Author: Site Staff

As federal lawmakers—even President Bush—tentatively wade into the health care reform waters, battles between employers and organized labor are expected to push the issue to new heights this year.

“Employers are becoming increasingly aggressive in trying to shift costs to employees,” says Richard Bank, director of the AFL-CIO’s collective bargaining department. And unions are expected to be equally aggressive in resisting that effort during big contract negotiations this year.

Grocery workers who struck grocery chains in Southern California for 4½ months in 2003-04 see their contracts expire next month, and their unions are expected to fight hard to win back some of the health care benefits they lost in 2004.

In addition, the United Auto Workers will renegotiate its contracts with the Big Three automakers, which have been vocal about the effect of employee health care costs on their competitive position. And General Electric will negotiate a new contract with 13 of its unions, some of which went on strike in 2003 over health benefits.

In the past few months, disputes about health coverage helped end contract negotiations at Harley-Davidson and Goodyear Tire & Rubber, leading to strikes.

“In every major strike in the last five years, health care benefits have been among the top two or three issues,” says Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

“This is a benefit that workers rely on,” he adds. “They don’t want you to tamper with it.”

Companies’ efforts to shift costs reflect the rapid escalation in health care costs. The AFL-CIO’s Bank also notes the pressure companies are getting from Wall Street to cut labor costs, “especially health care costs.” And globalization pits U.S. companies against overseas competitors with much lower benefits costs, often because they operate in countries where the government provides health care, he added.

General Motors estimates its health care costs come to $1,500 per vehicle, putting it at a disadvantage against competitors that don’t pay such costs.

“American employers are strapped with a really expensive benefit,” Chaison says.

Bank also cites accounting rules that require employers to reveal their obligations for retiree health care costs on their balance sheets.

“Those are big numbers for a lot of companies,” he says.

At Harley-Davidson, one dispute was the company’s proposal that workers begin paying part of their health insurance premiums. The contract the union approved in mid-February left the company paying all the premiums but increased union members’ deductibles and co-pays. Negotiations in which a company that has been paying all health care costs asks union members to start paying part of the health insurance premium can be particularly contentious, Chaison says.

“Workers feel that if they pay any of the premiums,” he says, “it opens the door to further concessions down the line.”

And contract negotiations that deteriorate into a strike can be costly for both sides. Analysts estimated that the strike by 2,800 Harley employees this month may have cost the company as much as $11 million a day. Goodyear reported in mid-February that the 86-day strike by about 15,000 members of the United Steelworkers of America late last year subtracted $367 million from its 2006 net income. Goodyear also expects the strike to have another $200 million to $230 million impact on its North American tire business in the first half of 2007.

But Goodyear says the new contract was worth it.

“We fully realize there were negative short-term effects of the strike,” Goodyear CEO Robert Keegan said on a call with analysts after the strike. “However, on balance, the improvements in our competitive position far outweigh those negatives.”

Goodyear estimated it will save as much as $610 million during the three-year term of the contract and realize ongoing savings of $300 million a year after that.

The contract allowed Goodyear to shed its responsibility for retired union members’ health benefits by providing funding for a trust that will take on those obligations. The level of funding was one area of disagreement: The company offered $660 million, while the union asked for about $1.3 billion. They settled on $1 billion.

Richard Hurd, a labor professor at Cornell University, said unions often manage to maintain their health benefits by making trade-offs in other areas, like work rules or pay.

“For the most part, unions are holding on to the basic structure of their health benefits,” Bank says. “However, there is no question that more and more costs are being shifted to employees.”

He added that if employers, for decades the primary providers of health care in the United States, continue to shift the responsibility onto employees, “there has to be an alternative system put into place.”

“The problems that we have with our health care system cannot be fixed at the bargaining table,” Bank says. “They demand a legislative solution at the national level.”

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

Cash balance pension plans do not discriminate against older employees, a federal judge has ruled.

