Are your employees a good investment?

I know that no one likes to be thought of as "just a number" and that we talk a lot about morale, mood and other feel-good aspects of the workplace on this blog. But at the end of the day, a business needs to make money - and if its employees aren't contributing to the bottom line, there's a problem.

The term ROI - return on investment - is bandied about quite often in financial circles. But what if you applied this same formula to your company's personnel? How valuable is Ken, Katie and Karl to your business compared to the cost of employing them (salary, benefits and other company-provided perks)? Do your employees' contributions outweigh the cost of keeping them on board?

While it's not always easy to put a dollar sign on a person's efforts and achievements, it can be an interesting exercise - whether at review time or any time. 

For example, is Ken in sales securing enough sales to cover his costs? While he may be pulling in great numbers, if his sales are spread around to multiple customers and require you to hire additional customer service representatives, his value isn't as strong. 

Or how about Katie, the customer service advisor who's great with her team but moody on the phone? If her snarky attitude has caused a handful of customers to take their business elsewhere, her value suddenly drops. How much did each of these customers spend a year - profit that you lost?

Then there's Karl in the warehouse. He's a solid, hard-working guy, but a bit accident prone. In three years, he's been in two workplace accidents that involved lengthy and costly workers' compensation claims. Your investment in Karl, then, involves more than just his hourly wages.

When it comes right down to it, you're looking at the same qualities you typically consider: attitude and actions. The difference with ROI is whether those qualities are advancing the success of your business, making each employee a worthwhile investment. Ideally, your employees bring in a positive ROI, making your "personnel" portfolio as robust as your personal financial investments.

Are your employees a good investment?

Unpaid internships: A rip-off or legitimate resume booster?

It seems that Mark Cuban has stirred up a bit of a hornet’s nest with his recent post about unpaid internships. He’s already received 90 comments, ranging from wholehearted approval of his argument (pro unpaid internships) to outright disgust that he’d support such a notion.

He explains:

“This summer, in response to the changing sports media landscape, I wanted to
create a “media pool” for the Mavs. I wanted to assemble a group of unpaid
interns that would acquire video, write game reports, track unique stats, do
interviews, interact with fans, and then compile all of this incremental media
and provide it free to any and every outlet we could think of.”

His justification for taking the unpaid internship route was this:

“One silver lining of a “great recession” that we are now in is that there are a
lot of incredibly talented people without jobs, or who have lost their jobs. I
didn’t care if they were 18 years old or 73 years old. I thought we could
assemble a talented group who would enjoy the internships and could also gain
valuable experience to add to their resumes.”

But his plans were quickly halted when he heard back from his HR department. He learned that to be legal, interns must be paid, unless they are performing work that is of no value to the organization. This didn’t sit well with Mark - that whether or not the trainee would welcome the “on the job” experience, or be willing to work for no pay, does not come into play.

To be clear, the U.S. Department of Labor has developed specific criteria for determining an internship’s pay status. For an internship to be unpaid, it must meet these six legal tests:

1. It must be an educational experience, the equivalent of vocational school
2. It must primarily benefit the trainee
3. The trainee cannot do work that would otherwise be done by a paid employee, and must work under the close supervision of a manager
4. The employer cannot derive immediate advantage from the trainee’s work or profit from it
5. The employer must not promise a paid job at the completion of the training period
6. The employer and trainee must agree (ideally in writing) that no wages will be paid during the training period


On one side of the ring are the people who feel that an internship is a great way for someone to try out a particular industry and gain practical experience – and if that person is willing to get a “foot in the door” for free, more power to him. (A risk vs. opportunity scenario.) On the other side of the ring are the people who feel that it’s wrong for an individual to work for a company, in any capacity, and not get paid. That no one should do the work of a paid employee, no matter what the possible pay-off later, for free.

What do you think? Should the guidelines surrounding unpaid internships be loosened? How does your business handle the matter of unpaid vs. paid internships – and how do you make the most of the employer-trainee relationship so that everyone benefits?

Unpaid internships: A rip-off or legitimate resume booster?

Hiring, salary freezes to melt within the next year

A majority of U.S. employers plan to reverse some of the changes they’ve made to pay benefits and other HR programs, according to the latest survey results from Watson Wyatt.

The survey discovered that 62% of companies that made hiring freezes and 69% of companies that froze salaries plan to eliminate them within the next 12 months. Almost half (48%) of companies that reduced their employer 401(k)/403(b) matches also plan on reversing their decision within the next year.

Unfortunately, not all of the affected employer benefits will experience the same changes. One in five employers plan to keep salary reductions in place and 46% of employers do not plan on reversing the increases in the percentage that employees now pay for health care premiums.

"While more employers now feel the worst of the current downturn may be behind them, most are not expecting to go back to 'business as usual'," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment." (Yahoo! News)

In the next three to five years, companies expect staffing issues including difficulties in attracting and retaining skilled employees to extend long-term. They also expect staff sizes to be significantly smaller than pre-economic levels.

