CEO's Notebook

CEOs give advice on: replacing your human-resources department with an employee committee; mixing up energy shakes; and battling the loneliness of a home office.

Hand's On

Worker, rule thyself

Do you really need a human-resources department?
BY CHRISTOPHER CAGGIANO

Sure, you sometimes ask your employees for input on human-resources-related issues. But would you turn the entire department over to them? Believe it or not, some companies do, managing all or part of their human-resources functions with employee teams. Some merely supplement a traditional HR department with representative committees. But there are some companies that go all the way, eliminating the human-resources department entirely.

Bill Palmer of Commercial Casework, a $10-million woodworking and cabinetry shop in Fremont, Calif., practices the partial approach. He put together an employee group to research and design the company's bonus plan. The group comprised Palmer and a crew of seven volunteers. Palmer says that he not only got good information about how to motivate his employees, but he also got more informed employees. "They learned a whole lot more about what it means to give and get a bonus," says Palmer. "They saw how difficult it was and wound up really taking ownership of the process."

Each year Palmer asks for a new group of volunteers. As he refines its membership and dynamics, the group "becomes another training tool," he says.

Martin McConnell, on the other hand, went all the way. McConnell is vice-president of finance for Spectrum Signal Processing Inc., a hardware and software designer with 180 employees in Burnaby, British Columbia. He says his company has no HR department at all. Instead, it uses rotating HR committees.

In a 1996 employee-satisfaction survey, Spectrum's managers discovered that its employees were not all that satisfied with the way human-resource issues were dealt with in the company. So Spectrum created a cross-functional employee team to focus on those issues. McConnell initially thought the committee would be only short-term; it would deal with the immediate problems and then disband. "But it gained so much interest and momentum, it became part of our culture," he says.

Now the committee regularly discusses and addresses most of the company's typical human-resources functions: performance appraisals and the employee handbook, as well as company training, recognition, mentoring, and orientation programs. (Payroll and benefits administration are handled by the accounting department.)

The committee consists of 12 elected members from various job functions. Member-involvement dates are staggered, so the committee is constantly getting new members and perspectives.

McConnell and CEO Barry Jinks also serve on the team, albeit in an advisory role. According to group chair Carol Schulz, the bosses' presence doesn't present a hindrance. "They have the same say as anybody else," says Schulz. "Plus it gives employees the feeling that they really do care."

McConnell admits that at first he worried the committee might establish some overly expensive policies. "But it's not us versus them," he says. "Whatever decision they made would be modified for what works for the environment. Or maybe we'd implement it in stages."

Palmer has had a similar experience. He stresses that at his company, the employee group has limited power. "It's called an advisory committee," he says. "We made it clear that when they make decisions, they need to get buy-in from all the employees, that it has to be beneficial to the company, and mostly, that I have to buy it, too."

McConnell says one big problem is enlisting committee members without distracting them from their regular jobs. So in 1997, McConnell and his group took on a co-op student from a local university to do the legwork. That's worked so well that the group is currently assessing the appropriate timing of bringing on a full-time human-resources specialist.

"We'd definitely like to have somebody eventually," says group chair Schulz. "But whoever we get will work side by side with the committee. They'll bring strategic expertise committee members don't have."

---

Start-ups slow down
Could it be? Could turbulence in the economy be affecting entrepreneurs? It seems so. Not only are the number of business failures up, as we reported last month, but the number of business start-ups in the first 10 months of last year dropped by 7%, according to Dun & Bradstreet's Monthly Business Starts report. In 1998 there were some 10,000 fewer start-ups than in the previous year (131,860 compared with 141,987). The slowdown was most dramatic in Dallas and Chicago, which showed the biggest percentage drop in start-ups, 26% and 19% respectively. --Cheryl McManus

NUMBER OF START-UPS IN LARGEST U.S. CITIES
CITY	OCT. '98	OCT. '97
New York	365	353
Los Angeles	198	174
Houston	209	199
San Diego	110	110
Baltimore	63	59
Milwaukee	35	33
Cleveland	67	60
Boston	37	37
Chicago	128	158
Philadelphia	64	59
Detroit	27	43
Dallas	92	124

---

Hot Tips
With all the 800-number florists, mattress makers, and lawyers out there, how can you come up with a phone number your customers will remember? Identity consultant Elizabeth Goodgold of the Nuancing Group, in San Diego, says it takes just a little creativity. She offers these rules for numbers that ring a bell: