Author: Sheila Feeney

How much should you pay an employee who is willing to risk their life on your behalf in a hot spot? Many companies look to the U.S. State Department, which calculates just how 40,000 citizens assigned to 600 posts abroad, will be compensated for the varying risks they assume.

    The State Department compiles quarterly reports determining what allowance an employee living abroad deserves for enduring both hardships and danger. The “hardship differential” is intended to compensate for living in unhealthy or physically difficult conditions. “Danger pay” is to compensate for living in the midst of civil insurrection, civil war and terrorism, which presents a threat of harm or imminent danger to the employee. These differentials, which range up to a maximum of 25% of base pay in each category, are not intended to apply to housing, which is provided by the government.

    While private companies usually exceed the premiums suggested by the State Department, the figures are never the less useful in objectively assessing the difficulties and dangers expats are likely to encounter. Bogota, Columbia, for example, wins only a 5% hardship differential, as many amenities that Americans expect are easily obtained, but scores a 15% differential on danger pay. Baghdad, unsurprisingly, scores 25% in each category. Here are some samples of other locations, and how difficult and dangerous they are judged to be in each category.

Location	Hardship Pay Differential	Danger Pay Differential
Bujumbura, Burundi	25%	25%
Jerusalem	10%	20%
Nairobi, Kenya	25%	0%
Kuwait City, Kuwait	15%	15%
Beirut, Lebanon	20%	25%
Monrovia, Liberia	25%	25%
Islamabad, Karachi Lahore & Peshawar, Pakistan	25%	25%
Kosovo, Serbia & Montenegro	25%	25%
Pristina, Kosovo	25%	20%
Freetown, Sierra Leone	25%	15%
Khartoum, Sudan	25%	15%
Sanaa, Yeman	20%	15%
Source: U.S. Department of State reports

Workforce Management, June 2004, p. 34 — Subscribe Now!

In October 2000, Robert Barbee, national sales manager for Household Automotive Finance Corp., began dating a member of HAFC’s sales force. Two months later, the company’s CEO warned him that his choice of partners was "a bad idea." Company policy stipulated that if a supervisor wanted to have a relationship with any subordinate, it was his responsibility to bring it to management’s attention "for appropriate action, i.e., possible reassignment to avoid a conflict of interest."

 

    But when Barbee was asked about the nature of his relationship with Melanie Tomita in March 2001, he wasn’t given an option to transfer. He was told that if he and Tomita didn’t discontinue their relationship, one or the other would be terminated. Barbee informed his superiors that both he and Tomita wished to stay on at HAFC. That seemed to be that–until the CEO discovered that Barbee had used tickets given to him by a client to take Tomita to a basketball game.

    Barbee was fired. He sued HAFC on the grounds that the company had violated his right to privacy guaranteed by the California Constitution. The appeals court decreed that Barbee had no reasonable expectation of privacy, and affirmed the right of employers to try to avoid sexual-harassment claims and even the appearance of a conflict of interest by having a dating policy. An HAFC spokesman declined to reveal how much the legal victory had cost the company, but the Barbee case clearly illuminates the problems that employers face when they use dating policies to exclude Cupid from the cubicle. Having rules is no guarantee that they will save employers money or court time. Whether companies should even try to regulate workplace romance or pressure employees to sign "volitional dating agreements" to indemnify employers from future harassment charges is a matter of much philosophical, economic and legal debate.

    On one side is Robert Bell Jr., the San Diego lawyer who represented HAFC. "Employees want to be able to date, but when things get messy, they want the employer to protect them," Bell says. "They can’t have it both ways. Companies need to be able to implement policies that prevent sexual harassment, and the only way they can is through policies like these." Nonsense, counters David Strauss, the San Diego attorney who took Barbee’s case on contingency. "Everyone in this company dated," he says. "The essence of the case was that the boss didn’t like him. He was hired by [the CEO’s] predecessor and was doing a good job," but the new CEO used Barbee’s violation of the dating policy as an excuse to fire him, Strauss says. "There was never any evidence whatsoever that Barbee influenced anything at all regarding [Tomita’s] assignments or salary," he notes, adding that she didn’t report directly to him.

