In This edition

1. Smart Women Don't Box: Leadership In The Connected Economy
2. Is Your HR Department Friend Or Foe? Depends On Who's Asking The Question
3. Four Steps To Making Talent Management A Core Competence
4. What Is Transformation? Why Is It So Hard To Manage?
5. Most Companies Taking A Selective Approach To HR Outsourcing, Watson Wyatt Study Finds
6. Case-Law & Legislation Review: Dismissal: Procedure Compensation
7. Book Reviews
8. Deadline Nears For Online Compliance
9. Downloads: Slideshow - An Ascendant Organisation In An Afrocentic Society
10.Unsubscribe & Moving Soon

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Jeff Sacht: Publisher-editor
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jeffs@worldonline.co.za

'A MUST TO PRINT & READ'

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1. Smart Women Don't Box: Leadership In The Connected Economy*

By Keith Coats who can be contacted at keith@tomorrowtoday.biz 

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A recent article exploring the subject of women and leadership carried the titled, 'Women can beat men at their own game'. My question is, "why would they want to do that?"

Trying to 'beat men at their own game' is not only a foolhardy tactic, but also one that will simply ensure that women leaders who succeed in this will merely join the majority their male counterparts on the 'irrelevant leadership scrap heap'. Not a pretty place to be.

Linda Tischler asks why it is that so few women are to be found in the 'corner office'. South African statistics confirm this to be the case in that only 1.9% of CEOs and MDs in the Rainbow Nation are women. A far cry from the progress being made within Government circles! In fact the United States, Britain, Australia and Japan do not fare much better when it comes to the relevant statistics.

Tischler's question is all the more intriguing when considered against the backdrop of women participation in leadership Graduate programmes. Here the statistics are far higher which only serves to highlight the question as to what happens between these programmes and arrival at the corner office? It is Tischler's assertion that women, having got to (or at least got close enough to sniff) the corner office, have decided it is not for them.

The demands placed on life at such altitude means that most women leaders are simply not prepared to pay the price. The cost to life away from work is considered too high and in fact that is the point, there apart from work. These are the positions that demand both heart and soul and whilst providing rich rewards, the irony is that there remains little time to enjoy the rewards! Women who see the demands associated with occupying the coveted corner office are simply not prepared to pay the price that is required. The power and prestige associated with such territory seemingly does not hold the same magnetism for women as it does for men. While the current business context sees that as a regrettable negative, I believe it to be a commendable attribute.

Whilst women remain every bit as capable as men in the competition for the corner office, Tischler asserts that they are also not willing to as hard as men for the right to occupy that space. This is partly due to society's allowance to men to focus entirely on competing whilst being less forgiving on women who wish to do the same. Perhaps this can be illustrated in another way through a recent conversation I had: Chatting to a woman in a senior leadership position within a large retailer, she reflected on the contrasting responses from employees towards a male colleague and herself.

"When he does something that is not liked it is excused as 'well that is just the way he is' and people get on with it - but when it is me, I am referred to as 'the bitch' and the response is often less that cooperative. He can get away with things that I cannot...it is as though it is expected of him but not of me and this is very frustrating."

So the natural response is for women to 'toughen up', get their guards up and when the bell sounds, come out swinging with a, "I'll show them" kind of attitude cheered on of course by a vociferous ringside chorus of, 'sisters are doing it for themselves.' They are encouraged to, 'beat the men at their own game'. Compete, hunt, kill... after all it is the survival of the fittest, a winner takes all scenario and so women are drawn into employing tactics that are, for the most part, doomed to fail. Men have made competition an art form over centuries of bloody practice during which their skills in applying such tactics, combined with what seems to be some natural genetic engineering at work, gives them (us) an unfair advantage. After all, if it is a boxing ring we are talking about, no authority would even consider allowing a lightweight in the ring with a heavyweight. It just wouldn't be a contest.

But what if it wasn't a boxing ring? What if the corporate environment was changing from a 'boxing ring' to something else, something where bulk, killer instinct and gloves where attributes about as helpful as a snorkel in the desert? And while some MacGyver out there might come up with an application for a snorkel in the desert the point is, it would indeed take a MacGyver to do so!

"Changing to what?" you ask. Well it could be anything actually but let's go with a 'children's playground?' A children's playground is your incredulous response to this seemingly ludicrous analogy, which induces some involuntary winces from the men readers, and I suspect, just the hint of a smile from the women readership. . A place normally more frequented by mothers than fathers and certainly the undisputed home of the 'little people'. This is the place where 'serious play' occurs daily. A place of laughter, tears, painful lessons, chaotic activity, imagination, respect, variety and above all, fun. The little people want to be there, love being there and the hours melt away in the midst of the frantic activity and noise that attracts onlookers, inducing in them memories of a long forgotten playground attitudes and activities. So what if, instead of viewing the corporate environment as a boxing ring, we reframe it as a playground?

I believe that the corporate environments that will succeed in the emerging Connected Economy will resemble playgrounds more than they will boxing rings. Yes, they will still be competitive and naturally the odd scrap will occur, but the environment will resemble that of a playground. The February 2004 edition of magazine (10 Best European Companies to Work For) noted that each of the companies chosen were considered to work by their employees. In essence, people wanted to be there or as Jim Jannard of Oakley framed it, "I want our people when they walk in to be so stoked they can hardly stand it. I want them to be dying to come back tomorrow. I want them to be desperate to find a place where they can use their own particular talents to add to us and make us great." Jannard could be describing a playground.

