Increase of Unionization in China; What Foreign Managers in China Ought To Know

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By
Ames Gross, President of Pacific Bridge, Inc., a recruiting and HR consulting firm specializing in Asia. For more information, please visit www.pacificbridge.com

Introduction

In the past, unions in China were either weak or virtually non-existent. Over the past decade, however, complaints about unfair labor practices have become increasingly common. This has led to a growing awareness of workers’ rights and the establishment of trade unions.

The state-run All-China Federation of Trade Unions (ACFTU) recently announced its plans to unionize all foreign-invested enterprises in China by 2008. Union leaders are also currently helping to draft a series of laws that would give unions more power.

Despite the efforts of the ACFTU, China’s unions are nowhere as powerful or as strident as their counterparts elsewhere. Nevertheless, it is essential for foreign managers and companies in China to monitor the nature, impact, and significance of unionization in the country.

This article will first examine the rise of unions in China, the role of the ACFTU, and the landmark unionization of global retailer Wal-Mart. It will then evaluate what these and other developments mean for foreign managers and companies operating in China.

Unionization in China Since Reform and Opening Up

In Maoist China, the concept of labor-management relations was alien. Workers were regarded as the vanguard of society, and worked together with cadres to create a socialist system.

Even when China began to open up in the late 1970s and early 1980s, labor relations hardly emerged as an issue. Labor was plentiful, and in the headlong rush for rapid economic expansion, poor treatment of workers and working conditions were seen as inevitable, even unavoidable.

After two decades of sustained development, however, workers have become increasingly aware of their rights and global labor norms. Workers who were laid off from inefficient state-owned enterprises clamored for their rightful compensation. Those working for foreign companies, too, have begun to make their voices heard.

Concerned by the rise in the number of lawsuits between employers and employees in labor arbitration courts, the National People’s Congress launched a campaign in August 2004 to enforce the Trade Union Law.

The Trade Union Law covers foreign and domestic companies, nonprofit organizations, and government agencies. The Law states that unions should be set up in companies where there are at least 25 employees. In companies with fewer than 25 employees, a representative may be elected to work with employees on various labor issues. The Law also makes it clear that unionized companies with 200 to 500 employees are required to have at least one full-time union official, and one additional official for every 500 employees.

Encouraged by the government’s actions, the ACFTU announced that it would “blacklist” and take legal action against any foreign company that refused to allow its employees to unionize. As of last year, 26% of China’s foreign-financed companies had been unionized.

Despite the trend towards greater unionization, independent unions are strictly prohibited. Those who attempt to set up such unions are usually sentenced to extended prison terms.

Furthermore, the right to strike is not provided for under the Chinese Constitution. All labor disputes, arising from contract violations or other issues, must be handled through consultations, mediations, arbitrations, or court proceedings.

The Role of the ACFTU

The ACFTU has strong ties to the government and is the only government-authorized union. Its members consist of provincial and industry federations as well as individual companies. All unions in the country must be affiliated with the ACFTU.

Historically, the primary function of the ACFTU was to transmit social and political values. Over the past two decades, its principal role has been to function as the labor-discipline enforcement arm of the government and the Chinese Communist Party. It also serves to promote political and economic stability so that the country can continue to attract foreign investment.

Hence, the ACFTU is more of a mediator for the government and management, rather than a defender of workers’ rights. It rarely, if ever, intervenes on the side of workers when disputes arise with management. It also hardly ever arbitrates in cases of worker protest and unrest.

Despite the Federation’s success with Wal-Mart (see below), unionists are largely inexperienced. To make up for this lack of experience, some of them have turned to their western counterparts for advice and training, particularly in grassroots organizing and collective bargaining techniques.

Case of Wal-Mart

Wal-Mart may be known in America and elsewhere for its staunch opposition to unions. But in August 2006, the world’s largest retailer announced that it would work with Chinese officials to establish unions in all its Chinese outlets. The announcement came shortly after Wal-Mart employees established their first union in China. Within a month of the announcement, 22 unions were set up all over the country.

Wal-Mart’s decision came as a surprise to many. The company had earlier said that it would not do anything to stop unions from being set up in its Chinese stores. But it had never suggested that it would actively participate in backing unionization efforts.

Wal-Mart has about 60 retail outlets and over 30,000 employees in China. It sees China as a potentially huge market and is keen to expand rapidly in the country. China is also the primary sourcing base for the millions of goods the retailer sells around the world.

Explaining the company’s move, a Wal-Mart official noted that unions in China are “fundamentally different” from their Western counterparts. The official also added that the ACFTU had made it clear that the Federation’s goal was to work with employers, and “not to promote confrontation.”

Wal-Mart’s decision to allow unions came after years of pressure from, and grassroots organizing on the part of the ACFTU. Wal-Mart was initially hostile towards the Federation and repeatedly denied meetings with its officials. Hence, the ACFTU resorted to grassroots techniques behind the backs of management. When Wal-Mart discovered that unions had been set up, it initially threatened not to renew the contracts of its employees. But it later relented and signed a memorandum with the ACFTU.

Under the Memorandum, a local union can enter Wal-Mart stores to propagate Chinese labor laws, hold multi-candidate elections for union chiefs and other executive committee members, and represent workers in collective bargaining.

But despite the inclusion of collective bargaining in the Memorandum, many are doubtful if any of the Wal-Mart unions can do so effectively. Much, of course, will depend on the strength of individual union and local officials. But evidence so far has shown that local officials are generally more interested in attracting foreign investment than in causing confrontation. And without the active cooperation of local officials, there is only so much that unionists can achieve.

Even labor activists are unconvinced that a unionized Wal-Mart will lead to significant changes in China’s labor climate. As these activists point out, the roles of unions in China are mainly to encourage workers to be more active in their work, distribute the workers’ welfare fund, and organize social and recreational activities.

Unionization Trends

The various attempts by ACFTU to speed up unionization should be seen in the light of China’s declining union membership. The closures and mergers of state-owned enterprises (SOEs) have drastically reduced the Federation’s membership base. Hence, the ACFTU has turned to foreign companies to enlarge its base. Moreover, apart from the need to address the disparity between unionization among the public and private sectors, unionization efforts by the ACFTU were also aimed at easing its financial challenges.

