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AUTHOR Mills, Jack; Kazis, RichardTITLE Business Participation in Welfare-to-Work: Lessons from the

United States.INSTITUTION Jobs for the Future, Boston, MA.SPONS AGENCY Rockefeller Foundation, New York, NY.PUB DATE 1999-01-00NOTE 68p.; Prepared for the Business Forum on Welfare-to-Work:

Lessons from America (London, England, Great Britain January20-21, 1999). Also sponsored by the New Deal Task Force.Eleven of the 19 case studies are appended.

PUB TYPE Reports - General (140)EDRS PRICE MF01/PC03 Plus Postage.DESCRIPTORS Adults; Case Studies; Employee Attitudes; *Employer

Attitudes; Employer Employee Relationship; EmploymentOpportunities; Employment Potential; *Employment Programs;*Entry Workers; *Job Placement; Job Training; PolicyFormation; Public Policy; *Welfare Recipients; WelfareServices

IDENTIFIERS *Welfare to Work Programs

ABSTRACTCase studies of 19 U.S. companies involved in

welfare-to-work programs found that political and economic factors haveaccelerated the rate at which employers are hiring welfare recipients.Although participation in welfare-to-work programs is dominated by largerfirms in a few industries (such as service and retail sectors), there ispotential for continued expansion of employer participation. The primaryfocus of employers to date has been on recruitment and hiring, but strategiesare being developed to improve employee retention, an area in which employersare receiving support from public policy. Employers identify businessbenefits from their participation, including increased access to labor,increased loyalty among new hires, reduced recruitment and hiring costs,reduced employee turnover, better quality new hires, and improved employeemorale. Challenges to employers who want to expand their efforts includeproblems with obtaining suitable services from providers of welfarerecipients and the complexity of working with those providers. Components ofsuccessful programs include high-level corporate commitment, localpartnerships, and postplacement services. Public policy recommendationsinclude the following: (1) changing policies and funding to balance "workfirst" and longer-term skill development strategies; (2) increasing publicinvestment in supportive services and expanding income supplements forlow-wage workers; and (3) providing public support to improve localservice-providing organizations that serve as intermediaries between thewelfare system and employers. (Contains 27 references.) KC)

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Business Participationin Welfare-to-Work:Lessons from the United States

Prepared for the Business Forum onWelfare-to-Work: Lessons from America20-21 January 1999, London

J F F

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January 1999

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Sponsored by the New Deal Task Force and the Rockefeller Foundation

7

A C K N O W L E D G E M E N T S

This report was written by Jack Mills and Richard Kazis. The authors wouldlike to thank the following Jobs for the Future staff for their assistance: HilaryPennington and Marlene Seltzer for their comments on early drafts; Andrea JuristLevy and Verna Lalbeharie for their research work; Marc Miller and Sybilla GreenDonos for their editing skills; and Barbara Kroner and Sarah Bennett-Astesano fordesign and production assistance.

A debt of gratitude is owed to the representatives of the companies interviewedfor this project. They generously gave time from their busy schedules to sharetheir firms' experiences and perspectives with us. We also thank the Welfare toWork Partnership and the National Alliance of Business for their assistance.

Funding for this study was provided by the Rockefeller Foundation. We thankJulia Lopez and Elizabeth Biemann of the Foundation staff, for their support andencouragement. We also thank the New Deal Task Force Secretariat for helpfulcomments and suggestions.

Jobs for the FutureJobs for the Future OFF), a national non-profit organization, works to strengthenthe foundation for economic opportunity and civic health in America by advanc-ing the skills and knowledge required for success in the new economy. JFF workslocally and nationally to develop innovative workforce development solutionsthat help people make effective lifelong transitions between work and learning.

TABLE OF CONTENTS

EXECUTIVE SUMMARY V

FOREWORD 2

PART ONEIntroduction 3

PART TwoGeneral Trends in Employer Welfare-to-Work Efforts 7

PART THREEWelfare-to-Work Experience of Leading U.S. Firms: Motivation and Benefits 10

PART FOURWelfare-to-Work Experience of LeadingU.S. Firms: High-Value Activities 14

PART FIVELessons and Implications from U.S. Experience 20

FOOTNOTES 25

BIBLIOGRAPHY 28

CASE STUDIESAmerican Airlines, EDS, Federal Express, Manpower Inc., Marriott International,McDonald's, Pizza Hut, Salomon Smith Barney, United Airlines, United Parcel Service,and Xerox Business Services

E X E C U T I V E S U M M A R Y


Prepared for the Business Forum onWelfare-to-Work: Lessons from America20-21 January 1999

January 1999 0 Executive Summary v

E X E C U T I V E SUMMARY

Business Participation in Welfare-to-Work:Lessons from the United States

Through the New Deal, the British government has embarked upon a majorreform of the welfare state, with a focus on reducing dependency and increasingthe employability of long-term unemployed individuals. As in the United States,which has undertaken similar initiatives during the last several years, Britishefforts make employment the primary goal, marking a shift from income supportto a work-centered welfare system. This shift puts employers at the heart ofreform.

On behalf of the New Deal Task Force, Jobs for the Future UFF) has researchedearly lessons from the U.S. experience to stimulate planning and discussionamong British employers and policymakers. This paper summarizes those lessons,with particular attention to the experience of a select group of large U.S. firms thathave British subsidiaries and effective welfare-to-work programs.

These companies are: Allied Signal, American Airlines, Anheuser-Busch, Bristol-Meyers Squibb, Chevron, EDS, Federal Express, Ford, General Motors, Hewlett-Packard, Manpower Inc., Marriott International, McDonald's, Monsanto, PizzaHut, Salomon Smith Barney, United Airlines, United Parcel Service, and XeroxBusiness Services.

Because the United States and the United Kingdom have very different politicaland economic structures and traditions, as well as different welfare and workforcedevelopment systems, no attempt is made to transfer JFF's findings about theAmerican experience into recommendations for Britain. Social policies from onecountry can never be adopted wholesale by another. However, we believethat the lessons from the past few years of welfare-to-work practice in the UnitedStates are instructive and relevant to the future development of the New Deal andother welfare-to-work initiatives.

Social and Economic ContextPolitical and economic factors have accelerated the rate at which U.S. employersare hiring people on welfare.

The "push" of federal legislation is increasing the number of welfare recipients seeking

work: The 1996 Personal Responsibility and Work Opportunity ReconciliationAct transforms welfare into a work-based system by limiting welfare recipientsto a lifetime maximum of five years of federally financed assistance. The Actrequires most recipients to find employment or participate in activities leadingto work. It also places a clear priority on immediate labor market attachmentknown as a "work-first" approachrather than longer-term education andtraining strategies.

The "pull" of a shortage of qualified entry-level employees is forcing employers to seeknew sources of labor: Tight labor markets combined with rising employer demandfor basic and soft skills in entry-level positions have prompted employers to

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look to new sources of potential employees,including the welfare population. Through mostof the 1990s, the demand for qualified entry-levelemployees has increased more quickly than thesupply. During the last five years, the number ofcompanies reporting skill shortages has doubled.In addition, the literacy, numeracy, communica-tions, and teamwork skills demanded by employ-ers have increased. In this environment, manyfirms are experimenting with new ways to findqualified, entry-level staff, reduce turnover, andimprove productivity.

Welfare has traditionally provided income to poorfamilies with dependent children.

Consequently, adult welfare recipients are over-whelmingly female and between the ages of 20 and45. The typical family that receives welfare is a singlemother with two children. (Able-bodied adult menand women without children are not eligible formost welfare programs; those who have recently losttheir job are eligible for short-term income supportthrough the Unemployment Insurance system.)Welfare recipients are distributed fairly evenly acrossracial groups, and as many as a third have depen-dents under the age of three. They are unevenly dis-tributed geographically: they are overwhelminglyconcentrated in the nation's cities and, to a lesserextent, rural poverty areas.

As a group, welfare recipients face serious skilldeficiencies.

At least 42 percent of welfare recipients lack a highschool diploma. A sizable minority have physicaland other disabilities that make work difficult.One-third have never held a job for longer than sixmonths. According to one estimate, only 10 percentof the welfare population is skilled enough toadvance beyond entry-level work. Other non-skillbarriers to employment include inadequate trans-portation to where jobs are located, a lack of day-care resources, and inexperience in strategies forfinding suitable employment.

As the welfare system becomes more work-centered,welfare and workforce policy are becoming moreclosely linked.

Recent reforms of both welfare and workforce devel-opment policy in the United States emphasize thepriority of work. Welfare policy promotes work as away to reduce dependency on public assistance.

Workforce development policy has moved towardskill-development strategies that are more work-based and responsive to employers than in the past.New policy priorities include: an emphasis on serv-ing employer needs, increased roles for business-ori-ented intermediary organizations and private-publicpartnerships, a one-stop service-delivery system,and an accountability system that includes perfor-mance measures on retention and advancement aswell as hiring. These reforms constitute a majorparadigm shift in the role of the Employment Serviceat the local level.

The success of a work-centered welfare policy islinked necessarily to the dynamics of the low-wage,low-skill labor market.

Many individual employers can changeand arechanginghiring and employment practices to bet-ter help welfare recipients find work. However,important questions remain about whether the U.S.economy has enough jobs for all welfare recipients;whether recipients are qualified for available jobs;and whether the jobs that are available to these indi-viduals, in combination with government incomesupport, make it possible for welfare recipients even-tually to achieve family-supporting incomes.

These are challenges that individual employers alonecannot address. It is why many U.S. expertsandemployerssee a necessary role for public policynot just in helping welfare recipients escape depen-dency but also in making it easier for the millions oflow-wage workers who are not on welfare to achieveself-sustaining incomes through a combination ofemployment, education, job training, tax, andincome-support policies.

General Trends in EmployerWelfare-to-Work EffortsMany employers are hiring welfare recipients.

Hiring of welfare recipients by U.S. firms has grownrapidly, more rapidly than many predicted even twoyears ago. The national Welfare to Work Partnership,an organization dedicated to helping companies setup welfare-to-work programs, has enlisted 7,500firms. In 1997, Partnership members hired over135,000 welfare recipients. Two recent surveys con-clude that more than half of U.S. firms report theyhave hired from the welfare population. However,most welfare recipients get low-wage jobs. Andunfortunately for both firms and welfare recipients,turnover rates in low-wage jobs are high, unless

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employers design programs to promote retention.

Participation is dominated by larger firms in afew industries.

Larger firms in a small number of industry sectorsare the major employers of welfare recipients, withfirms of more than 100 employees estimated toemploy 61 percent of working welfare recipients.

The service and retail sectors account for 60 percentof all employment but 80 percent of the jobs securedby welfare recipients. Business services, eating anddrinking places, and health services alone accountfor 45 percent of employment for welfare recipients.

However, as Jobs for the Future's research and inter-views indicate, firms in diverseand frequentlyhigher-payingindustries, such as high technology,transportation, health, and heavy manufacturing,have successful welfare-to-work policies. Efforts todiversify target industry sectors are beginning tobear fruit.

There is potential for continued expansion ofemployer participation, particularly amongsmaller businesses.

Further expansion of employer hiring from the wel-fare population is both likely and feasible, assumingcontinued economic growth. Even in a recession or aperiod of slower growth, firms will face ongoingchallenges in finding and retaining qualified, entry-level workers.

While participation of small firms in welfare-to-workprograms has been relatively weak, two-thirds ofsmall firms that used local intermediary organizationsto recruit candidates for employment reported hiringwelfare recipients. Smaller firms that hire welfarerecipients have a much higher ratio of welfare hiresto total employees than do larger firms. Marketing tofirms by employer associations, business networks,and other local intermediaries, an idea that is gain-ing momentum in many communities, may helpincrease small-business involvement in welfare-to-work efforts.

Most employers focus primarily on recruitmentand hiring, but strategies to improve retention arebecoming more commonand they are receivingsupport from public policy.

The primary emphasis of welfare-to-work effortsto date has been recruitment and hiring. However,employers are increasingly interested in ways to

lower turnover and improve retention of entry-levelemployees.

Federal and state policies have also focused on mov-ing recipients off welfare and into employment.Increasingly, though, policymakers recognize the needfor additional funds to support strategies that helprecipients stay employed and advance in careers. Thenewly enacted Workforce Investment Act authorizesresources for training current employees, with anemphasis on low-skill workers. Federal welfare-to-work legislation provides $3 billion for measures toimprove retention and advancement of the hardest-to-employ welfare population. One target group forthis assistance is non-custodial parents with signifi-cant barriers to market success. These resources canbe used for pre-employment training and related ser-vices delivered by public agencies, local One StopCenters, or other community-based organizationsthat are part of the local workforce development sys-tem.

The Welfare-to-Work Experience ofLeading U.S. FirmsJobs for the Future interviewed 19 leading U.S. com-panies about their welfare-to-work activities.(Profiles of 11 of these large firms, all of which havea presence in the United Kingdom, are included inthe full report.) The interviews explored: corporatemotivation for developing and sustaining welfare-to-work programs, the benefits firms derive, the kindsof activities in which the firms engage, and the roleof local partnerships in simplifying and strengthen-ing employer participation.

The primary motivation for employer participationis to meet business objectives.

Wage subsidies motivate firms to begin welfare-to-work efforts but are not by themselves sufficient tosustain involvement. Public funding of recruitment,training, and support services encourages sustainedefforts by improving welfare recipients' job perfor-mance while reducing companies' financial expo-sure.That said, firms report two other motives forinitiating welfare-to-work efforts: the desire to begood corporate citizens and peer pressure or influ-ence from other companies they see as leaders intheir industry or community.

Employers identify a number of important businessbenefits from their welfare-to-work involvement.

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Three benefits are foremost: more effective access to anexpanded labor pool, reduced employee turnover, andincreased motivation and loyalty among new hires.

Firms report other benefits as well. These include:reduced recruitment and hiring costs; better-than-average quality and performance for new hires;and improved morale among a firm's incumbentworkforce.

An additional benefit comes from public subsidiesfor hiring welfare recipients and for training andother services that improve job-readiness and pro-ductivity. Employers appreciate subsidies becausethey help reduce the risks and costs of employingwelfare recipients.

Finally, employers enjoy "spill-over" benefits frominnovations that benefit not just welfare recipientsbut all entry-level employees in a company.Examples include: more effective mentoring and ori-entation programs for all new hires and strategies foraddressing transportation needs or other barriers towork that can extend beyond the welfare population.

Employers identify several challenges to expandingtheir efforts.These include:

How well local service providers can customizetheir activities to meet employer needs;

The need for quality referrals and screening ofpotential hires, given the poor job-readiness ofmany welfare recipients and other low-skillworkers;

Perceived inflexibility of welfare and workforcedevelopment agencies;

The time and resources commitment required todevelop new programs; and

Complexities of integrating services needed bymany welfare recipients into a firm's existinghuman resource practices.

Partnerships play a critical role in successfulbusiness experience.

U.S. companies have found it particularly helpful toenlist local agencies who excel at providing servicesthat are beyond the firm's core competencies. Everyfirm interviewed by Jobs for the Future stressed theimportance of working in partnership with effectivelocal organizations. Examples include: community-based organizations and temporary help firms that

help companies recruit and assess potential newhires; regional bus lines or private firms that providetransportation to and from workplaces; communitycolleges that provide training and skill development;and a range of organizations that collaborate withemployers to design and deliver work-based train-ing and post-placement support.

From the company perspective, successful partner-ships must meet clearly defined business objectives.Partners must provide excellent customer service,understand an employer's specific entry-level laborneeds, and be committed to continuous improve-ment in meeting employer standards.

Large, engaged firms are involved in two kinds ofwelfare-to-work efforts:

1. Activities that increase their access to qualityemployees and help the firm retain and advancethose employees; and

2. Collaborative inter-firm activities that share bestpractice, increase overall business involvement,and influence public policy.

1. Activities that increase access, retention, andadvancement

Firm-specific efforts focus primarily on expanding access

to sources of new employees, improving the quality of the

job match. Effective strategies include:

Better screening and matching of job seekers tojob vacancies;

Pre-employment preparation in basic skills,communication, and "soft skills" and short-termtraining targeted to the firm or industry; and

Improved orientation to the job, training on thejob, and support during socialization to the job.

Examples of firms interviewed by JFF that engage in

these efforts: Allied Signal, American Airlines,Chevron, EDS, Federal Express, General Motors,Hewlett-Packard, Manpower, Marriott,McDonald's, Monsanto, Pizza Hut, SalomonSmith Barney, United Airlines, United ParcelService, and Xerox Business Services.

Companies are increasingly concerned with strategies forincreasing retention and lowering turnover. Activitiesinclude:

Supervisor training on working with new hires;

Mentoring and coaching by company staff;

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Post-placement support to address logisticaland personal barriers to employment; and

Provision of health and other benefits toentry-level workers.

Examples of firms interviewed by JFF that engage in

these efforts: American Airlines, EDS, FederalExpress, Marriott, McDonald's, Pizza Hut,Salomon Smith Barney, United Airlines, UnitedParcel Service, and Xerox Business Services.

Many companies are developing efforts to strengthencareer-advancement opportunities for entry-level workers.

Activities include:

Helping entry-level employees to develop careerplans;

Encouraging employees to engage in additionaltraining and education (within and outside thefirm); and

Joining consortia of firms in the same industry oroccupational cluster to collaborate on training, jobmatching, and other efforts that can improveadvancement opportunities within and outside asingle firm.

Examples of firms interviewed by JFF that engage inthese efforts: EDS, Federal Express, Manpower,Marriott, McDonald's, Pizza Hut, United Airlines,United Parcel Service, and Xerox BusinessServices.

While effective participation in welfare-to-work efforts

requires staff, companies vary in how they organize and

manage their activities. There is great variation in howfirms organize the operational management of wel-fare-to-work efforts, depending upon the extent towhich a firm's operations and management are cen-tralized. Xerox Business Services decentralizes mostdecision-making in welfare-to-work efforts to localmanagers; EDS, on the other hand, has more central-ized roles for planning, program design, goal-setting,and reporting. Regardless of organizational struc-ture, corporate staff often play important roles inproviding local offices with guidance, tools andmaterials, examples from other parts of the company,and other ways of simplifying local start-up andimplementation.

2. Collaborative, inter-firm activities that promotebusiness engagement

Large firms frequently contribute staff time and resources

to help coordinate and advance business involvement in

local welfare-to-work efforts through membership onlocal Workforce Investment Boards that set policyand priorities for federal workforce-related spendingor through other local partnerships. Companies pro-vide leadership in planning and governance. Theyare well-positioned to provide detailed labor marketinformation, advocate for quality and continuousimprovement in placement and training programs,and offer practical advice to local welfare and work-force agencies on simplifying the system and makingparticipation more attractive to employers.

Employers also find it advantageous to collaborate with

other firms in their region or their industry. Examplesinclude United Parcel Service's Employee Share pro-gram and American Airlines' efforts to improvetransportation for employees. Collaborations can beespecially helpful to smaller firms with more limitedstaff and resources. They can be strengthened andfoimalized through technical assistance from publicand quasi-public institutions at the state and locallevels.

At the national level, membership in business-led organi-

zations and learning networks facilitates joint activitiesaround sharing best practices and representingemployer interests in national policy debates.Business organizations, such as the Welfare to WorkPartnership, the U.S. Chamber of Commerce, theNational Alliance of Business, the Conference Board,and Business for Social Responsibility, provide inter-ested and member companies with important oppor-tunities for inter-firm collaboration, learning, anddirect technical assistance.

Lessons and Implications fromU.S. ExperienceAlthough U.S. experience with a work-centeredwelfare system is modest and the long-term resultsunknown, the experience of participating firms andindividuals has yielded important lessons for employ-ers; their partners in designing and implementingprograms to employ welfare recipients; and the poli-cymakers who are reshaping the U.S. welfare systemand its public institutions. These lessons fall into twocategories: implementation advice to employers andlessons for the public system at the regional andnational levels.

Implementation Lessons to Employers

Successful initiatives require strategic planning

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and high-level corporate commitment, so that par-ticipation meets clear business objectives and thecommitment to participate is communicated effec-tively throughout the company.

Local partnerships can simplify and strengthenemployer efforts to hire welfare recipients whocan succeed. By working and contracting withlocal service deliverers for help on recruitment,screening, skill-development, and support ser-vices, firms can improve their job matches and, asa result, increase employee productivity

Productivity and employer satisfaction can beincreased by greater emphasis on post-placementservices for new hires. Employers are more likelyto be satisfied with their involvement in welfare-to-work if they derive long-term productivity ben-efits, not just short-term public subsidies.Promising retention strategies include these post-placement services: mentoring and coaching;supervisor training; help overcoming logisticaland personal barriers to long-term employment;and access to company benefits plans.