So, if this is where corporate environments need to be heading, why would women who get to occupy the corner office, want to keep things the way they are? Why would they be lulled into trying to 'outbox' their male predecessors and counterparts? Change is needed and who better than women leaders to introduce such changes. Now, I am not saying that men won't or can't lead such change but it is just that they will battle the prevailing winds of tradition as well as their own make-up (or even instincts) in doing so. Of course there are some notable exceptions with Richard Branson coming to mind almost immediately. However, the reality is that no longer can we maintain the current status quo in our office environments as we shift into a Connection Economy. This reality is compounded by the arrival of Generation X (the Bright Young Things - those between 20-35) and their move deeper into the corporate changing rooms. The challenge will be to make the necessary changes and my message to women leaders out there is simple: Don't follow the way it has always been done - don't box! The rules of the game are changing (just as they have done throughout previous changes from one economic context to the next) and savvy leadership will be required.

I remember chatting to a senior Vice-President of an international pharmaceutical company in Moscow about such matters. Her response was one of resignation that bordered on despair, "I know what you are saying about women in leadership is true" she commented, "but if I really wanted to introduce the changes I know are so needed in the corporate environment, I would have to leave and start my own company". More and more women are doing precisely this and it will be worth watching the results of these companies as they grow and find their feet in the Connection economy.

Smart women don't box and savvy leaders focus on building playgrounds. You might not be able to do anything about the former but certainly leaders everywhere can engage in the latter activity. My advice: Go on...be a Player!

*Reprinted by permission of the author.

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IN-COMPANY WORKSHOP: MANAGING CHANGE & TRANSITION IN THE NEW WORLD OF WORK

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An Intensive and Practical 2- DAY WORKSHOP FOR HUMAN RESOURCES AND LINE MANAGERS TO DEVELOP THE CONFIDENCE AND COMPETENCE TO PLAN FOR AND LEAD TEAMS THROUGH CHANGE & TRANSITION. Enhance your ability to plan for and lead a team through the transitions triggered by a continuously changing world of work. Contact Jeff Sacht to request a workshop flyer and to arrange an in-company workshop customised to your requirements. Facilitation is charged on a realistic daily rate and not a per person cost. Also available as a web download for self-delivery/in-house use under license agreement. Contact jeffs@worldonline.co.za

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2. Is Your HR Department Friend Or Foe? Depends On Who's Asking The Question*

From July 27 - 09 august edition of Wharton@Work 

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Talk to human resources professionals, consultants and scholars who study the workplace and you will find two different views of HR.

According to its critics, HR departments can be needlessly bureaucratic, obstructionist, stuck in the "comfort zone" of filling out forms and explaining company benefits, and too closely aligned with the interests of management yet lacking the business knowledge to be effective strategic partners. Dealing with these types of HR departments "is like going to the dentist," says David Sirota, author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing). When people are asked to rate the quality of different functions within their company, he adds, "IT and HR are repeatedly rated the lowest."

The more positive view of HR is that it works directly with senior management, providing crucial input into major business transactions such as mergers and acquisitions and restructurings. In this scenario, HR departments have moved away from the traditional role of administrators -- many of those responsibilities are now outsourced -- to a more creative focus on their prime role, which includes recruiting talent, promoting mobility and career development, and improving organizational effectiveness. "I would not choose HR as a career if we couldn't be a strategic partner with the business," says Kathy Gubanich, managing director of HR at The Vanguard Group. "HR is fortunate to report to the CEO of Vanguard.... If we didn't, it would mean HR's priorities are being set differently."

Peter Cappelli, director of Wharton's Center for Human Resources, recently led a discussion at the Center focused on the question: "What is the role of HR now?" From the 1920s on, Cappelli says, HR was seen as a way to advocate for, and protect, employees -- an orientation that became "quite explicit in the 1950s and beyond as part of an effort by management to prevent unionization." But more recently, and especially over the past decade, the threat of unionization is much less widespread even as technological advances have made employees more expendable. The "social contract" between employee and employer -- in which companies provided lifetime employment to its workers in return for loyalty and commitment to company goals -- has ended.

These days, employees are afraid to quit because of the tight labor market and reluctant to complain about increased workloads for fear of being laid off, says Cappelli. "Companies are pushing more and more work onto employees, and HR departments are becoming the mechanism for doing that. As a result, the idea that HR people are there to represent workers -- or at least deal objectively with their concerns -- is pretty much gone." In addition, with companies continuing to cut back employee benefits such as healthcare and pensions, HR departments have found themselves "increasingly the bearer of bad news to employees."

Meanwhile, HR issues are very much a part of the press's business coverage, whether it's Hewlett-Packard's recent announcement that it is laying off 14,500 employees (including a number of HR positions) or the breakdown of talks between Citigroup chairman Sandy Weill and Citigroup's board over the retirement perks available to him under his contract. Weill, who is reportedly interested in starting a private equity fund, had earlier committed to staying on as chairman until April 2006.

Strategy-driven HR: Reality or Goal?

If you look at the history of HR, says James Walker, a consultant on strategic human resources based in La Jolla, Ca., trends in HR -- such as outsourcing, the establishment of call centers and service centers, and the integration of work-life balance issues -- usually require about a decade to take hold.

For example, "most of us would like to see HR be transformed more rapidly into a business partner, with less emphasis on administrative functions that can now be outsourced," Walker says. "To achieve that, it's vital to help key HR individuals accelerate their development of business skills. I think many companies are, in fact, doing this, but not as fast as I would like. There is still a tremendous attraction within HR to the comfort zone of more traditional and functional support-service kinds of relationships."

The classic area where HR leaders can provide strategic input is "anticipating a merger," says Walker. "A very well-defined set of opportunities and experiences exists, including assistance in valuing the merger, developing the integration plan, communicating with employees, matching talent, and so forth. Some company HR departments play a key role here. In others, they are still observers, cleaning up the mess afterwards." HR executives who serve as business partners, he adds, are more likely to be in strategy-driven organizations -- professional services firms, financial services firms, high-tech companies and "to some extent pharmaceuticals, the opposite end of the continuum from healthcare companies and manufacturers." The most talented HR leaders, he says, tend to work "in pockets within a business. They have established a relationship with their client executive in which they are able to have a dialogue and push back as appropriate."