Judge E. Richard Webber of the U. S. District Court of the Eastern District of Missouri last week dismissed age discrimination charges against U.S. Bancorp of Minneapolis, noting that the benefit and interest credits provided to plan participants did not discriminate on the basis of age.

Judge Webber rejected plaintiffs’ argument that the plans are age discriminatory because the same benefit provided to an older employee as a younger employee will result in a smaller retirement annuity to an older employee.

That result, Judge Webber ruled, is not because of age discrimination, but occurs because of the “time value of money, a characteristic correlated with age, but not age itself.”

The cash balance plan involved in the litigation was set up in 1998 by Mercantile Bank of St. Louis, which was later acquired by Firstar Corp. Firstar later bought the majority of stock of U.S. Bancorp, with U.S. Bancorp being the surviving entity of the merger.

The ruling is the first since a second circuit court-the 3rd U.S. Circuit Court of Appeals-ruled last month that the plans are not age discriminatory. The 7th U.S. Circuit Court of Appeals, in a widely publicized decision, ruled last year that cash balance plans in general and IBM Corp.’s in particular, are not age discriminatory.

Of the seven lower court rulings since the IBM decision, five have rejected age discrimination charges, while two courts have said the plans violate age discrimination law.

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

Harvard University gave workers the excuse they were looking for last week when they said a nap after lunch may reduce the risk of heart attack.

But time-conscious managers may have a rebuttal: Though much forgotten in the press, another Harvard study, published several years earlier, made its own news splash by arguing that naps are associated with a higher incidence of heart attack.

So, who to believe?

The most recent article, published in the Archives of Internal Medicine, studied 23,000 Greek men and women ages 20 to 86 for an average of six years. After controlling for differences in body size, diet, exercise and smoking, subjects who napped three times a week for half an hour had a 37 percent lower death rate from heart disease. The effect on men was more pronounced than on women.

The conclusion seemed to contradict a study published in 2000 in the Journal of Epidemiology by a researcher in the department of nutrition at Harvard’s School of Public Health. That study compared approximately 500 Costa Ricans who had survived heart attacks with a nearly equal number of healthy people. Those who suffered heart attacks were 50 percent more likely to have taken a daily siesta.

Parsing the two contradictory conclusions, Martin Moore-Ede, a physiologist and the chief executive of Circadian Technologies, a research firm specializing in managing shift workforces, says: “Napping is a great solution if you are energetic and active and if you have adequate exercise during the day, but it’s not a great solution if you are a couch potato.”

Moore-Ede says the research done on the Greek workers was more thorough, especially since it followed them over time rather than retroactively determining what caused the Costa Rican subjects’ heart attacks.

Whether or not napping reduces the risk of heart attack, during the past decade some employers have started promoting napping. This trend will only accelerate, Moore-Ede says, as the number of people with flexible work schedules who work on the road and who work outside the normal 9-to-5 hours increases. Nearly one in four workers, or 24 million people, fall into this category.

“If you have an active lifestyle, whether you’re running through airports or digging ditches, then napping is a good solution,” Moore-Ede says. “Sleep deprivation itself is associated with cardiovascular risk.”

Jeremy Smerd

 

 

Pfizer has long been praised by HR experts and academics for its commitment to training and developing employees. But con- fronted with an increasingly challenging market, the New York-based pharmaceutical company is changing its approach.

Even before January’s announcement that it was laying off 10,000 of its 100,000 employees worldwide, Pfizer had begun to shift its hiring and employee development strategy, says Chris Altizer, vice president of global leadership and talent development.

In the past, “Pfizer was not focused on managing the external environment,” he says. The com­pany would plan for what kind of talent it believed it would need dur­ing the next 10 years and develop that talent from within.

But that’s not an option for Pfizer and other pharmaceutical companies anymore, experts say.

Not only are such companies subject to the expiration of a popular drug’s patent, which opens the market to ge­neric competition, but smaller bio­technology firms are able to produce new drugs more quickly, making it crucial for big pharmaceutical companies to have a continuous stream of promising drugs in the pipeline.