In addition, the ACFTU was also keen to eradicate the notion in the West that China had become a giant sweatshop and address the perception that it was not representative of workers’ interests. Besides genuine fears of even greater labor unrest, the ACFTU also hoped to prevent interference from international labor organizations.

With the success of unionization in Wal-Mart, the ACFTU also hoped that other foreign firms in China would fall in line.

It is often mistakenly believed that there is no collective bargaining in China. Such bargaining does occur in large joint ventures and the larger Chinese state-owned enterprises. But the bargaining process is not as sophisticated, legalistic or adversarial as in the United States or other western countries.

Recently, media coverage has focused on how foreign companies have resisted efforts to set up unions in the workplace. Evidence shows that the ACFTU has identified mainly U.S- and Korean-based companies as being noncompliant with minimum legal labor requirements.

Chinese authorities might also resort to unionization as a disciplinary tool against foreign companies that are seen publicly as being unfair to their workers. For instance, a Taiwanese-owned electronics company, Foxconn, received orders to set up unions last year in the Chinese city of Shenzhen. The company, which produces iPods, had earlier been exposed by the media for forcing its employees to stand throughout the 12-hour shifts.

To Unionize or Not to Unionize – Is There a Choice?

ACFTU is determined to set up more unions within foreign firms in China. And even giants like Wal-Mart have succumbed to such efforts. So would the failure to unionize indicate a violation of China’s labor regulations?

Due to China’s arbitrary Trade Union Law, the answer is not as clear-cut as many would like it to be. A foreign company would of course be violating Chinese laws if it disallows its employees from forming unions. But beyond that, it is unclear whether all companies with 25 or more employees must have a union, or if a union should be established only upon request.

As for employees wanting to set up unions, evidence so far has suggested that workers are unlikely to be at the forefront of such efforts. Generally speaking, many Chinese workers perceive a job with a foreign company as prestigious and hard to come by. Hence, they might not want to jeopardize their career prospects and personal well being by taking the lead to set up a union.

If there is any lesson that foreign firms in China can learn from Wal-Mart’s unionization experience, it is the fact that resisting unionization efforts is usually counterproductive. If approached by the authorities or employees, it would be best if foreign companies allow their unions to be established. For a start, goodwill can be generated, as the company will be seen as protecting the rights of its employees. Furthermore, it is important to bear in mind that the vast majority of unions in China cooperate with and are supportive of management. Therefore even with unionization, there is usually little union interference into company operations.

In addition, further goodwill can be generated if the foreign firm gives the impression of being eager and enthusiastic to work with Chinese officials in contributing to the country’s social stability. After all, the directive for greater unionization came from no less than Chinese President Hu Jintao. Mr. Hu has made “building a harmonious society” a cornerstone of his administration. And having harmonious labor-management relations is undoubtedly one important component of the harmonious society that he envisages.

But of course it is hard to predict how these relatively powerless unions will transform in the next 10 to 20 years. More time is certainly needed before Chinese workers emerge as a force to be reckoned with. But clearly, China is eager to put global norms in place in several aspects of its economy and society, and these unquestionably include unionization. Indeed, many Chinese see unionization as an indispensable component and irreversible trend in the country’s movement towards greater globalization.

Conclusion

Unlike their western counterparts, Chinese unions still have some way to go before they can acquire greater clout and influence. Even though more unions are being set up, the practice of collective bargaining is still a concept that many are still learning to grapple with. But clearly, in the years to come, leading the way in collective bargaining will surely be unions from the private sector.

As China further progresses, it is likely that Chinese unions and their operations will attain greater sophistication and develop norms that are in line with their global counterparts. But for now and the foreseeable future, these unions are likely to work amicably with management, and will be closely aligned with the fundamental goals of the Chinese government.

For more information, please visit www.pacificbridge.com.

Australian View

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by NICK FORSTER, Director
WEST AUSTRALIAN MANAGEMENT CONSULTANCY GROUP • nforster@ecel.uwa.edu.au

Leaders and Followers
For many years people have attempted to get to grips with the essence of effective leadership. Is it innate or can it be learnt? What constitutes effective leadership? Is it a set of skills? Does it have something to do with that mysterious quality called charisma? Is it contingent or are leadership competencies universal? Decades of research and thousands of research studies have only partly answered these questions. We do know that leaders are intelligent, but not too intelligent. They often possess outgoing and ascendant personalities. They have a genuine interest in people, even if this serves Machiavelian purposes. They are very self-confident, often to the point of arrogance. They possess a high need for personal achievement and success. In the late 1990s they were expected to have long-term visions and an ability to manage constant change. In many countries they are, still, usually male and tall.

Another way of thinking about leadership is to ask this question: what kind of leader do you want to follow? Barry Posner, Director of the Centre for Creative Leadership, in Greensborough, California, has been asking thousands of employees from around the world exactly this question for several years. He presented his findings at the World Conference on Management and Leadership in Perth, November 1997. What he found was that managers typically pick on a set of five core competencies and attributes that their “ideal” leader should possess. The first was communication skills. This included the capacity to listen, to inspire, to reach hearts as well as minds and the ability to “touch” everyone in the company. The second was honesty, signifying a lack of engagement with destructive office politics, professional trust, reliability and high ethical standards. Third, was vision, signifying the ability to think the “unthinkable,” to be creative innovative, adaptable to change combined with a high capacity to embrace new ideas and learn new things. Fourth came competence, referring to technical expertise, professional know-how and the ability to take tough management decisions. Fifth came equity, meaning the ability to avoid favouritism, giving fair rewards for a job well done and treating all subordinates as intelligent human beings who want to make a contribution to the organization.

Thinking about leadership from the perspective of followers is useful for three reasons. First, the only undisputed definition of a leader is, “one who has followers.” So, if you really know what inspires them, you will be a better boss. Second, almost all of the skills listed above are not “innate.” They are behavioural and can be learnt and developed throughout life. Third, Posner’s research showed that these desired competencies are valued in many different cultures. So, if you can learn them, you will become a more effective leader in the fast changing and globalised business world of the future.