Over the last 10 to 15 years, HR has begun to have a much bigger impact on how a company operates, says J. Steele Alphin, global personnel executive at Bank of America. "To put this in perspective: At Bank of America, we have $28 billion of non-interest expenses. Of that, $15 billion is related to personnel" -- everything from salaries, incentive plans and fringe benefits to talent retention programs and risk management strategies. "If you can effectively manage those dollars, trying to get as high a return on investment as possible, then you approach the opportunity a lot differently."

To fulfill his mandate of growing revenue, increasing productivity and developing leadership in the company, Alphin, who reports directly to CEO Ken Lewis, has assembled an HR team that includes managers with degrees in business, HR, psychology and engineering. "Our team looks very similar to any other high-level team in Bank of America," he says. So when HR sits around the table with other departments, "we don't talk HR; we talk about the business."

Lewis, he adds, "looks to us to be business leaders, business partners, the person at the table who will always bring up the critical fact that no one else does." Alphin, who has 10 direct reports, says that most of those 10 people show up "on replacement charts for other areas of the company. One of our goals is to be a net supplier of talent to Bank of America. We have had personnel executives move into running real estate, branding and transition on acquisitions."

According to Mark Bieler, a human resources consultant who was executive vice president of HR at Bankers Trust from 1985 to 1999, "without the direct tie to strategy, there is no context for HR work. You have to be completely focused on aligning HR practice, policies and procedures to the overall strategy of the organization." In the mid-1980s, when Bieler was at Bankers Trust, chairman Charles Sanford converted the company from a commercial bank to an investment bank -- "about as radical a cultural shift as one could imagine," says Bieler. "My role was taking a set of HR practices that I had inherited and making sure they were consistent with where we were trying to take the firm. At the simplest level, that means redesigning pay systems, not so much to pay people more -- although investment bankers do tend to make more -- but to restructure the system to include smaller amounts of fixed compensation and to put more of people's pay at risk.

"In addition, we became the first bank in the mid-1980s to offer a cafeteria style benefits approach because we wanted people to take charge of their lives, to be more entrepreneurial. Cafeteria benefits were more suited to the type of organization we wanted to be.... We shifted our recruiting goals, changed the way new employees were socialized.... and bit by bit, brick by brick, aligned what we did from the people point of view with the strategy of the company."

Jack Welch, former CEO of General Electric and author of a book entitled Winning, noted in a recent interview that "outside of the CEO, HR is the most critical function in any company. Development of leaders is the ultimate responsibility of every CEO and thus is an integral part of HR. I saw my job as allocating people and dollars to opportunities. I wasn't designing products. I was putting people where I thought they were right for the job. I did that with my partners in HR." HR evaluation systems, he says, "should be rigorous and nonbureaucratic" and monitored as closely as financial reporting is now monitored under Sarbanes-Oxley.

While many HR professionals say their role is to be a strategic partner with senior management, critics question whether this is possible given that HR people often lack the business skills to understand strategy or their role in implementing it. Furthermore, some senior managers aren't interested in having HR as a strategic partner; they just want the department to go out and hire the people they (the managers) want.

"If top management doesn't see value in having HR as a strategic partner -- and if HR can't think out of the box in that role -- then the partnership is probably not going to happen," says Wharton management professor Nancy Rothbard. She cites the case of a woman who heads HR at an in-house call center for a large financial services firm who is "constantly experimenting with new ways to help the company achieve its overall goals," such as trying out new tools to better select employees and sitting through hours of training sessions to test their effectiveness. Overall, says Rothbard, such an approach "means committing resources -- in terms of top management's time as well as the time of managers a level below." The effort, she says, "took guts on HR's part because it wasn't clear there was going to be a definite payoff."

Of course becoming a "partner" with senior management doesn't always happen. At Vanguard, says Gubanich, "you have to earn your way to the table. I might also say that rather than a strategic partner; we are more of a strategic enabler. We need to understand the business deeply -- where it is now and where it wants to go. This is important because sometimes I think we get caught up in, 'What is the coolest program?' or 'Should we be designing something new?' The key question has to be: 'Was HR successful at moving the company in the direction it wanted to go?'"

HR at Vanguard has a number of strategic imperatives, Gubanich adds, "such as hiring the right people in the right place in the right time; looking for breadth and depth of leadership talent; maintaining the right culture for the organization; risk mitigation and operational excellence.... For example, if someone at Vanguard wants to create a new business, we talk about the people and programs needed to get there. Do you have the leadership necessary for that? Do you have the training programs? Do you know how to take a group and say, 'We are now going to do things this way instead of that way'? What do you want to accomplish? Will you be sales oriented or service oriented? What are the competencies required for the job? Will you focus on external or internal hiring or a combination of the two? And so forth."

The same orientation exists at Air Products, an $8 billion industrial gas, chemical and home health care company headquartered outside of Allentown, Pa. Vince Kraft, director of industrial relations, reports to the vice president of human resources. "When people say HR is non-strategic and does not understand the business, here it is just the opposite," Kraft says. "We are imbedded in a variety of operational issues especially in the field. We are out there among the employees, customers and the distribution network, and we are seen by senior management as very valuable, especially when it comes to areas like professional development and succession plans."

In some companies, HR's influence extends beyond their own departments. "Outside of the marketing function," notes Bank of America's Alphin, "the personnel function at Bank of America has one of the biggest responsibilities relating to brand. For example, every year we hire about 40,000 people externally. Each time we interview someone, we are looking for talent. That person, in turn, has a chance to see our company. That's a branding opportunity. If you interview people, even if you do not hire them, the experience should be such that they would want to bank with us."

A Two-Tiered System

Critics of the way HR has developed over the past decade suggest that HR has become a "handmaiden of management," more concerned with carrying out directives from above than supporting the needs of employees.

