Pat Perry is fed up.
Sitting in an airy office conference room, the usually genial president of the Employers Resource Council, Northeast Ohio’s largest employers’ association, is uncharacteristically ticked off. He leans forward, his voice gets louder, his cheeks flush, his hand strikes the table.
“It isn’t the weather that sends people out of Northeast Ohio,” Perry exclaims. “Where we hurt is our business community competitiveness. We should become the model in the United States in saying Northeast Ohio understands how to develop terrific places to work, that’s how they’re attracting talent to the region and keeping it.”
But that doesn’t appear to be the case. Perry has just reviewed the results of the 2002 Workplace Practices Survey the ERC conducts every year in partnership with SBN Magazine. The survey looks at human resources issues including wages, benefits, screening, information disclosure and hiring. The 243 responses this year were the most in the survey’s three-year history, more than doubling last year’s return.
Companies from small tool and die shops to publicly traded corporations with more than $1 billion in revenue responded to the ERC/SBN Workplace Practices survey. The average respondent had 185 employees and annual sales of $62 million, double the size of last year’s average respondent. The majority of this year’s respondents, 124, were manufacturers, but companies from 43 other industries, including distribution, nonprofit and retail, also participated.
Even with a much larger sample, the results mirror last year’s numbers. The similar results are surprising in light of the economic changes between August 2001 and 2002, but disappointing, Perry says, because many Northeast Ohio employers still say they’re battling the same problem: attracting and retaining qualified employees.
“There is some irony in these results,” Perry says. “The irony is we put retention at the top, but as organizations in Northeast Ohio, we’re not doing all we can in terms of some basic meat-and-potatoes practices to help retain people.”
The ERC/SBN Workplace Practices Survey is voluntarily filled out by employers and ERC members, so not all the same companies respond each year. The questions, however, remain the same. Although unscientific, the survey still points to trends in Northeast Ohio workplaces, which we explore in our special report.
“You’ve got to have a leader in there that sees the big picture and how developing a much better workplace is going to correlate into increased sales, reduced expenses and yielding enhanced profitability,” Perry says. “And not all leaders in Northeast Ohio get it. The sooner that they make changes to become a great organization, the sooner they’re going to be able to effectively compete in this global economy and more effectively compete in Northeast Ohio.”
Employers do appear to get it when it comes to some employee incentives. More than 91 percent offer 401(k) plans, 87 percent offer financial assistance to employees to upgrade their skills, 73 percent offer cash bonuses to nonmanagement employees and 71 percent offer long-term service awards.
But much more needs to be done. The old ways need to change.
The key to retention is communication with employees, but only half of the survey respondents indicated that people in the organization know the company’s mission statement.
Just 62 percent review financial information quarterly, and more than 25 percent don’t distribute job descriptions.
“Organizations who intend to retain high-caliber employees need to overcommunicate,” Perry says. “You do that by ensuring that you know what the mission of the company is, that they understand where the company stands from a financial perspective, that they have written job descriptions.”
Few employers offer attractive benefits like childcare assistance or eldercare (9 percent and 6 percent), and less than half, 48 percent, offer flexible schedules. With more dual-income households and more employees taking care of elderly parents, these benefits should be expected, not unique.
“These benefits really don’t cost a lot of money, but could make a big difference in employees’ lives,” Perry says. “These are terrific retention strategies and tools.”
Along with attracting and retaining good employees, employers said they’re struggling to increase revenue and profits, according to the survey. Many respondents expressed concern about encroaching foreign competition and containing benefits costs.
One manufacturer which has figured out how to keep employee morale high while improving productivity is Fairlawn-based Bioproducts Inc. The 75-year-old pet food flavor and vitamin manufacturer cut its voluntary turnover rate in half, from 18 percent in 1998 to 9 percent last year. The company also had no layoffs last year and reduced its recruitment costs by 40 percent.