Clothes Maketh the Man?
“What to wear today?” As we crawl out of bed looking forward to another cut and thrust day at work, the choices for women seem to be endless. Skirt and blouse? Dress? Trousers and shirt? Dress suit? Dress with jacket? Blouse or shirt? Stockings or socks? Which earrings? Hair up or down? Muted, power or sexy look? For most guys the options are limited to, er, combing the hair (short), donning a shirt (white), tie (preferably with a “wacky” motif to show what rebel he is), suit and shoes (dark). That’s it. The definitive, dull male uniform of the 20th century. But unless they are really well made, by say Armani or Paul Smith, suits all look pretty much the same and most companies dictate “sober” colours and “traditional” styles. Corporatus clonus exemplified. But, why do we persist so slavishly with this dull, bog-standard male uniform?

Companies will argue that suits “create uniformity” (there’s that word again), “our clients expect it,” “the public expects it” and “other companies expect it.” Really? Has anyone actually bothered to ask any of these groups, which include you and me, if it really concerns us what managers and professionals wear – as long as it is clean and presentable? My last GP in the UK, for example, sported two earrings and a pony-tail. I never saw him in anything other than jeans and T-shirts. He did not alarm the older people at his surgery and he was an exceptional doctor. It’s also worth recalling what extravagant and varied clothes men used to wear, particularly in the 16th and 17th centuries!

Peter West, Managing Director of BP Manufacturing Australasia, commented in a talk to my MBA students that he rarely wore a suit and tie to work. When asked why, he said, “The suit alienates me from the engineering staff. All a tie does is separate my neck from my head. It serves no other useful function.” When I first met him he was in jeans, T-shirt and a leather waistcoat. You forgot about this fact one, or maybe two, nanoseconds after meeting him. Some American companies have introduced “dress as you like days.” But, most men, confused by this new found freedom and their historical lack of dress sense, soon reverted back to the old uniform. But, in the growth companies of the moment, no one bothers with the old suit and tie format. Staffed by predominantly young people who are obsessed with ideas, innovation and growth, this is the last thing on their minds. So, let’s at least loosen the reins and allow men to experiment a bit with their working clothes. They have nothing to fear but their bad dress sense. Now, where’s that bright purple retro’ suit with the lapels modeled on the wings of a jumbo jet…?

The Right Stuff
Browsing through the thousands of job advertisements in The Australian recently, I was struck by the very high caliber of senior managers that companies seek to attract. Frequent references are made to the need for “exceptional communication skills,” “the ability to work in teams,” “the ability to motivate and mentor staff,” “highly developed people management skills,” “exceptional leadership abilities,” etc. One might reasonably conclude from this that Australian public and private sector organisations are stuffed full of senior managers who exhibit these admirable qualities. But, are they? All recent studies indicate that most Australian managers fall well-short of these ideal “soft” management skills (e.g. Karpin in 1995 or Arthur D. Little in 1997). Or, try this test. Get a piece of paper and write down the names of senior managers you know who possess the competencies listed above in abundance. I tried it recently and arrived at a list with two names on it! Having worked in academia for over ten years, this was a rather disappointing tally (or, sadly, indicative of the quality of senior management I have worked under during this time?).

Job advertisements are so predictable – a repetitive, stale shopping list of ideal competencies that seem to have little connection with the skills that many candidates posses. One has to search very hard to find adverts like the Roc Oil Company advert in 1997 that ended with the memorable line, “Doom merchants, office politicians and prima donnas need not apply for these positions,” or the Apple Computer advert that sought “raging, inexorable, thunder-lizard evangelists” to work for them in the early 1980s. One essential factor missing from every single advertisement that I have seen is “having a good sense of humour.” Research, presented at the BPS Annual Conference (UK) in January 1999, indicates that staff give far greater credence to humour in their senior managers than they do to intelligence and are more productive than staff who work for humourless managers. Common sense also tells us that a sense of humour is an important but often overlooked personal attribute.

Humourous people often have the skills cited above in abundance because they are psychologically healthy, don’t take themselves too seriously and have a real interest in other people. Humourless people are usually “toxic” to some extent. Funny people are also good to work with and humour is one of the best on the job stress relievers we know about. So, why not ask job candidates to tell a few jokes or cite instances when they have used humour to diffuse tense or difficult situations? These two simple questions will help to sort the “doom merchants, office politicians and prima donnas” from the people you really want to hire and work with.

Growing Big Ears
It has been estimated recently that Australian business loses at least $500 million a year because senior managers in companies do not listen to their employees’ ideas and suggestions.

In old, reactive and bureaucratic organisations, senior managers sit on the top of the pile and don’t really have to listen to anybody (e.g., BHP over the last few years or much of the Public Sector). In the new information age, leaders have to listen to the ideas of everyone, regardless of where they are in the company. This is because change is endemic in organisations. Innovations have to be developed quickly and it is often younger employees who have the best ideas. Organisations also have to be very close to and responsive to their customers.

Leaders of cutting edge companies spend a great deal of time listening to their staff. Here’s a few examples, David Hearn, CE of Goodman Fiedler has lunch with at least 20 junior staff each week. Jerre Stead, CEO of the Legert Corp spends 60% of his time talking with junior staff.

Motorola holds regular “rap sessions” between top executives and shop floor workers every three months. The seven directors of Viking Freight Systems in California spend at least 25% of their time visiting the company’s 4000 employees in eight states. Peter West, of BP Kwinana, spends 40% of his time with his junior staff.

Andy Grove of Intel holds at least six open question and answer forums at different company locations each year. Noel Goutard, CEO of the French auto parts maker Valeo expects all his employees to make at least ten suggestions for improvement each year (25,000 suggestions annually). The best ones receive bonuses liked to the success of the changes.

Lincoln Electric, of Cleveland: elicits 2-300 new ideas every month from its employees. These are linked to profit sharing. Even suggestion boxes are passé now. The Communication Corporation in California has replaced these with “screw-up” boxes where junior staff can point out management failings. Senior managers have to respond to these within one month.

So, if you don’t already have one, maybe it’s time to subscribe to a DODGI (The Body Shop). If you want to make more money, your company’s senior managers could consider subscribing to Sir Jack Cohen’s SOYA principle or to MBWA (Hewlett Packard) or MBCAL (Microsoft). So, either grow big ears or perish!

HRs Business Value; Effective people management strengthens organizations

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According to the Society for Human Resource Management (SHRM), the human resource (HR) profession is maturing into a strategic business role by creating and implementing business plans for human capital that mirror the goals and priorities of the organization. The SHRM study benchmarks the state of the HR profession worldwide in 23 countries and 11 languages.

