Aon Hewitt Think Tank: Let’s Talk Leadership

Panelists discuss leadership trends at Aon Hewitt's Top Companies for Leaders Think Tank event. Photo courtesy of Frank Mari

Panelists discuss leadership trends at Aon Hewitt’s Top Companies for Leaders Think Tank event. Photo courtesy of Frank Mari

Each year, our “What’s Keeping HR Up at Night” survey asks HRE readers to share some of the challenges that keep them counting sheep in the wee hours.

We recently closed this year’s poll—the results of which you can find in our upcoming July/August print and digital editions. While the findings yielded some surprises— as they always do—HR’s biggest woes remain pretty much the same in 2015. When asked to identify the biggest HR challenges facing their organization today, the most common replies were “ensuring employees remain engaged and productive” (39 percent), “retaining key talent” (26 percent), and “developing leaders” (24 percent). These issues have comprised the top three challenges among our readership for three years running.

CHROs at some firms, however, are apparently sleeping more soundly than others, at least as far as leadership development is concerned.

Earlier this week, I had a chance to listen to HR leaders at a handful of organizations who excel in this area; so much so that they earned a spot on Aon Hewitt’s most recent Top Companies for Leaders list, which consists of 25 organizations singled out for their strength of leadership practices and culture, examples of leadership development on a global scale, alignment of business and leadership strategy, business performance and company reputation.

On Monday evening, representatives from 23 of these 25 companies converged on General Electric’s picturesque GE Crotonville campus in Ossining, N.Y. There, they would spend the next two days talking about some of the leadership development efforts that landed them on the guest list for “the party that everyone wants to attend,” said Pete Sanborn, the Atlanta-based global practice leader of Aon’s talent and organizational practice group, in kicking off Tuesday morning’s activities by individually acknowledging each of the Top Companies and the characteristics that set them apart.

One trait shared by these organizations is a knack for finding and nurturing potential leaders early on in their careers, and setting them on the leadership track.

As part of a Tuesday morning panel presentation, GE’s Peter Cavanaugh and Belinda Tang from IBM Corp. discussed approaches to identifying and assessing young, would-be leaders. (GE and IBM hold the No. 1 and No. 2 spots on Aon’s latest Top Companies for Leaders list, respectively.)

Entry-level leadership initiatives are certainly “not a new concept,” said Cavanaugh, global learning and operations leader at GE.

Such programs, however, “provide a framework for taking new approaches to developing leaders,” he said.

GE, for example, selects certain entry-level employees to work on high-level project groups, providing ideas and input, and, moreover, getting a taste of what it’s like to lead a team.

At IBM, the Armonk, N.Y.-based technology company has introduced Consulting by Degrees, a developmental program designed to groom top, entry-level business consultants to one day fill leadership positions.

Within the program, these young IBMers “are operating like senior consultants,” said Tang, vice president of global leadership development at IBM.

Participants build core skills over a two-year period, performing work for clients and returning to the classroom every six months to practice speaking with clients and “doing the things that make a great consultant” before deciding the area in which they want to specialize, she said.

Getting broad leadership experience under their belts in their early days at IBM helps these high-potential consultants find a niche within the organization—regardless of their pedigree, Tang told the audience.

“We hire the best athlete,” she said. “We’ve had dance majors who have flourished with us.”

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SHRM ’15: Global Shift, High Performers and More

Blistering temperatures hovering around 115 degrees apparently didn’t keep folks away from this week’s SHRM 2015 Annual Conference and Exposition in Las Vegas. Under the theme “It’s Time to Thrive,” the event attracted a record 15,500 attendees from around the globe. (Vegas seems to be a draw, no matter what the time of the year.)

SHRM photoCrowds and the heat index aside, I did notice at least one refreshing change at this year’s event: a lot more practitioner speakers.

Though I didn’t do a thorough analysis, a quick scan of the program book suggested there were definitely more HR leaders on the program than in prior years—a development I would certainly put under the category of a good thing.

