CANADA’S TOP 100 EMPLOYERS

Showing the Love

After two lean and mean decades, businesses are realizing they need to hang on to employees—and attract new ones. KATHERINE MACKLEM reports on the return of company loyalty.

October 24 2005
CANADA’S TOP 100 EMPLOYERS

Showing the Love

After two lean and mean decades, businesses are realizing they need to hang on to employees—and attract new ones. KATHERINE MACKLEM reports on the return of company loyalty.

October 24 2005

Showing the Love

After two lean and mean decades, businesses are realizing they need to hang on to employees—and attract new ones. KATHERINE MACKLEM reports on the return of company loyalty.

CANADA’S TOP 100 EMPLOYERS

UNLIKE MANY debt-laden twentysomethings struggling to enter the world of work, Ryen Dickson makes the transition look like a breeze. After two years of college studies for a technician’s diploma, he registered for a four-year millwright apprenticeship program and was hired by Dofasco Inc., a major steel producer in his hometown of Hamilton. In his first year, he earned $40,000. Even during three four-month periods of study at college, he remained on Dofasco’s payroll. Dickson, now 25, is weeks away from earning his papers. Loan-free and gainfully employed, he intends to continue working at Dofasco. “I’m comfortable here and I like what I do,” he says. And that’s

music to the ears of senior managers at the company, which has invested heavily in training with the goal of creating a stable workforce for the future.

After two decades of lean and mean corporate management marked by layoffs, downsizing and cutbacks, the vanguard of smart employers is suddenly aware that the workplace today is facing a crisis. “Gone are the days of lifetime employment in exchange for lifetime commitment,” says the Conference Board of Canada in a report on public trust, which states that the changing nature of the employee-employer relationship is a factor contributing to a broader decline of trust in Canada’s public institutions. Companies have been asking their workforce for flexibility without providing compensation in return. While a more nimble workforce has allowed business to compete better in an increasingly global marketplace, this has come at a price. Workers have been advised that managing their work lives is their responsibility, that the five-career lifetime is the norm. The end result has been the demise of employee loyalty.

Add to that Canada’s demographics. The oldest baby boomers, at close to 60, are about to retire. Linda Duxbury, a business school professor at Carleton University who specializes in workplace issues, points out that for the last 25 years, the labour force in Canada has grown by roughly 226,000 a year. That number is now rapidly declining, and by 2010 only 42,000 new workers will be entering the workforce annually. “Within the next decade,” Duxbury says, “for every two people who are retiring, there will be less than one person to take their place.” Duxbury predicts that how a company manages its workforce will be critical to its business success—something the best employers in Canada have already figured out.

Canada’s top employers are recognizing that not enough people are coming up through the ranks, says Anthony Meehan, president of Mediacorp Canada Inc., the publishing company that creates the list of Canada’s 100 best employers. “It’s a real change in the economy. When employers have somebody who is good, they don’t mind spending money to keep them.” Adds Richard Yerema, author of Canada’s Top 100 Employers, “Individual job-seekers don’t think they have a lot of power.” But they do. At the leading edge of enlightened employers are the ones who have renewed their focus on employee loyalty. But unlike an earlier era of paternalistic bosses, today’s best employers see the link between contented employees and the bottom line. They know that soon the strongest businesses will be the ones with the most engaged and stable workforces.

FIVE YEARS AGO, Dofasco’s senior managers received a wake-up call. They had commissioned demographer David Foot to study their workforce and to measure the pool of potential future workers in the broader community. The average age of Dofasco’s employees turned out to be 44 and getting older, while the average length of service was 23 years. That meant that over the subsequent five to 10 years, an overwhelming 50 to 70 per cent of workers would be eligible to retire. And the pool of potential, future talent was limited. “We recognized it would be better to plan and be prepared than to have to react,” says Brian Mullen, director of human resources. “It was a big eye-opener.”

Dofasco now spends $15 million a year on training and development, much of it on a revitalized apprenticeship program. Mullen estimates that for each of the 200 to 250 apprentices in the company’s system at any given time, Dofasco spends $250,000, even though once they’ve finished their training, there’s nothing stopping them from working for someone else. While the majority do stay with Dofasco, Mullen expects other industries to become more aggressive in their attempts to lure the trained workers. Still, the program is regarded as part of Dofasco’s competitive strategy and a way to keep the company viable. “It’s not just a noble thing to do,” says Mullen. “There’s a solid business case.”

Not only are progressive employers looking forward and training the next generation of workers, they are using increasingly sophisticated methods to sell their companies as good places to work, both to current and potential employees. Borrowing from their marketing departments, some have started to think of themselves as brands, not to consumers but to workers. “Employer as a brand,” says Yerema, “is new this year.” The recruiters are becoming marketers, Meehan adds. “They are selling the company to existing employees and also to new people.” It’s an interesting shift. In the past, human resources departments have been seen as a drag on business and a cost to the overall operation. “Now these guys call themselves talent acquisition specialists,” Meehan says.

