All posts by Jack Robinson

Jack Robinson is a senior editor at Human Resource Executive magazine.

How Microsoft’s LinkedIn Deal Could Change HR

The HR tech world just got a big new player. Really big.

Once Microsoft closes its $26 billion acquisition of LinkedIn late this year, the software giant will own a service that has become increasingly important to HR departments around the world. With Microsoft’s resources behind it, LinkedIn could become a massive force not only in recruiting, but in the larger world of HR, experts say.

LinkedIn CEO Jeff Weiner said as much in an email to his staff on Monday announcing the deal.

Among the business opportunities for Microsoft, he noted, is “expanding beyond recruiting and learning and development to create value for any part of an organization involved with hiring, managing, motivating or leading employees. This human capital area is a massive business opportunity and an entirely new one for Microsoft.”

That doesn’t necessarily mean a Microsoft-backed LinkedIn will be moving into payroll, benefits administration and other bread-and-butter HR applications, though.  Many experts see the company integrating LinkedIn data into Microsoft Office tools, but not moving wholesale into new lines of business.

Under Microsoft, “LinkedIn could become a network for learning and collaboration,” providing HR departments a tool for connecting employees, says George LaRocque, a well-known HR technology consultant. “I think that’s the direction.”

LinkedIn already is a force to be reckoned with. Though far smaller than social-media titans like Facebook, it virtually owns the world of professional connections, with over 100 million active users and four times as many profiles. It’s increasingly necessary for an active business person to have a presence on the site, which has made it a critical resource in many businesses — particularly sales and HR.

The company posted $2.9 billion in revenue last year. About $1.9 billion of that was in its “talent solutions” business, the company says. Most of that came from recruitment services, which include premium search functions, targeted job postings, a referral tool for current employees and company branding. Through its April 2015 acquisition of the online tutorial site Lynda.com, LinkedIn also has a solid presence in training.

Though revenue was up 41 percent from 2014, in other ways LinkedIn has lost momentum, which is what helped make it an acquisition target. After disappointing earnings, the share price had dropped by 50 percent — from over $260 in February 2015.

Many experts say the marriage with Microsoft makes sense because the two companies don’t overlap in services, yet cater to the same audience — business professionals. That opens up the potential for connections between Microsoft productivity tools and LinkedIn’s vast people database.  The immediate opportunities may be in customer relationship management — an area where Microsoft already has a presence with its Microsoft Dynamics software.

The reality, though, is that no one knows what Microsoft plans to do with LinkedIn — likely including Microsoft itself, notes LaRocque, principal analyst and founder of New Providence, N.J.-based #hrwins.

“I think we’re all going to be reading tea leaves for a little bit on this one,” he says. “The opportunities are endless.”

But most experts say Microsoft is most likely to build on its strengths as a provider of tools that business professionals use every day. LaRocque sees the company connecting LinkedIn’s Lynda tutorial videos to Excel, for example, so that users can get immediate help.

He and others don’t see this as a beginning of a move to take over HR technology — or even just recruiting.

“I have a hard time thinking Microsoft is excited about getting into talent acquisition,” though LinkedIn may well stay in that business, LaRocque says. On the other hand, LinkedIn’s networking and communication functions could become another “pillar” of the company’s Office 365 platform. “They’re impacting HR technology in a huge way,” he says. “But they’re not the classic HR player.”

Kyle Lagunas of the IT market research firm International Data Corp. has a similar view. He sees three key opportunities for Microsoft in the acquisition: LinkedIn’s in endorsements, recommendations and posts.

If properly leveraged by Microsoft, LinkedIn endorsements — in which users rate each other for various skills — could be used internally “to map influence across various subject matters, skills and capabilities,” he notes in an email.

Recommendations shared among LinkedIn users could provide a powerful tool for recruiters, he says. And companies could track posts on LinkedIn’s Pulse service to help workers develop — and demonstrate — expertise.

Another HR tech expert agrees that the Microsoft-LinkedIn deal will lead to new tools for HR departments, but not fundamentally change the landscape.

Kathryn Minshew, CEO of a career site called The Muse, notes that the two companies both target established white-collar professionals. She doesn’t see that changing with Microsoft’s purchase of LinkedIn — leaving plenty of room for businesses like hers.

“I think this acquisition is a great thing  for the industry — it validates the core role that HR has,” Minshew says. ” Companies are starting to realize that products and platforms in the human-capital space have a much broader impact.”

