10 acknowledged it would limit their ability to meet production
requirements and fulfil customer demand. "It is encouraging to see that so many
organisations have discussed the impending skills shortage at board level,"
concluded Hughes.
"Given the potential impact on business
performance, it is essential that board-level commitment is gained to help drive
rapid change to talent management strategies," he added.
http://home.businesswire.com
Business Wire (press release) - San Francisco, CA, USA
October 12, 2005
Strategic Workforce Management, Attracting New Talent Are Top Challenges in HR
Executive's Agenda says Aberdeen Group
Employee Self-Service and Online
Assessment, and Application Integration Are Dominating the HCM
Technology-Deployment Agenda
According to
Aberdeen's latest research, competing for
talent is long-term concern and short-term business driver of Human Capital
Management (HCM) executives across all industries. Focus on growing internal
talent, establishing career paths, and succession planning (96%), and building a
brand that attracts new employees (89%) are also on the 12-month agenda. Yet
best-in-class companies are less concerned about recruiting tomorrow's talent,
focusing instead on defining the balance between the level of service and cost
of benefits, as well as planning and managing a global workforce.
Aberdeen conducted its
recent HCM survey in conjunction with the Human Capital Institute (HCI), a
Washington, DC-based provider of educational programs for human capital
practitioners, talent managers, and executives. According to
Aberdeen's new report, "The HR Executive's
Agenda: The 2005 Benchmark Report," HR executives' top strategies include:
-- Emphasizing long-term
workforce planning;
-- Improving the
company's brand as a desirable, viable place to work; and
-- Updating and
integrating HCM technology.
In fact, 59% of HR
executives identify the improvement of HCM technology as a key response to their
business challenges. Specific investment areas include hiring management
solutions, pre-employment assessment, employee self-service, and performance
management. The report confirms that 96% of HR executives outsource some portion
of their HR technology solutions today.
"The lifecycle of the
employee - from hiring until retirement - has become the focus as chief
executives in human capital weigh more competitive hiring practices, improved
performance management, and better retention and succession planning
strategies," says Dr. Katherine Jones, HCM research director and report author.
"Improving performance management with an eye to improving employee productivity
and performance is both a short-term goal and a long-term strategy. Executives
are working to retain their best talent and plan for job succession throughout
the corporation."
To obtain a complimentary
copy of the report, follow this link:
http://www.aberdeen.com/link/sponsor.asp?cid=1968
About AberdeenGroup, Inc.
AberdeenGroup provides
fact-based research and insights focused on the global, technology-driven value
chain. Aberdeen's benchmarking, market and solution assessments, sales
acceleration programs, and conferences support Global 5000 value chain and
technology executives and the solution providers who serve them. For more
information, visit
www.aberdeen.com or call 617-723-7890
http://www.eveningtimes.co.uk
Glasgow Evening Times -
Glasgow,Scotland,UK
September 15, 2005
by Jonathan Rennie
Firms reveal fear of staff crisis
timebomb
ALMOST three quarters of
organisations across the country expect to experience a staffing crisis in the
next five years.
A new study has revealed that companies large and small share the same fear that
a shortage of staff talent lies just around the corner. And the majority of
businesses believe the most critical management issue they face in the medium
term is attracting and retaining high-calibre workers.
These are the key findings
from Deloitte's 2005 Talent Pulse Survey.
The consultancy firm
interviewed 1400 managers worldwide and of all respondents, 74% anticipated a
shortage of talent within three to five years. Of those polled, 69% cited
recruitment as important and 66% voiced concern about retention. Interviewees
also identified a clear link between talent management and business performance.
More than half (54%)
believe talent issues have an impact on the overall productivity and efficiency
of the organisation and 40% say that a lack of good people affects a firm's
ability to innovate. Ashley Unwin, consulting partner at Deloitte, said
organisations now needed to be agile in turning this understanding into clear
people strategies that will create attractive working environments. He said: "Organisations
must nurture talent so staff make the biggest possible contribution, and retain
them throughout their career rather than losing them to a competitor."
The survey shows firms are
aware of the issue - almost half (46%) said demographic changes and skills
shortages had been discussed at board level and a fifth (20%) said that it was
an emerging issue for the chief executive. The study also revealed most
organisations plan to change their investment priorities to attract, retain and
develop talent.
Dr Paul Lynch, senior
lecturer at Strathclyde University's Business School, believes the results of
the study won't be a shock for Scottish firms. According to the hospitality and
SME industry specialist, the bigger worry for small firms in Scotland is the
impact of larger competitors poaching the best employees.
He said: "Statistics like these aren't surprising for anybody working in
Scotland. "Firms across the country are facing up to the challenges of
demographic change. "Even the Scottish Executive is attempting to rectify the
situation with its Fresh Talent Initiative. "The challenge for Scottish SMEs is
the situation of "cherry picking".
Small firms always face a
tough fight to keep their best staff. "Larger firms are more likely to be able
to offer a more strategic management career route. That is generally not the
case for small companies.
"It means SMEs need to be clever in their approach and they have to look beyond
an ad-hoc staffing policy. Certainly, the hotel and hospitality sector in
Edinburgh has taken on board the gravity of the situation.
"An action group was launched last year by smaller hoteliers to deal with the
issue of recruitment and retention.
"All sectors have their
own particular rules and issues, but in general terms they are all affected by
this."
Management-Issues -
London,UK
15 Sep 2005
New strategies needed to
beat talent crunch
The looming talent crunch will have a devastating effect on the competitiveness
of organisations which cannot rethink their approach to talent management, a new
report has warned.
Impending baby boomer retirements, a widening skills gap and outdated approaches
to talent management are combining forces to produce a "perfect storm" that
threatens long-term business performance, according to a new survey conducted by
the Human Capital practice of Deloitte.
In a global survey of 1,396 HR practitioners, seven out of 10 said that
attracting new talent poses the greatest threat to competitiveness. Two-thirds
put the inability to retain key talent as their greatest challenge, while a
third pointed to workers with inadequate skills.
"Deloitte's new research points to an inescapable conclusion: the widening
skills gap is a global phenomenon, particularly among the categories of key
workers who disproportionately drive an organisation's performance" said
Deloitte's Ashley Unwin.
"This trend will leave behind companies that do not begin to rethink their
approach to talent management."
More than seven out of 10 respondents confirmed they were experiencing, or
expected to experience, a shortage of white-collar workers.
