JULY 15, 2004

INSIDE INFO
By Amey Stone

10 Employer Secrets Worth Cracking

From financial health to company culture, here's a look at some of the crucial info any prospective or current employee needs to know

Thank goodness the labor market is finally loosening up, and more good jobs are becoming available. Still, finding a new position is tough enough that you don't want to make a wrong move.

So here's a critical point to consider: All employers have secrets that you'll want to uncover �? things like a drastically underfunded pension plan, a laissez-faire attitude toward new regulations, or using high tech to snoop on employees. Then there's the more intangible, but often the most serious, problem you need to watch out for: Getting stuck in a corporate culture where you don't fit in and have little chance of getting ahead.

Even if you're not considering a new job but just evaluating your prospects at a current employer, here are 10 questions that you should have answered. In many cases, it would be impolitic to ask outright and, you won't find the answers in the employee manual, but you can find ways to ferret out the information you need.

1. Will this company be able to take care of me in retirement?
BusinessWeek's July 19 cover story, "The Benefits Trap", revealed that many large companies don't have enough assets to cover their pension obligations. At the same time, many of those companies are reducing retiree medical benefits in hopes of boosting the bottom line.

A classic mistake most people make when contemplating a career move is to base their decision too much on annual compensation and forget to consider the value of benefits, says executive coach Paul Bernard, principal of Paul Bernard & Associates in New York. "For baby boomers this is a big issue," he says.

How to find out: Pension plan details are in a footnote to the company's annual report, so you can check to see if your plan is funded adequately. Find out if the health-insurance program for retirees has been scaled back recently. If it hasn't, the next few years might bring cuts.

2. Is the 401(k) program loaded with lousy funds?
Securities regulators are now looking into whether poorly performing funds end up in employee retirement plans because of alleged revenue-sharing arrangements between the mutual-fund company and the plan provider. Big changes in these deals are coming, says Pete Swisher, of Unified Trust Co., which creates 401(k) plans for small- and midsize companies. "In general, your plan shouldn't include any funds that have been inferior choices for a while," he says.

How to find out: Get a list of all the funds in the plan and see how many have returns below the 50th percentile in their category for a year or longer, suggests Swisher. Another method: See how the funds are rated on BusinessWeek's Mutual Fund Scoreboard. Most of the funds in the plan should rank better than a "C."

3. Will I keep getting stock options?
Just because option grants have been lucrative in the past doesn't mean they'll continue to be. Due to accounting changes (new rules are likely to require options to become an expense on the balance sheet), companies are scaling back on allocations to employees. Some are replacing them with grants of restricted stock, but usually in smaller amounts.

What you can do: Companies can't tell you ahead of time how their plans will change, says Deborah Sawyer, an executive recruiter at Morgan Howard Worldwide. But be ready: If the plan changes, your total compensation should stay roughly the same even if options make up a smaller percentage.

4. Does the company snoop on its employees?
It probably does more than you think. Software is increasingly being used to monitor workers. A June survey from software firm Proofpoint and Forrester Research found that 43% of companies employ staff to watch outbound e-mail, mainly looking for leaks of confidential memos and intellectual property. "A little frightening, isn't it?" says Gary Steele, CEO of Proofpoint, which sells e-mail-monitoring software.

Internet Security Systems (ISSX ) unveiled a service in May that first analyzes how much nonbusiness related surfing employees are doing and then provides filtering software to block offending Web content. Hyperion (HYSL ) offers sales managers "dashboards" that show daily progress on all deals in the pipeline. Hyperion Chief Executive Jeff Rodek says companies should share information they gather with employees or risk coming off as "Big Brother."

What you can do: It's legal for companies to read employee e-mail, so use a private e-mail account for all personal communication, advises Steele. You can try asking about employee monitoring, but you may not get a straight answer. It's best to assume you're being watched.

5. Is the company able to cope with all the new regulatory scrutiny?
It may seem like old news, but the deadline for complying with major provisions of the sweeping corporate governance legislation known as Sarbanes-Oxley, or SOX, is just coming up in November. A July 14 survey from PricewaterhouseCoopers found that 79% of respondents said their company still has work to do to comply. Senior management needs to be paying attention to compliance issues or risk being ensnared in a regulatory net that can affect the company stock and, indirectly, employees' job security.

