Diverse Employees Lure Diverse Customers

A lack of employee diversity may be preventing your company from reaching a broader range of customers.

By Stephenie Overman

Every business needs customers. A company can have cutting-edge, high-quality products, but, unless customers buy those gadgets or services, the organization can’t get off the ground. Even established companies must find new ways to effectively serve and expand their customer base if they want to grow. One way to attract more customers is to hire a diverse workforce.

Having a diverse workforce is critical from a business standpoint because it enables companies to get in touch with the wants and needs of a broad range of customers by drawing on the expertise of employees with whom those customers and potential customers identify, says Mitzi Adwell, vice president of strategic solutions for The Newman Group, a Los Angeles-based Futurestep Company that provides talent management strategy services and solutions.

Companies looking to expand their customer base need to do more than push products and services to customers, she says. They need to "pull" customers in by finding out what influences what they buy and where they buy. A diverse employee population can help provide that information.

For example, diverse employees at an adult beverage company may have insights on consumption habits in different market segments, Adwell explains, which helps marketing and sales staff determine where to place products to attract new customers. "It’s that level of understanding that sets your go-to-market strategy," she says.

Having a diverse workforce can also help a company reach its existing customers by providing them with better service. "When someone older goes into a consumer electronics store, they’re sometimes made to feel clueless by the young staff," says Bruce Tulgan, founder of RainmakerThinking Inc., a management training firm based in New Haven, Conn. But that more-mature customer may have a better experience if he or she can talk to a more-mature salesperson who is in tune with the customer’s needs and concerns.

A number of companies recognize the need to find a better balance among their employees, according to Tulgan, an expert on young people in the workplace. "I visit between 50 and 100 organizations a year, and I find that a lot of organizations in the retail and restaurant business want to balance out the natural trend of having a young workforce," he says. As a result, these companies are always on the lookout for candidates "who are a little older and more experienced" to better reflect the diverse ages of their clientele.

Recognizing the business case for diversity is just the first step. You then need to set goals, build a good sourcing pipeline and demonstrate the company’s commitment.

Where to Focus

Creating a more-diverse workforce isn’t about filling quotas; it’s about expanding your efforts to reach untapped pools of appropriate candidates. The first step is to examine your workforce using an internal audit, which can identify areas where diversity is lacking and help your company better direct its search.

"Do a good internal check," says Dolores Scotto, an HR consultant in Woodbridge, N.J., who focuses on strategic staffing and recruitment. "The results sometimes do startle you."

At one company where Scotto was working, an audit revealed that the workforce was predominantly made up of people in their 30s and 40s. The company had a practice of hiring employees with MBAs, and these people tended to be in that age range—workers "who were still up-and-comers," she says. "That became the age group with the most cultural fit.

"The company wanted to open up to Baby Boomers and to [members of the] military. We wanted to work with hiring managers to bring in people who were a little older, who bring more to the table."

Scotto believes that even companies that want a diverse workforce and recognize its importance often become comfortable with the familiar. Committing to a diverse workforce means reaching beyond that comfort zone, she says. From there, compare all candidates, and if all things are equal, consider "which different mind-set might bring more to the table" to attract a wider pool of customers.

Two examples of companies that have focused on diversity recruiting efforts to better reach their customers are:

Last year, Minneapolis-based electronics retailer Best Buy announced a change in hiring strategy to create a workforce that is more representative of the changing demographics of its customers. For the last 20 years, "we have focused on males between the ages of 18 to 25," Lisa Martens, a senior analyst with Best Buy, told the Boston Herald in August 2008. Now "female spending is a huge piece of the pie in the consumer electronics world," so the company has stepped up its recruitment of women.
At Gallery Furniture in Houston, "We mirror and match the population," says founder and owner Jim McIngvale. "We hire roughly according to the percentage of customers who are females, males, African-Americans, Hispanics, Asians." As a result, "The staff knows the market. We rely heavily on the staff to know what the customer wants—what different customers want."
And McIngvale takes literally the old sales phrase "You have to speak their language."

"If someone who walks in speaks Spanish, we have a salesperson who is bilingual," he says.

Everyone’s a Teacher

While it pays to have a workforce that reflects the diversity of a company’s customer population, it doesn’t need to be a 1-1 ratio, says professor Stephen Brown, executive director of the Center for Services Leadership at the W.P. Carey School of Business at Arizona State University in Tempe.
Rather than saying “10 percent of our customers are Cuban-American, so 10 percent of front-line workers are Cuban-American,” Brown believes “you need to have your front-line employees coached” by other employees on the preferences of key ethnic groups. In that way, members of various groups can inform each other about areas that may be culturally sensitive.


For example, a company may wonder if Hispanic customers want to be spoken to in Spanish or English. In a focus group, Brown says, “women with Hispanic surnames said too often the company assumes that [they] want to be spoken to in Spanish.” If you have Hispanics in your workforce, these employees would be able to coach other workers on customer preferences, Brown explains. They could tell other employees to give a customer with a Hispanic-appearing name the option of speaking Spanish but not to assume it’s the preferred language.

Members of a diverse workforce also can coach each other about the level of formality that different customers may prefer. For example, “Anglos tend to be informal,” according to Brown, as do younger people.