Global demographic changes show that the number of 15-29 year olds entering the
job market is steadily contracting, while growing life expectancy is further
contributing to the problem.
Yet despite this, only one in seven identified approaching baby boomer
retirement as a concern, despite overwhelming evidence indicating a large exodus
of experienced staff from the labour market in the next three-five years.
"Retirement legislation is under review in some countries but the current
situation sees skilled workers continuing to leave their profession or trade
around late middle age and too few people are joining the workforce to fill
their place," Unwin added.
"Governments are able to partially alleviate the depth of talent pools through
policies on immigration, taxation and education but their impact is likely to be
superficial in the face of global working population forecasts."
The survey found the level of significance accorded to recruitment and retention
of able staff was consistent across every region surveyed, irrespective of the
size of the organisation.
Almost half (46 per cent) of those surveyed said that demographic changes and
the impending skills shortage had been discussed at board level and most
identified a clear link between talent management and business performance.
More than half (54 per cent) believe talent management issues will impact their
overall organisational productivity and four out of 10 say it affects the firm's
ability to innovate. A third also acknowledge it will limit their ability to
meet production requirements and fulfil customer demand.
Deloitte's Sabri Challah said it was encouraging to see that so many
organisations have discussed the impending skills shortage at board level.
"Given the potential impact on business performance, it is essential that
board-level commitment is gained to help drive rapid change to talent management
strategies," she said.
"Firms must adapt their talent-management strategies quickly, so that they can
continue to attract the best people, nurture them to help maximise their
contribution, and retain them, rather than lose them to competitors."
Ashley Unwin added: "Companies can avoid sustaining a direct hit from the
looming talent crisis by rethinking and reinventing their talent management
processes into a well-designed talent strategy that drives productivity and
differentiates a company from its competitors."
Author: Management
Issues News
http://inhome.rediff.com
Rediff - India
Dexter Roberts, Michael Arndt and Pete
Engardio
BusinessWeek
September 13, 2005
Why US companies
love China
For more than two decades, Western bosses chased the China dream. They professed
to love the scorching Maotai served at those endless government banquets
celebrating yet another costly and complex joint venture.
Just as they
began noticing rising profits from sales of cars or telecom gear, they'd get
blindsided by sudden rule changes favoring local players, demands for new
technology transfers, or cut-throat pricing from Chinese imitators unconcerned
about profits. Some early entrants ended up writing off huge investments. But
more often, CEOs groveled before their boards back home, begging for another
$100 million to sink into a mainland venture that was always just about to turn
the corner. This was China, after all. Everybody had to be in China, right?
Finally, the
long march is reaping benefits. Of more than 450 US companies surveyed by the
American Chamber of Commerce, 68% today say they are profitable, and 70% say
their China margins equal or exceed their global average. Such an answer would
have been unthinkable just five years ago, before China entered the World Trade
Organisation and had to open its economy wider to foreign companies. The biggest
beneficiaries are the pioneering multinationals -- such as Procter & Gamble,
Caterpillar, and United Technologies -- that arrived in the 1980s, then stuck
it out in the worst of times. But now even small and medium-size US companies
are realizing they have to play their China hand or lose out altogether. If a
company stays the course, the results can be remarkable. China contributed 9% of
Motorola Inc's $31.3 billion in sales last year, and thanks to smart products
and marketing the Schaumberg (Ill.)-based company is battling with Nokia Corp
for leadership in the world's biggest handset market.
Low-cost exports
from China, and the brainwork done at 16 labs, have also helped revive
Motorola's fortunes. For many products, "China will become a larger market than
the US," says Motorola Asia Pacific Senior Vice-President Simon Leung. "And it
helps our global operation from the perspective of costs, quality, and time to
market." The prospects of some companies, in fact, may be brighter in China than
at home, where they have entrenched competition or are saddled with high-cost
operations. "In China, nobody has home-court advantage," says Jonathan Woetzel,
McKinsey & Co.'s Greater China director. "You can play a new game and get a new
lease on life." While Hewlett-Packard Co. has been in crisis mode in the US, its
China sales have risen 20% annually for four years. Booming China is one of the
most important markets for slumping General Motors Corp.
And it is a
godsend for financially troubled auto-parts giant Delphi Corp., whose China
sales have been growing 30% annually for 11 years and hit $637 million in 2004.
Delphi has just opened a tech center on a still-muddy site in Shanghai's Pudong
district where, by 2010, 1,500 engineers will design parts for the explosion of
new models rolling off the assembly lines of customers like GM, Volkswagen, and
Nissan. "China is our company's hope for a growth machine," says Delphi Asia
President Choon T. Chon. As China liberalizes to meet World Trade Organization
commitments, new opportunities are opening in fast-growing areas such as
finance, retail, and tourism. It's also easier to make acquisitions. "The beauty
of China today is that all options are open," says Stuart L. Levenick, group
president of Caterpillar Inc., which has recently bought several Chinese
construction machinery makers.
This isn't to
say China has suddenly become an easy place to do business. Indeed, it remains
one of the world's riskiest and most complex markets. Intellectual property is
brazenly ripped off and contracts are violated with little recourse. Corruption
is rampant. The baffling regulatory environment is a work in progress. Growing
capacity gluts and fierce competition from Chinese companies -- some aided with
cheap state loans -- still can keep prices and margins low. Then there is the
sheer pace of change, making it necessary to constantly adapt to stay ahead.
Local talent
Still, many
multinationals that invested the time, effort, and resources have begun to learn
the lessons needed. Among them, obviously, are that guanxi, or connections, and
investing early do matter, as Motorola's experience has shown. Partly as a
reward for staying the course after Tiananmen, Motorola was allowed to own 100%
of its key operations, while its telecom rivals had to form ventures with state
partners. But succeeding in today's China is about a whole lot more than guanxi
and getting your products past customs. The big winners are investors who have
nurtured Chinese managerial talent and given them the reins to run vital
operations.
They localize
manufacturing, parts sourcing, and R&D to the greatest extent possible to lower
costs and leverage China's immense talent pool. The winners treat partners as
equals when joint ventures are a plus, and part ways when they aren't. They also
keep a grip over distribution and after-sales service networks to ensure
customers are satisfied. And they invest heavily in training to integrate
Chinese engineers and sales staff into their global organizations -- and keep
them motivated so they won't jump ship. "Retention of skilled workers is on
every company's mind now in China," says Dayton Ogden, chairman of recruitment
firm Spencer Stuart Management consultants. "You have to make your company a
place where people want to stay."
