Workforce Planning Makes for a Smarter Reduction in Force

Contributor: Nicholas Garbis

The economic crisis has organizations in a race to cut costs, which includes a major reduction in force. I have wondered about the handling of the reduction in the workforce and how it fits with concepts of strategic workforce planning.

Background and Level-setting on Strategic Workforce Planning

Strategic workforce planning is a process where scenarios are created based on the three to five year (or longer) business strategy, translated into a workforce “demand” (quantity by role/level/skill set/competency) and compared to a forecasted workforce “supply” (based on rates of termination/retirement and current skills/competencies). The difference in the demand and the supply is the “gap.” This is calculated for each future year, and specific plans are created to address the gap—most common being efforts to find the new talent while slowing the reduction in the current “supply.” Occasionally, the strategic workforce planning results in a need to modify business strategy to bring the workforce “demand” into the realm of the achievable (e.g., not enough internal/external talent to staff a proposed expansion).

Strategic workforce planning is a process that is more akin to financial planning than any other HR processes—which is why it is often most successful when it is done with the business units (not from central HR). At higher levels of sophistication, strategic workforce planning includes financial modeling on the various costs of the various strategies for closing the gaps.

It is not applied everywhere. Strategic workforce planning is most often done on a limited number of roles within an organization. Criteria for applying strategic workforce planning to a role (e.g., engineers, actuaries, nurses, etc.) might be those roles with a high cost-to-hire, roles with a long learning curve or those roles that are “pivotal” to the business (where a vacancy is disproportionately disruptive to the operations/profitability of the business).

“Roles” are not people; they are groups of jobs or job codes. If the names of individuals are in your plan, it is probably a succession plan or destination plan. Both of these are highly valuable, but they are not strategic workforce planning.

Strategic Workforce Planning and the Reduction in Force

Where strategic workforce planning is in place, reductions in force are what one would expect them to be: a crisis situation that requires immediate adjustment to a strategic plan. This is not different than the way business strategy is changed to reflect the sudden appearance of an unexpected situation (e.g., new competition, change in material/land costs, sudden economic downturn).

Right now, the current economic conditions are leading to reductions in business revenue forecasts, and there is a scramble to deliver expense reductions. In a knowledge/service economy, labor expense is one of the largest expense items that an organization can impact in short time period. However, in a knowledge/service economy, the workforce (the labor expense) is the key catalyst of value creation.

Without strategic workforce planning in place, I question the ability for an organization to execute a reduction in force effectively. It can be like clear cutting in a forest—executed rapidly with lots of collateral damage and limited attention paid to future business sustainability.

Reduction in Force Gone Wrong

The worst type of reduction in force I hear about is the type where everyone who wants to leave is able to take a package and go. But the absolute worst is when more people leave than what was desired/forecasted. This “peanut butter” approach—spreading the reduction in force evenly across the organization and/or roles—is like a retailer closing store locations based on the first letter of the city they are located in. It just doesn’t make good business sense.

A reduction in force has even become a way of doing business—shedding 5 percent or 10 percent of the workforce every few years even as they grow as a business. To my eyes, this “reduction-in-force-saw” approach indicates that an organization is sorely lacking in human capital management disciplines including basic headcount management (no bloating), performance management (managing out low performers along the way) and strategic workforce planning (aligning HC strategies with business strategies).

Enabling Smarter Reductions in Force Within Critical Roles

If an organization has done strategic workforce planning for a specific set of roles, they will have a context in which to process and understand the sudden change in business revenue and the resulting reduction in workforce “demand.” The response to get out the “reduction-in-force-saw” will be tempered by a strategic perspective—the current state of the critical roles (i.e., are they in oversupply or undersupply), how various revised business scenarios change the workforce “demand” and revise the levels of oversupply/undersupply.

It also makes sense to revisit the “supply” side assumptions, as termination and retirement forecasts should reflect new conditions in the labor and financial markets.

If there is an oversupply, do the reduction in force, and do it right. Keep the best talent and apply reductions from the bottom performers up. Communicate it well and make some investment in preserving your employment brand along the way. Develop a way to stay in touch with the re-hireable folks impacted by the reduction in force.

If there is still undersupply in a critical role, a reduction in force within this role could send the business off track for years—possibly resulting in bankruptcy as one electronics retailer recently demonstrated. In this case, look for other reductions and efficiencies in the workforce. Cut the low performers who are unlikely to make a turn-around and consider reductions in pay (rather than headcount) for some of the low/medium performers in these roles. The reduction in force should be aimed elsewhere, away from a critical role that is in a state of undersupply even when the scenarios are adjusted.

