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March 2007

The Talent Commodity Trap @ Circuit City...

Stop me when you determine you have heard this one before...Company A builds product/service from the ground up, and the product/service provided is wildly acclaimed as cutting edge and a must have for early adapters and ultimately, society in general.  Page 2 - Other companies identify the success and move to get involved in the marketplace, carrying plans to spend as much cash as necessary to buy market share and/or use gargantuan size to step on vendors to create margins on price per unit that Company A can't match.  Company A reacts to the pressure on margins and market share by eliminating every expense possible, which ultimately results in cuts that impact people - layoffs, wage concessions, etc...Circuit_city

Sound familiar?  It should, since it has happened in multiple tech industries, most notable from my experience in the Cell/Wireless industry.  Additionally, Wal-Mart tends to take over entire industries on the scale model - see the trend in supermarkets, and most recently in consumer electronics...  That's where the recent developments at Circuit City come in:

From the LA Times:

"A new plan for layoffs at Circuit City is openly targeting better-paid workers, risking a public backlash by implying that its wages are as subject to discounts as its flat-screen TVs.  The electronics retailer, facing larger competitors and falling sales, said today that it would lay off about 3,400 store workers -- immediately -- and replace them with lower-paid new hires as soon as possible.

The laid-off workers, about 8 percent of the company's total work force, would get a severance package and a chance to reapply for their former jobs, at lower pay, after a 10-week delay, the company said.

While other companies, such as Caterpillar Inc., have introduced two-tiered wage systems, where newer workers make less, firing workers and offering to rehire them at a lower wage is very rare.

Circuit City Stores Inc., the nation's No. 2 consumer electronics retailer behind Best Buy Co., says the workers being laid off were earning "well above the market-based salary range for their role." They will be replaced with employees who will be paid at the current market range, the company said in a news release.

It's a Talent Commodity Trap.  The pressure has turned all or a majority of Circuit City's business into a commodity.  If you lower the caliber of worker interacting with your customers, why should they come to you?  Or more importantly in the case of Circuit City, why would they come to you when they can go to Wal-Mart to get their groceries and toys at the same time?  Do you follow the path of your product by downgrading your workforce or do you try and make that workforce the differentiating factor to your product?

It's a interesting talent situation.  Compare and contrast this reaction to that of Publix, another Wal-Mart competitor, which faced with the same pressures, is focusing on Performance Management and having tough conversations with employees about what it takes to be customer centric.   Which route to competitiveness creates the culture you would want?  Which one is easier?  Is it worth the effort to work hard on Pay-For-Performance vs. just laying a bunch of people off?

Additionally, Seth Borden of KMB and the Union Free Employer is riffing on Circuit City - citing orgs like the AFL-CIO pointing to the Circuit City layoffs as reasons workers need protection in today's global economy.  From the capitalist point of view, they don't need protection, just brave employers to have conversations with them about how to protect the brand and be "different"/add value when compared to the Wal-Mart's of the world....

Pay-For-Performance Hardball Where You Least Expect It - Publix

No doubt you have had hundreds of conversations about Pay-For-Performance in your organization - how to ensure budgeted merit increase dollars go to your best performers and create a gap between what the performers get when compared to the average folks. If you are in a Fortune 500 company or simply have standardized your comp plan, you likely have a Merit Matrix to reinforce this type of reward system. If so, does your plan include taking money away from those who don't meet the performance goals you have outlined? I didn't think so - but Publix (yes, the service-oriented supermarket) has. From the Lakeland (FL) Ledger: Publix_del_girls

"Lakeland-based Publix Super Markets Inc. spent years creating a "Tie Pay To Performance" plan that offers penalties as well as rewards. Mass merchants have used performance incentives for years, but they're usually tied to a store's performance and are meant to foster teamwork.

Publix zeroes in on each worker and adds the unconventional twist of institutionalizing disincentives even for top performers. "We want a customer experience the customer deserves and expects at Publix, so we are rewarding people for hard work while increasing what we pay overall," said Shannon Patten, spokeswoman for the grocer that employs 142,000 people full- and part-time in five states. "But some associates face a decrease if their performance slips."

