To: PR Case Studies Fr: Bill Sledzik Re: Sample Situation Analysis Note to PR Case Studies Students: This Situation Analysis was developed by a team of students in the senior-level PR Seminar class. It’s really good, but it also represents the research of 4, not one. So Don’t panic! I don’t expect this level of research from one student, nor do I expect a 12-page document (more like 5-7). But I want you to see what a good Situation Analysis looks like and how it can lead you into a productive PR strategy. I also want you to see how understanding of the issues increases with the amount of research you do. Note how the students researched issues and trends affecting their client. Note how they incorporated the results of that research into their report. And note how the entire document leads to one, clearly focused problem statement. Please don’t try to mimic the section headings. This is NOT a template. Every client is different. This Situation Analysis was designed to solve the problems of Parker Hannifin. Your client’s needs are quite different. This particular case was designed to help Parker recruit competent engineers and accountants in what has been a severe labor shortage in those areas. If I have a criticism of this document, it’s the shortage of paragraph breaks. It is exceptionally well organized and well written. Parker Hannifin Corporation Situation Analysis Company/Industry Overview Parker Hannifin is a global manufacturer of products that control motion, flow and pressure. With corporate headquarters just outside of Cleveland, Ohio, and 254 plants across the world, Parker serves more than 400,000 customers in 1,200 markets. Despite the economic fallout from September 11, Parker remains a strong company and continues to make acquisitions that strengthen its market positions in Latin America and Southeast Asia. During the past few months, the company was initially hurt by the prospect of lost revenues in the commercial aerospace industry, but the promise of large military contracts has helped stabilize its stock prices. Encouraged by the financial resiliency their company showed during these tough times, Parker’s leaders have committed themselves to growing the company’s market share and revenues. They’ve also recognized a company-wide need for qualified engineers and accountants to fill the positions that will be opening up as the American economy recovers and company expansion continues. This situation analysis will summarize the research findings we believe are relevant to the recruiting of accounting and engineering graduates for Parker’s corporate headquarters and eight manufacturing divisions. Internal Factors Affecting Recruiting Parker has more than 44,000 employees working in eight divisions across the world. These “Happy Parker People” like their company and like each other, as supported by these facts: The average Parker employee stays with the company for 17.5 years, and Parker claims a higher percentage of inner-company marriages than any other corporation. One of Parker’s strengths seems to be its corporate culture. The line between upper management and low-level employees is almost non-existent. Employees are free to communicate with each other and voice their complaints outside the chain of command. As Erica Brothag from corporate communications put it, “It’s not uncommon for our CEO to come down and eat in the cafeteria with our maintenance people.” Surely this kind of atmosphere is not found in every corporate environment. Good work is recognized and rewarded at Parker. Interns who return to work for Parker are treated as experienced employees rather than new hires. Parker takes their intern experience and counts it toward seniority-based benefit plans. The company likes to promote from within and always posts open positions internally before releasing them to the public. Relocation, however, is usually an unavoidable part of accepting a promotion. It’s not uncommon for a Parker employee to move four or five times while climbing the corporate ladder. To make matters worse, most of Parker’s American plants and offices are located in small towns of which many people have not even heard. As Parker’s recent survey of new hires pointed out, relocation continues to be a difficult issue for the company recruiters and human resources department. The company has tried to offset the negative impact of relocation by offering a substantial relocation package. Parker purchases employees’ homes or pays up to three months of rent, in addition to adjusting employees’ salaries to account for changes in the cost of living. These practices show a strong commitment to employees, but perhaps Parker could do even more to ease the pains of relocation or fill its open positions with employees from the same location. The relocation issue certainly hurts Parker’s recruiting success, but other internal factors are just as damaging. While Parker’s manufacturing efficiency depends largely on maintaining eight specialized divisions, the lack of centralization really hurts all phases of the company’s internal and external communications. Parker recruiters tell stories of running into each other at college career fairs. When this happens, students seeking employment opportunities are confronted with two different Parker booths and two different Parker recruiters, each displaying different colors and logos. The students begin to wonder if they’re dealing with one company or two. Unfortunately, the confusion extends beyond college campuses. A panel of Parker’s top human resources personnel revealed that farther along in the recruiting process, Parker managers working for different divisions sometimes interview the same candidates and unknowingly compete against each other in bidding wars. All of these scenarios result from a lack of communication between divisions and a lack of human resources centralization. If Parker’s divisions want to continue to recruit for themselves, they must communicate with each other to avoid the situations described above. According to the corporate human resources department, efforts are now being made to coordinate Parker’s college visits and make Parker booths a “one-face presentation,” but the communication problems between the eight divisions need more than a few quick-fixes. In cases where Parker has overcome its communication breakdowns and recruited students successfully for interviews, starting salaries have sometimes been an obstacle to securing the best and brightest