Types of Global Companies

It is a global economy indeed; however, can multinational companies act internationally across transnational borders?

In the book Managing Across Borders, by Chirtopher Bartlett and Sumantra Ghoshal, the authors explain the key differences between multinational (MNC), global, International and transnatinal companies...

Multinational Companies

The multinational or multidometic organization offers a very high degree of local responsiveness. It is a decentralized federation of local businesses, linked together through personal control by expatriates who occupy key positions abroad

Global Companies

Global organizations offer scale efficiencies and cost advantages. With global scale facilities, the global organization seeks to produce standardized products. It is often centralized in its home country, with overseas operations considered as delivery pipelines to tap into global market opportunities. There is tight control of strategic decisions, resources, and information by the global hub.

International Companies

International companies have the ability to transfer knowledge and expertise to overseas environments that are less advanced. They are coordinated federations of local businesses, controlled by sophisticated management systems and corporate employees. The attitude of the parent company seems to be parochial, fostered by the superior know-how at the center of the organization.

Transnational Companies

Global competition is forcing many businesses to shift to a transnational model. This organization combines local responsiveness with global efficiency and the ability to tranfer know-how better, cheaper, and faster. The transnational company is made up of a network of specialized or differentiated units, which focus on managing intgrative linkages between local businesses as well as with the center. The subsidiary becomes a distinctive asset, rather than simply an arm of the parent company. Manufacturing and technology development are located wherever it makes sense, an there is an explicit focus on leveraging local know-how in order to exploit worldwide operations.

What is "At Will" Employment?

Do you want to hire project based or temporary workers but are unsure of how to NOT get sued for wrongful termination? Review this informaiton for more answers:


What is At-Will Employment?

"At-Will Employment" means that if an employee is not covered by an employment contract, the employee can't be forced to stay with an employer and, in turn, an employer can't be forced to keep the employee and can terminate him/her at any time. In other words, the employee can quit at any time and the employer can let the employee go at any time. It has been the unwritten employment contract for decades. (It had its origin in English common law and had begun to gain acceptance in the U.S. by 1877.) However, during the past twenty years, some state courts have made exceptions to the "at-will" doctrine. These exceptions are designed to protect employees from abuse or unequal treatment by their employers. This opened the door for an onslaught of litigation. In many states, discharged employees can now recover economic losses and get their jobs back by proving: (1) that the employer broke an implied contract of continued employment (such as an implied promise of job security); or (2) that the termination was contrary to public policy (such as dismissal for refusing to violate a law). A few states also include (3) that the termination violated an implied covenant of good faith and fair dealing (meaning the company was unfair).

Limitations on At-Will Employment

Employers do not have the right to discriminate against an employee illegally or to violate state or federal laws, such as those controlling wages and hours. Most state discrimination laws are quite broad. In addition to protecting against the traditional forms of discrimination based on race, color, religion, national origin and age, many also protect against discrimination based on sexual orientation, physical and mental disability, marital status and receiving public funds. Separate state laws protect workers from being fired or demoted for taking advantage of laws protecting workers from discrimination and unsafe workplace practices. And there are a number of other more complex reasons that may make it illegal for an employer to fire you -- all boiling down to the fact that an employer must deal with you fairly and honestly.

Promises of Continued Employment

Unless you want to create an employment contract that obligates your employee to work for you for a period of time and limits your right to fire the employee for the same period, do not put language in your handbook that promises employees a job as long as they follow your rules. A court might interpret this as a contract of employment, promising that employees will not be fired absent good cause. To avoid this, state in the handbook that your company reserves the right to terminate employees for reasons not stated in the handbook or for no reason at all. Even though you may never have to rely on this language, at least your employees will know where they stand.

Free Agent Los Angeles

Below is an article from the Los Angeles times that exemplifies the movement to Independent Contractor status by former employees...

L.A. Area Leads in Employers That Aren't

By Molly Selvin and Molly Hennessy-Fiske, Times Staff Writers

July 27, 2006

One hundred workers count on Betsy Briones for their paychecks. But not one of them works for her.

Briones is a so-called nonemployer, relying exclusively on contract or temporary workers. This arrangement, which allows employers to avoid the soaring costs of health insurance and other benefits, is booming in California, according to a Census Bureau report to be released today.

The 63-year-old Briones runs a busy referral agency for in-home care workers out of her Los Angeles residence, placing caregivers with elderly or disabled clients. All of her caregivers are independent contractors and are responsible for obtaining their own benefits, she said.

Los Angeles County — a hotbed for small business — seems to be the capital of this "free agent nation." It has more nonemployers than any other U.S. county, although their ranks are now growing even faster in the Inland Empire, according to the census report.

California businesses have been hiring contract and temporary workers in construction, administrative and high-tech jobs for years, and the practice appears to be spreading to industries such as real estate brokerages, beauty salons and insurance agencies, the report said.

The number of nonemployers grew 19% statewide from 2000 to 2004, reaping 27% more in revenue, according to the Census Bureau. During that time, the number of nonemployer real estate offices grew 46%, while healthcare and social assistance businesses increased 27% and architectural and engineering services jumped 12%, the report said.

Los Angeles County added 4.6% more nonemployers in 2004, while Riverside and San Bernardino counties added 7% and 7.1%, respectively, according to the report.

As the economy slows, analysts expect the tight labor market and increased business investment to boost demand for temporary workers, already up 2.7% in June compared with last year, according to the Labor Department.

"A lot of people want to have a business but don't want the headaches of actually having to employ people," said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. The recent growth of nonemployers — particularly in the entertainment, transportation and warehouse industries — is dramatic, Kyser said.

Los Angeles-area businesses become nonemployers to avoid the costs of workers' compensation, paid leave, health insurance and state taxes, he said. Contractors end up paying more for their own healthcare or go without it.