Success also
requires an ever more sophisticated understanding of the Chinese market. China's
emerging consumer class, for example, cannot be treated as an undifferentiated
mass. Tastes vary by region, and many upwardly mobile professionals see cell
phones with all the latest features as fashion statements. Others demand top
performance at a low price. It's also a mistake to focus exclusively on rich
cities like Guangzhou and Shanghai. "To continuously grow your business, you
must go to level-two, -three, and -four cities," says Sun Cheng Yau, head of
Greater China for HP. In smaller cities, some members of HP's growing network of
200 service reps even have to work out of their own homes.
Few companies
pay better attention to all these details than P&G. It has invested more than $1
billion in China since 1988 in four factories and a Beijing R&D center. P&G
sells 17 brands, from Head & Shoulders shampoo and Cover Girl makeup to Pringles
potato chips and Pampers diapers. It leads each category in which it competes,
except detergent. Even here, Tide is No. 2.
Hundreds of P&G
research managers live with Chinese families in cities and on farms to learn how
they use everything from detergent to toothpaste. The insights have helped P&G
adopt a multi-tier pricing system for some brands. The company sells cheaper,
basic versions of Tide and Crest in small cities and villages, for example. In
beauty care, it has created different versions of Olay moisturizing cream -- one
for supermarkets and a pricier version with skin-whitening and anti-aging
properties sold only in upscale department stores. "We have extended the brand
to meet different needs," says Christopher Hassall, a P&G vice-president for
Greater China. P&G is using the strategy for Olay and Crest in other developing
nations and may try it in the US.
Sitting pretty
Smart marketing
also is enabling some US companies to succeed even in industries where Chinese
manufacturers are ferociously competitive. Haworth Inc. is an example. At a time
when hundreds of US furniture makers are shutting down due to cheap Chinese
imports, Holland (Mich.)-based Haworth is selling locally all the office
furniture it can produce in its Shanghai factory -- even though Haworth products
usually cost 30% to 50% more than models by local producers. One of its secrets:
a team of Haworth designers and psychologists who, free of charge, develop an
entire workplace "environment" for potential clients after interviewing
executives and staff.
That appeals to
multinationals, and a growing number of Chinese companies, concerned about
retaining and motivating talent. Haworth also welcomes passersby to try out its
ergonomically designed furniture, and enjoy free cappuccino and wireless
Internet connections, at its Shanghai Creativity Center in the trendy Xintiandi
district. "You have to give people a chance to experience your product before
they buy," says Haworth Asia Vice-President Frank F. Rexach. Since adopting the
strategy three years ago, "business has started to explode," says Rexach. Each
month, Haworth sells more than 100,000 chairs priced at up to $1,200 apiece and
75,000 workstations.
Carmakers also
are learning to look beyond the wealthiest Chinese consumers. GM had enjoyed
enormous success with its Buick Regal, which starts at $25,138, since production
began in 1998 with partner Shanghai Automotive Industry Corp. Now, GM is trying
to reach the gamut of consumers by expanding its line to include imported
Cadillacs like the XLR, which retails for $158,000, locally made Chevrolet Spark
sedans starting at $5,654, and even minivans. GM has launched three Chevrolet
models in the past six months. And it built a network of 1,000 distributors.
"One thing you learn in China is that you have to move fast," says GM China
Group President Kevin E. Wale.
Such
diversification is becoming essential to remain a serious player. As China
emerges as the world's biggest market for everything from cars to digital TVs,
it increasingly will influence global trends. Already, many cell phones sold in
China have features not available in the US At Motorola's labs in Shanghai,
Chengdu, and Beijing, engineers are working on phones that surf the Web and
double as MP3 players. All the lessons from the corporate pioneers will come in
handy to first-time investors. But they needn't follow the same trail. Changing
rules mean new entrants can leap in with different strategies. Chicago-based IGA
aims to do just that in the grocery business.
The nonprofit
alliance of grocers would seem to have little chance against retail giants such
as Carrefour and Wal-Mart Stores Inc., which have arrived in force. But IGA has
signed up five Chinese retailers with a combined $1.6 billion in annual revenue.
The group is trying to convince Beijing officials that it can help homegrown
retailers compete with the giants by lowering costs via group buying. IGA also
can help retailers export their own packaged foods, clothing, and even DVD
players under its brand through its 4,500 worldwide affiliates. "We are giving
local players the chance to make contact with the international market," says
CEO Thomas S. Haggai.
As Beijing opens
areas like tourism to outsiders, meanwhile, companies need more flexible
business models. Parsippany (N.J.)-based Cendant Hotel Group Inc., which opened
its first Ramada hotel in China in 1993, now is launching its Super 8 chain of
motels, a sector Beijing is encouraging to offer more affordable rooms to
tourists and business travelers and to create more jobs in services. Cendant has
opened 10 motels this year, mainly in city centers, owned by Chinese
franchisees.
It wants around
60 within three years. "Overlay the personal income of China's growing middle
class with a country with 21,000 miles of highway and big events coming up like
the Beijing Olympics," says Cendant CEO Steven A. Rudnitsky, "and we are very
bullish on business opportunities." To many smaller US companies, China still
seems far too intimidating. But with hundreds of manufacturers succumbing each
year to brutal mainland import competition, more are concluding they must take
the China plunge.
More than half
of new American Chamber of Commerce members in China are managers from small and
midsize companies. Chicago-based Phoenix Electric Manufacturing Co., a
100-employee, $20 million maker of electric motors for power tools, kitchen
appliances, and other products, recently opened a second Chinese factory, in
Suzhou. For Phoenix, the move was "a matter of survival because our customer
base is moving here," says Chairman John S. Bank. It enabled Phoenix to keep its
biggest clients, such as General Electric Co. and Emerson Electric Co., which
have shifted most of their consumer-electronics production to the area.
No doubt China
will keep trying the patience and pocketbooks of US companies. It will be many
years before China develops the intellectual-property rights protection,
transparent policymaking, and level playing field that will make it anywhere as
predictable as the West or Japan.
But one by one,
most of the obstacles that for so long made China a money pit are diminishing.
So, too, is the rationale for companies who thought they could be global players
without getting into China.
http://www.bangkokpost.com
Bangkok Post - Klong
Toey,Bangkok,Thailand
By
Imtiaz Muqbil
June 6, 2005
Treating staff fairly
one key to success
Travel and tourism companies looking for ways to better retain
and motivate staff to deliver quality customer service are being offered a very
simple piece of advice: ensure they are treated fairly in the workplace.
