Posts belonging to Category HR leadership

Latest Wrinkle in Employers’ Severance Policies

More of a case has been made for some much-needed and immediate reviews of employers’ severance policies.

476619387 -- money and gavelAs this story from Bloomberg lays it out, the U.S. Supreme Court just decided in favor of the Obama Administration and its Internal Revenue Service in a dispute over taxes on severance compensation, overturning a lower-court decision that could have forced the IRS to refund more than $1 billion.

In its ruling in the case of Quality Stores Inc., the court has said payments to laid-off workers are subject to Social Security and Medicare taxes under the Federal Insurance Contributions Act. In essence, the defunct company fired 3,100 workers when it closed its stores in 2001 and 2002, paid the taxes on their severance and then asked a bankruptcy judge to order the IRS to refund $1 million.

Obviously, this is a huge victory for the IRS, which has been fighting more than 2,400 refund claims from companies and their ex-employees. It’s also a huge wake-up call in the business community. As Bob Hertzberg — the lawyer representing Quality Stores before the Supreme Court — told Bloomberg: “The decision is a huge blow for employers and employees alike. In addition to the impact on Quality Stores and its former employees, this ruling has far-reaching implications for the thousands of other organizations and workers fighting for refunds.”

This news comes right on the heels of a news analysis by HRE Staff Writer Mark McGraw about a U.S. Equal Employment Opportunity Commission lawsuit against CVS Pharmacy Inc. that experts say could also shake up how companies approach severance agreements.

In that case, the EEOC is charging that CVS “conditioned the receipt of severance benefits for certain employees on an overly broad agreement set forth in five pages of small print,” and interfered with their right to file discrimination charges and/or communicate and cooperate with the EEOC, according to the suit.

As A. John Harper III, a partner in the labor and employment practice group in the Houston office of Haynes and Boone, told McGraw, the provisions in the CVS separation agreement coming under scrutiny are “common in many severance and other employment-related agreements.”

Comments he got from Robert Hale, a Boston-based partner and chair of Goodwin Procter’s labor and employment practice, are worth repeating, too:

If the EEOC wins here, that would make it difficult for employers to reach agreements that prevent former employees who accept severance pay [from making] disparaging statements or [disclosing] personnel information that many employers understandably view as confidential.”

At the very least, as this case makes its way through the courts and as the Quality Stores decision continues reverberating, employers should be closely evaluating their severance agreements. As Hale puts it,

HR should work with counsel to take a hard look at existing severance agreement forms to determine whether any steps should be taken to reduce the risk that a decision in this case would make those existing agreements more vulnerable to legal challenge.”

A Message Worth Repeating?

In case you missed it (apparently I did), Jack and Suzy Welch crafted a LinkedIn post last week that again spoke to the importance of HR.

188065235“HR should be every company’s ‘killer app,’ ” they wrote in the piece, titled So Many Leaders Get This Wrong.

“What could possibly be more important than who gets hired, developed, promoted or moved out the door? Business is a game, and as with all games, the team that puts the best people on the field and gets them playing together wins. It’s that simple.”

Considering this, the two noted, it’s too bad “HR rarely functions as it should” and is often relegated to the background. “If you owned the Boston Red Sox, for instance, would you hang around with the team accountant or the director of player personnel?” they ask.

They continue …

Sure, the accountant can tell you the financials. But the director of player personnel knows what it takes to win: how good each player is and where to find strong recruits to fill talent gaps. Several years ago we spoke to 5,000 HR professionals in Mexico City. At one point we asked the audience: ‘How many of you work at companies where the leader gives HR a seat at the table equal to that of the CFO?’ After an awkward silence, fewer than 50 people raised their hands. Awful!”

They then go on to propose how to fix this mess …

It all starts with the people they appoint to run HR — not kingmakers or cops but big leaguers, men and women with real stature and credibility. In fact, managers need to fill HR with a special kind of hybrid: people who are part pastor (hearing all sins and complaints without recrimination) and part parent (loving and nurturing, but giving it to you straight when you’re off track).”