The purpose of the study was to provide an occupational snapshot of HR as its practitioners view it today. The study surveyed a random sampling of SHRM members and explored several components of HR professionalism including body of knowledge, autonomy, ideology of service, credentialing, recognition and external control.

“The business value HR professionals contribute to their organizations is growing as more CEOs recognize the power of effective people management,” said Susan R. Meisinger, SPHR, president and CEO of SHRM. “HR professionals are capable of leveraging human capital, strengthening organizations and improving the bottom line. The voice of the HR professional is an important one in all organizational decisions.”

HR Body of Knowledge Contributing to Organizational Success

Nearly all (99 percent) respondents agree that HR represents a unique body of knowledge and skills. More than 75 percent of practitioners agree that HR’s body of knowledge and skills are recognized as a profession by society in general.

More CEOs expect HR professionals to have a firm grasp of the business and overall marketplace. Survey respondents (89 percent) agree that HR must have business knowledge or experience and nearly every respondent (97 percent) agrees that business knowledge or experience is necessary to advance one’s career in HR. More than three-quarters of HR professionals who responded to the survey hold university degrees and, of those, 39 percent are in business administration. Individuals with a business background will be called on even more to use their business and HR backgrounds to help employees better understand how they can contribute to organizational goals and strategy.

HR Professional Discretion and Autonomy and Ideology

More than 70 percent of HR practitioners in the survey hold a position at the supervisory level or above. The majority (63 percent) of HR practitioners agree that they have considerable autonomy and discretion in doing their work. Despite this autonomy and authority, most HR professionals do not work closely with the organization’s highest officers, as only about 40 percent report to chief officers.

Still, HR professionals express great regard for the work they do and for the service they provide employees. HR practitioners in the survey (95 percent) are concerned with the well-being of employees in their organization and more than 60 percent of respondents place a higher value on doing good work than on their own compensation. In line with this value, HR professionals are committed to professional and organizational development.

Occupationally Controlled Education, Training, Credentialing and Certification

Nearly 30 percent of survey respondents agree that credentials are needed to work in HR and more than twice as many (64 percent) believe that credentials and HR certification are necessary for career advancement. More than 40 percent of HR practitioners surveyed have professional certification in HR.

It is also important to note that most HR practitioners use a variety of continuing education opportunities, such as membership in professional HR associations, like SHRM, and attendance at industry and academic conferences that allow individuals to gain more business knowledge.

Recognition of HR as a Profession

In the United States, HR has a recognized body of knowledge and skills that add value to the organization’s bottom line. However, the profession does face some professional obstacles that closely tie to the overall recognition of HR as a profession. The perception that HR is not held in high esteem by the organization, the lack of corporate HR strategy, the lack of HR budget and the lack of top-down implementation of HR strategy are the most challenging obstacles. It is critical that more HR professionals increase their visibility within organizations if the HR profession is to continue maturing. HR professionals can use their expertise to improve retention, recruitment, corporate culture, productivity and morale – all of which have a direct impact on the bottom line and a positive impact on the profession as a whole.

Global Employer Brand: A Challenge

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A study of executives from dozens of organizations in 25 countries around the globe by the Bernard Hodes Group Global Network confirmed what many already knew, but added a new challenge to the topic of employer branding. Nearly two-thirds (62%) of the approximately 500 respondents indicated that they had formal employer brand management programs in place, but only 24% have metrics to measure the results of their efforts.

“The old saying is, ‘what can be measured can be managed,'” observed D. Mark Hornung, Senior Vice President at Hodes and director of the firm’s U.S. employer brand efforts.

“While most agree that employer branding is important enough to devote resources to its pursuit, more needs to be done to prove its effectiveness.”

Part of this discrepancy can be explained by the difficulty in measuring the impact of brands of any kind. Even global rankings of top consumer brands rely on relatively simple estimates of organizations’ finances and credit the brand for whatever value cannot be directly tied to a tangible asset. Despite this lack of precision, there is little dispute that brands can make- or break- an organization. Many credit the revival of Apple Computer to the global success of one brand, the iPod personal music player, and its accompanying service, iTunes.

Similarly, a strong employer brand can be the deciding factor in the success of an organization. Libby Sartain, former head of employment at Southwest Airlines, documents the attraction of Southwest as an employer for much of the airline’s success in her recent book, “Brand from the Inside.”[1] Starbucks has much lower staff turnover and a constant flow of quality candidates because of the strength of its employer brand.

So how do you know if your employer brand is helping your organization and, if so, how much does it help?

One simple way is to monitor the percentage of hires you make from employee referrals. If you have a consistently high percentage of hires (more than 30%) coming from your own employees, that is a good indicator that people like working for you well enough to recommend it to their friends and neighbors. If the percentage begins to fall, that could be an early warning indicator that there are problems brewing. (Note, too, that you can have too high a percentage of referrals that can dilute your efforts to build an inclusive workplace. You need to monitor the rates carefully.)

Another measure is to survey new hires periodically during their first year after being hired. Ask them about their experiences during the hiring and on-boarding process, how the job they are doing matches up against what they believed they would be doing, etc. A good practice is to survey new hires at regular intervals- thirty, ninety, 180, and 365 days, for example. That way, you will begin to build up a database of replies that will help you measure how realistically your employer brand is communicated and where you may need to improve.

The “holy grail” of brand measurement, of course, is what impact the employer brand has on the organization’s performance. While no one has so far been able to separate out the precise contribution of the employer brand to a firm’s bottom line, there is evidence that companies with strong employer brands outperform their competitors financially.

One component of the employer brand is the investment the employer is willing to make in the employee. In a study published in the Harvard Business Review in 2004[2], researchers found that employers who invest more in their employees’ training and development outperform the stock markets by up to 35%. Even during the downturn in 2001, the authors recorded a 4.6% increase in stock value among companies with strong T&D budgets versus the declining markets.

Another measure of a strong employer brand is your rate of voluntary turnover. Common sense says if people are leaving at a high rate your employer brand is weak. But what is the value of having people stay?