Employee retention and motivation are major issues in the highly competitive,
globalised travel and tourism industry which relies heavily on service delivery,
even while requiring staff to work long and odd hours, and put up with customer
demands that vary from pillar to post. Although pay, training opportunities and
career prospects are seen as the major determinants of job satisfaction and
staff morale, a research paper presented at a conference of tourism educators in
Malaysia last week underscored the importance of fairness in the way employees
are treated _ known in the jargon as "procedural justice''.
Says the paper, by researchers Aizzat Mohd. Nasurdin, School of Management,
Universiti Sains Malaysia and Mohamed Abdullah Hemdi, Faculty of Hotel and
Tourism Management, Universiti Teknologi MARA:
"Procedural justice plays a pivotal role in influencing citizenship behaviour
performed by service employees at the workplace. Such positive,
customer-oriented behaviours, in turn, helps promote service quality. `The
proposition that fair treatment of employees will ultimately result in
beneficial outcomes for organisations is especially salient for the hotel
industry [whose] dependence on human resources is higher than other
industries.''
Because the students of today are the job-seekers of tomorrow, human resources
management issues are significant topics of study at tourism educators'
conferences.
Other topics discussed included how Singaporean hotel employees are reacting to
"job redesign'' in the workplace at a time when the island state is facing
critical labour shortages, and how introduction of new technologies can be
better managed from a staff perspective.
But the paper on "procedural justice'' took many of these factors back to
basics, noting very clearly: "One central issue that affects an employee's
decision to perform organisational citizenship behaviour (OCB, academic jargon
for customer service delivery) is fairness.
"This is because fair treatment of employees will subsequently lead to fair
treatment of customers. Therefore, as service providers, hotels need to
understand the role of justice in influencing OCBs among their employees.'' The
paper made no attempt to position this as a new theory but did reiterate a lot
of the past research and studies conducted since 1991, in order to remind the
industry of an issue that may have receded from the radar screen. Employees
experience "procedural justice'' issues in deciding everything from pay
increases to promotions, adjudicating internal conflicts to taking leave.
Says the paper: "Fair decision procedures entail the use of objective facts and
evidence, a lack of bias, being consistent, and being honest. Fair treatment by
organisational authorities indicates that the individual is a respected, valued,
and worthy member of the institution. These feelings of respect, worth, and
favourable social standing experienced by organisational members may motivate
them to exert additional effort by performing tasks beyond their role
prescriptions. Treating employees in a fair manner include issues pertaining to
politeness, kindness, dignity, respect for rights, and concern for the needs of
others. `In hotels, extra-role voluntary behaviours exhibited by
customer-contact employees when handling person-to-person encounter with hotel
guests is likely to improve the functional aspect of service quality.''
The paper noted that "procedural justice reflects a person's judgments about the
fairness of the decision-making process'' as well as the perceptions of "whether
the decisions were made according to the organisation's formal procedures and
from the quality of interpersonal treatment received from the organisation's
authorities in enacting those procedures.
"In an organisation, the use of fair decision-making procedures will reassure
its members that their interests will be protected and advanced as long as they
maintain their membership status. Over time, members in a social exchange
relationship are likely to feel proud of their institution, which in turn, may
motivate them to reciprocate by engaging in voluntary and positive behaviours''
toward the employing institution.
The paper says it is equally important to ensure that companies make each
employee feel like "a respected, valued, and worthy member of the institution.''
To be successful, service providers, such as hotels, need to recruit and retain
employees who are productive, self-initiated, and able to provide value-added
services to customers. Hotel employees who exhibit high levels of courtesy are
respectful and considerate to one another. These behaviours affect the quality
of employee interactions among themselves and is likely to spillover on the
employee-external customer interactions. Likewise, employees who display
sportsmanship tend to view matters positively and avoid unnecessary complaining,
all of which serve to create a positive work climate within the hotel. ``Such a
pleasant internal environment is likely to result in higher service quality.''
Imtiaz Muqbil is executive editor of Travel Impact Newswire, an e-mailed feature
and analysis service focusing on the Asia-Pacific travel industry.
http://www.cpiworld.com
29-May-05
Human Resources Executives Name Talent
Retention Top Concern
A recent survey by
Career Partners International (CPI)
indicates that retention is the top concern among human resources executives,
followed by succession planning, attracting and securing talent, and management
and organizational performance systems.
The survey, designed and
implemented by PinOak Analytics for CPI, randomly surveyed 344 human resource
executives and decision makers in an online poll. Almost half of respondents
(47%) named retaining talent as one of their top two concerns. About one-third
of all respondents cited succession planning (37%), attracting talent (36%) and
performance systems (32%) as one of their top two concerns.
The results didn’t surprise
CPI’s president and chief operating officer, David P. Hemmer. “Retention is a
growing concern for corporations, because the war for talent is back on. With
the predicted impending retirement of 77 million Baby Boomers, employees will
have more options to change employers,” he said. Hemmer cited a survey by the
Society for Human Resource
Management (SHRM) last year, which indicated that, at any given
time, 75 percent of employees are looking for other opportunities. “Under those
conditions, retention has to be a key concern,” Hemmer added.
Fast
Company - USA
By:
Michael A. Prospero
May 2005
The March of War
With our
November issue, Fast
Company will celebrate 10 years of publication. Each month until
then, we'll review one of our favorite editions from the first decade.
In August
1998, Fast Company
set off to cover the war. In one of our dispatches, the combat was nearly
literal: A young staff writer spent four days amid flares and smoke bombs in
Campbellsville, Kentucky, training at a battle-conditions leadership school run
by two former U.S. Army Rangers.
But the
far bigger campaign of the day was the war for talent. "The logic is
inescapable," we wrote. "The team with the most talent wins. [And] there are
simply not enough truly talented people to go around."
Remember,
this was a time when every corner hot-dog vendor had a Web site and Next New
Things were cropping up faster than Monica Lewinsky rumors. Companies old and
new were coming to grips with a new reality: Competitive advantage resided less
in access to capital or powerful technology than it did in having to great
people. And getting and keeping the best and brightest was about more than just
foosball tables and signing bonuses.
It still
is. For a brief while after the dotcom collapse, the battlefield was littered
with resumes and underwater stock options. But there was no detente, and the war
rages on. It has become clear again that over the long haul, there's only one
way to compete in the global economy -- on talent.