Diversity Pool

There are simple ways to find a good pool of diverse candidates:

Hire your customers. Sporting goods giant Cabela’s believes that hiring shoppers is the best way to make sure its sales staff represents its customer base. To make it convenient for customers to apply for jobs, the company has set up employment kiosks in its stores. (For more on Cabela’s hiring strategy, see "Luring Shoppers as Employees" in the July-September 2007 issue of Staffing Management.)

Get the most from your employee referral program. Make sure your employee referral program can help accomplish your goal of diversity. Referrals often come from the same small group of employees, says Scotto. To increase participation and receive referrals for more-diverse candidates, provide plenty of publicity for the referral program so that all employees are aware it exists and know how it works, she advises. Incentives can help, too.

If your workforce is homogenous, however, an employee referral program can backfire, leading to a "like-me" phenomenon that hinders any diversity efforts, Scotto warns.

Tie in with affinity or focus groups. Sometimes finding a diverse pool of job candidates "takes a little digging," Scotto says. Search the Internet to find different types of affinity organizations, such as the National Society of Black Engineers and the Association of Latinos in Finance and Accounting, she suggests. "Look not only at local colleges but maybe to historically black colleges. … Think outside your own little radius."

Appearance Matters

Companies committed to hiring a diverse workforce must walk the talk to be attractive to candidates. Adwell stresses that credibility is key.

Candidates "should see a workforce that is reflective of what you’re saying. They should be able to see a true testament that [they] can grow with the organization," she says. Make sure the employee photographs on your company web site present the right image. And during the interview process, introduce potential hires to employees who can share their own stories of diversity.

If your company hasn’t had a good track record, Adwell recommends letting candidates know that your company is working to change that. Tell them that while your workforce may not look diverse today, you "have set the business case and communicate the importance of diversity from the top down. Everything is in alignment" to make improvements

SHRM LINE: Job Market Recovery Will Be Slow

11/6/2009

By Theresa Minton-Eversole

Though the U.S. unemployment rate likely will continue to climb for the next few months, HR professionals in the manufacturing and service sectors expect hiring in November 2009 to surpass levels reached one year ago, according to the Society for Human Resource Management’s (SHRM) latest Leading Indicators of National Employment (LINE) survey.

Hiring is still not widespread, though November 2009 marks the fifth straight month that job additions were expected to outpace layoffs in manufacturing and services. But because the recession has been so long, “any improvements we see now are only improvements on what was already a weak job market one year ago,” cautions Jennifer Schramm, SHRM’s manager of workplace trends and forecasting.

The SHRM LINE data are collected through a monthly survey of human resource executives at more than 500 manufacturing and 500 service-sector firms and focus on four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. The net increasing index is calculated as the percentage increasing minus the percentage decreasing.

Employment Expectations	Manufacturing	Service
Hiring will surpass layoffs in November 2009 in manufacturing and services; the activity is also ahead of the November 2008 pace.	+15.3	+5.9
Recruiting Difficulty	Manufacturing	Service
In October 2009, both sectors reported increased recruiting difficulty during the same month for the first time since January 2007.	+2.8	+13.0
New-Hire Compensation	Manufacturing	Service
For the 13th straight month in October 2009, the rate of increase for new-hire compensation dropped in both sectors.	-3.0	-4.2

Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.

Employment Expectations, Recruiting Difficulty

November 2009 is the first time that LINE data show that year-over-year hiring has increased in services since February 2008 and in manufacturing since August 2007. Still, says Schramm, “Net expectations are fairly low, indicating that any improvements are developing slowly.”

In the manufacturing sector, a net total of 17.8 percent of respondents reported they will add jobs in November 2009 (32.0 percent adding jobs vs. 14.2 percent eliminating jobs). In the service sector, a net total of 15.8 percent of companies will add jobs in November 2009 (26.1 percent hiring versus 10.3 percent cutting jobs)—the seventh straight month that the hiring rate will surpass the layoff rate in that sector.

LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. Interestingly, despite the large number of people unemployed, members of both sectors report having slightly more difficulty in landing top-level talent compared with 2008.

For the eighth consecutive month of 2009, LINE recorded single-digit response levels for those reporting increased difficulty with recruiting. The low response totals can likely be attributed to two factors: fewer HR professionals being engaged in recruiting now and HR professionals’ heightened selection standards attributable to the large number of people looking for work.

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'Any improvements we see now are only improvements
on what was already a weak job market one year ago.’
— Jennifer Schramm, SHRM’s manager of workplace trends and forecasting
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However, the net total in both sectors showed a rise in recruiting difficulty compared with October 2008. In the manufacturing sector, a net of 6.8 percent of companies reported less difficulty with recruiting during October 2009. Still, it is the first time recruiting difficulty has increased on a year-over-year basis in manufacturing since October 2007. In the service sector, a net of 7.8 percent of companies had less difficulty recruiting in October 2009. This marks the first time that recruiting difficulty has increased on a year-over-year basis in the service sector since February 2008.

The results do not indicate a major reversal in recruiting difficulty but do reflect the notion that labor market conditions may be improving slightly from a year ago.

New-Hire Compensation

The rate of increase for new-hire compensation has been falling for more than a year, according to the LINE report, and employers reported that they continued to keep wages and benefits packages in check for new hires in October 2009. The continuing high rate of unemployment and large pool of jobseekers have given many companies the option to reduce the wages and benefits they are offering new hires in a continuing effort to control costs.