Of course, these comments are right in line with others offered up by Jack and Suzy Welch in the past. In a 2004 story we ran, Jack Welch shared an anecdote similar to the one in Mexico City, pointing out that having a scorekeeper in baseball who’s more important than the director of player personnel on a team is crazy.

Also, this isn’t the first time Jack and Suzy Welch referred to HR as a “killer app.” (One reference I found dates back to 2006.)

I’m sure some of you may be scratching your heads, wondering why the two are revisiting this subject once again. But considering how many organizations have yet to adjust their thinking, I think a case could easily be made that it’s a message worth repeating. (In case you were wondering, last count, the LinkedIn piece received 163,376 eyeballs, 2,679 likes and 565 comments.)

Adding one more point of view to this discussion, Bloomberg TV interviewed former GE executive and former Home Depot CEO Robert Nardelli yesterday, asking him to share his thoughts on the couple’s piece. Nardelli, who is now founder and CEO of the investment banking firm XLR-8,  said he was in complete agreement. (No surprise there, considering he describes Jack Welch as a mentor.) Companies, he said, “will spend an inordinate amount of analysis on your physical capital, and yet it’s your human capital that brings that to life.”

An Eye to the Future

As I’m sure many of you are aware, HRE has published a fair share of stories on the need for HR leaders to pay closer attention to their own talent pipeline.

159252853In light of this, I’d like to once again call your attention to an initiative introduced by the National Academy of Human Resources a number of years ago aimed at raising future leaders in the profession: The NAHR Ram Charan HR Essay competition, which is now open to undergraduate and graduate students majoring in HR, industrial/labor relations or related fields.  In addition to the priceless prestige that goes with being selected a winner, award recipients also receive handsome cash prizes of $20,000, $10,000 and $5,000. The deadline for submissions is Aug. 1.

This year’s topic ….

Performance Management – A Very Real Issue for Employers and Employees.  Students are asked to identify a new way to measure and improve employee performance that is efficient, effective, and will be embraced by employees because they view it as a fair system that is helpful to them in their career.  The new process must be measurable for effectiveness, contributions to the success of the organization, and reassure management that the right people are being rewarded.”

If you know of anyone who might be interested in participating in this competition, please pass on the above link.

And if you’d like to get a sense of some of the original research and thinking that resulted from last year’s competition, check out the first, second and third place winning entries, submitted by Tiffany Scheff and Josie Trine of Cornell University’s ILR School; Joseph Redlitz of Rutgers University, and Indranil Dey of the Asian Institute of Management in the Philippines, respectively. Their topic: “How are electronic technology and social media affecting the employment relationship between employers and employees; and the roles, responsibilities and contributions of HR organizations?”

I suspect those of you who do will walk away feeling a bit better about the profession’s future.

Momentum Building for Putting Disabled to Work

Nice to see how much attention RespectAbilityUSA has gotten in just a little more than a month since I posted this plea to employers by the Washington-based nonprofit to get more disabled Americans into the workforce.

122470463 -- disabled execThe group — dedicated to empowering people with disabilities — made sure I saw this latest release touting all the big names to have signed on since that plea went out Jan. 13, including BMX bike legend and host of MTV’s The Challenge, T.J. Lavin; Delaware Gov. Jack Markell; U.S. Rep. Pete Sessions, R-Texas; U.S. Rep. Brad Sherman, D-Calif.; and Paralympian Matt Cowdrey.

Yes, the word is getting out. So much so that Lavin is now starring in a new public-service ad for RespectAbilityUSA that started airing Feb. 14. In the ad, he says “whether it is me, you, or someone who just wants to work — we all should have the same opportunity to achieve the American dream.”

