Geopolitics reverberate in foreign HR

Attendees at SHRM’s Global Lounge cite challenges raised by civil unrest, spread of democracy.

By Mark Schoeff Jr.

eopolitical challenges that drive a typical day for Secretary of State Condoleezza Rice also can pose obstacles for human resources professionals in the Middle East.

The political violence and turmoil that has roiled Lebanon over the past four months undermines business recruiting and retention in the country, according to Rima Shaar, deputy human resources director at Fransabank in Beirut. Following the February assassination of former Prime Minister Rafik Hariri, a series of bombings have punctuated the struggle for Lebanon’s independence from Syria.

One HR manager whom Shaar knows decided to move from Lebanon to Kuwait. “She said, ‘I’m not going to die in Lebanon,’ ” Shaar said. “People sometimes feel insecure in the country. A lot of explosions (are) happening. This affects (a) company’s overall productivity.”

Shaar, who is also a part-time United Nations consultant and professor at the American University in Beirut, is one of more than 425 attendees from 43 foreign countries attending the SHRM annual conference in San Diego. The SHRM Global Networking Lounge at the convention center is home base for international attendees. More than 150 people attended the opening luncheon on Sunday, and more than 80 participated in Monday round tables.

Challenges related to retaining and motivating employees in Lebanon have increased respect for the human resources function. “It’s become more strategically oriented. HR has a seat at the table, or at least a voice to the board members and to the general management,” Shaar said.

Shaar’s battle to keep good people in Lebanon is similar to one that a fellow HR professional in the United Arab Emirates is waging. Anas Naser S. Al Otaiba, human resources manager at Zakum Development Co. in Abu Dhabi, is trying to “find the right people with the right education in order for us to develop them to work in the oil fields.”

But his job is being complicated by a trend that is making President Bush smile. As Saudi Arabia and Qatar move, albeit slowly, toward democracy, they’re attracting workers from other parts of the region—including employees Otaiba would like to keep in the UAE.

“If (Saudi Arabia and Qatar) change (to a) democratic system, then there will be economic growth,” Otaiba said. “Economic growth means you have new buildings and new roads, and they need people to work on those projects. A closed system doesn’t have much of an economy.” Another key factor stoking competition between Middle East countries for oil industry talent is the dramatic increase in energy prices over the past couple years.

SEEKING, DEVELOPING, PAYING TALENT IN ASIA
Competition for the best people also is a challenge for human resources managers in South Korea. “It’s a very competitive society,” said Youngjun Lee, an HR manager at LG International Corp. in Seoul. “The top talented worker group is very small.”

While recruiting for his firm, which connects manufacturers of electronic, oil and chemical products to buyers, he encounters people who are attracted by the Korean operations of U.S., European, Japanese and Chinese companies. “They make much higher payments than Korean companies.”

Neighboring China may be producing a lot of jobs and enjoying a galloping economy, but the next step in its economic development is to enrich its workers. “We need more people with multiple skills ... (and to) have the people grow with the company,” said Crystal Zhang, human resources manager at Curtis Instruments Co. in Suzhou, Jiangsu Province, China.

Just as China is moving to a more liberal economy, India has been breaking free from the shackles of socialism for more than a decade. Even state-owned companies are becoming more global and dealing with cross-cultural challenges like compensation.

The Oil and Natural Gas Corp. of India expanded its business to the Middle East, Europe, Russia, Southeast Asia and Africa to meet the 4.2 percent annual growth of energy consumption at home.

“We are very aggressively going international,” said A.K. Balyan, director of human resources. “There are cross-cultural issues.” One of them has had to do with cultural issues like rewarding performance, a compensation category that was not highlighted in India’s socialistic system. India is now allowing the state oil company to offer pay that has both a fixed dimension and one linked to performance.

SHRM survey finds little change in benefit offerings

Stability may indicate that despite rising health care costs, packages remain competitive.

By Carroll Lachnit

ependent-care flexible accounts are up. Employer-funded reimbursement accounts are dipping. Vision insurance is coming into focus. Paid family leaves are picking up. On-site vaccinations are falling.

