CASE 6

Health and Wellness

This week we will be looking at a case involving health and safety in the workplace. First up is a young man in London suffering a fatal seizure after working three days straight until 6 a.m. as an intern at Merrill Lynch in order to secure employment at the banking giant. In 2013, 21 year old Mortiz Erhart, a German national interning at Bank of America Merrill Lynch was found dead from complications stemming from an epileptic seizure in the shower at the student facility he was staying at. Mr. Erhart had been reportedly working long hours and maintaining an inhuman sleep schedule in the hopes of outshining his fellow interns and claiming a coveted spot at the mega bank. Mr. Erhart had suffered from 1-2 seizures a year since 2010, a fact that he did not disclose to his co-worker, nor on the medical paperwork he filled out before starting with the firm. Although from all accounts he had been happy, healthy, and managing his condition with medication, his parent contest that the probable source of his fatal seizure was exhaustion brought on by overwork.

Although, Merrill Lynch was not found at fault for the young man’s death, his passing did spark criticism about the banking industry’s culture of competition and the firm’s management of its employee’s workload. Could a health and wellness program have possibly avoided this tragic outcome? Can a culture of safety avoid people from overworking themselves?

OSHA, while not the governing body in this case, give some advise on these matters, stating: “Managers and supervisors should learn to recognize signs and symptoms of the potential health effects associated with extended and unusual work shifts. Workers who are being asked to work extended or irregular shifts should be diligently monitored for the signs and symptoms of fatigue. Any employee showing such signs should be evaluated and possibly directed to leave the active area and seek rest.” The aforementioned monitoring suggested above was not in place to for Mr. Erhart, nor for anyone else at the Merrill as they have no “punch clock” or any other system designed to monitor their employees’ working hours.

Joshi Herrmann at The Independent ran a story in August of 2014 titled “A year on from intern Moritz Erhardt's death, has banking industry changed its ways?” exploring the changes that Merrill has implemented to avoid another tragedy. The banking juggernaut now hires 40% more interns as a measure to promote work/life balance among its young up-and-comers. Other initiatives designed to dissuade interns from burning the candle at both ends include a no working on the weekends policy, accrual of 4 vacation days during the internship period, and managers designated to monitor intern workload. A number of other measures have been adopted throughout the industry in response to Mr. Erhart’s death, such as gym memberships and wellness programs. These measures may be unrealistic in the high stakes world of investment banking. One anonymous source interviewed in the article says that when he asked for the membership form for the gym, he was told by a his manager that he should go for a run before early in the morning before he is needed and more or less forget about the gym.

While the investment banking industry may not be the poster-child for successful health and wellness programs, there have success stories. American medical and beauty supply heavy Johnson & Johnson claim that their wellness program have saved them a whopping quarter billion dollars in medical payouts over the last decade. Big-box hardware store Lowes has seen a sharp decline in employee smoking rates by offering up to $100 a month toward employee insurance premiums. For other successful wellness programs—as well as some additional info on Johnson & Johnson—check out the video from the Institute for Health and Productivity Studies below.

Promotion of health and wellness may be beneficial for many companies, safety is a chief concern for all organizations. In 2014, there were upwards of 3,700 workplace deaths in the EU alone. Another 4,500 occupational fatalities occur in the United States every year. In 2013, workers compensation payouts totaled $63.6 billion in the US. While compliance with regulation is paramount, prevention and training is the best way for businesses to curtail rising worker’s comp insurance premiums and maintain a productive workforce. OSHA, a US regulatory body underneath the Deptartment of Labor governing worker safety requires companies to log every instance of workplace accident. This practice may now be in danger. Check out the embedded NPR broadcast below to learn more.


As stated in the absolutely brutal PSA’s embedded below, “There are no accidents”.

Sources:

Ec.europa.eu. (2017). Accidents at work statistics - Statistics Explained. [online] Available at: http://ec.europa.eu/eurostat/statistics-explained/index.php/Accidents_at_work_statistics [Accessed 30 Mar. 2017].

Greenfieldboyce, N (2017). Congress May Undo Rule That Pushes Firms To Keep Good Safety Records. [online] Available at: http://www.npr.org/sections/health-shots/2017/03/20/520589621/congress-may-undo-rule-that-pushes-firms-to-keep-good-safety-records [Accessed 30 Mar. 2017].

