State wants company's jobs, not its business.

• Author: Maley, Frank
• Position: Hewitt Associates Inc.

When a company offers to create 900 well-paying jobs, it's usually a no-brainer for the state Commerce Department. Officials craft an incentive package to cinch the deal and rush to get it signed before another state ups the ante.

But it's not so simple when the company offering to create the jobs is Lincolnshire, Ill.-based Hewitt Associates Inc., a human-resources outsourcing and consulting company. Hewitt makes money--about $2.8 billion in revenue in 2005--mostly by persuading companies to get rid of HR and other employees and let it do their work. Which means that adding 900 jobs to the 600 in Hewitt's Charlotte office could have happened by eliminating more jobs among its Tar Heel clients. Case in point: Hewitt won a contract with Charlotte-based Wachovia last year to provide payroll and other services. The bank eliminated at least 219 jobs and says Hewitt hired 168 of those it let go to do the work. Hewitt wouldn't say.

The state's solution: Offer Hewitt a package that could total $8 million but ask it not to do business--or much business, anyway--in North Carolina. The state wrote into the deal that most new jobs must replace out-of-state jobs. But it allowed 135 hires for work previously done in North Carolina by clients to count toward the 900 that...