Companies frequently find it advantageous tointegrate efforts for welfare recipients into theiroverall human resource practices. It is frequentlyeasierand less controversial within a worksiteto provide all entry-level staff with the kinds ofsupport services that can help welfare recipientssucceed in the transition to employment.Whether they receive public assistance or not,most low-wage, low-skill employees can benefitfrom access to employee assistance programs, on-the-job training, and help with personal barriersto employment. Broad availability of such assis-tance can help reduce high turnover in entry-levelpositions.

Policy Lessons for the Public System

For welfare-to-work to expand significantly andbecome sustainable in more U.S. firms, large andsmall, changes in government policies and practicewill be needed. We highlight five policy prioritiesthat can help the United States achieve the publicgoal of meeting both employer and individualneeds:

Change policies and funding to better balance"work first" and effective longer-term skill devel-opment strategies, with a particular emphasis on:

Pre-employment skill development programs cus-

tomized in response to the needs of specific employers.

Salomon Smith Barney's close collaboration withWildcat Service Corporation is a good example ofa program that is responsive to an employer whilepreparing welfare recipients for jobs that pay welland offer career-advancement opportunities.

Skill advancement strategies while individuals are

employed, including access to career planning;innovative partnerships with education and train-ing providers; more on-the-job training opportu-nities for all entry-level employees; and supportfor additional training and credentials.

Increase public investment in activities that sup-port the decision to work. For example, provideadditional resources to help pay for on-the-jobsupport services; transportation, child-care; andsubstance-abuse services, and other activities thatcan make work more viable for welfare recipients.

Create and expand income supplements for low-wage workers, such as the gradual expansion ofthe Earned Income Tax Credit, which supple-ments wages of the working poor, rewardingthem for work and raising their effective earningsthrough the tax system.

Remake the culture of the public-sector welfaresystem. Fund efforts to accelerate and support thetransition of government from the role of simpleadministrator of income maintenance to that of apartner in promoting work, with responsibility forsetting performance standards, developingaccountability systems, and strengthening part-nerships with the private sector and non-profitcommunity organizations.

Provide public support to build the capacity oflocal intermediary organizations. Successful localwelfare-to-work efforts combine the strengths ofthe public, business, and non-profit sectors. Publicfunding should promote the engagement ofemployers and their partners in both governancestructures and in a one-stop service-delivery sys-tem that provides a single point of contact forindividuals and employers.

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January 1999 o Business Participation in Welfare-to-Work

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F O R E W O R D

Through the New Deal, the British government has embarked upon a majorreform of the welfare state, with a focus on reducing dependency and increasingthe employability of long-term unemployed individuals. As in the United States,which has undertaken similar initiatives during the last several years, Britishefforts make employment the primary goal, marking a shift from income supportto a work-centered welfare system. This shift puts employers at the heart ofreform.

On behalf of the New Deal Task Force, Jobs for the Future OFF) has researchedearly lessons from the U.S. welfare-to-work experience to stimulate planning anddiscussion among British employers and policymakers. This paper summarizesthose lessons, with particular attention to the experience of a select group of largeU.S. firms that have undertaken welfare-to-work activities and that also have asignificant corporate presence in Britain.

Because the United States and the United Kingdom have very different politicaland economic structures and traditions, as well as different welfare and workforcedevelopment systems, no attempt is made to transfer JFF's findings about the U.S.experience into recommendations for the U.K. In fact, we recognize that no pro-gram or policy can simply be transported wholesale from one country to another.However, we believe that the lessons from the past few years of welfare-to-workpractice in the United States are both instructive and relevant to the future devel-opment of the New Deal.

This paper is written with that goal: to characterize and summarize the experienceof a select group of U.S. firms and their public, private, and non-profit partners asthey implement new welfare-to-work efforts. Lessons we highlight for policy andpractice are derived from the U.S. context. We leave it to our British colleagues todistill appropriate lessons for the U.K.

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P A R T 0 N E

Introduction

What is Driving U.S.Welfare-to-Work Efforts?

The United States is in the early stages of an unprecedented social experiment:remaking welfare policy to emphasize employment. The vehicle is national legisla-tion that limits the amount of time an individual can receive welfare benefits andsets work requirements for recipients. Enacted in 1996, this federal legislationaccelerated a policy shiftfrom income support to a work-centered welfare sys-temthat was already occurring in many states.

Employers are now central to welfare policy. This has come at a time when eco-nomic forces are also leading U.S. employers to embrace new strategies for findingqualified staff, including individuals from the welfare population. Economic andpolitical realities are combining to push employers and welfare recipients towardone another, presenting both parties with new opportunities. At the same time,moving welfare recipients into work poses many challenges that are beyond theinfluence of individual employers, given the characteristics of this population, onthe one hand, and available low-wage employment opportunities, on the other.

The Policy Context: New Legislation and System Reform

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act trans-formed welfare into a work-based system. The Act limits almost all welfare recipi-ents to a lifetime maximum of five years of federally financed assistance, endingthe previously assumed right of poor parents to federal welfare assistance.' TheAct also requires most welfare recipients to find employment or participate inactivities leading to work. It places a priority on job search and immediate entryinto the labor marketthis is known as a "work-first" approachrather thanlonger-term education and training strategies.

Prior to the legislation, in the 1970s and 1980s, most publicly funded employmentand training programs, including those targeted to welfare recipients, had focusedon improving individuals' skills and abilitiesa human-capital approach.However, unless these programs had close connections with employers, partici-pants rarely secured better-paid work than those who did not participate, espe-cially over the long run.2

Public support of welfare eroded during the 1980s. Calls mounted for increasedpersonal responsibility and an end to income and other entitlements for the poor.Welfare policy continued to produce poor outcomes, and evidence mountedregarding the negative impact of long-term dependency. States responded by test-ing a range of work-based welfare strategies.

The 1996 federal legislation accelerated the shift to the work-first approach towelfare reform over a human-capital approach. Just as important, it gave the statesresponsibility for designing and administering public assistance. The federal gov-ernment now provides states with block grants, with the amount based on each

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state's allocation of federal welfare spending between1992 and 1995. States have broad discretion in: allo-cating block-grant funds to different purposes, estab-lishing the respective roles of state and localgovernments, determining the stringency of workrequirements, and deciding the amount and form ofsupportive services available to recipients. As thefederal government's role has diminished, consider-able variation in strategy and emphasis has emergedamong the 50 states.

As the U.S. welfare system becomes more work-cen-tered, its connections to the public workforce-devel-opment system are becoming closer and moreimportant. Meanwhile, that public system has signif-icantly changed. In recent years, states have experi-mented with ways to improve the performance andaccountability of a very decentralized employmentand training system, which is delivered locally bypublic, private, and non-profit institutions thatinclude: the Employment Service, community col-leges, community-based organizations, employerintermediary organizations, and One Stop Centerscreated by local Workforce Investment Boards.

The 1998 Workforce Investment Act has reformedthe public U.S. workforce-development system,based on the following principles:

A more market-driven system of resourceallocation and accountability;

Greater emphasis on quality service and respon-siveness to both employer needs and those of thelabor force;

An increased role for public/private partnershipsand for intermediary organizations at the locallevel, organized by industry or occupational clus-ter, that serve as brokers among employers, jobseekers, and service providers; and

A priority on outcomes that include measures ofretention and advancement, not just hiring.

Publicly funded at the federal level, the workforcesystem is governed at the local level by WorkforceInvestment Boards. The Chair and a majority of themembers must be employers. The system is anchoredin local labor markets by publicly funded One StopCenters that can be managed by public, private, ornon-profit entities.3

Economic Factors: Rising Skill Demands,Tight Labor Markets

While public policy pushes welfare recipientstoward work, tight labor markets and rising demandfor better-skilled, entry-level workers have forcedemployers to become more aggressive in their searchfor new employees. Emerging recruitment strategieshave included welfare recipients in their outreach.

Through most of the 1990s, the demand for entry-level employees in the United States has increasedfaster than the supply.4 Unemployment is at its low-est point since the early 1970s. Employers are report-ing difficulty filling entry-level and more skilledpositions. During the last five years, the number ofcompanies reporting shortages of skilled workershas doubled, reaching almost seven out of every tenemployers.5

Finding qualified, entry-level workers has emergedas a major problem. In focus groups in three U.S.cities, employers agreed that among new applicantsfor entry-level jobs, many appear to have "signifi-cant motivational, attitudinal, and life skill problems[and that] very basic screening dramatically limitedthe pool of eligible employees."6

American companies also face serious and growingdifficulties with high turnover among entry-levelemployees. A survey of 500 representative U.S.employers found that 26 percent of entry-levelemployees stayed on the job for six months or less;23 percent remained seven months to one year; only15 percent stayed over two years.l

Employer concerns about the availability and cost ofqualified staff are being fueled by long-term work-place trends. Firms increasingly expect those theyemploy to be able to learn new tasks and adapt tochanging job requirements.8 In many industries,more flexible production methods, rapid changes inproduction processes and technology, shorter prod-uct cycle times, and the search for custom and nichemarkets have raised employer expectations of front-line employee skills. In addition, changes in workorganization and hiring and in promotion patternshave increased employer reliance on the externallabor market for new hires, undercutting career lad-ders that once existed inside many firms.

Job requirements at the low-end of the labor markethave risen. Employers more frequently expect basicnumeracy and literacy, as well as basic computer


facility and "soft skills," such as communication,teamwork, problem solving, reliability, and a posi-tive attitude.9 In an era of tight labor markets, risingemployer expectations of entry-level recruits createserious and costly mismatches between job seekersand employers. In this environment, firms havebecome far more concerned about the costs of ineffi-cient recruitment and hiring, high turnover, andpoor productivity.

In response to these challenges, many employers areexperimenting with new ways to find and keepqualified entry-level staff. The openness to newapproaches to recruiting, hiring, and retaining work-ers is noteworthyand leads naturally to explo-ration of the potential of hiring new workers fromthe welfare rolls.

Welfare Reform and Low-Wage Labor Markets

Individual employers can changeand many arechangingtheir hiring and employment practices tohelp welfare recipients find jobs and succeed at work.However, a work-centered welfare policy is of neces-sity linked to the dynamics of the low-wage, low-skilllabor market. It is also linked to questions aboutwhether enough jobs exist for all welfare recipients,whether recipients are qualified to fill available jobs,and how public policy can improve the functioningof that labor market.

The welfare population: In the United States, publicassistance has traditionally targeted poor familieswith dependent children. Consequently, adult welfarerecipients are overwhelmingly female and betweenthe ages of 20 and 45. The typical welfare family is asingle mother with two children. (Able-bodied adultmen and women without children are not eligible formost welfare programs; those who have recently losttheir job are eligible for short-term income assistancethrough the Unemployment Insurance system.)Welfare recipients are distributed fairly evenly acrossracial groups. The total welfare caseload (adults andtheir children) in mid-1998 was 8.4 million individu-als. This is a 42 percent drop from its peak in 1994 of14.4 million.

The welfare population is disadvantaged when itcomes to skills and work-readiness. The UrbanInstitute reports that 42 percent have not completedhigh school. One-third of welfare recipients havenever held a job for over six months. According tosome estimates, without additional education or

training, only about 10 percent of the welfare popu-lation has the skills to advance beyond entry-levelwork.19 A sizable minority has physical, psychologi-cal, and other disabilities that make work difficult.As many as a third have children under the age ofthree. Long-term recipients are particularly ill-equipped to enter the workforce. Although around70 percent of welfare recipients report recent workexperience, a study of long-term recipients in LosAngeles found that less than 25 percent reportedworking during the prior two years."

While welfare recipients vary significantly in theirability to succeed at work, many are capable of mov-ing from dependence to employment. Even beforereform, over 40 percent of recipients typically leftwelfare in fewer than two years. Recent studies indi-cate that about half of the adults leaving welfaremove directly into employment and others find jobswithin a few months.12 That said, as more welfarerecipients move into employment, it is inevitable thatthose who remain will be less educated, less skilled,and plagued by other barriers to employment.

The low-wage labor market: If policy is to reducewelfare dependency through work, there will haveto be enough jobs for this populationjobs that paywages high enough for families to escape poverty.Urban Institute scholars estimate that the new wel-fare rules will push at least 140,000 recipients a yearinto the labor market between now and 2002.13(High-end projections are above 300,000 a year.)14

The Urban Institute and others have concluded thatabsorbing these new workers will be possible in agrowing economy. However, barriers such as limitedaccess to information about job openings, inconve-nient shifts, poor transportation to work, and inade-quate child care pose problems for matching welfarerecipients with those jobs.

The jobs available to these new workers are unlikelyto pay wages sufficient to pull families out ofpoverty. Data from 11 state welfare offices show thatthe hourly wage for most jobs that welfare recipientshold is between $5.50 and $7.00 per hour.15 A studyin four states found that the average quarterly earn-ings for welfare-to-work participants were less thanfull-time, minimum-wage employment and substan-tially below the poverty standard for the typical wel-fare family, due to part-time work and short tenurein each position held.16 This and similar studies

January 1999 Business Participation in Welfare -to -Work

165

reflect earnings during a booming economy, amongrecipients likely to have relatively better educationand skills. Economist Gary Burt less has concluded:17

When employer demand is high and unemploy-

ment is low the great majority of recipients whodiligently seek work will eventually find it. But

because of the nature of the jobs they find, andthe poor preparation they bring to those Jobs,

unskilled single parents will usually find Jobs that

pay low wages and do not last long.

The earnings of those moving from welfare to workremain near poverty levels. This is a challenge thatindividual employers alone cannot address. It is whymany U.S. policy expertsand employerssee anecessary role for public policy in two areas:(1) helping welfare recipients escape dependencythrough employment; and (2) making it easier forthe millions of low-wage workers who are not onwelfare to achieve self-sustaining incomes through acombination of employment, tax, and income-sup-port policies. To reduce both dependency andpoverty, policy must help local, entry-level, labormarkets become more efficient, but it will also haveto address the serious problem of low earnings forindividuals who succeed in obtaining those jobs.


17

P A R T T w o

General Trends in EmployerWelfare-to-Work Efforts

Based on the experience of U.S. firms during the first few years of large-scalewelfare-to-work initiatives, we draw several general conclusions:

Many employers are hiring welfare recipients.

Participation is dominated by larger firms in a few industries.

There is potential for continued expansion of employer participation,particularly among smaller businesses.

Most employers are concerned primarily with recruitment and hiring, butstrategies to improve retention are becoming more common, and they arereceiving support from public policy.

Many employers are hiring welfare recipients.

Hiring of welfare recipients by U.S. firms has grown rapidly, more rapidly thanmany predicted even two years ago. By December 1997, after one year in opera-tion, the national Welfare to Work Partnership had enlisted 3,200 companies,which reported hiring more than 135,000 welfare recipients that year.I9 A survey ofthese firms found that 79 percent expect to hire welfare recipients during 1999, fora total of 250,000 additional workers from the welfare population.I9 Membershipin the Partnership continues to grow; in late 1998, it reached 7,500 firms, each ofwhich had hired at least one welfare recipient.

Two recent surveys conclude that over half of U.S. firms report that they havehired from the welfare population. In a 1998 survey of 500 employers, selected toreflect the distribution of U.S. firms, 62 percent reported having hired welfarerecipients.29 In Michigan, over half of 900 employers in three metropolitan areashad hired someone who had been on welfare at some point, according to a 1997survey.2I

In addition, far more welfare recipients who get jobs are staying employed. In1992, the percentage of welfare recipients who left welfare and were employed ayear later was only 19 percent. In 1997, that figure had climbed to 32 percent.22Improving this rate for former welfare recipients and for other low-skill workerswould reduce employer costs and improve productivity.

This does not mean that all these firms made special efforts to recruit welfarerecipients. Each year, millions of jobs are filled by people with no more skills thanthose of many welfare recipients. Employers hire these individuals through rou-tine recruitment practices, such as classified ads and employee networks. Andmany welfare recipients land positions through their own efforts, without anemployer's participation in formal welfare-to-work programs.

Participation is dominated by larger firms in a few industries.

Larger firms in a few industries are the major employers of welfare recipients,according to a study of employment patterns in Florida, Maryland, Missouri, and


18

Oregon.23 Mid-size and large firms (i.e., over 100employees) employ 61 percent of working welfarerecipients but constitute a far smaller proportion ofall business establishments. As Table 1 indicates,large firms are far more likely to hire at least onewelfare recipient, and the number of hires per firm,on average, rises with firm size. However, these dataalso demonstrate an important fact: while smallerfirms have been less likely to hire welfare recipients,those that do so have a much higher ratio of welfarehires to total employees than do larger firms.

The service and retail sectors account for 60 percentof all employment but 80 percent of the jobs securedby welfare recipients.24 Business services, eating anddrinking places, and health services alone account

for 45 percent of employment for welfarerecipients.25

Efforts to diversify the industry sectors in which wel-fare recipients are employed appear to be effective.Firms reporting success in hiring welfare recipients canbe found in manufacturing, construction, high technol-ogy, and transportation, in addition to the service andretail sectors.

In many larger firms that invest in strategies to pro-mote retention and advancement of welfare hires,wages of those leaving welfare are higher than theaverage. For example, the large companies JFF inter-viewed reported paying their employees hired off wel-fare from a low of $6.25 per hour to a surprisingly high$11.75 an hour.

Table 1: Firm Size and Employment of Welfare Recipients24

Firm Size Percent of Firms Employingat Least One Welfare Recipient

Hires per Firm Employees per WelfareRecipient Hired

Large (500+) 78.6 12.4 187.2

Mid-size (100-499) 29.1 3.1 72.2

Small (20-99) 9.2 1.7 29.3

Very small (1-19) 1.2 1.2 7.2

Table 2: Employment of Welfare Recipients by Industry Sector26

Industry Sub-sector Percent of Total Hires

Business Services 19.0

Eating and Drinking Places 14.7

Health Services 10.8

Food Stores 5.5

Social Services 4.9

Hotels/Lodging 4.6

General Merchandise Stores 3.6

Educational Services 3.4

Miscellaneous Retail 2.5

Real Estate 2.4

TOTAL 71.4


19

There is potential for continued expansion ofemployer participation, particularly among smallbusinesses.

Further expansion of employer hiring from the wel-fare population is both likely and feasible. Marketingthe benefits of recruitment and hiring from the wel-fare population has been uneven, particularly amongsmall and mid-sized firms. A survey of Michiganemployers showed that while over half had hiredsomeone currently or previously on welfare, under17 percent had been contacted by a public or privateplacement agency explicitly trying to place welfarerecipients. Significantly, two-thirds of firms con-tacted by such agencies reported hiring a referral.28

If small businesses are to reach their potential to con-tribute to increased numbers of welfare recipientshired, new and different outreach methods will beneeded that take advantage of the capacity and moti-vation of business associations to serve their mem-bers' workforce needs. Such marketing strategies areemerging, particularly from business groups, such aslocal Chambers of Commerce and industry-specifictrade associations, many of whose members areeager to expand their sources of qualified, entry-level hires.29

This optimistic view is premised on continued eco-nomic growth. Of course, in a recession or even in aperiod of slower growth, some of the pressure fornew hiring that many firms feel may weaken. Forthis reason, advocates of welfare-to-work efforts arestriving to establish, expand, and institutionalizelocal initiatives now. They hope that if they succeednow, it will be easierin a less-heated economicenvironmentto sustain strong partnerships andinitiatives that seek to improve recruitment, match-ing, and productivity in entry-level work.

Most employers are concerned primarily withrecruitment and hiring, but strategies to improveretention are becoming more common, and theyare receiving support from public policy.

The primary emphasis of welfare-to-work programsto date, and of employer efforts, has been recruit-ment and hiring. However, employers are increas-ingly interested in ways to lower turnover andimprove the retention of entry-level staff. Employersare introducing or expanding a range of policies thatcan influence how long welfare recipientsor anynew entry-level employeesstay on the job. These

include:

Better screening, pre-employment training, andmatching of job seekers to job vacancies;

Improved orientation to the job, training on thejob, and support during socialization to the job;

Training for front-line supervisors on workingwith new hires;

Mentoring, coaching, and other ongoing on-the-job support;

Help with child-care, transportation, and otherpersonal barriers to work; and

Provision of health and other benefits to low-wage employees.

Employers increasingly see skill development (priorto hiring and on the job) as a means of reducingturnover and increasing employee loyalty, adaptabil-ity, and productivity. In recent years, U.S. firms haveincreased the percentage of employees they train.While better-educated employees still receive thelion's share of firm-provided training, U.S. compa-nies are now training more front-line employees.30

Federal and state policies are beginning to encourageindividual firms and local welfare-to-work partner-ships to pursue strategies that focus on retention andadvancement as well as hiring. Federal welfare-to-work legislation, enacted in 1997, provides commu-nities with $3 billion in new resources forinterventions that can improve the retention andadvancement of hard-to-employ welfare recipients.Also, the 1998 Workforce Investment Act authorizescommunities to invest more effectively in supportingtraining for current employees.