“It starts at the top with the CEO and the values that he brings to the organization that trickle down through the organization,” says Robert Adamov, Bioproducts vice president, human resources. “We make our share of mistakes, but you’ll see people walking into each other people’s office and apologizing when they blow it.”
Adamov says part of Bioproducts’ employee satisfaction secret is its incentive plan, which includes informal performance bonuses like a thank you note or a free lunch, and more extravagant perks like airline tickets or company-sponsored trips. There are also standard formal incentives like promotions and pay raises based on seniority.
It’s not just extra cash and gifts that help boost employee satisfaction and performance. After an employee survey showed a demand for skill and executive development, Bioproducts launched its CareerBuilder and LeaderBuilder programs. CareerBuilder is a Web-based system to help employees form their career goals and chart what they need to do to get there. LeaderBuilder is a management development program culled from the expertise of the University of Michigan, Northwestern University and M.I.T.
“Employees who want the organization to succeed will consistently go the extra mile to help the organization achieve its goals,” Adamov says. “(Bioproducts) is very good at sharing the wealth with all of its employees.”
In a recession year, Bioproducts reached 94 percent of its profit goal even when all employees were awarded bonuses.
Cash-strapped companies unable to invest in incentive or executive education programs can still attract and retain top employees by simply breaking from the old ways.
“What you find is that more traditional organizations have been able to take dollars that they’re spending on traditional comp and benefits programs and shift those to more creative applications,” Perry says. “In fact, many organizations are finding that the traditional benefits, compensation and work schedules were even more costly.”
At the ERC, employees work staggered shifts, with some arriving early as 6:30 a.m. and some leaving as late as 6:30 p.m. Not only are ERC workers more satisfied with a nontraditional work schedule, the organization’s members get four more hours of service each day.
“It cost us nothing,” Perry says. “You’ve got to shift out of the traditional paradigm and take some risks. The right people you take risks with are the ones that are going to carry your organization to the Holy Grail.”
Here are the other issues we cover in our report.
Open book management
With the collapse of Enron, WorldCom, Adelphia and many other companies, employees are now more concerned with what’s going on in their employer’s books.
Are employers sharing financial information? How are they doing it? Company newsletters are popular, but are too often reserved for promotion announcements, event reminders and vague letters from the president about how the company is doing.
SBN explores this issue and how to best keep employees aware.
Benefits
Health care costs jumped again this year, and controlling those costs was one of the top 10 concerns of employers who responded to the survey.
The average employer asks employees to pay about 22 percent of their health care premium, nearly identical to the amount reported in the previous two years of the survey. Yet, almost 14 percent of employers this year said they still pay for all their employees’ medical insurance premiums, while many offer no health care coverage at all.
SBN explains how employers on both ends of the spectrum manage costs.
Web-based training
More than 64 percent of employers reported they would pursue Web-based training for their employees if it were available, but few actually take advantage due to the expense. Some larger companies like Pioneer-Standard, Philips Medical Systems and Ohio Savings Bank have taken the lead in Web-based training.
SBN tells the story behind Pioneer-Standard’s unique training program.
Online recruiting
Newspaper help wanted ads are losing popularity among Northeast Ohio employers, according to the survey. More companies are posting job openings on the Web, and for good reason.
Web ads are cheaper, they reach more job hunters and they usually offer a quicker turnaround time. SBN explains how Web classified ads are coming of age.
Temporary vs. part time
For human resource directors, it’s always a question of whether to hire a part-time employee or whether using temporary workers on an as-needed basis is more effective.
According to this year’s survey, companies use both types of workers equally, although temporary workers seem to be gaining a slight edge. SBN weighs the benefits of each type of employee, and which would be the best fit for your company.
Wage battle
Often, increasing hourly wage or yearly salary is dictated by a collective bargaining agreement or pay scale. But when it’s up to you, how do you decide when and by how much to raise your employees’ wages?
How can you keep your salaries competitive to attract new workers but still control your greatest expense? SBN explains how to develop a sound wage structure. How to reach: Employers Resource Council, (216) 696-3636