In the manufacturing sector, a net total of 0.1 percent of respondents said they would decrease new-hire compensation in October 2009 (2.4 percent increased, 2.5 percent decreased). That is the lowest October response total in five years for manufacturers reporting increases to new-hire compensation.

In the service sector, more companies actually raised new-hire compensation than reduced it in October 2009. A net total of 2.2 percent of companies increased wages and benefits packages for new hires (6.9 percent increased, 1.3 percent decreased). Still, it was a drop of 4.2 percentage points from October 2008, and perhaps an indication that those landing new jobs in October 2009 continue to accept lower wages and benefits during challenging economic times.

“The rate of increase for new-hire compensation continues to fall as it has for over a year,” said Schramm. “Employers are still able to find many willing job applicants even as they keep wages and benefits packages low—a sign that, despite some improvements, the job market overall remains weak.”

Exempt, Non-Exempt Vacancies

But indications that hiring conditions are improving slowly can be found in LINE’s vacancy data. Vacancies, defined as open positions that employers are trying to fill, increased from the previous year in October 2009 in all four job categories for manufacturing and services. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand.

In the manufacturing sector, a net total of 6.2 percent of respondents reported increases in exempt vacancies in October 2009 (15.9 percent reported increases, 9.7 percent reported decreases). This is an increase of 4.1 percentage points from October 2008. In the service sector, a net total of 1.9 percent of respondents reported increases in exempt vacancies in October 2009 (11.9 percent reported increases, 10.0 percent reported decreases). This is the third consecutive month that exempt vacancies have risen in both the manufacturing and service sectors from the previous year.

Vacancies for hourly jobs also rose in both sectors in October 2009. A net total of 4.1 percent of manufacturing respondents reported that nonexempt vacancies increased in October 2009 (18.0 percent increased, 13.9 percent decreased). This increase of 3.9 percentage points from October 2008 suggests that work is being ramped up slowly at some companies. In addition, the Federal Reserve reported that industrial production rose 5.2 percent during the third quarter of 2009, the largest gain since the first quarter of 2005.

For nonexempt service positions, a net total of 15.6 percent reported increased vacancies in October 2009 (27.7 percent increased, 12.1 percent decreased). This marked a significant increase (17.5 percent) from October 2008, when a net total of 1.9 percent of service companies reported decreases in nonexempt vacancies.

“Wide-scale layoffs across the economy were just beginning to hit at around this time last year, so it is not necessarily surprising that compared to last October, vacancies are now increasing in all four job categories for manufacturing and services,” said Schramm. “However, this could be another indication that employment conditions may be slowly starting to improve.”

The responses in the LINE survey are weighted using the proportion of total employment represented by the respondent’s industry. These weights are calculated using the annual

Organizations Step Up Pandemic Plans, Fear Disruptions

10/22/2009 By Steve Bates




U.S.-based and multinational organizations are taking steps to prepare for an H1N1 pandemic amid increasing fears that the virus will hurt their operations, according to a new Society for Human Resource Management (SHRM) poll.

The poll report, The H1N1 Virus—How Prepared Is Your Workplace, compares the status of preparations among organizations in September 2009 with May 2009. Companies continue to be concerned about the virus, also known as swine flu, but their plans have shifted since the spring.

In May 2009, only 40 percent of organizations polled said they expected that the illness would have a moderate negative impact on them, while 57 percent said it would have no negative impact. In September 2009, however, 64 percent of respondents said the pandemic will have a moderate negative impact on their operations, while only 33 percent predicted that they will be spared negative impact. In each survey period, 3 percent expected a large negative impact on operations.

Small organizations (47 percent of those polled) are more likely than mid-sized (27 percent) and large ones (31 percent) to report that a pandemic will have no negative impact on their overall business operations. Mid-sized firms (71 percent of respondents) are more likely than small companies (52 percent) to forecast a moderate negative impact on operations.



From May to September 2009, the percentage of organizations reporting that they had a disaster preparedness plan for a major H1N1 virus outbreak declined slightly. Publicly owned for-profit and nonprofit organizations are more likely than privately owned for-profit organizations to have such a plan. Large companies are more likely than small ones to have a flu disaster plan.

The latest SHRM H1N1 poll, released Oct. 19, 2009, was fielded Sept. 15-28, 2009, building on similar questions asked of a randomly selected sample of SHRM members in May 2009.

Most companies that SHRM polled in September 2009 are not changing their paid leave policies during the flu season. Thirty-nine percent have modified their policies or plan to modify their policies to require a medical statement that an employee who has been sick can return to work. Twenty-seven percent of respondents have changed or plan to change their leave policies to accommodate persons in high-risk groups for H1N1 complications, such as pregnant women.

The new poll found that many organizations are planning to offer H1N1 vaccine to their employees, though the details vary significantly:

39 percent will offer it free to employees.
18 percent will offer it but will charge employees.
15 percent will offer vaccine to family members of employees, but employees will have to pay for it.
7 percent will offer it free to family members of employees.
7 percent will offer vaccine free only to at-risk employees.
6 percent will provide vaccine only to at-risk employees, and employees will have to pay for it.
Educating employees on flu prevention measures is the top strategy HR professionals are using to reduce the spread of the H1N1 virus in the workplace, with 89 percent of organizations providing such education. The next most common strategy is monitoring the situation by following guidance from governmental agencies and other organizations, used by 84 percent of SHRM poll respondents. An equal number are making available hand sanitizer, other disinfectants, masks and other flu prevention tools.