Last month’s post included results from a just-completed RespectAbility poll showing three out of four people with disabilities surveyed value a job and independence over government benefits. This latest announcement, one short month later, mentions companies that are starting to get it, such as Walgreen’s, EY and AMC. They “have found people with disabilities to be highly valued employees who drive their company’s productivity as loyal, safe employees,” the release says.

Now, says Respectability President Jennifer Laszlo Mizrahi, “it is time for other companies to open new doors for people with disabilities.”

“The bottom line,” she says, “is that people with disabilities want a hand up, not a hand out. They want to work side-by-side with people who don’t have disabilities, make their contribution to society, pay their taxes and achieve the American dream.”

I like how Lavin puts it, too: “Recognize the disability, respect the ability, but imagine the possibility.”

We’ll keep watching this momentum and where it heads. In the meantime, employers and their HR executives should be bracing for two final rule revisions — issued by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs and impacting affirmative-action plans for veterans and people with disabilities — that go into effect on March 24. I have a news analysis appearing soon on our website,, about these new rules and what they mean, and will share a link here when it goes live.

You might say the rules, revising the OFCCP’s Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act, are the government’s way of ensuring this momentum does, indeed, go forward.

Courting Controversy at AOL

Tim ArmstrongAs you just might have heard, AOL chief Tim Armstrong is making headlines again, this time for attributing recent alterations to the company’s 401(k) plan in part to rising medical costs associated with two employees’ families “distressed babies.” Armstrong has since apologized, and emailed AOLers two days after making the contentious comments, to announce his reversal on the changes.

This latest flap comes just months after Armstrong made news by angrily firing an employee during a meeting; a move he apologized for within four days.

So, Armstrong has offered up the expected mea culpa here, expressing his regret for singling out two employees’ children as factors in AOL’s climbing medical costs.

But we thought it would be interesting—albeit in hindsight—to ask a handful of HR experts how they would handle Armstrong’s penchant for creating controversy, and perhaps give HR leaders a few pointers on how to keep executives at their organizations from making headlines for all the wrong reasons.

Here’s a sampling of what they had to say:

Rita McGrath, an associate professor of management at the Columbia Business School in New York, says a little coaching could go a long way for Armstrong.

“If there were ever a case for why a top-notch executive coach would be great for a CEO, this would have to be it,” says McGrath, who was quick to offer the disclaimer that executive coaching is “not the work that I do.”

“As an executive, everything that you do has substance and symbolism. In both of Armstrong’s somewhat bizarre communications—firing an employee in a public meeting, blaming cutbacks on ‘distressed’ babies—the symbolism conveys mean-spiritedness at best, and at worst [reveals] a guy who is unable to control himself in a public forum.”

A good executive coach, she says, “would be able to do two things: increase his awareness of the perception of his communications, and put in place mechanisms to help him change the more dangerous aspects of his behavior.”

Lou Solomon, founder of Charlotte, N.C.-based communication consultancy Interact and author of Say Something Real, doesn’t quite get why Armstrong was commenting on employee benefits at all, let alone making questionable remarks about “distressed babies.”

“Any changes in employee benefits should be facilitated and communicated by HR,” says Solomon. “There is nothing more destructive than a lone, loose-cannon CEO. The folks in HR and communications have to scramble to pick up the pieces, when they should have been out front to begin with.”

(Incidentally, Solomon raises an interesting point there. In a Feb. 10 column, Forbes contributor Dan Munro went a step further, wondering if the comments—whether uttered by Armstrong or anyone else—were not only insensitive, but perhaps constituted a HIPAA violation as well. Read it here.)

The fact that Armstrong even knew of these two employees’ healthcare situations is cause for concern, adds Rob Wilson, president of Employco USA Inc., a Westmont, Ill.-based employer management, contract staffing and human resource outsourcing services provider.

“From an HR perspective, you cannot talk about individual cases or personal employee issues,” said Wilson, in a statement. “Further, taking that information and using it as a scapegoat to cut retirement benefits is a poor business move.”

