ORC Sightlines

October 2006

ORC and Chinese Delegation Share HR Insights

Recently, China’s Bureau of Foreign Affairs asked ORC to meet with a panel of Chinese HR experts visiting the US to study American HR systems. As China embarks on its eleventh Five Year Plan, the delegation was interested in learning about

A panel of ORC consultants met with the delegation for two hours to discuss these issues. With the help of a translator, Rebecca Rosenzwaig presented a comprehensive overview of the current state of HR in the US and how we got here, Tom Connors explained the US labor relations system and how it differs from that in China, and Michal Fineman discussed the latest theory and practice in talent management among US-based multinationals.

As the meeting progressed, it was the fundamental differences between the two countries’ systems that drew the most discussion. The Chinese delegation appeared to expect a more unified, centrally controlled approach to HR issues in the US and were clearly skeptical that the American hybrid of basic legal mandates and market forces could adequately protect workers’ rights. They were especially eager to understand how employers retain workers in an at-will relationship and what prevents employers in the US from exploiting employees without a contract to guarantee specific pay and benefits. Given the irrelevancy of organized labor in China, where unions are controlled by the government, they were unaccustomed to the idea that labor unions could represent so few American workers and yet influence employer behavior. On the other hand, the discussion of talent management practices, especially regarding identification and development of future leaders, drew head nodding around the table, and the Chinese reported using similar techniques in their organizations.

Measuring Satisfaction with International Assignment Programs

Clients of ORC’s International Mobility practice were recently invited to attend a webcast presentation by ORC consultant Marta Bredehoeft about how to gauge satisfaction among expatriates and managers with the company’s international assignment programs. The webcast is available for free download (Windows Media required).

Satisfaction studies can be valuable tools for identifying gaps between the expectations stakeholders have of the program and what the program actually delivers. Areas of concern that frequently emerge when we help companies audit their international assignment programs are insufficient relocation support, lack of career planning for expatriates, poor communications about the program, and inconsistent treatment.

Not all areas of dissatisfaction require major changes to the program; very often, in fact, we find that the underlying problem is poor communications, especially from line managers, who are usually the individuals “selling” an assignment to a prospective expatriate. The fix, then, may be better education of line managers or more proactive communications from HR or a third-party provider.

Satisfaction studies can be conducted through a variety of means. Normally, the backbone of the study is an online survey including narrative as well as check-the-box questions. Individual interviews are usually the best way of gaining insight into the concerns of senior managers. Focus groups are an excellent vehicle for digging more deeply into areas highlighted in the survey, understanding the different perspectives of different populations, and brainstorming possible solutions. Which methodologies are employed in any given study will depend on the culture of the organization and the purposes and scope of the study.

For more information about the design and content of satisfaction surveys or future ORC webcasts on international mobility issues, contact Steve Nurney in the US at 212-852-0322, or Siobhan Cummins in Europe at +44 20 7591 5600.

Variable Pay Budgets More Aggressive in 2007 than Merit Increases

ORC’s 2006 Budgets & Structure Adjustments Survey shows that merit increases are expected to remain steady next year. Average actual increases for 2006 were 3.74 percent, compared to increases of 3.77 percent projected for next year. The high tech industry and life sciences industries are expecting the largest merit increases: 3.86 percent and 3.84 percent respectively.

Budgets for variable pay programs, on the other hand, will rise noticeably in 2007. The average variable pay budget for exempt employees, projected at 9.16 percent, and for non-exempts, 7.18 percent, are both two percentage points higher than in 2006.

More employers than last year (34 percent v. 29 percent) are creating special budget pools to target specific needs, such as internal and external equity, recognition of top performers, spot awards, and so forth. The average special budget amount planned is 0.8 percent.

Salary structure adjustments continue to reflect approximately 75 percent of the merit increase budget figures. This year salary structures were adjusted upward by 3 percent for exempts and 2.9 percent for non-exempts and are projected to rise by the same amount in 2007. As in previous years, approximately 0.8 percent of payroll will be spent on promotions for both exempt and non-exempt employees.

ORC’s annual Budgets & Structure Adjustment Survey breaks down results for participants by industry and sub-industry, region and major locale, and employee group (executive, exempt, clerical, technicians, and production and maintenance workers). Results are provided free of charge to the 450 companies that participated in the survey. Non-participants can purchase the full report for $250. For more information, contact Tricia Richards at 425-746-6963.

American Companies Seen as “Data Cowboys” by European Governments

Speaking at the October meeting of ORC’s Global Diversity Forum, privacy lawyer Mark Schreiber of Edwards Angell Palmer & Dodge recounted a conversation he had recently had with a European privacy official. US companies are “data cowboys,” the official complained, obsessed with collecting data and providing inadequate protection for employees’ privacy. In truth, the US is outpacing Europe in some sorts of legal protections, such as those covering medical information and email spam, as well as in enforcement. But compliance with the EU’s data protection law still lags in US companies and misunderstandings persist about the requirements.

American companies should not be deterred from implementing diversity metrics that rely on private data, Schreiber stressed, but they should be careful to comply with data protection mandates, and in some EU national jurisdictions local laws may prohibit collection of ‘sensitive personal data’, such as race and ethnic origin and sexual orientation. Companies may collect data about their European employees only with the subject’s unambiguous consent or under a Data Protection Agreement or Safe Harbor status. The consent option works well for US companies receiving limited quantities or type of data from the EU, but can be unwieldy for larger operations. Employees can also revoke their consent at any time. Putting data protection agreement language in employment contracts is a relatively easy way to comply in companies with a limited number of people controlling data. A more comprehensive strategy is to register with the US Commerce Department under the Safe Harbor to protect them from prosecution by European data authorities. Safe harbor companies must show they have a detailed privacy policy.

Companies considering filing for Safe Harbor status should be aware that it would subject the company to enforcement by the Federal Trade Commission, and breach of the privacy policy would be considered an unfair and deceptive act. The Safe Harbor also does not protect the company against claims by EU residents for acts carried out in the EU.

To discuss the European Union’s data protection directive, contact Fiona Webster at +44 1618 652 048. For more information about ORC’s Global Diversity Forum, contact Liz MacGillivray at 212-852-0406, or Deirdre Golden at +44 20 7591 5600.

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