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2006 HR Honor Roll

Monday, October 16, 2006
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The 2006 HR Honor Roll winners were Eastman Kodak's Robert Berman, William Kuchta of Paychex and Select Medical Corp.'s S. Frank Fritsch.

Dare to Be Digital

Eastman Kodak's Robert Berman helped the company come back from a sticky racial discrimination case, all the while assisting during the organization's ongoing transformation.

By Christopher Cornell

HR professionals should never be surprised when they are confronted with a thorny personnel issue, and expected to find a way to resolve it. But few have been in the kind of delicate spot Robert Berman, chief human resource officer and senior vice president at Rochester, N.Y.-based Eastman Kodak Co., found himself in several years ago.

In the late 1990s, a number of employees charged the company with racial discrimination relating to treatment in pay and promotion. While it was up to Kodak's legal team to deal with the lawsuit that followed, it was Berman's job to address the HR issues.

Address them he did, implementing sweeping changes designed to make the company more overtly inclusive. For this success and other achievements, Berman has been selected to join the Human Resource Executive® 2006 Honor Roll.

"In HR, we were focused on making sure that we understood the concerns, and on stepping back and taking a look at where we needed to make changes," Berman says.

It was Berman who was at the forefront of a comprehensive compensation review of nearly 800 supervisory and management staffers, looking at, among other factors, their abilities to lead in an inclusive way. The result: the turnover of nearly one-third of all supervisors and managers, through a combination of reassignments, resignations and terminations.

"That was a significant change in the organization," he says, "but we were committed to creating a leadership team that would be seen as highly credible at all levels."

Berman also oversaw the deployment of nearly 300 specially trained cultural-change advocates.

Culture Change

During this difficult period, Berman was also called on to contribute to a fundamental change in company culture.

If you've bought a camera recently, chances are it was digital, not a traditional film camera. Kodak long ago saw the impending change in its core business, and is now in the midst of a transformation from a traditional chemical-based imaging company to a digital-imaging company. But the transformation involves more than just product lines. Kodak officials have made the evolution a metaphor for wide-ranging changes to the entire company.

In a traditional company, "a new generation of new products is developed every five to 10 years," Berman says. "It's every six months at a digital company, and employees and managers have to drive changes at that order of magnitude.The implications for leadership are pretty profound."

Berman distilled HR's answer to the digital challenge into a strategy that became known as "the four greats" -- great hires, great feedback, great moves and great assignments.

"Historically within Kodak, we relied on search firms almost completely," Berman says of the "great hires" portion. "We wanted to create a different expectation for our managers, where one of the hats you're wearing all day is the hat of a recruiter."

Great feedback included an overhaul of Kodak's 360-degree assessment process for leaders, driving a new development-planning process for all executives in the company and new mentoring opportunities for senior executives. In addition, the company, which had previously made use of outside assessment firms to evaluate and provide feedback to key talent, brought that practice back in-house.

Under "great moves," Berman sought to erase company silos. "We identified three types of boundaries within Kodak: geographical, business and functional. Now, whenever high-potential talent is moved, we make sure [those workers] cross two of these boundaries."

Under great assignments, Berman's team is constantly seeking to assign teams tasks of accelerating the development of new products or processes.

Policy Drift

In addition, Berman instituted new executive-development and employee-assessment strategies, with the goal of counteracting decades of drift in those policies.

Among the problems: Company leaders saw the amount of money spent as an indicator of commitment to executive development, line managers weren't providing candid feedback to subordinates and the entire workforce was focusing on activities rather than outcomes.

As part of the improved strategy, two metrics are watched closely: "quality of feedback" (derived from an annual survey where all executives are asked to describe the quality of the feedback they are getting from their supervisors) and "quality of succession planning (as measured by careful examinations of the viability and diversity of agreed-upon successors)." Both are now reported to Kodak's board of directors annually.

"In order for us to deal with the magnitude of change, we required real leadership capability, so we put a system in place to not only develop our current talent, but create a robust pipeline of future talent," Berman says.

Under Berman, compensation practices also got a thorough overhaul. Until a few years ago, like many other companies, Kodak used stock options as a key component in its compensation plan. However, new accounting rules requiring the expensing of stock options changed all that.

Berman and the company's compensation committee established a performance-based, long-term incentive program known as Leadership Stock, in which payouts are determined by the company's performance against specified long-term business goals. This program now covers more than 700 executives globally.

Berman gives his HR team credit for the execution of these policies.

"I've been impressed by their incredible resilience," he says. "The team has been going through astounding changes at a pace I would have considered impossible. They're so committed to what it is we stand for and what it is we deliver. They love the brand and they've been working tirelessly to execute Kodak strategy and preserve Kodak values."