In that
1998 issue, we heard from Ed Michaels, a McKinsey & Co. director who helped run
a study of talent involving nearly 6,000 managers and executives at 77
companies. He described a "silent battlefield," as big companies hemorrhaged
more young workers than they knew about -- and certainly more than they could
afford.
Today, the
need for future leaders is even more pressing, says Helen Handfield-Jones,
coauthor of The War for
Talent (Harvard Business School Press, 2001), a book spun out of the
McKinsey study. As baby boomers prepare to retire, employers are finally
figuring out that there just aren't enough midlevel executives to replace them,
Handfield-Jones says. The need now is to develop current staff for higher-level
roles -- and that in itself may prove the best retention policy. "Make sure your
very best people, high-potential people, are having such a steep learning curve
and such a rich series of challenges that they won't want to leave," says
Handfield-Jones, who now runs her own consulting firm.
Of course,
to retain great people, you have to hire them first -- and that critical battle
is still being waged, too. In 1998, we described an emerging "talent market"
that connected buyers of talent with sellers, especially with the free agents
who had divorced themselves from traditional career paths. "There is a bull
market for talent," we exclaimed, "and we're all in it."
Breathless, yes. But the matchmakers we introduced are still in the game, like
M2 Inc., a broker for independent consultants whose client roster has more than
doubled, to 12,000. Back in 1998, "there was the mentality, 'Why would I bring
in people to help me? Why not hire?' " says M2 senior vice president Lori
Perlstadt. Now the idea of a talent brokerage is more widely accepted in
corporate HR departments.
If
anything, of course, globalization has made the talent market bigger and more
powerful than ever. The new brokers are outsourcing firms that connect American
companies with low-cost -- but still highly skilled -- workers offshore. That
has created a new sort of talent war, pitting employees in one place against
their eager replacements in another.
And it
raises the question: Where will tomorrow's talent war be waged? Certainly, any
company that hopes to compete will still need to find the best people available.
But increasingly, those people will come from... anywhere.
Excerpt
"But there
is also a silent battlefield in the war for talent. . . . Most companies are
losing more people in these ranks than they realize. . . . They don't know where
these people are going. Most important, they don't know why these people are
leaving."
http://www.management-issues.com
Management-Issues -
London,UK
Author: Management
Issues News
23 May 2005
Poor workplace design
damages productivity
A well-designed,
employee-friendly office can boost productivity by as much as a quarter, latest
research has suggested. The study by the Commission for Architecture & the Built
Environment and the British Council for Offices has found even simple things
such as good lighting and having adequate daylight can reduce absenteeism by 15
per cent and increase productivity by between 2.8 per cent and 20 per cent. The
two organisations are urging business leaders to take more account of the links
between good workplace design and improved business performance when planning
and designing new buildings, and overhauling old ones.
The report, Impact
of Office Design on Business Performance, has also argued that how workplaces
are design is going to become more important in the future as more and more
workers work remotely or outside a formal workplace. By next year, it has
estimated, some 30 per cent of the world's top companies will have adopted a
highly mobile work style model, with 35 per cent having a workforce located
outside the boundaries of the conventional workplace. Good workplace design can
make a big difference in staff satisfaction, attraction, motivation and
retention, it argued.
It can also affect
the level of knowledge and skills of workers, how innovative and creating they
are, how they respond to business and technological change and how effective the
organisation is at attracting and retaining customers. Poor workplace design, by
contrast, is linked to lower business performance and higher level of stress
experienced by employees.
An employee's
workplace is responsible for 24 per cent of their job satisfaction level and
this can affect staff performance by five per cent for individuals and 11 per
cent for teams. In one major UK company, staff turnover at a call centre reduced
by 11per cent after a move to new well-designed offices and output doubled
during the same period, it argued.
Paul Morrell, CABE
commissioner and president of the BCO, said: "As the pressures of competition
place new demands on differentiation through quality of knowledge management and
creative thought, new environments are needed to encourage interaction and
teamwork. "Those employers who ignore the evidence of office design as an
enabler of staff satisfaction and performance risk the loss of key staff and
ultimately business success," he added.
Richard Kauntze,
chief executive of the British Council for Offices, said: "No part of the BCO's
work is more important than developing a greater understanding of the
relationship between an office building and the effectiveness of the people who
work in it. "The workforce is by far the most valuable asset of any business,
and almost always the biggest cost. A business that gives serious attention to
the physical environment of the office is far more likely to increase staff
productivity than one which ignores the building," he added.
http://www.iht.com
International Herald
Tribune - France
April 20, 2005
 Worker
shortage in China: Are higher prices
ahead?
GUANGZHOU, China To much of the world,
China's reputation for manufacturing can be summed up in one word: cheap.
But on the
factory floors here and in the newly built neon-lit offices, managers say times
are changing - and costs rising. Skilled workers and technicians are taking
advantage of acute shortages to demand double-digit salary increases. Employers
are saddled with Asia's highest levels of social charges and forced to offer a
host of perks to retain people. The rising labor costs are threatening the model
of development - the export zones clustered along the coast - that has brought
China the prosperity of the past decade.
Chinese
wages are still low by European or American standards, but a worker in a sneaker
factory in southern China today is paid about 30 percent more than his
counterpart in Vietnam and 15 percent more than a worker in Indonesia. Some big
companies are moving production to Vietnam and still others are considering
moving inland in China, where labor is cheaper but logistics much more difficult
and thus more costly. For consumers around the world, rising costs in China
could signal an end to the years of deflationary cycles of cheaper and cheaper
products.
Here in
southeastern China, the persistent shortages of migrant workers spurred local
officials in February to raise the minimum wage by as much as 34 percent, the
largest increase in a decade, to between $70 and $82 per month. This brings
southern China to the minimum wages levels of Thailand and puts it well above
the $30 to $50 levels in Bangladesh, $45 in Vietnam and Cambodia and $35 in
rural parts of Indonesia.
"Five years
ago we would have never thought this was possible," said David Lai, the
financial controller for Kingmaker Footwear Holdings, referring to the sharp
rise in Chinese wages. Kingmaker makes Timberland and Caterpillar shoes and
plans to hire about 2,000 workers in Vietnam to make up for a shortage of the
same number of people in its factories in China. But not everyone can shift
production to Vietnam, so Lai predicts that a key consequence of higher Chinese
wages will be higher prices.