Case in point: a Monday morning session by Steve Fussell, executive vice president of human resources for Abbott Laboratories in Abbott Park, Ill.  Titled “Managing a Global Workforce During Times of Change: M&A, Organic Growth and Spin Offs,” Fussell’s talk recounted Abbott’s dramatic and impressive transformation in the aftermath of spinning off its research-based pharma arm, AbbVie, in 2012. (Fussell, BTW, was named to HRE’s Honor Roll in 2010.)

As Fussell explained to the packed room, the spin off left Abbott with a much more global business and workforce. (Today, he said, less than one-third of the firms’ revenue now comes from the United States and 70 percent of employees are outside of the country.)

On top of that, he added, Abbott became, almost overnight, a much more customer-facing business.

These changes, Fussell said, will inevitably lead a very different leadership mix in the coming years.

“Three to five years out,” he said, “I can tell you that we will probably double the number of people in senior leadership roles … who do not carry a U.S. passport.”

As a part of the transformation, HR focused on three specific buckets: core, critical and unique.

“Core,” he explained, is having people who feel and behave like owners and are able to make hard decisions. “We don’t want GMs saying this doesn’t matter in this market,” he said. To that end, he continued, Abbott built business advisory committees in every one of its markets around the globe and requires leaders in those markets to talk about those areas they consider to be core.

“Critical,” he said, “are the [issues] we have to get right together to build the market presence that allows us to [successfully] compete.”

And then there are those issues that are “unique”:

Don’t call me up and ask me about the summer bonus somewhere … . If I’m getting those calls … I need to question the people we have in those jobs.

Fussell also shared what he looks for in leaders. First and foremost, he said, leaders need to be able to analyze a situation. “Do they have an analytical ability to notice the things that are happening in the markets in which they serve?” he asked. “Can they see things our competitors can’t see?”

Second, he continued, are they leaders who can diagnose the things that ultimately will determine outcomes?

Third, are they able to describe a direct course of action? “Do they have a sustainable record of taking what they’ve seen and diagnosed, and then put together an outcomes-based approach … ?”

And fourth, can they execute? With a tone of sarcasm, he said “I’m sure none of you have seen a business that noticeably missed its plan for the year, perhaps by a mile, and then, after looking at all your performance ratings, found that 36 percent [of the employees]exceeded performance.”

Performance—and rewarding those employees who excel at it—was certainly at the heart of a presentation delivered Tuesday afternoon by Michelle DiTondo, senior vice president of human resources for MGM Resorts in Las Vegas.

In the session title “MGM Resorts: What is it Worth to You to Keep Your Top Performers?” DiTondo shared the talent-retention challenges facing the gaming giant and detailed an approach currently being piloted to help address them.

Envision having 50,000 of your 62,000 workers all located on a single street—and then having the vast majority of biggest competitors located on that same street as well. (In this case, the street is the “Las Vegas Strip.”)

That’s the reality facing MGM Resorts, DiTondo said.

To tackle this challenge, DiTondo said she put a unique twist on question business leaders at MGM Resorts were more than familiar with: What are your very best customers worth to you?  She asked them to think about what their very best-performing employees were worth to them?

“It’s an easy analogy for us,” she said. “As business leaders, we understand the value of treating our best customers [known as ‘whales’] differently from all of our other customers. We understand why an airline has a first-class lounge for customers who pay more …  .”

By making sure all of this is done in a very public way, she said, you’re able to drive “aspirational behavior.”

Every industry has “whales,” not just gaming,  she added.

At MGM Resorts, DiTondo said, the highest level of its loyalty program is called “NOIR.”

These “whales” represent less than 1 percent of the company’s total customers and are treated very differently, she explained. “They get exclusive awards such as being picked up in a private plane [or] staying in “The Mansion,” [exclusive quarters] just behind the MGM Grand. Why are they treated differently? Because while they represent just 1 percent of MGM Resorts’ database, they drive 600x more revenue compared to the average customer.”