Bieler sees "some truth" to that claim but says it's "largely because of the decentralization of the functions. The most common model today in large corporations is a smaller, highly expert central staff and then masses of HR people in distributed HR organizations throughout the company. Their reporting relationship may either be dual -- to the head of the line operating office and to the head of HR -- or may be direct. But at the end of the day, the power dynamic seems to favor HR's relationship to their senior line executive. This distribution of the HR function has many advantages but one of the downsides is a decrease in the view of HR as playing an ombudsperson role in the organization."

According to Air Products' Kraft, "the climate change" toward HR being perceived as pro-management "began when we started to outsource what is generally described as administrative duties, but what are generally regarded by employees as positive employee relations -- such as help with medical insurance, leave and vacation issues. The day-to-day contract between employees and management of keeping each other informed has been relegated to either voicemail or email as opposed to conversations. HR began to be perceived by the employee base as a necessary evil."

Kraft also notes a tendency to treat people as "numbers rather than as individuals, which is not the fault of the company but really the fault of financial pressure from Wall Street. It's very hard not to feel the pressure to cut costs...."

When Leon Cornelius, a director of GM's labor relations staff, first started at a GM plant in 1978, "all the HR issues were handled right there, in the plant," he says. Employees could ask questions about benefits, compensation, and "if you were sick or somebody passed away, there were people who you could talk to about it and find a sympathetic ear. It wasn't strategic; it was more transactional, but it had that personal touch. Now it's all about going to the web and calling 1-800."

The system could be better if it were two-tiered, Kraft suggests. "Somebody has to develop an alternative dispute resolution system or some mechanism that allows employees a voice.... I still view that as a part of the HR function, although it doesn't seem to be happening."

Kevin Sullivan, an employee relations consultant at IBM, acknowledges allegations of HR bias towards management, but points to the company's appeals process as an effort to "maintain the integrity of the system." Once employees exercise their right to challenge a performance appraisal, salary decision or other personnel matter, that challenge is handled in one of two ways -- either through the appointment of an investigator, assigned by management, to look into the complaint, or through a panel review. The panel, which is available to U.S.-based employees, consists of five individuals -- three employees and two managers, all of them randomly selected -- who hear the case and make a decision. "That system gets used. Our employees are not shy about coming forward."

In many companies, Sullivan adds, employees feel that the social contract between the company and its workforce no longer exists and that "employees are on their own. What companies must do is offer a compelling case to the individual as to why he or she would want to work there. In our case, we emphasize our skills training, our workplace flexibility options (including work-at-home), our commitment to diversity, our focus on performance differentiation, our leading-edge technology and our leadership development.... You have to show employees that opportunities exist."

For Mark Bieler, the bottom line is that "the quality of HR functions correlates more than anything to the quality of culture and management they are supporting. If you put me in an environment as head of HR in a company that fundamentally doesn't respect people and has a short term orientation toward them, I would have a difficult time either championing the needs of the people or furthering the objectives of the organization through HR policy or practice."

Seeing the Employee as Customer

According to the August 2005 cover story in Fast Company magazine, entitled "Why We Hate HR," HR people are not interested in an "open-minded approach" when it comes to making exceptions to company policies, including pay schedules. "Instead, they pursue standardization and uniformity in the face of a workforce that is heterogeneous and complex.... Bureaucrats everywhere abhor exceptions -- not just because they open up the company to charges of bias but because they require more than rote solutions."

Rather than sending the message that the company values "high-performing employees and is focused on rewarding and retaining them," the article says, "HR departments benchmark salaries, function by function and job by job, against industry standards, keeping pay -- even that of the stars -- within a narrow band determined by competitors. HR, in other words, forfeits long-term value for short-term cost efficiency." The article poses this question: "Who does your company's vice president of human resources report to? If it's the CFO -- and chances are good it is -- then HR is headed in the wrong direction."

Sirota has a different way of getting at the same issue: If you think of HR as having three roles, says Sirota, the first is to carry out administrative functions. The second is to serve as strategic partner, and the third is to see the employee as customer. The most important part of that customer-centric view involves "working with management to develop policies, practices and philosophies geared toward creating a truly motivated and dedicated workforce," says Sirota. Generally speaking, "in many organizations, that role is more notable by its absence."

When HR managers "say they want to be business partners," suggests Sirota, "what they mean is they want to work for management. Most companies say employees are our greatest asset, but what they really mean is they are our biggest cost." HR should "be proactive. Walk around the company, find out the issues, just as you would do with customers. External customers are surveyed regularly. HR should be surveying their internal customers as well."

GM's Cornelius agrees that "what's missing in today's workplace is the view that HR is there for the employees. When younger people in the organization come to me for advice I say, 'Have you talked to anybody in HR about this?' and they roll their eyes and say, 'Why should I bother to do that?'" But it doesn't have to be that way, Cornelius adds. "An HR person can handle a hard conversation with an employee about what he or she needs to do to improve, but that employee can still walk away thinking: 'If I do these things, I will have somebody there who will help me move around the company or get me positioned for a promotion.'"

HR also tends to push onto managers a number of functions that could be done by HR staff, such as finding and downloading the forms needed when an employee retires. "HR has dumped a number of jobs on other functions that they used to do themselves," Cornelius says. But he also has praise for specific HR policies including, for example, those dealing with layoffs. "I give GM credit in situations where there is a downsizing. They stand tall when it comes to the employees. The situation is handled in a very humane way." And where major long-term issues are involved, such as restructurings and joint ventures, "HR is actively a part of those strategic discussions, along with labor relations. HR brings value" to the table.