"China is
the biggest manufacturer in the world," he said. "If the overall labor cost goes
up, the world has no choice - they have to accept it." Economists say there are
no signs yet that Chinese products overall are getting more expensive. Chinese
exports continue to rise and the economy is surging forward. But the years of
massive investment flows into the country are severely straining the country's
labor force. And the investment is challenging long-held assumptions about near
infinite pools of workers. The days when you could open a factory near Hong Kong
and easily fill it with dirt-cheap workers are over, human resource managers
say, especially with a labor shortage of 2 million people in Southeast China.
How can a
country with 1.3 billion people have a labor shortage? Population experts say
factories are seeking a very specific type of worker: young, very mobile,
willing to work very long hours and be far away from their families. There are
plenty of underemployed people in the Chinese countryside, but most of them do
not fit this profile. At the upper end of the pay scale, competition for
technical and white-collar talent in Beijing, Shanghai and other industrial
areas is so fierce that salaries for certain categories of employees are
approaching U.S. and European levels.
A Guangdong
newspaper last week gave the example of Hu Cai Publishing, which is so desperate
to hire a maintenance man that it is offering an annual salary of up to 150,000
yuan, or $18,000, a huge sum by Chinese standards and many times what a
professor with a PhD would earn. "People need to take off the rose-colored
glasses and take a hard look at pay levels and benefits - and the total cost
that it takes to set up here," said Jessica Pfeifer, a Shanghai-based specialist
on compensation at Hewitt Associates, a human resources consultancy. "The market
is so dynamic and almost crazy right now that it can be a little bit out of
control, the way people are aggressively going out and stealing talent from
other organizations," she said. The labor and skills shortages have spurred
debates in the Chinese press, with one article earlier this month in the
Workers' Daily saying there are "very critical structural problems in the
Chinese labor force."
The
publication of such frank articles is seen as a sign that the authorities in
Beijing are worried. "China's biggest paranoia is how it can maintain a
competitive position," said P.O. Mak, senior vice president for human resources
at GE Consumer Finance Asia. "It's increasingly a serious concern - these rising
costs are eating into income. Companies that do not have the scale will be
hurt." Yet even companies that do have scale are finding China's eastern coast
increasingly expensive. It now costs more for Intel, the computer chip
manufacturer, to assemble chips at its plant in Shanghai than at its facility in
Malaysia, according to a senior manager at the company. To reduce costs, Intel
is building a plant outside the central Chinese city of Chengdu, where labor is
cheaper but logistics more complex
Other
companies are so worried about losing workers that they are trying innovative
things to retain them. Epson, the printer manufacturer, chartered 58 buses over
Chinese New Year to take workers from the company's Suzhou factory to their
hometowns and then back to the factory once the holiday was over. "The workers
appreciated that very much," said Vincent Leung, a human resources executive
with the company. "Our retention rate improved by 8 percent."
The fact
that the labor shortage in Southeast China of about two million workers has
persisted for more than nine months is leading Chinese commentators to question
the very formula that has brought the country its growing prosperity. Economists
are debating whether the system of export processing zones, where factory
workers travel thousands of kilometers to their workplaces, is sustainable. For
years this extraordinary degree of mobility in the Chinese labor force was a
dream for businesses in China because it meant that factories could cluster
along the coast, surrounded by their suppliers and near the container ships that
carry their goods to overseas markets.
Workers
travel as long as 30 hours by bus or train to these factories and then live in
dormitories provided by the factories. Today, managers in Southeast China say it
is looking increasingly likely that factories will soon have to move to where
the workers live - and not the other way around. But this of course is more
costly for business. "Sooner or later we'll have to move," said Samson Chan,
chairman of the Hong Kong Toys Council, an association of companies with toy
factories in Southeast China. "But when you talk about moving it always costs a
lot of money. You have to start from scratch, make a new building, train new
people."
Critics say
the migrant labor system has helped contribute to low rates of training for
workers. A government report on labor and skills shortages released last year
criticized the culture of disposable workers, where employers did not adequately
train migrants because they knew they might not be with the company in the long
term. "There is a practice of using workers but not developing them," said the
report, issued by China's Labor Ministry. This constant churning in the labor
market was reflected in a survey carried out last November by UBS, the
investment bank. Employees in southern China keep jobs for an average of 2.1
years before moving on, the survey said.
"The system
is inherently problematic," said Apo Leong, the executive director of the Asia
Monitor Resource Center, a group that inspects factory conditions. "There is no
guarantee of an abundant supply of migrant workers, especially with this kind of
assembly line development." The affects of the shortage are being keenly felt on
the ground here in Guangdong Province, across from Hong Kong.
Chan of the
Toys Council said factory owners were very concerned about the approaching 2005
Christmas season, which normally requires about 20 percent increases in staffing
levels and which will begin soon because of the shipping time to Western
markets. "A lot of manufacturers are worried that there will be a huge shortage
of workers starting in May and June," he said. This is despite salary increases
of between 25 to 30 percent this year, he said. Chan also said that toys
produced this Christmas could be marginally more expensive than those for last
year because of labor costs.
The labor
shortage is sometimes portrayed as a short-term problem that is specific to
Guangdong, a province that is disproportionately reliant on migrant workers. But
some population experts say that it is related to a demographic shift in China
and that the situation could get worse with time, especially if factories keep
opening at the current breakneck pace. Dali Yang, a professor of political
science at the University of Chicago, predicted in a recent article that the
supply of entry-level, low-skilled industrial workers had started to shrink.
Because of the effects of the one-child policy, which was implemented in 1979,
the number of people between the ages of 15 to 19 will decline by 17 percent in
five years to about 103 million from 124 million today. This decline of about 21
million people is the equivalent to about four times the entire population of
Denmark.
Managers
say it is logical that wages will continue to rise if shortages persist. An
average worker in a sneaker factory now makes the equivalent of about $100 a
month. For some labor intensive factories with tens of thousands of workers,
that is too expensive.
Dream
International, the world's largest maker of stuffed animal toys, said earlier
this month that it would hire 6,000 workers in Vietnam this year to fill
expanded factories but none in China. The company is operating at 80 percent
capacity in China because it cannot find enough workers. Salaries are only part
of what employers in China have to pay. One striking difference between China
and its Asian neighbors is the high level of social charges. Sometimes called
"mandatory benefits," they include a social security tax, medical care tax and
housing savings plan, all of which add up to the equivalent of 40 to 50 percent
of an employee's salary.
