Author: Site Staff

Amid the soaring rhetoric at the Democratic National Convention last week, in which presidential nominee Sen. Barack Obama, D-Illinois, promised to fight for universal health care coverage if elected, observers expect his initial health care agenda to be much more modest.

In his acceptance speech, Obama said, “Now is the time to finally keep the promise of affordable, accessible health care for every single American.”

That pledge made to a huge crowd in Denver came after the adoption of a party platform saying that Democrats are “united behind a commitment” of universal coverage.

The platform also said health care was a shared responsibility between employers, employees, insurers, providers and the government. Indeed, the platform decisively rejected a single-payer health care system, adding that employers should have incentives to offer coverage.

But, echoing what Obama already had endorsed, the platform calls for a public health care plan. Details on how such a plan would work weren’t provided, but Obama has said such a plan, funded by employers that don’t make a meaningful contribution toward their own health care plans, would be available to individuals not covered by employer plans.

Additionally and following an idea Obama has advocated, the platform backs a new federal health reinsurance program in which the government would assume liability for catastrophic health care claims, an idea that surfaced 15 years ago as part of a sweeping health care reform package then pushed by the Clinton administration.

While the promise of universal coverage makes for a good sound bite, political observers say the health care reform goals of Obama, if elected, would be much more modest, at least in his first year or two in office.

“Rhetoric is easy. Policies are much harder to implement,” said Grace-Marie Turner, president of the Galen Institute, an Alexandria, Virginia-based health policy organization.

“Don’t expect big, broad changes in the first year. Comprehensive health care reform takes time and education,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

In fact, Obama and many members of Congress haven’t forgotten the last time a Democrat—Bill Clinton—was elected president and promised to quickly enact a universal health care program.

“Congress has the memory of an elephant. The experience of 1993-94 looms large,” McArdle said, referring to the collapse of the Clinton health care reform plan.

The plan’s failure was widely attributed to the political naiveté and arrogance of then-first lady Hillary Rodham Clinton, now a Democratic senator from New York. As chairwoman of the task force that put the plan together, she largely shut out key legislators in drafting the plan and in trying to build support for it. The plan overreached, largely knocking out employers and insurers in favor of regional public health care cooperatives.

Rather than quickly seeking enactment of a universal health care reform plan—a costly and difficult venture, an Obama administration’s first steps in the health care arena are likely to focus on expanding coverage through existing popular public programs.

These include the State’s Children Health Insurance Program and possible expansion of the federal Medicare program to early retirees, who often find it tough and expensive to obtain coverage in the individual market if they are not covered by their former employers.

“You may see additional options for early retirees—perhaps, some kind of Medicare buy-in,” McArdle said.

Whatever direction Obama, if elected, chooses to go in the health care reform arena, his approach in trying to get such legislation passed will be very different than that of the Clintons, especially Sen. Clinton, who excluded legislators in the drafting process and later bashed critics rather than trying to work with them.

“Politicians have learned a valuable lesson since 1993. You don’t give Congress a finished product. You don’t work behind closed doors and you don’t ignore major stakeholders,” said James Gelfand, senior health policy manager at the U.S. Chamber of Commerce in Washington.

“The Clinton way was, do it ‘our way or the highway.’ Democratic strategists know that isn’t going to work,” the Galen Institute’s Turner said.

The approach taken by an Obama administration would be to “set the policy objectives and let Congress fill in the details. As a senator, Sen. Obama has a much better sense of the normal give and take between the legislative and executive branch and that will be a plus” in drafting and trying to get legislation passed, McArdle said.

With the Clinton plan failure as a lesson, an Obama administration would be careful not to alienate key stakeholders, observers say. In fact, the Clinton plan to kick out commercial health insurers from the health care delivery system led the industry to launch an advertising campaign against the plan. Ultimately, that campaign proved extraordinarily effective in undermining public support, especially among those satisfied with their current coverage.

Obama’s aides “have learned. Don’t threaten the coverage people currently have,” Gelfand said.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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HR executives at many large corporations may have a nursing mother’s program in place or simply want to know how they can make improvements. Here’s a link to the U.S. Office of Personnel Management’s package of tools that you might be able to adapt to your workplace. Among them are details about why breastfeeding is beneficial, how to establish a successful lactation program at the office (“A room that provides privacy is most important”) and a list of organizations that can provide additional information.

The U.S. Department of Labor’s Office of Compliance Assistance Policy offers a wealth of tools for HR executives who need to know everything about employee benefit plans, HIPAA, COBRA, record-keeping, changes in health care law and more. Click here to get started.

