Author: Site Staff

HEADING FOR RETIREMENT
Underlining the need for recruiting workers into health care from other fields is the estimate that approximately 4,600 health care professionals in southeastern Michigan will retire in the next five years. The percentage of health care workers in the region who are between 30 and 50 will drop by 2010, while the 50-and-over age groups will rise.
Age Group
	20-29	30-39	40-49	50-59	60+
2005	15%	24%	30%	24%	6%
2010	16%	23%	26%	25%	9%
Source: Michigan Health and Hospital Association, Watson Wyatt Worldwide

 

OLDER NURSES, LOWER TURNOVER	PERCENTAGE OF NURSES WHO CHANGED HOSPITALS WITHIN PAST TWO YEARS, BY AGE GROUP
Younger nurses are a much more mobile population than their older colleagues, according to a study of 1,600 nurses by the Health Care Advisory Board. That’s a factor that might bode well for nursing programs that focus on training career-changing workers.	24 OR UNDER	31%
	25-34	28
	35-44	20
	45-54	12
	55-64	9
	19
	Source: “Drivers of Nurse Job Satisfaction and Turnovers,” Health Care Advisory Board

Market speculation regarding Monster Worldwide’s sale is driving up its stock price.

Shares for the online job board opened at $48.51 and climbed to $49.51 during trading on Thursday, May 17, but ultimately retreated to $48.36 at the close. After-hours trading took the price to $49. Volume topped 9 million shares traded—an astounding figure, considering Monster’s trading averages just under 2.9 million shares daily.

For the company, the surge in price is a welcome respite from the lackluster performance Monster had experienced earlier this year.

Rumors of a takeover intensified Tuesday, May 15, when it became public that Monster was pulling out of a Goldman Sachs conference. Market observers interpreted it as a signal that Monster may be soon be making a buyout announcement. That day, shares climbed $1.16, an increase of 2.51 percent, to close at $47.35.

The surge in price is a much-needed shot in the arm for Monster following a stock options scandal that rocked its leadership and resulted in the resignation of longtime CEO Andrew McKelvey and the firing of general counsel Myron Olesnyckyj, who also held the titles of senior vice president and secretary at Monster.

Monster officials have said that putting itself on the block is not a strategy it is pursuing. However, takeover rumors circulating the market seem to be working in its favor.

An increase in stock price occurred when the company announced the appointment of Sal Iannuzzi as its new CEO.  Before coming to Monster, Iannuzzi was CEO of Symbol Technologies, which he helped sell to Motorola. Some market analysts believe he was brought on to Monster to do the same. Since Iannuzzi’s appointment in mid-April, Monster’s stock has climbed by more than $8 a share.

—Gina Ruiz

While the Senate is enmeshed in tortuous negotiations over a bipartisan comprehensive immigration bill, President Bush gave his support on Wednesday, May 16, to a government-run employment verification system that human resources organizations have dismissed as ineffective.

Bush conducted a roundtable at the Embassy Suites hotel near the Washington Convention Center with two members of his Cabinet and five representatives of corporations that use the Basic Pilot verification system.

Both Bush and congressional leaders have asserted that work-site enforcement is integral to achieving immigration reform. But major HR groups don’t want Basic Pilot to be the foundation for enforcement because it cannot stop identity theft.

In December, the government conducted an immigration raid that resulted in 1,282 arrests at Swift & Co., the nation’s largest meat processor. Swift, one of 16,000 U.S. employers using Basic Pilot, says the disruption to its operations has cost $30 million.

The workers who were targeted had stolen American identities to qualify for employment.

The presidential event on Wednesday emphasized an upgrade that is being made to Basic Pilot, a Web-based system that checks new-hire information against Social Security and Department of Homeland Security databases.

In recent weeks, a mechanism has been added to the system that incorporates green card and employment authorization photos so employers can check them against photos on documents presented by new hires.

The photo tool, which is designed to combat identity fraud, is being tested with 40 companies and will be rolled out in the coming months.