Bank of America is taking the idea of serving employees one step further. The company just opened a facility near Charlotte, N.C., which provides a flexible work environment and allows people who live in nearby communities to spend a day or two every week at that location, rather than commuting an hour or more each way into the city. "It's a new concept and we have gotten very good response to it," says Alphin. "In addition, we are already seeing increases in productivity among employees who use this option." Alphin points to another initiative at Bank of America instituted this year -- a broad-based incentive plan that will pay out between $500 and $3,000 to eligible employees from mid-level managers to their associates, in addition to existing incentive programs already in place.

He predicts that some companies will start insourcing HR functions that they previously outsourced. "We have about 1,200 people in HR now but that number will soon grow to 1,500 because we are bringing some staffing back in house -- including recruiting -- that we had outsourced. We liked the pricing but we didn't like the quality," Alphin says. "You always have to look at that tradeoff."

Performance-based Pay

Given the recent controversies over huge compensation packages at public companies, pay-for-performance continues to be a hot-button issue for everyone from CEOs down to lower level employees. According to Walker, "the leading-edge thinking now is much more on segmenting work across the company and also segmenting the work force" in ways that let differences be defined and valued. "This allows HR to move away from a system of 'everyone is treated the same' to one where people can be treated differently according to business needs, individual preferences and performance. That's a trend, starting with IBM and working through a lot of companies."

IBM's Sullivan would agree. The philosophy of the company toward its 330,000 employees "is to pay our best people like the best people in the industry are paid. The rest of our employees get paid competitively. We also have a performance appraisal system in which we hold people accountable. That's the underpinning of the system, whether it is pay, promotions or the opportunity for stock options and other awards and recognition. It is all based on performance."

At Vanguard, with its 11,000 employees, "we describe ourselves as a pay-for-performance organization," adds Gubanich. "As such, we believe that the top performers should be rewarded more. We do all kinds of analysis on pay and total compensation -- where it should fall on the individual level as well as the job aggregate level. In addition, it can't just be all about the individuals. It is valuable to also have team and company incentives."

Issues of pay and performance are now reaching boards of directors as well, says Bieler. "One key factor in the evolution of HR departments has been Sarbanes-Oxley. At least for the head of HR, this has radically changed the relationship with the board's compensation committee. Recently, as part of my work redesigning two companies' compensation systems, I dealt with consultants hired by the compensation committee. That hadn't happened before. So issues around pay -- including sensitivity to full disclosure of executive perks, for example -- are in the forefront these days, as are issues of management development and succession. Sarbanes-Oxley has had a profound effect on the relationship between the board and the company, in which the HR function plays a key role."

The question arises, adds Walker, as to where a board gets guidance on matters of corporate pay, perks, etc. "Is it from corporate HR or does the board hire its own consultants directly?" With regards to compensation, "HR executives should be doing the analysis and bringing information and advice to the board. If you want HR to be a strategic partner, it can't be just with the CEO; it has to be with the board as well."

But pay issues are not always easy to administer, especially at places like universities and hospitals, where, as Bieler says, "there are numerous constituencies, all of whom think they are in charge. It is hard to get your arms around a clear cut strategy." Cappelli suggests that one approach to setting pay, "left over from this idea of looking out for employees, is to have a model of equality: Treat everyone roughly the same, especially in issues of pay. Of course places that do this get complaints from top managers saying, 'I lost these people because HR wouldn't let me pay them enough.' Top managers, who for the most part are high achievers, believe people should be paid based on their own performance."

The problem, says Cappelli, "is that perceived inequities drive people crazy. It's one thing to say, 'This person is a star, pay him or her more or he might quit.' What happens next? People who discover this person is being paid more [within an equal pay system] start to complain. So you move to a model where everyone is paid based on performance. But this approach requires an objective assessment of performance that everyone must be willing to buy into. That's the hard part."

*Reprinted under license agreement with Wharton Business School, University Of Pennsylvania.

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IN-COMPANY WORKSHOP: MANAGING FOR DIVERSITY

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An Intensive and Practical 2- DAY MANAGEMENT/ SUPERVISOR WORKSHOP to develop insight and self-knowledge about intercultural competence and enhance your capacity to work with a diverse workforce. Contact Jeff Sacht to request a workshop flyer and to arrange an in-company workshop customised to your requirements. Facilitation is charged on a realistic daily rate and not a per person cost. Also available as a web download for self-delivery/in-house use under license agreement. Contact jeffs@worldonline.co.za

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3. Four Steps To Making Talent Management A Core Competence*

By Tony DiRomualdo who can be contacted at mailto:td@nextgenerationconsulting.com 

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According to a study reported in the June 2005 issue of the Harvard Business Review, 'people-driven' businesses are now predominant. But many companies, even in people businesses, don't yet have the talent management processes they need to excel. While organizations have perfected sophisticated techniques for managing capital investments, suppliers and the production and flow of goods and services, their capabilities in managing people seriously lag.

In their article, "The Surprising Economics of a 'People Business'" consultants Felix Barber and Rainer Streck argue that people are now the most significant cost in many industries when compared to spending on capital, R&D and suppliers. In industries like advertising, IT services, financial and brokerage, engineering, telecommunications and health care, personnel represent the largest component of total spending (40 percent to 70 percent). These are what the authors refer to as people businesses. They have high overall employee costs, a high ratio of employee costs to capital costs and limited spending on activities like R&D.

Another category they identify is 'people-oriented' businesses. These are companies where spending on personnel, while not the largest component of total spending, is nonetheless significant because it exceeds capital costs. Companies in this category include software firms, airlines, restaurants, pharmaceutical and chemical companies, consumer goods and automotive. Only industries like utilities and oil spend more on capital costs than on people.

The authors assert that in people and people-intensive businesses, the performance of talent drives the overall performance of the company. And the distinct economics of people-driven businesses call not only for different business performance measures but also different management practices. In these businesses, where even "the slightest changes in employee productivity have a significant impact on shareholder returns, 'human resource management' is no longer a support function, but a core process for line managers."