Building off of this model, DiTondo, with her CEO’s blessing, began to rethink the way MGM Resorts’ approached its top talent. “If we have high-performing employee, do we apply the same sort of things to them that we give to our high-performing customers?” she asked. “Do we give them access to the chairman? Are they given access to senior leaders? Are they given exclusive benefits that are only for high performers? Do we have personal relationships with them? Do we know about their family, their interests, their personal milestones? Do we understand the impact on the business were they to leave? Do we treat them like VIPs? From my standpoint … the answer is no.”

In the pilot, DiTondo said, MGM Resorts partly copied an approach taken by Chipotle Mexican Grill to groom more restaurant managers internally. Under the initiative, she said, general managers at the chain were given a $10,000 bonus for each individual who was promoted into Chipotle’s management program.

To hold onto and incent its top talent, DiTondo said, MGM created, as a part of the pilot, a tiered bonus program for general managers and executive chefs who met certain benchmarks that included a “super incentive” of 1 percent of both the restaurant’s top and bottom lines.  (At one of the highest performing buffets, she said, these high-performing individuals could now receive a $30,000 bonus, compared to $3,000 under the prior arrangement.)

On top of that, she said, they also now have the potential of reaping a bonus of 10 percent of a person’s base pay if that individual is promoted to a GM and executive chef job. (To receive the bonus, the individual needs to put in a place a plan, as well as coach and mentor the candidate.)

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In other news: SHRM continued its tradition of releasing its latest Employee Benefits Survey at the annual conference.

According to Evren Esen, director of SHRM’s survey programs, the big headline this year was employers’ continuing commitment to wellness. Of the 463 respondents, employers with wellness programs jumped between 2011 and 2015 by 10 percent, from 60 percent to 70 percent.

Esen suggested that employers were investing in wellness as a way to counter the financial strain resulting from healthcare.

In line with this increase, the study revealed significant increases over the past five years in the use of healthcare premium discounts for participating in wellness programs (from 11 percent to 20 percent) and healthcare premium discounts for those not using tobacco products (from 12 percent to 19 percent).

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Towers Watson and Willis Announce Merger

According to this press release sent out early this morning, Willis Group Holdings and Towers Watson just announced the signing of a definitive merger agreement under which the companies will combine in an all-stock merger of equals transaction.

According to the release, the implied equity value of the transaction is approximately $18 billion. The transaction has been unanimously approved by the Board of Directors of each company. The combined company will be named Willis Towers Watson.

John Haley, Chairman and Chief Executive Officer of Towers Watson, said, “This is a tremendous combination of two highly compatible companies with complementary strategic priorities, product and service offerings, and geographies that we expect to deliver significant value for both sets of shareholders.”

Haley says he also expects to “realize substantial efficiencies by bringing our two organizations together, and have a well-defined integration roadmap to capitalize on identified savings, ensure the strongest combination of talent and practices, and realize the full benefits of the merger for all of our stakeholders.”

There’s no word yet on how — or even if — the two organizations will combine their robust human-capital management practices, but we’ll keep you posted here  when we learn the answer to that one. (Calls to both sides for comment have yet to be returned.)

Mark Stelzner, founder and managing principal of Inflexion Advisors in San Francisco, shared his thoughts on the merger with HRE Daily earlier today.

Towers Watson and Willis, he said, complement each other in many ways, creating potential for stronger offerings for the newly combined organization and, by extension, its clientele.

“Like any merger of this size and complexity,” he said, “clarity of purpose, organizational restructuring, operational rationalization and cohesive external messaging are going to materially impact the success or failure of the newly combined entity.”

Stelzner’s advice to existing clients of both organizations: Take the time to weigh whether the emerging philosophy, strategy, services and product offerings are strategically aligned with their current and future needs.

Meanwhile, Liz DeVito, an associate director at Kennedy Consulting Research & Advisory in Keene, N.H., who specializes in HR consulting and covers the benefits, human capital, outsourcing and investments markets, says the merger’s timing may put TW in a precarious position from a talent perspective.

“TW is now vulnerable to client and talent poaching,” she says. “The deal has six months to close, which is a long time, and I’m sure the competition is drawing up campaigns to poach consulting clients from TW, especially in the areas of rewards, talent management and HR transformation.”