Here's how it works. Top performers, many of whom pocketed raises two to three times and up to $1 per hour more than what they were used to getting, love it. Others are getting their standard raises. Many must resolve to work harder. In February, 19 percent of employees up for review got no raise and 4 percent took pay cuts. Publix says the plan is working. In August, 68 percent of hourly workers got a raise. The rest were put on six-month notice they had to shape up. Six months later in February, 77 percent got reviews good enough for raises, showing more workers got the message.

It's a culture shock at a chain already named one of the nation's 100 best employers, that consistently rates tops in Consumer Reports customer service ratings, and was just named the best of 19 major retail chains rated by the University of Michigan Customer Satisfaction Index. For years, virtually all Publix store workers could count on a modest annual raise. Not now. Semi-annual evaluations, based on supervisors' numerical ratings in 21 areas, grade workers as role model, superior, successful or two types of needs-work-to-keep-the-job. The rating is matched to a performance pay range for each job. Publix gives workers a six-month warning to improve their performance to keep their current pay rate. That goes for top-rated "role models," too."

Wow. That's hardcore, and obviously a plan that is designed to ensure that the Publix brand of service first is sustained moving forward. It's also notable that Publix to my knowledge is a employee-owned and a union-free workplace - you have to wonder that if the Employee Free Choice Act was passed, if Publix could be so nimble and aggressive on this type of plan. See the Union-Free Employer for more details on this bill and contrast what the EFCA would mean for companies like Publix as they attempt to maximize service to customers. After all, protecting their brand focused on service is what allows Publix to survive against Wal-Mart Supercenters where companies like Bruno's and Winn-Dixie (both chains in the Southeast) have fallen.

Last Note - I actually took a tour of a Publix with a youth group earlier this week. I prompted my six-year old son to ask the manager "Why do Winn-Dixie stores shut down and Publix stores never do?" The manager didn't miss a beat, explaining that they never cheered when a competitor shut down, but identified a dedication to quality and service as the keys to the brand's success....

Wellness Campaign - Super Size Me...

We are currently ramping up a Wellness program at SourceMedical - in addition to Fitness Club/Gym reimbursement, health screenings, etc., we are screening Super Size Me, a documentary which features Morgan Spurlock trying to exist for 30 days on nothing but super size meals from McDonald's. 

To get a flavor for what our employees are witnessing, take a look at the following experiment from the movie.  Is there any doubt we look back 50 years from now and rank McD's french fries up there with smoking and asbestos as qualified health risks?   Eat like an athlete, even if you are a desk jockey....

Danny, The World Needs Ditch-Diggers Too...

To quote Austin Powers, I'm a man, baby... As a guy, quoting movies is part of who I am... And I can work it into a HR/Talent blog entry... From Caddyshack:Judge_from_caddyshack_2

Judge Smails: The man is a menace! Cut that off! Music is a violation of our personal privacy! He's breaking the law!
Danny: I've always been fascinated with the law, sir.
Judge Smails: Really? What areas?
Danny: All areas. Personal privacy, noise statutes....I'd planned to go to law school after I graduated, but my folks won't have enough money to put me through college.
Judge Smails: The world needs ditchdiggers, too.
Lacey: Nice try.

Here's the transition - Does your company look for stars only when recruiting, or have you come to the realization that your world needs ditchdiggers too?  Chief Executive magazine cites the growing trend of companies, even elite ones, to go deeper into the talent pool to find what they need.  From Chief Executive's recent article, "A Counterintuitive Human Capital Strategy": 

"Google’s co-founder Sergey Brin recently admitted to analysts that the firm’s high bar for hiring has held back expansion and that the firm will have to make significant adjustments to its hiring process. Like many companies with hiring firepower, Google focused on candidates’ academic performance and favored candidates from elite schools. But the firm is also able to point with pride to new staff members who don’t have college degrees but do boast solid professional track records.

The fact that firms such as Google are paying attention to “academic underachievers” comes as no surprise, given that the stakes for talent are higher than ever. The Information Age has given way to the Talent Age, with human capital fast replacing financial capital as the key differentiator among businesses, especially in the service sector, where superior talent and competitive advantage go hand in hand."