Three-fourths of companies say they have developed an employee communication strategy related to the virus. Almost that many organizations say they have informed employees not to come to work if they have flu and cold-like symptoms. More than 70 percent are disinfecting common areas of the workplace frequently.

Strategies that have not yet been implemented but are planned by organizations include:

Sending home those employees who come to work with flu and cold-like symptoms, planned by half of organizations polled.
Setting up telecommuting options for employees if there is an H1N1 virus outbreak in the employer’s area or region; 32 percent.
Informing employees not to come to work if they have flu and cold-like symptoms; 23 percent.
Securing anti-viral flu medication (e.g., Tamiflu) for employees (e.g., working with health care providers to ensure adequate medication supplies for employees); 16 percent.
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Most companies are not changing
their paid leave policies
during the flu season.
-----------------------------------------------------------------------

Organizations responding to the SHRM poll have made a variety of changes regarding employee travel since May 2009. More have implemented alternatives to business travel, such as use of video or audio conferencing. And more are restricting nonessential business travel in general. However, fewer companies say they are restricting employee business travel to and from regions where the H1N1 virus is confirmed; fewer are limiting business visitors from virus-affected regions; and fewer are curtailing product shipments to or from affected regions in the United States or elsewhere.

The proportion of organizations securing antiviral flu medication such as Tamiflu for employees dropped significantly from May 2009 to September 2009, from 52 percent of those polled to 25 percent.

Modest Hiring Gains for Manufacturing, Services Expected in October

The U.S. job market should offer increased opportunities for workers in the manufacturing and service sectors in October 2009, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey report for October 2009.

Though hiring was down in September 2009 compared with September 2008, the latest LINE report marks the fourth straight month that job additions will outpace layoffs in both the manufacturing and service sectors. September 2009 vacancies increased from September 2008 in three out of four job categories for manufacturing and services.

“Though the labor market remains weak, the pace of layoffs does appear to have slowed, and job seekers may find increased opportunities in both the manufacturing and service sectors in October,” said Jennifer Schramm, manager, SHRM workplace trends and forecasting. “Exempt job vacancies rose in both sectors and in nonexempt service-sector jobs, another indication that labor market conditions might be improving slightly.”

Employment Expectations	Manufacturing	Service
Hiring will surpass layoffs in October 2009 in both the manufacturing and service sectors.	-2.5	-6.4
Recruiting Difficulty
Both sectors reported little difficulty in finding top-level talent in September 2009.	-9.9	-10.1
New-Hire Compensation
Wages and benefits packages in both sectors rose at the slowest rate in five years during September 2009.	-6.9	-4.9

Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.

The LINE employment report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. These sectors employ more than 90 percent of the nation’s private-sector workers.

Employment, Vacancy Expectations

The LINE employment expectations index provides an early indication of the U.S. Bureau of Labor Statistics (BLS) numbers. The index has tracked in lockstep with national economic patterns since the recession began in December 2007. The last time the year-over-year change in this index was positive was November 2007. That will not change in October 2009, but for the fourth month in a row, more employers in the manufacturing and service sectors will add jobs rather than conduct layoffs.

In the manufacturing sector, a net total of 17.9 percent of respondents reported they will add jobs in October 2009 (33.3 percent will add jobs, 15.4 percent will eliminate jobs). That represents the highest net gain in hiring for manufacturing since October 2008. In the service sector, a net total of 13.4 percent of companies will add jobs in October 2009, the sixth straight month that the hiring rate will surpass the layoff rate in that sector.

LINE data cover exempt vacancies, or primarily salaried positions, and nonexempt vacancies, which are mostly hourly employees. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand.

Vacancies, or open positions that employers are trying to fill, for salaried jobs inched up in both sectors in September 2009, according to the LINE report. In the manufacturing sector, a net total of 10.7 percent of respondents reported increases in exempt vacancies in September 2009 (19.3 percent reported increases, 8.6 percent reported decreases). This is an increase of 2.8 percent from September 2008, and the second consecutive month that exempt vacancies have increased from the previous year.

In the service sector, a net total of 0.4 percent of respondents reported increases in exempt vacancies in September 2009 (10.9 percent reported increases, 10.5 percent reported decreases). For the service sector, this is the second consecutive month that exempt vacancies have risen from the previous year.

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‘Many organizations may hold off on adding
to overall head count while they try
to gauge the strength of the economy.’

Jennifer Schramm, manager, SHRM workplace trends and forecasting
-----------------------------------------------------------------------

Vacancies for nonexempt positions—or hourly jobs—also increased in the service sector in September 2009; however, they decreased in the manufacturing sector.

For nonexempt service positions, a net total of 6.9 percent reported increased vacancies in September 2009 (24.3 percent increased, 17.4 percent decreased). This marked a small jump from September 2008, when a net total of 0.8 percent of service companies reported increases in nonexempt vacancies.

A net total of 8.7 percent of manufacturing respondents reported that nonexempt vacancies increased in September (20.5 percent increased, 11.8 percent decreased). This is a net decline from September 2008, but the fact that more manufacturers had increased vacancies during the month suggests that work is being ramped up slowly at some companies.