Contributor: Nicholas Garbis

Pension Funding: The Long View

Contributor: Richard Berger
Posted: 10/19/2010 12:00:00 AM EDT | 0

The past few years have not been fun for defined benefit plan sponsors. When the new Pension Protection Act (PPA) funding rules went into effect in 2008, employers struggled to understand and comply with them. Plan assets headed south in 2008, contributions went up and funding ratios dropped in 2009. Pension relief measures allowed some tactical management of contributions, but 2010 arrived and the final rules are in effect. Now is a good time to step back, to review the situation and set a long-term course of action.

For starters, plan sponsors must now comply with funding rules that were never intended to make their lives easier or more predictable. The new rules are actually designed to leave a tidy corpse, ready to be euthanized by the plan sponsor, or entrusted to an extended life in the care of the Pension Benefit Guaranty Corporation (PBGC) established in 1974 by the Employee Retirement Income Security Act (ERISA).

Many plan sponsors have frozen their plans, and once a plan has been frozen, odds are that its days are numbered. These pension lame ducks will only reach the finish line when the assets are sufficient to settle all benefit obligations, either through purchasing annuities for promised benefits or offering lump sum payments. Right now, the finish line is out of reach for most plans, because the prices for lump sums and annuities are high, and plan assets have only partially recovered from their plunge in 2008. There is no quick exit for frozen plans, so plan sponsors must focus on the medium to long haul. Frozen or not, the funding problem remains.

A moving target

In financial economics, “the law of one price” means that identical securities should have identical prices. If they deviate from that price, it creates an arbitrage opportunity to buy low and sell high, and thereby earn a sure profit. Because the future expected cash flows (benefit payments) from a pension plan are like bond payments, this arbitrage principle has been interpreted to mean that the value of pension liabilities should be determined like the market price of a bond.

You might argue that funding a pension plan based on market rates is a lot like flying a plane from New York to Seattle, hugging the ground, climbing steeply at the Continental Divide and diving again after crossing the mountains! Yet the PPA funding rules accept this view of pension liabilities, and the IRS publishes monthly discount rates that are based on high quality corporate bond rates. These discount rates are used to compute the value of your plan’s liabilities. Month by month, pension liabilities move with the corporate bond market. As a result, those who try to fully fund a pension plan are aiming at a moving target.

Traditional pension strategy has been to invest, say, 60% in equities and 40% in fixed income and other investments (or maybe to split asset classes 50/50), refined for maximum return for a given level of risk. Those who continue to follow this strategy may do well, particularly if equity markets and bond interest rates rise. But what if equity markets fall, while interest rates hold steady or decrease further? And who can fully understand what actual deflation, a real fall in the price level, would mean?

The traditional strategy could turn out badly, with higher liabilities, assets lagging, dropping funding ratios and rising contributions. Because of this danger, plan sponsors may be strongly inclined to modify their investment strategy to lessen the risk. This would likely imply a shift in allocation to appropriate fixed income investments, which move in closer coordination with plan liabilities.

The downside would be that these investments have lower expected returns, with less potential for growing out of underfunding through superior returns. Many plan sponsors will be reluctant to abandon hope that the underfunding can be cured by asset performance. The only other way to remedy the underfunding is by increased contributions.

Tradeoffs – what do you do?

If your pension plan is not frozen, new participants are still becoming eligible, and new benefits are still being earned each year. In that case, you can adjust your benefit formula to take into account the higher costs that may be incurred with a safer investment strategy. If your plan is already frozen, you have to determine the tradeoffs between risk and reward, safety and cost.

In either event, you need to evaluate the interaction between future returns and future bond yields, to quantify your exposure. Until your plan is terminated and all benefits are settled, you cannot entirely avoid risk. You will be better served by knowing the risk, and taking steps to address it, rather than crossing your fingers and hoping for the best.

Beyond simple projections for next year’s budget, plan sponsors need to examine longer-term forecasts to understand what is feasible and what the downside risks are to continuing the traditional investment strategy. A simple deterministic projection (for example, assuming that assets earn a given percentage per year and discount rates remain the same going forward) will often reveal how long it will take to put a frozen plan in a position to be terminated, or what the long-term costs of a continuing plan will be.

Such projections can provide a simple sanity check, to understand what is possible or likely. An asset liability study, which models market behavior of assets and liabilities, can give valuable information about risks and the costs of the traditional investment, versus predominantly fixed income allocations. Forecasts are not tools to predict the future, but can be very useful for evaluating the implications of alternative scenarios.