P A R T THR EE

Welfare-to-Work Experience of LeadingU.S. Firms: Motivation and Benefits

On behalf of the New Deal Task Force, Jobs for the Future interviewed representa-tives of 19 American firms regarding their involvement in welfare-to-work initia-tives.31 (Case studies of the welfare-to-work efforts of 11 of these firms accompanythis report.)

These are not typical U.S. firms. Rather, they are multinational companies thathave demonstrated a commitment to hiring welfare recipients and taking leader-ship positions in designing, promoting, and implementing welfare-to-work efforts.They include firms in a range of sectors: business services, transportation, retail,high technology, and financial services. In addition, while they are headquarteredin the United States, each has a significant business presence in the UnitedKingdom.

In these interviews, we addressed five key issues:

The firms' motivation for their efforts;

The benefits that accrued;

The kinds of high-value activities they undertook;

How companies managed and implemented these activities; and

Lessons from their experiences.

The first two issues are summarized in this section. The others arecovered in sections four and five of this report.

Business Motivation to Participate

Among the firms interviewed by JFF, meeting business needs was the primaryreason for participating in welfare-to-work initiatives.

Business reasons: Entry-level labor needs spur many employers to seekexpanded sources of qualified staff. Public subsidies for hiring, training,and/or support services can influence employer decisions to participate.Successful welfare-to-work programs have also reduced turnovermarkedly.

Companies reported two other motives for initiating welfare-to-work efforts, butthey emphasized that business reasons would determine whether their efforts con-tinued and grew:

Corporate citizenship: Many firms, particularly those with a local cus-tomer base, are committed to improving the quality of life in the commu-nity and earning local goodwill. Recognition as a good corporate citizen isfrequently an important motive.

Peer influence: Firms are frequently influenced by others they see as com-petitors for leadership in an industry or community. Peer recruitment ofcorporate CEOs can play an important role in initial decisions to partici-pate.


21

Employer Perceptions of Business Benefits

The companies we interviewed identified a numberof business benefits that derived from their welfare-to-work involvement. Foremost are: access to anexpanded labor pool, reduction in employeeturnover, and increased employee loyalty. Employersalso report reductions in hiring costs and better-than-average quality and performance levels among newrecruits. Many firms report improved morale amongexisting employees in participating facilities, as wellas greater attention to human resource issues thataffect entry-level staff generally.

Access to an expanded labor pool: By partneringwith community-based organizations with roots inparticular neighborhoods or ethnic communities,companies have expanded the pool from which theyrecruit. This benefit is significant in tight labor mar-kets and in firms or industries where workforcediversity is valued. Over half of the firms JFF inter-viewed stressed this benefit. "As a responsible cor-porate citizen, United Parcel Service's goal is to havea workforce that reflects the diversity of the commu-nities we serve," says Ken Parks, Vice President ofCorporate Human Resources. "We have a continuingneed to fill UPS jobs with dedicated people, and ourapproach has always been to partner with education,government, and non-profit organizations to locate,employ, and retain them."

Many firms are partnering with temporary employ-ment companies to both gain access to new laborpools and reduce hiring risks. As Manpower CEOMitchell Fromstein notes, "Welfare-to-work makesgood business sense because there are many jobsgoing unfilled and many candidates who want towork."

Satisfaction with quality of hires: Among compa-nies with welfare-to-work programs interviewed byJFF, every one reported that it is satisfied or very sat-isfied with individuals employed through these pro-grams. This is consistent with a survey of membersof the Welfare to Work Partnership, which foundthat 76 percent of responding firms value the welfarerecipients they employ as good, productiveworkers.32 Almost all the firms we interviewedexpect to expand their welfare-to-work efforts in thecoming year. Two noted that a rise in unemploymentmight change their plans, but no firm we inter-viewed expects to reduce its commitment in thecoming year.

Reduction in turnover: Effective recruitment, screen-ing, and pre-employment preparation can helpimprove job matches and lower turnover. SalomonSmith Barney reports a 90 percent retention rate forwelfare-to-work program participants it has hiredover two years, compared to an average of 82 per-cent for all employees in equivalent positions. UPSreports a 30-day retention rate of 70 percent for wel-fare-to-work program participants, about 10 percentbetter than for all new entry-level employees. (Oneof the company's most successful sites reports an 88percent retention rate for new hires.) Marriottreports a 65 percent retention rate after one year forwelfare recipients, compared to 50 percent for entry-level employees in general. According to GeraldGreenwald, Chairman and CEO of United Airlines,after one year, "United employees hired from publicassistance have one-half the attrition rate of similarlyplaced employees not from public assistance." Justover half of Welfare to Work Partnership firms reportthat welfare hires show the same or higher retentionrates when compared to employees hired throughstandard procedures.33

Subsidies for training and hiring: Companies thathire welfare recipients are eligible for a range of stateand federal tax credits and subsidies, including thefederal Work Opportunity Tax Credit and theWelfare-to-Work Tax Credit.34 These subsidies helpoffset employer investments and the risks they takeof making poor job matches as they reach furtherdown the employment queue for new hires.

For example, the federal government subsidizedabout two-thirds of the average $5,000 cost to theMarriott Corporation of its highly regardedPathways to Independence training program. EDShas identified seven sources of federal and stateresources that can offset training and support costsfor welfare recipients. Federal job training fundshave helped support the pre-employment trainingthat has successfully prepared welfare recipients towork at Salomon Smith Barney (through WildcatServices Corporation) and EDS (through theAdvanced Technology Program). Among firms weinterviewed that have programs in place, about threein four say they take advantage of public subsidies.

Spill-overs from welfare-to-work efforts to generalhuman resource policies: Some companies reportthat developing welfare-to-work as a humanresource priority strengthens the firm's commitment

January 1999 e Business Participation in Welfare-to-Work

9wti

11

to existing staff in lower-level jobs. Relationshipswith local organizations that recruit and screen wel-fare recipients help companies identify other quali-fied employees. Mentoring and orientation programsdesigned for welfare recipients can be useful for allnew employees. Strategies for addressing child careor other barriers to work can be easily extendedbeyond the welfare population.

United Airlines created a 60-day mentoring programtargeted to its new welfare employees. It was notlong, though, before the program was extended to allentry-level staff. As a United manager explained,"Not only did we improve retention, but a survey ofmentors found that they actually felt better abouttheir jobs and the company." EDS has expanded aneffort to identify government training grants andsubsidies for its welfare-to-work efforts into a corpo-rate initiative to identify and make use of all avail-able sources of public funding for human resourcedevelopment.

Employers that make family-friendly policies into acompetitive advantage tend to integrate welfarerecipients relatively easily into their organizations.American Airlines, for example, has contracted withthe private firm, Ceridian, to provide resource andreferral services for entry-level employees, not justwelfare-to-work hires. Many firms that hire welfarerecipients, such as AT&T and Eli Lilly, have alsobeen recognized for their progressive work-life poli-cies.

To encourage loyalty and retention, a number offirms extend the company's benefits package to allpart-time staff. Xerox provides health insurance forall employees who work more than 20 hours a week,as well as flexible work schedules, child-careresources, and a dependent-care fund. This enablesmany welfare recipients, who frequently work part-time, to take advantage of company benefits. Of thefirms interviewed by JFF, six are among thoseselected by Working Mother magazine as the 100 BestCompanies for Mothers in 1998.35

Concerns and challenges: Employers we interviewedwere overwhelmingly positive about their experi-ences (many attributed this to their focus on strate-gies to hire qualified employees and promote theirretention.) At the same time, they voiced severalimportant concerns. They acknowledged that:

It is difficult to build collaborative relationshipsat the local level that are sufficiently responsiveand customized to meet firm-specific needs.The employment and training system has his-torically served clients and their skill needs,rather than to seeing employers as an equallyimportant customer.

Some of the regulatory and bureaucratic rou-tines of local public agencies introduce aninflexibility that complicates and impedes busi-ness involvement.

Even in large firms, the time commitmentrequired to design and implement new pro-grams can be significant, and local managersmay not be able to participate to the extent theywould like.

It takes careful consideration to find the mostappropriate way to balance services to newhires from the welfare system with those pro-vided to all entry-level employees. At times,different services seem necessary, but differen-tial treatment can have repercussions with theexisting workforce.

Organizations with the capacity to provideeffective recruitment, screening, training, andsupport services are crucial to successful wel-fare-to work programs. Without them, fewfirms believe that hiring welfare recipientswould produce good outcomes.

(See next page for Table 3: Benefits to Firms andEmployees of Improved Access, Retention, andAdvancement Strategies.

12 January 1999 a Business Participation in Welfare-to-Work

Table 3: Benefits to Firms and Employees of Improved Access, Retention, and Advancement Strategies

RECRUITMENT AND HIRING

Benefit to Firm Increases sources of qualified entry-level employees

Reduces the cost and time required for entry-level hiring

Benefit to Individual Increases information about available jobs, improves job matching, andincreases access to hiring decision makers

JOB RETENTION

Benefit to Firm

Benefit to Individual

Increases employee loyalty, quality of work, and morale

Reduces employee-replacement and lost-productivity costs

Provides essential orientation to jobs, new-employee skill building,knowledge and support regarding navigating the workplace, and waysto address barriers to employment

ADVANCEMENT

Benefit to Firm Increases quality, quantity, and range of performance, ability to adapt,and the growth of employee skills to meet changing job requirements

Benefit to Individual Provides the means to gain new, marketable skills, increases employability,and heightens opportunities for wage increases and promotions.


24

P A R T F OUR

Welfare-to-Work Experience ofLeading U.S. Firms: High-Value Activities

Among the employers we interviewed, we found a sophisticated understanding ofthe challenges companies face in designing effective programsand local partner-shipsfor hiring and training welfare recipients. The employers we surveyedunderstand that successful welfare-to-work efforts require more than a simpleexchange of public subsidies for targeted hiring by private-sector firms. We foundimpressive examples, particularly in the areas of improved pre-employmentpreparation and retention strategies, of corporate commitments to new approachesand a willingness to work closely with public-sector and community-based insti-tutions.

In all these firms, activities are fairly new, localized in particular facilities andcommunities, and still evolving; none would claim that their efforts adequately orcomprehensively address access to work, job retention, and career advancement.Taken together, however, these efforts illustrate some of the most promising strate-gies for employers who want to improve their entry-level labor force while help-ing to address a critical societal problem.

Large, engaged firms tend to be involved in two kinds of welfare-to-work effortsin the United States:

Activities that increase their access to quality employees and help the firmretain and advance those employees; and

Collaborative, inter-firm activities that share best practice, increase overall busi-ness involvement, and influence policy.

1. Activities that Increase Access, Retention, and Advancement

The companies we interviewed have developed innovative approaches to address-ing their needs for quality, entry-level and better skilled workers. These includestrategies to improve access, retention, and advancement. All of the most innova-tiveand effectiveapproaches involve collaborative partnerships with non-profit, public, and private organizations that supply welfare-to-work services toindividuals and employers. Business-oriented intermediary organizationsfrequently serve as brokers for arranging these services.

Expanding Access to Employment

Companies are eager to find new sources of qualified employeesemployees withgood basic skills, motivation, and discipline. Increasingly, they are tappingexpanded labor poolsfrom different neighborhoods, diverse countries of originand ethnic/racial backgrounds. Targeted recruitment, outreach, and screeningassistance from organizations that know and understand welfare and other low-skill, disadvantaged populations can be very valuable to employers. For employ-ers to stay engaged, programs must also assure that identified job candidates areready to work hard and be productive. For welfare recipients, who tend to be less-job ready than the population as a whole, this challenge cannot be minimized.


"-)5

Several strategies for improving the quality of thejob match stand out from our interviews, all ofwhich are consistent with other research. These are:

Recruitment and screening;

Pre-employment preparation; and

Short-term training targeted to the firm orindustry.

Recruitment and screening: Many companies areturning to publicly sponsored community-basedorganizations for assistance in recruiting staff andscreening them for overall job readiness and for their"fit" with particular labor needs. All the firms inter-viewed by JFF that had welfare-to-work programsdeveloped partnerships with local organizations toimprove job matching.

Monsanto has organized networking sessions so itshuman resources staff can get to know community-based sources of potential employees. Marriott con-tracts with public agencies and community-basedorganizations to recruit for its Pathways toIndependence training program, and it restricts par-ticipation to referrals from those organizations.Chevron's service-station territory managers contractwith local placement agencies to recruit and screenapplicants. American Airlines partners extensivelywith community-based non-profit organizationsrather than building in-house programs, because thecompany does not consider preparing welfare recipi-ents for employment to be a core competency.

Temporary help firms and other for-profit placementcompanies can also play an important role inimproved recruitment. Manpower has developedassessment tools that help it determine whetherapplicants are qualified for various office or lightindustrial positions. To facilitate its welfare-to-workefforts, Manpower has adopted a strategy of locatingoffices in inner cities to tap the labor pool there.Many firms routinely use staffing firms to help themrecruit from new sources. Anheuser-Busch hasformed a partnership with the staffing firm Interimfor help with recruitment and screening of its entry-level workers. Hewlett-Packard's San Franciscooffice houses a dedicated Manpower staff member torecruit and screen for entry-level positions. Throughthis relationship Hewlett-Packard has met its initialgoal of placing 30 welfare recipients in temporarypositions and moving several into permanent jobs.

Employee screening can help firms take advantage

of tax benefits available for hiring welfare recipients.One aspect of screening can be welfare recipients'eligibility for tax credits available to firms. Somecompanies, including fast-food giants, Pizza Hut andMcDonald's, contract with outside firms to processapplications for these tax credits.

Pre-employment preparation: Improved screening isoften followed by pre-employment preparation thatincreases the ability of welfare recipients or otherentry-level workers to meet firms' job qualifications.Many welfare recipients need to improve both basicskills and communications and "soft skills" if theyare to succeed at work. In the current environment,which stresses "work first" and discourages long-term education and training, short "orientation towork" courses are becoming more common.

One influential model is the three-week "boot camp"created by STRIVE, Inc., a non-profit organizationbased in New York that works with hard-to-employyoung adults, including welfare recipients. Graduateshave demonstrated the discipline needed to keep ajob; the program weeds out those who are not ready.Another model is Sprint's six-week, soft-skills train-ing program, which is held at a community collegeand followed by fourteen days of in-house training.Local social service agencies, education and trainingservice providers, and community colleges providepre-employment training to FedEx job candidates aspart of the firm's involvement with Tennessee'sFamilies First program. Xerox Business Servicesvalues highly the pre-employment training in workattitudes, communication, and XBS expectations thatlocal organizations provide to prospective employers.

Assistance with non-work barriers to employment:Companies believe it is essential to provide assis-tance to welfare recipients in overcoming the manyserious barriers to initial employment, such as lackof child care and transportation. Although the over-whelming majority of companies we interviewedassist welfare recipients with these needs, they tendto see these services as properly provided by pub-licly funded programs and agencies.

Pre-employment job-specific training: Companiesare particularly interested in working with educationand training partners to design and deliver cus-tomized pre-employment preparation that relatesdirectly to a firm's job openings. Some companiesthat have worked closely with education and train-


ing institutions have found that jointly designed pro-grams can successfully prepare potential employeesfor a specific workplace culture and work assign-ment. Four out of five firms with ongoing programs,interviewed by JFF, emphasized the value of the job-specific pre-employment training welfare recipientsreceived.

Short-term training programs that introduce poten-tial hires to job-specific skills related to a firm orindustry are gaining favor. Salomon Smith Barney's(SSB) partnership with Wildcat Service Corporation,a community-based training provider in New YorkCity, is one example. Wildcat and SSB designed thetraining together, and each runs components of it.The program includes 16 weeks of training and a 16-week internship at SSB. The firm hires those whocomplete the program successfully as permanentemployees.

The publicly subsidized Advanced TechnologyPartnership run by EDS prepares welfare recipientsto work as EDS system administrator associates,business analysts and help-desk staff. EDS has foundthat closely linking pre-employment training to thefirm's needs yields new hires from the welfare rollswho are more settled in their work environment,more committed to their work, and quicker to graspnew concepts. An important element of training isexposure to real workplaces: potential hires learn bydoing, and their preparation is grounded in the reali-ties of the work they will perform.

Improving Job Retention

The companies we interviewed understand that ifnew hires are to remain employed beyond a fewweeks, long enough to make a positive contributionto the enterprises, serious attention must be paid tosupporting them through the series of transitionsthat returning to work requires. While this is gener-ally true for hires in entry-level positions, wherewages are low and hours are often inconvenient, itis particularly true for welfare recipients returningto the job market.

The companies we interviewed are experimentingwith a range of strategies for increasing employeeretention. These include:

Improved orientation and mentoring by companystaff;

Supervisory training in interpersonal andmanagerial skills;

Post-placement support to address personalbarriers; and

Access to company benefits.

Orientation and mentoring: To ease the transition toa new job, some employers are revising the orienta-tion they give new hires to make it less perfunctoryand more supportive. Among firms with programsin place and interviewed by JFF, more than halfhighlighted their welfare-to-work program's orienta-tion and mentoring components. UPS hasredesigned its orientation program. A number offirms have found that establishing a kind of "buddysystem" that pairs new hires with supervisors orexperienced workers who can serve as mentors canhelp new hires adjust more quickly and effectively.At Xerox Business Services, the "Friends at Work"program engages existing staff to help support newentry-level employees as they make the transition towork. Pizza Hut favors job coaching by outside part-ners to support new hires as they learn the job andinteract with supervisors and co-workers, a modelthat is common among organizations that place indi-viduals with disabilities. These strategies can beimplemented at relatively low-cost, with internalstaff and resources.

Supervisory training: Improved training for super-visors of entry-level staff is an efficient way to helpnew hires succeed. These employees are the interfacebetween new hires and the company, yet few haveany significant training in either interpersonal ormanagerial skills. Supervisory staff are particularlyill-prepared for the aspects of their job that approach"social work." However, few of the firms we inter-viewed provide supervisor training, a finding that isconsistent with other research on employer activities.

Innovative private- and public-sector efforts to trainsupervisors exist. Ceridian Performance Partners, afor-profit unit of Ceridian Corporation, providestheir supervisors with a two- to four-hour trainingcourse and ongoing telephone access to supportfrom experienced managers. Ceridian's Partners inProgress program, which helps firms hire, train,and retain qualified welfare recipients, also providestraining to supervisors.

At least 20 companies have received training forsupervisors and entry-level employees from theDenver Workforce Initiative, a demonstration pro-gram designed to improve the access of low-income


young adults, and in particular men aged 18 to 35, tofamily-supporting employment. Its "Managing toWork It Out" training curriculum prepares supervi-sors to teach new hires to anticipate and solve cer-tain workplace problems, in order to increaseretention rates.36

Post-placement support: Companies looking to helpnew hires address personal barriers to employment,including psychological adjustment to employmentand logistical issues such as child care and trans-portation, frequently partner with outside organiza-tions to provide welfare recipients (or any new hire)with necessary long-term support. In general, com-panies we interviewed see the need for this kind ofsupport, are eager to have outside agencies provideit, and would like to see public funds support it.Among the firms with ongoing programs which JFFinterviewed, about two-thirds offered some form ofpost-placement support.

STRIVE case workers maintain regular contact withthe individuals they place throughout the first yearof employment, helping them to deal with conflictswith supervisors, family or personal problems thatmight lead them to quit. Salomon Smith Barney con-tracts with Wildcat for similar post-placement sup-port. Marriott worked with a contractor to set upand manage an extensive Employee Assistancephone line service, which can respond to employeesin 150 languages. This service has been adopted byother employers including Allied Signal, AmericanAirlines, and some McDonald's. UPS developed aninnovative transportation program to help welfarerecipients in Camden, New Jersey, get to night-shiftjobs at the company's Philadelphia facility, ten milesawaya program that the local public bus line nowoperates without a subsidy.

Access to company benefits: About one-third of thefirms we interviewed, including UPS, UnitedAirlines, and Xerox Business Services (XBS), providepart-time employees with access to full companybenefits. This is a strategy to encourage loyalty andimprove retention. UPS, XBS, and some other firmsalso see access to on-the-job skill training, particu-larly in new technologies, as a benefit that workersvalue, not simply an unavoidable cost.

Promoting Advancement

If retention is more challenging than hiring, provid-ing advancement opportunities for welfare recipients

is even more daunting. The public-sector employ-ment and training system is only beginning to makeavailable resources for training low-wage individu-als who are working. Welfare recipients frequentlylack technical and other job-specific skills required toadvance from entry-level work to jobs that pay fam-ily-supporting wages. And many firms have movedaway from internal career ladders that enabledlower-level employees to advance within the com-pany.