DeVito says she was at Mercer when Aon bought Hewitt and Towers Perrin & Watson Wyatt merged, “so I speak from experience. The competition will be able to exploit client anxiety over the next few months.”

She says the same goes for consulting talent as well.

“I’m sure Willis-TW leadership will come up with an attractive stock options program to retain key talent, but there will be some leakage,” she says.

What I have noticed in my research over the past six months is that the HR consultancies are poaching talent right and left. I’ve never seen it so active in my three years of covering this market.

They’re poaching from the Big Four human capital consulting practices and strategy firms, as well as each other, she says.

“They’re looking for consultants with very specific capabilities as they build out next generation service offerings in talent management,  HR technology advisory, HR analytics (particularly strategic workforce planning), HR transformation, organization design, and change management.  And these are all areas where TW has very strong capabilities and talent.

“I’m sure there were a lot of phone calls today from TW consultants to the competition,” DeVito says.

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Know When the ADA Trumps Your Policy

101390464 -- gavel and law booksBeware your urge to discipline.

That seems the best mantra for HR leaders in this new ADA day.

Two reminders of the mounting murkiness when it comes to drawing the line between your work policies and the amended Americans with Disabilities Act floated my way recently in this piece from the Society for Human Resource Management (registration required) and this from The Growth Co., headed up by Lynne Curry.

The SHRM piece highlights a $180,000 settlement Walgreens agreed to pay a cashier who the company fired after she took and ate a $1.39 bag of potato chips without paying for it. Turns out the cashier, Josefina Hernandez, was a diabetic who needed the chips during a hypoglycemic attack to stabilize her blood sugar.

Also turns out, in this age of heightened disability sensitivity and the need for employers to be sure they’re engaging in reasonable-accommodation discussions and the interactive process, Walgreens apparently did everything wrong. (Requests for comments from Walgreens have not been returned.)

According to the piece, when a loss-control supervisor asked for an explanation after finding the empty potato-chip bag under the counter at her cash register, Hernandez wrote in a statement, “My sugar low, not have time.” The supervisor didn’t know what she meant, so she was fired for violating Walgreens’ anti-grazing policy. On the contrary, the courts found, it was Walgreens that was in violation, of the ADA.

Had HR been involved throughout the investigation and pre-termination process, Walgreens would probably have been $180,000 richer. As Robin Shea, an attorney with Constangy, Brooks & Smith, says in the piece, “HR people are generally in the best position” to determine whether workplace discipline and/or termination is an overreaction.

“If it appears that the employer is using a nuclear weapon to kill a gnat, then maybe termination is not the answer,” she tells SHRM.

The other piece concerns alcohol. In it, Curry reminds us that, as much as an employee’s alcohol dependence brings everyone down — employee, co-workers and employer — and although you can establish policies prohibiting alcohol consumption at work or prior to work events, an alcoholic does have rights.

For the record, here’s Curry on that:

“According to the federal Equal Employment Opportunity Commission, an alcoholic who can perform the essential functions of his [or her] job may have a disability requiring employer accommodation under the Americans with Disabilities Act. The courts are fairly unanimous in ruling that an employer needs to grant at least one leave of absence so an alcohol-dependent employee can participate in a treatment program if the employee hasn’t misused alcohol on the job or engaged in misconduct.

“For example, in the landmark Schmidt v. Safeway Inc. case, the court ruled that the ADA may require an employer to provide a leave of absence to an employee with an alcohol problem if it is likely that the employee would be able safely to perform his duties following treatment. With an alcohol-dependent manager, a leave of absence for outpatient or inpatient treatment may be the logical accommodation.”

At the same time, she writes:

” … alcoholism doesn’t immunize managers or employees from the consequences of their actions. Employers can hold alcohol-dependent managers and employees to the same performance and behavior standards as non-alcoholics and discipline or discharge an alcoholic whose alcohol use adversely affects his job performance. As an example, if an alcoholic employee often arrives late to work or makes frequent errors, the employer can take disciplinary action based on the poor job performance and conduct. Furthermore, the 2nd U.S. Circuit Court of Appeals ruled that the ADA does not protect an employee from termination for alcohol-related absenteeism when reliable attendance at scheduled shifts is an essential job function.”