The last few years have forced defined benefit sponsors to improvise and react to rules and events. Now is a good time to take the longer, active view so that you can take the initiative, instead of simply reacting to what tomorrow brings.

Contributor: Richard Berger

Optimizing Restaurant Labor Costs

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Meeting the Challenge of Optimizing Restaurant Labor Costs

Labor management technology: it’s not just mobile shift scheduling apps.  Here’s what you need to know…Brought to you by CrunchTime!

 

By Paul Molinari

Juggling restaurant staff schedules can be a stressful and time consuming process.  Even the best managers sometimes rely on a combination of sticky notes, bulletin boards and spreadsheets containing an ever-changing list of employee contact information, time-off requests, and schedule changes. It’s a big challenge to manage all of this information while making sure the restaurant is properly staffed at all times.  After all, it’s the staff on hand that can make or break the guest experience.

Enter Labor Management technology solutions.  A quality back office system will include an integrated labor management solution where the entire staffing process is streamlined and systematically controlled with easy-to-use functions that automate and optimize labor schedule requirements based on a number of critical factors — all from a single platform.  Make no mistake, you’ll find no app for this in the App store.  Why? Because this is a big, honking business problem with a lot of complex moving parts and only an integrated enterprise-class back office solution sophisticated enough to understand your entire business will optimize the labor component of your restaurants.  Mobile is a vitally important component, but it is only one piece of the solution.

Labor management is all about labor optimization

To truly optimize labor you need to consider the following:

  • Forecasting Capabilities
  • Mobility
  • Real Time Access to Information
  • Collaboration Tools
  • Silo Busting
  • Labor Rule Enforcement
  • Integration to other systems

At the heart of labor optimization is having a solid forecast that accurately projects the ebbs and flows of your business days.  Forecasts should allow for a number of business drivers (sales, guests, transactions, menu mix) to learn and get smarter from historical data, but should also consider fixed tasks, holidays, LTOs, and other special events that impact the business day.  Next, you need to be able to build smart staffing demand templates that will translate your business drivers into a reliable staffing demand.  Finally as you build your schedules, you should have visibility into skill levels, certifications, pay rates, availability, budget information, and labor rules.  Sounds easy.  But then stuff happens.

As the day begins, sales may be off the mark, employees may not be able to cover their shift, weather could impact different day parts, LTO may not be predictable, or a media buy might have an unanticipated effect.  This is where mobility can really make a difference.  Having real-time access to evolving intraday sales trends, the timeliness and availability of your staff can empower your manager to make sound decisions on-the-fly as they run their shift.

Further, right from their mobile device or desktop, managers can view a schedule, approve staff requests, and communicate messages to relevant team members about shift openings or important updates.  Mobility also facilitates collaboration with the restaurant team members who can easily offer, pick-up and swap shifts right from their own smartphones, tablets or desktop computers.  The manager should not have to get involved until it is actionable by her.  While this is awesome and helps streamline scheduling, have no doubt, there are other critical aspects to consider when optimizing labor costs.

Labor scheduling can’t be in a silo – it affects everything…

An integrated enterprise solution should also include integrated dynamically generated task lists that ensure accountability to every core task of your restaurant operations.  You cannot silo labor scheduling because every core task in your restaurant can affect the delicate balance of ensuring that you have the right person at the right place at the right time.  So, if your suggested ordering system is off and someone needs to run to the grocery store to get supplies or if your daily prep plan underestimated demand and the kitchen gets backed up, then you will have team members running around performing tasks that are critical to your operation (like running to the store), that are not considered in your staffing plans.

Having the ability to optimize the restaurants staff size and quality for every shift is what sets Labor Management apart from Labor Scheduling.  Right-sizing your staff will reduce the costs associated with over and under-staffing. Using smart staffing templates will create labor schedules based on sales and guest-traffic forecasts, as well as past consumption and traffic patterns.

Good labor management solutions will have Performance Management capabilities, too.  These allow operators to reward top performers and coach more effectively by tracking employee performance, attendance, and task completion.

OK, but what about overtime?  Better solutions will provide visibility to overtime during the scheduling process and will alert your management team well before it occurs.  If you are relying on systems to tell you about overtime as it is about to occur you are going to lose the battle.  Your team needs to know about OT far enough in advance to do something about it.  Finding out in real-time is not always helpful.