Among the firms which JFF interviewed, there arenotable examples of career-advancement efforts tar-geted to welfare recipients and other low-wageworkers. The companies cite the value of skillupgrading to productivity and the effect that skillsexpansion and promotion opportunities have onretention and commitment. These businesses alsorecognize that minimum-wage jobs or part-timework at low wages will not lift families out ofpoverty and frequently weaken employee resolve toremain on the job.

Employer strategies for promoting career advance-ment include:

Help in assessing career options and plan-ning next steps: For example, all welfarerecipients and other entry-level accountassociates at XBS participate in a compe-tency-based development system thatincludes self-assessment of the skills theyneed to move from their current assignmentsto future ones of their choice.

Access to education and training on the jobor with employer subsidy: Additional skilldevelopment is typically critical to anyemployee's ability to advance into morecomplex job assignments. XBS makes avail-able on-the-job training, computer-basedtraining on-site, and tuition assistance forcourses taken at traditional educational insti-tutions. At UPS, extensive internal trainingprograms are available, and pay is linked toskill development. UPS partners with anumber of community colleges to delivercourses on-site at workplaces, and it reim-burses successful completers for 50 percentof the tuition. Among firms with welfare-to-work programs interviewed by JFF, over halfhighlight the internal training opportunities


they provide; about a third assist welfarerecipients with career advancement plan-ning.

Employer efforts can only go so far in promotingadvancement for individual staff members.Consortia of firms within the same industry sector orcluster of occupations can spread the cost andincrease overall employer demand for skill develop-ment for front-line employees.37 Similarly, commu-nity-based brokering organizations can helpindividuals identify career pathways to better oppor-tunities within the same or a different industry oroccupation sector. "Community career ladder" initia-tives of this type are underway in a number of com-munities, although little public money is availablefor them.38

Organizing and Managing Firm Activities

Welfare-to-work programs must meet the needs ofspecific business units and local facilities if they areto survive and mature. At the corporate level, staffoften play important roles in providing local officesand facilities with guidance, tools and materials,examples from other parts of the company, and otherways of simplifying local start-up and implementa-tion.

In the companies we interviewed, the level of over-sight from corporate headquarters varies with theextent to which the firm's operations and manage-ment are centralized. For example, XBS decentralizesdecision-making to local managers, and this princi-ple guides its company-wide welfare-to-work efforts.Because it is largely dependent upon franchisees,McDonald's creates standardized training curriculafor interested franchises, but it cannot compel localfranchises to participate in welfare-to-work efforts.EDS is about to centralize its welfare-to-work plan-ning, goal-setting, and reporting in its newly createdoffice of the Executive Vice President of HumanResources Worldwide.

The extent to which a corporate headquarters setsquantifiable participation goals and requires localoffices to report on progress also varies. AmericanAirlines has no specific goals or monitoring. EDSand Marriott require regular reports from managers.Pizza Hut and Marriott make participation by localestablishments voluntary but structure their pro-grams to provide strong business incentives to par-ticipate. At Pizza Hut, Work Opportunity Tax

Credits go directly to the profit line on a store'sincome statements, so hiring welfare recipientsaffects the store manager's performance measuresand year-end bonuses.

Corporate staff roles frequently include:

Identifying the business objectives for welfare-to-work and priority strategies for achieving them;

Developing program models or identifying suc-cessful local initiatives to disseminate to localoffices;

Disseminating directives regarding corporate par-ticipation goals, if they exist; and

Collecting and disseminating learning from localexperience for use in the design of future initiatives.

Local managers typically are responsible for decid-ing when and how to participate in local programsand partnerships, championing the effort within thefacility, and ensuring the quality and value of theeffort.

2. Collaborative, Inter-Firm Activities thatPromote Business Engagement

In addition to activities that firms pursue to addresstheir particular business or public-relations needs,many companies also engage in efforts to organizebusiness's involvement and voice on issues of wel-fare policy and practice. The firms JFF interviewedare engaged in three types of inter-firm activities:

Involvement in governance and program plan-ning at the local level;

Participation in networks of businesses in thesame industry or region; and

Membership in national organizations andnetworks.

Local Governance Structures and Program Planning

Employers across the country are playing an increas-ingly important role in the governance and planningof local, public, workforce investments. Recent pas-sage of the Workforce Investment Act formalizes pri-vate-sector involvement: local Workforce InvestmentBoards, which bring together representatives of busi-ness, labor, and government to jointly govern the useof federal workforce development funds, must havea majority of members representing businesses andbe chaired by a business representative. Amongfirms JFF interviewed that are involved in welfare-to-work efforts, over a third participate in local gov-


'c?

ernance boards.

Large firms frequently contribute staff time andresources to help coordinate and advance businessinvolvement in welfare-to-work efforts. For instance,United Airlines has loaned an executive to run theChicago land Business Partnership. Employers arewell-positioned to provide detailed labor marketinformation, advocate for quality and continuousimprovement in placement and training programs,and advise the public system on how to make ser-vices simpler and more attractive to employers.

Business Networks

Increasingly, firms are finding it advantageous tocollaborate with other firms in their region or indus-try. Among firms JFF interviewed that have ongoingwelfare-to-work programs, a majority participate insuch collaborative activities. These collaborationscan be very helpful to smaller firms whose staff andresources are limited. For example:

Ford is collaborating with General Motors andother automobile industry firms in the Detroitarea to establish widely recognized, entry-level,skill standards:

Fed Ex is organizing a consortium to improvetransportation to firms at the Dallas/Fort WorthAirport;

UPS facilities coordinate with small, local firms sothat part-time employees can more easily balancethe demands of two part-time jobs;

Ford Motor Company has made natural-gas-pow-ered vehicles available to transport welfare recipi-ents to jobs in the Detroit area;

American Airlines and McDonald's havedeveloped and disseminated curricula forpreparing employees for an industry, not just asingle company.

National Networks and Organizations

At the national level, membership in the Welfare toWork Partnership, a government-sponsored net-work, is one vehicle for sharing best practice andarticulating employer concerns and interests innational policy debates. UPS has loaned a seasonedexecutive, who ran the firm's welfare-to-work pro-gram in Philadelphia, to the Partnership. Every firmwith an ongoing welfare-to-work program that JFFinterviewed is a member of the Partnership, as are

three out of four companies we interviewed that arejust starting programs.

Other national organizations, such as the NationalAlliance of Business, the U.S. Chamber of Commerce,the Conference Board, and Business for SocialResponsibility, also provide important venues forsharing effective practice in welfare-to-work andother human resource policies. Companies pick uppromising ideas and strategies through these organi-zations and the opportunities they provide for inter-firm collaboration and direct technical assistance.Some of this interaction is informal. For example, EDSand Xerox consulted with other multinational firmsbefore beginning their welfare-to-work efforts. Anemployee-assistance hot line developed by Marriotthas been adopted by other Partnership members.Government-funded agencies that are part of thereformed workforce development system also helpfacilitate inter-firm communication and learning.


3019

PART FIVE

Lessons and Implications fromU.S. Experience

Although U.S. experience with a work-centered welfare system is modest and thelong-term results unknown, the early experience of participating companies andindividuals has yielded practical lessons for employers. It has also providedlessons for their partners in designing and implementing local welfare-to-workprograms and for the U.S. policymakers who are reshaping the welfare systemand its public institutions.

These lessons fall into two categories:

Implementation lessons for employers; and

Lessons for the public system that can make a work-centered and employer-responsive welfare system more effective for employers and welfare recipients.

Implementation Lessons for Employers

There is no "cookie cutter" model for an effective welfare-to-work programandno implementation manual to pull off the shelf. However, from our research andfrom the experience of firms we interviewed, important lessons emerge about pro-gram design and implementation.

Successful initiatives require strategic planning and high-level commitment.

Companies find that it is important to develop clear business objectives and evalu-ate available resources, priority needs, and the appropriate division of laborbetween in-house staff and outside organizations (see box on page 21 for a recom-mended planning process). CEOs and senior management must signal the effort'simportance to corporate and local office staff.

Local partnerships can simplify and strengthen employer efforts to hire and retainwelfare recipients.

Successful welfare-to-work efforts invariably involve collaborative partnerships.Employers partner with local welfare agencies charged with moving recipientsinto employment. They also partner through the public workforce developmentsystem with public- and private-sector organizations that can help them improvetheir performance in hiring, retaining, and increasing productivity from new hiresoff the welfare rolls. Firms want to "buy" expertise in provision of services that arenot part of their core competencies. They also want to increase the efficiency andreduce the costs and risks of their efforts to improve hiring and job retention.Intermediary organizations that are well-grounded in labor market realities inparticular industries and occupations or that have particular skills in brokeringamong employers, job seekers, and service providers are becoming increasinglyimportant partners in local workforce service delivery.


From the company perspective, valuable partner-ships are those that provide its staff with excellentcustomer service, understand employers' specificlabor needs, and are committed to continuousimprovement in meeting employer standards. Theyare based on mutual commitment to meet clearlydefined business objectives.

U.S. firms have found it particularly helpful to enlistpartners who specialize in services, such as:

Temporary help firms and community-basedorganizations for recruitment and assessment ofpotential new hires;

Regional bus lines or private firms for help withtransportation toand from work-places;

Community col-leges and privateeducation andtraining providersfor skill develop-ment; and

A range of organi-zations that havethe capacity to col-laborate on design-ing and deliveringeffective work-based training pro-grams andpost-placementsupport services.

Companies canencourage andstrengthen these part-nerships through vari-ous means. Largefirms can set perfor-mance standards forprograms and offerassistance to partnersin achieving them.Xerox BusinessServices, for example,sets standards for out-comes, evaluates theextent to which its partners meet them, and providesinformal advice on improvements. UPS and Bristol-

Meyers Squibb fund innovative service providersthrough their corporate philanthropic activities.McDonald's provides customer-service training forthe staff of its partner organizations.

Productivity and employer satisfaction with wel-fare-to-work can be increased by greater emphasison post-placement support services and activitiesthat reduce turnover and increase, ob retention.Too often, employers appear to perceive welfare-to-work participation as a single transaction: hire a per-son from the welfare system and get a publicsubsidy. This view is likely to disappoint all con-cerned. While there is no doubt that companies wel-

come public subsidies,many employersregard this as a weakincentive. Focusgroups with employ-ers repeatedly con-clude that companieswould rather publicfunds be used to helpprepare potentialemployees for on-the-job success than tosubsidize employersfor hiring ill-preparedstaff who are likely toquit or be fired soonafter hiring.40

Moreover, employersare most eager to hirequalified individualswho will stay with thefirm for a reasonablelength of time and beproductive. For thisreason, employerswho are looking forlong-term value ratherthan short-term wagesavings pursue strate-gies that promote jobretention. As notedabove, primary amongthese strategies are:improved orientation

and mentoring; supervisory training; supports tohelp employees address personal barriers; and bene-

Recommendations for PlanWelfare-to-Work Program 3

ning a9

Based on the experience of its member firms, the Welfare toWork Partnership recommends the following planningprocess:

Find or assign a company champion: A CEO or other high-level decision-maker who cares can make a big difference ina company's level of commitment and its resolve to sustainor expand initial efforts.

Assess the company's internal situation: A firm must assessits staff and financial resources, labor needs, personnel prac-tices, company culture, and level of commitment to decidewhether to hire welfare recipients, how many to hire, andwhat services to make available.

Review recruiting and hiring options: A company mustdecide whether it will create a program in-house, contractwith a local intermediary organization that brokers recruit-ment, training, and placement, or hire directly through thepublic sector.

Understand the welfare population: The welfare popula-tion is diverse, with different levels of skills, work experi-ence, and readiness to meet employer standards. Employersneed to communicate to potential employees the qualitystandards they expect from new hires.

Develop a strategic plan for hiring: Firms that develop suc-cessful programs identify their workforce needs clearly,communicate them to partners, identify support services fornew hires that will increase their likelihood of retention, anddevelop close working relationships and communicationwith organizations that recruit, assess, place, train, and sup-port welfare recipients who enter the labor force.


3221

fits that can substitute for income, offer hope foradvancement, and encourage workers to stay withthe firm.

Integrate welfare-to-work efforts into a firm'soverall workforce practices.

Many companies find that effective strategies toimprove retention of welfare recipients are worthextending to entry-level workers generally. The non-welfare population that works at entry-level jobs,particularly adult men or working adult women notreceiving public assistance, shares with the smallerwelfare population many barriers to economic self-sufficiency: poor education and family, child-care,and transportation problems. Innovative servicesdeveloped for, and successful with, welfare recipi-ents can be expanded and can be made more costeffective at a larger scale. In addition, on a practicallevel, it is difficult to provide welfare-to-work partic-ipants with services and benefits not available toother employees in similar jobs.

Policy Lessons for the Public System

For welfare-to-work to expand significantly andbecome sustainable in more firms, large and small,changes in U.S. governmental policies and practicewill be needed. Through our interviews and otherresearch, we identified five policy priorities that canhelp promote continued progress toward a welfareand workforce development system that meets bothemployer and individual needs. These are:

Change policies and funding priorities to better bal-ance "work first" with effective skill development.

The basis of current welfare policy is "work firstjob search and rapid labor market attachment aboveall else. Federal legislation and state implementationreward quick placement and make it far more diffi-cult for welfare recipients to qualify for publiclyfunded pre-employment education and training.While "work first" has enabled many work-readyrecipients to move more quickly into the labor forceand has forced education and training providers tobe more aware of and responsive to employerdemands, there are indications that this strategymust be balanced and tempered.

From an employer's perspective, "work first" can beimpractical and problematic. A large segment of thewelfare population is not qualified for most entry-level jobs. Forcing ill-prepared recruits upon

employers may alienate companies.

From the job seeker's perspective, constraints onaccess to education and training can cut off routesinto better-paying jobs and career advancement. Andbeing pressured to apply for jobs that are beyond aperson's skill levels can further undercut self-esteemand motivation to work.

Public policy must continue its aggressive encour-agement of work. However, as the NationalGovernors' Association has concluded, "Getting ajob, keeping it, and using it to develop new skills areimportant steps along the road to economic security. . . [but] for many welfare recipients, work will notprovide a path out of poverty unless they can accesseducation and skill training that will enable them toadvance into better jobs." 41 In a society where post-secondary education and credentials are the primaryroute to decent wages, a more flexible, balancedapproach to welfare policy is needed that combinesjob search, education, job training, and work in waysthat help individuals build marketable skills quicklyand move up to better jobs over time.42

Two important areas for greater public support are:1) customized pre-employment skill developmentprograms linked to offers of jobs upon successfulcompletion (e.g., EDS's Advanced TechnologyProgram and Salomon Smith Barney's relationshipwith Wildcat Services Corporation); and 2) skilldevelopment strategies for individuals while theyare employed (including through courses and cre-dentials granted in-house or at local educationalinstitutions).

Increase public investment in activities that supportwork and career advancement.

A work-centered welfare system cannot succeedwithout broad-based participation and support ofbusiness. This approach places new responsibilitieson employers to help solve serious social problems.Public policy must not demand too much of employ-ers. Private sector responsibility should be coupledwith public sector support that lessens the risks andcosts that companies incur in playing a more activerole in reducing welfare dependency.

In the United States today, significant publicresource are available. One source is the federalgovernment's allocation of $3 billion for new wel-fare-to-work programs that promote retention andadvancement. These funds are helping pay for such

22 January 1999 0 Business Participation in Welfare-to-Work

3 3

activities as pre-employment services, on-the-jobtraining and supports, transportation and child-careservices, substance abuse counseling, and otherways to "make work work" for particularly hard-to-employ welfare recipients.

Another source is the substantial savings states haverealized as federal welfare block grants they receivehave remained stable while their welfare caseloads,and payment obligations have shrunk. However, itappears that only a few states have chosen to expendthese funds, which they control, on additional ser-vices and supports for welfare recipients and theirfamilies. Many states have chosen to hold them inreserve, spend more on politically popular programsunrelated to work or welfare, or return some of themoney to taxpayers through tax cuts.

The temptation to reduce public welfare spendingshould be resisted. If anything, addressing seriousbarriers to employment will cost more money in theshort-run, not less. Yet without adequately address-ing the supports and services that can help prepareall but the most poorly equipped welfare recipientsfor work, the progress being made in moving peoplefrom dependence into employment will likely stall.Companies will collaborate with public authoritieson welfare reform initiatives only if they feel theyare having their needs met and are not being askedto take on unreasonable risks and costs. Companieswill only hire and retain people who have motiva-tion and basic skills. As the most-employable welfarerecipients leave the rolls, leaving those who needmore skills and more help, significant public invest-ment will be needed to prepare this population forkeeping and succeeding in private-sector jobs.

Create and expand income supplements forlow-wage workers and their families.

Low-wage work does not lift families out of poverty.The U.S. government has recognized this throughthe gradual expansion of the Earned Income TaxCredit, which supplements wages of the workingpoor and thus rewards them for work by raisingtheir effective earnings through the tax system.While use of this tax credit is expanding, the govern-ment has made little concerted outreach effort toemployers or community-based organizations tohelp those who are eligible learn about and takeadvantage of the credit. If the public goal is toreduce poverty, not just public-assistance payments,

expansion of the tax credit and other strategies toraise earnings through government policy will beneeded. Such efforts are in keeping with anapproach to welfare reform that focuses on workingpoor families in general, rather than solely on publicassistance recipients.

Remake the culture of the public-sector welfaresystem.

Welfare reform has changed the role of governmentfrom simply an administrator of income mainte-nance to a partner in efforts to move people intowork and keep them employed. The system is dri-ven now by employment-related goalsand by pub-lic payments that are increasingly based uponmeeting performance benchmarks for placement,retention, and wage rates. The welfare and work-force development systems are becoming more inter-dependent.

This shift will require significant change in state andlocal agencies and the way they do business. Theywill need help in building their capacity to serveemployers, partner with multiple non-governmentalagencies, and become more entrepreneurial. Publicagencies also need help moving toward accountabil-ity systems based on accurate information about out-comes for individuals and families, which requiresinvestment in the design and implementation of bet-ter management information systems. Private-sectorinvolvement in governing the local welfare and pub-lic-employment system can help increase the capac-ity of public agencies. To accomplish this remakingof the U.S. welfare system, states and the federalgovernment will need to provide adequate resourcesfor professional development of public-sectoremployees, as well as resources for organizinggreater private-sector involvement and assistanceto the public system.

Provide public support to build the capacity of localintermediary organizations.

Successful local welfare-to-work efforts combine thestrengths of the public, business and non-profitsectors. Public funding should promote the engage-ment of employers and their partners in both localgovernance structures and in a one-stop service-delivery system that provides a single point of con-tact for individuals and employers.


NO TES

1Not all welfare recipients are expected to be able to work. Twenty percent can be exempted for rea-sons of hardship. Under federal legislation, states must meet a requirement of 50 percent of recipientsin Jobs or work-related activities by 2002.

2 Julie Strawn. 1998. Beyond Job Search or Basic Education: Rethinking the Role of Skills in Welfare Reform.Washington, DC: Center for Law and Social Policy, p. 20.

3 One Stop Centers offer a core set of employment-related information and assessment services to anyinterested individuals. They organize referrals and access to training and skill-development services forindividuals in need of more intensive services.

Decisions about entities that operate local One Stops are left to the discretion of local WorkforceInvestment Boards, which are required by the new law for all local labor markets. The boards, whichmust have majority representation of local businesses, oversee workforce development within the labormarket, set policy, and establish performance standards and accountability measures. To insure maxi-mum independence, the boards do not deliver services.

4 Since 1992, labor demand has risen 16 percent, while labor supply has risen only 7 percent. NationalAlliance of Business. October 1998. "The U.S. Labor Market: Getting Inside the Numbers." WorkforceEconomics, Vol. 4, Issue 3. Washington, DC: The National Alliance of Business, p. 3.

5 Speech by James Kelly, CEO, United Parcel Service of America, Inc. National Alliance of Business'30th. Annual Conference: Knowledge Networks: Centerpiece of the 21st Century. October 1998.

6 Brandon Roberts and Jeffrey D. Padden. 1998. Welfare to Wages: Strategies to Assist the Private Sector toEmploy Welfare Recipients. Chevy Chase, MD: Brandon Roberts + Associates, p. 22.

7 Marsha Regenstein, Jack A. Meyer, and Jennifer D. Hicks. 1998. Job Prospects for Welfare Recipients:Employers Speak Out (Occasional Paper Number 10). Washington, DC: The Urban Institute, p. 52.