Muse, with 50 million site visitors annually, serves a diverse population of workers with an average age of 29, and 60 percent female. Those people, she says, may keep their resume on LinkedIn, but The Muse “is where their heart is.”

“I don’t know that the human-capital space is ever meant to have a single winner-take-all,” Minshew says. “There’s a lot of room for those who want to take a different approach.”

Two Tough Lessons on Training

New commercial truck drivers must cover thousands of miles with a trainer before they can work on their own. For women, that means ThinkstockPhotos-57533192spending weeks in close quarters with a boss who most likely is a man.

What could go wrong?

A pair of recent Equal Employment Opportunity Commission cases suggests the situation is every bit as risky — both for drivers and employers — as you might think.

The cases involve two trucking companies that got in trouble over sexual harassment of female trainees. One escaped major sanctions and may even recover legal costs from the agency, thanks to a U.S. Supreme Court ruling that lawyers call a victory for employers.

The other … let’s just say it didn’t go well.

That company, Missouri-based Prime Inc., is one of the nation’s largest long-haul truck companies. After a female trainee charged the company with sexual harassment and the EEOC sued, the company in 2004 adopted a new procedure: women trainees were paired only with female trainers.

But in the end, the new procedure apparently did far more harm than good.

Because the company had only five women trainers, according to the EEOC, women trainees had to wait a year or more to get in. Men, however, were accepted immediately.

In 2011 the EEOC sued again, and U.S. District Court Judge Douglas Harpool didn’t have much trouble concluding the training practice was discriminatory. In April he signed a consent decree ordering the company to pay $2.9 million to 68 women who had applied to the company’s training program.

The settlements, which include back pay and compensatory damages, ranged from about $29,000 to nearly $92,000 each. The company also agreed to hire all the women immediately. In addition, the company paid $250,000 to another female driver trainee who had brought the complaint to the EEOC.

On top of that, the company — which finally ended its same-sex training policy in 2013, two years after the EEOC filed suit — promised not to reinstitute the practice.

Was Prime’s 2004 training policy a well-intentioned response to the first complaint that accidentally led to a second one? Or a passive-aggressive jab at women who had complained? In a final order in the case dated May 26, the judge says he can’t tell.

“While Prime’s same-gender training policy was illegal, misguided, and ill-advised, the court is not willing to find … [it] was evil or malicious,” Harpool writes.

The other trucking company fared better in its battle with the EEOC. On May 19 the U.S. Supreme Court unanimously found that Iowa-based CRST Van Expedited Inc. may be entitled to $4.5 million in legal expenses it incurred battling the agency over another sexual-harassment case.

The case stems from a 2005 claim by a female driver trainee who said she was sexually harassed. Two years later the EEOC filed a class-action suit on behalf of 250 women whom it said had been victimized. Most of those plaintiffs were dismissed, however, after the court found the EEOC had not properly investigated their claims.

Employment lawyers lauded the Supreme Court’s ruling as a victory for employers.  The ruling “has made clear that a defendant may be entitled to recover attorneys’ fees even absent a victory on the merits,” write Lindsey M. Marcus and Michael A. Warner Jr., partners in the employment law practice of Franczek Radelet in Chicago.

Though the outcomes were very different, the lesson for folks in HR is the same: Training, like trucking, can be a risky business.

 

 

 

 

 

 

Do CEO Stock Options Mean Trouble?

It’s the season for fretting about chief executive compensation. Annual proxy statements for most public companies are in. The numbers have been crunched. Now it’s time for the hand-wringing.

200401764-001But there are some surprises this year. The New York Times, using data compiled by Equilar, reports that average compensation for the 200 best-paid CEOs last year was $19.3 million, down 15 percent from 2014.

This follows an analysis by Equilar and the Associated Press of a larger group of CEOs that found pay was up, but at a slower rate compared to past years. The AP story noted that public companies are increasingly relying on performance-based compensation such as stock grants or options.

The theory, of course, is that CEO pay should be aligned with the interest of company shareholders. But there’s an active debate over whether stock options — a very common part of CEO compensation packages — are the best way to do that.

That’s where we find this proxy season’s most interesting news about CEO pay. In the latest issue of the Harvard Business Review, Dylan B. Minor offers evidence that stock options not only encourage CEOs to pursue bold innovation, but also to take dangerous risks.