Navigate labor law and regulation compliance

Best practices are essential when it comes to labor law and regulation compliance, but navigating those laws and regulations can get confusing – and, um, laborious.  Make sure the labor management solution you choose can help enforce compliance with local, state, federal and company labor laws, including break laws, minor laws, and overtime guidelines.  Going even further, the solution should be configurable to enable the company to enforce best labor practices in every location anywhere in the world – in any language.  Finally, a secure labor solution will also create full audit trails for all critical transactions.

So, there you have it.  Labor management isn’t only about shift scheduling apps and it isn’t only about making sure your employees have an easy way to request time off or trade shifts.  No, labor management is really all about labor optimization and helping the company consistently find a perfect balance of staffing requirements-to-sales projections, day-in and day-out.

 

Dick’s firing on most cyclinders.

Dick’s Sporting Goods overcame weakness in its golf and hunting businesses to generate much better than expected second quarter same store sales and made further inroads in e-commerce.

The nation’s largest sporting goods retailer said second quarter same store sales increased 3.2%, far better than the decline of 1% to 3% the company had forecast. The comp increase was even stronger without a significant headwind from the company’s underperforming golf business. Same store sales at Dick’s Sporting Goods stores increased 4.1% while same store sales at Golf Galaxy locations declined 9.3%. Total company sales increased 10.3% to roughly $1.7 billion and were aided by the addition of new stores and an e-commerce penetration rate that increased to 6.3% of sales from 5.6% of sales the prior year.

“As anticipated, the golf and hunting businesses continued to experience negative comps. However, excluding these two categories, the remainder of the business delivered a 7.8% same store sales increase,” said Dick’s chairman and CEO Ed Stack. “We saw significant strength in several areas, including categories that have received more space within our stores, such as women’s and youth athletic apparel. The headwinds in our hunting business continued in the second quarter. However, as we look at the entirety of our outdoor business, strength in other outdoor categories offset the declines in hunting, and our total outdoor comps were flat for the quarter.”

Profits declined to $69.5 million, or 57 cents a share, including a $20.4 million charge related to restructuring of the company’s golf business, compared to $84.2 million, or 67 cents a share, the prior year.

“We have consolidated our Golf Galaxy merchandising, marketing and store operations into Dick’s Sporting Goods. In addition, we have eliminated specific staff in our golf area within our Dick’s Sporting Goods stores,” Stack said. “These changes are necessitated by the current and expected trends in golf. We will invest these cost savings into other aspects of our store operations and into the growth areas of our business.”

One of those areas is the company’s newest concept known as Field & Stream. One of the new outdoor stores was opened in the second quarter, but seven additional locations are planned for the third quarter. In addition, plans call for the opening of 24 new Dick’s stores in the third quarter as part of a full year plan to open 46 stores. One Golf Galaxy store is expected to open.

Looking ahead, Dick’s said it is cautiously optimistic about sales in the third and fourth quarter, forecasting same store sales growth of 1% to 3% for the third quarter and full year. However, to realize those sales, Dick’s said increased promotional activity to appeal to cautious consumers would pressure margins and advertising expenses and negatively impact earnings by four cents a share.

Dick’s ended the second quarter with 574 Dick’s Sporting Goods stores and 85 Golf Galaxy stores.

Busy Working, Robin Williams Fought Demons

LOS ANGELES — Peering through his camera at Robin Williams in 2012, the cinematographer John Bailey thought he glimpsed something not previously evident in the comedian’s work. They were shooting the independent film “The Angriest Man in Brooklyn,” and Mr. Williams was playing a New York lawyer who, facing death, goes on a rant against the injustice and banality of life.

His performance, Mr. Bailey said Tuesday, was a window into the “Swiftian darkness of Robin’s heart.” The actor, like his character, was raging against the storm.

That defiance gave way on Monday to the personal demons that had long tormented Mr. Williams. With his suicide at age 63, Mr. Williams forever shut the window on a complicated soul that was rarely visible through the cracks of an astonishingly intact career.

At the very least — if his life had followed the familiar script of troubled actors — there would have been whispers of on-set antics: lateness, forgotten lines, the occasional flared temper.

Not so with Mr. Williams. “He was ready to work, he was the first one on the set,” said Mr. Bailey, speaking of Mr. Williams’s contribution to “The Angriest Man in Brooklyn,” of which he was the star.

“Robin was always 1,000 percent reliable,” said a senior movie agent, speaking on the condition of anonymity to conform to the wishes of Mr. Williams’s family. “He was almost impossibly high functioning.”