My take is that most of us in the Talent sector understand the value of the "steady, yet unspectacular" performer.  It's never more apparent to me than when I have a big block of vacancies for the same role.  In the last year, my company has worked to fill 12-13 Account Managers and 12-15 Training Specialists at the same time.  Filling a big order like that seems to get me in the compare and contrast mode, and appreciate the steady candidate who may not be a star.  Invariably, I find the hiring manager for the block of vacancies thinking the same way.  The rationalization usually revolves around 1) whether the candidate has the skills to do the job and can be projected as a "Meets" performer, and 2) the fact that if you have all stars, you ultimately will have dissatisfaction because not everyone can move up in the organization.

Of course, that rationalization assumes you could get all stars for all of your positions, which is unrealistic.

What about you - would you take all stars if you could get them, or would you want some steady (hopefully) low maintenance performers on your team who are content with where they are?

Responses to the "Firing Slow" Post...

Earlier in the week I cut a post waxing poetic on the expectations of managers to fire employees for real or perceived performance issues without ever having a series of coaching conversations with them.   Sound familiar?  It did to Lisa at HR Thoughts and Deb at 8 Hours, who had heard it before and pitched in with their takes on the topic...Officespace_lumbergh

From Lisa at HR Thoughts:

"A supervisor comes into HR and hands over a 2 inch thick file. In it, they say, is evidence that Johnny has a conduct issue. Cool, we say, we will take a look at this and then get with you tomorrow to talk it over. Enter the intern who has the honor of sorting through 6 months worth of documentation. Outcome? Supervisor gets an "A" in compiling paper but an "F" overall. Now, HR people, quick, why the "F" . . . . YES, supervisor failed to talk to the employee about any of the instances, about any of his/her concerns, and really, about anything at all. To top it off, there was a performance review in the midst of the 6 month documentation period and the employee was rated Fully Satisfactory. Houston, we have a problem. At this point, we punt."

From Deb at 8 Hours and Lunch:

"but not firing fast does have negative implications for the organization. too many to ignore. in fact, it often says a lot about the leadership within the company. how often have you seen non-performers linger for years, unaware that they're having any problems. and have you noticed what that does to morale? remember, people aren't stupid. they know who is doing what, and who is capable and who isn't. so what does that make them think of management then?

then again, hiring slow and not letting managers get away with firing 'that day' without doing their homework first, can suddenly turn into an "HR is not supportive or responsive" riot. this means we have to communicate a lot with our managers, and often need to take the time to train/coach managers through the process. and sometimes it means managing the manager through the early days of the new hires tenure, checking in to make sure that things are going as well as we'd all hoped."

Good stuff from a couple of pros.  For the R-rated version, hit the comment on the site from the Evil HR Lady - she calls it like she sees it....

Union Pacific Could Use a Benefits Consultant...

Let's say you are a Benefits Manager at a large company or just a HR type wearing the benefits hat at a smaller employer.  You get to the question on the Rx side - should I cover birth control pills? - and the answer is simple.  A ounce of prevention and a $10 generic prescription makes sense from an employee relations standpoint, correct?Protest

Apparently, the scenario isn't as clear as I thought it was.  A federal appellate panel in St. Louis ruled recently that The Union Pacific Railroad Company did not discriminate against its female employees by excluding birth-control pills from its health insurance coverage.  From a NYT article covering the decision

“Union Pacific’s health plans do not cover any contraception used by women such as birth control, sponges, diaphragms, intrauterine devices or tubal ligations or any contraception used by men such as condoms and vasectomies,” the opinion said. “Therefore, the coverage provided to women is not less favorable than that provided to men.”

Thursday’s ruling grew out of several sex-discrimination lawsuits by female Union Pacific employees who used prescription contraception, including two railroad engineers, Brandi Standridge of Idaho and Kenya Phillips of Missouri. The suits were consolidated into a class-action suit on behalf of all the railroad’s females employees who used prescription contraception without insurance reimbursement.