Employers “need help from the government to make sure the person they hire is here legally, that they’re not dealing with forged documents,” Bush said following the event, according to a White House transcript. “In other words, we can’t ask our employers to verify somebody here unless we help them.”

The Embassy Suites in Washington has been using Basic Pilot since the facility opened in November 2005, says Glenda Wooten-Ingram, director of human resources at the hotel.

Wooten-Ingram participated in the presidential meeting, which took place around a nondescript table in a small conference room in the hotel’s basement, where White House aides put up a backdrop promoting comprehensive reform.

“It’s been working great,” Wooten-Ingram says of Basic Pilot. The hotel has hired 451 employees since it opened. About 10 percent of applicants have been rejected by Basic Pilot as ineligible to work.

Job seekers tend not to contest the Basic Pilot verdict with the Social Security Administration. “They don’t come back,” Wooten-Ingram says. The hotel has not had problems with tentative nonconfirmations that turn out to be wrong.

In the Basic Pilot test that was run for Bush, the system provided verification within three seconds, according to Wooten-Ingram.

Such results don’t assuage the HR Initiative for a Legal Workforce, a group whose members include the Society for Human Resource Management and the HR Policy Association.

The organization is lobbying to get rid of the trial verification system.

“Instead of requiring all U.S. employers to use Basic Pilot—as current [immigration legislative] proposals would mandate—Congress should take steps toward enacting [a] secure electronic employment verification system that relies on biometric or other state-of-the-art identification technology and can make false documents and identity theft ineffective,” the group said in a statement released a couple hours after the Bush event.

Wooten-Ingram, however, says the photo tool may help address identity theft. She also says it can make verification easier—a process that now can involve many documents but not visual identification.

“It really lightens the burden off HR,” she says. “The photo is blown up very big so that you can see.”

While photos are added to Basic Pilot, its fate likely will be determined in congressional negotiations over immigration reform.

On Wednesday, May 16, Bush asserted that such efforts should encompass border security, work-site enforcement, a temporary worker program and a process for dealing with illegal immigrants already in the country that is “without amnesty [and] without animosity.”

—Mark Schoeff Jr.

TOP SAFETY CONSULTANTS

The safety consulting industry is a small, fragmented collection of well-established firms that provide a wide range of occupational safety and health, industrial hygiene, ergonomics and environmental risk assessments for employers in all industries.

The professional association for the industry, the American Society of Safety Engineers, reports 30,000 members. Increasingly detailed OSHA regulations and risk management techniques have pushed companies to reduce in-house safety and health staff and rely more on outside consultants with the technical expertise necessary for complex risk management and safety and health practices. In some cases, consultants provide full-time on-site services for their client companies.

Long-term contractual fee-for-service work or retainers for specific services are common. Demand for safety and health services and revenue for the consulting firms have softened in recent years as workers’ compensation insurance rates have flattened and fewer new safety standards have been circulated. To enlarge the view, click on the image below.

State of the HR Consulting Industry

Rebounding from a decline in previous years, the HR consulting industry saw growth of 6.1 percent in 2005 and maintained a steady growth rate of 9.1 percent in 2006, resulting in an $18.4 billion market, according to a recent study conducted by Kennedy Information. Furthermore, the study forecasts that the global HR consulting industry will experience an 8.3 percent compound annual growth rate from 2006 to 2010.

Legal and regulatory changes regarding retirement benefits, such as the enactment of the Pension Protection Act in 2006, are identified as being the lead drivers within the U.S. market. Other factors contributing to demand include increasing need for executive talent management strategies and the implementation of HR technology as well as trends in business process outsourcing, including HR outsourcing. According to Watson Wyatt, there are about 950 firms globally that provide HR-related consulting services in such areas as recruitment, compensation, retention and benefits.

To enlarge the view, click on the image below.
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STATE OF THE INDUSTRY

With employers squeezed by higher health insurance and pension costs, group life insurance sales growth in the employer market has been slow for nearly a decade.