I agree with these assertions but would go one step further to say that in people-driven businesses talent management must be a core competence for the entire business. Not only should line managers be adept at managing people but the corporation needs to have a robust people management capability that is clear, coherent, and applied company wide.

Many companies are only beginning to appreciate the importance of enterprise wide talent management. For example, I recently spoke with an HR executive in a large services organization who indicated that her firm was finally waking up to the importance of managing their talent in an integrated fashion across the enterprise. The company realized it was losing tens of millions of dollars a year in unnecessary recruitment and termination costs and lost productivity. Its approach to recruitment was fragmented and not connected to other key talent management activities. It did not have an enterprise view of vacancies and surplus people across the organisation. Development and deployment of people were separate and non-integrated activities. Lastly, there was no organizational focal point to oversee the process.

The result was that for several years hundreds of people were laid off in one part of the business while hundreds of others, often with similar skills to those departing the organization, were hired in other parts of the company.

Regrettably, this situation is not unusual in many organizations today. Indeed, many companies are missing substantial opportunities to save costs and improve performance by upgrading their talent management capabilities. There are four steps that companies can take to quickly assess their talent management process and begin improving their talent management competency:

# Step 1 - Identify Key Roles. Analyze the key steps in each part of the talent life cycle (identification and attraction, hiring and inculcation, motivation and development, appraisal and reward, building and sustaining relationships) and map the key players and their roles and responsibilities to each stage. Are there gaps in responsibilities - key activities that no one is directly accountable for? Are there overlapping responsibilities - multiple people responsible for the same activity? Are the right people in the right roles? Are line managers provided with consistent and effective processes, guidelines and tools for managing talent?

# Step 2 - Take an Inventory of Your Talent Management Skills. Identify the critical skills needed to play the key roles in the talent life cycle effectively. To what extent does your company employ people who possess them? What might you do to improve or develop them? What are you doing in-house that might be better outsourced? What have you outsourced that you should be doing in-house?

# Step 3 - Measure the Right Things. Assess the measures you use to evaluate the performance of your talent management process at each life cycle stage such as offer-to-hire ratios, average tenures of new hires, performance ranking, skill fit to job requirements, etc. What data are you capturing and reporting? Does it feed directly into a enterprise talent scorecard? How do these measures align with your overall talent management strategy?

# Step 4 - Set Up a Process-Wide Feedback Loop. Everyone managing talent needs to understand the big picture and to connect their role and responsibilities to the overall objectives of the process. How is data captured in each stage of the life cycle reported and communicated? How are knowledge and experiences shared across the process? Where are the information gaps and missed communications? How much feedback is formally captured and communicated versus informally discussed among staff? What key actions might you take to improve your feedback mechanisms?

With so much of the costs and performance of a business now dependent on people, isn't it time managing them became a core competency of your organization?

*Reprinted by permission of the author

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4. What Is Transformation? Why Is It So Hard To Manage?

By Dean Anderson and Linda Ackerman Anderson who can be contacted at anderson@wpsmag.com 

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Different kinds of change require different strategies, plans and degrees of employee engagement. The inadvertent implementation of tactics that don't fit the type of change commonly leads to failure. Is this happening in your organization?

The three types of change occurring in today's organizations are developmental, transitional and transformational. Change management effectively supports developmental and transitional change, but it is woefully insufficient for transformational change. Understanding the type of change the organization is going through is critical to determine whether typical approaches can work.

Developmental change improves what the business is currently doing, rather than creating something new. Improving existing skills, processes, methods, performance standards or conditions are all developmental changes. Specific examples include increasing sales or quality, interpersonal communication training, simple work process improvements, team development and problem-solving efforts.

Transitional change replaces what already exists with something completely new. The organization must dismantle and emotionally let go of the old way of operating while the new state is being put into place. This transitional phase can be project-managed and effectively supported with traditional change management tools. Examples include reorganizations, simple mergers or acquisitions, creation of new products or services that replace old ones, and IT implementations that do not require a significant shift in culture or behavior.

There are two variables that define transitional change:

The destination can be determined in detail before the transition, allowing it to be managed.

People are largely impacted only at the levels of skills and actions, not the more personal levels of mindset, behavior and culture.

Transformational change is far more challenging for two distinct reasons. First, the future state is unknown when the transformation begins and is determined through trial-and-error as new information is gathered. This makes it impossible to manage transformation with predetermined, time-bound and linear project plans. An overarching change strategy can be created, but the actual change process must emerge as you go. This means that executives, managers and front-line workers alike must operate in the unknown-that scary, unpredictable place where stress skyrockets and emotions run high. Second, the future state is so radically different from the current state that the people and culture must change to successfully implement it. New mindsets and behaviors are required. In fact, leaders and workers often must shift their worldviews just to invent the required new future, let alone effectively operate it.

Without inner shifts of mind and culture, the external implementation of new structures, systems, processes or technology cannot produce the intended ROI. For example, many large IT implementations fail because they require a mindset and a culture change that do not occur. The new systems require people to share information across strongly held boundaries or put the needs of the enterprise over their own turf agendas. Without these changes, people do not use the technology as designed, and the change fails to deliver its ROI.

Traditional change management is insufficient for the people and process complexities of transformation. Because transformation impacts people personally, you must get them involved to garner their support-the earlier the better. Employee resistance is always directly proportionate to the degree to which people are kept in the dark and out of the change process. To create employee engagement, get staff involved in building the case for change and determining the vision for the new state. Consider using group meeting technologies, which can involve hundreds of people simultaneously.

Another engagement option would be to consider a wider range of people for the change leadership team. Provide mindset, behavior and change development to all employees. Use employee groups to identify customers' requirements for the transformation and to benchmark what best-in-class organizations are doing in your industry. Ask employee groups to provide input on the enterprise-wide changes that impact them, and give them the authority to design the local changes improving their work. Before implementation, get them involved in an impact analysis of the design to ensure that it is feasible and won't overwhelm the organization.

