Lessons from Tiger

It is now more than four days since Tiger Wreck began and questions still remain. I'm sure Tiger truly believes it as a "private matter" when he says it is.... and many will agree. However, a public figure or public company is often better served by coming forward with the truth - no matter how painful. Take the case of Andy Pettitte who admitted steroid use (albeit "for rehabilitation purposes rather than to enhance his body") ... this is largely forgotten now. Now take Roger Clemens who is using all efforts to deny ever using steroids despite the mounting evidence. The Roger story is still very much in the public view. Everyone remembers the efforts of Tylenol to quickly come forward and remove their product from the shelves after learning of contamination. But how about Ford who knew the Pinto had issues that could cause explosion of the gas tank in rear-end collisions but denied this until the discovery process revealed some damaging documents. Some argue - Ford has never been the same since.

As HR professionals, we are often in a position to advise leaders or employees when negative situations occur and we should remember the lessons of coming forward versus stonewalling. In my view, Tiger would be better served to come clean and let the media move on to the next big scandal

The Public Option is Back in

All indications are that the Senate Democrat Health Plan that will be revealed on Thursday will include a "moderate" public option. Details need to be reviewed but it may not be as bad as it could be. One of the features will be the ability for states to "opt out", giving states with plenty of competition (like Texas) the ability to bypass a public health plan. For those of you that have had operations in Mississippi or Alabama, you understand the issue with Blue Cross Blue Shield being the only game in town making it difficult (impossible?) to negotiate rates.... so these states could benefit from a public option. The original version was to have a public option - subsidized by government - compete with insurance providers.... which would be very difficult for these providers to compete on cost. One of my biggest concerns with the original version was the notion that companies must offer health coverage to their employees or pay something like 9.5% of payroll into the public option and employees would then be required to use the public option. I've been around the table when Health Care costs are being discussed with Sr. Executives, and my concern is during difficult times (like we have been through in the past year and 1/2), it would be easy to see that 9.5% is a less costly option. Of course we would argue the need to have a competitive health plan and how it would be difficult to attract and retain talent - but all it takes is one energy company to move forward with the public option (especially a large company) and everyone will follow suit. Before you know it - the Public Option is the only game in town. Hopefully the new "moderate" public option will alleviate this concern.

Government Meddling in Executive Pay

Well today the "pay czar" Kenneth Feinstein announced that those companies that received TARP funds will have their base salaries cut by 90% in 2010. This will only impact the top 25 executives at these firms.
Fortunately, the Energy industry did not fall under TARP and is not impacted by these changes. However, President Obama quickly followed the announcement by urging Congress to pass "say on pay" for all publicly traded companies.
So what will happen? More than likely, Congress will pass a non-binding "say on pay" where shareholders will have the opportunity to vote on management pay packages. It will likely be a vote on the Compensation Discussion and Analysis (CD&A) section of the proxy.
HR should begin to review their pay philosophy and practices looking for "red flag" issues. Most energy companies are owned primarily by large institutional investors that may have their "red flag issues" clearly identified, or they will likely subscribe to shareholder services groups like Glass Lewis or Risk Metrics (ISS). Some of these services have requirements such as: disclosing performance measures and targets, listing peer companies, risk evaluation, etc. If you need help reviewing your Executive Compensation prior to "say on pay" being required, feel free to contact me for assistance.

Today's Job Report

The consensus seems to be that the recession is over and we can now expect growth in the economy to begin. Unfortunately, as many of you know, jobs are always the last thing that recovers following a recession. Today's job report showed that new claims for jobless benefits fell to 550,000 versus the expected 560,000. While this is good news in the fact that the worse seems to be over, there is still not enough confidence for full-fledged hiring to begin.

In the energy sector, a report indicated that Shell continues to go through their major restructuring previously announced by the new CEO in attempt to simplify the organization. The report indicated that Shell's upper level management count was reduced by about 20% from about 750 t0 600 and now each department is finalizing plans to reduce their organizations. Some posters have indicated that employees are having to reapply for their jobs or can apply for others.

Hopefully we will see a recovery in jobs in the energy sector soon.

HR Hiring Activity in Energy

Last last year and early this year (first month or so) -- there were several senior level HR jobs out for search in the industry. Then during February, March and part of April - it seemed to just dry up. Many jobs were put on hold, retirements were postponed and HR hiring activity stalled. Then it appeared that activity was starting up in late April and May -- but then the summer came and jobs stalled again.

There are some jobs that are being filled - but nowhere near the level that the industry has seen in the past. I have some inquiries about temporary or contract help - but even this seems to be quiet. My experience is that there is cost control efforts and bringing in anyone new - is noticeable and questions are asked.

Looking out - oil prices have recovered some, demand looks good in the out years for oil (think China)... so hopefully hiring activity will pick up. Natural Gas prices in U.S. are still under pressure and so are Natural Gas companies, so don't expect much for awhile.