***

Constant Learning Curve

Paychex Inc.'s William Kuchta is keeping his company's bottom line healthy while helping to create a new generation of HR executives.

By Michael Felton-O'Brien

With more than 30 years in the human resource field, Paychex Inc.'s William Kuchta still has to pause for a moment before answering a question about what guiding principle directs his daily work habits.

"Well, I try to learn something every day," he says. "Because no matter what you're doing today, and no matter how long you have been doing it, you can probably make it better tomorrow."

As the vice president of organizational development for the Rochester, N.Y.-based payroll-services and HR-outsourcing company, Kuchta often finds himself searching for answers that will benefit his organization as well as improve the lives of its 10,500 employees. While finding common ground between the two is not always easy, he has learned along the way that individual accomplishment means little if it does not benefit the entire business.

"An HR person who has success [whose] company doesn't succeed, that's not good," he says. "Everything we do in this department is tied to some kind of ROI."

Kuchta's expertise also extends past the HR domain and all the way to the research and development of new payroll products for clients, according to Jonathan J. Judge, president and CEO of Paychex.

"Will plays a significant role as a liaison with many industry resources and organizations -- and helps Paychex with product development. He understands the marketplace and needs going forward, and he can help us identify what's next for our client base. Not many HR professionals are also involved in the development of a company's product offering," he says.

Of his many accomplishments, which have earned Kuchta a place on Human Resource Executive's 2006 Honor Roll, two examples in particular stand out: his work in reducing the company's high turnover rate and his involvement in the creation of masters in HR programs at two local colleges.

Taming Turnover

One of the major obstacles in the service industry is turnover of client-services representatives, and Paychex was experiencing higher-than-normal turnover rates. It was costing the company not only time and money spent training new employees; it was also causing service disruptions to clients who interacted with the service representatives.

"Unlike many companies, we knew that there was not going to be a single 'silver bullet' to fix the problem," he says. After some in-depth investigation, Kuchta realized that the solution would need to be discovered on a department-by-department basis.

"I analyzed why it was happening in each of the major domains such as sales, service, corporate and IT. In most of the cases, the biggest answer was that we were not hiring people who were appropriate fits for the positions."

He worked with each area's vice president and management to identify the cause of that area's turnover problem, then developed and implemented solutions specifically designed to address each cause. In several areas, the approach centered on improving hiring practices.

"Instead of using a [screening] test, we now teach our managers to ask behavior-based questions that are suited to fit each domain," Kuchta says.

A major effort was also made to improve candidate sourcing to this unique industry, and a new interviewing and selection process was developed and rolled out. Aligned with this was a redesign of field-service career paths. In technical areas, more effort was put into technical development and career ladders.

The results speak for themselves: Paychex's overall turnover rate was decreased by half, and in the IT area alone, turnover was cut by 75 percent.

Training the Future

Kuchta's quest for knowledge is also evident in the ways he's helping to create a whole new generation of HR executives to continue the work he and his colleagues have started.

Kuchta, who holds a doctorate in education from the University of Bridgeport, Conn., has helped to launch masters in HR programs at two Rochester, N.Y., colleges. He currently serves as chair of the Human Resource Program Advisory Board at Nazareth College and as a member of the advisory board for the Human Resource Development Program at St. John Fisher College.

As for his educational efforts, Kuchta seems to know a win/win situation when he sees it.

"Well," he admits, "it's a little less than altruistic. It's as much a case of feeding ourselves with quality candidates as it is creating new HR people. We want to make what we do with these programs become a kind of a model for what the profession is."

And having two masters in HR programs located so close to company headquarters creates a unique synergy between company, city and college.

"We have a company of 2,600 employees here in Rochester, and most positions are for people who provide service and products dealing with HR. It's been a wonderful match locally of creating a labor supply that didn't exist before" and already having a natural outlet nearby it can feed.

While the master's programs are still in their infancy, Kuchta is hopeful for the future. "We've got a couple of sophomores in the program now and I would expect we'll get some really good labor out of [them]," he says.

Kuchta maintains a steady presence on the college campuses, attending one or two on-campus events, helping with career advisory sessions and even teaching class for an evening when called upon.

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"Even a normal class turns into somewhat of a career-counseling session sometimes," he says. But that's fine by him, because Kuchta knows that the next great HR executive could be sitting in that classroom with him.

"And I'm always recruiting," he says.

***

There for His People

Whether responding to an emergency or the demands of rapid growth, S. Frank Fritsch exhibits a deep commitment to his company's employees and genuine interest in their needs.