In addition, the Federal Reserve reported that industrial production increased for the second straight month in August 2009.

“It is too soon to tell when demand might pick up,” said Schramm. “Many organizations may hold off on adding to overall head count while they try to gauge the strength of the economy. Instead they may try to make up for lost revenue by boosting the productivity of their existing staff or by taking on temporary workers.”

Recruiting Difficulty, New-Hire Compensation

Should companies choose to hire, however, there is skilled talent to be had. Both sectors reported little difficulty in landing top-level talent in September 2009, although the rate of increase in new-hire compensation falls behind the previous year for the 12th straight month.

LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. For the seventh consecutive month, LINE recorded single-digit response levels for those reporting increased difficulty with recruiting in September 2009. The low response totals can likely be attributed to fewer HR professionals engaged in recruiting during the economic downturn. And with an increased number of people looking for work, HR professionals can afford to be selective.

In the manufacturing sector, a net of 10.8 percent of companies reported less difficulty with recruiting in September 2009 (3.2 percent had more difficulty, 14.0 percent had less). In the service sector, a net of 7.3 percent of companies had less difficulty recruiting (9.8 percent had more difficulty, 17.1 percent had less).

With millions of people already seeking work and many others expected to resume their job searches as the economy improves, this trend in the LINE recruiting difficulty index is not likely to reverse soon.

The rate of increase for new-hire compensation has been falling for a year as some companies have been reducing the wages and benefits they are offering new hires in an effort to control costs. For the 12th straight month, increases in wages and benefits packages in September 2009 will fall behind totals from the previous year.

In the manufacturing sector, a net total of 0.3 percent of respondents said they would decrease new-hire compensation in September 2009 (3.2 percent increased, 3.5 percent decreased). That is the lowest September response total in five years for manufacturers reporting increases to new-hire compensation.

But in the service sector, more companies raised new-hire compensation rather than reduced it in September 2009. A net total of 5.6 percent of companies increased wages and benefits packages for new hires (6.9 percent increased, 1.3 percent decreased).

Still, this was a drop of 4.9 percent from September 2008, when a net total of 10.5 percent of service companies increased new-hire compensation.

“Recruiting difficulty and new-hire compensation rates remain down, indicating that this is still a very tough market for job seekers,” said Schramm.

Workforce readiness credentials demonstrate to businesses that potential employees have the skills needed to succeed.

By Diane Cadrain



At the crossroads where education meets employment, in community colleges and state one-stop centers, job seekers are flocking to work readiness certification programs. Employers value these work readiness or career readiness credentials because they document and verify that a job seeker has the skills and mind-set to perform either entry- or higher-level work. Job seekers want them because they prove that a person has the right academic and workplace competencies.

And money is available. The federal stimulus bill—the American Recovery and Reinvestment Act of 2009—has made more than $3.5 billion available for training. That money, says Labor Secretary Hilda Solis, will help dislocated workers "retool their skills and re-establish themselves in viable career paths."

Workforce readiness credentials provide jobless Americans with an opportunity to expand their skills and a demonstrable yardstick of their abilities and progress. For employers, many of whom say they can’t find enough qualified workers regardless of the nation’s economy, work readiness certifications help to bridge the gap between worker skill levels and the demand level for skills.

There are a number of programs where companies can look to find potential employees with the right skills, but a few programs dominate the field. Here’s a look at the most robust of them.

National Work Readiness Credential (NWRC)

This certification program, created by workforce development authorities in five jurisdictions (the District of Columbia, New Jersey, New York, Rhode Island and Washington), describes itself as a universal, transferable, portable national standard for work readiness. The NWRC is in use in 24 states, at sites varying from state labor departments to school districts, regional workforce boards and community colleges.

"Participation is increasing. We’re getting a lot of inquiries," says Joe Mizereck, executive director of the National Work Readiness Council, the organization overseeing and managing the use of the credential. He notes that "we’ve added 15 to 20 [testing and evaluation] sites" over a two- to three-month period.

The credential is appropriate for those who are entering the workforce for the first time, those returning to the workforce after some time away and those transitioning from one industry to another. It’s designed to develop the skills needed for typical entry-level jobs, defined as non-supervisory, non-professional positions for which one doesn’t need technical education beyond on-the-job training.

"The four test areas are math, reading, oral language and situational judgment. We test for reading and math in the context of business situations," explains Mizereck.

In the retail world, where customer service is crucial, Mizereck says, retailers like drug chain CVS and discount chain Dollar General value the NWRC for its ability to test for soft skills such as situational judgment.

"Situational judgment stresses the value of working on a team, of calling in sick when you can’t come to work," Mizereck explains. "Employers say, ‘If you can give us people with soft skills, we’ll train them.’ So we help people develop the soft skills."

National Career Readiness Certificate (NCRC)

Not to be confused with the National Work Readiness Credential, this certification program is a product of national testing organization ACT—known for its college testing programs—and is based on ACT’s WorkKeys system. It tests for core employability skills in three areas: reading for information, locating information and applied math. It also tests for work habits such as carefulness, cooperation, discipline and drive.

"Over half the states use WorkKeys to power their career readiness certification programs," says Martin Scaglione, president and COO of the ACT Workforce Development Division.

