| COMPETITIVE ADVANTAGE |
National Association of Insurance Commisioners
Cathy Weatherford sums up her nonprofit association’s business issue succinctly. Five years ago, a 30 percent turnover rate "was killing us," says Weatherford, executive vice president and CEO for the association, whose research supports the work of the chief insurance regulators from the 50 states, D.C., and four U.S. territories. The Kansas City-based association simply couldn’t meet the salary offers that for-profit companies were making to the computer professionals who make up 40 percent of its staff.
Surveys showed Weatherford that the association could compete if it retooled its workforce policies. By offering a wide variety of low-cost programs and policies, the association made itself an extremely attractive place to work. The elements include a four-day workweek, flextime, telecommuting, casual dress, a no-layoff policy, and a novel idea that brought national attention: employees are allowed to bring their infants up to the age of six months to work with them. Turnover dropped from 30 percent in early 1996 to below 9 percent currently.
|FINANCIAL IMPACT |
National City Corporation
You don’t have to be an investment banker to know that great customer service starts with well-trained and experienced bank employees. National City Corporation knew that this would be a difficult goal for a company that experienced more than 51 percent non-exempt employee turnover in 1999. Many employees left within 90 days of their hire dates.
The company turned things around by starting a series of workshops for entry-level employees. Hiring managers were taught how to prepare for the arrival of new employees and make their transition to a new job smoother. New employees were paired with experienced bank "sponsors" who had attended a half-day workshop on employee development.
The program paid off. New hires are now 50 percent less likely to quit within their first three months, which saves the company at least $1.35 million annually. Absenteeism among new employees is down 25 percent, for an annual savings of 306,000. And as new hires complete workshops, the improvement in sales and product referrals has led to a revenue jump of $3.7 million.
|GLOBAL OUTLOOK |
Novo Nordisk, a Danish pharmaceutical company that specializes in the treatment of diabetes, operates in 68 countries and employs more than 18,000 people. Its "triple bottom line" approach, which tracks not only profits but also environmental and social impacts, has made it popular with socially conscious investors. Still, says Peter Moeller, vice president, business and organization, "when it comes to being an employer of choice, we are mostly ‘world’ famous in Denmark."
The company is working hard to build its global markets, and its human resources strategy is viewed as a key to success. One approach is a "People Strategy," aimed at improving five key areas: customer relations and competitive awareness; attraction and retention; development of people; building a winning culture; and equal opportunities. The same focus areas are being addressed in all of the company’s divisions, whether in Japan, Belgium, or the United States.
A 2002 handbook provides concrete goals, tools, and examples of success: How the company tripled its sales force in the United States. How Japanese employees shifted to a performance- based bonus system, instead of the country’s traditional bonuses-for-all approach. How the "Balanced Business Scorecard" measures performance against targets that affect all of top management’s compensation.
No one likes slashing benefits or shifting health-care costs to employees. SRA disliked the idea so much that it chose a different solution. In August 1999, the Fairfax, Virginia, provider of IT services opened an on-site medical clinic. Services include disease-management programs, blood-pressure screenings, and lunch-andlearn programs. Nurses—and the doctors who provide guidance—help employees manage complex chronic medical cases.
An SRA nurse visits first-time parents, providing instructions on newborn illnesses and other baby-care issues. This has led to a lower incidence of emergency- room and mental-health visits by new moms.
The nurses also help to resolve employee problems with medical and dental claims. The input allows employees to stay focused on work, and provides insight on claims issues to SRA. The Nurse Advocacy Program has helped control costs and has generated goodwill in the community. It also has served as a shot in the arm for the company’s recruiting and retention efforts.
|MANAGING CHANGE |
With profits in the tank and a turnover rate of more than 167 percent, Designer Blinds was in big trouble. The 170-employee company, located in Omaha, Nebraska, had to make dramatic changes or face a certain demise.