The five-year compound annual growth rate for the industry is just under 2 percent, according to LIMRA International. March 2006 data from the U.S. Bureau of Labor Statistics show that 52 percent of all employees have access to life insurance through the workplace, at an average cost to the employer of 5 cents per hour worked. Ninety percent of the workers covered are not required to contribute. With penetration for group life reaching nearly 70 percent among large employers, group life insurers continue to push annuity sales.

Insurers are turning to the small-employer market for group life growth, but with some reticence about their ability to develop this market as a profitable sector. The insurers listed here cover nearly 97 million employee lives.

To enlarge the view, click on the image below.

The Securities and Exchange Commission is examining disclosures for 401(k) plans and is looking at ways to provide such information using interactive software, SEC Chairman Christopher Cox told the mutual fund industry on Thursday, May 10.

“We’re interested in both the disclosures of the constituent investments in the 401(k) and the aggregate disclosures by the plan,” including overall expenses and performance of investments in the accounts, Cox told the 1,200 members of the fund industry gathered in Washington for the 49th general membership meeting of the Investment Company Institute.

Disclosures concerning 401(k) plans currently range widely from full prospectuses and shareholder reports to “one-page charts that contain extremely limited information,” Cox said.

The SEC is working with the Department of Labor on the project.

The SEC wants to make it easier for 401(k) participants to understand expenses as well as the after-tax, after-inflation returns that they are getting, compared to appropriate benchmark, Cox said.

“We’re confident that we can achieve a great deal in the coming months,” Cox said in his speech, in which he encouraged the mutual fund industry to voluntarily file fund information using interactive Extensible Business Reporting Language software that allows easy comparisons for fund data.

In addition to using “XBRL” software for mutual fund disclosures, Cox said, “there will be a significant future role for interactive data” for 401(k) information.

Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Culminating four years of work, a diverse group of public policy experts on Friday, May 11, recommended several new pension plans designed to provide more secure retirement coverage to millions more American workers.

The goal of the initiative, dubbed the Conversation on Coverage, is to dramatically increase the number of people participating in retirement savings programs. Currently, about 52 million employees don’t have formal saving vehicles for their senior years.

The group proposed two new kinds of pension products that pay workers a set amount of their retirement each month. Under the Guaranteed Account Plan, each participant’s account is credited with an annual contribution equal to a percentage of his or her pay.

The plan would generate a guaranteed annual return, be insured by the federal Pension Benefit Guaranty Corp. and operate on funding rules that reduce the volatility in employers’ payments.

Another defined-contribution proposal is called the Plain Old Pension Plan. A simplified version of the traditional defined-benefit pension, advocates say that it would be easy for companies to administer because contributions would be based on published government tables.

In order to expand retirement coverage to workers whose employers don’t offer a plan or who aren’t eligible for their company’s plan, the group would establish an individual Retirement Investment Account. Under this proposal, all employees would automatically have a payroll deduction deposited in a central clearinghouse.

The clearinghouse would be a government entity but would contract with private-sector firms to invest the funds. Workers could carry the account with them from job to job.

The coverage coalition also proposed what it calls a Model T plan to help small businesses offer pensions through a multiple-employer payroll deduction.

The coalition is trying to make a strong statement about the importance of retirement savings by bringing together participants from across the political spectrum. The next step is to transform its proposals from policy ideas into concrete products.

They will try to do this in the next phase of the project, which involves advocating for legislation, setting up task forces and demonstration projects, and reaching out to employers.

Creating momentum might be a challenge because Congress passed landmark reform last year, the Pension Protection Act. Pension fatigue could be a problem on Capitol Hill.

But Karen Friedman, policy director of the Pension Rights Center and director of the initiative, isn’t daunted.

“We’re getting our ideas out in the marketplace,” she said following a news conference at the National Press Club. “They’re not going to be [relegated to] sitting on desks or shelves.”

The recommendations come at a time when defined-benefit plans are waning. A study of Fortune 100 companies released in mid-May by Watson Wyatt shows that 58 of them sponsored such plans, down from 63 in 2005 and 90 in 1985. The number of Fortune 100 companies offering defined-contribution vehicles has risen from 10 in 1985 to 42 last year.