Matt Eventoff, owner of Princeton Public Speaking in Princeton, N.J., suggests HR can help keep executives from committing similar slips by helping them take a good look at themselves. Literally.

“Exposure is often very, very valuable for an executive,” says Eventoff. “Prior to an important call, presentation, panel discussion, etc., prep the executive by asking continuous questions and allowing the executive to answer—all while being taped, and then allowing the exec to review the tape.

“This is obviously very sensitive training, but simply seeing the answer on tape is eye-opening, especially for an executive who’s used to speaking ‘off the cuff.’ ”

The second step would be taking the executive’s answers to the aforementioned questions and “illustrating how they might sound and look to different audiences,” he continues, adding that HR may want to bring in an outsider for this part of the process.

“Asking difficult questions of a C-level executive can be uncomfortable for all parties, especially if they work together every day,” says Eventoff. “And it’s also difficult to tell your boss he or she is wrong on a regular basis. Every boss says they want this feedback, but the number [of those that truly do certainly does not include] every boss.”

HR Budget Outlook for 2014

Late last month, I did a Q&A with Harry Osle, principal in charge of HR transformation and advisory services at the Hackett Group, at our corporate offices in Palm Beach Gardens, Fla. Osle shared the key headlines (and what they mean for HR leaders) from Hackett’s latest 164719145research on HR’s 2014 agenda, which was officially released yesterday and will be distributed on the Business Wire next Tuesday.

During our discussion, one of the topics Osle briefly touched on involved HR budgets for 2014. Generally, the picture Osle (and Hackett’s research) painted isn’t terribly rosy and is pretty much of a repeat of what Hackett found for 2013. Overall, he said, budgets are going to be flat to down -1 percent while full-time-equivalent headcount is going to be down, on average, -2.7 percent.  Sure, some organizations should see modest increases while others will see modest decreases, but, in general, many HR departments are going to once again be in the familiar position of doing more with less.

Right in step with this outlook, you probably read or heard this morning’s jobs report, with the Bureau of Labor Statistics reporting that the U.S. economy added 113,000 jobs in January, far fewer than the 180,000 economists were predicting. Some cited bad weather as a major reason for disappointing numbers, though there’s no way to know how much of a factor that was. (Manufacturing and construction were the two bright spots in the report, adding 21,000 and 48,000 jobs, respectively.)

In the Hackett study, 48 percent of the 150 organizations studied are forecasting a budget increase in 2014, while only 27 percent are projecting an increase in staff. “This will be a year of altering the way that money and staff will be aligned to enable HR to deliver higher-value services while keeping costs relatively flat,” the report says.

Put another way, organizations are going to have to be very smart about the way they spend their HR dollars this year.

In light of these findings, it’s probably no surprise that those surveyed by Hackett indicated they will be counting on measurement and data more in 2014. If an HR leader is going to invest in a new strategy or initiative aimed at addressing a current challenge or better positioning the company for the future, it figures that he or she is going to want to know how these initiatives are paying off and impacting the businesses’ overall performance.

For most of you, I suspect Hackett’s HR-spend numbers don’t come as a huge surprise. Doing more with less has become something of a mantra in recent years for those in the profession—which would also lead me to believe most of you are probably getting pretty good at it by now (and hopefully wiser in the way you allocate your dollars). So if there’s a silver lining here, I’d have to think HR has an opportunity, yet again, to get even better (and smarter) at maximizing its spend between now and the end of the year.

Attractive vs. Promotional Recruiting

Intriguing post by John Sumser on his HRExaminer site recently. His premise — I’m pretty 187845015 -- recruitingsure — is that there’s good recruiting and bad recruiting … and way too many companies are still doing the bad recruiting.