    The power of workplace attractions was exemplified last month in Fort Myers, Florida, when a woman and her ex-boss paid back the $35,000 in taxpayer funds that she had received earlier in a harassment settlement. According to the Associated Press, Julie Dalton, a chief deputy for Lee County property appraiser Ken Wilkinson, claimed that he had pressured her to have an affair, and then, after their relationship became public, pressured her to resign, which she did in March 2002. Dalton claimed that Wilkinson’s abuse of his position had caused her mental anguish and damaged her reputation. After a reporter saw them together over the holidays, Wilkinson wrote a check for $23,100 and Dalton cut a check for $13,100 to reimburse Lee County Risk Management, the county’s self-insurance fund.

No one has estimated how many valuable workers desert jobs with dating taboos so they can see their sweetheart without apology, or determined how much time and money is spent to implement and enforce rules against workplace intimacy.

Torturous tort
    Microsoft mogul Bill Gates and opera impresario Luciano Pavarotti married their own employees. But what happens when a philanderer dates and discards through the company ranks, leaving legions of angry, litigation-prone employees in his wake? Rationales for dating policies concerning supervisors, subordinates and especially clients, patients and vendors are understandable. Employers wish to avoid conflicts of interest, ethical trespasses and leaks of proprietary information. They want to make sure that the time at work is not spent flirting and sending romantic e-mails. They wish to assure other employees that the workplace is a meritocracy, not a patronage trough. And they are terrified of sexual harassment suits, which might arise when narcissistic executives abuse their power over underlings, or when subordinates interpret–correctly or not–any demotion, transfer or firing in the wake of a breakup as a form of retaliation, an illegal quid pro quo demand for sexual favors. Just defending a harassment case can cost at least a quarter of a million dollars, and losing one can cost millions, notes ArLyne Diamond, owner of Diamond Associates, a management consultancy in Santa Clara, California.

    The gossip and distraction generated by an explosive sexual harassment case can cause a temporary 20 percent dip in productivity, Diamond adds. Should the case make the papers and the evening news, adverse publicity can dampen profits by as much as 30 percent. Not only are women more likely to be the complainants in sexual harassment cases, but they also make up about 85 percent of the nation’s consumer base, even for men’s products, Diamond says. They may be put off by publicity implying that a company doesn’t treat women fairly.

    But allowing anecdotes and fear to force strict prohibition policies can spawn a flurry of other problems. The courts have repeatedly affirmed the right of employers to have dating rules, but no one has estimated how many valuable workers desert jobs with dating taboos so they can see their sweetheart without apology, or determined how much time and money is spent to implement and enforce rules against workplace intimacy.

    Lawyers estimate that no more than 10 percent to 20 percent of sexual harassment complaints involve executives in the workplace. And more often than not, liability has little to do with whether a company has a dating policy and everything to do with how a company responds once a complaint has been lodged. Some attorneys point out that dating prohibitions are largely unnecessary even as a smoke screen for firings because most workers can be fired at will. Surveys reveal that 69 percent to 84 percent of all companies–including Time Warner, AT&T and many universities, who affirm that they are among them–opt for the "no policy" route. Only 12 percent of respondents to an American Management Association survey published in 2003 reported that their company had a policy. Of those, 92 percent said that the only policy they had concerned relationships with subordinates. Whether employees know about their employer’s policy is another matter. Line workers often have no idea that one exists, or if it does, what it says.

    One reason for managerial ambivalence was revealed in the AMA survey. Thirty percent of the 391 managers polled admitted to dating a co-worker themselves. While a soured affair may dampen one’s ardor for reporting to the same place of employment as one’s ex, dating someone who shares the same profession turns out to be an excellent bet for lasting love: 44 percent of the dating managers wound up marrying their colleague, and another 23 percent became involved in a long-term relationship. Below the management level, the numbers are huge. In a 2003 Vault.com survey, 59 percent of 1,118 employees polled admitted to dating a colleague. Another 17 percent said they would like to.

    Of the 14,396 harassment complaints brought to the EEOC in fiscal year 2002, 47 percent were dropped because investigators could find "no reasonable cause" for the charges. The EEOC doesn’t break out cases that arise from dating situations and takes no position on whether employers should have dating policies, says EEOC assistant legal counsel Dianna Johnston. "Sexual conduct only becomes sexual harassment if it’s sufficiently severe or pervasive that it creates a hostile environment. Asking someone out for dinner once or twice is not going to rise to that level. But if you ask and then take an adverse employment action because they said no, that would be unlawful retaliation." Courts tolerate a tremendous amount, as long as the company acts promptly, efficiently and in good faith once an employee complains, regardless of whether the victim dated the alleged perpetrator or not, Johnston says. "If they get involved and get it resolved early on, it goes away before it ever goes to court."