Although the number of plans may be dropping, the funding status of the largest company pensions is strengthening, according to a recent study by Milliman. The consulting firm reported that the 100 plans it surveyed could cover nearly 100 percent of their obligations—a significant improvement from early in the decade, when the bursting of the high-tech bubble and the September 11, 2001, terrorist attacks caused an economic downturn that created huge pension deficits.

Companies continue to worry about the expense and volatility of maintaining defined-benefit plans. But initiative participants are confident that the private sector will be receptive to their recommendations.

“We’ve built into our discussions and the proceedings we’ve gone through the viewpoint of employers,” said John Kimpel, former senior vice president of Fidelity Investments.

They also tried to go beyond what Congress accomplished with the Pension Protection Act. That law provides a safe harbor for companies to set up automatic enrollment for 401(k) plans. A firm can decide whether it wants to implement a plan.

The initiative’s proposal on the individual retirement account, however, mandates an automatic payroll deduction.

“We’re creating a guaranteed savings infrastructure,” said Michael Calabrese, vice president of the New America Foundation.

—Mark Schoeff Jr.

 

Last year’s pension law was supposed to make dealing with complex retirement issues easier for companies, but in at least one instance, it might have the opposite effect.

 

One provision in the Pension Protection Act attempts to solve the problem of legal restrictions on providing distributions from pension plans to retirement-age employees who are still working. The problem is becoming acute because, with fewer young people due to enter the U.S. labor force in coming years, companies are expected to try to persuade older employees to work longer, if for fewer hours.

 

Under the law, employees who are still working at a company can start to receive a company pension at age 62.

 

But businesses are concerned that when the government issues regulations implementing the PPA measure, it might incorporate some of the burdensome rules that the IRS proposed in 2004.

 

The IRS’ proposal “was a pretty unworkable regime,” says Lynn Dudley, senior counsel for the American Benefits Council, which represents large companies on benefits issues. “It required counting of hours. It required you to have a normal retirement date that was consistent with your industry. It was a very complicated set of regulations.”

 

On the other hand, companies regret that the law set a starting age of 62, instead of the 59½ the IRS had proposed. In fact, some are pushing for letting active workers access pension assets at an even younger age: The American Benefits Council supports allowing workers to draw upon both defined-benefit and defined-contribution plans starting at 55.

 

“The actual retirement age in the U.S. has dropped significantly,” Dudley says. “It’s not that people don’t continue to work, but they desire a more flexible structure.”

 

Employers are concerned because they don’t want to lose valued employees, she says.

 

“A lot of people who can retire early, at age 55, leave and go work for somebody else. We’re trying to make it attractive for them to stay.”

 

Joel Rich, a senior vice president at Sibson Consulting, a division of human resources consulting firm the Segal Co., said companies will wait to see what the regulations implementing the PPA provision look like.

 

“If it turns out that it’s going to be administratively burdensome, it may not be worth the effort,” he says.

 

Despite a steady stream of articles and conferences about the aging workforce in the past few years, a recent survey of 1,000 U.S. companies by Manpower Inc. showed that just 28 percent have a strategy for retaining older employees.

 

Their strategies aren’t necessarily the phased retirement envisioned in the pension law, in which employees reduce their hours or responsibilities while starting to draw pension benefits. A 2006 Ernst & Young survey found that while 14.3 percent of companies had strategies in place to retain the “business wisdom” of older workers, just 2.6 percent had instituted phased-retirement programs. Eleven percent of the companies that had strategies cited flexible work scheduling, and 10.3 percent said they hired retirees as consultants or contractors.

 

The relatively slow pace at which companies are moving is not just about government regulation. Bill Arnone, practice leader for employee financial services at Ernst & Young, argued that human resources departments are “swamped” by a number of issues that take precedence over the aging workforce, like executive compensation, stock options and pension law changes.

 

The companies surveyed by Manpower cited cost and productivity as barriers to implementing strategies. Health benefits for older workers are more expensive than those for average employees, Arnone said. “A one-year increase in the average age of the workforce will lead to a 3 percent increase in health care costs.”

