Human Resources Forum

By: Bev Kaye & Sharon Jordan-Evans
From: The Human Resources Forum – May 2003

Tough Times Haven't Hurt Corporate Giving

Despite the tough economy, company contributions to worthy causes continue to rise. The Conference Board recently reported in its annual survey of corporate giving that contributions rose to $4.5 billion in 2001 (the latest year for which official figures are available), an increase from $3.9 billion the previous year.

  • Large US corporations added a significant layer of giving to their contribution budgets in the aftermath of the September 11 terrorist attacks in 2001. However these disaster and relief efforts did not reduce overall giving budgets, which generally increased from 2000 to 2001. The survey also found:
  • Average giving rose 8.9%, from $19 million in 2000 to $20.7 million in 2001.
  • US corporate contributions (excluding 9/11 giving) as a percentage of domestic pre-tax income remained unchanged from 2000 at 1%.
  • Support for education regained its position as a top priority in corporate contributions.
  • The median ratio of total US contributions to the number of US corporate employees was $448, up 33.3% from 2000 and 2% from 1999.
  • The share of non-cash contributions is steadily rising, a trend that has been sustained since 1992.
  • Among the respondents that maintained corporate foundations, 41% made gifts to their foundations in 2001, down from 62% in 2000. Individual gifts varied widely in size, from $543 to $600 million. The median value of these gifts was $3.6 million, down from $5 million for the previous year.
  • International contributions rose by 16%. For more information, contact www.conference-board.org.

Keys To Successful Succession Planning

Filling in a hole in the executive team, whether itís expected or not, can cause a great deal of stress. Wouldnít it be simpler to have successors within the organization already identified and groomed to take over when needed? Of course, but according to a recent Business & Legal Reports (BLR) article, many organizations donít do it. 

The need for an effective succession planning system is critical in todayís rocky economy. BLR suggests that the criteria for identifying the high-performers must have organization-wide agreement. The basic criteria, of course, should be job mastery.  In addition, many top management executives look for the following three characteristics: the ability to articulate strategy and vision, relating well to others, and showing ìexecutive presenceî or the ability to fit into the top circle.  

However, criteria must be applied throughout the organization to all supervisors. To develop an effective succession planning system, you must ìhave an agreed upon set of competencies at its core.î Some common competencies offered by one executive consulting firm included the abilities to exercise sound judgment, leverage market opportunities, develop talent, instill trust, drive for results, foster teamwork and demonstrate a global mindset.
 
It's also imperative that your succession planning system go beyond just looking at who will fill the top slot. You must go deep in your organization and find who will fill the positions of the ones who move to the top.

HR Executives Choose Sponsor Companies To Meet at Forum

As reported last issue, sponsor companies of this year's The Human Resources Forum, an invite-only event for senior HR execs on board P&O's newest ocean liner Adonia May 7-10, 2003, have been requesting high-level HR decision makers that they would like to meet with one-to-one while on board the event through the Forum's proprietary appointment system. 
 
Now these same decision makers (all pre-qualified HR executives to ensure a high-level meeting) are making their selections -- picking which sponsor companies they would like to meet with while on board, as well as the conference sessions they would like to attend. 
 
Once their selections are entered, they will be compared with sponsors' selections so that mutually requested meetings can be set up between the two parties. At last year's Forum, when a delegate and sponsor both requested to meet each other, the appointment system fulfilled 96% of those meetings.
 
Please take a few moments to review the confirmed list of attendees by clicking on /delegatelist/ and see if you would like The HR Forum to arrange meetings for you with these impressive executives. The average budget per delegate attending this year's event is $9.6 million. 
 
There are still a few opportunities to participate as a sponsor at this premier event but you must contact us soon as time is running out. To find out more about the event and how you can become a sponsor please call Jessica Livada at 212-651-8714 or via e-mail to jlivada@richmondevents.com. 

HR Outsourcing Pays Off

According to a recent survey on HR benefits and outsourcing by Fidelity Investments, as reported on plansponsor.com, at least 85% of CFOs, COOs and other senior benefits executives consider outsourcing a good investment. That figure was dependent upon the plan outsourced. In addition, when broken down specifically, the numbers got even better.
 