    While case law is scarce, what exists is largely pro-employer. It appears, in fact, that employees who engage in consensual affairs surrender a portion of their legal standing to sue. In a 1999 Florida case, the Dade County School District was held blameless for the harassment a male endured from a bitter ex-girlfriend. The court reasoned that it was not his gender that had caused his ex-girlfriend to pepper his wife and son with phone calls, lobby students to claim that he had sexually abused them and curse him out in public. It was his "termination of the intimate physical and emotional relationship she shared with him."

Some progressive and profitable companies that take a charitable view of intra-office intimacy say that honorable intentions and common sense are the only tools they need as guides.

    That’s not all. "If the perpetrator is really important and high up in the company, I don’t care what policy you have. They’re untouchable," Strauss says. "Without this person, the company would take an economic hit, so they coddle him." It is exactly this tendency to create a "protected class" of harassers that is likely to put a firm in court. "If you want to get away with as much as you can, that’s a problem," Johnston warns. Employers that "have a neutral procedure for investigating these complaints" that employees scrupulously follow have little to worry about.

Love is in the air
    Some progressive and profitable companies that take a charitable view of intra-office intimacy say that honorable intentions and common sense are the only tools they need as guides. When Greg Crum, 56, vice president of flight operations for Southwest Airlines, and Michelle Crum, 45, Southwest’s assistant manager for recruitment training for in-flight operations, were married in October 2000, "we had 127 guests, and 110 were Southwest employees," including CEO Herb Kelleher and COO and president Colleen Barrett. "The wedding was just one big Southwest party," Michelle says happily. Of Southwest’s 35,000 employees, about 2,000 are married to each other. Its ticker symbol is LUV, an acknowledgment of both its home base at Dallas Love Field and its huggy corporate culture.

    In addition to being allowed to date, employees are even permitted to ask out passengers just as long as they’re polite and don’t do anything shifty like use a company database to mine personal information. "We encourage nepotism," declares spokeswoman Linda Rutherford. So how does Southwest deal with the oft-cited situation of a boss dating a subordinate? "Each supervisor handles that differently," according to "what is the right thing to do for the company," says Lorraine Grubbs-West, director of field employment. "We give our frontline leaders a lot of empowerment. Each situation is so different and individualized, we want to make sure the leader can consider all the extenuating circumstances and facts."

    In 11 years, Southwest has fired two men for "inappropriate conduct," Rutherford says. While it has had a handful of complaints about unwanted attentions, "nothing has ever risen to a court level" because the situations were all promptly and thoroughly investigated. Intimate relationships at Southwest, when they occur, are more likely to be volitional than exploitative, in part because "we invest an inordinate amount of time and resources to get the right people in the door," who will treat customers, co-workers and subordinates sensitively and respectfully, Rutherford says. Detailed pre-employment screenings are designed to identify individuals who have a reverence for the rights of others, common sense and a willingness to work cooperatively.

   Meredith Corp., a publicly held media and marketing firm of 2,800 employees in Des Moines, Iowa, doesn’t see the need to become involved in the personal lives of its employees unless asked to intervene. The company has ethics and conduct codes and a business policy that negate the need for a dating policy to address conflicts of interest or leaks of proprietary information, says Ken Mishoe, corporate director of personnel.

    Meredith employees are a very sophisticated lot who "know automatically" without being lectured that dating a subordinate could call their objectivity into doubt. But sometimes, a reorganization or promotion can unexpectedly put one person in the position of managing a romantic partner. "If we know about it, we talk to them, but historically, they’re always the ones to bring it up," Mishoe says. Meredith strives to accommodate couples. For a limited time, an employee might even report to a person with whom he or she is romantically involved, but both parties know "that we’re going to work with them over time" to eliminate any conflict, or perception of conflict, that might arise.

    The fallout from breakups is no big deal, Mishoe says. One woman appealed to human resources, complaining that she felt uncomfortable because a colleague she no longer wished to date continued to pursue her. "We sat him down and said, ‘Don’t ever ask her out again. Don’t talk to her. Don’t even go to her to apologize,’ " Mishoe recalls. "It was hard on him, but he did it. We followed up with her to make sure."