Wharton School of the University of Pennsylvania. “But in this case, the pipeline of drugs that companies must develop is difficult to anticipate.”

To address this, Pfizer, whose drugs include Lipitor, is now focusing more on hiring and developing employees who can jump from one position to the next, Altizer says.

In recruiting, this means Pfizer, which used to hire candidates according to job descriptions, now evaluates what competencies the candidate demonstrates, he says.

Previously, if Pfizer was looking to hire a country manager, “the interview would be, ‘Tell me about your experience in your past jobs,’ ” Altizer says. “Now, I’m going to be more explicit about what I’m looking for. I want to know if they have the skills to manage a product launch.”

Similarly, Pfizer is focusing on developing employees based on competencies rather than grooming them for a specific role, he says.

“You can’t train someone who isn’t a chemist to be one,” Altizer says. “But you can take someone with project management skills and move them from manufacturing to research.”

This kind of competency-based training is necessary for Pfizer to get through the tough times it is confronted with and create a truly flexible workforce, says Bill Craib, vice president at the Human Capital Institute, an international professional association dedicated to strategic talent management.

“They need a person who can switch from working on a heart disease product to one that helps people stop smoking,” he says.

Ultimately, however, Pfizer may need to alter its hiring strategy even more to hire talent as it needs it, Cappelli says.

By having a “just in time” approach to talent, Pfizer can be flexible and respond immediately to market changes, he says.

But Altizer says that’s not part of Pfi­zer’s plans right now.

“We believe this approach to employee development will allow us to reach out to someone within our workforce at a specific time as we need it,” he says. If Pfizer finds itself in a position where it has to hire people from outside, then the company’s training program clearly isn’t doing its job, he says.

—Jessica Marquez

Dear Confused:



It is easy to become confused about coaching and mentoring. To add to the confusion, it is important to distinguish between coaching as a management skill set and professional coaching performed by a professional outside your company.

The similarities have more to do with the required skill sets that mentoring and coaching share. Both the mentor and coach use strong interpersonal and communication skills as well as intentional coaching skills. The objectives of the mentor and coach can be similar–to increase personal work-related effectiveness within the work/organizational culture. Both are organizational resources that can greatly enhance one’s professional and personal learning and development and achievement of goals.

Characteristic	Mentoring	Coaching
1. Primary location	Internal	Internal or external
2. Primary role	Senior-level in authority or expertise within the company. Longer-than- average tenure in company. Can be on technical track with an interest in coaching or a management track with an interest in helping develop talent for his/her organization.	Professional coach with specific training applicable to professional coaching. Certified in the use of work-related personal assessment tools.
3. Experience and knowledge required	 Broad organizational perspective around the company’s structure, policies, processes, politics  Similar future career direction  Has broad, multiple work experiences related to person’s interests	 Past successful business experience  Formal education/experience in organizational psychology and coaching  Certified in the use of personal work-related assessments (behavioral, personal values, soft skills, job competencies, etc.)
4. Goals	 Support success and advancement Support and advise on career development  Serve as a personal advocate  Advise the person on best ways to maneuver the political waters of an organization and open doors  Provide advice about strategies for best way to accomplish work goals	 Support success and advancement  Create greater self-awareness around strengths and weaknesses and opportunities for learning and development  Help people identify personal goals that support work goals  Maintain focus on desired areas/objectives  Help people accomplish personal development faster than if left on their own
5. Methods	 One-on-one face-to-face meetings, lunch or dinners  Casual setting  Knowledge sharing  Tells, advises, suggests, instructs	 One-on-one phone or face-to-face meetings More formal structure with informal conversational tone  Measurable goals established  Personal talent/personality/soft-skill assessments  Periodic meetings with boss  Use of provocative questions to expand the person’s universe
6. Involvement of others	May be directed to others to accomplish work	Typically includes boss of person being coached to articulate work-related goals and key accountabilities
7. Scope	Organizational and career maneuvering within context of current job and future potential	Personal and professional development within context of current job and future potential

Using a combination of mentoring and coaching can be exponentially more rewarding to both the individual and to the organization over using just one or the other strategy. For more on reasons for employing a coach, please Why Employ a Personal Coach.