In his piece, “On Being Attractive,” he likens this bad recruiting to “catching the horse after it’s left the pasture.” Here’s his description:

Recruiting, as currently practiced, is a defensive and reactive process full of promotional techniques. Placing an ad on a job board, hiring a staffing or search firm and filling a requirement after it is identified are all reactive behaviors executed in defense of a set of circumstances that happen out of the control of the recruiter. The industry that has grown up to support recruiters and other HR professionals assumes that a reactive posture is the starting point.”

Attraction, on the other hand, gradually and interestingly introduces the prospect [of working at your company] with no threat of immediate sales pressure. Usually, attraction-oriented tools and processes give the prospects something of value well in advance of the sales pitch. … It is friendlier, with a relaxed pace.”

I reached out to Sumser to get a little more clarity on what these recruiting techniques that attract candidates are, what he describes as “the best ways to convert so-called passive seekers into active seekers.”

From what I gleaned in his response to me, it has to do with reputation, walking your talk rather than talking it:

The trick, for every company, is to figure out what makes people want to work for you. You can start getting a sense of this by talking to your best employees and really understanding what they like. In some cases, it will be as simple as perks. In most cases, it will be a complex package of social status (in the larger community), growth potential, opportunities to learn and develop, and a reputation as a great place to be from. That’s a particularly useful technique … . By always working to get your best people promoted out of your organization, you can create an amazing talent flow. If working for you is a gateway to an even better job, people will want to join to take advantage of the dynamic. … You build this over time by putting your employees’ futures ahead of your temporary inconvenience when they leave.

Oh and by the way, Sumser holds little love for Best-Place-to-Work contests. Those BPW plaques, he says, “are easily purchased by companies with enough funds to spend … . It’s a form of advertising.” I tend to agree.

Granted, the importance of establishing your credibility and authenticity as a great place to work, as opposed to banging your drum, is not necessarily a new concept. Neither is the importance of helping high performers excel in their careers, and not necessarily just in your confines. But I, for one, have never seen these concepts laid out in such interestingly opposing terms.


Looking for HR’s Most Influential, Once Again!

What a difference a decade makes. Ten years ago, in April of 2004, Human Resource Executive® presented its first-ever ranking of the Most Influential in HR in a cover story titled “Making Their Marks.”

99144300 -- influentialThose named to that list included key chief human resource officers who helped elevate the HR role, such as Bill Conaty from General Electric, Kay Coles James from the U.S. Office of Personnel Management and Ursula Fairbairn from the American Express Co. — all of whom have since retired or moved on from those positions.

But names from that list also included key people who influenced the HR world in other powerful ways: Kenneth Lay and Jeffrey Skilling, for the parts they played in the now-infamous Enron financial scandal that turned a new eye on corporate governance; the late Sen. Edward “Ted” Kennedy, D-Mass., and former Sen. Nancy Kassebaum, R-Kan., for their contributions to the final draft of the Health Insurance Portability and Accountability Act, which set all new privacy concerns and paperwork in motion in HR organizations nationwide; and even the late Alayne Gentul, the senior vice president and director of human resources for Fiduciary Trust International, who died in the 9/11 World Trade Center tragedy trying to usher every last employee to safety and became symbolic not only of such authentic HR leadership but of the need for better emergency planning and record keeping throughout corporate America when the unthinkable happens.

Now, for our April 2014 issue, we at HRE are excited to announce we’ll be revisiting this ranking and are looking for your input. Surely, with such monumental events and changes in the last 10 years as the Great Recession, the Affordable Care Act, the growth of social media and technology in so many HR applications, increasingly aggressive governmental oversight into so many HR concerns as well as the ever-evolving role of the HR executive as a strategic business leader, new names will surely come to mind.

We’d love to hear from you and work your input into our final list. Remember, the list can run the gamut from HR academician to practitioner to thought leader … even to non-HR business leaders and bureaucrats who have influenced the HR space.

All we ask, along with your suggestions, are brief descriptions as to why we should be considering them for our Most Influential list for 2014. We also ask that we receive your nominations no later than Wednesday, Jan. 29. Email all nominations to under the subject head “Most Influential in HR.”