Workforce Management, February 2004, pp. 36-40 — Subscribe Now!

Business executives and others who have a keen interest in the cost of health care are questioning the individualistic nature of American culture, and raising this question: How can the health-care crisis be solved when no one is willing to sacrifice a cent or a service to benefit everyone?

    “Until the system completely fails, it can’t be fixed,” says Jerome Mattern, a member of the Society for Human Resource Management’s national committee on benefits and compensation. “There are still too many entities lobbying to protect their own interests.”

    Mattern argues that insurance companies, employers, drug manufacturers and health-care providers all demand the right to pursue maximum profits without governmental mandates. Workers demand unfettered access to the providers of their own choice without taking responsibility for their own unhealthy, bill-inflating behaviors. Government seeks relief from the private sector for having to foot the bill for the poor and underinsured.

    Lee Exton, vice president of The Segal Company, is more sanguine: “I don’t think the system is poised for collapse. It’s a trillion-dollar industry, and they’re going to keep it going somehow. We’ll probably see more involvement at the government level.”

    That is exactly what worries Kate Sullivan, director of health-care policy for the U.S. Chamber of Commerce. She says that government mandates are impoverishing employers by forcing them to provide coverage they cannot afford, and by requiring that procedures such as gastric-bypass surgery and dermatological disorders be covered.

    But even employers have to look at the problem as a whole and not just from their own perspective, or it won’t get fixed, says Sue Cunningham, benefits program manager at Stanford University. She worries that a single-payer system would be corrupted by politics and special-interest groups, but says that “we have to come together as a nation to provide at least basic coverage for everyone.” It’s in business’s interest to provide at least that, “because it costs too much not to.”

    Americans will not solve the health-care crisis until they reach a consensus on the question: “Is access to basic health care a right?” says Alwyn Cassil, spokeswoman for the Center for Studying Health System Change. “If we answer yes, that means everyone doesn’t get everything.” Cassil says that countries such as Sweden, Finland and the United Kingdom “ration care overtly. We ration it covertly.”

    Mattern notes that the business community is already starting to fracture on the issue of limiting the profits of pharmaceutical companies, with a fight shaping up between the drug industry “and all other employers.” Dan Conroy, human resources manager for Nexen Group Inc., is a sharp critic of pharmaceutical companies. “They’re ripping us off,” he says. “Our employees want to be able to buy their drugs offshore, but we can’t reimburse them” because of the regulations.

Workforce Management, November 2003, p. 34 — Subscribe Now!

Brian Fishel, senior vice president for development and recruiting at Bank of America, doesn’t warm to the subject, but when pressed, he admits that, yes, he does have some nominees to take the place of CEO Ken Lewis should the unthinkable happen.

    “Clearly, the board has the say at the top,” Fishel says. But he has several candidates waiting in the wings to replace not just Lewis but all senior management, should any or all of them depart. “Our theory is the more the better [in terms of promotion candidates]. We want to be deep.”

    The reason why Fishel has a roster of folks on his replacement charts is that Lewis “is driving the process. He meets with all his top line executives for two hours during the summer, and that’s when they do their organizational assessments, talent reviews and succession planning. It really is Ken Lewis driving the commitment, the discussions and the execution.”

    The candidates emerge naturally, Fishel says, because the company has “a very organized, thorough and disciplined approach to what we call talent planning” that links compensation to performance. In a leadership model similar to GE’s, candidates are constantly evaluated and reassigned according to how well they meet the targets and goals that are set for them.

    Fishel concedes that human resources executives can’t do good succession planning unless they have the support of a company’s chief executives. But human resources personnel also have to bring something to the table that the executives can’t ignore: a deep grasp of the company’s finances, goals and growth projections that enables them to offer ideal solutions.

    When dealing with the top brass, “you’d better know your numbers cold and what the drivers and levers of their business are in order to be credible. A good personnel partner should be anticipating their needs and offer them options,” Fishel says.

But just how does one approach the indelicate subject of succession planning with top managers who, in their own minds, see themselves as forever young?

    “I personally don’t come out and ask that question of a leader–‘When you’re not here…?’ ” Instead, Fishel says, he initiates a discussion about which subordinates might be candidates for cross-training, new assignments or promotion. He will also suggest candidates to assume subordinates’ positions from the replacement charts “and lead them through a conversation,” requesting feedback. After credibility has been established, Fishel says, the subject of the leader’s own position may emerge naturally.