Where does this leave us? I guess with a simple “Be Careful.” And in today’s increasingly employee-supportive legal landscape, “Consult Counsel,” too.

As clear-cut as it may seem that certain activities — such as stealing company property and alcohol abuse — have no legitimate place in your organization, except as forbidden zones in your employee handbook, just remember to beware the law, where black-and-white mandates are far outweighed by shades of gray.

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Here’s a New Gen Y Adjective: Conservative

Gen Yers apparently don’t need to “get real” when it comes to retirement—a survey released earlier this week suggests many may already be “real,” at least when compared to their elders.

ThinkstockPhotos-494091025A study of 1,000 American adults released Wednesday by TIAA-CREF, titled the 2015 Lifetime Income Survey, found that, when it comes to retirement planning, Gen Yers (those between age 18 and 34) seemingly are more conservative than older generations in their retirement outlook, with only 56 percent saying they are counting on Social Security to provide income in their retirement. In contrast, 76 percent of those between ages 35 and 44 and 73 percent of those between ages 45 and 54 indicated that was the case.

According to the study, 34 percent of the respondents said if they could choose one primary goal for their retirement plan, it would be to ensure that their savings are safe, no matter what happens in the market—a marked increase from older generations. Only 16 percent of Americans ages 35 to 44 and 22 percent of Americans ages 45 to 54 reported the same.

The survey also found that Gen Yers tend to take a pragmatic view about the length of time their retirement may last: 34 percent say they plan to accrue retirement savings to allow them to live comfortably for more than 25 years, compared to only 26 percent of respondents overall. However—and here’s the particularly disturbing, though not necessarily surprising data point—31 percent aren’t currently saving any money for retirement, due in part to financial challenges such as student loans or jobs that don’t offer retirement plans.

Here’s one take on the findings, this from Teresa Hassara, executive vice president and head of Institutional Business at TIAA-CREF …

“Many in Gen Y came of age during the Great Recession, which helped shape their attitudes and outlook[s] on their own finances. They face higher student-loan debt and fewer prospects for full-time employment with benefits than previous generations, making it harder to save enough for a comfortable retirement. The gap between the need for financial security and having the will and the means to achieve it may well impact this generation for decades to come.”

All points well worth considering the next time you re-evaluate your benefits-communication strategy.

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HBR: It’s Time to ‘Blow Up’ HR

powIt’s summer blockbuster season, with actors like Chris Pratt and Dwayne “The Rock” Johnson saving us from rampaging dinosaurs and earthquakes with the aid of tons of CGI special effects (and plenty of clunky dialogue), so perhaps it’s appropriate that the Harvard Business Review (subscription required) has emblazoned the cover of  its July/August issue with an icon of a ball of dynamite and the provocative headline “It’s Time to BLOW UP HR And Build Something New.”

The three related articles inside aren’t quite as explosive as the cover suggests, but  thought-provoking nonetheless. The first piece is by none other than our own Talent Management columnist, Wharton professor Peter Cappelli, who writes that business leaders tend to see HR as a valuable asset during talent crunches but as a mere nuisance when times are better. In order to get out of this rut, HR leaders need to “set the agenda,” Cappelli writes. Rather than waiting for the CEO to tell them what to do, HR leaders must strongly advocate for excellence in every process the function touches (or should touch), from layoffs to recruiting to performance management, he writes.

HR leaders also need to either deepen their own knowledge of analytics or partner with those who are experts in order to “help companies make sense of all their employee data and get the most from their human capital,” Cappelli writes. Finally, HR leaders must help their organization’s leadership “take the long view,” he writes:

How can HR bring the long view back into organizations? By reconciling it with the immediate pressures that businesses face, which those one-at-a-time projects are designed to address. … HR should also keep stepping back to study those initiatives in the aggregate: What emerging needs do they point to? How do those needs map to the organization’s talent pipeline and practices? Which capabilities need shoring up?  … That’s the kind of analytic counsel the “new HR” should provide.