Highest marks went to outsourcing defined contribution plans -- 97% considered it a good investment. Additional plans considered good outsourcing investments were health and welfare programs (91%), defined benefit plan administration (89%), alternative compensation programs such as stock plans (89%) and payroll (85%).
 
An overwhelming majority of respondents (92%) reported that a vendorís capabilities and expertise delivered significant benefits for their organization, particularly in terms of improved services and better access to information. In addition, nine out of 10 executives and managers agreed that outsourcing facilitates data transfers via better Web-based technology and reduces administrative burden by giving employees direct, self-service access to HR/benefits information.
 
When asked if their organizations could provide comparable services internally, 88% reported it would be too burdensome and/or too costly (86%). However, more than three-quarters (83%) said they believed the value of outsourcing could not be measured in dollars alone.

Stock Option Programs Still Afloat

Many companies are struggling with underwater stock options but the high tech industry seems to be handling this new challenge most effectively. Thatís according to a new study from Buck Consultants, which looks at the adaptability and resilience of equity programs in the high technology industry. 

The supplemental option grant was the most frequently applied strategy to address the issue of underwater options, with 70% of high technology companies using this approach. Nearly one-third of this group used a supplemental grant more than once. However, the stock marketís continued decline since April 2002 meant that many of these companies exhausted their ability to grant supplemental options without ever solving their underwater problem. 

Many of these companies used one or more option exchange programs, in which option holders voluntarily exchange underwater options for alternative consideration. In Buckís examination of 71 such exchange programs executed between April and December 2002, 94% used the cancel/delayed option re-grant, in which optionees receive new options after the six-month-and-a-day waiting period. A key feature of this program is that the company does not have an immediate earnings charge. 

Exchange programs remove a large number of underwater options from overhang, replacing them with new, on-the-money shares and ñ in theory ñ renewed motivational value. The justification for corporate investment in exchange programs is the expectation that, as the economy improves, these revitalized equity interests will enhance the companyís recovery. 

While high technologyís faith in equity seems as strong as ever, it is also taking more sophisticated forms. Buck analysts pointed out that the exchange program design reflects a new sensitivity to the concerns of investors and regulators, particularly among larger companies. The study found larger organizations were less likely to include officers in exchange programs (43%), less likely to offer a one-for-one exchange rate (29%), and more likely to reset vesting schedules (71%). For more information, contact www.buckconsultants.com. 

Time To Get Engaged

Retention strategies have long been hailed as a workforce imperative, but authors Beverly Kaye and Sharon Jordan-Evans have found that the challenge today is not just retaining talented people, but more importantly, fully engaging them. Employees who have an emotional involvement with their work can lead their organizations to greater productivity, higher customer satisfaction and greater profits.
 
At a recent meeting of global talent leaders, Kaye and Jordan-Evans joined in the discussion of todayís retention strategies and reveal 10 of the groups' key findings and best practices.

  1. Reciprocity is key.  Employees are investors in the company and expect a return on investment.
  2. Retention must be part of the organizationís DNA.  Successful organizations have woven retention and engagement deeply into their structure.
  3. Loyalty is never a given.  Loyalty must be earned; even satisfied employees sometimes leave.
  4. Organizations must be seen as employers of choice.  You have to compete on compensation and benefits, but win on culture, learning and development.
  5. Stars include more than just the top 10% -- or 1%! Stars are people at any level who bring value to the organization.
  6. A recovering economy spells choice.  As the economy recovers, talented people will be even more in demand and will have greater choices.  Talent will become harder to find, and even harder to engage.
  7. Mentor widely and in both directions.  Build learning relationships in all directions and hold all partners responsible for the success.
  8. Train intelligently.  Provide on-going retention training in manageable bites,  make it a continuous effort and find ways to size the retention plan to the specific demographics of the organization.
  9. Recognize managers who keep employees. Meaningful recognition remains a potent energizer for employees and managers alike.
  10. Create the internal headhunter profile. When employers integrate retention efforts into the culture, headhunters have a difficult time prying talent out of the organization. For more information, contact Beverly.kaye@csibka.com or sjordevans@aol.com.