8 Richard Kazis. 1998. New Labor Market Intermediaries: What's Driving Them? Where Are They Headed?ABackground Paper for the Task Force on Reconstructing America's Labor Market Institutions.Cambridge, MA: MIT Sloan School of Management, p. 8.

9 Harry J. Holzer. 1996. What Employers Want: Job Prospects for the Less-Educated. New York: RussellSage Foundation. Philip Moss and Chris Tilly. 1996. Growing Demand for "Soft" Skills in Four Industries:Evidence from In-Depth Employer Interviews. New York: Russell Sage Foundation.

10 Judith Combes Taylor. 1997. Learning at Work in a Work-Based Welfare System: Opportunities andObstacles. Boston, MA: Jobs for the Future, pp. 3, 15.

11 Gary Burtless. Summer-Fall 1998. "Can the Labor Market Absorb Three Million Welfare Recipients?"Focus. Madison, WI: University of Wisconsin, p. 3.

12 U.S. Department of Labor, Bureau of Labor Statistics, private communication.

13 Daniel McMurrer, Isabel Sawhill, and Robert Lerman. 1997. Welfare Reform and Opportunity in theLow-Wage Labor Market. Washington, DC: Urban Institute. p. 2.

14 Kenneth Deavers and Anita Hattiangati. 1997. Welfare to Work: Building a Better Path to PrivateEmployment Opportunities. Washington, DC: Employment Policies Foundation.

15 National Governors' Association et al. July 1998. "Tracking Recipients after They Leave Welfare:Summaries of State Follow-up Studies."<www.nga.org/welfare/statefollowup.htm>

16 Brandon Roberts and Jeffrey D. Padden, p. 29.

January 1999 o Footnotes 25

17 Gary Burt less, p. 6.

18 The Welfare to Work Partnership is an organization of businesses formed at the request of PresidentClinton. Its mission is to motivate the American business community to hire and retain former welfarerecipients without displacing existing workers.

19 Keith H. Hammonds. June 1, 1998. "Welfare-to-Work: A Good Start." Business Week, p. 102.

20 Marsha Regenstein, Jack A. Meyer, and Jennifer D. Hicks, pp. 2, 54.

21 Harry J. Holzer. July 1998. Will Employers Hire Welfare Recipients? Recent Survey Evidence fromMichigan. East Lansing, MI: Department of Economics, Michigan State University, Table 7.

22 U.S. Department of Health and Human Services' First Annual Report to Congress on the TemporaryAssistance to Needy Families (TANF) program, cited in National Alliance of Business. October 1998."The U.S. Labor Market: Getting Inside the Numbers." Workforce Economics, Vol. 4, Issue 3. Washington,DC: The National Alliance of Business, p. 9.

23 Brandon Roberts and Jeffrey D. Padden, pp. 126-143.

24 Brandon Roberts and Jeffrey D. Padden, pp. 132,135.

25 Brandon Roberts and Jeffrey D. Padden, pp. 126-143. This statistic may be misleading. Staffing firmsare a major employer of welfare recipients employed in the business services sector, but these hires arerecorded as hires within the temporary help industry, not the industry in which they are placed.


27 Brandon Roberts and Jeffrey D. Padden. p. 139.

28 Harry J. Holzer, 1998, pp. 22-23.


30 A 1996 survey of representative U.S. firms conducted by the American Society for Training andDevelopment found that 43 percent of companies reported an increase in the percentage of employeesreceiving training while only 6 percent reported a decline. An average of 69 percent of employees at thesurveyed companies received some training. Laurie Bassi and Mark Van Buren, "1998 ASTD State ofthe Industry Report." Thining and Development, January 1998. pp. 26-29.

31 For this project, JFF identified a group of about three dozen U.S. companies that met two criteria:1) they have undertaken welfare-to-work efforts: and 2) they have a significant corporate presence inthe United Kingdom. Information on companies was gathered from our own research, with additionalassistance from the Boston College Center for Corporate Community Relations. Business for SocialResponsibility, the National Alliance of Business, and the Welfare to Work Partnership. Nineteen firmsagreed to in-depth interviews, which lasted 40 to 90 minutes.

By design, these firms are atypical U.S. companies. They are large, multinational businesses. They havealready chosen to be active in welfare-to-work activities at the level of firm practice and, frequently,national policy. These are engaged employers with sizable corporate human resources staff. We chosethem for this study precisely so that the experience of leading firms could be examined. It would bemisguided to draw conclusions from these interviews alone about typical or overall employer partici-pation in welfare-to-work. For this reason, we distinguish in the report between general trends and theexperience of this sample of firms.

32 Wirthlin Worldwide. 1998. "Survey of the Partnership's Business Partners." In The Welfare to WorkPartnership. Annual Report. Washington, DC: Welfare to Work Partnership.

33 Lyn A. Hogan. 1998. "Welfare-to-Work: Engaging the Business Sector." Paper presented at theInternational Conference on the Local Dimension of Welfare-to-Work, Sheffield, U.K., p. 8.

34 The Work Opportunity Tax Credit offsets up to $2,400 of the wage cost of new hires who are retainedfor more than 120 hours. The Welfare-to-Work Tax Credit offers a maximum tax credit of $3,500 in thefirst year and up to $5,000 in the second for hiring and retaining long-term welfare recipients.

35 Deborah Wilburn. October 1998. "100 Best Companies for Working Mothers." Working Mother.

36 Rebecca Brown et al., July 1998. "Working Out of Poverty: Employment Retention and CareerAdvancement for Welfare Recipients." www.nga.org/Welfare/EmploymentRetentionEmployed.htm>

26BEST COPY AVAILABLE 36 January 1999 Footnotes

37 Examples include WIRE-NET in Cleveland, which works with local manufacturing firms: theGarment Industry Development Corporation in New York City: and the San Francisco HotelsPartnership Project: and the Wisconsin Regional Training Partnership. See Kazis, New Labor MarketIntermediaries.

39 See Laura Dresser and Joel Rogers. 1997. Rebuilding Job Access and Career Advancement Systems in the

New Economy. Madison, WI: Center on Wisconsin Strategy.

39 Lyn A. Hogan. 1998. Blueprint for Business. Reaching a New Workforce. Washington D.C.: The Welfareto Work Partnership, pp. 9-15.

49 Brandon Roberts and Jeffrey D. Padden, p. 67.

41 Rebecca Brown et al., pp. 6-11.

42 Julie Strawn, p. 24.

BEST COPY AVAILABLE

January 1999 o Footnotes 27

37

B I B L I O G R A P H Y

Bassi, Laurie and Mark Van Buren. 1998. "The 1998 ASTD State of the IndustryReport." Training and Development.

Bassi, Laurie J., Scott Cheney, and Mark Van Buren. 1997. "Training IndustryTrends 1997." Training and Development. Alexandria, VA: The American Society forTraining and Development.

Brown, Rebecca et al. 1998. Working Out of Poverty: Employment Retention and CareerAdvancement for Welfare Recipients. Washington, DC: National Governors'Association. <www.nga.org/Welfare/EmploymentRetention.htm>

Burtless, Gary. Summer-Fall 1998. "Can the Labor Market Absorb Three MillionWelfare Recipients?" Focus. Madison, WI: University of Wisconsin.

Hammonds, Keith H. June 1, 1998. "Welfare-to-Work: A Good Start." BusinessWeek.

Hogan, Lyn A. 1998. Blueprint for Business: Reaching a New Workforce. Washington,DC: The Welfare to Work Partnership.

Hogan, Lyn A. and Marco Argentieri. 1998. The Road to Retention: ReducingEmployee Turnover Through Welfare to Work. Washington, DC: The Welfare to WorkPartnership.

Hogan, Lyn A. 1998. "Welfare to Work: Engaging the Business Sector." Paper pre-sented at the International Conference on the Local Dimension of Welfare to Work,Sheffield, U.K.

Holzer, Harry J. 1998. Will Employers Hire Welfare Recipients? Recent Survey Evidencefrom Michigan. East Lansing, MI: Department of Economics, Michigan StateUniversity.

Holzer, Harry J. 1996. What Employers Want: Job Prospects for the Less-Educated. NewYork: Russell Sage Foundation.

Home Care Associates Training Institute. June 1997. Welfare-to-Work: An Employers'Dispatch from the Front. Bronx, NY: Home Care Associates Training Institute.

Kazis, Richard. 1998. New Labor Market Intermediaries: What's Driving Them? Where

Are They Headed? A Background Paper for the Task Force on ReconstructingAmerica's Labor Market Institutions. Cambridge, MA: MIT Sloan School ofManagement.

Levin-Waldman, Oren M. and George W. McCarthy. April 1998. "Small Businessand the New Welfare" (Policy Notes).

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Moss, Philip and Chris Tilly. 1996. Growing Demand for "Soft" Skills in FourIndustries: Evidence from In-Depth Employer Interviews. New York, NY: Russell Sage

Foundation.

National Alliance of Business. 1998. "The U.S. Labor Market: Getting Inside theNumbers." Workforce Economics, Vol. 4, Issue 3. Washington, DC: The NationalAlliance of Business.

National Governors' Association et al. July 1998. "Tracking Recipients After TheyLeave Welfare: Summaries of State Follow-up Studies."<www.nga.org/welfare/statefollowup.htm>

Pavetti, La Donna. 1997. How Much More Can They Work?Setting RealisticExpectations for Welfare Mothers. Washington, DC: The Urban Institute.

Pear, Robert. May 27, 1998. "Welfare Workers Rate High in Job Retention atCompanies," New York Times.

Regenstein, Marsha, Jack A. Meyer, and Jennifer D. Hicks. 1998. Job Prospects forWelfare Recipients: Employers Speak Out (Occasional Paper Number 10).Washington, DC: The Urban Institute.

Roberts, Brandon and Jeffrey D. Padden. 1998. Welfare to Wages: Strategies to Assistthe Private Sector to Employ Welfare Recipients. Chevy Chase, MD: Brandon Roberts+ Associates.

Society for Human Resource Management (SHRM). June 22, 1997. "Gap GrowsBetween Worker Skills and Jobs DemandsHR Professionals Predict MoreComprehensive Recruiting, Training" (press release). <www.shrm.org>

Strawn, Julie. 1998. Beyond Job Search or Basic Education: Rethinking the Role of Skillsin Welfare Reform. Washington, DC: Center for Law and Social Policy.

Taylor, Judith Combes. 1997. Learning at Work in a Work-Based Welfare System:Opportunities and Obstacles. Boston, MA: Jobs for the Future.

Welfare to Work Partnership. 1998. Annual Report. Washington, DC: Welfare toWork Partnership.

Whiting, Basil J., Judith Combes Taylor, and Richard Kazis. September 1997. JobRetention and Advancement Strategies for Low-Wage Young Adult Workers. Boston,MA: Jobs for the Future.

Wilburn, Deborah. 1998. "100 Best Companies for Working Mothers." WorkingMother.

Wirthlin Worldwide. January 1998. "Survey of the Partnership's BusinessPartners." In The Welfare to Work Partnership. Annual Report. Washington, DC:Welfare to Work Partnership.

January 1999 0 Bibliography 29

39



Case StudiesAmerican Airlines

EDS

Federal Express

Manpower, Inc.

Marriott International

McDonald's Corporation

Pizza Hut

Salomon Smith Barney

United Airlines

United Parcel Service

Xerox Business Services

4 0

CASE STUDIES

American Airlines (AA)

Business AreaOne of the world's largest air-passenger carriers,with 80,000 employees

Benefits of Welfare-to-Work InvolvementCorporate citizenship motivated AmericanAirlines, a member of the government-initiatedWelfare to Work Partnership, to begin its wel-fare-to-work efforts. The airline also saw anopportunity to broaden its pool of applicantsfor entry-level jobs. The program has helpedAA hire quality employees, while reducinghiring time and probably hiring costsas well. These benefits drive AA's welfare-to-work efforts.

Highlights of Welfare-to-Work InvolvementSince late 1996, American Airlines and affiliatedcompanies have hired 1,200 welfare recipients.AA hires welfare recipients mainly for part-timejobs in its airport operations, with starting payof about $7.50 to $8.50 per hour, and full-timejobs in its reservation operation, with startingpay of $7 per hour.

Rather than create in-house programs, AApartners with community-based non-profitorganizations to ready welfare recipients foremployment. AA does not see preparing welfarerecipients for employment as one of its corecompetencies.

Corporate and local staff roles. Corporate-levelstaff have developed a model for welfare-to-work activities and provide guidance to localoperations that simplifies implementation.Corporate staff also identify quality partnerorganizations and build networks with thoseorganizations to make it easier for local staff toaccess their services. Local staff build and sus-tain partnerships, recruit through them, anddetermine whether the partnerships are work-ing well.

AA applies the same hiring standards to welfarerecipients as it does to other applicants forentry-level jobs, and AA integrates its efforts tohire welfare recipients with the rest of local

41

recruiting responsibilities. Therefore, corporatestaff do not monitor local welfare-to-workefforts, although AA does periodically gatherinformation on the number of welfare recipientshired.

Relationships with partners. American Airlinespartners with organizations that have a reputa-tion for quality services in readying welfarerecipients for work. AA sets program qualitystandards and provides feedback about its satis-faction with outcomes. Local AA staff workclosely with partners to assure that they under-stand AA's hiring standards, such as timeliness,communication skills, and attitude and behav-ior on the job. AA staff provide informationabout job openings and needed skills, partici-pate in developing criteria for successful pro-gram completion (e.g., attendance, timeliness,attitude, and dress), give input on programdesign, participate in program activities such aspresentation and interview skills development,and provide workplace tours and short-term jobshadowing.

Local role, and support of retention andadvancement. Supervisors are responsiblefor retention of employees. The airline has notdeveloped specific retention services for welfarerecipients, either in-house or through partnerorganizations. Instead, because AA recruitsmany entry-level employees from non-traditionalbackgrounds, it has sought to offer support forsupervisors and coaching for all entry-levelemployees. The airline has also contracted withCeridian, a for-profit employee assistance firm,to provide a resource-and-referral service for allemployees. The service provides high-qualitysupport in dealing with a wide range of work/life issues. It is designed to meet the needs ofentry-level employees in particular, and it pro-vides Spanish bilingual/bicultural services.

Because AA's airport agent and reservation jobsare complex, the airline provides entry-levelemployees with four to six weeks of orientationand training in technical and customer serviceskills. In addition, a less-intensive

CASE STUDIES

American Airlines (AA)

Highlights of Welfare-to-Work Involvementcontinued

supervisor-employee relationship for new reser-vations employees makes it possible for super-visors to listen in on calls, coach, and rolemodel. In some locations, AA is testing the ideaof having skilled co-workers provide role mod-eling and mentoring to new employees.

Future TrendsAmerican Airlines involvement in welfare-to-work is dependent upon hiring needs and tightentry-level labor markets. The company expectsto maintain or expand its involvement in wel-fare-to-work during the coming year.

Challenges and Promising ActivitiesBecause lack of transportation limits the employeepool, it is a major challenge for employers withoperations at airports. In Dallas/Fort Worth, AAis organizing a coalition of employers to addressthis challenge. However, the cost of increasingthe availability of transportation is a seriousconstraint for airport-based firms.

Other than this effort, AA has rarely partici-pated in intermediary organizations such asa Regional Employment Board or WorkforceDevelopment Council. However, the airline hasreceived information from intermediaries on thequality of potential partners' services, therebymaking it easier for AA to select its partners.

Having observed that AA employees often needassistance with non-work needs, the airline hascontracted with Ceridian to provide a resource-and-referral service similar to the AssociatesResource Line Ceridian developed for MarriottInternational. (See Marriott case study) Theservice provides many of the benefits of goodcase management.

However, AA notes that the organizations withwhich it partners, other than Ceridian, tend toprovide discrete services, rather than meet anemployee's overall needs. AA suggests that ifthese providers of specialized services formed a

network, they could better integrate their effortsto meet all of an employee's needs.

Key LessonsAA's experience with service providers hasbeen surprising. "The extent to which serviceprovider organizations have been cut offfrom companies in the past has really beeneye-opening," says Mary Ann Lynch, AA'sManaging Director for HR Policy andEmployee Services. "They've been thrilledthat AA reaches out to them." Lynch notesthat new measures of success for agenciesreceiving public funding, such as the qualityof jobs program participants secure and theextent to which they retain jobs, are strongincentives for service providers to workwith employers.

A portable credential is useful to employees,AA, and industry-wide. AA's Travel Academytraining credentials participants for good jobs.AA has licensed the program to job-trainingprograms and to secondary schools for use inschool-to-career programs. By doing so, AAexpands the pool of candidates for its jobsand provides benefits for other travel servicesfirms, including small and mid-size employ-ers.

Contact PersonMary Ann Lynch, Managing Director, HR Policyand Employee Services, (817) 967-1433

CASE STUDIES

EDS

Business AreaA professional services firm that providescomputer systems and technology services,business process management, managingconsulting, and electronic business; 110,000employees, including 75,000 in the UnitedStates and over 9,000 in the U.K.

Benefits of Welfare-to-Work InvolvementEDS' goal for its welfare-to-work program isto increase shareholder value by combatingthe critical shortage of information technologylabor, reducing hiring and training costs, andextending the firm's corporate citizenship,according to Laura Gragg, program managerfor EDS' Government Partnership Plan. Shesays that the firm's welfare-to-work efforts,which have strong screening and training com-ponents, have provided a source for technicallyskilled employees. According to internal evalua-tions, welfare recipients who participate in EDS-sponsored training programs and are then hiredby the company are more settled in their workenvironment than other new, entry-levelemployees. They are also more committed totheir work, quicker to grasp new concepts, andmore motivated to try new things.

Data from the EDS-sponsored AdvancedTechnology Program (ATP) show that the pro-gram achieves substantial savings for the firm.Almost three-quarters of the savings reflect thedifference between entry-level and average com-pensation, with the balance resulting aboutequally from lower recruiting and training costsand from the use of public funds to underwritetraining.

EDS' success in using public funds for trainingwelfare recipients has been influential in itsrecent decision to substantially expand thisstrategy. Through its new Government Partner-ship Plan, EDS plans to seek all sources of pub-lic funding that its employees are eligible for,use those funds to underwrite wider training,and apply the savings to expanding theemployee development program.

Highlights of Welfare-to-Work InvolvementEDS has partnered with other organizations todevelop award-winning programs providingtechnical training and mentorship services.

Technical training for welfare recipients.The Advanced Technology Program (ATP)is an award-winning partnership of EDS,other employers, three community colleges,and state and local organizations that providesupport services. The program is limited towelfare recipients and receives federal, state,and local funding through Michigan's work-force development boards.

ATP's intensive training combines classroomand on-the-job learning. Following carefulscreening, a five-week preparation phase pro-vides introductory technical/professional skillstraining. Next, an eight-week job-skills develop-ment phase provides technical training in oneof several employment tracks and continuedtraining in professional skills. Finally, participantsenter a four- to five-week internship, with bothclasses and on-the-job training. ATP participantsmust put in 55 hours a week for 18 weeks.

EDS hires participants who complete the pro-gram successfully. The firm has hired systemadministrator associates, business analysts, andhelp-desk staff from ATP. Incomes in these posi-tions are high enough for many employees toend all public assistance, including food stampsand Medicaid, within a year of employment.

Support for retention and advancement. Whenhiring a welfare recipient, EDS provides formalsupport from supervisors and informal supportby co-workers. A best-practice example is theaward-winning Work First program, operatedby EDS and Oakland Community College. Theprogram provides a mentor-manager orientationto assist welfare recipients with work transitionand workplace navigation skills.

EDS sees staff development as the key toimproved retention. The firm helps staff developindividual plans and provides a range of train-ing and tuition-reimbursement options.

CASE STUDIES

EDS


Relationships with partners. Strong partnerships,careful screening, and extensive training arekey to EDS's welfare-to-work program. Overthe years, the firm's local staff have developedsignificant partnerships with Oakland (Michigan)Community College, The Cornerstone Partner-ship in St. Louis, and Detroit's Focus: Hope.EDS has invested substantial resources intodeveloping training at these organizations,providing technology, technical assistance,and curriculum design/development. It alsoloans executives, such as the chief of informa-tion for Focus: Hope, to the training agencies.

EDS recently donated a computer lab to theDallas Urban League, which will use it for pre-employment software training. EDS will workwith Urban League staff to prepare welfarerecipients to enter the workforce. In addition,EDS will define and disseminate informationabout job titles and skill sets for open positionsand help the Urban League pursue continuousimprovement activities.

EDS seeks to partner with organizations thatwill recruit welfare recipients who are potentialemployees and assist them with overcomingbarriers to employment, such as the need forchild care and transportation.

