Author: Site Staff

Companies can draw on new empirical data to underscore the importance of designing health benefit programs that combat absenteeism. The study, “How to Present the Business Case for Healthcare Quality to Employers,” finds that the actual cost of health-related absenteeism could be as much as 35 percent higher than conventional estimates.

In fact, expenses associated with absenteeism can run upward of $74 billion annually for U.S. companies, says Mark Pauly, co-author of the study and professor of health care systems at the University of Pennsylvania’s Wharton School.

Researchers derived this figure by taking into account spillover expenses, such as overtime and overstaffing, that companies incur to compensate for the absence of a worker.

What’s more, the study finds that absenteeism takes a heftier toll on knowledge-based industries. Positions where absenteeism is most costly include mechanical engineers, paralegals and motor vehicle salespersons. Knowledge-based positions require more teamwork and foster interdependence, which explains why the absence of a colleague would have a more severe ripple effect, he explains.

Besides shedding light on the indirect costs associated with absenteeism, the study helps companies to gain a clearer understanding of the return on investment that their health benefits programs render.

Companies that do not apply spillover expenses when estimating the financial impact of absenteeism are most likely underestimating the value and merit of health care programs that reduce absences.

The study’s primary call to action is for companies to create health benefit programs that more aggressively tackle absenteeism. The problem is more detrimental than they might think, Pauly says.

–Gina Ruiz

Tolerance in the workplace, also known as co-worker sensitivity, didn’t fare too well in America last year, according to an annual workplace ridicule survey conducted nationwide.

Nasty, rude comments made about others in the workplace over sex, homosexuality, ethnicity and disability were up in 2005 compared with 2004, a recent telephone survey by Boston-based Novations Group found.

The survey also showed that last year, racial slurs in the workplace nearly equaled those tallied in the company’s 2004 survey. Age-related ridicule of older workers also was reported by nearly one-fourth of those surveyed, primarily by workers under 34.

Most of those targeted for ridicule never hear the slurs themselves, says Novations spokesman Phil Ryan. Rather, they tend to be reported by those overhearing them from co-workers.

Men were more likely to report workplace ridicule about women, especially sexually inappropriate comments–41 percent to 29 percent–and slurs targeting gays and lesbians, for which they led reporting by nearly 2-to-1 versus comments about women.

Reports of anti-homosexual comments were more frequent in the West (45 percent) than in the Northeast (34 percent), the North Central U.S (33 percent) and the South (32 percent).

The survey did not collect data identifying the age and sex of the alleged sources of the derogatory comments or what the actual comments were.

“We’re not sure how valid the research is,” Ryan says. “All we know is we get very similar data every year, so we’re doing something right.”

Mirroring the prior three years, sexually related comments last year were the most frequently reported, by one-third of the employees. Their frequency hit 35 percent last year, up from 31 percent in 2004. Reported gay and lesbian bashing rose to 24 percent, up from 20 percent in 2004 but matching 2002 levels.

—Mark Larson

Brent Schlenker is sold on the power of video games to teach, not just entertain. As a learning consultant at computer chip maker Intel, Schlenker says he created a computer game that allowed people with no factory experience to quickly master a 25-step manufacturing process.

But even he sees big hurdles that make corporations wary of using the games as a major training tool. For example, Intel recently took part in a learning experiment in the virtual world “Second Life,” but Schlenker couldn’t log on at times thanks to an information technology glitch. “It was hard to get into ‘Second Life’ because of our firewall,” he said recently.

Schlenker was speaking at a conference titled the “Serious Games Summit,” part of a broader game developer gathering in San Jose, California, in late March. A major theme of the summit was that games hold great promise for corporate learning, yet the nascent field faces challenges as perilous as any faced by Tomb Raider Lara Croft.

A small fraction of organizations—most famously the U.S. military—have adopted computer games as a major part of their training strategy, says Tom Hunter, who heads game consulting at business advisory firm Qittitut Consulting. “That’s going to change a lot sometime in the next five years,” he predicts. Hunter is designing a game centered on diagnosing virtual patients to be used for doctors’ continuing education.

Advocates of computer games and simulations for training cite benefits such as people’s willingness to practice and improve a skill because they’re having fun. Backers also tout the ability to safely simulate situations that would be dangerous in the real world, as well as the familiarity of younger workers with games.