We very much look forward to hearing from you!

New Report: CEOs Focused on Employees for 2014

dv1954038This just in from the Conference Board, from its CEO Challenge 2014 report based on a survey of CEOs, presidents and chairmen from more than 1,000 companies around the world: Human capital — how best to develop, engage, manage and retain talent — was named the leading challenge among 10 choices, followed by customer relationships, innovation, operational excellence and corporate brand and reputation.

The findings represent an acknowledgement by global business leaders that people really are their greatest resource, says Rebecca Ray, report co-author and Conference Board senior vice president of human capital:

Though particular strategies vary from region to region, business leaders are working to optimize their greatest resource — their employees and those who will lead them. This emphasis on people-related issues makes perfect sense in a still-uncertain economy. Building a culture that supports engagement, employee training, leadership development and high performance is something companies can control, and can mean the difference between growing market share and simply surviving in 2014.”

Interestingly, this year’s survey included a question on “hot-button issues” CEOs were most concerned about. “Big Data” was cited as the No. 1 hot-button issue, a topic that’s addressed by my colleague Mark McGraw in this recent story. Other hot-button issues cited by respondents included “diversity in our leadership ranks,” “potential economic depression in Europe” and, for U.S. respondents (perhaps not surprisingly), “healthcare benefits for employees.”

Breaking down the findings region by region, the report finds that “improve performance management processes and accountability” rose to the No. 1 strategy in China, which is facing a slowing growth rate, as well as in Asia as a whole. The report also found that three of the top five strategies for innovation are predicated on human capital, with “create culture of innovation by promoting and rewarding entrepreneurship and risk-taking,” “develop innovation skills for all employees” and “incentivize key talent for innovation.” Even our cranky HR Technology columnist, Bill Kutik, acknowledges in his latest piece that CEOs seem to finally be coming around to the importance of the people in their organizations.  All in all, it appears that CEOs will be keeping their CHROs close by for the foreseeable future.

Measuring Outcomes Still an HR-Analytics Conundrum

Interesting post recently by Frank DiBernardino on The Conference Board’s Human Capital 459059493 -- measuring outcomesExchange site. Leads me to believe HR still has a long way to go in being able to apply meaningful metrics to its profession.

The problem, DiBernardino points out, comes down to a long-standing lack of agreement by HR leaders and analytics experts on what the measurable outcomes should be.

He quotes Ed Gubman, former executive editor of People & Strategy:

Our field — HR — has been pursuing better human capital metrics for a long time now, but despite some real creativity, we are hampered by lack of agreement on the big outcome measures. We have trouble getting metrics to capture mind share and popular usage because we have nothing comparable to finance’s ROI, net income and the like.  And, without accepted outcome measures, deep-dive, HR analytics leads us further into the trees without knowing where the forest is. Until we do these things, we will have sequoia-size measurement aspirations and sapling-size realities.”

Unfortunately, writes DiBernardino, “most of the contemporary approaches to human capital analytics do not effectively address [such] criticism.”

Here’s his description of what’s been going on so far:

Several prominent organizations in the analytics space describe a continuum that goes from anecdotes to descriptive metrics to predictive and prescriptive metrics. While worthwhile in understanding the relationship of the metrics, this continuum, by its nature, lacks a coherent context for a systemic, integrated, business-centered approach to human capital analytics. To make matters worse, all too often, many of the analytic projects are one-off exercises designed to solve a single problem. These problem-specific projects occur frequently, requiring the discovery process to restart again and again — a very inefficient, time-consuming and expensive approach.”

He also provides a game plan for improving this current inadequate state of HR analytics. He calls it his “RBI method … for all you baseball fans” … making sure your approach includes: Recurring human capital financial performance, Business-strategy alignment and Issue-driven situations. Worth a read to get clear on what those are.

And for a different take on the state of big data and HR analytics, read HREOnline‘s news analysis posted today, Jan. 7, here.