Gary Pavlica used to employ 12 men in his West Los Angeles construction company. He had been paying for their health, workers' compensation and liability insurance.

"But it got to be too expensive," he said. "I couldn't make a decent profit."

A few years ago, Pavlica encouraged each of them to get a contractor's license for their particular trade. Now, he hires the same men as independent subcontractors to do the framing, electrical work, painting and other work on his jobs.

"It's up to them now to get their own insurance," he said.

Pavlica characterized the new arrangement as a win-win situation. "Basically I'm exempt from the insurance responsibilities," he said. And his subs "work for other contractors instead of just waiting for me to get the work for them. They're licensed and insured and bonded."

Briones felt the same, noting that as independent contractors, many of the caregivers she places also list themselves with other agencies, giving them more opportunities for employment. The same flexibility applies to nonemployers. If business slows, they don't need to lay off anyone; they just use fewer contractors.

"You talk to these people and they say the same thing: 'I'm not hiring anyone ever,' " said William Dennis, a senior research fellow at the Washington-based National Federation of Independent Business Research Foundation.

Some workers prefer these conditions because it gives them the flexibility to make their own schedules, take time to care for young children or ailing parents and live where they want. Computer technology enables independent contractors or "permatemps" — permanent temporary employees — to work from home. Some are part of the "EBay economy," buying and selling on the Internet for themselves.

"I just don't think I could ever work for anyone; I'm too independent," said Sarah Shaw, 41, who runs her women's accessories business out of her Hollywood garage. She said she preferred paying for her own benefits over working for someone else.

Many successful free agents can do better as independent contractors than as employees.

Terminating an "At Will" U.S. Employee - Factors to Consider

When terminating an "At Will" employee in the United States there are 3 factors to consider:

By Kevin Muir, Author of the Employee Termination Guidebook
www.employeeterminationguidebook.com

(Author’s note: As you read this article, you’ll notice I use "he" to describe the problem employee. Please be aware I’m referring to a problem employee of either gender.)

Factor #1: Fight Or Flight… How The Problem Employee Will Take Advantage Of You

Even when you don’t tell him directly, the problem employee always knows he’s “on the bubble” and may be fired soon. It’s almost as if he can read your mind.

This wouldn’t be a problem if the employee would take the hint and improve his performance and behavior. But, this seldom happens because a bad apple remains a bad apple. Instead, you’ll notice that his behavior will get worse. He’ll either:

Begin an intimidation campaign against you to save his job, or,
Become a zombie doing little work.

You’ll notice these behaviors match the “fight or flight” response you learned in school. If you recall, when an animal gets into trouble, there are just two reactions, fight or flight. As we’ve seen, your employee will react the same way when his job is threatened.

In either case, he's taking advantage of you and your company by taking a paycheck and not doing his job… and this will only continue if you don’t do something right away. Your only recourse is to get rid of the employee as quickly as possible.

Let me cover each of these reactions.

In my experience, most employees will decide to “fight” and carry out an intimidation campaign. Sometimes these campaigns are subtle, but often they’re very public. Here’s what happens.
He starts politicking including telling lies about you, turning others against you and destroying your reputation. He wants you to suffer as much as possible. His goal is to build up his political base and force you to back off.

In this case, you only have one choice. You must show him (and others) you’re the boss and fire him right away. You can’t have an employee undermining your authority. His malicious behavior justifies his termination.

Now let’s discuss the opposite reaction, “flight.” In this scenario, the problem employee shuts down and stops working. He’s always late to work and misses more goals and deadlines. And, he spends much of his time on the phone, in e-mail and instant messaging his friends.

At this point, the employee has accepted that you’ll eventually fire him. So, his strategy is to drain as much money as possible out of the company while doing the least amount for it. In effect, he’s daring you to fire him.

What do you do? You can try to rehabilitate him, but the employee is now too far gone. Your best choice is to terminate now ... but you need to do it right.

(By the way, this is also the best thing for the employee as well. It's clear that he's not happy and productive. It's better to give him the push to get another job that is better suited for him. There's nothing worse in life than going into a job you hate and that makes you miserable. You are actually doing the problem employee a favor when you terminate.)


Factor #2: The Problem Employee Will Destroy Your Morale and Results… If You Don’t Do Something About It Today

Suppose you decide to give the problem employee an extra chance and let him stay with the company. What happens to you and your department?

Let me give it to you straight. The employee will poison your relationships with everyone he interacts with including customers, suppliers and co-workers. This is a natural outcome to being “on-the-bubble” and having a bad attitude.

Your results will suffer because you’ll be losing customers and suppliers… and because you now have to spend so much time managing just this one employee. Unfortunately, it may take you years to patch-up these relationships.

Besides this, the employee may poison your department and company as well. Your “good” employees will see it’s all right to act badly and not do their jobs. Your department and company morale will drop, and this will further erode results.

Here’s the worst part. You’ll lose your best performing employees. They don’t want to work for a company with poor morale and terrible results. They would rather work with other winners in a positive and productive environment.

The problem employee is a cancer in your organization. This cancer spreads by turning good employees into bad ones and by forcing your best employees to leave. In either case, you must cut out the cancer at its source before it spreads further.

Factor #3: The Longer You Wait… The Harder It Is To Terminate The Employee
If you wait to fire the employee, there is a good chance you’ll never be rid of him.

Let me give you two common reasons this happens.

First, if you decide to rehabilitate the problem employee, he’ll drain all the energy from you. You’ll find yourself spending all your time managing this one employee and firefighting any damage he’s causing with customers, suppliers and co-workers. Eventually, he wears you down, but you still can’t fire him.

Why? Because firing him is admitting that your rehabilitation effort failed. (By the way, if this describes your situation, I want you to know you’ve not failed. Most problem employees can’t be saved regardless of what you do. Remember… a bad apple remains a bad apple.)