Expanding activities. EDS is rolling out anextensive new corporate human resources cam-paign that seeks to increase the employment ofwelfare recipients. A recently implemented, morecentralized corporate structure has provided theopportunity to expand its welfare-to-work effortsand leverage its local experience. Under theleadership of the firm's new Executive VicePresident for Human Resources Worldwide,the Government Partnerships Plan will helpEDS retain and upgrade the skills of its work-force, employ more welfare recipients, andunderwrite these activities with public funds.

Corporate staff have identified at least sevenfederal and state training subsidies, tax incen-tives, and hiring incentive programs availableto local operations. Staff are leading efforts toenable the firm to identify current employeesand new hires who are eligible for subsidies.They are also training managers to identify jobcodes for which welfare recipients could behired, determine core competencies for eachposition, and apply sophisticated recruitingmethods to identify quality candidates.Corporate staff will also design training for wel-fare recipients.

Goals for local participation in hiring, retaining,and developing welfare recipients will be set bycorporate headquarters. Local staff will developtwo-year implementation plans and providequarterly progress reports to corporate staff.Each EDS unit will identify a project leader,identify a number of new positions for the ini-tiative and determine the types of training thoseindividuals will receive.

Challenges and Promising PracticesDemand for employees with information technol-ogy skills will remain strong for the foreseeablefuture, even if unemployment increases gener-ally. This makes recruiting good job candidatesa key challenge. Through strong partnershipsand high-quality programs, EDS has had suc-cess in recruiting highly motivated and techni-cally adept individuals who are receivingwelfare benefits and training them.

To meet its business needs and to promote localeconomic development, EDS is reviewing theopportunity to develop seven customer call cen-ters close to low-income communities. Staffingthese centers is a challenge. Typical call centeremployees are 18 to 24 years old, an age groupwith relatively high rates of unemployment inlow-income communities.

44

CASE STUDIES

EDS

Key LessonsJob-focused pre-employment training iseffective in developing technical staff for EDS.The award-winning Advanced TechnologyProgram meets the needs of welfare recipientsand EDS. However, a large amount of pre-employment training can be difficult to carryout under laws and regulations that stress awork-first approach.

EDS has used partnerships to provide effec-tive technical training. In partnership withemployers, community colleges and commu-nity-based organizations are effective plat-forms for high-quality technical training.

The success of EDS in training welfare recipi-ents holds promise for broader workforcedevelopment efforts. The GovernmentPartnership Plan is a bold strategic effort tomake multi-faceted connections between pub-lic resources and business objectives whilealso addressing issues of recruitment andretention of non-traditional labor pools. It willrequire both flexibility on the part of publicfunding sources and the ability of EDS to bal-ance its own objectives with public policies.

Contact PersonLauren Gragg, Program Manager, (972) 604-2212

4.5

77 . re . J .

CASE STUDIES

Federal Express (Fed Ex)

Business AreaOne of the largest express transportation com-panies, providing domestic and internationaldelivery services with about 140,000 employees,including 5,000 in the U.K.

Benefits of Welfare-to-Work InvolvementFed Ex began its welfare-to-work initiative in1997. While government tax credits initially ledFed Ex to hire welfare recipients, the firm hasidentified four additional important benefits:reduced hiring time, improved quality of newhires, the ability of former welfare recipients tostay on the job and advance in employment atFed Ex compared with other entry-level work-ers, and the increased loyalty of new employeesto Fed Ex.

Highlights of Welfare-to-Work InvolvementFed Ex is involved with Families First, a Memphisinitiative that is part of Tennessee's welfare-to-work effort. The Fed Ex/Families First Partner-ship involves state employment and humanservice agencies, local governments, the localprivate industry council, community colleges,education and training providers, and other ser-vice providers. The program is designed to meetthe needs of both employers and job seekers.

Within the past year, Fed Ex has hired approxi-mately 260 Families First participants, placingthem in either warehouse or clerical jobs. Mostare employed as cargo handlers at a base rateof $8.67 per hour.

Relationships with partners. Fed Ex worksclosely with training organizations that preparewelfare recipients for employment. These orga-nizations provide training in job readiness andother soft skills, as well as specific skill trainingfor Fed Ex jobs. The training stresses the impor-tance of taking initiative and seeking opportuni-ties beyond entry-level work. Fed Ex attributesthe program's positive outcomes to the trainers'pre-employment interaction with and orienta-tion of new employees.

Fed Ex recruiters meet regularly with trainersand program participants prior to employment.The meetings help trainers incorporate Fed Exstandards for instruction and curriculum intothe program. Fed Ex recruiters spend one-on-onetime with participants, helping them becomefamiliar with one another, an aspect of the pro-gram that eases the transition to employment.

Support for retention and advancement. Fed Exoffers "flex time," trains managers in imple-menting flexible schedules and other work/lifeissues, and has many support groups to helpemployees balance work and family life. Formerwelfare recipients receive the same benefitspackage as other employees, including medical,dental and vision-care insurance, and tuitionreimbursement. For the last three years, WorkingMother magazine has selected Fed Ex as one ofthe 100 Best Companies for Working Mothers.

Challenges and Promising ActivitiesEntry-level work at Fed Ex is demanding andturnover is high. Most, if not all, entry-levelpositions filled by Families First participants arepart-time. However, retention rates for FamiliesFirst workers are better-than-average for thefirm as a whole due to the pre-employmenttraining participants receive and the substantialbenefits Fed Ex provides to its part-time workers.

Transportation and child care present consistentdifficulties for new employees. While reimburse-ment for child care is available from the govern-ment, Fed Ex personnel and partner organizationsdeal with short-term or last-minute crises as theyarise. The close relationship between Fed Ex andits partner organizations makes it possible toaddress crises and system-level problems.

To ensure the integrity and quality of pre-employment training, Fed Ex works closely withtraining staff and program participants. Fed Exhas invested considerable time and effort in set-ting standards and policies, designing curricula,and informing instructors about Fed Ex jobopenings and skill needs. Moreover, FedExworks to ensure that staff approach participants

6

CASE STUDIES

Federal Express (Fed Ex)

Challenges and Promising Activitiescontinued

as individuals: it cautions instructors and super-visors not to "treat participants as a number,[because] they feel it."

Future TrendsFed Ex intends to expand its welfare-to-workefforts beyond its Memphis hub. It is contactingits recruitment centers nationwide to planrecruitment and hiring strategies. Centers reporton the number of welfare recipients employedto date, as well as plans for a local welfare-to-work effort. Fed Ex encourages the recruitmentcenters to seek partner organizations, and theMemphis office provides guidance to centersthat wish to establish new local welfare-to-workprograms. Fed Ex expects its need for entry-levelworkers to continue, making this investmentworthwhile.

After one year of operation, the Memphis officehas identified several ways to strengthen its wel-fare-to-work program and support employees'transition to work. The office plans to establish avoluntary mentor program for new hires, in theexpectation that mentors will ease the adjustmentto work, reduce the adjustment period, and helplower turnover. Fed Ex has also established a pilotprogram in which people seeking GEDs are hiredfirst in temporary positions; after receiving GEDs,they are considered for permanent positions. Thefirm is also arranging for Families First partici-pants to have a quality, accessible child care.

Key LessonsFed Ex's welfare-to-work program dependsupon communication and commitment.Strong, constructive, working relationshipsamong Fed Ex human resources staff andmanagers, the training staff, and other part-ners involved in the Families First initiative

are essential. These relationships enableFed Ex to communicate expectations clearly,provide feedback on quality, and guideimprovement of pre-employment trainingand orientation.

Fed Ex provides substantial, consistent inter-nal support. Maintaining these relationshipsrequires support within Fed Ex and consistent,thoughtful effort over time. Benefits to the firmmake this substantial investment worthwhile.

To employ individuals with significant barri-ers, Fed Ex needs strong partners. Workershired through Families First often face com-plicated barriers to employment, and thosewho work with them need to be committedto seeing them succeed.

Fed Ex has found that involvement frequentlyexpands to new services and supports. Notonly does Fed Ex expect commitment to suc-cess from supervisors and trainers, the firmis demonstrating it by piloting mentoring pro-grams and through its work on GED andchild-care activities.

Contact PersonWillie Payne, Senior Recruitment Specialist,(901) 797-5824

47

CASE STUDIES

Manpower, Inc.

Business AreaThe world's largest temporary-help and staffingfirm, with 2 million employees, including about33,000 in the U.K.

Benefits of Welfare-to-Work InvolvementManpower's core business is to help otheremployers meet short- and longer-term staffingneeds. Manpower specializes in office, lightindustrial, and professional technical jobs.Technical jobs are the firm's fastest growing area."Welfare-to-work makes good business sensebecause there are many jobs going unfilled andmany candidates who want to work," saysManpower CEO Mitchell Fromstein.

Highlights of Welfare-to-Work InvolvementManpower has employed welfare recipients formany years and doesn't distinguish betweenwelfare recipients and other job seekers.Manpower got involved with welfare-to-workas a natural extension of its business and out ofa sense of civic responsibility.

Manpower is a temporary employment agency,but it provides a vehicle for welfare recipientsto secure permanent jobs. About 54 percent ofManpower's temporary placements in theUnited States lead to permanent job offers.

Building the system. Manpower is a foundingmember of the Welfare to Work Partnership andlocal partnerships throughout the United States,including those in Nashville, TN; OrangeCounty, CA; Milwaukee, WI; Granite City IL;and Detroit, MI. In addition, Manpower's expe-rience as an intermediary between employersand job seekers and its systems are a significantresource for the firm's welfare-to-work efforts.Manpower's credibility with and knowledge ofemployers extends the reach of existing place-ment efforts and can enhance the opportunityindividuals receiving welfare have to achievepermanent employment.

In Orange County, Manpower partners with Curtis& Associates to help participants in California'sGAIN (Greater Avenues of Independence)Program move from welfare-to-work. Curtis

& Associates recruits welfare recipients andManpower trains and employs them. EdwardRamirez of Curtis & Associates says thatManpower personnel provide a great deal ofmentoring and motivation, reducing the stressof seeking employment.

In Louisville, Kentucky, Manpower has an officeat the Wiggins Family Investment Center. Thisone-stop shopping approach makes it easy forwelfare recipients to access social services,including a wide range of job training and assis-tance in overcoming barriers to work.Manpower provides job-seekers with assess-ments of interest and skill. It also offers trainingin soft skills, such as punctuality and communi-cation, and computer training on more than 350software packages.

The "reverse funnel." Manpower's employmentprocess efficiently interviews, evaluates, trains,and matches welfare recipients with jobs. Unlikethe typical "funnel-like" hiring process, withmany candidates seeking one job, Manpower's"reverse funnel" approach matches each welfarerecipient to one of the many temporary jobsManpower seeks to fill. The firm also provides awide range of training services before and afteran individual goes to work through Manpower.

Corporate role. Manpower's corporate staff pro-vide research on worker assessments, job train-ing strategies, labor market trends, and customerdemands. Corporate staff have developed inno-vative assessment and training strategies.

Local role. Local Manpower staff develop rela-tionships with employers, enter into governmentcontracts, and build relationships with commu-nity organizations in order to secure job orders,funding for training, and recruitment assistance.

Relationship with partners. Manpower hasestablished partnerships with city governments,community colleges, and community-basedorganizations in Seattle, Philadelphia, New York,San Francisco, and Nashville. Manpower's roleis to provide services that enable welfare recipi-ents to meet Manpower's prevailing standardsfor temporary employees. The firm bases its

CASE STUDIES

Manpower, Inc.


efforts on continuing skill building, leading to acareer path rather than simply a job. To achievethis objective, Manpower combines work experi-ence, upgrade training, and retention assistance.

In Nashville, the firm won a contract to providetraining services to welfare recipients who aremoving to work through the city's welfare-to-work program. Public funding produces as muchrevenue for Manpower's welfare-to-work train-ing as its other training activities, according toDebra Richardson, Manpower's NashvilleTraining Manager.

Manpower has developed numerous relationshipswith non-profit, faith-based, and governmentorganizations as part of its welfare-to-workefforts. These partners provide recruitmentservices and assist participants to overcomebarriers to employment. The most importantcharacteristics of successful partners are flexibil-ity and their capacity to help individualsquickly overcome child-care, transportation,and other barriers.

Services Manpower provides. Manpower'swelfare-to-work partnerships are designed toprepare welfare recipients for entry-level jobs,with skills especially in call centers, data entry,office skills, and information technology.Manpower brings four major assets to thesepartnerships: assessment, skills training,employer credibility and access, and upgradetraining.

Assessment. Manpower's methods of matchingjob seekers with job openings are the same forall candidates. Assessment procedures aredesigned to "screen in" job-seekers for a rangeof jobs rather than screen them out from jobs.Assessment activities frequently include theproduction of work samples and in-depth inter-views on work history, job preferences, and skills.

Training. Manpower has created a video-based"Putting Quality to Work" program that illus-

trates the use in work situations of "soft skills"such as punctuality, accepting supervision, takinginitiative, and treating co-workers as customers.The firm's Skillware program provides hands-on experience with the newest office software. Aself-paced computer-based training tool thatuses work simulations, Skillware can developoffice job-related software competence in eighthours or less, and provides training in wordprocessing, database, spreadsheet, electroniccommunication, and data entry. In addition,training in Good Manufacturing Practices andtraining in high-demand soldering skills, isavailable for those seeking light manufacturingjobs.

Employer credibility/access. Manpower hasextensive relationships with employers, well-positioning it to open the doors to jobs forwelfare recipients. Manpower's reputation forsuccess in matching the person and the job pro-vides credibility to welfare-to-work partnershipsin which it participates. Within those partner-ships, Manpower reassures firms that employeeswill have the necessary skills and characteristics.Manpower also benefits welfare-to-work part-nerships with its Quality Performance program,which monitors job-placement matches and pro-vides training to continuously improve the extentto which it meets employer needs and includesappraisals of staff performance and job skillassessment validity.

Support for retention and advancement.Successful completion of training is factored intoManpower's job-matching process, increasing itsvalue to employers. Manpower is beginning tointegrate training with placements by developinginternships and work assignments based on theskills an individual seeks to develop. In addition,Manpower provides all employees access toTechTrackindividualized, self-based trainingin over 1,000 networking and programmingtechnologies that leads to certification. Thistraining makes it possible for some welfare-to-work participants to get lucrative information

49

CASE STUDIES

Manpower, Inc.


technology jobs, especially over the longer term.TechTrack is already available through anInternet site, and Manpower plans to make thefull range of its training available on-line.

Challenges and Promising PracticesManpower's research shows that the U.S. econ-omy is strong and that the likelihood is verysmall that unemployment rates will increasesubstantially in the foreseeable future. However,in a downturn, it is likely that the last hired willbe the first fired. Because so many welfarerecipients have gotten jobs recently, a significantnumber might lose jobs. Public funding foroutplacement and counseling services mightbecome very important.

Key LessonsManpower helps smaller businesses managehiring risk. By providing a "try before youbuy" service, Manpower reduces the riskinvolved in hiring, especially for smaller firmsthat lack a human resources staff.

Manpower has developed tools that fitwelfare-to-work efforts. Because it benefitsthe client firm where employees are placedand the job seeker, Manpower has developedhigh-quality assessment, training, and job -matching tools and strategies. These havegreat value in supporting candidates' desireto retain employment and gain promotions.

Manpower's partners provide supportservices. Because Manpower doesn't offerassistance in overcoming non-work barriers toemployment, it is building partnerships withorganizations that can provide that assistance.

Contact PersonSharon Canter, Director of StrategicInformation, (414) 906-6253

50

CASE STUDIES


Business AreaA worldwide operator and franchiser of hotelsand senior living communities, with 117,000employees, including 2,000 in the U.K.

Benefits of Welfare-to-Work InvolvementAmong welfare recipients who participate inMarriott's Pathways to Independence program,retention rates and job performance levels arefar higher and their loyalty to the firm is greaterthan entry-level employees in general. Theretention rate is 65 percent after one year versus50 percent for entry-level employees who didnot go through the Pathways program.

"We have been able to get employees who hitthe ground running," says Janet Tully, a formerdirector of community employment and trainingfor Marriott. "We knew that they would be welltrained. That they have been so loyal is some-thing we really did not expect."

The Pathways program also provides access to anew labor pool, reduces hiring costs, and givesMarriott wonderful publicity, according to FredKramer, director of community employment andtraining.

Marriott's pioneering Associate Resource Line(ARL) provides resource and referral informa-tion designed specifically to meet the needs ofentry-level employees. The ARL helps employ-ees maintain high-quality job performance,reduces turnover, and reduces associated costs.It has yielded a 4-to-1 return on investment,with 23 percent of users reporting reducedabsenteeism, 34 percent reporting being less dis-tracted, 20 percent noting improved relation-ships with co-workers, and 17 percent sayingthe service meant they did not have to quit theirjobs, according to Marriott.

Highlights of Welfare-to-Work InvolvementThe Pathways to Independence programenables Marriott to hire qualified employees;the Associate Resource Line helps reduceturnover.

Pathways to Independence highlights.Pathways to Independence began in 1991. In

51

1998, Marriott ran the program at 28 hotels inthe United States. Success in the program guar-antees a job at Marriott or another hotel.Marriott's data show that typically 95 percent ofprogram participants secure jobs.

In 1997, 220 welfare recipients participatedin the program. In 1998, its best year ever,Marriott expanded participation to over 500people and expects to have at least as manyparticipants in 1999. With contracts through theyear 2000 in hand, Marriott expects to expandthe Pathways program.

Associate Resource Line highlights. The ARLhas widespread use throughout Marriott. It isavailable to entry-level employees in general,including welfare recipients hired through thePathways program. Data for 1996 indicates that44 percent of calls relate to child-care or parent-ing issues, 9 percent relate to elder care issues,27 percent concern personal crises (e.g., hous-ing, immigration, domestic abuse, custody,harassment, child abuse, domestic crises), and20 percent involve counseling. The ARL has amultilingual capacity; in 1996, 13 percent ofcallers did not speak English.

Pathways to Independence Program operations.A six-week training program combines 60 hoursof classroom training with 120 hours of on-the-job occupational skills training. The program isdesigned to build relationships between traineesand Marriott staff, who conduct classes and skilltraining. Marriott staff play a much more signif-icant role in carrying out the Pathways programthan is common for welfare-to-work programs.Each class of 15 welfare recipients involves 15 to40 Marriott Associates.

The Pathways program focuses on soft skills.Marriott has found that the program's success inhelping participants develop a positive self-imageincreases their willingness to see themselves ina positive work role and to be held accountablefor their actions. Training topics include cus-tomer service, teamwork, accepting and givingcriticism, and career development opportunitiesat Marriott. The program also teaches life skills

CASE STUDIES



(e.g., personal finance and how to apply for theEarned Income Tax Credit, a federal income sup-plement).

Marriott contracts with government agenciesfor funding that offsets a substantial portion ofprogram costs.

The role of partners. Marriott develops partner-ships with government funders and community-based organizations on a city-by-city basis. Amongits partners are Jewish Vocational Services,Goodwill, and Job Corps. Partners are the exclu-sive referral source for the Pathways program.They pre-screen candidates, using proceduressimilar to typical hotel screening, such as checkingfor substance abuse, literacy, and a willingness towork. Some partners understand Marriott's workenvironment very well. In at least one case,Marriott accepted into Pathways 94 percent ofwelfare recipients referred by a partner. Marriott'sgoal is to accept 50 percent of referrals; it consid-ers that an acceptance rate of 25 percent or less isa sign that the partner needs to improve itsunderstanding of Marriott's employee require-ments and program standards.

Partners provide a variety of other services aswell. The best partners provide training in lifeskills, behavior, and self-esteem; case manage-ment services before, during, and after the pro-gram; support for overcoming barriers toparticipation in the training (e.g., by conveningtrouble-shooting sessions among the participant,the case manager, and Pathways program staff);and services to encourage job retention andcareer development.

Roles of corporate and local staff in thePathways program. Corporate staff developedthe Pathways program and the ARL, market theprograms to hotels, and monitor quality. In regardto Pathways, corporate staff modify the curricu-lum to keep it current with Marriott workprocesses, set up contracts with funding sources,train hotel staff to host the program, and liaisonbetween local hotel staff and the funding source.

Over time, corporate staff reduce their role frommajor responsibility to troubleshooting.

Local staff participate in the program voluntar-ily but tend to continue their involvement oncethey see the benefits. They run the classroomaspects of the program. Local staff also super-vise a job-shadow component of Pathways. Atsome hotels, Marriott's human resources staffsupervise the program and serve as job coun-selors during welfare recipients' transition toemployment.

Marriott provides partners with informationabout job openings and needed skills and inputinto policies and program design that improvespartners' capacity to help participants meetMarriott's standards. Marriott staff also workhard to assure that partners share the firm'sexpectations, and they work with partners' staffon continuous improvement of the programs.