According
to Watson Wyatt, a consultancy that specializes in remuneration issues, these
nonsalary costs in India equal 16 percent of an employee's salary, in Malaysia
12 percent, in Indonesia 10 to 15 percent, and in Australia 20 percent. "We do
emphasize to clients who are coming to China for the first time that China is
not a cheap place to do business," said Bob Charles, a senior consultant at
Watson Wyatt. These social charges have been around for years and in some cases
are capped, but the difference today, Pfeifer of Hewitt Associates said, is that
many companies are so desperate to retain top managers that they are increasing
other perks. "You need to be offering some supplemental benefits, things like
supplemental medical, housing, or savings plans - retention focused plans that
often are cash-based in the end but put hooks in the organization to retain
people," she said. When these types of benefits are factored in, companies are
paying an average of an additional 80 percent of an employee's salary in
benefits, Pfeifer said.
Yet even
with the extra perks, many Chinese employees are taking advantage of the high
demands for their skills and leveraging job offers. "The reality is that if you
go across the street you're going to get 20 to 30 percent higher pay," said Jim
Hemerling, senior vice-president at the Boston Consulting Group in Shanghai.
"What we see today is ping-ponging of people," Hemerling said. "People will have
CVs that literally have half a dozen 18-months tenures. They go from company to
company to company."
An article
in the People's Daily earlier this month gave these striking figures: For every
experienced skilled worker, there are 88 vacancies, and for every factory
technician there are 16 vacancies. The bottom line for companies is that
personnel costs are rising, both on the high end and for unskilled workers.
Companies these days are investing in China to be present in such a large market
more than relocating because costs are cheaper than in other countries, he said.
Charles, of
Watson Wyatt, said that rising costs in China were unlikely to lead to
large-scale moves by the manufacturers to Southeast Asian countries, where total
labor pools are considerably smaller.
He does not
rule out India, however.
http://www.expertclick.com
NewsReleaseWire.com (press release) -
USA
Greensboro, NC
April 24, 2005
Employee
Retention Survey: Foolish Time for Layoffs
Corporate executives are hungrily looking for ways to cut costs to impress
stockholders. Unfortunately, there is a serious risk involved in reducing
payrolls through schemes like layoffs and early retirements. The vulnerability
and cost to company morale, customer relations, intellectual capital, and
operational continuity are significant.
Three erroneous assumptions motivate corporate leaders to engage in outdated
practices like layoffs and early retirements: people put on the street are
replaceable; replacing gray beards with young turks is always a good move and it
really doesn’t cost that much to hire someone new. These assumptions are false
and tend to lead employers into high-cost downward spirals that can have
far-reaching negative effects.
The first assumption is that reducing payroll through layoffs or an early
retirement program will be easy to achieve by reducing the number of older
employees. The expectation is that the employer will be able to save a
considerable amount of money by hiring people to do not cost the company so much
for health benefits. This fact is not necessarily so, given that maternity
benefits—important for younger workers—are not needed at all by the firm’s more
senior employees.
According to employer beliefs , young people can do the same job as older
workers, for less money.. The fallacy in this reasoning is to expect “young
turks” to replace the “gray-beards” interchangeably, and that younger people
with less experience will be able to easily slide in and do the job without a
heavy investment in training, education, and on-the-job experience. The reality
is that younger workers may demand lower pay, but they don’t have the strength
that comes from knowing the product or service, customers, market, procedures,
or history. In addition, the younger people may encounter resentment from people
who had valued relationships with the exiled experienced workers.
Amazingly, many employers believe that it is easy to recruit and hire top
talent. That condition does not exist today. Finding receptive candidates in a
tight labor market is not a simple matter. The competition for good people means
that your cost of bringing on the replacements may be quite high. Economically,
it may be a lot less expensive to retain the intellectual capital in which you
already have a substantial investment.
Younger workers will be leaving companies soon, looking for greener pastures.
There will be plenty of jobs available, so there will be a lot of movement…a lot
of churning in the employment marketplace. Employers that can maintain a stable
workforce will have a decided advantage.
Reducing payroll now is akin to shooting yourself in the foot or trying to run a
race with your feet tied together. Now is the time to hold on to employees who
know their jobs and the people they serve. With good leadership support, these
talented human assets will perform at significantly higher levels than new
employees. The smartest strategy is a good employee retention strategy.
The impetus for
this press release was the report of a company in the energy field offering
early retirement packages to several thousand employees in an effort to reduce
staffing by 450 jobs. Estimates are that the company will now be forced to hire
approximately 1,000 skilled workers this summer, as the labor market tightens.
This strategy may allegedly appeal to stockholders, but it does not seem to make
any business sense.
Joyce Gioia
from Expansion
Management Magazine
www.expansionmanagement.com
February 14, 2005
Revenue
Growth, Health Care Costs Top List of Concerns for CFOs
What’s keeping financial executives up at night?
Making sure their companies remain in the black.
Thirty-four percent of chief financial officers
(CFOs) said their company’s top priority this year is growing revenue, according
to a survey conducted by Robert Half Management Resources. Twenty-two percent
said managing expenses was a top priority.
Nearly half (45 percent) of respondents said
they anticipate employee health care plans to be the biggest cost increase this
year, followed by technology spending (20 percent) and employee recruitment and
training (11 percent).
“CFOs are ready for the prospect of growing
their businesses in [2005], especially after a long period of economic and
regulatory challenges,” said Paul McDonald, executive director of Robert Half
Management Resources. “They also realize the importance of stepping up
recruiting and retention efforts to boost productivity and revenue.”
McDonald said the survey showed that CFOs remain
concerned about keeping expenses in check.
“Rapidly increasing health care costs have
become a challenge,” he noted. “Financial executives are looking for ways to
help offset some of these costs, while gauging employees’ tolerance for rising
out-of-pocket expenses.”
IT
Spending on the Rise In U.S., Around the World
Worldwide spending on information technology hit
$965 billion in 2004 and will grow at an average rate of 6 percent by 2008 to
reach $1.2 trillion, according to International Data Corp.
Research showed that U.S. spending on technology
will reach $416 billion this year, an increase of 5.8 percent, and will grow at
a pace of 5.9 percent to reach $501 billion by 2008, according to the company.
“These results indicate a positive outlook for
the U.S. and worldwide IT market, particularly after 2005,” the report said.
“With an improving business environment and recent GDP gains, companies are
loosening their restraints for information technology investments.”