Minor, a visiting assistant professor in Harvard’s business school,  summarizes in his article the results of a recent research paper. Minor compared two kinds of CEOs, divided by what kind of equity-based compensation they received. His conclusion: those who got stock options were more likely to get their companies in trouble than those who got straight shares.

Others have made the case that stock options create a perverse incentive. Shares reward a CEO for success, just like options. But unlike options, shares also penalize the CEO for failure. Some argue that shares therefore provide a better incentive for CEOs to pursue long-term benefits.

Minor offers some hard data to back up this argument. He compared the two groups of CEOs against two measures of risk-taking.

The first analysis looked at whether companies were linked to an environmental disaster or brokeThinkstockPhotos-466936217 environmental laws. He found that those with CEOs getting options were 65 percent more likely to get in trouble than companies with CEOs receiving shares.

Minor then looked at whether companies ran into financial irregularities. He found that those with CEOs receiving options were 50 percent more likely to be investigated by the SEC for an earnings restatement than were companies with CEOs receiving shares.

“In sum, higher powered incentives can increase both good and bad risk-taking,” Minor writes. It’s a good lesson for companies of all sizes: In providing incentives to top executives, think carefully about the behavior you’re encouraging.

EEOC Spotlights Diversity in Tech

A unusual forum held in the nation’s capital last week signals growing regulatory interest in the technology industry’s hiring and promotion practices.

ThinkstockPhotos-524374920The Equal Employment Opportunity Commission held the May 18 meeting about diversity in the industry as it released a report confirming what everyone already knows: tech is mostly white, male and young.

Does the hearing suggest the EEOC may soon come down on tech employers with formal guidance or even enforcement action? Labor lawyers say no — at least for now.

“I think the EEOC’s goal is to keep the issue in the spotlight,” says Erin M. Connell, a partner and employment lawyer at Orrick, Herrington & Sutcliffe in San Francisco who testified at the forum.

The effort continues a campaign by civil rights leader Rev. Jesse Jackson to pressure tech companies to become more diverse — and transparent — in employment, she notes.

Industry leaders “are hitting this at all levels,” says Connell, who counts many technology companies as clients. “They want to improve their numbers — because of the public pressure, because of the moral imperative … and because there’s a business case for diversity.”

Research has shown that “companies with higher diversity have better business results,” Connell says. This is particularly true when they serve — as tech companies do — a diverse population of customers.

The EEOC report looked at diversity data for the industry nationally as well as in Silicon Valley. It finds that whites account for 69 percent of the U.S. tech workforce, compared to 63 percent in all private employment. Among executives and managers in tech, 83 percent are white.

All employees Executives and managers
Tech All industries Tech All industries
White 69% 63% 83% 87%
Asian 14% 6% 11% 5%
Hispanic 8% 14% 3% 4%
Black 7% 14% 2% 3%
Other 2% 3% 1% 1%
Men 64% 52% 80% 71%
Women 36% 48% 20% 29%
Source: EEOC

Asian Americans also are overrepresented, compared to their share of all private employment. About 14 percent of tech employees, and 11 percent of tech managers and executives, are Asian American. That compares to 6 percent of workers across all industries.

Hispanic and black workers are, as a result, underrepresented in tech, often dramatically. And so are women: They account for 36 percent of all tech workers and 20 percent of executives and managers in tech, compared to nearly half of all jobs in private industry.

Though the report did not break down workers by age, another panelist at last week’s forum offered a scorching appraisal of the role age bias plays in the industry.

“Job postings declaring a preference for new or recent graduates are common, and some companies have actually specified which graduating class they are seeking,” said Laurie McCann, a senior attorney with the AARP Foundation, according to an EEOC news release.

Panelists didn’t necessarily agree about the best strategy for the industry to diversify. Some who testified put an emphasis on reform of industry hiring and funding practices. A cloistered world of CEOs and venture capitalists who look and think like each other perpetuates the problem, some argued. Greater emphasis on techniques to minimize unconscious hiring bias could help, they said.

Connell and others argued that improved educational opportunities are key, including industry-sponsored tech boot camps for girls and minority youth. Closing the gap in employment requires enlarging the pipeline of young people interested in the industry, she says.

In any case, Connell says she sees no sign that the EEOC plans to do more than nudge the industry to improve.

“It’s never off the table — I don’t want to give any false comfort there,” Connell says. But “I did not get the sense that any enforcement mechanisms are on the horizon.”