The next piece is by none other than Ram Charan, the management consultant who stirred up controversy last year with an HBR piece in which he argued for splitting HR in two. Well, he’s back and this time he’s got company in the form of co-authors Dominic Barton, global managing director of McKinsey & Co., and Dennis Carey, the vice chairman of Korn Ferry. In “People Before Strategy,” they argue for a new triumvirate at the top of organizations comprised of the CEO, the CFO and the CHRO. This three-person team will form a “core decision-making body” for the organization in which the CHRO will be the trusted advisor in all things people-related. “Forming such a team is the single best way to link financial numbers with the people who produce them,” they write.

The final piece is a deep dive into the work done by the HR department at tech firm Juniper Networks to make itself a vital part of that business. Juniper Networks has had to make a number of adjustments to its business over the years, write co-authors Jon Boudreau (of the University of Southern California’s Marshall School of Business) and Steven Rice (former EVP of HR at Juniper Networks and now CHRO at the Bill & Melinda Gates Foundation), and HR has been key in those transformations. Rather than reaching for the latest “bright shiny objects,” as too many HR leaders do, they write, the JN team worked hard to understand the big picture of the company’s business, identify the most valuable ideas, apply them in context and carefully manage their impact.

The work the HR team did included working closely with business leaders to reorganize the organization to make its operating model more simple, do away with cumbersome processes that were adding little value (including a forced-ranking system that was hurting morale) and finding ways to increase collaboration and innovation.

Developing a reputation as an innovative HR organization “requires walking a fine line,” the authors write. Ideas for innovation often arise from popular talks and articles, yet if you “embrace too many of these … or apply them too superficially,” you’ll develop a reputation for fad surfing, they write. Instead, “dig beneath the surface to the fundamental scientific research and insights, and you can set the stage for true impact.”

All in all, a worthwhile series of articles — complete with the bizarre yet compelling artwork the HBR has been featuring in recent years.

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Are We On the Path to Paid Sick Leave?

sick employeePaid sick leave seems to be on everyone’s mind lately, from Hillary Clinton and Thomas Perez to the leadership at Chipotle and McDonald’s.

For example, you may remember Secretary of Labor Perez recently embarking on the Lead on Leave—Empowering Working Families Across America tour, during which he sought to “promote best practices and discuss how paid leave and other flexible workplace policies can help support working families and business,” according to a Department of Labor statement.

One of Perez’s stops on that roughly month-long jaunt was Oregon, where lawmakers recently passed a measure that would require employers with at least 10 workers to offer up to 40 hours of paid sick time annually. If Oregon Governor Kate Brown signs the bill—which she is expected to do—the Beaver State would join California, Connecticut and Massachusetts as the only states to have enacted paid sick leave requirements.

President Obama has urged Congress to pass federal legislation giving U.S. workers seven days of paid sick leave. But the consensus remains that such a bill would be unlikely to gain the necessary Congressional support in the near future.

Some companies, of course, aren’t waiting for a federal paid sick leave law to become reality. Microsoft, for example, made headlines in March by requiring many of its 2,000 contractors and vendors to offer 15 paid days off for sick days and vacation to their employees who perform work for Microsoft.

At the time, many scoffed at the notion of other large companies doing the same, but two of the biggest names in the fast-food universe were quick to follow the Redmond, Wash.-based tech giant’s lead.

Just days after Microsoft went public with its bold move, for instance, McDonald’s announced it would add paid time off to its roster of benefits, even for part-time workers, at the 10 percent of McDonald’s franchises that are company-owned.

And, effective July 1, Denver-based Chipotle Mexican Grill Inc. will provide paid sick leave to hourly workers—a benefit previously enjoyed exclusively by the restaurant chain’s salaried workers.

The front-runner for the Democratic presidential nomination would no doubt like to see more employers go a similar route.

Hillary Clinton has made paid sick leave a centerpiece of her platform, commending cities such as Philadelphia for signing paid sick leave bills into law, and expressing her support for such legislation in public forums.

This week, the New York Times made mention of Clinton’s assertion that no one should “have to choose between keeping a paycheck and caring for a new baby or a sick relative,” in a piece noting the momentum gathering behind paid sick leave in the business sector as well as the political sphere.