Second, by waiting to fire, you’re giving the problem employee time to build a legal case against you. His strategy is to unmask your weaknesses as a manager and document any mistakes you’ve made. You can tell when this is happening when you see him taking notes of your meetings and discover him copying important files to take home.

Soon, he’ll go to a lawyer who will tell him how to make your life miserable.. Then, you can’t fire him because you're now risking a wrongful termination suit.

So why do managers and supervisors wait to fire a problem employee… when it’s obvious you should terminate right away?

The primary reason is most managers and supervisors have never been trained in proper termination procedures… and they're afraid of legal mistake. But don’t let this hold you back. In the next section, you’ll discover an easy and low risk way to terminate even in the most difficult employees.

Gain an Understanding of the Contingent Workforce

The following information is from the book SPHR Exam Prep: Senior Professional in Human Resources. It provides a good overview of the contingent workforce, which is becoming an important tool for corporate profitability and global expansion. More information at: http://www.quepublishing.com/articles/article.asp?p=437082&seqNum=8&rl=1

The contingent workforce is composed of those individuals who work for an organization but are not permanent full-time employees. Use of a contingent workforce is increasing and it is estimated that contingent workers represent more than 20% of the total United States workforce. The dynamics of today’s organizational and business environment often drive employers to use contingent workers to achieve a strategic advantage. These drivers of change are discussed extensively in this chapter and in others, but a brief summary is appropriate.

Increased competition and the need for cost-efficiency require that employers have flexibility in adjusting employment levels and employment costs to demand for its product or services and in relationship to its level of operations, both of which might be constantly changing and volatile. A permanent full-time workforce does not permit that. The changing psychological contract encourages lack of permanency of relationships, both in employee and employer expectations.

Contingent workers are in alignment with those expectations. Changing technology often requires new skills that permanent full-time employees might not have and might not be capable of developing. Downsizing and rightsizing could result in the loss of organizational capability, which can be augmented with the use of contingent workers. The increasing difficulty of compliance with the complexity of employment laws and the cost associated with them can be largely avoided by having workers that are employees of other organizations. Finally, significant cost savings can often accrue from outsourcing the organization’s work to organizations located in foreign countries in which the wage rates are low.

However, the use of contingent workers does not come without some organizational concerns and disadvantages. Increased flexibility often brings about loss of control. The employer might be able to control only the outcome of work, not the means used to obtain it. This issue is further discussed in Chapter 5. Use of some types of contingent workers might, in the long run, be more expensive than permanent employees because the source of those workers must not only be reimbursed for compensation and benefit costs but must also be paid a fee in addition.

There is a concern regarding the loyalty of employees that are not employed on a full-time basis. Will the employee act in the best interest of the organization or of the actual employer? Another issue of substantial concern is the impact of this strategy on the remaining permanent full-time workforce. Does the practice lower overall morale and induce stress and concern among the remaining workers who might become worried about their own job security?

A final issue is one of ethics and social responsibility. The SPHR must lead the organization in balancing its obligations to its employees, the community or communities in which it operates, and society as a whole against the organization’s legitimate desire to maximize its profits for stockholders. The advantages and disadvantages of use of the contingent workforce are summarized in Table 3.8.

Table 3.8 Advantages and Disadvantages of Using the Contingent Workforce

Advantages

• Flexibility.
• Savings in the cost of taxes and benefits.
• Access to expertise not internally available.
• Potential savings in overall compensation costs.

Disadvantages

• Perceived lack of loyalty
• Potential for overall higher costs, depending on the situation
• Lack of knowledge of the organization's culture, policies, and procedures
• Concern with disclosure of organizational proprietary information
• Impact on morale of permanent workforce
• Loss of internal capabilities
• Potential for increased training costs when contingent workers must be trained on unique or unusual processes or procedures used by the organization

A contingent workforce can be composed of many types of workers. Employers often use several sources simultaneously. Common types or sources of contingent workers include the following:

Part-time workers Part-time workers can be obtained from a temporary employment agency, in which case flexibility is maximized and the organization avoids liability for taxes and benefits. Part-time workers can be employees of the organization. Although that arrangement might be somewhat permanent in nature and of limited flexibility, organizations often provide no or a limited range of benefits, resulting in cost savings.

Temporary workers Traditional temporary workers are obtained from employment agencies that specialize in providing these types of workers. However, the employer can also hire temporary workers internally.

NOTE

The employer that hires temporary workers must do so based on some rational basis such as temporary or seasonal increases in operations, the need to replace workers during the peak vacation period, and so forth. The temporary workers should be terminated when the temporary demand for additional workforce ceases. Continued employment of temporary workers for extended amounts of time might negate their temporary status and obligate the employer to provide expensive benefits. Microsoft Corporation paid a 97-million dollar settlement to workers that it had mischaracterized as temporary workers.

NOTE

Hiring temporary labor from a temporary employment agency can also pose potential legal problems for the employer. If the organization exercises control over the temporary employees, provides training, negotiates compensation, or engages in other employment-related practices, the temporary employee is likely to be considered by the courts as an employee of both the organization and the temporary employment agency (referred to as dual employment).
In such cases the organization might be obligated to provide certain benefits. In addition, as a dual employer, the organization must comply with all employment laws in its relationship with the temporary workers. For example, the organization might have an obligation to provide reasonable accommodation to a temporary worker under the Americans with Disabilities Act and can be found liable for illegal discrimination or harassment under the Civil Rights Act of 1964.

NOTE

Temporary employees in many situations have the right to join unions that are the certified bargaining agent either of the temporary employment agency or of the organization.


Consultants Often consultants are contracted with to provide expertise not currently available to the organization and not needed on a permanent and continuing basis.

Contract workers Contract workers are often hired on a project basis. After the project is complete, the organization has no further obligation to the individual.