What’s more, a three-dimensional computer environment can increase retention, says Philip Rosedale, founder of Linden Lab, which created “Second Life.” More a virtual world than a game with clear objectives, “Second Life” allows people to create animated versions of themselves and do such things as own land, sell services and even dance at a nightclub. “If you’re going to have a meeting in ‘Second Life,’ you’re going to remember it better,” Rosedale said at the conference.

But businesses also may remember investments in “e-learning” made a few years ago that didn’t pan out. Officials in corporate learning departments are wary of taking a risk on games, participants at the summit suggested. “The fear factor’s big,” said Brian Gomez, a consultant for video game technology at defense contractor Northrop Grumman.

Then there are perception issues, including the notion that games are not “serious business.” Another myth to combat is that a $100,000 game teaching workplace skills can rival the sophistication of such popular games as “Grand Theft Auto,” a multimillion-
dollar production, says Jay Wagman, co-founder of QuestG, a consultancy working to create games for leadership development. “We’ve got to manage expecta- tions,” he said.

Despite the challenges, there are hope­ful signs for games winning in the corporate market. “LearnLand,” an experiment in corporate learning held in “Second Life,” attracted the active participation of 60 Fortune 500 companies, including Intel. Sponsored last year by the Masie Center think tank, the project included trial projects in new-employee orientation and peer-to-peer learning. Mark Oehlert, who helped manage Learn­Land, says that even participants from traditionally conservative firms were intrigued by the virtual world’s possibilities, such as the ability to fly. “Don’t underestimate the elasticity of the users’ imagination,” says Oehlert, now an associate with consulting firm Booz Allen Hamilton.

Schlenker, meanwhile, may be able to get into “Second Life” after all. After he spoke at the conference, a “Second Life” representative handed him a business card. “Let’s get your IT thing fixed,” she said.

—Ed Frauenheim

Companies may want to stop throwing money at their top executives, according to a recent survey by executive search firm Korn/Ferry International.

The study finds that only 5 percent of global executives say that inadequate or inconsistent compensation is the main reason they left their last job. Rather, they cite lack of challenges or opportunity for career growth (33 percent) as the top reason they left. Twenty percent of respondents pointed to ineffective leadership, while 17 percent said the attractive job market was why they left their last jobs.

“Executives don’t leave jobs for better money; they leave for better opportunities,” says Jack MacPhail, managing director, Americas, for leadership development solutions at Korn/Ferry.

Four in 10 executives say that in order to retain talent, organizations should do more to empower employees to make decisions. Thirty-two percent say companies should focus more on career development, while 16 percent say organizations that do more to create a better work/life balance would better retain executives.

When asked what is most important when reviewing a job opportunity, 40 percent of executives say the company’s management team. Seventeen percent cite culture as the most important factor, while 16 percent say the company’s reputation is key.

Forty-five percent of executives say that large multinational or national companies are the most appealing companies to work for, while 27 percent prefer stable midsize companies and small fast-growth firms.

Forty-five percent say they would consider a change in industry, a change in job function or a change in location when considering a new opportunity.

—Jessica Marquez

When business is booming, it’s usually a good time to attract candidates to lead a company. But that may not be the case when the job in question is top spot at the federal pension insurer.

Pension Benefit Guaranty Corp. executive director Bradley Belt has announced that he will step down at the end of May, after more than two years on the job. His successor will be chosen by Labor Secretary Elaine Chao, with input from the White House.

Chao may not find a long line of applicants at her door. Following huge airline and steel company bankruptcies over the past several years, the PBGC has a $22.8 billion deficit. It also has experienced substantial increases in the value of its claims—from $2.9 billion in 2000 to $9 billion in 2004—and in assets under its management, which have grown from $39 billion to $58 billion during the past year. The federal insurer backs the pension benefits of 44 million American workers and retirees participating in more than 30,000 private-sector defined-benefit plans.

“The difficulty of filling that slot stems from the fact that it’s hard to find someone smart enough to do the job and foolish enough to take it,” says J. Mark Iwry, a nonresident fellow at the Brookings Institution, a Washington think tank. “It’s a very hot seat.”

In addition to running the PBGC, Belt has been the chief advocate for the Bush administration proposal to overhaul federal pension rules. Belt argues that the rules are outdated and have led to huge shortfalls in plan funding. In that role, Belt has weathered criticism from both Capitol Hill and business lobby opponents.