Frederick Reicheld studied this for his book, “The Loyalty Effect” and found that keeping employees can pay big dividends. In one retail banking system, for example, his research found that bank branches with the same manager over seven years enjoyed 10% less customer defection than other branches. That resulted in $1 million in annual surplus revenue for those branches with loyal employees and customers.[3]

The other challenge posed by the Hodes global survey was that many still don’t agree on what, exactly, an employer brand is.

Roughly half (52%) define the employer brand as, “The essence of what we offer our employees communicated internally and externally.”

The rest of the respondents were split between “Our promise and contract to current and potential employees that defines the delivery of our HR agenda” (22%) and “A solution for the consistency, style and impact of external recruitment marketing materials” (26%).

The best answer as to what is an employer brand would be the one fewest respondents selected, the “promise and contract” between the employer and employees.

Your promise and contract with employees, current and potential, is the foundation of your employer brand. So you must examine all of the touch points between your organization and your employees to ensure that those “moments of truth” are consistent with the promise and contract you have made with employees, implied or explicit.

From how you “greet” people when they visit your employment Web site to how they are treated while they are being interviewed, to how they are introduced to your organization during orientation, to how you communicate with them once they work for you, are all facets of your employer brand.

“The good news about the global employer brand study is that it shows people are aware of its importance and are talking about it,” Hornung remarked. “There is a lot of work to be done developing metrics and implementing them. It should make the next few years in employment marketing really exciting!”

D. Mark Hornung is a Senior Vice President of Bernard Hodes Group. Called “the father of employer branding,” he works with clients such as The Clorox Company, Raytheon, Mercury Interactive and others. Previously, he developed branding for clients such as Starbucks, Discover Financial, and Nissan. Mark was CEO of Bravant, a start-up that developed an online behavioral assessment application, Career@gent(tm). Mark teaches branding in the Continuing Education department of San José State University. He has a degree in Philosophy from John Carroll University. He is co-author of Opportunities in Microelectronics Careers. His writing has also appeared in the New Yorker.

FOOTNOTES:
[1] Sartain, Libby and Mark Schumann, “Brand from the Inside” (San Francisco: Jossey-Bass, 2006)
[2] Bassi, Laurie and Daniel McMurrer, “How’s Your Return on People?” Harvard Business Review, March, 2004.
[3] Reicheld, Frederick F., “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value” (Cambridge, MA: Harvard Business School Press, 1996)

4 Tips: Negotiating for a raise

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In today’s still unstable job market, it may seem even more challenging than ever to successfully negotiate for a salary increase.

However, you should remember that while many organizations have been running lean and many managers and their teams have been forced to do more with less for a long time now, savvy organizations are beginning to focus on retention efforts. This means that there will be a concerted effort to hold onto their key talent, according to leading career management services company Lee Hecht Harrison.

“The important thing to remember when asking for a raise is to be prepared,” says Keith Emerson, senior vice president and general manager of Lee Hecht Harrison’s Boston office. “The best approach is to plan very carefully for any objections you might encounter. If you go in from a position of strength and confidence and make up your mind that no matter what, you won’t come backed empty-handed, the fear of being told no will be eliminated.”

In this spirit, here are four tips for successfully negotiating for a raise:

* Identify three of your strongest accomplishments within the organization or areas in which you took on extra responsibility.

State clearly: I would like a raise of $, which will then open negotiations. Keep in mind, however, that it is not a good idea to suggest a raise without knowing the salary range for your position, industry and level of experience. Do your homework and be aware of your company’s policy on raises before you begin.

* Practice with someone else.

Having someone play the devil’s advocate will prepare you to think on your feet and anticipate any objections you might encounter so you can have your responses prepared. For example, if you are told that the company can’t afford to give out any raises at this time you might point out ways that you already have or plan to save the organization money and then ask when you can expect the raise freeze to thaw.

* If you are still turned down, ask how you might improve in asking for a raise in the future.

This ensures that even if you are turned down the first time, you are still gaining from having made the request.

* Remember that there are other forms of compensation other than money that can be negotiated.

Look into other options like flextime, career development, coaching and educational opportunities, which can further your career and increase your future contribution to your organization.

Having said all of this, remember some things to avoid will include acting entitled to the raise before making your case and threatening to quit unless that is truly your intention. “Threats usually backfire and it is much smarter to come from a position of strength and honesty when negotiating,” says Emerson.

European Survey, Future of Human Capital Measurement

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Survey findings show that many senior HR Executives are concerned with the ability of current measurement systems to meet the increasing demands of HR reporting and analytics, and that the greatest opportunity for impact exists within 3 HR themes- Workforce Planning, Employee Engagement and Satisfaction, and Training & Development.

Washington DC – – The Infohrm Group, the global leader in workforce planning, reporting, and analytics has recently announced results of their 2007 survey of European organizations entitled “The New Frontier of Human Capital Measurement.”

Featuring data from 60 HR leaders, the survey polled participants on such issues as satisfaction with current human capital measurement systems, the extent to which workforce data is used in business decision-making, and the HR areas in greatest need of more effective measurement and reporting.

Key findings include:

Current State of Play:

1. European HR leaders are extremely concerned with the ability of current measurement systems to meet the increasing demands of HR reporting and analytics.

2. Fewer than 25 percent of organizations have made the leap from measurement efficiency to measurement effectiveness, defined as making extensive use of workforce data in business decision-making.

3. While process-based metrics are common, human capital impact measures are less widely-used.

Vision of the Future:

4. Leaders strongly agree that HR measurement will increase in importance over the next 5 years.

5. The greatest opportunities for measurement ROI are in 3 areas: Workforce Planning, Employee Engagement and Satisfaction, and Training & Development.

6. An effective assessment of individual and organizational measurement capabilities is critical for developing a metrics strategy and change management plan.

According to Infohrm’s CEO, Peter Howes, “The survey results confirm our assumptions about the growing importance of effective human capital measurement, especially in such strategic activities as workforce planning and analytics. In order to keep up with the demand for workforce data and insights, European organizations will need to invest in measurement systems that enhance maagers’ access to data, and in developing the analytics and business partner skills of their HR professionals.”