As an employer of nearly 2 million civilian workers, the federal government has a repository of workforce management material to guide its own agencies. Here’s a link to Office of Personnel Management handbooks and guides that you may be able to adapt to your workplace.

To comment, e-mail editors@workforce.com.

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As Owens Corning focuses on continuing to expand globally, acquiring and developing talent at a rapid pace is a mounting challenge.

    “We are growing in Asia, Europe and Russia,” says Joseph High, senior vice president of HR. “Recruiting in those places can be a real challenge.”

    To address the issue, he and his team are making a concerted effort to find out which employees are interested in working abroad. Also, the company has changed its policy to allow employees to take short-term as well as long-term assignments abroad.

    “We are putting the word out that employees don’t have to commit for two years,” High says. “In some places, we have specific projects that might only take a few months.”

    Offering shorter-term assignments allows employees to get a feel for what it would be like to live and work abroad, he says. “And then those employees come back and share their experiences with others.”

    The company also is stepping up its communications about opportunities abroad. One approach is its “Lunches With Leaders,” at which employees are invited to hear the company’s country leaders talk about their businesses.

    “Many employees are resistant to working abroad due to the fear factor,” High says. The language barrier scares some people, he says. “They are afraid that if they get to China, they will say something wrong.” The lunches help to address some of those concerns.

    High also tries to address global issues in his monthly HR town hall meetings by inviting HR executives from different countries to speak.

    A recent town hall meeting focused on the importance of succession planning. The company’s goal is to have two solid candidates for every key leader within the company.

    And the challenges facing HR executives in attaining this goal are similar around the world, High says. To demonstrate that, he invited the HR leader from India to discuss the business challenges of developing talent within the country.

    “This is a North American, Midwestern kind of company, so there is a lot of education that needs to take place,” he says. “And people are really interested in hearing about others’ experiences in other countries.”

    Focusing on specific challenges that HR faces around the world helps HR managers to get a better sense of the global commonalities throughout the organization, High says.

    “It provided everyone with examples of things that worked well and things that failed,” he says. “Everyone could relate to the issues.”

    By highlighting their experiences, High hopes to show HR executives that no matter where in the world they are, the challenges aren’t that different.

Some employers plan to offer various benefits to employees to alleviate the impact of higher gasoline prices, including a compressed workweek and increased use of telecommuting, a new study has revealed.

Within the next six months, 22 percent of employers plan to offer at least some of their employees the option of a four-day workweek, and 24 percent plan to allow more employees to telecommute, according to Mercer’s 2008 Gas Price Impact SnapShot Survey.

The survey also found that two-thirds of the responding companies plan to increase mileage reimbursement amounts by as much as 20 percent for business-related travel, while 41 percent anticipate raising car-allowance provisions by as much as 20 percent.

Other findings indicate that organizations are considering creative steps to help employees offset gasoline prices, including organizing car-pooling programs and offering company-funded van services from bus and train stations. Some 30 percent of responding companies offer car-pooling programs, and 23 percent plan to implement them in the next six months.

Organizations are also offering prepaid gas cards for perfect attendance and subsidies for public transportation costs. The subsidies are provided by 20 percent of the respondents, and 8 percent plan to offer the option in the next six months, according to the report.

“These options are more practical than raising salaries to cover high gasoline costs because of the implications associated with increasing pay, such as employer taxes, 401(k) matches based on percentage of pay and bonus payouts that are a percentage of pay,” said Mitch Barnes, principal at Mercer in Atlanta.

“Making the most of creative alternatives to help employees save on commuting costs is good management practice, supports attraction and retention concerns, and doesn’t add significantly to corporate expenses,” he said.

Mercer surveyed more than 300 U.S.-based companies last month. The report will be available online in mid-September and can be accessed at www.imercer.com/snapshot.

Filed by Colleen McCarthy of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

At first blush, the move by retailer Kohl’s to replace chief executive Larry Montgomery and assign him functions including HR looks odd. It seems like a demotion, even, for the longtime executive.

But the recent shift, which included promoting company president Kevin Mansell to CEO, is likely a wise one in keeping with Kohl’s reputation as a talent management leader, observers said.

If anything, the fact that an ex-CEO is supervising HR at a major corporation may be a sign of how important human resource issues are becoming.

“In a lot of ways it makes sense,” said Anne Brower, senior partner at retail consulting firm McMillan Doolittle. “Talent and talent management are critical in a retail organization.”