The process starts with job profiling, which involves looking at jobs, identifying tasks and doing an analysis of skills required to be successful at those tasks. "The profiling is a key component," says Scaglione.

Employer input starts there, as a certified job profiler from a local technical college works with company employees who are subject-matter experts in each job. Together, the profiler and employee experts work to define the tasks and skills needed to perform each job successfully. Once the job profiles are completed, the company has a tool to accurately describe to educators, students and job applicants the specific job skills needed.

"At this point ACT has 16,000 profiles, identifying tasks on jobs from baker to zookeeper, and covering 85 percent of all jobs today," says Scaglione. The WorkKeys tests result from the profiling process.

"Some states have their own names for the certificate—for example, Georgia calls it Georgia Work Ready, and Florida calls it Florida Ready to Work," Scaglione adds.

States that use the NCRC under their own state-specific names include, in addition to Florida and Georgia, Alabama, Arkansas, Indiana, Kentucky, Mississippi, Montana, North Carolina, Oklahoma, South Carolina, Tennessee, Virginia, West Virginia and Wyoming. States that use the NCRC under its own name include Alaska, Iowa, Louisiana, Michigan, New Mexico, Ohio and Oregon (pending). Regardless of what name is used, the programs are functional equivalents.

State workforce development agencies typically administer the certification programs. In Georgia, for example, the Georgia Work Ready program is the keystone of the Governor’s Office of Workforce Development.

Deborah Lyons, executive director of the Governor’s Office of Workforce Development, says business is booming at Georgia Work Ready. "We’re now giving out 5,000 certificates a month, compared to a more usual average of about 3,000. In the last 18 months, 53,000 were earned."

The program targets four groups: high school seniors, college and technical college students, the unemployed, and GED holders, says Lyons, and employers have a lot of input on the delivery of Georgia Work Ready training.

Applicant participation begins with administration of the Georgia Work Ready assessment, after which the test taker receives scores in applied mathematics, locating information and reading for information. Then a Georgia Work Ready administrator at a local technical college will administer "gap training"—a program that allows test takers to focus on the areas where they need to improve.

"On a regional level, we build strategies around particular industries," explains Lyons. "We get industry leaders to build the initiative. They identify high-demand jobs, identify the necessary training and build career pathways."

One example of Georgia Work Ready’s vigor is its bioscience initiative, a linking of education, workforce development and training to the needs of the bioscience industry, which, in a 13-county area of north central Georgia, includes entities such as the federal Centers for Disease Control and Prevention, Emory University, the University of Georgia, and a growing number of pharmaceutical and medical manufacturing companies. In that geographic area, Georgia Work Ready has produced specialized training programs to develop a skilled labor pool able to work in clinical, research and manufacturing jobs in the industry.

And the training and certification are transportable across state lines. "Everyone tested gets a number," says Lyons. "Employers go on the site, key in a number and get that person’s score. That person is in the national WorkKeys database."

In Michigan, which started using the credential through its local workforce agencies in July 2009, state workforce development officials are reaching out to employers to make sure that they understand the value of the credential.

"Employer involvement is a critical part of our strategy," says Keenan Wade, manager of the Business and Industry Training Section of the Michigan Department of Energy, Labor, and Economic Growth. "They have to value it."

Workforce Skills Certification System (WSCS)

The WSCS is a product of Comprehensive Adult Student Assessment Systems (CASAS), a California-based organization that is also the creator of a number of other assessment tools. Originally created by a consortium of schools and employers in the Sacramento area, the WSCS is currently in use at the Seattle/King’s County Workforce Board in Washington state and at the Hartford Workforce Board in Connecticut.

The WSCS assesses basic skills in people who are functioning at the lower end of the skills continuum. Those who receive the certification are considered capable of passing a GED. Its target population includes people new to the workforce, incumbent workers and dislocated workers.

CASAS Program Director Jane Eguez says the WSCS complements the ACT WorkKeys program. "They measure different types of skills," says Eguez. "WorkKeys measures skills at a higher level. The WSCS is the beginning of the continuum, and the ACT test is at the end."

Workforce Alliance for Growth
In the Economy (WAGE)

This program only operates in Arkansas, but participation there is booming. "We’ve served 8 percent more students from March 1 to May 17, 2009, than in the same period last year, which equates to 511 students," says WAGE Coordinator Paige Cox. "Last year, we opened two new WAGE centers, one in Camden and one in Little Rock."

The WAGE program, which other states have studied, targets people new to the workforce and incumbent workers whose skills range from a sixth-grade to a 12th-grade level.

As with the other certification programs, employers customize the training, individually and on the local level.

"Our instructors go out into business and industry and do a ‘literacy task analysis,’ analyzing the skills needed to be successful on a particular job," says Cox. "Then they test employees’ current skill levels and customize the training."

In fact, Cox says, WAGE is so successful in Arkansas that a number of businesses there require WAGE certification and give WAGE certificate holders preference in hiring. "We’re providing the skills that business finds useful," says Cox. "WAGE participants are getting jobs."

Gradual Improvement Expected for August Hiring

8/7/2009 By Theresa Minton-Eversole



Layoffs continue to permeate the labor market, but more companies in the manufacturing and service sectors are hiring compared with the first few months of 2009, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) Report survey for August 2009.