Herrmann, J. (2014). A year on from intern Moritz Erhardt's death, has banking industry. [online] The Independent. Available at: http://www.independent.co.uk/news/business/analysis-and-features/a-year-on-from-intern-moritz-erhardts-death-has-banking-industry-changed-its-ways-9652559.html [Accessed 30 Mar. 2017].

Institute for Health and Productivity Studies. (2017). Extraordinary Workplace Wellness Programs. [online] Available at: https://www.youtube.com/watch?v=s-QbV_OstxQ [Accessed 30 Mar. 2017].

Kennedy, M. (2013). Bank intern Moritz Erhardt died from epileptic seizure, inquest told. [online] the Guardian. Available at: https://www.theguardian.com/business/2013/nov/22/moritz-erhardt-merrill-lynch-intern-dead-inquest [Accessed 30 Mar. 2017].

Lebowitz Rossi, H, (2017). 5 hallmarks of great corporate wellness programs. [online] Available at: http://fortune.com/2015/04/13/corporate-wellness/ [Accessed 30 Mar. 2017].

Morgaine, B. (2015). Do Corporate Wellness Programs Really Work? | LivePlan Blog. [online] LivePlan Blog. Available at: https://www.liveplan.com/blog/2015/10/does-corporate-wellness-work-the-surprising-truth-about-employee-wellness-programs/ [Accessed 30 Mar. 2017].

Moshinsky, B (2013). Bank of America Intern’s 5 A.M. E-Mail Before Death Worried Mom. [online] Available at: https://www.bloomberg.com/news/articles/2013-11-22/bank-of-america-staff-quizzed-as-coroner-probes-intern-s-death [Accessed 30 Mar. 2017].

Mylowesbenefits.com. (2017). Tobacco-Free Discount Increased in 2016 | Lowes Benefits. [online] Available at: http://mylowesbenefits.com/drawer/tobacco-free-discount-increased-in-2016/ [Accessed 30 Mar. 2017].

Osha.gov. (2017). Extended Unusual Work Shifts. [online] Available at: https://www.osha.gov/OshDoc/data_Hurricane_Facts/faq_longhours.html [Accessed 30 Mar. 2017].

Osha.gov. (2017). Worker Fatalities Reported to Federal and State OSHA | Occupational Safety and Health Administration. [online] Available at: https://www.osha.gov/dep/fatcat/dep_fatcat.html [Accessed 30 Mar. 2017].

Social Security Administration  Research, Statistics, & Policy Analysis  (2015). Annual Statistical Supplement, 2015 - Workers' Compensation Program Description and Legislative History. [online] Ssa.gov. Available at: https://www.ssa.gov/policy/docs/statcomps/supplement/2015/workerscomp.html [Accessed 30 Mar. 2017].

Thomas, E. (2013). 'Exhausted' Merrill Lynch intern died from epileptic fit in shower. [online] Available at: http://www.dailymail.co.uk/news/article-2511911/Moritz-Erhardt-exhausted-Merrill-Lynch-intern-died-epileptic-fit.html#ixzz4RTj2xoP1 [Accessed 30 Mar. 2017].

YouTube. (2017). Workplace Accidents - Prevent-it. [online] Available at: https://www.youtube.com/watch?v=3jLGkmOVtnI [Accessed 30 Mar. 2017].

CASE 5

To the victor go the spoils?

This week we’ll be looking at a TED talk where author, Al Gore speechwriter, and business guru Dan Pink rolls out an opposing viewpoint to the traditional method of incentivizing modern employees with monetary benefits. But first let’s take a look at some of the current strategies in place to build a compensation and reward structure within an organization.

Weighing internal equity vs. external equity

When deciding on the pay scale of an individual position, an organization must decide how much weight should be given to the needs for the position within the company compared to their core activities versus what the market rate for the job presently is. When researching the market for an appropriate pay scale, one can find a huge range being offered to a given position—largely due to the aforementioned “internal equity” determined by various companies in the market.

Fixed vs. variable pay

Means what it says on the tin. Deciding on whether or not an employee should be paid a fixed, expected salary or if the salary should fluctuate depending on the employee’s or the overall business’s performance.

Performance or membership

Similar to the fixed versus variable debate, but tying compensation to an individual’s performance, the team’s, or the organization’s overall performance.

Job vs. Individual

Will an organization pay a different rate for a superstar employee compared to a mediocre performer in the same position or decide to pay all employees within the same pay scale for the position?