Workforce Management, August 2003, p. 49 — Subscribe Now!

With a sigh, Susan Wells makes this admission: “I’m in denial,” says the acting chief of the archaeological division for the Western Archaeological and Conservation Center in Tucson, referring to the possible loss of her job. “I’ll get irritated when it’s time.”

    Wells is an ebullient G.S. 12 and a 20-year veteran of the National Park Service who supervises collections of spear points, pottery shards, sandals and petrified human feces (“coprolites”). She’s also in charge of identifying and mapping all potential archaeological sites in 60 different parks, lest someone decide to locate a sewage lagoon over a potential cache of Indian artifacts.

    Wells is one of about 858,000 of the country’s 1.8 million civil service employees who work in jobs that have been classified by the Bush administration as “commercial.” That means that the agencies they work for have been ordered to subject these jobs to “competitive sourcing” to meet an unprecedented push to inject free-market competition into government activities. In the coming months, a team of efficiency experts will descend on the conservation center to study how Wells and others do their jobs, and write up “performance work statements” that allow the government workers and private contractors to stage a gladiatorial bidding battle to see who can do the work most cheaply. “I’m very apprehensive, both about the amount of time it’s going to take and what the results will be,” Wells says. “It’s not a witch hunt, but I don’t even know what business model they’re using.”

    Critics say that the “A-76” campaign to hawk jobs like Wells’s is just so much coprolite. The aggressive push to quantify and then bid out such positions, they say, is in itself a horrific waste of taxpayers’ money. While the administration insists that conducting public-private competitions “is not an outsourcing initiative,” detractors say that is exactly what it is–an ill-considered ideological crusade to divert as many civil service jobs as possible into the private sector. Doing so, they claim, not only places sacred national treasures and critical missions in the hands of profiteers who will put Smokey the Bear into Mickey Mouse ears, but also imperils resources that belong to the American public. Bush administration spokesmen insist that competition will result in a leaner, higher-performance government and will whittle the federal payroll. The fight is an interesting one, in part because it raises the very provocative question of exactly how much money, if any, can be saved by putting federal jobs in play.

    “Our ultimate objective is to have competition for commercial activities,” says Trent Duffy, a spokesman for the Office of Management and Budget, the agency in charge of the president’s management agenda. Implementation of A-76 has been protracted and tumultuous, in part because Congress often springs to the defense of embattled agencies. (The House already has passed a bill introduced by congressmen from Nebraska and Florida, for example, to halt 2004 funding for the archaeological-center job competitions in Nebraska and Florida.) Agencies were supposed to have completed competitions on 15 percent of their target jobs by the end of fiscal year 2003, but the numerical criteria were scrapped this spring. After implementation problems and complaints from both unions and private contractors that the process was grossly unfair, modifications were decreed. Direct conversions to the private sector were almost completely eliminated, agencies must now notify OMB of their progress by submitting quarterly reports and tracking competition results, and the competition process was shortened dramatically, to be completed within a year, with a possible six-month extension.

    “These competitions under the old way took four years,” Duffy says. “If you’re a small business, you don’t have the time and staying power to do it; it was a de facto barrier to competition. By reducing the process by a factor of four, we’ve greatly streamlined and simplified the process, which leads to cost savings.”

    The OMB says that studies from both the public and private sectors show that subjecting in-house operations to competition results in savings of 10 to 40 percent no matter who wins. “Just by holding a competition, you have savings of 30 percent,” Duffy says. That’s because the A-76 process unearths redundancies and inefficiencies that can be eliminated, giving civil service employees a road map to perform in a more cost-efficient manner, he says.

Government workers have wound up “winning” (retaining their jobs) in more than 50 percent of the public-private competitions held. Detractors counter that these claims are a perfect example of Enron accounting.

    The OMB claims that it costs between $2,000 and $5,000 for each position studied, but there will be an $85,000 savings per position over five years. Government workers have wound up “winning” (retaining their jobs) in more than 50 percent of the public-private competitions held. Detractors counter that these claims are a perfect example of Enron accounting. They point out that no appropriations accompanied the order to conduct the costly performance work statements on which the competitions are based. That means that agencies are being diverted from their mandated missions to participate in the competitions. Millions of dollars that could be spent by already cash-strapped agencies on public service is instead devoted to counting wastebaskets, digging up ancient paperwork and cooperating with consultants. (The OMB says that agencies will be able to work the estimated costs of the competitions into their fiscal year 2005 budgets.)