Outsourcing Outsourcing is the process of contracting for services or products with external vendors rather than producing them internally. Frequently outsourcing results in substantial compensation savings because of the economies of scale that are created when an organization specializes in a particular type of work and/or employs specialized software. Outsourcing often permits access to specialize expertise not available internally to the organization.

Offshoring Offshoring refers to hiring workers in foreign countries to perform tasks previously done in the United States. Oftentimes, substantial cost savings can be realized because of the lower compensation rates in those countries.

Leasing Leasing typically involves a contract with a professional employer organization (PEO). A PEO is an organization that assumes the employer rights and responsibilities for employees that it provides to its clients. An employer wanting to lease its currently employees signs a contract with a PEO and the PEO hires the employees. The organization then leases them back, with the PEO assuming the responsibilities of an employer. Employee leasing tends to be particularly suited for small employers that do not have internal expertise to comply with the complexities of today’s employment laws. Also, because the PEO has a much larger workforce, it might be able to provide the former organizational employees with much better benefit packages. Obviously these services do not come without a cost, and it is estimated that leasing raises total labor costs by about 5%. For many employers this is additional money well spent.

U.S. Labor Costs for March 2006

The U.S. Bureau of Labor reported in June on employer costs for March 2006
(see chart below). Wages accounted for over 70% of employer costs and benefits the remainder. The most costly line item employer expense is required taxes with health benefits not far behind.

U.S. Executives Satisfied with Outsourcing Non-Essential Business Functions

Despite the angst surrounding outsourcing, it appears U.S. executives are well-satisfied with turning over nonessential business functions to outside providers. A survey by Capgemini reveals that nearly 73 percent of U.S. companies plan to step up outsourcing activities in coming years, with about 23 percent stating a preference to outsource "a broad range of functions and processes" that do not reflect core business activities. The survey of 288 executives found that most lauded outsourcing as a way to zero in on core business issues (57 percent), improve process speeds (56 percent) and provide immediate cost savings (56 percent).
From:

Workforce Week
www.workforce.com
June 18 - 24, 2006
Vol. 7 Issue 25

The Future of Contingent (Direct Hire Placement) Search

For all direct hire Staffing Company owners this is a good article to take heed...

The Future of Contingent Search
What does the future hold for the age-old industry currently in transition?
Monday, June 19, 2006 by Dr. John Sullivan

article by Dr. John Sullivan and Master Burnett

The traditional contingent search business model is a risky one in that it is incredibly susceptible to macroeconomics, technological innovation, and population demographics. While many industries can balance their product and service portfolios to survive the most brutal application of the laws of supply and demand, many smaller contingent search providers ride a one-trick pony.

In 1999, contingent search providers were riding waves of success that made those on the North Shore of Maui look tame. Search commissions were rising steadily, exceeding 45% in some markets, newbies to the profession were pulling down six-figure incomes, and the influx of job orders seemed unending. Then 2001 hit, and one contingent firm after another cut back, laying off thousands. Now that double-digit employee growth is once again a challenge for most companies, you would think that the glory days of contingent search are back. But, as many firms will attest, they aren't.

Revenue Is There, But Not From the Same Sources

While industry revenue is forecasted to grow from 10.4% in 2005 to 11.6% in 2006, the industry is deriving the greatest percentage of newly booked revenue from value-added services, namely temporary or contract staffing and professional services. More companies are relying on contingent workforces than ever before. It is estimated that in 2006, as many as two-fifths of newly created jobs are first offered on a temporary basis. That's a fourfold increase in the growth of contract labor in just 10 years.

While the job orders being placed with traditional contingent agencies aren't drying up, the increased use of contingent labor and a confluence of technology driving candidate visibility is forcing such firms to change or die. With the opportunity to maintain minimum placement volume needed to sustain a business in jeopardy, many contingent search providers are increasing the scope of value-added services they offer, and are finding clients more receptive than ever.

The contingent search industry has long been one that defined success too early, in that it never sought out opportunities to extend the value of its services beyond the initial placement transaction. This lack of prior industry development has made the industry ripe for a series of progressive, qualitative transition cycles. Early leaders embracing this transition are already blurring the lines between temporary staffing, contingent staffing, retained staffing, professional services, and training. With this transition firms like Adecco and Kelly, which had few urban competitors, today have thousands, ranging from local companies of one to foreign companies of thousands.

The Confluence of Technology Driving Candidate Visibility

Traditional contingent search firms take advantage of their ability to find candidates who have not been found by companies or who have been overlooked. It is, for the most part, a low-volume, high-margin business. However, the confluence of numerous technologies that service the recruiting function and the proliferation of the Internet have made a majority of the world's workforce more visible to corporations and, in the process, eroded the value proposition contingent search providers once banked on.

In this new era, contingent search professionals are finding it a lot harder to find a candidate who:

• Doesn't appear on a lock-out list (a list of the agencies' other clients or strategic partners of the client organization);
• Hasn't already been introduced to the company via the employee referral program; or
  Doesn't already appear in one of a multitude of databases that employers have purchased access to; or
• Hasn't already applied directly to the company sometime in the past four years; or
• Presents a background so stellar that companies don't balk at paying search fees.

In short, the inventory of talent that contingent search providers can trade upon for permanent placement is in extremely short supply.

New Services on the Horizon

As stated earlier, those agencies embracing change are finding more ways to extend the value inside the organization. The most common extension is, of course, the move into supporting temporary labor. While many large service providers like Randstad and Kelly have the market economics to secure the largest companies in a metropolitan area, a number of small- and medium-sized firms desperately need help leveraging contingent staff.

In addition to temporary staffing, a number of other potential services are on the horizon, some that many large organizations should consider taking advantage of. Those we find most interesting include:

Outsourced Referral Program Management

Employee referral programs are quickly becoming the predominate source of hire inside most organizations. Those firms that lead their industries in hires attributed to employee referral can attest that providing world-class customer service to both referees and referrals is essential to maintaining program momentum.