As Hollywood struggled on Tuesday to understand how Mr. Williams — effervescent in the extreme — could take his own life, authorities released details of his death. A clothed Mr. Williams hanged himself with a belt from a door frame in his bedroom in Tiburon, Calif., according to Lt. Keith Boyd, assistant deputy chief coroner for Marin County.

Mr. Williams’s wife, Susan Schneider, went to bed at 10:30 Sunday night and woke up on Monday believing her husband was still asleep in a separate bedroom. A personal assistant, concerned that he was not responding to knocks on his door, discovered the body, cool to the touch and with rigor mortis, at about 11:45 a.m. on Monday.

Mr. Williams, who had recently been treated for severe depression, was declared dead at 12:02 p.m. Officials found a pocketknife in the room, apparently with dried blood on it, and superficial wounds on Mr. Williams’s left wrist, said Lieutenant Boyd, who declined to say whether there was a suicide note. Toxicology reports are still pending.

To a large degree, said studio executives and agents who worked with him, Mr. Williams seemed to use work as a way to keep his personal demons caged. At an age when most actors are slowing down, Mr. Williams was engaged with a half-dozen recent and planned projects. They ranged from stage work and low-budget films to an anticipated — though still distant — big-budget sequel to his biggest hit, “Mrs. Doubtfire,” which took in about $728 million worldwide in 1993, after accounting for inflation.

Photo

Mr. Williams and Mila Kunis in the movie “The Angriest Man in Brooklyn,” released in May.CreditLionsgate

Seeming to thrive on performance, despite the undertow of depression andsubstance abuse, Mr. Williams interrupted a live comedy tour for his heart surgery in 2009. But he quickly returned to finish his run. Stanley Wilson, a film producer who attended Juilliard with Mr. Williams and remained a close friend until the end, said a 2011 stint on Broadway left the actor “overwhelmed with joy.”

“He was totally proud” of his recent work, Mr. Wilson said, speaking by telephone on Tuesday. But he acknowledged that Mr. Williams had long been a “melancholic guy.”

Experts say that it is impossible to predict who will commit suicide. The act is so radical, individual and rare that it defies precise scientific analysis.

But there are factors that increase its likelihood, experts said, and many of them were Mr. Williams’s longtime companions: drugs, alcohol, depression. After a cocaine-fueled early career, Mr. Williams quit cold turkey in the mid-1980s and strung together two decades of sobriety before returning to alcohol while shooting a movie in Alaska, according to his own public statements. He entered rehab in Oregon in 2006.

Mr. Williams was also a middle-aged white male facing career challenges — his 2013 television series, “The Crazy Ones,” was canceled by CBS after one season — only a few years after the heart surgery. More than 70 percent of all suicides in the United States are white men, most of them in their middle years, and many take their lives in the wake of some loss, whether professional, personal or physical.

Charles J. Biederman, a Los Angeles lawyer who represented Mr. Williams in entertainment dealings, strongly refuted tabloid reports on Tuesday that the actor was in acute financial distress.

“No, no, he was doing fine,” Mr. Biederman said. Other members of Mr. Williams’s professional coterie also insisted that money problems were not an easy explanation for what happened. “He didn’t have crazy money like before his divorces, but the coffers were still full,” said a person who worked closely with Mr. Williams, who was currently on his third marriage.

Mr. Wilson said: “He was not broke. He got highly paid for the series, and he just did two movies.”

Mr. Wilson did acknowledge that money had been an issue for his friend roughly two years ago. In an interview with Parade last year, Mr. Williams said as much, telling an interviewer that he had decided to do “The Crazy Ones,” his first steady TV job in 30 years, because of the paycheck. Mr. Williams’s salary for the show was reportedly between $150,000 and $200,000 an episode, which for a season of 22 episodes could have paid more than $4 million.

“There are bills to pay,” Mr. Williams told Parade, adding that he had recently re-listed his Napa ranch for $29.9 million because “I just can’t afford it.” (The ranch, initially listed in 2012 for $35 million, is still for sale.)

Whether for emotional or financial reasons, Mr. Williams in recent years increased his workload, even taking on commercials. He played a football coach unhinged by hunger for Snickers and his voice was used in spots for iPad Air devices.

His 2006 relapse appeared related to concern about his ability to keep working. “It’s fear,” Mr. Williams said in a 2010 podcast interview with the comedian Marc Maron. “You’re kind of going, ‘What am I doing in my career? Where do you go next?’”