    “Sometimes, you wonder if there should be even yet another layer to vet these competitions,” says Ray Bjorklund, vice president of market intelligence and chief knowledge officer for Federal Sources Inc. of McLean, Virginia, a consultant for both the government and large contractors. Many businesspeople believe that outsourcing is a no-brainer in terms of savings, Bjorklund says, “but I have yet to see a real independent assessment that outsourcing is always cheaper.” He guesses that the real savings after all the hassles and delays is far closer to 10 than 40 percent.

    “There’s not a lot of data in this. I looked for data,” says Max Sawicky, an economist with the Economic Policy Institute in Washington, D.C., who is writing a paper on federal contracting. “You can’t find evidence” for the OMB claims of savings. “What you find are anecdotes that are the equivalent of press releases” and rampant “sample selection bias…The way they have of classifying these jobs [as commercial] is ridiculous,” Sawicky adds. “You need to have a core of very accomplished, highly qualified and well-paid people who are not afraid of losing their jobs . . . to monitor contracts and enforce provisions. You can’t manage a contract any better than managing people, and the General Accounting Office routinely reports on [government] failure to monitor contracts. Monitoring contracts can be labor intensive to the point that it may not even be worth it.”

    Sawicky asserts that certain “simpler” jobs for which productivity is “easily observable,” such as office cleaning, lawn mowing and some software functions, might be reasonable candidates for outsourcing. More complicated work presents tremendous problems because in-house experts have to evaluate whether the contractors are performing honestly and productively. “Defense is where the most contracting is done, and there’s a long history of overspending there,” Sawicky says. Another “glossed-over issue” is that government workers who lose the competitions often wind up working for the private contractors that won–at a lower salary and with fewer benefits. “There are no savings when someone else is getting the money instead of the workers.” And employees dropped from federal rolls can wind up costing the government. If displaced employees are “stuck without medical insurance, they could wind up resorting to Medicaid,” and devouring taxpayer money.

    Unions representing government employees have a litany of grievances about the public-private competition initiative. They say the competitions have demoralized dedicated careerists and prompted a talent flight out of government. What is much more surprising is the grumbling from the private sector. Louis Ray, CEO and president of Matcom International Corp. in Alexandria, Virginia, has bid unsuccessfully for work three times via the A-76 process. His firm won’t be bidding again, even under the new rules, unless it does so as a partner with the government going up against an outside contractor. The competitions, Ray complains, “are, generally speaking, rigged.” The government, he says, has an advantage in its “huge supportive infrastructure” and routinely underestimates the cost of “overhead–facilities cost, telephones, all that stuff we have to pay for. For general and administrative costs, they just throw in a number, which is about half of what anyone can really run a business for. And the government doesn’t have to run on a profit margin.” How on earth, Ray asks, can an unsubsidized business compete?

   The government’s edge can work in mysterious ways. Students and citizen volunteers contribute untold thousands of hours every year to help each of the archaeological centers, for instance. These citizens won’t be working for free on behalf of private companies.

    While hopeful that the new streamlined process will yield better results than the messy and protracted process of the past, Jim Giles says that the competition mandate to date “has not saved any money in my view.” Giles, an independent review officer from Cherry Point, North Carolina, writes the performance work statements on which the contests are based. While Giles is regarded by the workers he evaluates as “the boatman on the Styx,” they have so far fared quite well as a result of his work, adopting many of the efficiencies he recommends. A-76 competitions “are very difficult for the private sector to bid on,” Giles says. In many cases, the playing field is uneven because “the government people don’t want to lose their jobs and do what they feel is appropriate, so they don’t.”

    But under the new system, Giles points out, “the government has no guaranteed place at the table when the contracting officer makes the decision.” This, and the streamlining modifications, will decrease the ratio of government wins dramatically, he predicts. Agency managers “are not experts in submitting proposals,” he says. “That’s what’s going to kill the government. There are ‘capture managers’ in these big companies with big egos, who at the end of the year get a Porsche,” if they’ve been successful in landing profitable contracts. “They’ll do whatever it takes to win,” and will do so handily over civil service employees who have not been trained to compete for contracts.