Kohl’s announced August 21 that Mansell, who has been the retailer’s president since 1999, had assumed the role of CEO. The company said Montgomery, who became CEO in 1999, will remain chairman of the board and “will hold full-time management responsibilities for the organization’s strategic growth and talent management initiatives.”

Kohl’s said Montgomery would continue to manage the human resources, legal and real estate departments.

Montgomery made $2.8 million in total compensation during the company’s 2007 fiscal year. Mansell made $2.3 million.

Menomonee Falls, Wisconsin-based Kohl’s is a department store chain that operates 957 stores in 47 states. Like other retailers, Kohl’s has been wrestling with a sluggish economy. Its net income for the quarter ended August 2 dropped 12 percent, to $236 million, though its net sales rose 3.8 percent, to $3.7 billion.

Brower dismissed the idea that Montgomery’s new role is punishment for poor performance.

Kohl’s looks to be operating well “in a very difficult environment,” she said.

In its press release, Kohl’s portrayed the executive changes as well thought out.

“As one of the fastest-growing department stores in the country, a strategic, long-term succession plan has been integral to Kohl’s success,” the company said. “Mansell’s promotion is the most recent demonstration of this strategy.”

It’s not unusual for a CEO to want to stay involved with a company’s talent, said Jeffrey Cohn, a succession-planning advisor.

When a veteran executive coaches the company’s rising stars, he or she benefits as well. It’s a “way for them to cement their own legacy,” Cohn said.

Montgomery’s HR role is a natural for Kohl’s, he said. “It’s a great company for talent management,” Cohn said. “They spend quite a bit of time mentoring young talent.”

The management shake-up at Kohl’s comes as many companies are tapping business execs to take on HR. A quarter of the Fortune 1,000 have selected their HR chiefs from outside divisions, according to the Center for Effective Organizations, a research group.

Boston University management professor Fred Foulkes said that keeping and developing talent is a challenge for the retail industry. Montgomery’s new role could increase the visibility of the HR function at Kohl’s, he said.

Foulkes also credited Kohl’s for promoting from within to fill its CEO post. That reduces risk and sends the right message to employees moving up the ranks.

“It’s very motivating to the people coming along,” he said.

—Ed Frauenheim

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Reformers are licking their chops over the  Democratic National Convention, with high expectations to place on the party’s platform new corporate governance rules such as “say on pay,” higher taxes on hedge funds and private equity shops, and wider pension coverage.

“In many ways this is a unique moment in the corporate governance world,” said Daniel Pedrotty, director of the Office of Investment at the AFL-CIO in Washington. “There is an upbeat, hopeful mood in the investor community.”

While experts don’t expect the platform to clearly lay out a path to reform on each issue, they are confident Sen. Barack Obama, D-Illinois, is on board with their causes.

“He’s proven himself an advocate time and time again” on corporate governance issues, Pedrotty said, referring to Obama, the party’s presumptive nominee.

In addition to formally nominating Obama, delegates to the convention in Denver will adopt the party’s official platform on issues ranging from health care to immigration to foreign policy.

AFL-CIO officials are particularly keen to advance say-on-pay issues, which would give shareholders an annual nonbinding vote on executive compensation, and to provide shareholders access to the corporate proxy to nominate directors. They also want to limit the influence of Wall Street brokers over corporate director elections, preventing them from casting votes of shares they hold but do not own.

Critics say unions are backing these issues to advance labor’s agenda, rather than having the best interests of shareholders in mind.

Although most corporate executives think say on pay is “stupid,” they “expect it to become a reality,” said Geoff Loftus, vice president, Society of Corporate Secretaries and Governance Professionals in New York.

However, he doesn’t see an Obama victory as crucial to bringing about corporate governance changes. If the Democrats win a veto-proof majority in Congress, they would be able to push through changes even if Sen. John McCain, R-Arizona, the presumptive Republican nominee, were elected, he said.

“Right now this is about Congress and how much of a majority the Democrats will roll up,” he said. “If they get over the override threshold, they’ll use (McCain) for batting practice.”

Thomas J. Lehrer, director of public policy at the Washington-based Business Roundtable, disagreed. “Governance issues are not partisan issues,” he said. Changing policies “for the sake of change” undermines the efficiency of the business model, he said.

AFL-CIO officials also want to tax carried interest as regular earnings. This issue, advanced last year by Sens. Max Baucus, D-Montana, and Charles Grassley, R-Iowa, and Rep. Charles Rangel, D-New York, would change taxation on carried interest to an income tax levy, now at 35 percent, instead of the 15 percent capital gains rate. The move would affect all kinds of investment partnerships, including hedge funds, real estate and venture capital firms.