When employees are engaged before implementation, resistance is minimized. Use these strategies to support change efforts, especially if they are transformational.

*Reprinted by permission of Workforce Performance Magazine. Free subscriptions to the Digital Edition are available worldwide at http://www.submag.com/sub/wk 

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5. Most Companies Taking A Selective Approach To HR Outsourcing, Watson Wyatt Study Finds

Press release by Watson Wyatt

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Most companies are taking an incremental, selective approach towards the outsourcing of their human resources functions, according to a new survey by Watson Wyatt, a leading human capital consulting firm. While the majority of respondents say they expect to outsource more in the future, they also report they are disinclined toward consolidating their outsourcing activities with a single vendor, and that they are far less willing to outsource the more strategic components of their HR function.

According to survey results, nearly two-thirds (65 percent) of the 135 companies surveyed characterize their HR function as mostly or completely insourced. Twenty-nine percent say they have an approach that is equally mixed between insourcing and outsourcing, and only 7 percent say they are mostly outsourced.

Of those companies that outsource multiple HR functions, only 8 percent consolidate the administration of retirement plans, health and welfare benefits and other HR activities with a single vendor, and only an additional 5 percent plan to do so in the future. Overall, 54 percent of companies have no consolidation approach in place and do not plan to have one.

"Most companies have decided to take a selective approach to HR outsourcing as they look for an optimal mix of internal and external processes and technologies," said Michael Cornetto, senior HR delivery consultant at Watson Wyatt. "Despite much speculation otherwise, there is no headlong rush toward the total outsourcing of all HR services. Many companies that investigate full HR outsourcing alternatives choose to refine their existing delivery model rather than outsource everything."

According to the report, companies that mix internal and external resources are the most efficient in terms of costs and the number of full-time employees supported by each HR staffer.

Looking at specific HR activities, results show that a large majority of companies outsource transactional HR activities such as 401(k) administration (84 percent) and at least some aspects of their pension administration (71 percent). Health and welfare administration is the next most likely area to be outsourced, but only 44 percent of respondents reported doing so.

"Not surprisingly, companies are most likely to use external resources for their more transactional HR activities," said Cathy Tripp, practice leader for health & welfare benefits administration at Watson Wyatt. "When they outsource, about half of companies hand the full administration of the HR activity over to a third party and the other half opt for hosted web-based applications while keeping some related administration in house."

Moreover, survey results indicate that this same pattern is likely to continue over the next couple of years. One-third (36 percent) of companies expect to outsource more in the next two years, while 51 percent expect their sourcing approach to remain about the same. Six percent of respondents said they will cutback on their outsourcing activities.

In the pension administration area, for example, many companies already outsource using a hosted web-based model. "But we are seeing more interest in companies asking the outsourcer to handle additional administration, such as the preparation of benefit packages for new retirees," said Jim Shaddy, retirement practice leader for the central U.S. division at Watson Wyatt.

"Over the next few years we will likely see increases in the outsourcing of transactional administration, such as retirement and payroll activities, but the vast majority of companies are planning to keep the more strategic components of their HR activities in-house," said Tripp.

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6. Case-Law & Legislation Review: Dismissal: Procedure Compensation

By Gary Watkins who can be contacted at

www.caselaw.co.za  ; www.workinfo.com 

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# Tibbett & Britten (South Africa) (Pty) Ltd v Marks & others

Case No: JR 152/04

Judgment Date: 24 February 2005

Jurisdiction: Labour Court, Johannesburg

Judge: Revelas J

SUBJECT: Dismissal: procedure Compensation

ISSUE: The employee was dismissed for unauthorised use of her company credit card. The court held that the arbitrator had misdirected herself in finding that the dismissal was substantively unfair. However, there were certain procedural irregularities, which warranted some form of compensation. The defects in the procedure could also have had an impact on the substantive findings and therefore that should also be taken into account in awarding the compensation. The employee was thus entitled to compensation. Further, the application for review was filed three days out of time and condonation was granted. Compensation in an amount equal to 6 months' salary was awarded.

SUMMARY OF FACTS: The employee was dismissed following charges of the unauthorised use of the employer's credit card which was strictly issued for use in the furtherance of its business, for her personal benefit and the irresponsible use thereof, being an employee in a senior position. Both chairmen in the appeal hearing and the disciplinary inquiry in effect found her guilty of fraud and made specific reference to "fraudulent" behaviour. The Commissioner held this to be a serious procedural defect in the proceedings in that the charges were totally unrelated to the findings of fraud.

The employee reported herself to the financial department in an "e-mail" letter, wherein she advised that she had used the company credit card for her own personal expenses and wanted to know how she could effect repayment. After this, she used the card for personal expenses again and the total amount involved was R1000, 00. As a result of this report, she was charged the way she was, and not with fraud.

SUMMARY OF JUDGEMENT: The employer claimed that the Bargaining Counsel had no jurisdiction to hear the dispute, as the dismissal was essentially one about an automatically unfair dismissal, since the employee consistently raised victimisation as the actual reason for her dismissal. The court found that the dispute was correctly referred as and unfair dismissal based on misconduct as the employee had not taken any steps to exercise her rights when she was dismissed.

The employer regarding the status of the advocate who represented the employee at the arbitration raised a second issue. The court held that an advocate may only appear in the Labour Court when a practising attorney had briefed him. The court did not deem is necessary to determine the matter any further than that, as the status of the legal representative was not very clear at that point.

Regarding the merits, the court found that as the employee was in a senior position, and in the light of the fact that she was aware that she had transgressed policy, she should have taken care not to use the company credit card for personal expenses again after she had reported this to her employer. The court criticised the disciplinary enquiry chairperson on the basis that the employee was not specifically charged with fraud or dishonesty and on the facts of the matter, which were common cause, she was not guilty of fraud and she should not have been found guilty thereof. Despite this error, the court held that dismissal was appropriate in this case and the court held that the commissioner erred when he found that the dismissal was substantively unfair.