The Infohrm Group is the global leader in on-demand workforce planning, reporting, and human capital analytics solutions. With over 25 years of experience, and a strong customer base consisting of Fortune 1000, non-profit, and government clients, Infohrm has paved the way for organizations to measure the impact of human capital initiatives and drive business results. The Infohrm solutions couple a leading edge on-demand technology platform with strategic consulting services to focus on the analysis of data to help organizations make informed decisions around human capital practices. Learn more at www.infohrm.com

Top 10 “Most Military-Friendly Employers”

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PITTSBURGH —
For its leadership in recruiting and promoting veterans and creating a comfortable work environment for them, Brink’s U.S., which is based in Richmond, Virginia, was found to be the most “military- friendly” employer in America.

G.I. Jobs, a national monthly magazine that assists transitioning military members and veterans in their search for civilian employment, has released its first annual list of Top 10 Most Military Friendly Employers. The list, drawn from a sample of Fortune 500 companies, was created based on company criteria including the strength of company military recruiting efforts, the percentage of new hires with prior military service, and company policies toward national guard and reserve service.

For a complete list, visit www.gijobs.net

“Since 9-11, the professionalism of the American military has been thrust center stage,” said Rich McCormack, Publisher, G.I. Jobs,. “It’s appropriate to recognize those companies that are ahead of the power curve when it comes to hiring and retaining America’s best and brightest. The survey is perhaps the most comprehensive effort yet to research and evaluate corporate policies and practices regarding veterans.”

Many companies maintain comprehensive programs to recruit transitioning military and support and encourage reserve service. Fortune 500 companies like Merrill Lynch, Schering-Plough, and Sprint offer generous policies for reservists, providing them with full pay or pay plus differential during their active service, continued medical benefits and insurance coverage for themselves and their families, and the opportunity to return to the same or like positions when their military duty ends.

The global integrated communications provider Sprint, of Overland Park, KS, is second on this year’s list of most military friendly employers. Sprint scored points with a strong military recruiting program, even during the recent downturn in the telecommunications industry, and with a plugged-in network of veterans that helps foster the hiring of other veterans. Of the 70,000 Sprint employees worldwide, nearly ten percent are veterans.

Ranking third on the list is General Electric Company, of Fairfield, CT. GE was noted for the Junior Officer Leadership Program it established in 1995 — an effort to hire, train and retain junior military officers transitioning from the service. The Home Depot, with its active military recruitment into its Store Leadership Program, ranked fourth.

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Military picks up relo costs

Memo:

I received the following letter from a reader and I thought you should be informed of its content.

For sure, now we are in uncharted waters with the War in Iraq, pending confrontation with North Korea, the complex situation involving Israel and the related political problems throughout the Middle East, and “homeland security concerns” about the apparent “sleeper cells” located throughout the world. Now is the time for continued alertness and continued tight security yet without compromising the civil liberties, the very thing that the US has become a beacon of hope in the world.

No one knows for sure how long the war situation confronting Terrorism, and the related turmoil and tension in the Middle East will last, however one thing for certain is that our troops will rotate and return home at some point.

Unlike the Vietnam Era, our soldiers today are among the most educated and highly trained employees available. I salute the troops for their dedication and sacrifice, loyalty, and the obvious great display of training and success; and join in honoring those who died and wounded.

Would you please help educate employers on the benefits of attracting these men and women while showing support for our veterans. It’s important to let them know that they will be in demand when they return home.

Use the following information to gain a deeper understanding and to share with your contacts the benefits of tapping this extraordinary talent pool, while benefiting yourself.

Please do not hesitate to contact me or the author of this letter and of the idea, Mr. Bill Gaul, by phone, 1-619-696-8700 or by email, bgaul@destinygrp.com if you have any further questions.

Thank you for reading this.

Ed Cohen, Publisher & Editor
GLOBAL HR NEWS

Today’s soldiers, sailors, airmen and Marines differ significantly from their predecessors: Each has volunteered for service, and in return, been exposed to technology and leadership opportunities never before available. Many are on ‘active duty’, military parlance for full-time, while others are ‘reservists’, citizen-soldiers who place their personal and professional pursuits on hold to serve our Nation.

Meet Evan Blanco, devoted husband and father of two. Evan was the VP of Strategic Planning/Projects for a large telecommunications company in Chicago. He’s also an Army Reserve officer. With four days notice, Evan received the call to report for duty immediately; his planning skills were needed to support the US Army Ground Intelligence Center and CENTCOM. Evan knew this was a possibility being in the reserves, and trained and prepared his department managers for such an occurrence.

Even after reporting for duty, Evan held weekly conference calls with his employees to ensure operations continued to run smoothly in his absence.

In exchange, his employer made up his pay differential for three months since he suffered a 65% pay cut when he put his uniform back on.

Fortunately for Evan, his wife is a veteran ‘Army wife’ and knows how to cope with long deployments, but not without difficulty.

Evan is the exception rather than the rule. Many families have been forced to look to extended family or public assistance to survive after the loss of income. While each story is different, in nearly every case the service member went willingly, and would do it again if called.

What compels people to make such sacrifices?
Why would someone that has settled into a comfortable life put themselves and their families through such hardships?

It is hard to explain if you have never served, but there is a thread of honor, service, and duty, which runs through every person who has served our country, and they recognize that the successes and comforts they enjoy are the result of the sacrifices made by our brothers and sisters in arms.

They are not content to “let someone else do it.”
When called, they answer, they go. When their mission is successfully completed, they come home. And when they come home, they bring unique experiences not available from any other source, experiences that can transform your company.

Looking back in history, during World War II, Colonel ‘Tex’ Stanton assembled a team of ten bright young officers who “knew something about data, information, facts and statistics” to manage the challenge of growing the US Army Air Corps from less than 1000 planes to over 50,000.

This endeavor came to be known as statistical control, and was the foundation of the Air Corps’ management system.

After the war, Stanton was hired by the troubled Ford Motor Company to respond to the challenges of shifting from wartime production of tanks and aircraft to meet the demands of the new post-war prosperity.

Stanton couldn’t do it alone – he reached out to the team he’d assembled to tackle the Herculean logistical challenge faced by a wartime nation. He called on veterans, the same ten officers who’d transformed the Army Air Corps’. The so-called “Whiz Kids” turned the limping company around and built it into one of the world’s powerhouses. In total, these ten men served Ford for a total of nearly 150 man years. Of the ten, two became presidents of Ford: Robert McNamara (who went from being president of Ford to secretary of defense and then chief of the World Bank), and Arjay Miller (who after retirement from Ford became Dean of Stanford Business School).