Below-market vs. above-market

This one is also pretty self explanatory. This decision revolves around the question of value of the position within the company. The decision to pay below-market rate may not only come from lack of value placed in a particular position but could also stem from a sense of prestige or positive resumé fodder for young promising talent. This may come at the cost of them “graduating” from the position to seek greener, more lucrative pastures.

Monetary vs non-monetary rewards

This will be the crux of the case we will be discussing shortly. Monetary rewards are exactly what they sound like, but may not be the best motivator. Non-monetary rewards can be paid time off, in-house child care, employee recognition awards, free lunches, free time to develop passion projects (like Google’s since abandoned "20% Time") or a endless number of other benefits.

Open vs. secret pay

Some organizations will dissuade employees from divulging their salaries to other workers to avoid conflict. While on the other side of the spectrum, some organizations publish their payroll within the company or even to the general public .

Centralization vs. decentralization

The question of whether or not to have all salary decisions made from a centralized segment of the organization or made individually by managers and departments.

Like all things in business, there is no silver bullet solution. Most of the above mentioned compensation methods exist as a spectrum rather than in a binary state. The best fit for an individual organization depends on the goals and culture of the business and its industry.

Compensation tools

Job based compensation plans

This is the predominant method of compensating workers in the United States. Striving to create a balance between internal, external, and individual equity. This method creates a hierarchical structure of jobs within in the organization, compares them with their market value, and assesses the individual based on experience, seniority or performance.  This method has it’s drawbacks as it forces an organization to strictly and subjectively categorize its different positions and doesn’t always take into account the difficulty of the tasks required and the rapid changes that may be taking place within the positions. This method may also plays directly against organizational efforts to avoid disenfranchising women and minorities and may institutionalize wage gaps.

Skill based compensation plans

This method starts all employees at a similar rate and rewards its employees based on development and/or performance. This method can bolster cross training initiatives and can give you a more manageable, well rounded staff. This method may come with a high price tag. If employees take advantage of all the training and development programs available, payroll costs can increase without the needed increases in revenue to support it. Thus, this method requires thoughtful implementation and careful oversight.

Paying for performance

When incentivizing employees most organizations directly link performance with pay increases; this ideology, when viewed too myopically, may have some significant disadvantages.

Author Dan Pink, believes that just strictly offering a monetary reward for performance may actually stifle creativity and lateral thinking in modern day workers. His claims—backed by a study (which has its detractors) from the London School of Economics—state that when offered a large incentive to solve a problem, all but the most mechanical parts of our brain effectively stop functioning. His theory posits that what really drives critical thinking and creativity is a three pronged approach consisting of: autonomy, mastery, and purpose. Rather than holding a sword of Damocles over an employee’s head or offering a payout large enough to cloud judgment, one should be challenged to master a skill that they deem important, to work toward something greater than themselves, and to have enough autonomy to create and work without inhibiting factors.

This philosophy is not inherently anti collaborative. Nor is it in opposition to common goals between employer and employee. While basing incentives on pure performance may work in very specific fields or business models, they can be disastrous in others. This focus on performance may lead team members to hold back valuable information from one another or attempt to sabotage each other to achieve greater personal success. It can also present opportunities for reckless and dangerous behavior, as seen in Lehman Brothers executives making incredibly risky financial bets in the name of personal bonuses, thus leading to the tanking of the US housing market and the global financial crisis of 2008.     

Performance based incentives may not be based on an individual's performance alone. Although performance and skills should be taken into account to avoid disenfranchisement, employees can be incentivized on a macro scale as well. Other approaches can include equally distributed profit sharing programs, team/organization-wide bonuses, or any other large scale incentives.

Balancing rewards it a challenging for any organization, regardless of size or practice. When building an appropriate compensation system one must carefully weigh the company’s needs and goals against those of their employees and strive to create value for all involved. There are no easy solutions.   



Sources:

Gomez-Mejia, L., Balkin, D. and Cardy, R. (2016). Managing Human Resources. 8th ed. Essex: Pearson Education Limited, pp.315-387.

Pink, D. (2017). The puzzle of motivation. [online] Ted.com. Available at: https://www.ted.com/talks/dan_pink_on_motivation?language=en [Accessed 16 Mar. 2017].

CASE 4

Learning and Development

In this week's post we will be looking at learning and development through the lens of two separate cases. Unlike previous posts, these cases are not problems that require solutions but cases which illustrate exemplary training programs and their benefits.