Unfortunately, most HR organizations are not adept at even spelling world-class customer service, let alone delivering it. For years, HR organizations have focused on containing costs and enabling self-service, two objectives that don't always drive customer satisfaction. Contingent search firms, on the other hand, have built their businesses around customer service, servicing not only the client but the candidate as well.

By outsourcing the management of the employee referral program to a trusted search provider, the client organization could gain several key benefits, including:

• The search provider could more easily ramp up and down the human resources attached to the client employee referral program to maintain pre-established customer service standards.
• Under a split-type agreement, the search provider could provide referrals with additional placement services should the client organization opt not to hire, thereby creating a revenue source to self-fund the employee referral program.
• The search provider could provide more advanced analytics regarding the success or failure of the employee referral program because traditionally agencies have been more adept than HR functions have been at applying metrics internally.
• The search provider could leverage economies of scale and build internal staffing proficiencies in marketing and sales skills to support the employee referral program that would not make sense for small- and medium-sized firms to invest in.

External Brand Assessment

While most lock-out list scenarios prevent companies from using an agency to raid another employer, they don't prevent organizations from hiring services to help identify and understand their position in the market as employers. Because contingent search providers have a proven ability to blueprint a competing talent organization, target specific talent, and establish contact with said talent, it makes sense to leverage that ability to identify and gauge an employer's reputation in specific talent markets. Professional recruiters may be more adept at getting an honest perception than market researchers because they have a proven ability to keep talent talking. Under such a scenario, search providers would:

• Build contact lists of target talent in competing organizations.
• Establish relationships with said talent over time.
• Use the established relationship to gather research on how the client is perceived in key areas by the target talent.
• Aggregate the research and report back to the client perceptions that limit the client's ability to attract said talent.

Competitive Landscape Mapping

Nearly every contingent staffing professional can tell stories about when it introduced a candidate to a client who came from a competitor whom the client was unaware of. While companies like to think that their marketing teams are adept at identifying potential competitors, staffing professionals often do a much better job at mapping who-competes-against-whom for customers, and especially for employees.

They are more adept at recognizing industries that hire compatible talent, and much more adept at identifying new entrants to the talent market. Client organizations can use contingent staffing firms to build competitive talent landscape maps as a precursor to organizational benchmarking initiatives. Maps can help insure that organizations have a realistic picture of who is after what talent in a specific geography, and what each player's strengths and weaknesses are.

Recruiter Training

While the visibility of candidates may have improved, the ability of the typical corporate recruiter to acquire said candidates has not. Most corporate recruiters are phone averse, and seem to think that proactively contacting any potential candidate before they have applied to you is an ethics violation!

As such, a number of contingent search firms have started offering training seminars and certification programs that help prepare recruiters to be successful in the role of corporate recruiter. Some aspects of these training programs focus on sourcing techniques, while others focus on how to engage candidates and deal with the all too common objections. A number of Fortune 200 companies now rely heavily on recruiters who have undergone said training.

Under this service, contingent search providers:

• Recruit entry-level recruiters onto their payroll.
• Train the recruiters in full life-cycle recruiting or a life-cycle specialty, depending on client needs.
• Provide the newly trained recruiters with on-the-job experience for a minimum period of time.
• Contract out or place the new recruiters with client organizations and guarantee their on-the-job performances for a set period of time.

Vendor Management

Another service that is growing in popularity among traditional contingent agencies is vendor management. Many corporations are horrible at managing the multitude of services that support the staffing function and could not optimize the deployment of searches or resources if the future of their staffing function depended on it.

Despite years of challenges and a host of software products that have sprung up to do the job, most companies still need help. Because agencies are generally better at using metrics internally and have a profit incentive to use resources wisely, outsourcing vendor management to a contingent staffing vendor again makes sense. They can leverage the same metrics that they use internally for assigning recruiters to job orders to assign subcontractors to accounts. Because their profits are tied to helping you maximize both the efficiency and effectiveness of your staffing efforts, you build in accountability to a corporate function that traditionally hasn't been held accountable.

Conclusion

Contingent search firms have existed for years and will continue to exist for years to come. But like all industries, the contingent staffing industry is not subject to life as we have known it forever. It too must evolve — now more than ever. The position of search firms is one that lends organizations a great deal of power to identify what does and does not make sense to do internally. In short, it gives organizations the strength needed to force trusted search providers to become mini-recruitment process outsourcers. Are you progressive enough to leverage your partners?

Dr. John Sullivan (JohnS@sfsu.edu) is a well-known thought leader in HR. He is a frequent speaker and advisor to Fortune 500 and Silicon Valley firms. Formerly the chief talent officer for Agilent Technologies (the 43,000-employee HP spin-off), he is now a professor of management at San Francisco State University. He was called the "Michael Jordan of Hiring" by Fast Company magazine. More recruiting articles by Dr. Sullivan can be found in the ER Daily archives. Information about his numerous other articles, books and manuals about recruiting and HR can be found at www.drjohnsullivan.com. Dr. Sullivan is also the editor of VP of HR, an e-newsletter providing "out of the box" solutions for senior HR managers. Free subscriptions can be obtained on his website.

EEOC and the Independent Contractor

Factors that the EEOC considers when determining whether a worker is an employee or independent contractor. The worker is an employee if ANY of the following apply:

• the firm or the client has the right to control when, where, and how the worker performs the job;


• the work does not require a high level of skill or expertise;


• the firm or the client rather than the worker furnishes the tools, materials, and equipment;


• the work is performed on the premises of the firm or the client;


• there is a continuing relationship between the worker and the firm or the client;


• the firm or the client has the right to assign additional projects to the worker;


• the firm or the client sets the hours of work and the duration of the job;


• the worker is paid by the hour, week, or month rather than for the agreed cost of performing a particular job;


• the worker has no role in hiring and paying assistants;


• the work performed by the worker is part of the regular business of the firm or the client;


• the firm or the client is itself in business;


• the worker is not engaged in his or her own distinct occupation or business;


• the firm or the client provides the worker with benefits such as insurance, leave, or workers' compensation;


• the worker is considered an employee of the firm or the client for tax purposes (i.e., the entity withholds federal, state, and Social Security taxes);


• the firm or the client can discharge the worker;


• the worker and the firm or client believe that they are creating an employer-employee relationship.