Top managers began by viewing recruiting and retention strategically and quantitatively. An entirely new approach to hiring was launched. One aspect was networking with representatives of various cultures, including the local Sudanese community, which had not been well represented in the workforce. Company supervisors and coworkers studied the culture and embraced it. The firm also identified Hispanics as the fastest-growing group in the area and made a sincere effort to welcome members of the community and to provide English as- a-second-language classes.
The diversification of the workplace has produced good results for several years, especially the last two. Employee efficiency and productivity is skyrocketing, quality is a benchmark for the industry, and turnover has plunged from stratospheric highs to 8 percent a year.
Ace Hardware Corporation
Ace Hardware Corporation faces a challenge that its competitors don’t. While Home Depot, Lowe’s, and Wal-Mart can require their stores to carry certain merchandise or follow a sales program set by corporate headquarters, Ace doesn’t always have that option. Based in Oak Brook, Illinois, it is one of the nation’s largest cooperatives, and its retailers make their own operational and financial decisions for their 5,100 stores. Ace’s field managers, who act as consultants to the retailers, can recommend changes, but compliance isn’t always mandatory. For Ace, dictates wouldn’t work. But collaboration would.
Working with Lake Forest Corporate Education, a strategic business unit of Lake Forest Graduate School of Management, Ace began in 1999 to train its field managers in the collaborative negotiating skills they would need to persuade retailers of the benefits of initiatives and programs. The retailers listened, and the partnership between them and Ace Hardware’s field managers is a demonstrable success. Ace has realized $8 million in cost savings, revenue earned, or increased productivity, all for direct and allocated costs of $312,545. That’s a $20 return for every dollar invested. And that’s how a successful partnership works.
|QUALITY OF LIFE |
As Starbucks continues to pour out profits grande from 4,798 company-operated and -licensed stores in North America and 1,443 internationally, it has become a corporate legend. Along with its spectacular growth in recent years, the Seattle coffee powerhouse also has earned a reputation for having one of the lowest turnover rates of any restaurant or fastfood company.
But in spite of all the perks— including a free pound of coffee per employee per week—keeping morale high and burnout low at any fast-food enterprise takes enormous human resources moxie. Much of its success is attributed to an almost unheardof policy of giving health benefits and modest stock options to full-time and part-time workers. Components of the total pay package include bonuses, savings ("Future Roast"), stock ("Bean Stock") options, and benefits for all employees. The upscale java enterprise also continues to fine-tune its renowned 39.5-hours-per-employee-peryear training program.
SunTrust Banks, Inc.
When a banking organization is undergoing dramatic change, from operating under 28 different bank charters to operating under a unified "OneBank" concept, one of the challenges it faces is to create a common vision and strategic focus. That was the situation that SunTrust Banks, Inc., and its 28,000 employees faced in 2000. Human resources leaders at SunTrust worked as business partners in many aspects of the centralization, and they took on a particular challenge: the bank’s recruiting and hiring process. As part of the process, the team identified the skills it would take for success in a variety of bank positions and created a selection methodology and a set of selection tools. Now, SunTrust has a consistent, effective, and legally defensible hiring process delivered at lower cost. Turnover has fallen significantly (from 46.9 percent for tellers in 2001 to 34.4 percent now, for example). And, most important of all, Sun- Trust is hiring outstanding people who can create and foster the banking relationships it wants to have with its clients.
As a new industry with selftaught, first-generation leaders, Electronic Arts, a $2 billion video and computer game company, faced this strategic imperative: how to develop two vital groups of leaders—"Suits" and "Creatives." The Redwood City, California, firm was growing explosively, but didn’t have the leadership talent to capitalize on business opportunities.
Five years ago, human resources executives launched two initiatives. The Emerging Leaders curriculum for top executives is an extensive business- oriented program that also includes training in leadership skills and individualized development. The Creative Leaders program provides an environment designed to stretch thinking by offering opportunities for employees to meet regularly with internal and external partners. Participants might work with an MIT professor specializing in Shakespeare, for example, or with other media experts to learn about creative storytelling in a digital environment.
The business results have been impressive: 69 percent of the participants have been promoted from within, and the multi-year retention rate is 88 percent.