While there are many reasons this group of ten were successful, it’s important to point out that before they changed American business they were successful members of the armed forces, applying their intelligence, creativity and leadership in service to our country.

Today, 21st-century “whiz kids” are proudly serving in our armed forces, waiting to be discovered.

They’re leading infantry companies with the Army and Marines; managing the execution of the most complex and precise logistics undertaking in the history of modern military operations; or flying strategic and tactical aircraft on grueling missions.

Today’s companies are finding their competitive edge by tapping transitioning military personnel The time to develop an effective military recruiting strategy has already begun, and it would be wise to brand your company now as a “Military Friendly Employer”. Don’t be caught on the sidelines watching our veterans returning home and going to work for your competitors.

ABOUT THE AUTHOR AND HIS COMPANY
If you’re ready to find “Whiz Kids” consider tapping experts in this field to assist you such as The Destiny Group www.destinygroup.com
The Destiny Group provides a military-to-civilian transition application for transitioning and former military service members, and has been selected three times as one of the TOP 50 career websites in the world, and the only one that specializes in this niche to have been selected by CAREERXROADS for this honor. Destiny offers customized career postings, a resume database, nationwide hiring forum events, Military SkillsTranslator and an online Military Mentor Network tool, in cooperation with www.Military.com

To learn more about hiring members of the guard and reserve, the ESGR (Employers Support of the Guard and the Reserve) has done an excellent job of building a website www.esgr.com to answer all of your questions. On the site you’ll see the logos of many employers that have gone far above what’s expected, and have supported our troops and their families, not just because “it makes them look good”, or “keeps them out of trouble”, but morally it has proven to be the right thing to do. In return these companies have been able to recruit and retain some of the most motivated and resourceful men and women available on the job market today.

Bill Gaul bgaul@destinygrp.com is President and CEO of The Destiny Group, an Internet-based recruiting tool that utilizes the latest patent-pending technology (including audio/visual) for organizations to use to source men and women departing the military services. Endorsed by all of the U.S. Service Academy Alumni Associations, this online system is the easiest and lowest cost method to reach transitioning military worldwide, without a per-head fee. Bill’s articles are Copyright 1997- 2003, The Destiny Group. For GLOBAL HR NEWS

Globalization May Lead to an Increasingly larger Middle Class

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J.J. Smith, SHRM

Alexandria, Virginia — Globalization could spur average incomes around the world to grow faster during the next 25 years than they grew from 1980 to 2005, says a study by the World Bank. Developing countries will play a leading role in globalization, but, unless managed carefully, economic growth in developing nations could be accompanied by income inequality and potentially severe environmental pressures, says the report Global Economic Prospects 2007: Managing the Next Wave of Globalization.

Once the final tally on 2006 growth in developing countries is complete, it is expected to reach a near-record 7 percent, the report says. During 2007 and 2008, growth in developing countries is expected to slow but will likely exceed 6 percent, more than twice the rate in high-income countries, which is expected to be 2.6 percent, the study says.

Globalization might more than double the world economy from $35 trillion in 2005 to $72 trillion in 2030, the report says. While those figures represent a slight acceleration of global growth compared to the past 25 years, it is driven more than ever before by the strong performance of developing countries, Richard Newfarmer, the report’s lead author and economic advisor in the World Bank’s trade department, says in a statement. The exact numbers for the period 2005 to 2030 will undoubtedly turn out to be different, but the underlying trends are relatively impervious to all but the most severe or disruptive shocks, he says.

In addition, broad-based growth in developing countries sustained over the 25-year period will increase workers’ earnings and affect global poverty significantly, says François Bourguignon, World Bank chief economist. “The number of people living on less than $1 a day could be cut in half, from 1.1 billion now to 550 million in 2030,” he says. However, some regions, notably Africa, are at risk of being left behind, and income inequality could widen within many countries, compounding current concerns over inequality between countries, he adds.

By 2030, globalization may triple the “global middle class” in developing countries, the report says. As many as 1.2 billion people in developing countries—15 percent of the world’s population—are expected to join the global middle class by 2030, which is up from 400 million today, the report says. The global middle class will have an annual purchasing power of between $4,000 and $17,000 per capita, providing them access to goods and services currently denied them, the report predicts.

In addition, that purchasing power will provide them with a political voice, says the report, which lists some of the goods and services the global middle class will gain greater access to:

* International travel.
* The purchase of automobiles and other advanced consumer durables.
* International education.
* Major roles in shaping policies and institutions in their countries and the world economy.

COMPETITION MAY HURT SOME
Continuing integration of markets will make jobs around the world more subject to competitive pressures, says Uri Dadush, director of the World Bank’s development prospects group and international trade department. As trade expands and technologies spread rapidly to developing countries, the jobs unskilled workers around the world—as well as some lower-skilled white-collar workers—will be eliminated because of cross-border competition, he says. “Rather than trying to preserve existing jobs, governments need to support dislocated workers and provide them with new opportunities. Improving education and labor market flexibility is a key part of the long-run solution,” he says.

In addition, the next wave of globalization will likely intensify stresses on the “global commons” and jeopardize long-term progress, the report warns. Nations will have to work together to play a larger role in issues involving global public goods—from mitigating global warming, to containing infectious diseases like avian flu, to preventing the decimation of the world’s fisheries, the report says.

J.J. Smith is editor/manager of SHRM Online’s Global HR Focus Area

DO BETTER THINGS… not do things better !

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Lou Adler, President
The Adler Group • lou@adlerconcepts.com

If you do things better, you’ll get a nice raise, a pat on the back, some recognition, maybe even a promotion. If you do better things, you’ll become famous.

While I believe strongly in Six Sigma process improvements, one thing I’ve noticed of late is the relentless focus on doing things better, rather than on doing better things. For example, if you reduce the time it takes to review resumes, automate interview scheduling, and interview six to eight candidates, you can improve recruiter productivity by 20% to 30%, maybe even 50%. But if you cut the number of candidates seen in half while increasing their quality, you can increase team (i.e. sourcer, recruiter, manager, other interviewers) productivity by 200% to 300%, while at the same time improving company performance.