    In the meantime, Susan Wells is wondering what fat the consultants will find in her bony operation: “Out of my staff of 25, three of us have permanent jobs.” There has been no secretary for at least 10 years. “The computer has made everyone his or her own secretary.” She just hopes that the government appreciates the value of the archaeological treasures in the National Park Service. After all, she points out, “the human adaptation to harsh conditions is a wonderful story.”

Workforce Management, September 2003, pp. 63-65 — Subscribe Now!

Richard Travers wasn’t in his Wall Street-area office the day that two planes crashed into the World Trade Center towers, killing almost 2,800 people. He walked there the next morning, escorted by uniformed officers of the New York City Fire Department, who met him at a Brooklyn subway stop and escorted him through the acrid smoke swirling over the Brooklyn Bridge to the site where 343 firefighters died. Eighty-eight of the fire officers who died the day before had taken out an optional life insurance policy through Travers, O’keefe, a group insurance and benefits broker, consultant and outsource service.

    While firefighters are city employees and receive most of their health and other benefits through the City of New York, the unions offer additional plans, and almost all the 2,400 uniformed officers in the New York City Fire Department opted to sign up for an optional life insurance policy brokered by Travers, O’keefe. So on Sept. 12, 2001, Travers was at his desk–amazingly, the phones and power were on–calling Amalgamated Life, the company that carried the policies covering the lives of the fire officers. “We clearly have an issue here,” Travers began. “We need to begin processing claims and make payments.” The problem? There were no death certificates and at the time, no remains. Most people were all but vaporized in the infernos that turned into 110-story collapses.

“The first claim was paid that Friday,” Travers says. “On my word, they made payments.” To date, more than $25 million has been paid out in life insurance claims, mostly in amounts of $320,000. (Some beneficiaries delayed filing claims for tax reasons, and a few officers had policies for lesser amounts.)

    “We could not have asked for anything more,” says Kevin Sullivan, the administrator for the Uniformed Fire Officers Association’s family protection plan. While Travers had served as a benefits consultant to the UFOA for almost two decades, “Amalgamated had just taken us on in February,” Sullivan notes. “It was an extremely difficult time, and they both really responded extremely well.”

    The UFOA presented Amalgamated with a commemorative plaque to thank the company for expediting the claims, and Travers now has a white fire helmet labeled Honorary Chief in his office that is dotted with American flags.

    Travers’s work wasn’t over then. As the broker for the union’s property and casualty insurance, he also had to obtain immediate coverage for a giant “bereavement vehicle” donated to the union during the recovery effort. But Travers was told he could obtain insurance to cover only $100,000 of its $150,000 value. He was on the brink of sending a messenger to the company with a check for $50,000 “so you can give me paper for $100,000” when the company president finally relented and agreed to write a custom policy for $150,000.

    Travers, O’keefe is a regional benefits consultant for all kinds of group insurance: flexible spending and tax-free commuter choice accounts, COBRA benefits, and health, life, property, casualty and directors’ insurance. Since September 11, Travers says, many companies have been surprised to see the heavy use made of “behavioral health” services such as employee-assistance services and psychological and psychiatric counseling, often around issues of bereavement, post-traumatic stress disorder and other panic and anxiety problems. “There had to be a lot of counseling given in order for people to feel safe. Some people flick on the light in the bathroom and relive the day every day,” says Travers, adding that mental health benefits ought to be broadened.

“There had to be a lot of counseling  given in order for people to feel safe. some people flick on the light in the bathroom and relive the day every day.

    “Mental health has to be treated in a fashion much fairer than it is now. It’s a stepchild to other health benefits–but it’s also very easy to abuse.” The abuse is in the form of too many people seeking therapy as a way to increase their “educational knowledge,” Travers says. In the meantime, many people with serious mental illnesses are denied coverage for treatment. “Why would we treat someone with a serious mental-health problem any differently from someone with cancer?”

Managing and serving
    Despite having lost many friends in the tragedy, Travers, 55, didn’t seek professional help himself. “I didn’t feel I needed it. I felt the pain would lessen over time. I had the distinct advantage of not seeing it myself.”