Hiring expectations in August will lag from those of 2008. Though hiring is down in August 2009 compared with the same time in 2008, more companies in the manufacturing and service sectors will add jobs rather than conduct layoffs. In fact, August 2008 marks the highest level of hiring in the manufacturing sector since October 2008. In the service sector in August, the hiring rate will surpass the layoff rate for the fourth consecutive month.

This news builds on some recent evidence that the job market is gradually improving, albeit very slowly.

“Though year-over-year increases in the employment expectation index have not been positive since November 2007 and remain down in August, this is the second month in a row when more employers in both the manufacturing and service sectors expect to add jobs rather than conduct layoffs,” noted Jennifer Schramm, manager, SHRM workforce trends and forecasting.

Wages and benefits packages for new workers, however, continue to decline. New-hire compensation rose at the slowest rate in July 2009 in five years in the manufacturing and service sectors.

Employment Expectations	Manufacturing	Service
Employment expectations are at five-year lows for August in both manufacturing and service sectors.	-11.5	-2.8
Recruiting Difficulty
Recruiting difficulty in both sectors in July 2009 is down compared with a year ago.	-5.5	-29.7
New-Hire Compensation
The rate of increase for wages and benefits packages in July 2009 has fallen compared with a year ago in both sectors.	-0.7	-8.2
Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.

The LINE Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing- and 500 service-sector companies. Together, these two sectors employ more than 90 percent of the nation’s private-sector workers. The SHRM LINE indices are not seasonally adjusted, however, so users are encouraged to take seasonality into consideration by comparing the LINE indices for the current month with the comparable LINE indices for the same month one year earlier.

Employment Expectations, Recruiting Difficulty

The LINE Report’s employment expectations index has tracked in lockstep with national economic patterns noted by the U.S. Bureau of Labor Statistics (BLS) since December 2007, when the nonprofit National Bureau of Economic Research said the recession began. The last time the year-over-year change in this index was positive was November 2007. That more employers in the manufacturing and service sectors will add jobs rather than conduct layoffs in August 2009 will not change that fact.

In the manufacturing sector, a net total of 11.0 percent of respondents reported they will add jobs in August 2009. In the service sector, a net total of 16.9 percent of companies will add jobs in August.

LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.

“Recruiting difficulty continues to hover at record lows,” said Schramm. “For the first time in five years in July [2009] and for the fifth consecutive month this year, LINE recorded single-digit response levels for those reporting increased difficulty with recruiting.”

The low response totals can likely be attributed to fewer HR professionals engaging in recruiting coupled with an increased number of people looking for work. Under such circumstances, HR professionals can afford to be selective.

In the manufacturing sector, a net of 13.1 percent of companies reported less difficulty with recruiting in July 2009 (2.8 percent had more difficulty, 15.9 percent had less). This is the second year in a row in July that more manufacturers reported an easier time recruiting in July than those who reported having more difficulty.

In the service sector, a net of 19.9 percent of companies had less difficulty recruiting in July 2009 (3.0 percent had more difficulty, 22.9 percent had less). With millions of people seeking work and fewer opportunities that exist, this trend in the LINE recruiting difficulty index is not likely to reverse in the near future.

New-Hire Compensation

With hiring down during the recession and a large pool of job seekers in the market, some companies are reducing the wages and benefits they are offering new hires in an effort to control costs.

In the manufacturing sector, a net total of 0.3 percent of respondents said they would decrease new-hire compensation in July 2009 (3.1 percent increased, 3.4 percent decreased). That’s the lowest July response total in five years for manufacturers reporting increases to new-hire compensation.

In the service sector, the trend of reducing new-hire salaries and benefits was slightly more pronounced. A net total of 1.6 percent of companies reduced wages and benefits packages for new hires in July 2009 (2.4 percent increased, 4.0 percent decreased).

“Many companies are continuing to reduce the wages and benefits they are offering new hires,” Schramm said. “With so many job seekers out looking, employers are finding it much easier to shrink these new-hire pay packages in their efforts to control costs and still find a ready pool of qualified job candidates willing to work at these reduced rates.”

Exempt, Nonexempt Job Vacancies

LINE Report data cover exempt vacancies, or primarily salaried positions, and nonexempt vacancies, mostly hourly wage positions.

In the manufacturing sector, a net total of 3.0 percent of respondents reported increases in exempt vacancies in July 2009 (15.3 percent reported increases, 12.3 percent reported decreases). Among the major job sectors, manufacturing had the second-lowest number of job openings in May 2009, trailing only the construction industry, according to the BLS.

In the service sector, a net total of 10.3 percent of respondents reported declines in exempt vacancies in July 2009 (12.0 percent reported increases, 22.3 percent reported decreases). The tight hiring conditions detailed in LINE match other data. In May 2009, there were 2.6 million job openings in the U.S.—a decline of 1.5 million from May 2008, according to the BLS.

In contrast, nonexempt employment typically decreases by a greater percentage than exempt employment during economic downturns and increases by a larger percentage during economic expansions. Nonexempt vacancy levels did not change much in July 2009 from the same time in 2008 in either sector.

A net total of 6.9 percent of manufacturing respondents reported that nonexempt vacancies decreased in July 2009 (17.2 percent increased, 10.3 percent decreased). July’s data matches that of July 2008, when manufacturing respondents also reported a slight increase in nonexempt vacancies.