If a worker who was dubbed an independent contractor is evaluated to have been an employee after the fact then back taxes, payments, and penalties may be due to the EEOC and IRS (among other entities).

Computer generated audio file of this article (MP3)

What are the California Holiday pay laws? Here is a recap:

California Holiday Pay - From the Division of Labor Standards Enforcement Website - http://www.dir.ca.gov/dlse/FAQ_Holidays.htm

Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require that an employer provide its employees with paid holidays, that it close its business on any holiday, or that employees be given the day off for any particular holiday. If an employer closes its business on holidays and gives its employees time off from work with pay, such a circumstance exists pursuant to a policy or practice adopted by the employer, pursuant to the terms of a collective bargaining agreement, or pursuant to the terms of an employment agreement between the employer and employee, as there is nothing in the law that requires such a practice. Additionally, there is nothing in the law that mandates an employer pay an employee a special premium for work performed on a holiday, Saturday, or Sunday, other than the overtime premium required for work performed in excess of eight hours in a workday or 40 hours in a workweek.


Q. Last week I worked eight hours on the 4th of July holiday, which fell on Wednesday. For the whole week I worked 40 hours. When I got my paycheck this week I was paid for 40 hours at my straight time rate. Aren’t I entitled to extra pay, of at least double time, for working on a holiday?


A. There is nothing in state law that mandates an employer pay an employee a special premium for work performed on holidays, Saturdays, or Sundays, other than the overtime premium required for work in excess of eight hours in a workday or 40 hours in a workweek. Unless your employer has a policy or practice of paying a premium rate for working on a holiday, or you are subject to a collective bargaining or employment agreement that contains such a term, your employer is only required to pay you your regular rate of pay for all the straight time hours worked on the holiday, and the overtime premium required for work in excess of eight hours in a workday or 40 hours in a workweek. Since you did not work over eight hours on the holiday, or more than 40 hours during the workweek, you were paid correctly.


Q. My employer is open for business on every holiday, some of which I have to work. Isn’t this against the law?


A. No. There is nothing in state law that mandates that an employer must close its business on any particular day, if at all. It is up to your employer to select which days, if any, it chooses to be open and closed for business, and if your employer is open on a holiday and schedules you to work that day, there is nothing in the law that obligates your employer to pay you anything but your regular pay and any overtime premium for all overtime hours worked.


Q. Last week we were closed for business on Monday to celebrate Memorial Day. Consequently, I worked Tuesday through Saturday that week, eight hours each day. When I got my paycheck this week I was paid for 48 hours last week at my straight time rate. Shouldn’t eight of those hours be paid at time and one-half, the overtime rate, since I was paid for more than 40 hours in the workweek?


A. No, you were paid correctly. In this situation, even though you did not work on the holiday your employer chose to pay you for it, which it has the absolute right and discretion to do. However, the determination of whether overtime pay is due is based upon hours worked, more than eight in a workday or more than 40 in a workweek, and not upon pay received. Thus, since you did not work more than eight hours in any one workday, or more than 40 hours in the workweek, you are not entitled to any overtime pay for the workweek.


Q. We get 11 holidays off each year without pay. My sister gets the same 11 holidays off, and she gets paid for all of them. Is my employer breaking the law because he’s not paying us for these holidays when he’s required to, even though we don’t work on any of them?


A. No, your employer is not breaking the law. There is nothing in state law that mandates that employees be paid for holidays that are not worked.

Planning Doesn't Equal Results - Communication and Incentives Help

Researcher/Writers Robert Kaplan and David P. Norton in their article "The Office of Strategy Management," published in the October 2005 Harvard Business Review, talk about why strategy execution has a low success rate in companies:

Over the past fifteen years, we have studied the root causes of this disconnect between strategy and performance. We have learned that most organizations do not have a strategy execution process. Many have strategic plans, but no coherent approach to manage the execution of those plans. Consequently, many key management processes remain disconnected from strategy. We have also learned that:

(a) Many organizations don't have a consistent way to even describe their strategy, other than in a large strategic planning binder. We believe strongly that organizations need to find a consistent, coherent way to translate their strategy into operational terms.

(b) Sixty percent of typical organizations do not link their strategic priorities to their budget, virtually ensuring that key strategic initiatives do not get funded and resources may not be supplied to deliver on the strategic plan.

(c) Two-thirds of HR and IT organizations develop strategic plans that are not linked to the organization's strategy. This is extraordinary.

(d) Seventy percent of middle managers and more than 90 percent of front-line employees have compensation that is not linked to the strategy.

(e) Most devastating, 95 percent of employees in most organizations do not understand their [organization's] strategy.

In short, there is often a chronic disconnect in organizations between strategy formulation and strategy execution.

So it seems that strategy could be much more cleanly executed if there was clear communication about corporate goals, checks and balances to make sure departmental goals followed, and compensation, funding, and rewards linked to execution. The authors describe the use of a Balanced Scorecard to track results in the article - http://hbswk.hbs.edu/item.jhtml?id=5269&t=strategy&wkrss=y.