candidates. Parker admits that while it can offer competitive salaries in the middle to upper-middle range, it cannot compete with the “big fish,” like Ford and Honda. These larger companies also have an advantage over Parker when it comes to name recognition. Mainstream business publications do not pay much attention to Cleveland or the smaller towns where Parker makes its products. In addition, Parker’s industry does not lend itself to great publicity opportunities. A motion control manufacturer makes many of the hidden components of larger products, so establishing its brand recognition outside of a small number of manufacturers and distributors can be very difficult. Parker’s products are less visible than cars made by GM or computers made by IBM, so its recruiting booths and web site are always less likely to be visited by college students than the booths staffed by GM and IBM. Consequently, if Parker wants the best and brightest engineers and accountants of the future, it must find creative ways to steal them from the “big fish” without the lure of a giant brand name or giant salaries. The Competition We studied TRW Inc. and Honeywell International Inc. because both companies compete with Parker in various industrial markets and in the recruitment of potential engineers and accountants. Incidentally, TRW and Honeywell were linked in a recent news story when TRW’s CEO, David Cote, left to become the CEO at Honeywell. The news was shocking, especially in Cleveland, where TRW makes its corporate home. TRW Inc. Just like Parker, has headquarters in Cleveland Makes automotive electronics and chassis systems, defense systems, information technology Offers two-year development program for graduate students – 65 percent minorities and women Divided into two groups: Space and Electronics Group/Systems and Information Group – recruit separately Offers broad range of internships and co-ops Offers extremely flexible, customized work schedules – seven times named one of the “100 Best Companies for Working Mothers” Participates in many minority organizations: The National Black MBA Association, The National Association of Black Accountants, Minority Engineering Programs, etc. 22.4 percent of senior management positions held by women and minorities Dedicated more than $8 million to “Strategic Philanthropy” in 1998 – $800,000 alone to community programs in Cleveland Gave $25,000 to University of Indiana, Department of Mechanical Engineering; $50,000 to Ohio State University; $5,000 to Cleveland Engineering Society Honeywell International Inc. Actively recruits business/engineering undergraduates from more than 50 schools Highly involved in diversity organizations Employee Learning Centers in Tempe, AZ; Morristown, NJ and Redmond, VA Annual 40-hour learning requirement for all employees and executives In 2000, donated $20 million to the arts, education and civic causes Provides online orientation for new hires One of the best rated 401K plans in the country 21st best benefits package among 100 largest Posts searchable online database to help direct students to career fairs and campus visits The Primary Publics * Accounting/Engineering undergraduates in the Midwestern United States. The Secondary Publics 1. Career service centers employees at the academically top-rated undergraduate accounting/engineering universities in the Midwestern United States. Career services centers can be found on the campuses of most universities. It’s also common for business and engineering schools to have their own career services centers separate from their main campus offices. These centers help students to find jobs by providing information about potential employers, collecting and distributing resumes, organizing career fairs, coordinating campus visits and scheduling interviews. It’s important for Parker recruiters to establish relationships with the employees of the targeted career services centers because these people can make the task of finding the best and brightest students less expensive and less time-consuming 2. School leadership, including professors, department chairs and deans at the academically top-rated undergraduate accounting/engineering universities in the Midwestern United States. The people in charge of running the targeted engineering and accounting programs can offer insight into recruiting issues, student organizations, co-op and internship candidates and potential hires. They have the ability to put Parker recruiters in direct contact with their own schools’ best students and influence those students’ attitudes toward Parker as a potential employer. 3. Student organizations and professional fraternities within the academically top-rated undergraduate accounting/engineering universities in the Midwestern United States. The best, most well rounded students in any program are usually those who are active in the campus organizations related to their fields of study. By becoming active in these organizations through professional advising, guest lecturing and financing, Parker can meet directly with the top engineering and accounting prospects in the schools from which they recruit and increase awareness of the Parker name within these schools. Recruiting Accounting Students Industry Trends From 1990 to 2000, the percentage of students majoring in accounting was cut in half. Right now, only one percent of current high school students plan to study accounting when they get to college. These figures are not likely to improve anytime soon, as most students say they make up their minds about pursuing accounting degrees between their junior years of high school and sophomore years of college. Equally disturbing is the news that the best and brightest business students are no longer majoring in accounting. Experts cite plenty of reasons for the decrease in accounting prospects. According to a CPA Journal article, here are the top five: Must complete 150 credit hours to sit for CPA exam CPA exam is now undisclosed, meaning that students cannot view test before taking it Writing skills have been de-emphasized, turning away highly literate students For the number of credits required for graduation, starting salaries in accounting are small Finance degrees offer more versatility, as well as more opportunities for bigger salaries Recruiting Trends To fill their accounting department voids, companies are now employing a variety of recruiting strategies. Rea and Associates sees internships as a great way to secure good accounting students