Mark G. Heesen, president of the National Venture Capital Association in Arlington, Virginia, said that boosting taxes on carried interest would be especially harmful to venture capital firms.

“Hitting venture capital with this is not what most people see as a good remedy,” Heesen said. “We believe [taxing carried interest] is not where this country should be going.”

However, he believes that Obama’s economic advisors understand the difference between investing in established companies and investing in startups. Heesen said venture capital could get a pass, even if carried interest taxes are upped.

“The devil is going to be in the details, and we’re not going to see the details until and if Obama becomes the president,” he added.

Meanwhile, Obama’s Web site calls for creating automatic individual retirement accounts in the workplace and expanding an existing tax credit for savers to match 50 percent of the first $1,000 saved by families who earn less than $75,000. Requests to Obama’s campaign staff for comment and further information were not returned.

“I think there is a lot of excitement that finally some significant progress may well be in sight on the retirement savings coverage front,” said J. Mark Iwry, a nonresident senior fellow at the Brookings Institution in Washington.

Iwry and David John, senior research fellow at the Thomas A. Roe Institute for Economic Policy Studies of the Heritage Foundation in Washington, co-authored the proposal, which enjoys bipartisan support. Iwry will speak at the convention as part of a roundtable symposium on retirement issues.

However, Obama’s retirement proposals could also cause concern for large pension plans, said Jan Jacobson, senior counsel, retirement policy, at the American Benefits Council in Washington.

ABC members are mostly plan sponsors of large corporate plans, so mandating an automatic workplace savings program with direct-deposit individual retirement accounts would not likely have a direct effect on them. But Jacobson wondered whether mandating expanded coverage could open the door for other government-required retirement programs.

On his Web site, Obama pledges to “require full disclosure of company pension investments” and states that “the lack of transparency [on pension investments] can make it easier for fund managers to make imprudent or even fraudulent investment decisions.”

“That might raise concerns of plan sponsors, which might see that as a first step of requiring types of investments in defined-benefit plans, or outlawing specific kinds of investments,” Jacobson said. “Are we going to get to the point that DB plans can only invest in what is politically correct at the time?”

Further details on Obama’s proposal were not available. But enhancing retirement security is a big vote-getter.

There’s little doubt that retirement security is an important topic for lower- and middle-income voters, whom Democrats typically draw, said Teresa Ghilarducci, the Bernard L. and Irene Schwartz Chair in Economic Policy Analysis at the New School for Social Research in New York.

She pointed to a poll by Lake Research Partners in Washington that asked workers what would make “the American dream more attainable.” A greater number of workers said preserving Social Security and ensuring all workers have adequate retirement benefits was more important to them than guaranteed health care or raising the minimum wage.

Expanding retirement coverage will come at a cost, and Democrats might look at reining in tax benefits of contributions to employer-sponsored plans and IRAs, which now cost the federal government $139 billion annually in lost taxes, one expert said.

“It is larger than home mortgages or charitable donations,” said Ann Combs, principal and head of the institutional strategic consulting group at Vanguard Group in Valley Forge, Pennsylvania. “I think it will definitely come into play, especially if [Democrats] have new proposals to expand coverage.”

Filed by Drew Carter of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Ohio Gov. Ted Strickland said Thursday, August 21, that he would oppose a controversial state ballot initiative that would require businesses to give employees paid sick time off.

The governor made the announcement in a statement e-mailed to news media.

“While we would hope that all Ohio businesses would make paid sick days available to their employees whenever possible, we believe that this initiative is unworkable, unwieldy and would be detrimental to Ohio’s economy, and we will be opposing it and asking Ohioans to oppose it as a result,” read the statement, issued in the name of the governor and Lt. Gov. Lee Fisher.

To avoid a law created by voter initiative, Strickland had hoped to reach a compromise between those who put the issue on the ballot—in particular, the Service Employees International Union—and the business groups that oppose it.

“This reality means that there will be a hard-fought campaign centering on this initiative in the coming months,” the governor said in the statement. “During that campaign, we call upon both sides to avoid portraying Ohio as unfriendly to business and economic development.”

The proposed new law would require employers of 25 people or more to grant seven paid sick days per year to all full-time employees and to provide paid sick days on a prorated basis to part-time workers.

Filed by Jay Miller of Crain’s Cleveland Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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