PS - If you haven't already signed up make sure to receive an electronic copy of the HBS Working Knowledge Newsletter. Visit http://hbswk.hbs.edu/reg/newsletter_sub.jhtml

Human Capital as a Part of Your Companies "Value Platform"

The overall value of a corporation is dependent upon three factors (accoring to many leading Intellectual Capital theorists, such as Hubert Saint-Onge and Lief Edvinsson): (1) Human
Capital (2) Organizational (Structural) Capital (3) Customer (Relational) Capital. The interaction of these is graphically represented below as the "Value Platform".

The high-level specfics of these factors are depicted below:

With regards to Human Capital here are some of the fundamental indicators on whether a company is excelling or failing in this area:

If you have employees that have a long tenure, are satisfied with their job, are active in making suggestions to the company, are actively being recruited, and you have a high revenue/profit return in proportion to money spent on salaries then you probably have the Human Capital side of the Value Platform model well under control.

Click here to view a related study.

Staffing Firm Ordered to Pay $5.7 Million in Back Wages and Penalties for Immigration Violations

Computech, Inc. was ordered by the U.S. labor department to pay $4.5 million in back wages and $1.2 million in fines for willful violations. The company violated wage requirements for the H-1B visa program's and provided inaccurate information on its H-1B application materials in violation of immigration laws. A national staffing company Computech will pay the back wages to 232 non-immigrant computer professionals. The Company brought non-immigrant H-1B workers into the country, often paid them nothing when there were no work assignments available, and also did not pay them the required wage rate in the areas where they were employed.

U.S. Leading Economic Indicators and related composite indexes

According to The Conference Board, the leading index of economic indicators increased sharply in January. It has increased in five of the last six months - 2.3 percent from July 2005 to January 2006 (a 4.7 percent annual rate). The main contributors to January's large gain were initial claims for unemployment insurance (inverted), real money supply, and building permits. "The Coincident Economic Indicators have been rising moderately but steadily in recent months, suggesting the economy is sustaining a relatively moderate pace. The Leading Economic Index, however, rose sharply in three of the last four months. That could be a signal of a faster pace this spring,” says Ken Goldstein, Labor Economist at The Conference Board.

UPDATE ON EMPLOYMENT GROWTH IN MAJOR METROPOLITAN AREAS

From the Federal Reserve Board said “beige book” report (January 18, 2006) on current economic conditions within their districts:

For more information see: www.federalreserve.gov/FOMC/BeigeBook/2006/

Boston
“Business activity continues to expand in the first district, although this growth is not generally translating to increases in employment,” the beige book reported.

New York
According to the report, “The labor market has shown further signs of strengthening, for both office workers and factory workers.” A major New York City staffing firm reported that “the number of quality jobs far exceed[s] the number of quality candidates,” with most recruiting activity occurring in financial and legal services.

Philadelphia
“Employment agencies and temporary help firms indicated that demand for workers has picked up recently,” the beige book said.”

Cleveland
“Hiring still appeared somewhat limited throughout the district,” the report said, “though staffing services companies reported an increase in client orders, which was attributed to expectations of ongoing economic expansion in 2006.”

Richmond
District staffing firms “continued to report generally strong demand for workers,” the book said. “Skilled manufacturing, administrative, and customer service employees were among the most highly sought worker categories across the district.”

Atlanta
“Economic activity continued to expand at a solid pace,” the beige book said. “Reports suggest that regional labor markets continued to firm, with the demand for skilled workers in the construction industry particularly strong.”

Chicago
“Employment continued to increase in many locales and in a wide range of sectors,” the book reported. “Staffing services firms reported that temporary hiring picked up steadily again in most areas.”

St. Louis
Economic activity in the district has “expanded modestly,” the report said. Growth was noted in the services sector.

Minneapolis
District employment “increased slightly,” the beige book stated, “with optimistic signs for future hiring noted.”

Kansas City
“The 10th district economy expanded moderately,” the report said. Manufacturing activity “expanded solidly” and “factory activity is expected to continue to grow in the months ahead.”

Dallas
“The labor market continues to slowly tighten,” the book said. “Workers with specialized skills remain in short supply,” and “temporary service firms say a very high percentage of workers are obtaining full-time positions from initial short-term contracts.”

San Francisco
The district’s “economy continued to expand at a solid pace,” the book reported, noting labor shortages in the energy sector.

STAFFING IN 2006 STARTS AT A FAST PACE

According to data released Friday by the U.S. Bureau of Labor Statistics:

$16.41
Employees average hourly earnings across the United States.

4.7%
The unemployment rate. Dropped from 4.9% in December and is at its lowest level since July 2001 when the rate was 4.6%.

7.6%
Increase in payrolls, for temporary help firms over the same month in 2005.

14,300
Number of jobs added to the payrolls of temporary help firms in January.

193,000
Nonfarm payroll employment increase in January 2006. This was below most economists’ predictions of nearly 250,000.

2,650,000
Total number of staffing employees—the highest number recorded for the month since the Bureau of Labor Statistics began tracking the industry.

For more information see: www.bls.gov

Looking for a Company to Provide Talent to Yours? Start Here...

If you want to find a reputable company to help you recruit talented workers then start by calling one of these associations - they can point you in the right direction:

American Management Association (AMA)
Location:
New York, NY
Phone:
212-586-8100
E-mail:
cust_serv@amanet.org
Website:
www.amanet.org

American Staffing Association (ASA)
Location:
Alexandria, VA
Phone:
703-253-2020
E-mail:
asa@staffingtoday.net
Website:
www.staffingtoday.net

Association of Canadian Search, Employment and Staffing Services (ACSESS)
Location:
Mississauga, ONT
Phone:
888-232-4962
E-mail:
info@acsess.org
Website:
www.acsess.org

Association of Executive Search Consultants (AESC)
Location:
New York, NY
Phone:
212-398-9556
E-mail:
aesc@aesc.org
Website:
www.aesc.org

Georgia Association of Personnel Services (GAPS)
Location:
Atlanta, GA
Phone:
770-952-3178
E-mail:
gaps@jobconnection.com
Website:
www.jobconnection.com