Marriott considers that the best measure ofPathways' value is the number of hotelsinvolved. For contract reporting, Marriott alsotracks data on participation, including the num-ber of welfare recipients who attend the firstday of class, the number who graduate, thenumber who become employed, and the num-ber retained for three and six months.

Support for retention and advancement. TheARL reflects Marriott's business strategy: tohave the most advanced human resourcespractices possible. According to a JFF casestudy by Basil J. Whiting, the ARL providesround-the-clock assistance using a case-managerapproach. Employees can get help with anypersonal problem that troubles them or a familymember. The ARL also provides managers withadvice on how to help a subordinate. ARL staffspend enough time, often over an hour, to getto know the employee and the details of theproblem, to research the problem, to identifyresources that can help overcome it, and toattempt to contact the resource provider beforereferring the employee. When the employeeand ARL staffer agree that the matter is satisfac-torily resolved, the case is closed. Within 30

CASE STUDIES



days, a Quality Assurance Team checks onthe results and the employee's satisfaction. Todevelop the ARL, Marriott contracted with ThePartnership Group, which has merged withCeridian Performance Partners and continues toprovides the ARL services.

Marriott provides a range of family-friendlybenefits that have led in its inclusion amongWorking Mothers magazine's 100 Best Companiesfor Working Mothers for the last eight years. Thefirm provides benefits to all entry-level employ-ees who work over 25 hours per week, such aspaying 65 percent of health insurance premiumsand offering information about and access to avariety of child-care programs and assistance.

After hiring Pathways program completers,Marriott assigns responsibility to their immedi-ate supervisors for providing mentoring andproblem-solving assistance. Marriott alsostresses the opportunities entry-level workershave for promotions. "Examples of peopleclimbing our corporate career ladder are allaround," says Tully. "It makes our welfare-to-work employees realize they can get some-where."

Key LessonsSupport from the very top is key to the suc-cess of Marriott's welfare-to-work program.Pathways to Independence requires a greatdeal of work and complete commitment fromthe company.

Marriott has found the need to overcomestereotypes about welfare recipients. The firmhas had to address this with some of itsemployees in order to successfully implementPathways.

Marriott's strategy of being the industryleader regarding benefits drove developmentof the Associate Resource Line. This strategycreated the conditions that made innovationpossible. Notably, several firms have adopteda resource-line service as an entry-levelemployee benefits

Promotion from within is a key aspect ofMarriott corporate culture. Promotion fromwithin increases entry-level employee com-mitment, increasing the quality of customerservice. It makes it possible for Marriott tocapture the value its investments in entry-level employees.

Partners are important to welfare-to-workprograms even when the firm's staff carry outmost activities. Partners recruit, screen, andprovide support services to overcome welfarerecipients' barriers to employment, especiallythose that are not directly related to work,such as child care and transportation.

The quality of partners' services occasionallyhas been a problem. "To ensure quality is con-tinuous in programs, Marriott depends uponopen two-way communication with partners,"says Kramer. "Partners need to be aware ofMarriott's expectations and what they have todo to meet them. In turn, Marriott mustknow its partners' needs and expectations."

Contact PersonFred G. Kramer, Director, CommunityEmployment and Training, (301) 380-8583

CASE STUDIES


Business AreaA quick-service restaurant business with overa million employees, including 250,000 in theUnited States and 36,500 in the U.K.

Benefits of Welfare-to-Work InvolvementThe major benefits to McDonald's of its welfare-to-work programs are greater retention, higherquality employees, and higher productivity.While the programs have not reduced hiringcosts, they have sometimes reduced the timeit takes to hire entry-level employees.

Highlights of Welfare-to-Work InvolvementMcDonald's restaurants provide easily accessibleemployment to welfare recipients. About 20,000of the firm's employees were receiving welfarewhen hired, an unplanned outcome of the firm'srecruitment and hiring activities. McDonald'sconsiders welfare recipients a valuable pool ofpotential employees for its many lower-wage($5.75 to $5.90 per hour), entry-level jobs.

The firm created its welfare-to-work program toincrease the benefits of hiring welfare recipientsfor both its restaurants and their employees.McDonald's provides training that makes newemployees more productive and increases thequality of their work. It also provides an oppor-tunity for employees to get better jobs, either atMcDonald's or with other employers. McDonald'shas programs in New Orleans, Minneapolis,South Florida, Chicago, and Hartford and isexpanding its efforts to hire and train welfarerecipients.

Because 85 percent of McDonald's restaurantsare owner-operated, the growth of the firm'swelfare-to-work program is determined bystore-owners' perceptions of its benefits. Theprogram holds lessons for other franchise busi-nesses and for efforts of large firms assistingwith small ones.

. Corporate role. McDonald's corporate staffencourage restaurants to participate in the wel-fare-to-work program by making it easier to doso. Corporate staff help restaurant managers

54

develop partnerships, provide them with sup-port services, and design training. However,corporate staff do not set goals or monitorrestaurants' efforts to employ welfare recipients.

Corporate staff meet with high-level governmentofficials to pave the way for good working rela-tionships between restaurants and local agencies.The corporate message to government agenciesis "make it simple." Corporate staff have alsocontracted with another company to processapplications for tax credits the firm receives forhiring welfare recipients. In addition, the firmemploys regional retention managers who helprestaurant staff improve training and retention.

McDonald's has created an employee-develop-ment curriculum based on its school-to-workprogram. The beginning level has modules oncustomer service, business communication,business math, job readiness, and businesssystemsskills applicable to many retail jobs.To emphasize opportunities to move up a careerladder, the curriculum has more advancedlevels. Within about a year of starting work,employees can train for McDonald's jobs paying$8 to $9 per hour, sometimes with benefits.

Local role. To meet local employment needs,restaurant managers develop partnerships withservice providers. Some restaurants have desig-nated a training manager as well. The basis forthese local efforts are the framework, curricu-lum, and networks supplied by corporate staff.For the many owner-operated McDonald's,these resources represent a significant corporatecontribution.

Relationships with partners. McDonald's storeswork with a variety of partners. For example,members of the Minnesota Retail MerchantsAssociation have agreed to use the McDonald'straining to prepare employees for work in theirown establishments. Jewish Vocational Servicesteaches the curriculum to welfare recipients,and McDonald's has the first opportunity toemploy them when they complete the training;if McDonald's doesn't offer them jobs, othermembers of the association can hire them.

CASE STUDIES



Restaurant managers provide information topartners regarding job openings and neededskills, work with partners to establish screeningcriteria that meet McDonald's needs, and setstandards for the soft skills, hard skills, andperformance levels welfare recipients need toachieve. Partners provide training before and/or immediately after welfare recipients are hired.As work processes at McDonald's change, thetraining curriculum does as well; McDonald'sworks with its training partners to respondsuccessfully to these changes.

Partners also provide other services, includingscreening for substance abuse and assisting inovercoming barriers to employment, such as alack of child care or transportation. Some part-ners provide post-employment support.

Training for partner organizations. McDonald'shas developed a customer-service training pro-gram for the staff of partner agencies. Topicsinclude customer service in non-profit organiza-tions, vision, how to avoid mistakes, and mea-suring program outcomes.

Retention and advancement. McDonald'semphasizes the importance of developing careerladders for welfare recipients. It considers itselfa point of entry to the labor market for first-timeworkers. Its training supports internal promotionas well as skill development that enables employ-ees to secure better jobs with other employers.

Involvement in governance. McDonald's is amember of the welfare-to-work Partnership.Corporate staff participate in the Illinois HumanResource Investment Council. The companybelieves that the activity that is most importantfor it to promote with the council is planning,and it has also assisted efforts to assess theneeds of job seekers and those who work inentry-level jobs. McDonald's is also involved inseveral local partnerships, including those inChicago, New Orleans, and Minneapolis.

Challenges and Promising PracticesMcDonald's restaurant managers are quiteaware of the trade-off between investing indeveloping successful partnerships versus otherrecruitment strategies. They evaluate the extentto which programs meet their hiring needs andhow easy they are to work with. Sometimes, themanagers choose not to invest the time andmake the changes necessary to develop partner-ships. Partners have sometimes been difficult towork with and inconsistent in meetingMcDonald's expectations. However, programssucceed when both the restaurant staff and ser-vice provider make a commitment to the part-nership. Restaurant managers must be clearabout the quality and quantity of positions theyseek to fill, consistent in their expectations, andopen to new recruitment and hiring strategies.McDonald's has found its customer-servicetraining to be a key asset in building partners'understanding of the approach it expects themto take in meeting the firm's needs.

McDonald's corporate culture is to promotefrom within, and its training supports thisobjective. However, the firm has found that aninth-grade level of literacy is necessary for theupper levels of training, which is required byjobs paying $8 to $9 per hour.

Future TrendsMcDonald's expects its welfare-to-work effortsto expand gradually. The firm prepared a reporton its experience in New Orleans and made itavailable on-line as a model for other McDonald'srestaurants that want to begin welfare-to-workprograms.

Key LessonsMcDonald's has developed ways to assistsmaller businesses. The efforts of corporatestaff to help managers develop partnerships,provide them with support services, anddesign training programs are examples ofsteps large corporations can take to benefitsmaller ones.

CASE STUDIES


Key Lessonscontinued

McDonald's provides training for partnerorganizations. McDonald's customer-servicetraining for the staff of agencies that providerecruitment, assessment, training, and supportservices is a concrete method of increasingtheir capacity to meet the needs of business.

McDonald's Jobs can lead to better employ-ment. McDonald's training programs make itpossible for employees to advance within thecompany. They also provide skills that qualifyMcDonald's employees for employment inmany service-sector jobs and offer the oppor-tunity for them to climb occupational careerladders.

Contact PersonRogercarole Rogers, Staff Director, EmploymentDevelopment, (630) 623-6540

CASE STUDIES

Pizza Hut

Business AreaA fast-foods business, Pizza Hut has 120,000U.S. employees, of whom 108,000 are in entry-level positions. In the United States, Pizza Hutis part of Tricon Global Restaurants and has thelargest percentage of company-owned storesamong fast-food chains. In the U.K., Pizza Huthas about 8,500 employees and is a unit ofWhitbread.

Benefits of Welfare-to-Work InvolvementPizza Hut cites several benefits of employingwelfare recipients. Stores receive tax credits forhiring welfare recipients, and Pizza Hut'shighly effective-tax-credit recovery system pro-vides significant revenue to the firm. Jobs Plus,Pizza Hut's most promising welfare-to-workprogram, has reduced annual turnover, (to 28percent for participants versus 130 percent fornew employees in general). The firm estimatesthat each avoided new hire saves at least $300 inrecruitment and training costs. Other Jobs Plusbenefits include reductions in the time it takesto fill positions and greater employee loyalty toPizza Hut.

Highlights of Welfare-to-Work InvolvementPizza Hut hired at least 9,000 welfare recipientsin 1997. About 700 of these individuals partici-pated in the Jobs Plus program. Tim Cate,Manager of Federal and State Hiring Incentives,projects that Pizza Hut will have hired 1,300welfare recipients through Jobs Plus in 1998.

Jobs Plus began in 1985, when a labor shortageaffected the U.S. service industry in general. Atthat time, Pizza Hut formed a task force thatrecommended efforts to hire seniors, non-work-ing mothers, and individuals with disabilities.In response, the firm established the Job Plusprogram, which provided employment servicesto support individuals with disabilities. PizzaHut has employed more than 14,000 individualswith severe disabilities through the program,among whom 73 percent were developmentallydisabled. By the early 1990s, Pizza Hut was

receiving the most revenue of any U.S. companyfrom the Targeted Jobs Tax Credit.

During the last several years, the Jobs PlusProgram has also helped Pizza Hut to recruit,train, employ, and arrange support services forindividuals receiving welfare who also havedisabilities.

Jobs Plus is a partnership between Pizza Hutand Integrated Resources Institute (IRI), a non-profit agency. Through a national database ofagencies, IRI sources employees for Pizza Hutand manages a two-way flow of information:agencies let the program know about job seek-ers who meet Pizza Hut's hiring criteria, andstore managers let the program know aboutjob openings.

Pizza Hut pays IRI for its services. The valuePizza Hut receives in return is that IRI makesrecruitment cost-effective and meets Pizza Hut'semployment needs well. What makes it so easyfor Pizza Hut is that the firm does not have tocommit major corporate resources to the pro-gram or train local staff. All corporate staff needto do is to explain the service to store managersand provide the Jobs Plus phone number.

Pizza Hut also trusts IRI to maintain qualitycontrol. Jobs Plus will stop working with anagency that regularly refers job seekers whodon't have the competencies for work at PizzaHut.

Pizza Hut considers IRI a business partner. TheWork Opportunity Tax Credit, which has replacedthe Targeted Jobs Tax Credit, expired in 1997.This is the key tax credit for the Pizza Hut pro-gram. Although it was re-approved retroac-tively, there was a period when Pizza Hut didnot receive tax credits for hiring Jobs Plus par-ticipants. During this time, Pizza Hut continuedto work with IRI (and pay for Jobs Plus services).

At the local level, store managers that regularlyuse Jobs Plus get to know the agencies that pro-vide support services to program participants.The most successful employment results from a

CASE STUDIES

Pizza Hut


strong working relationship between a managerand a local agency.

Services Pizza Hut's partners provide. Agenciestypically prepare candidates for employmentbefore referring them to Pizza Hut. The prepara-tion focuses on soft skills but can include hardskills. After hiring, many agencies provide anon-the-job "coach" who works with the newemployee. This model, common among agenciesthat support employment of individuals withdisabilities, provides a high level of service.The coach teaches the new employee the joband facilitates interactions with supervisors andco-workers. The coach also helps with supportservices, such as securing reliable transportationfor the employee to and from work.

Roles of corporate and local staff. Corporatestaff market the Work Opportunity Tax Creditsavailable to stores and have set up a system sostores can use them easily. The tax credits go tothe store's profit line, so hiring welfare recipientsimproves store managers' performance measure-ments and year-end bonuses. Corporate staffreport that many stores come to have high levels ofparticipation after having a few good experienceshiring welfare recipients and receiving tax credits.

The tax credit operates as a "pull mechanism,"in contrast to a "push mechanism" such as cor-porate staff requiring store managers to hirewelfare recipients.

Regional field staffing leaders assist stores inmaking connections with IRI, local serviceproviders, and government agencies.

Through the program's work with individualswith disabilities, store managers have receivededucation, support, and rewards to developindividualized, successful positions for JobsPlus participants, and have learned to workwith job coaches and the agencies that employthem. The managers apply this approach toemploying welfare recipients. However, once aperson is hired, Pizza Hut treats those who come

through Jobs Plus the same as other entry-levelemployees. They get positive feedback, especiallyduring the first two weeks, and managers takesteps to make the new employee feel like partof the store's team. Like all employees, they alsoget regular in-store training and new productroll-out training. Managers also try to be flexibleregarding work scheduling. Pizza Hut increaseswages yearly and tends to promote from within.Employees can be nominated for promotionsby other employees or nominate themselves.

Challenges and Promising PracticesBy the 1990s, Pizza Hut had received TargetedJobs Tax Credits for more employees than anyother employer, in large part because of itsemployment of individuals with disabilitiesthrough Jobs Plus. Recent uncertainty relatedto the Work Opportunities Tax Credit is a majorfrustration for Pizza Hut. In September 1998,Congress renewed the credit for one year.However, Pizza Hut has found it difficult tocommit resources to expanding the Jobs Plusprogram when the future of the tax credit isuncertain.

Pizza Hut contrasts the Jobs Plus program andagencies that participate in it with its generalexperience with welfare offices. Pizza Hut hasnot had an easy time working with governmentwelfare agencies. The company believes this isbecause of a difference in organizational goalsand culture: welfare offices seek to get checksto people, while other agencies want toget people to work and help integrate clientsinto jobs.

Key LessonsPartnerships bring expertise and efficiency.Jobs Plus is Pizza Hut's most promising pro-gram because of its partnership with IntegratedResources Institute. IRI understands PizzaHut's employment needs and is expert inmanaging the agencies that provide job appli-cants and support services. It would be muchmore difficult, and perhaps more costly, if

58

CASE STUDIES

Pizza Hut

Key Lessons.continued

Pizza Hut had to identify a quality providerfor each store that wanted to participate.

Pizza Hut uses the tax credit that fits itsbusiness environment. Pizza Hut considersthe Work Opportunity Tax Credit a majorbusiness resource but finds the welfare-to-work tax credit far less useful. The company'swage structure and relatively short-termemployee retention fit the former rather thenthe latter. Also, the Work Opportunity taxcredit applies to a range of target groupsPizza Hut employs, while the welfare-to-workTax Credit only applies to welfare recipients.

Cultural differences between the private andpublic sectors are factors in firm decisions.Pizza Hut perceives that its difficulty in work-ing with welfare offices results from their ori-entation toward getting checks out to clientsrather than getting clients to work and assist-ing them to integrate into jobs.

Contact PersonTim Cate, Manager, Federal and State HiringIncentives, (502) 874-2762

59

CASE STUDIES

Salomon Smith Barney (SSB)

Business AreaA financial services firm with more than 35,000U.S. employees and 1,300 in the U.K.

Benefits of Welfare-to-Work InvolvementFor hiring welfare recipients, SSB has earned taxcredits, reduced payroll ($8/hour for an intern'sfirst four months versus $20/hour to pay a tempagency), and reduced hiring time. In addition,managers are more secure about hiring decisionsbecause the internship lets them get to know can-didates for employment better. Program partici-pants who are hired into permanent positionshave a retention rate of 90 percent, comparedwith an average retention rate of 82 percent forequivalent positions.

Highlights of Welfare-to-Work InvolvementSSB began its welfare-to-work efforts in 1995,when the firm had 550 openings. Barbara Silvan,Senior Vice President of Human Resources, hadlearned of Wildcat Service Corporation, a non-profit, community-based program that trainswelfare recipients. SSB hired four Wildcat interns.Steadily increasing this number, SSB has nowhired 75 former welfare recipients throughWildcat into permanent positions; 90 percentare still employed. Silvan is a strong championof SSB's welfare-to-work efforts.

Services partners provide. Wildcat prepares wel-fare recipients for employment at SSB and otherfirms. It recruits and screens welfare recipientsto identify those likely to succeed in financialservices firms, then engages them in a 16-weektraining course in computer, communication,and work-readiness skills. Wildcat makes surethat welfare recipients who begin internships atSSB are in the habit of getting to work on time,and dress and behave professionally, and thatthey have worked out housing, child-care,transportation, and domestic-violence problems.The training simulates "real work"partici-pants must dress for work (not school), arriveon time, and attend class daily. Those who missmore than a few classes are dropped from theprogram. SSB interviews those who complete

the training and selects some for four-monthinternships. If performance in the internship issatisfactory, SSB offers the candidates perma-nent positions.

Relationships with partners. SSB and Wildcatstaff worked together to ensure that Wildcatunderstood SSB's hiring standards. Wildcatsought feedback from SSB on unsuccessful can-didates, using it to improve the pre-employ-ment program. Ultimately, Wildcat hired a staffperson from the corporate sector who could bet-ter understand SSB's culture and expectations.Wildcat can now more readily identify welfarerecipients who are likely tosucceed at SSB. Wildcat now proposes about30 candidates to SSB, and the firm hires 20 to22 interns. During the last few cycles, SSBhas hired 80 to 85 percent of the interns intopermanent positions.

Wildcat's skills training is flexible and gearedtoward SSB's needs, and Silvan regularlyinforms Wildcat staff about business develop-ments that might change skill needs. Wildcatincorporates these changes into the curriculum.It has even adapted some of SSB's internal train-ing classes for program participants, who mas-ter the material before they arrive at SSB.

Silvan has found that hiring welfare recipientsis no more burdensome than hiring any otheremployee. It requires her time at three pointsin each cycle. In the initial phase, she identifieswhere SSB needs interns, interviews and placesthe interns in their four-month positions, andprovides the first-day orientation. Mid-way,she coordinates three workshops that SSBoffers during the 16-week internship. In thefinal phase, she identifies and places internsin permanent positions.

Centralizing these functions in one office mini-mizes candidates' nervousness and simplifiesthe hiring process. Silvan knows what her man-agers are looking for, and they trust her judg-ment. "For SSB managers, SSB's partnershipwith Wildcat has become synonymous withquality employees," says Silvan.

CASE STUDIES

Salomon Smith Barney (SSB)

Challenges and Promising ActivitiesThe SSB environment is high-powered, andemployees must be able to handle the culture"to look and speak the part." SSB expects thesame high standards of all employees, andbelieves that differentiating among types ofemployees risks stigmatizing some and anger-ing others.