Mortality also appeared to weigh on him. While shooting “Boulevard,” an indie drama that was filmed in Tennessee in the spring of 2013, Mr. Williams spoke pointedly about the recent death of another famous comedian — his idol, Jonathan Winters.

“On set, Robin talked about losing Jonathan Winters in all his brilliance and goodness, like any other fan,” said Dito Montiel, the director of “Boulevard.”

For Mr. Bailey, Mr. Williams’s little-seen performance in “The Angriest Man in Brooklyn” is the comedian’s “defining role,” revealing him for the tormented, if comic, soul that he really was.

No IPO Needed: Rocket Internet’s Samwer Brothers Become Billionaires On PLDT Investment

For the last two months, German startup accelerator Rocket Internet has been working toward an initial public offering, holding meetings with potential investors before making any formal announcements of its intentions. Going public was to be a sign of validation for Rocket and the three Samwer brothers, who cofounded the Berlin company in 2007 with the original intent of mimicking established U.S. technology companies in overseas markets.

In spite of its IPO plans, Rocket surprised everyone on Thursday by announcing a $445 million investment from the Philippine Long Distance Telephone CompanyPHI -1.31% (PLDT ) for a 10% stake. That investment values Rocket at $4.45 billion and allows the company to establish a strategic partnership with an emerging markets leader in online payment solutions.

“Rocket and PLDT share a vision for the growth opportunity of Internet and mobile business models in emerging markets, as smartphone penetration increases exponentially,” said Rocket Internet CEO Oliver Samwer in a statement. “Strategic partnerships are a core part of Rocket’s strategy to provide great services to consumers and rapidly roll out new Internet based business models across diverse geographies.”

Sources close to the company said that a deal with PLDT had been in the works for weeks as Rocket was concurrently making IPO plans. This investment does not alter Rocket’s intentions to go public, said sources, who added that the startup accelerator is hoping for a larger valuation in the 4 billion Euro ($5.3 billion) to 5 billion Euro ($6.7 billion) range when it finally does.

A spokesperson for Rocket declined to comment.

For Oliver Samwer and his brothers Marc and Alex Samwer, PLDT’s investment, confirms them each as billionaires. The investment consisted of all new primary shares in Rocket, diluting the brothers down from a 65.2% ownership stake to a 58.7% stake. Their combined ownership in Rocket alone is now worth $2.6 billion and comes in addition to their 17% holding in pre-IPO online fashion retailer Zalando, which is valued at $5.3 billion. Forbes estimates that the Samwer brothers are now each worth at least $1.2 billion.

Those net worths may rise when Rocket or Zalando both test the public markets, which could happen by the fall said sources. Individuals close with Rocket’s plans note that the company is raising to possibly open 100 new startups in the next 18 months. To date, the Berlin accelerator has launched more than 75 different companies in Europe and emerging markets, including Zalando and Zalora, a fashion e-commerce company in Southeast Asia.

Southeast Asia remains one of Rocket’s biggest focuses with the likes of Zalora and Lazada, an Amazon-like retailer. And while the company has experimented heavily in marketplace and online retailing companies, it’s hoping that its partnership with PLDT will pave the way for its expansion into financial technologies. PLDT subsidiary Smart Communications, for example,  handled $4.5 billion in payments in 2013, and has working relationships with the likes of MasterCard MA +0.61%, Citibank and Visa V +0.49%.

“Our investment demonstrates our commitment to the global Internet market and our belief in the powerful synergies between e-commerce and mobile payments, particularly in developing economies,” said PLDT CEO Napoleon Nazareno, in a statement.

PLDT will take one seat on Rocket’s nine-member supervisory board, which also has places occupied by Len Blavatnik’s Access Industries, which owns a 9.8% stake; Swedish investment firm AB Kinnevik, which owns a 21.5% stake; and the Samwer brothers’ investment company Global Founders, which was formerly known as European Founders Fund.

Follow the author on Twitter at @RMac18 or email me at rmac@forbes.com.

Vineyards In the Clouds: Wine Behind The Scenes At Delta Air Lines

This is the first in a two-part series about a little-explored segment of wine sales: in-flight selections on a major airline carrier. With orders that run into the thousands of cases, and with persistent exposure to high-end business and luxury travelers, being picked up for “onboarding” can be a major boon to a winery’s fortunes. The selection process is precarious, however, with considerations as wide-ranging and variable as volume availability to label design.