The court did find that there were procedural irregularities in that the employee raised the issue of victimisation at both the disciplinary hearing and the appeal and she was informed that this was a separate issue which should be raised in a separate forum. Neither chairperson should have adopted such an approach. The question of victimisation could have had a bearing on the sanction imposed by them. It tends to support a suggestion of bias on their part, or a justified perception of bias. In addition, the court found that the chairperson in the appeal was not appraised of the record of what had occurred at the disciplinary hearings and merely rubberstamped the findings before him. Consequently, the court found that the procedure followed was not fair and that this could have impacted on the amount of the award. The evidence was that the employee had found new employment 5 months after her dismissal, albeit at a lesser salary and she was awarded 6 months' salary in compensation. No order was made as to costs.

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7. Book Reviews

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# Enlightened Power: How Women Are Transforming the Practice of Leadership

To purchase this book click on: http://www.kalahari.net/e-trader/referral.asp?toolbar=mweb&linkid=5&partnerid=293&sku=27905622 

Editor: Lin Coughlin, Ellen Wingard and Keith Hollihan, Jossey-Bass, 2005

How are women transforming the practice of leadership in the 21st century? Enlightened Power is a first-of-a-kind book that answers this question-and forever changes the traditional notions involving women in leadership. The book features the accumulated wisdom of 40 influential men and women who represent the most compelling voices in the field, including: Dynamic business leaders such as Eileen Fisher (founder, Eileen Fisher, Inc.), Barbara Corcoran (founder and chairman, The Corcoran Group), and Pat Mitchell (president and CEO, PBS) Trailblazing women from other arenas such as politics (Ambassador Swanee Hunt), the military (Rear Admiral Deborah A. Loewer, USN), and sports (U.S. Olympian Marilyn King) Renowned thought leaders such as Riane Eisler, Rayona Sharpnack, Sally Helgesen, Peggy Klaus, Bruce Patton, Nancy J. Adler, and Gail Evans Leading-edge academics, activists, executives, entrepreneurs, and practitioners

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8. Deadline Nears For Online Compliance

From IOL July 24 2005 www.iol.co.za 

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Owners of businesses who fail to publish so-called "information manuals" on their websites by August 31 may be imprisoned for as long as two years, IT law firm Buys Inc said on Sunday.

"This rather severe penalty follows a 2003 amendment to the Promotion of Access to Information Act," said the firm's Reinhardt Buys.

"The original Act did not provide for penalties or offences and, as a result, very few businesses cared to incur the trouble and expenses to publish their information manuals, notwithstanding a repeated extension of the final compliance date."

The purpose of the Promotion of Access to Information Act (PAIA) is to give effect to the right to information - enshrined as a basic human right in the South African Constitution. All private bodies, such as companies, partnerships, and even one-person businesses should prepare information manuals, Buys said.

"Once a copy of their manuals are lodged with the Human Rights Commission, copies should also be published on their websites. "Further paper-based copies of the information manuals should be made available to the public. "Section 51 provides a detailed list of issues that businesses should address in their information manuals.

"In short, the contact details of the business and the information collected and held by it should be listed. To enable request for information by members of the public, the manuals should also detail the information application procedures and related costs." - Sapa

Click on http://www.workinfo.com/free/Sub_for_legres/Data/POIDA/paia.htm  to download your guide to compiling the PAIA manual.

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9. Downloads: Slideshow - An Ascendant Organisation In An Afrocentic Society

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In this slide show Prof Henry Grimbeek and Lawrence Sichinga contrast and compare two different models of organizational functioning - Eurocentric and Asian and asks which model is more suitable for an African context.

Download a PDF copy of the slide show at: http://www.workinfo.com/free/downloads/180.htm 

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10. Unsubscribe & Moving Soon

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UNSUBSCRIBE: Scroll to the end of the newsletter where you will find a code directly linked to your name. Click on the unsubscribe link. PLEASE DO NOT REPLY TO THIS NEWSLETTER TO UNSUBSCRIBE. MOVING SOON: If you are changing your email address soon and would still like to continue receiving this newsletter, please email us your new or temporary email address to ensure that you do not miss out on the next edition.

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About the e-Journal/e-Newspaper

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Equity-Skills News & Views is a free bi-monthly newsletter for business owners, Line Managers, and Human Resource Practitioners (who support Line Managers) with the implementation of fair and developmental people management systems and practices. The style of this e-Newspaper fits between the traditional email newsletters and printed professional trade journals & magazines. Subscribers will be kept up to date with the latest developments in the world of people management, receive handy people management tips, and feedback about labour court rulings that relate to the implementation of the key Labour Acts. Please add equity skills news & views to your list of approved senders if your Internet provider or server administrator filters incoming e-mail, to make sure you receive periodic e-mail alerts and this newsletter to which you are subscribed.

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Opinions expressed by contributors DO NOT NECESSARILY REPRESENT the standpoint of the publisher-editor of Equity-Skills News & Views. Information published here is for general information, and is not intended as legal advice. The authors, editors, and publishers do not accept responsibility for any act, omission, loss, or damage occasioned by any reliance upon the contents hereof.

This message is sent in compliance with the ELECTRONIC COMMUNICATIONS AND TRANSACTIONS ACT. 2002, Act No. 25, 2002 [South Africa] passed on 20 May 2003.

Sender: Jeff Sacht

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E-mail: jeffs@worldonline.co.za

Telephone: +27 011 485 4943

Facsimile +27 011 485 4943

Publisher-Editor: Equity-Skills News & Views

'A MUST TO PRINT & READ'

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Copyright (c) 2004 Registered electronic newspaper: 1SSN 1684-5714