NLRB May Raise Bar For Employers to Oust Unions

Companies seeking to oust a union that’s no longer supported by most workers could soon face a new obstacle.

Currently an employer may stop dealing with a union when a contract comes up for renewal. Management just needs objective evidence – typically a petition – that a majority of workers no longer support it. But the NLRB’s top lawyer wants to raise the bar companies must cross to withdraw recognition.

In a May 9 memo, National Labor Relations Board general counsel Richard F. Griffin Jr. instructs the agency’s regional directors to raise a new argument when companies unilaterally withdraw union recognition. He believes employers should first seek a formal decertification election — and continue to deal with the union until winning the ballot battle.

In the memo, GBallot-boxriffin contends this would be better for companies by eliminating uncertainty and lessening delay and litigation.

The current board law “has created peril for employers in determining whether there has been an actual loss of majority support for the incumbent union, has resulted in years of litigation over difficult evidentiary issues, and in a number of cases has delayed employees’ ability to effectuate their choice as to representation.”

The new standard, he contends, “will benefit employers, employees, and unions alike by fairly and efficiently determining whether a majority representative has lost majority support.”

But management-side labor lawyers generally see this as a move to strengthen the hand of unions by forcing companies to continue bargaining with a union that may no longer have much support.

And the NLRB could go along with Griffin, says one expert.

As long as three of the five board members are Obama appointees, “I think there is probably a good chance … the board would be receptive to the general counsel’s argument here,” said labor attorney Steven M. Swirsky, a member of the firm at Epstein Becker & Green in New York.

The current practice was set by the board 15 years ago in a case involving Levitz Furniture Co. Now Griffin is instructing regional offices to disregard that standard and issue unfair-labor-practice complaints in future cases where employers unilaterally withdraw recognition and unions file charges, Swirsky says. That would eventually bring his argument for raising the standard in front of the board for a ruling.

Over the last 10 years, employers have won 70 percent of employer-requested decertification elections, NLRB records show. But requiring those elections often will mean a lengthy series of labor complaints and appeals by the union – even if few workers support it – before companies can withdraw recognition, Swirsky says. And while that’s dragging on, a company is stuck.

“You freeze the status quo in many respects,” he says. “That can be harmful for employees, too.”

Can Sexual-Harassment Training Backfire?

An article in the British newspaper The Guardian has sparked new debate in HR circles over whether sexual-harassment training can cause more harm than good.

The article recounts research suggesting that training may make some men less sensitive, not more, to appropriate boundaries in the workplace. Among others quoted in the piece is Lauren Edelman, a law professor at the University of California, Berkeley :

“Sexual harassment training may, in fact, make it less likely that males will recognize situations that are harassing … Sexual harassment training may provoke backlash in males.”

Some of the research pointing in this direction is more than a decade old. One often-cited study from 2001 concluded that men who had training were less likely than those who didn’t to recognize or report sexual harassment.

But some research is more recent, suggesting the problem is not going away. In one 2012 study, a sociologist interviewed workers and sat in on training sessions. Justine E. Tinkler, now at the University of Georgia, concluded that they often resisted the message:

“Gender stereotypes are used to buttress perceptions that sexual-harassment laws threaten norms of interaction and status positions that men and women have an interest in maintaining.”

sexual harassment

Related research has found that sexual-harassment training can mostly inspire fear among workers.

This is a hot topic with many in the HR field. Many who weighed in online acknowledged the problem, but argued it’s less of an issue if the training is of high quality.

Writing in Slate, Nora Caplan-Bricker cites a 2013 study that, she says, “suggests that it is possible to teach people how to identify sexual harassment — and to convey how company policies treat it — without inciting a backlash effect.”

Studies suggest that training that lasts at least four hours, that is interactive and led by an expert or direct supervisor, rather than an HR specialist, are most effective, Caplan-Bricker writes.

Many employment lawyers seem to agree. One is Richard Cohen, a partner in the New York City office of FisherBroyles. He writes:

“After conducting my fair share of harassment trainings, and studying, critiquing and/or sitting in on numerous others, I come down on the side of those academics who believe that harassment training is helpful and productive when done right.”

Trade Secrets Law Has Broad Effects

If you’re not tuned into the world of intellectual property, you may not have heard of the federal “Defend Trade Secrets Act.” But the new law has effects so sweeping that most large companies will be affected, experts say. And that includes their HR departments.