before they have even graduated. Said R&A’s director of human resources, Dan Troussant, “If we have a secret, it’s that we’re very committed to building relationships through internships.” Parker offers accounting internships, but the company might want to create more opportunities for senior-level accounting students. No one within the corporate office could offer exact figures, but human resources personnel estimated the number of internships and co-ops offered at Parker to be between 200 and 250 per year. This averages to about one student worker per Parker plant. If Parker views its culture as a strength, then the best way to recruit fresh accountants is to introduce them to that unique corporate atmosphere and show them first hand why Parker is a good company for which to work. It’s also important to note that paying a crop of undergraduate interns $13 or $14 an hour to learn the job is cheaper than hiring two or three of graduates at competitive salaries and training them for six to nine months. Because the search for soon-to-be accounting graduates is so competitive, it’s important for employers to identify the best business schools in their region and become part of those schools’ academic cultures, gaining advantages through name recognition and networking. According to several articles published in accounting trade magazines, accounting firms have had recruiting success at schools where their senior finance people remain active in student organizations, either as professional advisors or guest lecturers. When professionals visit with these groups, the students get a sense of the kind of people for which they could be working, and if their impressions are favorable, they tend to remember the name of the firm when it comes time to send out resumes. A focus group we conducted with Kent State accounting students proved that starting salaries are no more important to potential new hires than the type of people with whom they’ll be working. Nine of the ten students listed “laid-back work environment” or “friendly co-workers” as being the most important elements of a potential job. One student put it this way: “Most places are pretty much the same. It’s the people who set one apart from the others.” Only one of the students who participated in the focus group had ever heard of Parker, and that student described Parker as “a big company in Cleveland.” It will not be easy for Parker to lure accounting students away from more glamorous jobs at well-known firms, but a company like Parker that prides itself on the kind of people it employs should bring its “happy” employees in direct contact with hundreds of accounting students each year. The face-to-face exchanges and real-life stories might prove to some students that a relaxed corporate culture offers several advantages over more stressful work environments. Campus involvement is the key to recruiting, but the process does not stop with the students themselves. Successful accounting firms develop positive relationships with accounting professors by placing their top company’s executives on accounting department advisory boards and helping professors shape their schools’ accounting curricula. A number of professors, in return for this kind of professional advising, are willing to put companies in direct contact with their top accounting students, which saves recruiters the time it takes to search through a pile of resumes at a career services office or sort through online applications. While it clearly pays to have a strong presence on the campuses from which you’re recruiting, our research has shown that Parker recruits accountants from only eight schools and does not actively participate in any of these schools’ student organizations. In addition, we were unable to find even one Parker associate seated on the advisory boards of these schools’ accounting departments. Becoming more involved on the insides of these programs might be the first step toward long-term recruiting success. For a long time, accounting graduates have made the “Big Five” accounting firms their top employment choices. As an article in the Ohio CPA Journal revealed, though opportunities in corporate accounting have drawn some students away from accounting firms, the “Big Five” still attract most of the accounting profession’s best minds. In markets where the big accounting firms still have a monopoly on the highest-qualified accounting graduates, desperate companies have resorted to hiring finance majors and putting them through nine-month training programs to mold them into accountants. Bruce Patterson, vice president of internal audit for Champion International, had this quote in the Ohio CPA Journal: “As a result of the 150-hour requirement in Ohio, we started to recruit students with a degree in finance who had taken a number of accounting courses.” The strategy described by Patterson is catching on in the Midwest region because most finance majors have had plenty of accounting course work but have not been able to find jobs in their now crowded field. To this point, Parker has not had great success converting finance graduates into accountants, but it might be wise for Parker to try and fix that problem. Recruiting Engineering Students Industry Trends As is the case in accounting, the engineering profession is suffering from a shortage of supply. It’s hard to pin down why a smaller percentage of students are majoring in engineering than in decades past, because successful engineers still earn high salaries and are relatively well respected. Some say the overwhelming emphasis placed on math and physics in engineering curriculums is turning Generation Y away from the field. Others say that the profession’s increasing dependency upon computers has further limited the number of people qualified to major in engineering with any hopes of earning a degree. Chances are, the reasons for the drop in engineering students are very complex and deeply entrenched within society. Employers must dig in and compete for those who are smart enough and educated enough to get the job done – and out-source when necessary. Recruiting Trends There are similarities between the way successful accounting firms are recruiting accountants and successful manufacturers are recruiting engineers. Some say that engineers, because of their highly analytical minds, are like a separate breed of people. Many engineers belong to large societies and organizations related to their various fields. Engineering students