By Barbara Worthington

When Hurricane Katrina ravaged the Gulf Coast last year, S. Frank Fritsch, senior vice president of human resources at Mechanicsburg, Pa.-based Select Medical Corp., instinctively crafted an immediate and compassionate response to be implemented by his company.

The company operates long-term acute-care hospitals and outpatient clinics in 41 states. Its Biloxi, Miss., hospital was completely destroyed and its Gulfport, Miss., and New Orleans hospitals sustained significant damage.

Staff members lost their homes, cars and irreplaceable items such as photographs and sentimental keepsakes. Fritsch realized early on that for Select's employees, there would be much rebuilding to do, both financially and emotionally.

"It was extremely important for him to be a part of that initial team that went in," says Pat Rice, president and COO of Select Medical Corp., adding that Fritsch "went to the sites . . . within less than 36 hours after Katrina hit." He encountered Select employees who had lost everything, as well as those left unscathed but shell-shocked. "He became kind of a counselor to help them through their shock and grief," Rice says.

Fritsch quickly assessed employees' overall needs, "both personal and professional," Rice says. In response, he personally arranged for food drops and clothing availability. Additionally, he helped mobilize teams to assist staff members at the Gulfport and New Orleans hospitals. He spent two weeks at the Gulfport site.

With banks closed, Fritsch also addressed Select employees' immediate needs for cash. "I had a pocketful of money," he says of his arrival on the scene with $20,000 in cash and traveler's checks. "We handed out small amounts of money to every employee."

Additionally, he established the Select Medical Disaster Relief fund, enabling employees to help colleagues who have suffered losses due to natural disasters. With Select Medical contributing $2 for every dollar employees contributed, the fund yielded cash necessary for affected employees to begin to rebuild their homes and lives. "We raised $600,000 for employees down there," Fritsch says. "It was really rewarding and exciting."

For his determination to go the distance for his people -- not only amid catastrophic circumstances, but fast-paced corporate growth as well -- Fritsch has been named to the Human Resource Executive® 2006 Honor Roll.

Tackling Growth

Fritsch has served as Select's senior vice president of HR since the company's inception in 1996. During his tenure, the company has undergone monumental growth to $2 billion a year in revenues and increasing its payroll from the original 12 employees to nearly 23,000. The company now operates 97 hospitals, 700 outpatient clinics and numerous outpatient rehab clinics.

For Fritsch, the challenges of integrating cultures, programs and systems with each new acquisition have been profound. His approach has been to focus on leadership, working to create succession and leadership-development plans.

Earlier this year, along with Select's president and COO, Fritsch introduced a new leadership-development opportunity designed to identify the top 100 leaders within the company. The comprehensive list includes a variety of senior executives, general managers and junior leaders with whom Fritsch works individually to establish personalized leadership-development plans.

Selection is based on leaders' tenure and potential, among other criteria. Fritsch, himself, explores each leader's motivations, development opportunities, personal vision, specialized talents and ways in which each leader shares expectations for engagement levels with his or her team members.

He also developed the Fritsch/Rice Employee Survey for Select Hospitals, or FRESSH, designed to evaluate in-house employee engagement. Feedback on the assessment enables Select to benchmark employee engagement levels and track improvement over time. "Employee engagement is very much a part of the fabric of the company," says Fritsch.

As founder and adviser for Caring and Resourceful Employees of Select, Fritsch has also enlisted more than 150 employees at Select's headquarters who actively participate in such volunteer pursuits as supporting Adopt-a-Highway and promoting community fund-raisers. "It's done so well, we've used it for a model for other towns," Fritsch says.

A Path to HR

Fritsch began to hone his people-management skills as a parole officer with the Department of Justice in Kentucky more than 20 years ago. "I learned everything I know about management from working with criminals," Fritsch says.

Within the criminal justice system, Fritsch recalls "gravitating toward management." He used his creativity to match resources with the needs of his parolees. 

In 1980, he moved into the position of personnel director at Chicago's American Hospital Supply. "I devoted most of my time to leadership development," he says of his tenure there. Eventually, he was drawn to HR and Select Medical.

John Saich, vice president of HR at Select, says Fritsch is especially adept at keeping the function well-integrated. "Frank doesn't allow HR to be remote."

Rice credits Fritsch with "keeping the HR function on the cutting edge of what needs to be done" at Select. "It's a very dynamic HR function that has to do with the growth of the company," she says.

According to Saich, Fritsch maintains his focus "on all levels of employees across the company" with an uncanny success. "He's effective in developing a network [throughout the country] to become good managers of people." Saich terms Fritsch "a very powerful influence that's trusted" within the company.

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