Home Health Services & Staffing Association (HHSSA)
Location:
Alexandria, VA
Phone:
703-836-6263
E-mail:
info@aahomecare.org
Website:
www.aahomecare.com

Information Technology Association of America (ITAA)
Location:
Arlington, VA
Phone:
703-522-5055
E-mail:
hmiller@itaa.org
Website:
www.itaa.org

Institute for the Accreditation of Professional Employer Organizations (IAPEO)
Location:
Little Rock, AR
Phone:
501-219-2045
E-mail:
info@iapeo.org
Website:
www.iapeo.org

International Association of Career Management Professionals (IACMP)
Location:
Washington, D.C.
Phone:
202-547-6377
E-mail:
iacmp@iacmp.org
Website:
www.iacmp.org

International Association of Corporate and Professional Recruitment (IACPR)
Location:
Winnetka, IL
Phone:
847-441-1644
E-mail:
iacpr@aol.com

International Confederation of Personnel Services Associations (IPSA)
Location:
Melbourne, Victoria
Phone:
61-3-9650-1044
E-mail:
riddells@ozemail.com.au

National Association for Alternative Staffing (NAAS)
Location:
Austin, TX
Phone:
512-469-9014
E-mail:
kim@naasnet.org

National Association of Computer Consulting Businesses (NACCB)
Location:
Alexandria, VA
Phone:
703-838-2050
E-mail:
naccb@naccb.org
Website:
www.naccb.org

National Association of Executive Recruiters (NAER)
Location:
Chicago, IL
Phone:
312-701-0744
E-mail:
execxxx@aol.com
Website:
www.naer.org

National Association of Personnel Services (NAPS)
Location:
Alexandria, VA
Phone:
703-684-0180
E-mail:
skennaugh@napsweb.org
Website:
www.napsweb.org

National Association of Physician Recruiters (NAPR)
Location:
Altamonte Springs, FL
Phone:
407-774-7880
E-mail:
kmg-assn@worldnet.att.net
Website:
www.napr.org

National Association of Professional Employer Organizations (NAPEO)
Location:
Alexandria, VA
Phone:
703-836-0466
E-mail:
info@napeo.org
Website:
www.napeo.org

National Technical Services Association (NTSA)
Location:
Alexandria, VA
Phone:
703-684-4722
E-mail:
vjohnson@ntsa.com
Website:
www.ntsa.com

New Jersey Staffing Association (NJSA)
Location:
Parsippany, NJ
Phone:
973-887-2288
Website:
www.njsa.com

Society for Human Resource Management
Location:
Alexandria, VA
Phone:
703-548-3440
E-mail:
shrm@shrm.org
Website:
www.shrm.org

TempNet
Location:
Des Moines, IA
Phone:
515-282-8192
E-mail:
mmycka@assoc-mgmt.com
Website:
www.tempnet.com

The Outsourcing Institute
Location:
Jericho, NY
Phone:
516-681-0066
E-mail:
info@outsourcing.com
Website:
http://www.outsourcing.com/

Hiring Intelligent Executives

Hiring intelligent executives (IQ, Emotional IQ , and Leadership IQ) is critical to an enterprises success. Here are "The Skills that Make up Executive Intelligence."

by Justin Menkes (from the Harvard Business Review, December 5, 2005)
http://hbswk.hbs.edu/pubitem.jhtml?id=5124&t=operations

Regarding tasks, intelligent leaders:	Regarding people, intelligent leaders:	Regarding themselves, intelligent leaders:
appropriately define a problem and differentiate essential objectives from less-relevant concerns.	recognize the conclusions that can be drawn from a particular exchange.	pursue feedback that may reveal errors in their judgments and make appropriate adjustments.
anticipate obstacles to achieving their objectives and identify sensible means to circumvent them.	recognize the underlying agendas and motivations of individuals and groups involved in a situation.	recognize their personal biases or limitations in perspective and use this understanding to improve their thinking and their action plans.
critically examine the accuracy of underlying assumptions.	anticipate the probable reactions of individuals to actions or communications.	recognize when serious flaws in their ideas or actions require swift public acknowledgment of mistakes and a dramatic change in direction.
articulate the strengths and weaknesses of the suggestions or arguments posed.	accurately identify the core issues and perspectives that are central to a conflict.	appropriately articulate the essential flaws in others' arguments and reiterate the strengths in their own positions.
recognize what is known about an issue, what more needs to be known, and how best to obtain the relevant and accurate information needed.	appropriately consider the probable effects and possible unintended consequences that may result from taking a particular course of action.	recognize when it is appropriate to resist others' objections and remain committed to a sound course of action.
use multiple perspectives to identify probable unintended consequences of various action plans.	acknowledge and balance the different needs of all relevant stakeholders.

Excerpted with permission from "Hiring for Smarts," Harvard Business Review, Vol. 83, No. 11, November 2005.

The Time to Plan for the Coming Skills Shortage is Now

Making the most of a mature workforce Some 64 million baby boomers (over 40 percent of the US labour force) are poised to retire in large numbers by the end of this decade. In industries already facing labour and skills shortages, forward-thinking companies are recruiting, retaining, and developing flexible work-time arrangements and/or phased retirement plans for these workers (55 years of age or older), many of whom have skills that are difficult to replace. Such actions are putting these companies ahead of competitors who view the aging workforce largely as a burden putting strains on pension plans and healthcare costs.

Advanced Screening Tools for Effective Talent Sourcing

Recruiting talent is constantly evolving more sophisticated tools. In this December 2005 Casino Journal article Greg Calvert, the CEO of The Performance Group, and I discuss the impact of pre-hire performance testing in the Casino industry.

http://www.billinman.com/news/Casino%20Journal/Casino%20Journal%20-%20Casino%20Metrics%20Article%20-%20122005.jpg