Today we look behind the scenes at Delta Air Lines DAL +0.75%, where consulting Master Sommelier Andrea Immer Robinson this week is choosing the wines to be served on board in Delta’s Business Elite class. My next post will profile two wineries in particular that made the cut: Merry Edwards from Sonoma and Rioja Alta from Rioja, Spain.

ATLANTA – It looks a little bit like a war room.

Video cameras. Projector. Four-panel large screen. Fluorescent lighting. Specs. Spreadsheets. Clipped forms of words, like “transcon” and “onboard” (used as a verb). And there’s a feeling in the air that there are major decisions being made.

Which brings us to the wine, more than a thousand bottles of it, from all over the world.

Most bottles sit on top of black-tableclothed tables positioned in a C-shape around this large conference room, adjacent to Delta Air Lines’ newly-opened Flight Museum at Hartsfield-Jackson International Airport, southwest of Atlanta. Walking from one end of the room to the other is like walking through a three-dimensional map of the players – some big, some small, plenty in between – in the wine world today.

This is the week that Andrea Immer Robinson (Master Sommelier, Master of Wine, and consultant to Delta) chooses the wines that will be served in Delta’s Business Elite class in 2015. She’s a masterful orchestrator, consulting spreadsheets, managing logistics, and shifting bottles from “general” tables around the perimeter to the “chosen” table in the center of the room.

The wines are grouped according to specifications such as Sauvignon Blancs from the US there, Cabernet Sauvignon/Merlot blends from France here, classic Spanish reds over there. But you get the sense that Robinson’s been filling in the spaces in between (in her head, at least) for the past year, as she’s tasted and built relationships with wineries around the world. Having worked in banking prior to her wine career, plus those MS and MW credentials, means she’s as fluent in spreadsheets as she is in Sémillon.

It's about the wine, but it's not only about the wine: Andrea Robinson, consulting Master Sommelier, runs the numbers alongside Sherry Cox, Strategic Sourcing Manager of Supply Chain Management at Delta Airlines.

“That’s the solution right there,” she said definitively, setting down her glass after comparative tasting two similar wines and turning back to her laptop.

Taste is just one tile in a kaleidoscope of factors in this selection process, which is set in motion annually beginning with an RFP to some 50 domestic and international brokers and negoçiants. This year, unlike in previous years during her tenure at Delta, Robinson allowed those suppliers to add a maximum of only five additional wines beyond her “wish list” RFP.

Factors other than taste that influence Robinson’s decisions include volume availability, origin of the wine, price, how the wine performs at altitude, and which new wine categories are positioned to “capture people’s imaginations.” Robinson pointed out two in particular: Soave from Italy and Verdejo from the Rueda region of Spain.

Robinson also makes an effort to align wines with the geography of Delta’s routes and taste preferences of the people likely to fly those routes. “We’ve got a great shot at putting a Washington wine on the list,” she said toward the end of the day yesterday. “Delta’s opening new international routes from Seattle, with multiple flights to Asia and direct to Paris seasonally. What everyone figures out when they go to the Pacific Northwest is how maniacally devoted people are to local wines. So we’re putting our mouth where our money is.”

Still, it’s a balancing act. When team members gave her feedback that the Asian market “went crazy” for a particular wine, Robinson’s immediate next question was whether the wine was a hit across the system rather than just on those specific routes.

A traveler in their seat on an airplane is a captive audience, and it’s an exceptional opportunity for both Delta and the winery to communicate to customers, to enhance the experience, to build loyalty, and to inspire customers beyond what’s in the glass in front of them for the duration of the flight. In my next post we’ll look at the narratives behind two of Robinson’s in-flight selections and how Delta builds the infrastructure of communication around those wines.

Cathy Huyghe writes about the business and politics of the wine industry. Follow her on Twitter @cathyhuyghe.

 

4 Lessons From the Red Carpet On Customer Service

If you scored Beyonce as a client, you’d make sure she got A-list customer service. When her handlers called, they’d reach the right person at your company on the first ring. You’d train your team to bring the love. If Beyonce was unhappy, you’d fix the problem—stat.

Why not treat your existing customers the same way? If you’re too lazy to give them red-carpet customer service, someone else will. And, it’ll kill your business.Accenture found 51% of consumers switched firms in 2013 after getting poor service. Want to hold onto your business and see it grow? Do this.

Get Crazy Curious. Your customers deserve luxury. You can’t deliver it if you don’t know what it is. Give yourself a crash course. Put off buying the S-Works bike. Spring for a night at the One and Only Resorts instead. Grill the bellman on how he’s trained. Look for ideas to bring back to your business. At my companies, we call customers guests to set the tone and give them the same special care that a guest at your home gets.