are no different, which is why the best recruiters find ways to infiltrate the most influential student organizations within the country’s best engineering schools. Student meetings provide excellent opportunities for experts to lecture on hot topics related to the engineering field and establish their company’s name on campus. Recruiters can accompany the experts to these meetings, get a sense for the level of talent within the school and establish personal relationships that usually play a big role during job selection time. Personal relationships between recruiters and engineering students are key, as we learned during a focus group we conducted at Cleveland State University, a school with which Parker has had an excellent relationship over the past decade. We spoke to nine engineering seniors, and four of them said they would be applying for jobs at Parker. When we asked the students what made them send resumes to one employer and not another, one cited an instance when a recruiter from a local company recognized him from a previous job fair. The personal touch was what convinced the student to seek an interview with that recruiter. A majority of the students agree that recruiters need to “treat students more like human beings.” The students also suggested that professional recruiters, and not experienced engineers, should be in charge of contacting students because engineers who have worked in the field for some years “will usually look down on students.” The Cleveland State University students also revealed to us their tastes in industry trade publications and their opinions on using the Internet for job hunting. Four of the nine students own subscriptions to Mechanical Engineering, indicating that an advertisement for Parker job openings in that magazine might be a wise investment. While all of the students had used the Internet at some point to search for jobs, they unanimously agreed that most Internet job postings are for experienced engineers. They also expressed a lack of faith in the reliability of the Internet as a job-finding tool. Many have placed numerous resumes online, but have received no callbacks in months. These findings suggest that while many companies are now accepting resumes via email and through Web sites like Monster.com, they are not following through on them in a timely fashion. Consequently, by increasing the efficiency of its Internet resume sorting process, Parker could grab a number of engineering students who might still be waiting to hear back from the competition. In fact, that idea has worked well for at least one other firm. Cisco Systems, which is constantly searching for qualified engineers, now hires nearly half of the job applicants it interviews, rather than the 20 percent that it did a few years ago. The company achieved this dramatic improvement by making an especially favorable impression on applicants who submit their resumes electronically. Cisco’s system works like this: Anyone who submits a resume to Cisco via direct email, or through services like Monster.com, is contacted by a Cisco employee within 24 hours. The Cisco employee, who is forwarded a copy of the applicant’s resume as soon as it arrives at Cisco’s headquarters, is in charge of responding to the applicant via email and answering any questions he or she might have about the company or its hiring process. Cisco has also stepped up its Internet advertising budget to attract more online resumes. The company recently discovered that Dilbert.com, an official online resource for fans of the popular comic strip, attracts over 160,000 visitors daily – half of whom are engineers. Cisco is now one of the page’s biggest advertisers. Perhaps Parker should be its next. While we were unable to make contact with all of the eight schools from which Parker recruits engineering undergraduates, we did discover that even at Cleveland State, where students and faculty are very familiar with the Parker name, important recruiting duties are sometimes being neglected. According to student members in the C.S.U. chapter of the American Society of Mechanical Engineers, Parker does not participate in their campus organization in any way. In addition, Parker is not scheduled to attend an upcoming wine-and-dine session hosted by C.S.U. and sponsored by the Cleveland Engineering Society. By missing out on these opportunities to establish personal relationships with local engineering students, Parker could be losing valuable human resources to its local competition. Cleveland State was not the only local university we researched. Interviews with several administrators within the University of Akron’s School of Engineering proved that Parker is well-known there among students and well-respected among faculty members. Said one administrator, “I think highly of Parker and would assist them in any way I can to make internship and co-op placements.” Such a statement is promising because it shows that Parker recruiters have established good relationships with schools that are close to home. These relationships are backed by commitments to internship and co-op programs, as well as to financial support in the way of scholarships and lab donations. Parker’s relationship with the University of Akron’s School of Engineering provides a good model for the way the company should approach its dealings with out-of- state schools. Phone calls to out-of-state engineering schools on the Parker recruiting list revealed recruiting procedures that need improvement. We spoke to an employee of the career services center at the University of Wisconsin’s School of Engineering. Though she knew several Parker recruiters by their first names and spoke very highly of them, she did not remember seeing a Parker booth at her school’s last career fair. She also talked about her office’s online database of student resumes, where employers can sort through potential candidates using different search criteria. The service costs only $300 per year and is an invaluable tool for recruiters looking to save time, but as she reported, Parker does not subscribe to the service. Problem Statement As Parker Hannifin grows, so does its need for qualified engineering and accounting graduates who possess the kind of Midwestern values that fit Parker’s unique corporate culture. The need is difficult to fill because the competition for engineers and accountants is fiercer than ever – and also because the Parker name is relatively unknown outside of the motion control industry.