Compared with pre-economic crisis levels, the companies surveyed expect the following changes within the next three to five years:

• 45% foresee difficulty retaining critical-skill employees
• 41% expect increased difficulty attracting critical-skill employees
• 50% expect no increase to current salary levels
• 52% expect to see a decrease in staff sixes
• 76% expect no change in employer contributions to defined contribution plans (e.g., 401(k))

The survey also found that nearly one quarter (24%) of the companies surveyed believed their results have “bottomed out,” double the number of survey participants that said the same in April.

"Laying off workers and cutting back on pay and benefits are never easy decisions to make. Now, companies are now looking to the new economic landscape that lies ahead," said Laurie Bienstock, U.S. strategic rewards leader at Watson Wyatt. "The challenge for employers is to reassess short-term cost cuts and ensure they have the right workforce and resources in place to meet the organization's long-term financial goals." (Yahoo! News)

Hiring, salary freezes to melt within the next year

Employers brace for 2010 healthcare cost hike

It’s estimated that U.S. employers will see a 9 percent jump in healthcare costs in 2010 and workers will be footing more of the bill, according to an annual trend report by PricewaterhouseCoopers (PwC).

The annual medical costs trends report also revealed that workers are more likely to utilize their health insurance coverage out of fear that they will loose their jobs. More uninsured and underinsured people are expected to turn to Medicaid for health coverage.

The rise in healthcare costs may be offset partially by cost declines associated with U.S. health care reforms and the potential for high deductible health plans and wellness programs, according to PwC.

Of the 500 employers surveyed by PwC: 



• 42% plan to increase their workers’ share of healthcare costs in 2010, and
• 41% said they would change the design of health care plans to increase medical cost sharing.

The study comes at a time when new health-reform legislation is heating up congressional hearings. President Obama has pledged to push his plans to revamp health-care regulation through Congress and Senate hearings this summer. Before anything is approved, it will be up to employers to manage rising costs.

"Employers are squeezing dollars out of their programs to save money," Mike Thompson, principal at PricewaterhouseCoopers global human resource solutions group, said in a statement.

"As the economy recovers, employers will refocus on more sustainable longer term approaches to medical cost containment based on an increasingly shared interest between employers and their workers." (Reuters)

What is your company doing to offset the rise in healthcare costs? Please leave a comment and let us know.

Employers brace for 2010 healthcare cost hike

Would you work for free to keep your job?

While getting ready for work this morning this story on Good Morning America caught my attention:

About 40,000 people work for British Airways, which means they show up, do their jobs and get paid. But now, the airline is asking workers to do their jobs for up to a month without the "getting paid" part.

British Airways asks its employees to work without pay for up to one month.

In a letter to employees this week, British Airways said, "The airline fights for survival ... people will be able to opt for one-week blocks of unpaid leave or unpaid work."

It's a twist on sacrifices being made by employees around the world. In Connecticut, for instance, Courtney Bosch was given a one-week furlough from Kodak.

"In these times, I was comfortable with it, you know I can honestly say I was happy to still be employed," Bosch said.”

Watch the story here.

Furloughs are one thing, but asking employees to work for free for up to one month is quite another.

With nearly one in 10 U.S. workers without a job, some people are so afraid of joining the ranks of the unemployed that working for free sounds like the only choice they have.

Employers should still use caution when considering such a plan. ABC News workplace commentator Tory Johnson went on to say that expecting people to work for free is “absolutely a slippery slope” for employers.

More than a thousand employees have signed up for British Airway’s “no-pay plan.” The airlines also said there is no sense of intimidation or peer pressure among employees regarding the plan.

Is asking workers to go without pay simply a sign of the times or is there a better way for companies to save money? Would you work for free to keep your job?

Would you work for free to keep your job?

HR survey shows more slashing salaries, less layoffs

Eight out of ten companies continue to cut labor costs, most by reducing salaries, worker hours, perks, and using furlough or forced vacations, according to a survey released yesterday by Challenger, Gray and Christmas.

According to the report, more than half (52%) of human resources executives surveyed in May said their companies had decided to slash or freeze pay, more than double the 27% of companies using the same cost-cutting techniques in January.

Executives listed as many as 13 different measures they’re currently using to cut expenses, but they’re not necessarily using these techniques in place of layoffs. Survey results revealed that the companies which had gone through layoffs were more likely to use cost-cutting methods than companies that had not.

Slashing benefits, pay, and perks allows companies to lower their labor costs without cutting workers. Layoffs can create a major challenge when the economy begins to recover and employers are short on trained workers. "It is a lot easier to restore compensation and benefits that it is to rehire and retrain workers when the economy improves," says John Challenger, chief executive of Challenger, Gray and Christmas. (U.S. News & World Report)

The percentage of employers making permanent cuts fell since the beginning of the year, from 56% in January to 43% in May, according to the survey. Altogether, 86% of executives said their companies were implementing cost-cutting measures, which is slightly better than in January when 92% of organizations were slashing costs.

Has your company been able to avoid layoffs by implementing other cost-cutting measures, such as salary reductions or freezes? Leave a comment and let us know what worked for your organization.

HR survey shows more slashing salaries, less layoffs