In July 2005, a federal district court in Nebraska ruled in favor of the plaintiffs and ordered Union Pacific to cover all prescription contraception approved by the Food and Drug Administration."

As luck would have it, Union Pacific seems to have found its common sense meter: 

“We’re not going to take it away,” the spokesman, Mark Davis, said. The ruling covers all of the railroad’s unionized female employees. 

In case you were wondering if the plan was restrictive across the board, prescriptions are available under the same plan, same group for Rogaine, for men’s baldness, and Viagra, for impotence, but not birth control pills until UP was forced by court order..

Yikes!  That is old school to the hilt.  If any of you were planning to launch that benefits consultancy you have been dreaming of, UP looks to be a valid target.... 

Reference Requests - Networking or Stealing?

I profiled the following on my job search blog - www.careercapitalist.com - and thought it was applicable for HR types as well.  Job Search Guy has a rant up at his site called "Are There Thieves at Your Job Interview?" - his take is thatDirtyrottenscoundrels if people ask for references before they can move forward with the selection process, they are simply stealing additionally candidates from the prospect and likely don't have an interest in the candidate in question.  Is everyone who asks you for references and referrals a Dirty Rotten Scoundrel?  From his notes:

"Here's the way it works: You're looking for a job and apply for an advertised position. You're given some initial good vibes about what a "good fit" you are. Then when you're softened up, they hit you with something like this:

"Oh, before we can proceed with this, I'll need at least three references from you today".

This is totally absurd! Why? Because they're stealing from you, plain and simple. This is what's really happening: They interviewed you because you had the basic qualifications but you don't really fit the job requirements, so they're not interested in you. They ARE interested in who you know. Once they have your references, they've just widened their candidate network and you unwittingly helped them. They're now going to recruit your references. Talk about creating your own competition!"

What Job Search Guy doesn't tell his target audience is there a lot of factors that play into what this type of request means.  First up, who is the candidate talking to?  Is it a recruiter positioning themselves as working for a company or the actual company with the opening?  Candidates are much more likely to run into this with recruiters trying to build databases than they are with the actual employer.  Also, if it is the employer, many employers will ask candidates for references as part of the application process during the initial visit with them, or as part of an online process before the candidate ever sees someone face to face.

The moral of the story - candidates shouldn't be alarmed by this type of concern.  After all, what are you going to do?  Walk away from everyone in your job search that ask you for references?  Good luck with that.  Additionally, what about treating every contact as a networking opportunity?  Even if you aren't a fit for the initial position that drew your interest, playing the game and sharing contacts with a recruiter will make you part of their Rolodex moving forward - increasing the probability that they call you when they do have a match.

As a recruiting HR type, I am sure that we don't ask for referrals enough.  One nice way to get into that is to offer a referral bonus to external sources as well as employees - that pretty much elimates all guilt from the equation for me...

It's a global, networked world my friend.  Don't buy into the calls to build walls around yourself or not be aggressive with prospects.  Network and prosper...

Talent Watch - Best Available Athlete

I have a recurring talent conversation with 3-4 colleagues I really like talking to - and it involves hiring generalists vs. specialists.  Simply put, once you get away from some very specialized positions in your company, are you open to finding the smartest available person to take the challenge you have or are you forever trying to match an overly complex set of "wants and desires" skill sets to the candidate pool, with the resulting effect on time to hire and cost per hire?  We also talk about this from the perspective of the NFL draft, where teams ultimately are on the clock and have to figure out if they are going to take an average quarterback based on their need or take a defensive back with lots of upside, even if they don't have a big need at that position.Combine_main_060228

Once I get away from the CPA and Engineering requirements, I am a big "smartest person available" recruiter, especially if the candidate has something in their experience that shows they will likely ramp up quickly in the position.  Dick Costolo agrees, citing the following in an entry he calls the "Best Available Athlete":

One of the things we've done a few times at FeedBurner is hire what our vp advertising Brent Hill refers to as Best Available Athlete. This is a bit of a silly analogy drawn from a term used when pro football teams are drafting college players. Sometimes there's a guy who was a quarterback in college and everybody knows he won't play quarterback in pro football, but he's smart, he's fast, he's strong, he's got a great attitude etc. Some team will select him on the bet that although they know he's not going to be a quarterback, he's the best available overall athlete remaining among the available players, and they know that a person with these qualities will work somewhere on the team.

