"We believe that people drive our business," says Colin Kelly, VP of HR for Prospect Heights, Illinois-based Household International Inc. Household is the winner of the 1992 Optimas Award for Vision, which is awarded each year to a company that has recognized an internal or external trend or development affecting the organization and has implemented a program in response to this trend.
The organization was chosen as the winner in the Vision category for demonstrating unusual foresight by recognizing that the problems of the external economy would lead to staff reductions in some areas, and for responding with an employee-placement program. This vision didn't begin there, however, nor did it end with the placement program.
During the time leading up to 1990, Household's entire human resources organization underwent a change in structure, people and programs in an effort to increase the level of contribution of the HR function to the overall success of the organization, according to Kelly. "We went to our businesses to see what they wanted for HR and to review the HR structure for the entire organization. As a result, the function was decentralized so that business unit HR directors now report directly to their respective business managers and have matrix accountability to the HR function," he says.
In addition, the HR staff positions were upgraded significantly to meet the challenge of becoming a strategic partner with management in the business operations. This position as a strategic partner was one of the factors that enabled Kelly to be aware of the imminent elimination of jobs—at the time it first became evident—and to work with management in development of a solution to the problem.
Kelly meets monthly with members of senior management, including the company president, Ed. Hoffman; group executives (five head line managers who run the individual businesses); and four senior staff people. It was during these monthly senior management meetings in the second half of 1990 that Kelly learned that the whole organization also would need to go through a restructuring—and that people would be let go in some of the business units.
At the same time, management recognized that other Household businesses were recruiting, and it was obvious too that as many of these open positions as possible should be filled from among the employees whose positions were being eliminated. What resulted was a hiring freeze and the birth of the displaced employee committee.
"Senior management was behind the plan 100%, because everyone said it was the right thing to do for our people. We put a high value on company loyalty, but we believe that if we ask our employees to be loyal to the company, we should be loyal to our people," Kelly explains.
He didn't expect the process to be easy, however. Few of the openings that existed at the time had job requirements that matched the experience of the displaced employees. "We knew they were good people, even though they may have been lacking the skills needed for the new positions. We were willing to do what was necessary to bring them up to speed," Kelly says.
The first step was to form the displaced employee committee, comprising eight HR directors who came from each of the company's area businesses in the U. S. "It was important to get buy-in from all the businesses in the organization," he says, adding that if corporate had mandated the solution, there might have been some resistance. "We didn't get any. Each business was involved from the beginning, and this overcame any resistance HR might have had. We had a corporate commitment to find positions in the company for everyone who had a good work record and wanted to stay, but it was also important to do everything possible to help them find something on the outside, just in case," he says.
"We came to the monthly meeting to discuss and match up the job openings with the people whose positions were being eliminated," he explains. Each member of the committee brought a list of the job openings and displaced employees from that member's business.
The emphasis was on employee potential, not previous experience. Supervisors often would be required to accept workers who had had few if any of the job skills needed in the new position, but who had proven themselves adaptable in their previous jobs, according to Kelly.
"We did a big up-front positioning using employee communications in the form of meetings, E-mail, newsletters, and so on. We put out a video, in which the president, some of the business heads and I talked with viewers about the program, explaining why it was necessary and how we wanted to keep everyone together. Some of the employees who already had been moved into new positions under the program talked about their new jobs and how happy they were. The message got out," Kelly says.
Kelly and his staff also did a lot of face-to-face communication with managers and employees throughout the process. "We had to have a discussion with hiring managers, to make sure they were willing to take someone on who was coming from another business environment," he says.
In rare cases in which a manager was resistant to accepting a displaced employee for a particular position, usually because the manager's expectations of qualifications didn't match the employee applicant, Kelly asked the HR head of that business to meet with the manager. "The HR person would explain that this was the Golden Rule scenario; we weren't doing anything for the displaced employee that we wouldn't have done for that manager," he explains. This approach was effective.
"We did career counseling with all of the displaced employees. Many needed re-education in interview skills," Kelly says. Affected employees received a career packet offering guidelines on interviewing, resume-writing and other job-hunting skills, to help them in their search for a new position, both internally and—just in case—externally.
"Some employees were resistant, as well. A few restricted themselves geographically or wanted to continue working in their current area of expertise," Kelly says. "We'd have a heart-to-heart talk with them and explain that they had to be flexible and willing to work in different areas, or otherwise other people would get the positions."