 

Rich noted a company’s level of interest in retaining older employees depends on the demographics of its workforce. And although the regulations for the PPA measure aren’t yet written, it’s possible they will make it hard for companies to offer phased retirement only to some employees rather than to all who are of retirement age.

 

If a company wants to persuade just a few employees to stay on, “it probably makes sense to do something else,” such as offering the targeted employees flexible hours or giving them a bonus for staying on, he said.

 

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

As Senate Majority Leader Harry Reid confirmed that a major debate on immigration reform would begin on Monday, May 14, he emphasized the importance of employer verification policy.

At a Capitol Hill press conference on Wednesday, May 9, Reid said that he would launch Senate deliberation by reintroducing the comprehensive reform bill that the chamber approved a year ago.

 

Immediately, Senate Minority Leader Mitch McConnell of Kentucky and four other Republicans who voted for last year’s Senate bill urged Reid to delay the debate until new bipartisan legislation could be cobbled together. Negotiations, which also involve the White House, have been going on for weeks.

 

Reid, D-Nevada, asserted that he set the debate timetable two months ago and that last year’s Senate bill would provide a good foundation to begin deliberation. He expects a bipartisan substitute to be offered during the debate.

 

Last year’s measure would have strengthened border security, implemented a mandatory electronic employer verification system, significantly increased fines for companies employing illegal workers, increased the number of nonskilled and highly skilled immigrants allowed into the country annually, and created a path to legal residency for many of the country’s approximately 12 million illegal aliens.

 

In his opening statement, Reid stressed the need to improve work-site enforcement.

 

“We’re going to have something on employer sanctions that is not a Catch-22, which it is now,” he said.

 

Reid, according to an aide, was referring to the controversy surrounding a December raid at six Swift & Co. meat processing plants. The action resulted in the arrests of 1,282 alleged illegal workers.

 

Swift was a target despite the fact that it participates in a government-run electronic verification program called Basic Pilot. Swift, which says that the Department of Homeland Security rejected its offer to collaborate in addressing the problem, asserts that the disruption cost $30 million. The workers deceived Swift—and the government—through identity theft, which Basic Pilot can’t stop.

 

“What we want is a system where the rule of law is realistic and enforceable … so that employers and employees know what the law is [and] can follow it,” says Federico de Jesus, a Reid spokesman.

 

De Jesus said the details of employer verification policy will depend on how negotiations unfold. But he says that the use of tamper-proof identification should be part of the solution.

 

The HR Initiative for a Legal Workforce, a coalition of groups including the Society for Human Resource Management and the HR Policy Association, is lobbying for what it calls a secure electronic employment verification system that utilizes biometric information provided by private-sector companies.

 

Verification policy is just one of the myriad details composing the complex and emotional immigration issue. Some leading Republicans want Reid to delay the debate.

 

In a May 9 letter to Reid, Sens. John McCain, R-Arizona, Arlen Specter, R-Pennsylvania, Lindsey Graham, R-South Carolina, and Mel Martinez, R-Florida, wrote, “We are united in our resolve to enact comprehensive immigration reform this year and will only support moving forward with legislation that is a product of the ongoing bipartisan discussions.”

 

All four voted for last year’s Senate bill.

 

But those negotiations may not result in a bill that satisfies House Republicans, a group of whom warned the Senate in a May 8 letter not to offer a bill that included “amnesty.”

 

“Amnesty occurs when an illegal immigrant is not deported as required by law, but is legalized and allowed to stay,” wrote Reps. Lamar Smith, R-Texas, Steve King, R-Iowa, Peter King, R-New York, Brian Bilbray, R-California, and Ed Royce, R-California. “Amnesty rewards lawbreakers with the objective of their crime, and it grants them benefits we withhold from those who have played by the rules and are waiting their turn.”

 

Smith is the ranking Republican on the House Judiciary Committee. King is the top Republican on the immigration subcommittee.

 

Smith asserts that stricter work-site compliance is a key to reform. “We could have a major attrition of the number of illegal immigrants in the country today,” he said. “There is widespread support for better enforcing employer sanctions.”

 

—Mark Schoeff Jr.