That's the essence of what I call "smartest available person", although my tag is limited because it doesn't really lend itself to being a descriptor of qualities other than intelligence that are important.  I like the concept because having a bench of interchangeable parts makes you stronger as a company moving forward.  As a manager who hires HR professionals, I seek the type of people who could and would do things other than HR when the time is right, because those types of candidates are the most progressive thinkers and ultimately provide the most value to the organization.  I also like to hire non-HR people for HR roles to get outside of the box as well.

Firing Slow - Conflict Avoidance 101

Slacker Manager recently did a post featuring a Dick Costolo entry called No False Positives.  The basic premise of Dick's comments is that waiting for the perfect hire (the hire slow philosophy) isn't always the best way to go, especially with positions that have strong performance metrics allowing you to quickly fire the non-performer.   Dick notes Sales as a prime candidate for the hire quick, fire quick philosophy:Apprentice

"You can hire fast, fire fast with sales people. It's very very hard to comprehend a priori who will be able to best sell your service/product in a particular region to a particular customer base. Since this is an area of the company where people generally are responsible for very straightforward, measurable and explicit individual goals (ie, sales targets), it's much easier to communicate and implement a hire fast, fire fast kind of policy with this group. You have to ensure you really stick to it however, and understand when company processes and products are causing the sales ramp challenge(s)."

Slacker Manager also notes that there is no "fire slow" school of thought.  Everyone wants non-performers out the same day they bring it to your office as the HR generalist supporting their functional area.   

The biggest slow down effect on the termination process of a non-performer is that managers generally don’t want to deal with the conflict of sitting down with the person to advise them of the gaps between expected and actual performance. Instead, most managers want to wait until they have had 3 months of performance below spec and fire in the first conversation they have had with the person.   

With this in mind, the best solution for HR Generalists who may be tagged with the label of being "non-responsive" or "barriers" to the termination process is to go on the offensive and let all know up and down the organization that they will work quickly to support the operators of the business, but those operators have to confront the non-performance and have actual coaching conversations with the employee in question.  Sounds simple, but conflict is never easy, especially for less experienced managers.

On second thought, hiring slow, firing fast does happen - it's called The Apprentice, which seems to be on it's last legs.  When is the last time you heard anyone talking about this show?

Good Cop or Bad Cop? Comments on the Scott's Wellness Program

A couple of weeks ago, we profiled the aggressive efforts of Scott's in implementing a comprehensive Wellness Program, with the an ultra-aggressive twist - firing smokers. In this week's addition of BusinessWeek, the readers fired back. As you might expect, the opinions are across the board, but always emotional:

From a worker who resents the invasion of privacy and codes such a program as discriminatory:

Thank you, BusinessWeek, for your article about Scotts Miracle-Gro and their invasive tactics into their employees' personal lives. It is truly shameful that a corporation makes use of data-mining software to "scour the physical, mental, and family health histories of nearly every employee" to invade their personal lives. I will never buy Scotts' products again. -- Bob Bevill Merrimack, N.H.

From a healthy self-employed worker who resents paying the bills for others:

I am 55 years old and have been self-employed for most of my working life. So has my wife. Both of us eat well but moderately, exercise regularly, and are trim and healthy. In spite of our excellent condition, we must pay over $7,800 per year out of pocket for our family's health insurance plan because 60% of our fellow citizens [are] overweight or obese, drink too much, smoke too much, and exercise too little. I find this infuriating beyond words. My view is that those people should pay out of their own pockets for the health consequences of their sedentary lifestyles. I applaud Jim Hagedorn's relentless yet engaging approach to enforced employee wellness and I hope that every company in the nation follows his lead. -- Tony Eldon Owner, Bay Area Property Inspections and BayMountain Environmental San Rafael, Calif.

Interesting comments across the board. One angle you will find if you click through is the call to separate health care from employees and nationalize the system. Do these folks really think that is an answer? Have they been to the DMV lately?