“With pay for most workers still growing sluggishly—as it has been for most of the last 15 years—political leaders are searching for policies that can lift middle-class living standards,” according to the Times. “Companies, for their part, are becoming more aggressive in trying to retain workers as the unemployment rate has fallen below 6 percent.”

Still, the fact remains that federal legislation seems unlikely to materialize any time soon, as the Times acknowledges.

“With most Republicans in Congress opposed to new leave laws, the biggest changes will probably occur at the state and local level, including in some Republican-led states.”

True enough. But with no federal movement on the horizon, it will be interesting to see if states or individual companies make significant changes in the coming months, or if Microsoft, Chipotle, McDonald’s and the like will remain outliers on paid sick leave.

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Female Managers: Change Agents or Just Cogs?

Do female managers act in ways that narrow, preserve or even widen the gender wage gap?

That was the essential question for Sameer B. Srivastava, an assistant professor,  and Eliot L. Sherman, a doctoral student, both of the Haas School of Business at the University of California, Berkeley, and their answer might just surprise you:

“We find conditional support for the cogs-in-the-machine perspective: In the subsample of high performing supervisors and low performing employees, women who switched from a male to a female supervisor had a lower salary in the following year than men who made the same switch. “

Their research, “Agents of Change or Cogs in the Machine? Re-examining the Influence of Female Managers on the Gender Wage Gap,” is featured in the latest issue of the American Journal of Sociology.

The study examined how the salaries of both male and female employees changed when they switched from reporting to a male manager to reporting to a female manager (and vice versa).

Previous research suggested that female managers can be “agents of change” who act in ways that reduce the gender wage gap, but this study didn’t support that supposition.

In fact, a subset of switchers—low-performing women who switched to working for a high-performing female supervisor—fared worse financially, not better, than their male colleagues making a comparable switch.

“A high-performing woman might, for example, worry about being devalued because of her association with a low-performing female subordinate,” says Srivastava. “This effect can occur when people see themselves as part of a valuable group but worry that others won’t see them that way. This might lead her to undervalue the subordinate’s contributions.”

Srivastava and Sherman analyzed 1,701 full-time employees in the U.S. who worked for a leading firm in the information services industry between 2005 and 2009. The researchers had access to complete employment data: salary, reporting structure, annual performance evaluations, and demographic information. For example, the average age of employees was 43; average length of employment was 8.85 years; and merit increases ranged from 3 percent to 5 percent.

The authors conclude that it may be wishful thinking to assume that the gender wage gap will automatically close as more and more women take management positions.

For fundamental change to actually occur, the authors say, the increasing number of women managers must be matched by an organizational culture that is committed to gender equality, fostering initiatives to reduce tokenism, and encouraging women to positively identify with their gender in the workplace.

So, HR leaders, I pose this question to you: Is your organization training its female managers to become agents of change or just cogs in the machine?

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Unions Helped, But Now Hurt, Cannabis Industry

Yea yea … last week it was drug abuse and addiction. This week it’s marijuana. Trust me, I’ve taken my share of ribbing around the halls 173779091--cannabisof HRE for having seemed to take on the “drug beat.” (Though Mark McGraw’s post on Wednesday about the implications of the Colorado Supreme Court’s Coats v. Dish Network decision may have spared me a few ribs.)

For the record, I’m not obsessed. Nor am I high. (Or funny, I’m sure.) Just hugely intrigued by the growing problem of drugs at work, and the almost explosive ascension of marijuana as a legalized “mind-alterer” and legitimate business. (Here are two recent posts — one late last year, one early this year — and a news analysis in which I’ve examined this phenomenon.)

It’s the business side of marijuana I find most intriguing in this recent piece on the Marijuana Business Daily site. Seems the very union that has nudged this burgeoning cannabis industry along, “helping to pass legislation and regulations that benefit business owners and the movement as a whole,” as the story puts it, is now presenting “canna-business” owners with some challenges.