X-Ray Souls.  When you attend a red-carpet event, a town car arrives to pick you up. You lean back on the soft leather seats, and you see Gray Goose vodka and Firestone IPA. There is a bowl of Terra chips, in case you are hungry. You feel cared for. The planners make sure.

Anticipate your guests’ needs the same way. Selling them cars? Share the best place to get a stereo upgrade. Writing content for them? Help them promote it online in credible places. Find new ways to make their lives easier and more effective. It creates great opportunities to grow your business.

Make Them Feel Your Muscle. At any red carpet event, guests pass through tight security before entering. Greeters check and cross-check your identity against a guest list. Giant body guards keep watch over every door. Once inside the large party tent, well-trained assistants guide you through the paparazzi shots to the people you really want to meet.

Guests at your business should feel just as secure. If you run a service firm, schedule a welcome call where you gather the team to walk them through their project. Review the deliverables carefully. Let them know when you’ll deliver progress reports. Make sure they know you’re looking out for them with solid follow-up and in words and tones that build certainty in your firm. Slack on this and they won’t come back, and will text or post their reasons to five of their friends

Crush the details. Quit saying you don’t have the budget to pamper anyone. At my company, we train our guest services team to be sensitive to guests’ tone of voice and cadence. That doesn’t cost anything but it helps us make a powerful, emotional-charged connection. That’s one reason 95% of our customers keep coming back.

6 Tips For Making A Good Impression In Your First Job

In 2006, Lauren Berger was fresh out of college and the assistant to a big-shot Hollywood agent. It would have been a dream job for any new grad. But Berger quickly realized that her work was really hard — and that her education hadn’t prepared her for the challenge.

“When I started my first job, I thought I was the most prepared job candidate there was. I had done several internships and was extremely career-focused,” she says. “I was in for a rude awakening.”

Berger entered what she called a “7am-9pm lifestyle” that pretty much alternated between work and sleep.

“At least for me, to perform well at school wasn’t that hard. You had to show up for class 90% of the time, sit in a chair and stare at the front and you have to do a lot of memorization the night before a test. Then you get to the workplace and it’s ongoing expectations — you can’t just show up anymore. You have to really be present. Not telling your boss about one phone call … could mess up a lot of the parts of the business beyond your comprehension,” she says.

After learning from all her mishaps, Berger decided to launch her own company. In 2009, with $5,000 in savings, Berger launched Intern Queen, a free internship website with information on internships and first jobs, plus internship listings. Her alarmed parents counseled her to get a job atStarbucks or McDonald’s. However, since then, Berger has been featured on the Today Show and Fox & Friends and in The New York Times and Bloomberg. She has published two books, with the most recent, Welcome to the Real World: Finding Your Place, Perfecting Your Work, and Turning Your Job Into Your Dream Career, out in April.

McDonald’s is ‘joint employer’ with franchisees, says National Labor Relations Board

McDonald’s Corp. said Tuesday that the National Labor Relations Board informed it that it will start allowing workers filing labor complaints to treat the fast-food giant as a “joint employer” with its franchisees.

The decision, which McDonald’s said was delivered by phone, could have wide-reaching implications because about 89 percent of McDonald’s more than 14,000 U.S. restaurants are owned by franchisees.

The Illinois-based hamburger chain quickly came out against the decision.

“This relationship does not establish a joint employer relationship under the law,” Heather Smedstad, senior vice president of human resources at McDonald’s USA, said in a statement regarding the corporation’s relationship with its franchisees. “This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong. McDonald’s will contest this allegation in the appropriate forum.”

Groups weighed in fast.

“The staff decision issued today by the National Labor Relations Board recommending that McDonald’s and its franchisees should be considered joint employers gives a whole new meaning to the word ‘outrageous,’ ” National Retail Federation Senior Vice President for Government Relations David French said in a statement from the trade group.

McDonald’s and other fast food operators have been pressured by union groups in recent months to raise wages and improve working conditions. McDonald’s and other restaurant operators have said that franchisees are independent business owners who set their own policies. Some worker activists said the decision was proof that McDonald’s controls its franchisees more than it claims to.

“The reality is that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge,” Micah Wissinger, an attorney at Levy Ratner who brought the case on behalf of McDonald’s workers in New York City, said in a statement provided by a public relations firm representing workers fighting for $15 hourly wages and a union.