That’s the ticker for the 2005 SHRM survey of employer benefits—small changes and few distinctive trends.

Perhaps that stability signals good news: Despite rising costs of health care and other financial pressures, companies continue to offer competitive benefit packages to entice new hires and retain current employees. SHRM surveyed 386 HR professionals in companies of varying sizes, asking them about 219 benefits. It has conducted the survey annually since 1996.

Sixty-nine percent of those surveyed said that the costs of their voluntary benefit programs remained about the same as in 2004. HR professionals said their organizations spent an average of 21 percent of an employee’s annual salary on voluntary benefits, such as health care and retirement benefits. That category excludes leave benefits. Companies spent 19 percent of an employee’s annual salary on such mandatory benefits as FICA and unemployment.

In the category of family-friendly benefits, the percentage of companies offering dependent- care flexible spending accounts increased from 73 percent in 2004 to 79 percent in 2005.

Another significant increase in family-friendly benefits came in the area of scholarships for members of employees’ families. It increased from 20 percent in 2004 to 27 percent in 2005. Organizations offering paid family leave increased from 24 percent in 2004 to 30 percent in 2005.

At the same time, however, the percentage of companies offering family leave above what is required by the Family Medical and Leave Act dropped from 39 percent to 26 percent.

As families change, benefit offerings change with them. Thirty-eight percent of respondents said that their organizations offer health care benefits for dependent grandchildren; 29 percent offered health care benefits for foster children.

Some companies appear to be trying to meet the needs of an aging workforce: 89 percent offered elder-care leave above and beyond state or federal FMLA leave. One in 10 companies offered a formal phased retirement program, in which workers have a reduced schedule or responsibilities prior to full retirement.

In the controversial area of domestic partner benefits, 41 percent of survey respondents said their organizations offered some form of coverage, whether for opposite-sex partners, same-sex partners or both. The percentage of companies offering same-sex benefits was about the same as opposite-sex partners—32 percent and 33 percent, respectively. The portion of companies offering same-sex partner benefits increased from 27 percent in 2004 to 32 percent in 2005.

Given that 11 states have passed constitutional amendments prohibiting same-sex marriages and that the Massachusetts Supreme Court has found that state’s ban unconstitutional, SHRM counsels benefit administrators to monitor state and local laws to ensure compliance.

Health care and wellness benefits saw few changes from 2004 to 2005. Ninety-seven percent of companies offered some form of health care insurance, whether that was an HMO, PPO or another plan. The percentage of companies offering prescription drug coverage was essentially unchanged: 97 percent in 2005 versus 98 percent in 2004. Vision insurance coverage increased from 71 percent of companies in 2004 to 80 percent in 2005. The survey found that 42 percent of organizations offered health care insurance to part-time employees.

Companies are increasingly trying to encourage employees to either shoulder more of the costs of health care or at least plan better for them.

Medical flexible spending accounts increased as a benefit offering, from 71 percent in 2004 to 78 percent in 2005. Also in 2005, 12 percent of companies participated in consumer-driven health care plans, which combine a high-deductible health insurance plan with the health savings account that carries over from year to year. Ten percent of companies reported using the plans in 2004.

Another mechanism for getting employees to shoulder more responsibility for health care spending is the health care reimbursement account, or HRA, which is funded by employers (as opposed to health savings accounts, which can be funded by both employees and employers). The survey shows that 18 percent of companies sponsor HRAs.

Financial and compensation benefits also saw few changes from 2004 to 2005. Eightyone percent of companies offered defined-contribution retirement plans in 2005, with 75 percent of companies offering an employer match. Thirty-nine percent of companies provided defined- benefit retirement plans in 2005, a slight drop from the 44 percent of companies that offered them in 2004.

The only significant difference in the financial and compensation benefit category was an increase in the percentage of companies that offered a match for charitable contributions: It increased from 25 percent in 2004 to 34 percent in 2005.