For more on mentoring, please seeMentoring Matters.

SOURCE: Carl Nielson, principal, the Nielson Group, Dallas, April 24, 2006.

LEARN MORE: An outline of eight steps in the coaching process is found here. Also, some companies are finding that group mentoring can be a cost-effective alternative to the old one-on-one style.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Dear Workforce Newsletter

Dear Defusing:



Communicate, communicate and communicate. Explain to the employees in each department that your company has instituted a rotation development program, and it’s here to stay on behalf of improving overall management today and into the future. Recommend to your employees that this is a time and a chance for the department to exert influence over the future leaders of the company. Resenting the manager and not being cooperative can really impair the current business as well as future plans.

Most of the work that should be done, though, is with the managers themselves as they attempt to lead these various departments. Managers need to be open and ask more questions, rather than making quick decisions. They should be reaching out to employees instead of trying to impress them with their managerial skills.

In essence, managers should express the fact that they’re learning from the employees what the key challenges are for each department, as well as how those departments could be properly supported with resources in the future.

By communicating these intentions and expectations, the rotating managers and the human resources department can play a major role in smoothing out the concerns of employees in various departments.

If possible, it should be explained to the employees what the time frames are for the rotation and what is expected of the employees during that rotation. An idea would be to have regular focus groups meet at various times during the rotation assignments to see how people are feeling about the performance of the manager. These would be something akin to a 360-degree feedback experience (which the mangers surely could utilize), while giving employees in the department a sense that their concerns are being heard and heeded.

On a final note: Provide managers who are actually in the rotation program with coaching about how to conduct themselves, so that they don’t attempt to manage the department (as compared to leading the department during the rotation program). One lesson that most leaders learn: It is the employees of the department who actually operate and, in most cases, manage the department. Leaders help set the vision, the pace and the expectations, but employees achieve the results. Of course, this should be one of the learning experiences for the rotation manager.

All in all, it is the managers who must make a trust relationship grow between the employees and themselves. In fact, it is one of the objectives of the rotation assignments to see whether managers can, in fact, create this trusting atmosphere.

SOURCE: William J. Morin, chairman and CEO,WJM Associates Inc., New York City, April 26, 2006.

LEARN MORE: Please read the role human resources should play in executive development.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question

Dear Workforce Newsletter

Hewlett-Packard Co. is phasing out its defined-benefit pension plan, completing the process it started a year ago when it closed the plan to new and younger employees.

After December 31, plan participants no longer will earn benefits in the DB plan. Instead, they will be eligible for an enhanced 401(k) plan match.

HP’s action is the second step the Palo Alto, California-based technology giant has made to wind down the plan. In January 2006, HP closed its pension plan to new and younger employees and offered those individuals a beefed-up 401(k) plan in which the company matches 100 percent of employees’ 401(k) salary deferrals up to 6 percent of pay.

Employees whose combined age and service were at least 62 remained in the DB plan and a 401(k) plan in which HP matches 100 percent of employees’ salary deferrals up to the first 3 percent of pay and 50 percent of employees’ pretax contributions on the next 2 percent of pay. Starting January 1, 2008, those individuals will move to the enhanced 401(k) plan.

HP said the changes are “consistent with actions being taken by many of HP’s industry peers and other large corporations.”

Other companies that have deployed a two-step approach to phase out their defined-benefit plans include IBM Corp. of Armonk, New York; NCR Corp. of Dayton, Ohio; and Sears Holding Corp. of Hoffman Estates, Illinois.

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

U.S. employers plan to offer Roth 401(k) savings plans, only a small percentage of employees now in the plans are making contributions, according to a new survey.