Actually, the story refers to unions, plural, but the leader of the charge to organize thousands of businesses — dispensaries, infused products companies, ancillary firms and cultivation sites in numerous states including California, Colorado and Minnesota — and to represent even more thousands of employees, from budtenders to growers, is the United Food and Commercial Workers Union, one of the largest labor organizations in the country. UFCW even has a marijuana division along with a parallel website dedicated to promoting unionized marijuana businesses.

Bear in mind, these businesses sprouting up faster than the plants themselves are being run — for the most part — by people who are new to business. Now they’re finding they have to negotiate collective-bargaining agreements, and “that can boost costs, increase red tape, lead to legal issues and create new headaches,” the story says.

Granted, there are positives, too.

As the MBD story notes, in addition to politically partnering with the industry and helping to muscle pro-marijuana legislation through in more than one state, the UFCW’s “experience in moderating employer-employee disputes is an asset, along with systems the union usually proposes to standardize employee reprimands and evaluations.”

Still, it will be interesting — “intriguing,” to quote this very post — to see just how these cannabis start-ups deal with the challenges of working with labor unions.

As industry consultant Todd Mitchem tells MBD:

“When someone’s pro-union in the industry, my question is, ‘What’s the motivation?’ [According to him, there’s not a lot of need in cannabis companies for the traditional watchdog role that unions have played in other industries, such as mining or automotive manufacturing.]

“By and large, this industry wants to play by the rules. You run into a massive divisiveness between the employer and the employee [once unions become part of the equation]. To overlay a union structure onto a fragile industry … is really short-sighted and, in my opinion, risky.”

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Are ‘Significant’ Changes to Comp Disclosures Coming?

If you believe the good folks over at Towers Watson, then the answer to that question in the headline is a yes. (A qualified yes, but, a yes nonetheless.)

One in three U.S. public companies expect to significantly change their approach to disclosing information on how they reward their executives in the wake of the Securities and Exchange Commission’s proposed pay-for-performance disclosure rules, according to a poll by global professional services company Towers Watson.

The poll also found that a majority of companies are likely to provide additional information and analysis that go beyond what the proposed rules will require.

In case you forgot, back in April, the SEC issued proposed rules to implement the Dodd-Frank provisions that require companies to disclose the relationship between executive compensation actually paid and the company’s financial performance.

The proposal would require company proxy statements to include a pay-versus-performance table and an explanation of the relationship between pay and performance. The Towers Watson poll of 453 corporate executives and compensation professionals was conducted June 4, during Towers Watson’s national webcast on the proposed rules.

According to the poll, 33 percent of respondents expect the pay-for-performance disclosure rule will fundamentally change their approach to executive pay disclosure. More than half of the respondents (55 percent) expect to do more than the minimum that would be required under the SEC proposal: 37 percent plan to disclose additional information and analyses to help tell their pay-for-performance story, while 18 percent will perform and may disclose additional pay-for-performance analyses.

“With the SEC rules on the table, companies can carefully evaluate how they tell their pay-for-performance story to shareholders,” said Steve Kline, a director in Towers Watson’s Executive Compensation consulting group and the practice’s pay-for-performance analytics team leader. “The fact that many companies expect to provide more information than the rules require is encouraging, although for many, the real challenge will be deciding the best way to present this information in their proxies.”

The poll also found that nearly half of the companies (46%) have been waiting for the rules to be issued and now expect to make some changes to their Compensation Discussion and Analysis (CD&A), while one in 10 view this as an opportunity to revamp their CD&A significantly. Additionally, roughly half of respondents (51%) anticipate using the same peer group for their pay-versus-performance disclosure that they use for benchmarking their total compensation.

“While not surprising given the language of the Dodd-Frank requirement, the fact that the SEC proposal defines performance in this disclosure as total shareholder return will put even more shareholder focus on this measure,” Kline said. “However, TSR is only a part of the pay-for-performance story. Companies will want to think carefully about the broader performance picture and how best to help shareholders understand how the pay programs support long-term value creation.”

Indeed, HR leaders will need to be a big part of that thought process around the “broader performance picture” in order to set the right framework to ensure compliance with these proposed changes.

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