One of the best ways I’ve seen to achieve these macro-level changes (doing better things) rather than the more typical micro-improvements (doing things better) is to understand the difference between top employees and top candidates. As you’ll soon discover, this shift in perspective will force you to question everything you’re now doing.

Imagine that a top candidate comes in for a interview, and within five minutes you know you have a star sitting across the desk from you. What are the “wow!” factors that excited you? (Pause and reflect before reading further.)

Aside from a good resume, they probably include many of these traits: positive first impression, great appearance, articulate, enthusiastic, affable, prepared, on-time, assertive, inquisitive, poised, and confident, with a strong handshake and great eye contact.

What did you do next? If you’re like most interviewers (especially hiring managers), you relaxed a bit, believing this would be an enjoyable interview, and gave yourself a mental high-five, knowing you’ll get a pat on the back from your client. You probably became less discriminating, and unknowingly started over-talking, under-listening, and maybe doing a little too much selling.

Now, fast-forward six months and you’re giving your new employee his or her first review. It’s not necessarily the person described above, but a truly outstanding person most likely found through some great networking technique or proactive employee referral program. What traits does this person possess if they really are a top performer? (Pause and reflect before reading further.)

Most likely the person has many of these traits: extremely competent and highly motivated to do the work required; extremely effective working with, motivating, and managing other people; courageous enough to take initiative and implement change; strong in the face of adversity and tough challenges; great at problem solving and decision making; committed to goals and deadlines; great growth potential; and a balanced ego.

With these two people in mind, who would you rather hire — a top employee or a top candidate? The right answer is the top employee.

Now consider this: Are all top candidates also top employees? My direct personal experience in over 1,000 different hiring situations (and many more indirectly with my clients), and in reading Peter Drucker (The Essential Drucker) and too many Hunter and Schmidt research articles in the Journal of Psychology, clearly indicates that top candidates are not the same as top employees.

Top candidates make great presentations, yet great presentations don’t correlate with top performance (even for salespeople). On the other hand, great employees are frequently not great candidates. The overlap is about a third of the time. So if you hire based on presentation, two-thirds of the time you’ll be wrong. While hiring errors caused by undervaluing performance and overvaluing presentation are a significant issue (indications of this problem include hiring people who are competent but unmotivated, or hiring people who talk a good game), this is really just the tip of the iceberg.

The real problem is that the hiring processes at most companies are designed to find and hire top candidates, not top employees. So even if you to want to hire top employees, you won’t be successful if you assume top employees and top candidates look for and accept jobs the same way.

Top employees, for example, are more discriminating. They want more information. They won’t waste their time. They want a better job, not another job. They decide with others, and they don’t want to be sold during the interview. They want a chance to be heard and challenged. If your hiring processes aren’t designed to cater to the needs of these top employees, you’ll never be able to consistently hire them.

For validation, consider some of the really top people you’ve recently hired. How many needed some special hand-holding, extra consideration, or went outside of your company’s normal hiring practices in some way? For more proof, consider how many top employees now apply for your current openings. If you’re not seeing enough top people, you might want to redesign your hiring processes to meet their needs rather than the needs of top candidates. This is what is meant by doing better things, not doing things better.

HERE ARE SOME IDEAS TO GET YOU STARTED:

1. Make it as easy as possible to apply.

This means no upfront questions, no application process — just a cut-and-paste resume, at most. You must use technology to determine if the person is strong rather than a questionnaire.

2. Make your job titles more descriptive, visible, and compelling in order to attract the attention of top people.

Ask your most creative marketing people for help with this. For example, “Become Our Next Rookie of the Year” will attract more top salespeople than “Sales Rep – Eastern Ohio.” Then, in the first paragraph of the job description, talk about the opportunity in the job rather than list the requirements. In fact, the first two sentences of the first paragraph are the most important. Make every job unique, tying each job in some way to the company strategy. This is what is meant by job-branding. It will take a lot of time to change every one of your job descriptions, but it will instantly change the caliber of the people applying. Try this just a few times to see how effective it is.

3. Develop sourcing strategies designed around the needs of your target audience.

This should be a combination of great online advertising, a robust career website, and advanced networking leveraging using your top current employees and related connections (alumni, associations, vendors).

4. Set up systems to identify and call these top people within hours after applying.

Make sure that your best recruiters make these calls to ensure that the person doesn’t opt out for the wrong reasons. Then, even if the person is not appropriate for the current job, use proactive networking to obtain three or four more names of other top people from them.

5. Evaluate how your recruiters and managers interview these candidates.

Top employees don’t want to be sold, nor do they want to discuss their behaviors. They want a chance to describe their accomplishments and find out about the challenges in the new job. This is how you use the interview to both recruit the candidate and assess their competency and motivation.

6. Evaluate everything else you do in your hiring process from the perspective of a top employee, not a top candidate.

Have the courage to challenge everything and everybody. Don’t let company policy, culture, or some PhD or lawyer stand in your way. This is actually the hardest part of the whole process.

Doing better things can have a far more significant impact than doing things better. But it takes a top employee to make it happen. These are people who will challenge conventional wisdom, have the courage to take personal risks, and who keep on pushing despite the challenges.

Not only do you want to hire more top employees, you must become one yourself. And of course, that is the real point of this article. There are a few more hidden lessons here as well, but I’ll leave those up to you to find. Email me at info@adlerconcepts.com to enter your suggestions.

………

Lou Adler (lou@adlerconcepts.com) is the president of The Adler Group, a training and consulting firm that develops leading-edge recruiting strategies. Adler is a veteran recruiter and founder of CJA Executive Search. He’s also the creator and founder of POWER Hiring and “Zero-based Hiring — The Six Sigma Process for Hiring Top Talent.” His industry career included general management positions with the Allen Group, as well as senior-level financial management positions with Rockwell International’s Automotive and Consumer Electronics groups. Lou is the author of the bestselling, Hire With Your Head – Using POWER Hiring to Build Great Companies (John Wiley & Sons, 2002), and the award-winning Nightingale Conant audio tape program, POWER Hiring: How to Find, Assess, Hire and Keep Great Talent (1999). Adler holds an MBA from UCLA and a B.S. in Engineering from Clarkson University, New York. Source: Electronic Recruiting Exchange (ERE)