A Vancouver tech firm, Business Objects, takes its branding seriously, recently creating a position called talent brand manager. Claire Adams, who holds the title, has commissioned surveys and focus groups asking employees what attracted them to the company, and what’s keeping them there. She stays close to key tech-oriented universities, to be on the lookout for future employees. She’s working on a one-line statement that sums up her company’s brand as an employer. One of the biggest parts of her job is public relations, she says, promoting the company as an employer of choice. The business case for all this effort is simple, says Greg Wolfe, general manager of North American operations for Business Objects, which, while based in San Jose, Calif., and Paris, has most of its employees in the Vancouver office. As one of the largest tech employers in the Lower Mainland area, Business Objects has to work hard both to attract new employees and to hang on to its best. “Making investments into branding is a no-brainer from a business perspective,” Wolfe says.

Hewlett-Packard Co. is another tech company committed to its employees. Founded in Palo Alto, Calif., in 1939, HP has a longstanding reputation as a company that cares about its workforce as well as the community in which it does business. Well before these things became trendy, HP instituted such programs as employee health benefits, and donated money and equipment to charitable organizations. In 1947, HP’s co-founder Dave Packard said: “The real reason HP exists is to make a contribution, to improve the welfare of humanity, to advance the frontiers of science. Profit is not the proper end of management, it is what makes all of the other aims possible.”

Today, HP has a progressive, open-door management style, and unusual perks including a company-managed cottage in eastern Ontario that employees can use for free. But unlike many IT peers, where many workers are on contract, HP limits the length of contracts to a maximum of two years. At that point, a manager should know if the work being done is a core function—and if it is, the person doing it should become a permanent employee, says Paul Tsaparis, CEO of HP’s Canadian operations. “Employee loyalty and engagement is a critical success factor for us,” Tsaparis says. “By committing to full-time employees, you absolutely get back commitment from them.”

The high cost of employee turnover is another reason employers want to hold on to their workers. Included are hard costs, such as severance packages and recruitment fees, as well as soft costs, such as the loss of corporate wisdom, fractured relationships with customers and suppliers, and the amount of time it takes for new employees to get up to speed. Robert Meggy, president, CEO, and owner of Great Little Box Company Ltd., which manufactures corrugated boxes and other packaging materials, says he is very conscious of the cost of recruiting and training new employees. A good employee can cost three times his salary to replace, says Meggy, an accountant by training. “Every time people leave, it just puts you back,” he says. “The cost of replacing someone is huge.”

Meggy has a dual strategy to keep his employees engaged. First, he opens the books to his staff. Even though Great Little Box Co. is privately owned, he reports the company’s income statement and balance sheet every month and then shares 15 per cent of the month’s profits equally among employees. On average,

Meggy says, employees receives $150 to $200. “It’s like a bonus, paid on the next cheque,” he says.

Meggy also meets with all employees, in small groups of 10 to 15, and goes through the company’s financial details, line by line, to ensure that everyone understands the company’s business.

“Since we started sharing financials,” says Meggy, “you can just see the sense of trust is so much higher. If you don’t share financials, it’s hard to create loyalty in a company.” Meggy points out that it’s not only in good times that employees respond positively to an open book policy. In the last recession, the company went into the red, he says. “People would come to my office with ideas of how to save money.”

Meggy also believes it is important for his staff to get along with each other—and that it helps the bottom line. Not only do people who get along communicate better with each other and get their work done faster and more smoothly, Meggy noticed that people who didn’t socialize with their colleagues usually left the company within a couple of years. To this end, the company hosts parties and social events, much like many employers. But in addition, it sets an ambitious annual target, which Meggy calls the BOX—Big Outrageous eXtravaganza— target. If the BOX is met, the whole company takes off for an extended weekend to an allexpenses-paid exotic destination. For the last three years, helped by a rising Canadian dollar, the company has met the BOX target. Last April, employees descended on the Luxor Las Vegas, one of the largest hotel complexes in the world. This coming spring, if the firm meets its target—and it is on track, Meggy says—employees will go to Mexico, where they celebrated in 2004. “You can’t beat the bonding that comes with a trip like the one to Mexico,” says Meggy.

For years, corporations have developed operational plans, marketing plans and sales plans, says Michel Tougas, managing principal with consulting firm Towers Perrin in Montreal. “Now, they are creating people plans,” he says. The most sophisticated among them recognize that an engaged workforce is a more productive one. Studies conducted by Towers Perrin show a small number of workers are either highly engaged or highly disengaged. The big chunk of workers in the middle are neither—and that’s where the opportunity for improvement lies, Tougas says. “Moving the needle a little bit among the masses in the middle makes a difference for employers,” he says.

At Dofasco, longtime employees recall the company’s restructuring in the early 1990s, which meant

ON THE WEB To read how we compiled Canada’s Top 100 Employers list, visit www.macleans.ca/topl00 rounds of early retirement offers, voluntary severance and, finally, layoffs. The workforce was cut from 12,500 to 7,500. Today, the turnover rate is about four per cent, Mullen says, with 80 per cent of that through retirement. And with sports teams, a recreation centre and one of the country’s largest Christmas parties—30,000 people at Copps Coliseum—the company has a reputation as a decent employer. “There is no perfect environment. It’s not like everyone is dressed in togas slipping through the workplace throwing rose petals over their shoulders,” says Mullen. “But this is a good place to work.” Still, the bad memories of the 1990s linger. “There wasn’t a lot of bitterness, but some people felt wounded,” says Mullen. “That impacts people’s sense of security. So yeah, it takes time to build that up again.” liH