For nonexempt service positions, a net total of 6.1 percent reported increased vacancies in July 2009 (18.2 percent increased, 12.1 percent decreased).

Q3 Employment Outlook: More Market Optimism, Dismal Hiring Plans

By Theresa Minton-Eversole




There are signs of increased faith in the U.S. job market for the third quarter of 2009, although many companies are still having difficulties projecting their hiring plans, according to the latest Labor Market Outlook (LMO) Survey by the Society for Human Resource Management (SHRM).

The survey examines recruiting and hiring trends across six months based on a quarterly survey of public- and private-sector human resource professionals at small, medium and large U.S. firms who have a direct role in the staffing decisions at their companies.

“The good news is that HR professionals are more optimistic about the third quarter than they were in the first half of the year,” said Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. “But the bad news is that they continue to forecast fairly flat payrolls throughout the quarter.”

Thirty-five percent of the nearly 500 HR professionals who responded to an e-mail survey sent to SHRM members in February 2009 said they believe that the job market will improve somewhat during the third quarter of 2009. Another 29 percent said they were neither optimistic nor pessimistic about job growth during the quarter.

Thirty-seven percent of respondents said they were pessimistic about U.S. job growth and expect increased job losses. This, however, is a major reversal from the LMO survey for the second quarter of 2009, when 70 percent of respondents expressed pessimism and predicted deeper cuts in the job market.

The degree of optimism did not vary much by U.S. geographical region. Not surprisingly, respondents from the Midwest and Southeast regions expressed the highest degree of pessimism (39 percent), while those in the West expressed the greatest degree of optimism (41 percent).

Even with the boost in confidence, many respondents said their companies are planning to hold the line on hiring in the third quarter. A majority of respondents (56 percent) said they will remain at their current staffing levels in the third quarter. In every size category of company that responded to the survey, at least 72 percent of respondents plan to keep payrolls flat or eliminate jobs in the third quarter of 2009. The highest concentration of respondents who are maintaining or decreasing total staff (86 percent) came from large companies, those with more than 500 employees.

Twenty-one percent of companies expect to hire in the third quarter. Privately owned for-profit entities (29 percent) report adding the most jobs, followed by the government sector (24 percent), publicly owned for-profit companies (18 percent) and nonprofits (14 percent).

Government data support these findings, showing that hiring conditions are still difficult but are improving. In May 2009, for example, employers eliminated 345,000 jobs—a terrible month by many standards but only about half the average monthly decline for the prior six months, according to the U.S. Bureau of Labor Statistics (BLS).

Risks of Wage Stagnation

Though less attention has been paid to the trend, many companies are increasing their use of wage freezes and salary cuts. The result: Wage growth has slowed to levels not seen in decades. If the trend continues, experts say, it could have a prolonged negative impact on the country’s economic recovery.

While little current data is available to suggest that wages have taken a downward spiral, there is evidence of corporate cutbacks used to control operating costs. For example, companies that intend to raise salaries in 2009 intend to increase workers’ wages only by a median 2.5 percent, according to SHRM’s 2009 Human Capital Benchmarking Survey. This is down from 3.5 percent in 2008 and the lowest increase in the survey’s five-year history.

Equally troubling, writes Joe Coombs, report author and specialist for SHRM workplace trends and forecasting, is that some of the largest U.S. job sectors are raising salaries below that median rate in 2009. Take durable goods: Manufacturers are planning a nominal 1.5 percent wage increase, while professional, scientific and technical services companies collectively expect to increase wages by only 1.9 percent, according to survey data. Further, government sector employers report they’ll raise salaries by just 2.1 percent in 2009.

Salary cuts, unlike freezes, are extremely rare during periods of slow economic growth, though many employers are not shying away from them during this recession. Compensation for new hires is being curbed at a rapid rate, according to data from SHRM’s Leading Indicators of National Employment (LINE) Report, which show that the rate of increase for new-hire compensation from November 2008 to June 2009 fell in the manufacturing and service sectors from the previous year.

Because new-hire compensation growth is a leading indicator of overall wage trends, this suggests that at this point in the recession, overall compensation rates for all workers might begin to be affected.

The BLS has tracked compensation costs for more than 30 years on a quarterly basis, and its employment cost index (ECI) numbers for the first quarter of 2009 caused many observers to do a double-take. For the January to March 2009 time frame, wages and salaries for private industry workers rose just 0.2 percent from the previous quarter—the lowest increase since the BLS began recording the data in 1975.

“There is a fair amount of information that shows things are particularly weak,” said BLS economist Wayne Shelly in the report. “You can clearly see the deceleration.”

Shelly noted, however, that for the past 10 years the index has remained relatively flat and has stayed ahead of the Consumer Price Index. And low inflation has made it harder for employees to get upset over small pay increases.

If unemployment remains elevated for years and is coupled with depressed wages, it will have a resounding effect on the economy’s ability to recover. For starters, low salary growth rates will impact consumer spending, which could lead to a significantly negative impact on the overall economy.

In addition, “the suppression of wage increases is clearly a potential morale killer for employees,” writes Coombs. “It could also lead to loss of loyalty from workers and, without adequate compensation, top-tier talent can quickly develop a roving eye for work elsewhere. [So] for some small employers, this may be a good opportunity to hire highly qualified job candidates.”