    As a large benefits consultancy that has grown since the mid-1980s to two offices and 42 employees, Travers O’keefe now represents a diverse group: the Tahari and JLO clothing companies, New York University School of Medicine, Weill Medical College, the Juilliard School of Music and Legal Services for New York City. The company is paid in either straight fees or commission, depending on the client arrangement. A benefits broker eases the complicated task of comparing different benefit packages. “I wouldn’t say we can’t do it ourselves, because we do it for other things, but candidly, you don’t get any better deal going outside,” a broker to compare companies on your own, Sullivan says. “You don’t know the market, and a broker can identify all the companies” that satisfy underwriting criteria and meet desired specs.

    “We literally act as a risk manager for our clientele,” Travers says. “We try to set up a three- to five-year game plan, and alert them to new trends, new concepts, new ideas and new technologies.” Increasingly, his business provides services directly. “We sell products to organizations and we’re also an employee benefits firm,” hired to administer and adjudicate employee claims and enrollment chores that human resources once provided in-house.

    In part, this outsourcing trend is driven by the Health Insurance Portability and Accountability Act, the new federal law governing patient privacy. “Because of these privacy laws, corporate America has had to build a fire wall around how they handle personal health information about individuals.” Travers O’keefe has trained its claims handlers to wash down all personal information that could identify employees who used health services before sharing utilization data with employers.

    Travers breaks into an “are you kidding?” smile when asked whether his employees ever get frustrated trying to get the insurance companies to deliver what they promise. “I have everything in writing,” he says. “All the t’s are crossed and all the i’s are dotted.” If a claims agent fails to reimburse a physician or patient according to contract, “we will go so high up in your company, your job will be at risk. We’re advocates every day. That’s what we do.”

    Contrary to what you may have experienced, Travers insists that “most insurance companies provide a very good level of service. But periodically, something happens in the claims office and it all falls apart.” Usually, this is because someone who knew what they were doing left and an inept person took over. “They cycle. They all take their turns falling off at different periods of time,” Travers says.

    Companies tend to handle the stratospheric increases in health insurance costs–about 15 percent a year–in two ways, Travers says: Some continue to have a “cost-sharing relationship,” absorbing a percentage of all increases themselves. But more and more often, employers spooked by unpredictably high bills are opting for “defined contribution: We’ll pay X amount of money on a monthly basis. They don’t have any other way to cap the spiraling cost of health insurance.” At present, he notes, “we spend $5,380 per person–man, woman and child–on health care each year, whether they’re insured or not,” with the vast bulk of the money being spent on the first and last years of life.

    Those costs are in large part why Travers sees consumer-driven health care as “the next, most appropriate step” in managing the health-care crisis in the United States. Consumer-driven health plans usually allocate a set amount of money to employees that they can spend as they like, exempting elective procedures such as plastic surgery or laser vision correction. Then employees have to spend their own money until they reach another tier of spending, at which point an HMO or PPO plan kicks in again. While the consumer-driven model is attractive to some as a way of capping employer outlays, and for giving more control and responsibility to patients, critics say it does nothing to reduce the spiraling cost of all health care and prescriptions, shifts a greater portion of the payment burden onto employees and is no solution for the burgeoning ranks of people who lack health insurance. But Travers insists that educating and assisting consumers to make wise choices will reduce costs because employees will be motivated to get value for the dollars they spend and given a reason to keep themselves healthy.

    “Health care in this country is viewed as a right and administered with a credit card,” Travers says. “Users have no responsibility for what they use.”

    Travers, who is single, utilizes benefits himself in a somewhat unusual way. While he declines to specify which plan he uses personally (Travers, O’keefe offers several choices to its own employees), he does say that he pays for all his primary-care visits out of pocket since losing his own indemnity point-of-service plan eight years ago. “I’m not going to a doctor I haven’t chosen… I want my own doctor. I’m not an unwise purchaser of health insurance, but my doctor isn’t in the book.” Similarly, Travers goes to his dentist every two months for a cleaning because he knows that oral health is important but refuses to floss.

    What can companies do to make sure their employees are getting what they are paying for? “Audits!” Travers says. That’s to make sure the underwriter isn’t overcharging. For the first two or three years with an annual carrier, audits should be performed each year, and every two to three years after that, by an outside firm that specializes in auditing health insurance.

    “The ones I use meet 99.5 percent accuracy” in proving that claims have been paid correctly, Travers says, “and I have all the reports to prove it.”

Workforce Management, August 2003, pp. 71-73 — Subscribe Now!