First, will be looking at restaurant chain, Nando’s, and its holistic approach to training and team building. By training all levels of employees, Nando’s have grown to over 1,000 locations in 30 countries, while maintaining high standards of customer service and more than quadrupling their sales. Nado’s selects two employees from each location to their buddy program, where they are taught to design compelling and targeted training exercises for their staff. All levels of management get whisked away from their comfort zones and live communally (bunk beds and all) and participate in team building exercises. By maintaining a culture of training, Nando’s has ensured that it can withstand any growing pains while maintaining a ‘family feel”.

In our second case, McDonald’s is using a strategy of gamification and emergent technology to better train its managers and staff to deliver a better product and create and capture value. In 2012, McDonald’s began using a game featured on the company’s intranet, designed to simulate serving an increasing number of customers on the fast-food chain’s new registers. The training simulation masquerading as a game quickly became a smashing success, with upwards of 50,000 users in the weeks after launch. Thus, saving McDonald’s an estimated $1.5-2.5 million in training. This was no mere flirtation with gaming, as now McDonald’s is implementing a virtual reality program to train managers tasked with implementing its new made-to-order preparation in its UK stores. The program, developed with tech-trainer Kallidus, tasks managers to run a shift in the new concept stores with their “JiT” model, allowing them to make learn and mistakes without the risk of losing revenue or jeopardizing customer relationships.

The proliferation of VR technologies mean that simulation training isn’t just for dangerous or expensive work anymore. Primarily used by militaries, surgeons, police forces, and the air travel industry, VR simulation training has been shown to greatly reduce the stress of an unknown environment by giving the trainee a taste of what's to come and developing a skillset to deal the challenges of the new setting or system. Although VR and gamification may be the new hotness when it comes to employee training and development, let us not forget the other flavors that can be used to teach and motivate staff.

On the Job - includes apprenticeships, internships, and job rotation. A classic and most used method for training. While allowing an employee to experience the real thing, it also opens you up for productivity loss and presenting a less polished, less professional image to your customers.

Presentation Methods - While most people are trained predominantly on the job, many companies utilize a number of other methods for training. These methods may be supplementary to OJT, be required before work begins, be presented throughout an employee’s career, or all of the above. They can include, presentation of audio/video, slides, webinars, workshops, role-play, collaborative exercises, courses from external educational institutions, simulations, board games, mentorships, and the list goes on and on.

Although the training methods can vary widely, the goals can usually be boiled down to a few distinct types: skills training, retraining, cross-functional, team, creativity, diversity and ethics.  

The methodology of an organization’s training program—like most things in business—relies heavily on the particular business’s needs and goals. While formulating the program, one must consider not only the organization’s needs but that of the employee as well. Once the individual needs are assessed and the type, location, and presentation are decided, it is time to implement. During implementation, feedback is key. Employees should be asked for feedback on their engagement and learning, while quantifiable metrics should be put in place after to measure the program’s success. Once metrics and feedback are collected, they can be used to calculate ROI and strengthen or augment the training program.

The Training Process as defined by Gomez-Meija, et al (2016).

Development vs training

While training is designed to correct a behavior or acclimate an employee to a new task or environment, development exists as an attempt to futureproof the employee to the benefit of both the organization and the individual. Employees may seek greener pastures if they are not challenged and offered opportunities to grow within the organization. Many companies offer tuition reimburstments or lay out defined career paths to enable growth beyond mere productivity increases. In the current workforce it is no longer the norm to spend one’s entire career at one company. Therefore, companies must offer an incentive to encourage a valued employee to stay beyond regular incremental pay increases. This can improve employee retention, increase your pool of internal hire candidates, and decrease spending on the costly new hire process.

Sources:

Gomez-Mejia, L., Balkin, D. and Cardy, R. (2016). Managing Human Resources. 8th ed. Essex: Pearson Education Limited, pp.263-313.

Howlett, D., Bruce, S., Bruce, S. and boulton, c. (2016). Super-sized gamification for training - McDonald's is lovin' it. [online] diginomica. Available at: http://diginomica.com/2016/06/08/super-sized-gamification-for-training-mcdonalds-is-lovin-it/ [Accessed 9 Mar. 2017].

Pollitt, D, (2006)  "Nando's tastes success through training: Expanding restaurant firm retains a family feel", Human Resource Management International Digest, Vol. 14 Iss: 2, pp.19 - 21