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June 1998


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USE RETENTION BONUSES DURING REORGANIZATIONS

Retaining key employees through a downsizing or reengineering can be tough, so more employers are offering retention bonuses, according to a nationwide survey on severance policies conducted by New York-based Coopers & Lybrand L.L.P.

The bonuses have become so popular that 43 percent of employers offered them in 1997, up from only 14 percent in 1995, the survey reports. Middle managers are the most likely recipients, followed by exempt employees. How much do the bonuses usually cost? Most companies offer 10 percent of non-management employees' salaries and 50 percent of management or executive employees' salaries. Some companies offer flat dollar amounts of anywhere from $1,000 for nonexempt employees to as much as $40,000 for senior management. In 74 percent of the surveyed companies, the bonus is paid as a lump sum at the time of termination.

Approximately 70 percent of the companies polled said the bonuses were effective in holding employees for the desired period of time and in making the downsizing or reorganization process successful, according to the survey.

HRM Update

ELECTRONIC RECRUITING BECOMES INCREASINGLY POPULAR

The percentage of corporate human resource executives using electronic sources to find job candidates soared to 88 percent last year, up from 40 percent two years ago, according to a survey by the international career services firm Lee Hecht-Harrison.

An increase in the use of electronic sources - such as the Internet, electronic resume banks, and internal job posting systems - was expected, but the extent to which HR executives have embraced the technologies is surprising. Clearly HR professionals are finding that these tools are very useful in terms of saving time and uncovering candidates they might not otherwise know about.

Some HR departments used the new technologies repeatedly, the survey found. Of the 465 human resource executives polled, 26 percent used the Internet more than 20 times last year to find job candidates. Nearly a third used it one to five times.

HR professionals are most likely to use the Internet to fill positions paying between $25,000 and $60,000. Thirty percent would use the Internet to fill jobs paying $60,001 to $80,000, and fewer than 20 percent would use it for jobs under $25,000 or over $80,000.

Lee Hect Harrison

HELP FOR THE SUPPLY OF HIGH TECH WORKERS

The demand for computer scientists, engineers and systems analysts will double over the next 10 years - creating a need for more than 1 million additional high-skill employees, according to projections from the U.S. Department of Labor.

As a result, Uncle Sam is taking several steps to help boost the supply of high tech employees. The initiatives taking place this year include agency efforts geared at

Expanding industry involvement in school-to-work programs. The Labor Department, in conjunction with the Department of Education, will provide up to $6 million in grants for industry groups that expand private sector involvement in school-to-work.

Upgrading the skills of the existing workforce. The Labor Department will invest $3 million in demonstration projects - in partnership with employers and training providers - to train dislocated workers for high tech jobs.

Continuing the national dialogue. The Department of Commerce will convene four town-hall meetings this year where representatives can discuss IT workforce needs, identify best practices and showcase successful models that others can replicate.

HRMagazine

EMPLOYERS PAY RETENTION BONUSES

Employers are willing to pay extra in the form of retention bonuses to keep good employees around during periods of "organizational transition," according to a recent survey of 829 employers by Philadelphia-based Right Management Consultants.

In all, 44 percent of the respondents said they used retention bonuses to keep top performers from leaving during plant closures, mergers, acquisitions, and other major organizational shifts. Over half of the surveyed employers in the telecommunications, financial services, and energy/utilities industries had a practice of providing retention incentives, making them the most likely to offer the bonuses.

The most common bonus amounts ranged from 25 percent to 50 percent of an employee's annual base pay, the survey found. When a fixed dollar amount was used, the range among respondents was $1,300 to $20,000.

More than half of those surveyed said they required employees to agree in writing that they would work through the end of the transition in order to receive the bonus. Up to 98 percent of the employees who signed the agreements did stay on for the designated period, the survey reported.

Bulletin to Management

WHY DO EMPLOYEES LEAVE?

In exit interviews, workers are more likely to say they changed jobs for more money than for any other reason, according to a nationwide survey conducted by Coopers & Lybrand L.L.P. But departing workers may not be willing to say what they truly feel in an exit interview.

"Most people feel comfortable saying they are leaving for better pay, but in many cases, the real reason is more profound," says Carl Weinberg, a partner with Coopers & Lybrand L.L.P. in New York. "To improve employee retention and avoid the high costs associated with new hires and training, employers need to identify the root causes of turnover. In our experience, there is usually a significant gap between the expectation of the employment deal that the employer created and the reality of the job. This gap weakens commitment and pushes good people out the door."

Sixty-three percent of respondents cited a higher salary as the reason for switching jobs. Relocating was the next most common answer, given by 47 percent of respondents. Other reasons for leaving included lack of career advancement (offered by 39 percent of respondents), an offer for a better position (37 percent), dissatisfaction with a current position (28 percent), a desire for a career change or to stay home with family (27 percent for both responses) and dissatisfaction with the organization (20 percent).

(Response totals do not add up to 100 percent because more than one reason could be given.)

Coopers & Lybrand



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