Passed by overwhelming margins in both houses of Congress, the bill went to President Obama last week. He’s expected to sign it any day now, and it will take effect immediately.

The main goal of the law is let companies sue under federal law over breaches of trade secrets. Until now, such cases landed in state courts. Lawyers say the act provides an important new tool for enforcing intellectual-property rights.

But a couple of provisions in the law relate to employment practices. The big one is a whistleblower clause that protects workers who disclose trade secrets to government investigators looking into violations of the law.

Here’s what this means for companies: The act also requires employers to notify workers Confidential documentsof those rights if they have contracts with non-disclosure or other trade-secret provisions.

“Because the notice requirement will ultimately appear in tens of millions of contracts, it’s another example of the law’s broad impact,” writes Santa Clara University School of Law professor Eric Goldman.

The new law also will let companies seek a court order to stop a former employee from taking trade secrets to a competitor. Employers can’t do this just because a former worker possesses protected information, though. They must have evidence that misappropriation is likely.

Depending on where you do business, things could get a little sticky, note David Almeling, Eric Amdursky and Darin Snyder of O’Melveny & Myers.

“Because state laws governing restraints on employment vary, this may result in different outcomes in different states,” the lawyers write.

Intellectual-property lawyers call the act a game-changer. Since so many trade-secrets cases involve employees, you can count on the effects reaching into HR departments across the nation.

Employee Handbooks Under Scrutiny

OK, pop quiz: What’s the difference between these two employee-handbook policies?

  1. “Be respectful to the company, other employees, customers, partners, and competitors.”
  2. “Each employee is expected to work in a cooperative manner with management/supervision, co-workers, customers and vendors.”

One, according to the National Labor Relations Board, is legal. The other is not. (I’ll tell you which was which in a minute.)

Don’t fret if you have trouble seeing the difference. That’s why we have lawyers. And that’s why there’s plenty of work for them as the ThinkstockPhotos-517631808NLRB cracks down on employee-handbook language — including provisions that once were standard — that it says is too broad.

In a series of rulings the agency has told companies to revise policies that infringe on rights of workers — unionized or not — to talk to each other about the company in person or through social media.

“Employers are really waking up to this,” says Lauri F. Rasnick, a member of the firm at Epstein Becker Green of New York. “For a long time, nonunionized employers didn’t give a lot of thought to NLRB decisions.”

The U.S. Chamber of Commerce contends the effort is part of an anti-employer crusade. In a highly critical December report titled “Theater of the Absurd: The NLRB Takes on the Employee Handbook,” the trade group argues that the agency “has undertaken a campaign to outlaw heretofore uncontroversial rules found in employee handbooks and in employers’ social media policies.”

Worse, according to the chamber: the NLRB’s guidance to employers often is contradictory, creating “a morass of confusion that leaves employers wondering just how they are to exercise effective control over their workplaces.”

Rasnick agrees. “I do think that’s part of the challenge for employers,” she says, noting that NLRB decisions aren’t always consistent. And they are continuing to evolve, with confidentiality provisions attracting more scrutiny in recent rulings, she says.

The latest headline came this month after an administrative law judge ruled that Quicken Loans and five related companies had illegal rules in its employee handbook, which it calls “The Big Book.” (Despite the Quicken name, the companies are not owned by software company Intuit; they’re led by Dan Gilbert, majority owner of the Cleveland Cavaliers.)

To the untutored eye, many of the rules seem pretty standard stuff. An example: “Think before you Tweet. Or post, comment or pin. What you share can live forever. If it doesn’t belong on the front page of The New York Times, don’t put it online.”

The problem with this rule, wrote judge David I. Goldman in his April 7 ruling:  Although the policy doesn’t tell workers they can’t bad-mouth the company online, “an employee considering this suggestion would reasonably feel chilled by this rule from expressing negative (but protected) information” about the employer.

The companies are appealing the decision to the full board. But there’s little indication that the NLRB is letting up on the effort.

Back to our pop quiz. Of those two employee-handbook policies, the first (“be respectful”) is illegal, according to the NLRB’s general counsel. The second (“work in a cooperative manner”) is OK.

The problem is in telling workers they must be “respectful” to management, as well as customers and others, wrote Richard F. Griffin Jr. in a memo last year. An employee might reasonably see that as a ban on complaining about the company, he wrote.

The second example is legal, Griffin wrote. “Employees would reasonably understand that it is stating the employer’s legitimate expectation that employees work together in an atmosphere of civility.”