Challenges and Promising Activities continuedAs part of the program, Wildcat counselors pro-vide long-term support to former welfare recipi-ents at SSB. A participant who has a problem orquestion can seek help from a counselor at anytime. During the four-month internship, SSBoffers three workshops on topics that help par-ticipants understand and function in the firm.For example, one workshop covers how toreceive performance feedback. Supervisors' firstappraisals are built into this workshop, helpingthe participants digest the feedback and usecriticism constructively. An intern who is hiredpermanently can continue to work with theWildcat counselor and also take advantageof SSB's Employee Assistance Program.

Advancement opportunities are the same forformer welfare recipients as for other SSB staff,including a salary increase after one year ofemployment. Several former Wildcat programparticipants have received promotions, andabout a dozen have taken advantage of tuitionreimbursement. Human Resources staff areavailable to advise employees on advancementopportunities and strategies.

Future TrendsSSB believes strongly that it should only hirewelfare recipients to meet a business need.However, the firm is so pleased with its involve-ment that it is expanding the Wildcat model tosome subsidiaries, such as Commercial Credit.Wildcat is helping identify business needs, forexample, identifying which jobs turn over mostoften. It is also helping SSB subsidiaries todesign small start-up programs, to locate a localservice provider to play Wildcat's role, and toidentify funding sources.

Key LessonsAn internal champion is key to SSB's efforts.Silvan takes overall responsibility for welfare-to-work efforts and communicates effectivelyinternally and externally.

Wildcat succeeds by considering the firm itscustomer. Wildcat has the commitment andcapacity to understand the corporate culture,program goals, and hiring needs.

Having the same standards of performance isimportant to SSB. Employee standards arehigh, whether or not an individual has beenon welfare.

Transitional opportunities benefit SSB andwelfare recipients. Four-month internshipsprovide an environment for SSB and theintern to succeed while reducing risk.

SSB and Wildcat provide welfare recipientswith long-term support and opportunities foradvancement. Participants have opportunitiesfor jobs with a future.

Contact PersonBarbara Silvan, Senior Vice President of HumanResources, (212) 816-2524

61

CASE STUDIES

United Airlines

Business AreaOne of the world's largest air-passenger carri-ers, and the largest majority-employee-ownedcorporation, with over 92,000 employees,including about 54,000 in entry-level jobs

Benefits of Welfare-to-Work InvolvementThe primary benefit of welfare-to-work isretention. The firm has retained 69 percent ofits welfare-to-work employees. According toGerald Greenwald, United Airlines Chairmanand CEO, "United employees hired from publicassistance have one-half the attrition rate ofsimilarly placed employees not from publicassistance." Reducing turnover reduces recruit-ment, hiring, and training costs.

Highlights of Welfare-to-Work InvolvenientAs of April 1998, 550 United employees wereformer welfare recipients. They work in cus-tomer service, ramp service, reservation sales,cabin service, flight attendant, service, andadministrative support. Ninety percent workfull-time; part-time employees can start work-ing full-time at the end of their first year.Employees receive a full benefits package,including health insurance, dental insurance,and a retirement plan. Full-time employmentand full benefits support retention at United.

United has developed a mentoring programto support retention of welfare recipients. Theprogram was designed by a cross-functionalteam that included union members, interna-tional employees, senior-level executives, andwelfare recipients. The team designed a peer-mentor model that wouldn't interfere withemployee-supervisor relationships. "Locationalchampions" oversee the program and assist bothmentors and employees. Mentors are volunteersand are expected to perform that role on theirown time.

Flexibility is a key principle of the mentorshipprogram. The peer approach is most common,although mentors range from co-workers tosenior vice presidents. Welfare recipients areassigned a mentor for their first 60 days ofemployment. However, Georgina Heard, man- 0

ager of executive development and successionand architect of United's welfare-to-work pro-gram, says that United hopes that relationshipswill continue after the 60-day period ended, andthat has often been the case.

The mentorship program was so successful inincreasing retention that United adopted it forall new hires in 1998 to improve long-standingturnover problems. "Not only did we improveretention but a survey of mentors showed thatthey actually felt better about themselves andthe company," says Heard.

Roles of corporate and local staff. In 1996,Greenwald pledged that United would hire2,000 welfare recipients by the year 2000. AsScott Gilday, Director of People Services forUnited, says, "The key to running a programlike this is to have complete support right fromthe top. If it is understood from the top downhow critical the program is, then it can beturned over to the employment departmentand the rest of the company to implement."

Corporate staff support local efforts to achievethe overall goal and facilitate a Welfare-to-WorkTask Team that local staff participate in. Theteam assembles planning materials, providesnew ideas, engages in continuous improvementefforts, and supports local staff efforts. Eachlocal employment office has a welfare-to-workchampion who works internally to promote theeffort and develops partnerships with commu-nity-based service providers.

Relationship with partners. United has devel-oped partnerships in many of the communitiesin which it operates. United recruiters workclosely with social service and other non-profitagencies in about 20 U.S. communities.

United's local staff work closely with commu-nity-based organizations so they fully under-stand United's requirements for employment.United encourages its partners to shadow air-line employees on the job to become familiarwith the positions and skills necessary for suc-cess. Local staff provide input into the design ofthe training program, customizing it to meetUnited's needs and often providing the

CASE STUDIES

United Airlines


software United uses so program participantscan learn it. Some local offices set standards forcommunity-based programs, evaluate their suc-cess inmeeting those standards, and participate incontinuous improvement processes.Services partners provide. Partner organizationsimprove United's access to an expanded laborpool and provide pre-employment interviewingto identify potential candidates for employment.In addition, partners provide valuable pre-employment training on soft skills and trainingthat is customized to meet the requirements forthe positions United seeks to fill. United countson its partners to maintain an up-to-date under-standing of its needs and continuously improvetheir recruitment and training in response tochanges in the work environment at United.

Retention and advancement. From the time theybegin working for United, employees receive on-the-job and/or off -site training. United encour-ages employees to take the initiative to identifythe training they want. Supervisors assistemployees to plan their training and identify theskills that provide opportunities for advance-ment. As positions open, entry-level employeeswith sufficient training can bid on them.

Increasing welfare-to-work capacity. UnitedAirlines is a founding member of the Welfare toWork Partnership, which Greenwald chairs. TheExecutive Director of the Chicago land BusinessPartners is a loaned United executive.

Challenges and Promising PracticesAs with many employers, United Airlines hashad deep concerns about entry-level employeeturnover. By expanding its mentoring programto involve all entry-level employees, it hasincreased retention rates.

Located at airports, United jobs are far frompopulation centers and can be difficult to reach.United is exploring a variety of approaches toovercoming transportation limitations, including

working with public transit agencies to establishnew bus routes and providing flexible schedul-ing to take advantage of existing public trans-portation.

Key LessonsBy expanding its mentoring program, UnitedAirlines is improving entry-level retentionrates. Developed originally for welfarerecipients, the program has been expandedto include all new entry-level employees.

United has attempted to develop a welfare-to-work approach that other firms can follow,including smaller firms. Low cost, low stafftime requirements, and simplicity are thedesign principles for United's welfare-to-workprogram. For instance, mentors undertaketheir activities on their own time, rather thanreceiving pay for mentorship activities.

Contact PersonEmily Derr, Employment Representative,(847) 700-6755

CASE STUDIES

United Parcel Service (UPS)

Business AreaThe world's largest package-delivery company,with 340,000 employees, including about 290,000in the United States and 3,000 in the U.K.

Benefits of Welfare-to-Work InvolvementCEO John Alden reports a 70 percent retentionrate for welfare-to-work program participants,about 10 percent higher than for all new entry-level employees. UPS is very satisfied withemployees hired through these programs.Welfare-to-work innovations have also reducedhiring and training costs, as well as the time ittakes to hire. The firm also receives federalWork Opportunity Tax Credits for hiringwelfare recipients.

Highlights of Welfare-to-Work InvolvementBetween January 1997 and November 1998,UPS hired 21,774 welfare recipients. It typicallyemployed these new hires in part-time jobs aspackage handlers and paid $8.50 to $9.50 perhour, with full benefits.

A decentralized organizational structure drivesUPS's approach to welfare-to-work efforts. "Thereis no one-size-fits-all model for a successful wel-fare-to-work program," according to Lea Soupata,Senior Vice President for Human Resources.

UPS involves corporate staff directly in effortsto strengthen welfare-to-work as a national ini-tiative, as well as involving local staff in specificprograms. UPS is very active in the Welfare toWork Partnership, "loaning" an executive to theeffort. Company staff also participate in govern-ing the Illinois welfare-to-work initiative.

UPS corporate staff document successful andcreative practices and disseminate that informa-tion to local facilities. Rather thari set goals foremployment of welfare recipients by localoffices, corporate staff expect local managers touse welfare-to-work as one tool among many toachieve full and effective staffing.

At the local level, UPS stresses the power andnecessity of collaboration with community part-ners, a policy UPS has pursued for over 25 years.

"As a responsible corporate citizen, UPS' goal isto have a workforce that reflects the diversity ofthe communities we serve," says Ken Parks,Vice President of Corporate Human Resources."We have a continuing need to fill UPS jobswith dedicated people, and our approach hasalways been to partner with education, govern-ment, and non-profit organizations to locate,employ, and retain them."

Relationships with partners. UPS looks for effi-cient, non-bureaucratic partners that will adaptservices to its needs. In Chicago, for example,UPS partners with the Grand BoulevardFederation, a community-based organizationthat provides welfare recipients with job-readi-ness training, coaching, and support services.In Atlanta, UPS works closely with GoodwillIndustries, an organization that helps individualswho have disadvantages and disabilities secureemployment.

UPS partners provide services that improvehiring and retention. These include screening ofpotential applicants and trainees, training inpre-employment life-skills and work readiness,coaching for both former welfare recipients andUPS supervisors on problem-solving, case man-agement services, and access to further educa-tion and training.

UPS invests in its community-based training andbrokering partners. The firm shares informationabout job openings and requisite skills. In com-munities where UPS is most engaged, it pro-vides input into recruitment or training-programdesign, helps set outcome standards, evaluatespartners according to those standards, partici-pates in continuous improvement processes, andleads efforts to develop new programs. The firmfrequently opens its facilities to job-seekers sothey can experience UPS as a workplace beforeapplying for a job.

Support of retention and advancement. UPS'sinvestments in entry-level employees promoteretention. The firm provides all-new employeeswith a carefully designed orientation to employ-ment, 22 days of on-the-job training, and men-toting by supervisors.

CASE STUDIES



The UPS culture values promotion from within.The average employee who stays with the firmfor fifteen years will hold six positions in thattime. This priority, combined with continualinvestment in new technology and workprocesses, leads UPS to offer skill developmentopportunities to its front-line workers, especiallycontinual upgrading of technology-related corn-petencies. Ongoing skill development is linkedto pay increases and promotions.

In an expansion of its extensive internal training,UPS is piloting courses at community collegesand holding college classes at its Philadelphiafacility. UPS is also partnering with MetropolitanCollege (a consortium of three community col-leges) to offer degree-granting programs atnight, accommodating the time-critical natureof UPS business. Employees in the night-sortoperation can attend "UPS University," withthe firm reimbursing them for 50 percent of thetuition. UPS has also provided $1.5 million toupgrade classroom technology.

Making part-time work pay. In Chicago andDallas/Fort Worth, UPS has worked with otherfirms to develop Employee Share, an innovativejob-sharing program that is available to all part-time UPS employees at those locations. To makeit easier for people to work at two part-timejobs, UPS works with smaller businesses tomatch work at each based on coordinated startand finish times. The program not only pro-vides employees with more income, it alsoexpands the breadth of work experience andskill development. UPS benefits throughincreased retention and loyalty. Smaller firmsbenefit because UPS has a much better capacityto screen of new hires than many small firmscan afford. The Small Business Association andthe U.S. Chamber of Commerce are interested inthe job-sharing program.

Transportation assistance. When seeking newworkers for a late-night shift at its facility near

Philadelphia's international airport, UPS receivedhelp from welfare officials in Camden, New Jersey,ten miles away. Camden welfare recipients provedto be a good source of employees, eventuallyproviding UPS with 700 workers whose retentionrate was an unusually high 88 percent. Becausepublic transportation between Camden and thefacility was limited, UPS began operating busesfor its new employees. Eventually, the local pub-lic bus system took the route over. Although UPSpromised to subsidize the route, the 53 dailytrips proved profitable. UPS has also developed aplan to help rural employees get to its Louisvillefacility, improving attendance and retention.

Challenges and Promising PracticesUPS entry-level jobs are characterized by partic-ularly high turnover. In general, UPS hires wel-fare recipients into part-time jobs between 5:00p.m. and 8:00 a.m., sorting and loading pack-agesjobs that require considerable effort andflexibility. Transportation to the facilities is lim-ited, making the firm receptive to strategies forlowering turnover.

Effective partnerships between UPS and service-delivery organizations require significant stafftime and commitment. In some situations, UPSis asked to take on too much responsibility,because it is seen as a firm with deep pockets.

UPS believes that effective programs begin withthe needs of participating employers. Yet toooften, businesses aren't at the table when deci-sions about government-funded efforts aremade. Moreover, government agencies oftencan't respond effectively to employers. In its roleas policy advocate, UPS is encouraging greaterflexibility in federal and state policies regardingwork requirements and education and trainingfor welfare recipients. The firm wants more part-time, well-paid jobs that have full medical bene-fits to count as work placements; it also notes aneed for flexibility related to the time it takessome welfare recipients to overcome barriers toemployment and work-readiness.

65

CASE STUDIES


Future TrendsIn the coming year, UPS expects to expand itswelfare-to-work efforts and increase the numberof welfare recipients it hires. Even if unemploy-ment rises and reduces demand for newemployees, UPS's strong relationships with itspartners and their effectiveness as a source forentry-level employees ensure that welfare-to-work hiring will expand.

Key LessonsPartnerships require two-way commitment.UPS recognizes that if it wants quality ser-vices from community-based partners, it mustinform, orient, and work closely with themover the long run.

Promotion from within develops employees.UPS strongly encourages promotion fromwithin its workforce to increase retention andcareer advancement.

Intermediaries are crucial to significantexpanding welfare-to-work. UPS believes thatto reach significant scale, welfare-to-workefforts must involve many employers and ser-vice providers. These relationships need to beencouraged, strengthened, and linked by localpartnerships and organizations.

Transportation barriers can be overcomethrough creative collaborations. For largefirms, creating new public transport routes tothe workplace can open up new sources ofqualified employees.

Large firms can help smaller businessesemploy welfare recipients. The EmployeeShare program reduces the risk and cost tosmall businesses of hiring welfare recipients.This helps UPS, its small firm partners, andprogram recipients who need more than onepart-time position to make ends meet.

Contact PersonKerry Ann McCallum, Corporate CommunityRelations Manager, (404) 828-4851

CASE STUDIES

Xerox Business Services (XBS)

Business AreaThe fastest growing division of Xerox Corporationand the worldwide leader in document out-sourcing, from copying and mail distribution todocument creation and LAN management, with12,000 employees.

Benefits of Welfare-to-Work InvolvementA member of the Welfare to Work Partnership,Xerox Business Services employs welfare recipi-ents as an extension of corporate social responsi-bility and a good business practice.Welfare-to-work efforts have reduced hiring costsand the time involved in hiring entry-levelemployees. In tight labor markets, XBS hasincreased the quality of entry-level hires byscreening and training candidates. Further, wel-fare-to-work retention rates of 75 to 80 percenthave helped XBS maintain its industry-leadingretention rate for entry-level employees, which issignificantly above the 60 to 70 percent typical inits industry. Employees hired through welfare-to-work programs are also significantly more loyalto XBS than are other entry-level employees, andthey are more flexible due to their pre-employ-ment training. The efforts are also a motivatingfactor to employees throughout XBS, increasingtheir pride in the organization.

Highlights of Welfare-to-Work InvolvementXerox Business Services employs 12,000 peoplein the United States, including 10,000 AccountAssociates stationed on-site at other firms thatoutsource business to XBS. Since September 1997,when XBS piloted its welfare-to-work efforts, thefirm has expanded the program to all 50 of itsU.S. locations and hired 188 welfare recipients.Most are employed as Account Associates at $7to $8 per hour. XBS Manager of Staffing andStrategy Joe Hammill, who oversees the pro-gram, says, "We have designed our entry-leveljobs to provide opportunities to learn other jobsand move to self-sufficiency. It's more than start-ing people at $7 an hour. It's about meaningful,challenging work that gives people fulfillmentand the opportunity for advancement."

8.7

The XBS corporate culture promotes empower-ment of staff, and welfare-to-work efforts aredesigned to do so as well. At the corporate level,Hammill did background research, designed aframework for involvement in welfare-to-work,and circulated the framework to all local offices.The XBS approach is to create partnerships withlocal welfare-to-work service providers that arecommitted to quality, responsive to XBS as a cus-tomer, and make the relationship as simple aspossible for XBS. In addition to a strong cus-tomer-service orientation, XBS seeks partnersthat can deliver the whole package of servicesXBS needs, either directly or through a networkof affiliated providers. Hammill has developed asix-page assessment tool that local XBS opera-tions can use to choose assessment, training, andsupport services for partners.

At the corporate level, XBS sets reasonable andmeasurable goals for local operations, such asemploying six to eight welfare recipients per yearand retaining a high proportion of them.Although there is no specific goal for advance-ment, local operations report on it. XBS is com-mitted to assuring that its welfare-to-workoperation is lean. Hammill is the only corporatestaffer, and he has other responsibilities as well.

Using the XBS welfare-to-work framework, localmanagers create relationships with a variety ofpartners. The flexibility XBS provides to localmanagers allows them to customize partnershipsas needed and take best advantage of state andlocal welfare-to-work services infrastructures,which vary considerably.

The most important service that partner organi-zations provide is pre-employment training onwork attitudes, communication, and expecta-tions and effective assistance in overcoming bar-riers, such as child-care and transportationneeds. Partners also provide training in job spe-cific skills. Further, some partners provide valu-able post-employment services, especially casemanagement services that assist people in com-ing to work and performing consistently byovercoming non-work problems, includingdealing with the welfare bureaucracy.

CASE STUDIES

Xerox Business Services (XBS)


XBS provides partners with information aboutjob openings and needed skills, as well as inputon policy and program design. XBS staff partici-pate in program activities. Work-site tours pro-vided by XBS help match program participantswith jobs. XBS also sets standards for programquality and outcomes, evaluates programs bythose standards, and informally advises onimprovements.

All entry-level employees at XBS receive signifi-cant retention and advancement supports. Theparent company, Xerox Corporation, is one ofWorking Mother magazine's top 100 firms. Xeroxprovides health insurance for employees whowork over 20 hours per week. Other benefitsinclude a dependent-care fund, significant child-care resources, and flexible work schedules.Managers' pay is tied to promoting work/lifebalance.

XBS tries to be a learning organization. AllAccount Associates participate in a competency-based development system that includes self-assessment of the skills they need to advance tofuture assignments of their choice. XBS supportsemployee learning through classes, on-the-jobtraining, computer-based training, and tuitionassistance. As a result of welfare-to-work part-nerships with community colleges, XBS hasbegun to explore relationships with them tosupport skill development.

Future TrendsXBS expects to employ between 200 and 250former welfare recipients by the end of 1998.XBS will probably increase that number in1999, but it is most interested in retentionand advancement of welfare recipientsalready hired.

XBS is working closely with Women inCommunity Service to develop the Friends atWork program and related training materials

that assist the efforts of co-workers to supportthe transition of new entry-level employees toemployment. While Friends at Work will sup-port welfare-to-work efforts, XBS encourages itslocal operations to offer the program to all newentry-level employees.

Key LessonsTotal quality principles ground welfare-to-work at XBS. The partner organizations focuson meeting XBS's needs is the most significantindicator of success because it provides thebasis on which the partnership can develop.

Corporate tools can simplify local managers'efforts. The XBS framework and assessmenttool helps local managers choose partnerorganizations.

Fitting welfare-to-work efforts to its corpo-rate culture is important to XBS. An empow-ered, decentralized approach fits XBS; a moretop-down approach would be very difficult toimplement. Corporate staff are able to managethe effort overall by having local managersreport on hiring, retention, and advancement.

Flexibility in developing local welfare-to-work partnerships helps XBS. This approachresponds to differences in the strengths andweaknesses of local service providers.

Welfare -to -work efforts have helped improveXBS's human resources practices generally.The network of relationships developedthrough welfare-to-work efforts can be lever-aged for other human resources efforts.Friends at Work and XBS's explorations ofexpanding its relationship with communitycolleges are two examples.

Contact PersonJoe Hammill, Manager of Staffing and Strategy,(716) 264-5372

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