Currently, just 22.4 percent of employers have added a Roth feature to their 401(k) plans, the Profit Sharing/401(k) Council of America found in its survey of 429 employers. Such contributions are made on an after-tax basis, but the contributions and investment income are not taxed when distributed so long as certain conditions are met.

Roth 401(k) plans were authorized under a 2001 law that allowed companies to offer them starting January 1, 2006, but also barred new contributions after December 31, 2010. Initially, companies held back on adding the feature until Congress made the plans permanent, which legislators did last year as part of a broader pension funding reform bill.

Now, though, 61 percent of employers that do not offer a Roth feature in their 401(k) plans are either considering or are planning to do so, according to the Chicago-based Profit Sharing/401(k) Council of America.

Among those employers with a Roth feature in their 401(k) plans, just 7.9 percent of eligible employees made Roth contributions in 2006—the first year such contributions were allowed.

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

Related article:

Few Employers Set to Launch Roth 401(k)s

Creative investment education programs that garnered results dominated the 2007 Eddy Awards this month, with many winners seeing increases in their plan enrollment and deferral rates, attendance at workshops and requests for more plan information—all thanks to clever and memorable workplace campaigns. The awards, sponsored by Pensions & Investments, were presented on February 12 at the P&I/IBF Defined Contribution/401(k) Conference in Palm Beach Gardens, Florida.

The awards recognize the best practices among corporate, public, union and not-for-profit employers in delivering creative and effective investment education messages to defined-contribution plan participants. To win, plan sponsors must find a creative way to give employees a thorough education in investing. One important criterion: The campaigns must show strong branding with the plan sponsor, and not be stock materials from the service provider.

A total of 30 awards were given at the 2007 Eddy Awards, more than in any previous year.

In the special projects category, Phelps Dodge Co., Phoenix, won for companies with more than 5,000 employees; Marubeni America Corp., New York, for companies with fewer than 1,000 employees; and the City of Baltimore Deferred Compensation Plan for public plans.

In the initial education campaign category, American Electric Power Inc., Columbus, Ohio, and Brookshire Grocery Co., Tyler, Texas, tied for corporate plans with more than 5,000 employees. Tree of Life Inc., St. Augustine, Florida, won first place for corporate plans with fewer than 5,000 employees.

In the ongoing education category, Hyatt Corp., Chicago, won top honors for corporate plans with more than 5,000 employees; Panalpina Inc., Redwood Shores, California, won first place for corporate plans with 1,000 to 5,000 employees; and Justin Brands Inc., Fort Worth, Texas, was first for plans with fewer than 1,000 employees. Trinity Health, Farmington Hills, Michigan, was first for not-for-profit companies, and New Jersey Transit, Maplewood, took the trophy for public plans.

Phelps Dodge’s special projects campaign used a baseball theme to target the company’s men who were not participating in the $700 million 401(k) plan. They received Cracker Jack and baseball cards, with bullet points about the importance of saving for retirement, during the campaign, which coincided with baseball season. The judges especially liked that the theme carried through the entire campaign and all the education pieces fit together. More important, 20 percent of non-participants requested additional information. JPMorgan Retirement Plan Services Inc., Kansas City, Missouri, is the plan provider.

MGM Mirage, Las Vegas, which took second place in the corporate special projects category for plans with more than 5,000 employees, featured a sunscreen theme. While judges liked the summer beach idea, they were more impressed with the results of the education initiative: Almost 8 percent of the target population enrolled in the $460 million 401(k) plan by the end of the campaign. MFS Retirement Services Inc., Boston, is MGM’s service provider.

The $230 million City of Baltimore Deferred Compensation Plan won first place for public plans in the special projects category. Judges liked how the campaign featured photos and testimonials of employees, all well-known within their union group. The campaign also included mini-toolkit and pen giveaways. One judge said, “It was very inviting and didn’t feel hokey at all. The testimonials were meaningful and thoughtful.”