How to find out: One way is to assess the role of internal auditors. "If internal audit is held in high esteem, that's a strong indication that the company has a solid compliance strategy and is running a tight ship," says Harald Will, chief executive of ACL Services, which provides internal-audit software. Keep up on company news to see if it has already run afoul of regulators.<PAGEBR />

6. Is turmoil at the top likely?
Employees at Credit Suisse First Boston were caught by surprise recently when Chief Executive John Mack agreed to step to down. Perhaps they shouldn't have been. He was sharing the CEO role with his European counterpart at parent company Credit Suisse Group. That's often a sign that one of them is dispensable.

"There are lots of cases where most people are shocked, but the astute employee saw the signs all along and already had it figured out," says Sawyer. Is your boss due to retire soon? Does a wave of consolidation in your industry mean your company is available to be swallowed up? If major change is coming, consider how potentially disruptive that could be, advises Bernard.

How to find out: Don't focus too narrowly on dynamics within your own division. Follow company and industry news. Pay attention to management shifts at the top.

7. What is the company's hidden culture?
Any long-term employee knows the hidden culture at their company. Is it hard-charging and aggressive? Or is it a more sensitive, consensus-driven place? "That's extremely important to know if you're the new kid on the block," says Bernard.

If you don't fit in, you might have trouble succeeding. You may be able to find a similar position at a company with a culture that suits you better. "If someone is very outgoing and likes a work environment with open communication and without a lot of structure, they might get frustrated at a place with a very traditional, rigid, structure where executives are shut off," says Tim Carrington, senior vice-president for strategic support services at staffing firm Aerotek. "The better the cultural fit, the more fulfilled we find the person is," he says.

How to find out: Before you start, go out to lunch or have drinks informally with a few people who work there, advises Bernard. Also, check out the job boards on Web sites like TheVault.com for company scuttlebutt �? just be sure to take this kind of griping with a grain of salt.

8. Is the company as family-friendly as it claims?
Morgan Stanley is now reeling from a $54 million settlement over sex-discrimination charges. No doubt the employee manual promised a work environment hospitable to women and minorities. Maternity and paternity leave and flex-time arrangements are other areas where official corporate policies may differ markedly from reality.

What happens to the careers of women who go part-time after having children? Do men ever really take paternity leave? Anyone with young children or planning on having them should check out the unofficial policies.

How to find out: Talk to employees with kids at the company. For women, see if women are in positions you aspire to and find out about their career paths.

9. What's the (real) travel and expense policy?
This might sound like small potatoes, but for executives in sales or consulting, it's something to watch for, says Bernard. Just as cultures vary at different companies, so may one applaud you for taking clients out to a fancy lunch while another would wonder why coffee and a donut wouldn't suffice.

Bernard says clients have recently complained to him that it can take 60 to 90 days to get reimbursed for expenses or that they're now required to fly coach. If you're going to be taking lots of trips to Europe and are accustomed to flying first class, this is something to check out.

How to find out: Again, your best source is informal chats with current employees.

10. Is the company in good financial shape?
Finding this out is No. 1 for employees at startups, as many people learned during the dot-com bust. Is there strong venture-capital funding? Are there lots of deals in the pipeline? What's the burn rate? Says Sawyer: "If you're going to go to work for a company that's venture-capital backed, you have to be able to ask smart questions." Even employees at large companies (think Enron or WorldCom) are wise to plumb company finances these days.

How to find out: At a private company, you may be able to see the books if you sign a nondisclosure agreement, says Sawyer. If you work at a public company, check out its balance sheet, debt rating, or average stock rating. BusinessWeek Online has such information in its corporate snapshot on public companies (see "estimates and opinions" and "company financials").

It's impossible to find all the secrets of a company without spending a long time working there. But if you ask the right questions and look for answers from the right sources, you'll learn plenty.

Stone is a senior writer for BusinessWeek Online in New York
Edited by Beth Belton

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