Not all of the employees who needed counseling were among the workers being displaced, according to Kelly. Household's internal online job-posting program, Inside Track, was available to all workers, although during the hiring freeze, hiring managers were required to give precedence to the displaced applicants. There were cases in which an employee applicant who wasn't among those workers being displaced became upset when a lesser-qualified candidate was hired into an opening. "A local HR staff member counseled with the employee and explained that the other employee's job was being eliminated. In most cases, employees understood and appreciated what we were trying to do," Kelly explains.
During a period from October until December 1990, the displaced employee committee was successful in placing 75% of the 135 displaced employees, from positions including everything from file clerk to assistant vice president, into other positions within the company. In almost every case, those employees not retained by the organization either had had unsatisfactory performance records or had maintained a very narrow job focus or location requirements. These people received a standard severance package.
"We had some people who were specialists in such fields as commercial real estate lending. Some of these specialists didn't want to change fields, but most people were willing to work the process through," Kelly says.
"Our organization may be better-suited to this type of program because we're diversified," Kelly admits. "We have more than 10 different businesses, but they're all related to financial services. During restructuring in one business, if we wanted to move people, we still were moving them into a financial service organization—banking, insurance, and so on. There's a lot of synergy at Household," Kelly says, although he adds that he thinks this program would work well elsewhere,
"When you look at the individual cases we handled, you see that some people moved into jobs that had duties very different from the requirements of their old positions. For example, a secretary working at corporate may have been moved out to our processing center to work in a customer-service capacity, or an employee trained to perform a specific role in marketing moved to operations. I think the majority of workers fall into those types of categories," Kelly says.
There were two basic risks, according to Kelly. "We could have had significant employee or manager resistance to what we wanted to do. We tried to head that off by including all the businesses on the committee and by the extensive employee communications. We didn't have any real resistance from anyone. The other risk was the possibility that employees might fail in their new jobs. That was a risk we were willing to take," he says, adding, "It hasn't happened."
A surprising benefit.
At Household, HR's capacity for vision didn't disappear after recognizing the need—and the opportunity—to move people into new positions. Well into the program, another trend—this one internal—became evident.
The success rate of the displaced employee program at Household was surprisingly high, according to Kelly, who followed up on the former displaced employees. After an initial period of learning, many of them began to perform beyond expectations, demonstrating increased adaptability and a much broader understanding of the business than they had before.
"Many of these people have moved again into other jobs within the organization, either for promotions or laterally, for career-development purposes," Kelly says. It has made them more productive and has given them more job satisfaction. "The morale is better," he says.
The real benefit is how this process, which began as an attempt to save employee's jobs, has expanded into a meaningful career-development process in the organization. "Moving people around really isn't that unusual anymore because we do so much of it. Now we tell people they're managing their own careers. We're encouraging them to accept lateral moves, which will give them broader experiences and will help qualify them for promotions in the future," he says.
The displaced employee committee is now the career-development committee, which meets every other month to discuss people in each business area and how they should be moved, whether to another business or another function. The committee facilitates this development wherever necessary, according to Kelly.
"This represents a real paradigm shift," says Kelly. "Our culture now says it's all right to move from line to staff and staff to line, from one business unit to another, to get experience and become broader-based managers and executives," he explains.
This program also has led to a new career-development process. The company's business heads and their HR directors meet with other business executives three or four times a year to review development plans for all their high-potential people, to determine what they should be doing, what courses they should take and the training they should have. "We have an executive education series for all our executives. Now we send other high-potential employees to the programs as well," he explains.
"Household employees of today and the future must be able to understand the purpose, function and culture of the company and be proactive in managing their own careers. We want our employees to be flexible and curious—and the company will have to provide the tools to management to make this happen. We've done research on how we can accomplish career-development goals and provide an environment that's compatible with these goals."
Kelly explains that there are four opportunities the organization can provide or enhance for employees:
- Challenging jobs, through lateral or upward career movement, or through development in place
- Relationships, both formal and informal, with fellow employees and with mentors
- Meaningful internal coursework
- Community service to challenge employees outside the boundaries of the traditional work environment.
The benefit from trying something new also applies to the organization. Like the displaced employees, Household has gained confidence from facing and conquering a new challenge. It also now has a process in place that can respond to any future economic downturns.
Household International cares about its people. It doesn't view them as a massive resource to be manipulated to improve the bottom line. It sees them as individuals, each one a customer. It also views each employee's ability to serve as the product of the organization.
Household realizes that meaningful work and independence are basic human needs. It has recognized the connection between the experiences employees have in novel environments and the professional growth they experience. This is the vision that has made it a stronger organization today, in a time in which ability to manage people is taking on even greater importance.
Personnel Journal, August 1992, Vol. 71, No. 8, pp. 50-56.