The $900 million State of Hawaii Deferred Compensation Plan, Honolulu, which won second place in the public plan category for special projects, featured flip-flop key chains and small fans with retirement messages lighting up as the blades spun.

Trustee Carol Raber said Hawaii’s provider, Citistreet, “did a great job helping us put the materials together. We wanted it to have a very Hawaiian feeling, and I think it worked out great. Employees loved the key chains and fans. They were fun and also had good information on them,” she said.

M.A. Mortenson Co. won in the Eddys’ “other media” category for a flash e-mail that featured the company’s CEO as a bobble-head doll. The message was part of an effort to draw more employees to education workshops. The $50 million 401(k) plan saw a 29 percent increase in attendance.

“I wish I got e-mails like that,” said one judge.

“It was really unique that they used their CEO as a character, instead of as a regular talking head,” another said.

Annette Grabow, manager of retirement benefits, said the CEO is revered among employees, and it was a great way to get more employees interested in attending the meetings. Wells Fargo Institutional Trust Services, Minneapolis, is the provider.

For a complete list of the Eddy winners, click here.

 

It appears Home Depot’s new human resources chief, Tim Crow, is going to have to hit the ground running to tackle two of the most pressing issues facing the Atlanta-based building supply retailer: meeting an aggressive recruitment target of 15,000 hires and overcoming gaps in customer service.

 Crow replaces Dennis Donovan, the executive vice president of human resources who tendered his resignation February 1. Crow joined Home Depot in May 2002 as vice president of performance systems. In February 2005, he was promoted to senior vice president.

“It would be difficult to understate the important role that Tim and his HR team will play in getting the company back on track,” says Jeff Sonnenfeld, a professor at the Yale School of Management.

Preparing for the busy spring and summer season will be no small feat. Home Depot, which already employs 355,000 workers and has 2,171 stores worldwide, plans to recruit 15,000 new employees for a variety of part-time and full-time positions in sales, night operations and specialty departments, says company spokesman Ron DeFeo.

Crow was not available for comment.

Meeting recruitment goals will vary drastically for Home Depot, depending on the position being filled, says Susan Hartman, director of retail recruitment consultancy HireQuest. Skilled employees being wooed for corporate jobs may hesitate to join the company in light of the recent departures of Donovan and CEO Robert Nardelli.

The managerial shake-up, however, is unlikely to make a difference when it comes to recruiting rank-and-file employees—either because they are unaware of the corporate brouhaha or because they simply don’t care.

“A cashier will have a much different attitude and level of understanding regarding the departure of Nardelli and Donovan” than someone at the corporate level, Hartman says.

The recruitment goals are attainable, but if Crow wants to give customer service a much-needed shot in the arm, he is going to have to reduce the high ratio of part-time workers, Sonnenfeld says. Only 20 percent of Home Depot’s workforce is made up of full-timers, which has had an adverse impact on customer service, he explains.

“Part-time workers are useful,” Sonnenfeld says. “But they present drawbacks in that they lack deep expertise and there’s high turnover, which are bad for service-oriented industries such as retailers.”

One of Crow’s most critical tasks is reviving the culture of strong customer service that Home Depot had before Nardelli became CEO in late 2000. His centralization policy made the company more efficient and saved it money, but it also eroded employees’ entrepreneurial spirit. Service suffered, Sonnenfeld says.

Besides increasing the number of full-time workers, Home Depot can enhance the quality of customer service by bolstering training and giving workers more power to make decisions. “This can be turning point for the company,” Sonnenfeld says. “Breathing back creativity and a sense of ownership among workers should take center stage.”

Analysts have urged Home Depot to work on shortfalls ranging from messy aisles to lackluster customer service.

Company earnings fell 3.1 percent in the third quarter of 2006 to $1.5 billion. Aggravating the situation, sales in that quarter at stores open at least a year dropped 5.1 percent. The company has already hinted that fourth-quarter results may lag expectations.

—Gina Ruiz