Firms
Still Grapple to Link People Metrics To Corporate Goals
Companies are still struggling to tie people
metrics with overall corporate goals, according to a survey by New York-based
The Conference Board.
Only 31 percent of survey respondents said that
human resources (HR) executives in their companies have a strong understanding
of strategic key performance indicators, only 25 percent said they consider
their HR leaders capable of linking people measures to such indicators and only
16 percent said they believed that HR professionals receive extensive training
to connect people measures to strategy.
“When determining how best to demonstrate achievement, HR managers must choose
from the hundreds of metrics that are available to track every aspect of an HR
department’s endeavor to recruit, develop and retain employees,” said Stephen
Gates, principal researcher for The Conference Board and author of the report
“Measuring More Than Efficiency: The New Role of Human Capital Metrics.” “What’s
imperative for the health of their businesses, however, is that HR professionals
tie these people measures more closely into their efforts to meet their
companies’ overall strategic targets.”
http://theglobeandmail.com
February 2, 2005
Satisfied employees affect bottom line, study
says
Satisfied and engaged employees -- even those who do not deal directly with
customers -- bolster a company's bottom line, according to a recent study from
Northwestern
University. The report, "Linking Organizational
Characteristics to Employee Attitudes and Behavior," studied 5,000 employees at
about 100
U.S. media companies, Workforce Online
reports. There is a direct link between employee satisfaction and customer
satisfaction, and subsequently between customer satisfaction and improved
financial performance, because a satisfied customer is less expensive to serve,
says James Oakley, the author of the study. Staff
New research on 37,000
customers in 100 markets, done by the Forum for People Performance Management
and Measurement at
Northwestern
University, shows how employee attitudes translate
into stronger sales. While all customer-service research to date had been done
with employees who have direct contact with customers, The Impact of Employee
Attitudes on Market Response and Financial Performance is the first study to
focus on all employees, including those with no customer contact. The study
found direct links between employee satisfaction and customer satisfaction and
between customer satisfaction and improved financial performance.
The most important way
companies can create a satisfied workforce, the study says, is to develop good
communication up and down the organization. Also, organizations in which
employees — and customers — have a voice are the most effective.
Employee engagement goes
hand-in-hand with satisfaction. “Organizations with motivated employees have
customers who use their products more, and increased customer usage leads to
higher levels of customer satisfaction,” the survey says.
The study also advocates
competition — such as incentive contests — among employees and teams for best
ideas and practices. The key is that the competition be focused on appropriate
outcomes, such as service delivery or quality measures.
Francis J. Mulhern, PhD,
associate dean and chairman of Northwestern University's graduate program in
integrated marketing communications, says the study should inspire companies to
focus more on internal marketing and communications. “After all, the products
produced by an organization's employees are the embodiment of the attitudes and
behaviors of the employees who produce them.”
RISK MANAGEMENT INCLUDES
WORKER ISSUES
Small
Times Magazine: Big News in Small Tech.
www.smalltimes.com
by John Bugalla, Scott Dunbar, Matt Ward
February 16, 2005
The
National Science Foundation (NSF) estimates 40,000 scientists in the United
States have the skills to work in nanotechnology. However, assuming that
nanotechnology grows into a $1 trillion industry as the NSF estimates, 800,000
highly skilled nanotechnology workers will be needed in the country by 2015. The
European Union and Asia also will require hundreds of thousands of specially
trained nano workers.
Risk
management – which includes asset protection – also includes people. Recruiting
and compensation issues will be a dynamic process as nations compete for
scientific and engineering nanotech talent. Attracting critical talent will be
an essential element of an emerging nano company's business plan. Keeping that
talent will also be critical for a company's success. Both recruitment and
retention will require creative approaches, particularly given a recent mandate
that could affect stock options.
U.S.-based technology startups are usually short on cash and revenues.
Traditionally, they have attracted key talent with the lure of stock options,
since cash compensation programs run counter to the mission of raising funds for
research and product development. The model for stock compensation has always
been very broad-based and egalitarian at technology companies. This philosophy
evolved from the collaborative environment that the technology sector grew out
of in university laboratories.
Changes in the road ahead
That
is expected to change this year. The Financial Accounting Standards Board (FASB)
has mandated recognition of financial statement expenses for stock-based
compensation. FASB is the rulemaking authority for accounting empowered by the
Securities and Exchange Commission.
That
means the fair value of stock options will have to be expensed beginning the
third quarter of 2005. The issue for employees is that companies may stop
granting stock options as this new expense will have to appear on income
statements and will therefore impact earnings.
This
is a change from the previously announced date of Dec. 15, 2004. FASB wanted to
give companies more time to adjust to the accounting rules and address the issue
of determining "fair value." There are a number of companies that are selling
financial models that will help determine fair value.
So
far, the effect of the new regulations has not been that significant in the
technology industry. But for some companies, employee stock option programs will
compose the largest expense item. That has prompted some to consider
discontinuing the programs. Public technology companies have begun to study
alternatives to stock options in a post-expensing world, like discounted options
or stock appreciation rights and performance shares.
Some
companies that see opportunities for growth on the horizon have decided that
they will stick with stock options, since they remain the most effective device
for attracting and retaining talent. This is especially true of pre-IPO
nanotechnology firms.
Managing the new reality
The
challenge for nanotechnology companies when they go public and once they become
public will be to keep their investors informed of their compensation
philosophy. Shareholders have become increasingly critical of potential dilution
from stock options in technology firms, especially where the equity is
concentrated at the top.
Companies assessing their potential risks also should consider their dependence
on their star researchers and innovators. Many nano companies are built around
key scientific and technical talent who develop the primary intellectual
property assets of the company – patents. The sudden death or departure of a key
individual could have a significant impact on the financial prospects of a young
company. Traditional planning tools like key person insurance or supplemental
retention/benefit agreements may be a solution that should be considered to
protect the company's investment in its talent.
In
addition, it can take years to develop nano concepts into commercially viable
technologies. While equity/stock has the allure of a long-term financial "home
run," it also is important to balance this potential with a package of
retirement and insurance benefits that provide basic protections in the
meantime.
Attracting critical talent and keeping it will be an essential element of an
emerging nano company's business plan. Greater attention and a creative approach
to compensation issues will be more important than ever before.
Knowledge Management Technologies
Integrating knowledge management technologies in organizational business
processes: getting real time enterprises to
deliver
real business performance [for a comprehensive pdf document: ]
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