“Brad has done an excellent job of presenting the administration’s case,” says Douglas Elliott, president of the Center on Federal Financial Institutions. “He knows the subjects well and he articulates them well.”

Belt should be around long enough to see the completion of a contentious House-Senate conference committee that is formulating a final pension reform bill.

He hasn’t indicated what he’ll be doing next, but Belt may head to the private sector to earn substantially more than the $152,000 that is the upper limit at the PBGC.

—Mark Schoeff Jr.

Federal employers could be headed for turbulent waters this year. Up to 20 percent of government employees are dissatisfied with their current jobs and may be looking to jump ship, according to a recent survey by Chicago-based CareerBuilder.

The projected turnover rates are not dramatically higher than those of previous years, but ongoing demographic changes in the workforce are making these levels more troubling than usual, explains Michael Erwin, senior career adviser at CareerBuilder. “Managing the changes precipitated by an aging workforce will be one of the defining challenges for federal employers,” he says.

Finding candidates with the appropriate skill sets to replace retiring workers is taking much longer than in past years, resulting in heftier workloads. About 50 percent of survey respondents said that their responsibilities have become unmanageable, up by 15 percent from the previous year.

To make matters more complicated, workloads have increased during a period of stagnant wages. About 25 percent of survey participants said they did not receive a raise, and 86 percent said they did not get a bonus in 2005. The confluence of stagnant compensation, higher workloads and an aging workforce make for a grim outlook.

However, there are important steps that federal employers can take to bolster retention rates and improve morale. For instance, they should look for ways to help employees find a better balance between work and personal life. Some 30 percent of survey respondents said they were dissatisfied with their work/life balance. Federal employers can introduce flexible working schedules or develop employee assistance programs to tackle this issue, Erwin says.

Furthermore, employers should look for ways to enhance career development and training programs, he says. Roughly 37 percent of survey participants said they are dissatisfied with their career advancement opportunities, and some 33 percent said they were unhappy with the training and development programs available to them.

–Gina Ruiz

Two back-to-back hires of activists–one made by a union coalition and the other by a group funded by Wal-Mart–show how management and labor are using PR campaigns and the aura of the civil rights movement to seek public support for their positions.

On February 25, Working Families for Wal-Mart announced that it had hired veteran activist Andrew Young to serve as chairman of the group’s steering committee.

Seven days later, the Change to Win Coalition, a group of seven unions that spun off from the AFL-CIO last year, said it had hired Frank Clemente, former director of Public Citizen’s Congress Watch in Washington, D.C., as its issues campaign director.

Each of these hires is an attempt to raise public awareness of their causes, observers say. Twenty years ago, employers and unions focused more on getting employees of specific companies to hear their pleas, but in today’s political climate, public opinion is much more important, says Lowell Peterson, an attorney at New York-based Meyer, Suozzi, English & Klein, which represents unions.

Gaining public approval is critical for the labor movement, which has been suffering from declining membership, he says.

In his new role, Young, who began his career as an aide to Martin Luther King Jr. and was later elected mayor of Atlanta, says he will help emphasize how the retailer helps poverty-stricken regions. Last week, Wal-Mart announced that it plans to build 50 stores in struggling communities over the next two years as part of a goal to create 15,000 to 25, 000 jobs.

“I have worked with government and I have worked with labor unions to address the poverty problem, but you need an entrepreneurial spirit to generate wealth,” Young says. “I’m not saying that everything at Wal-Mart is perfect, but they are making the model work.”

Working Families for Wal-Mart, which is funded by Wal-Mart, is paying Young through a contract with his consulting company, Goodworks International. Working Families for Wal-Mart would not disclose how much Young’s company is being paid.

Clemente served as senior policy adviser in the U.S. House Government Reform Committee and was issues director for Jesse Jackson’s 1988 presidential campaign. He says he is helping to define and communicate the Change to Win Coalition’s goals. “People need to see unions as representing the best interest of the people,” he says.

Both Young and Clemente have the gravitas to help their respective groups, says Robert Bruno, associate professor of labor and industrial relations at the University of Illinois in Chicago.

“They are people who will garner people’s attention,” Bruno says. “But more importantly, they can rally the support of the communities they are trying to target.”

For Wal-Mart, that community is largely composed of minorities, who are an increasingly important constituency as Wal-Mart expands into urban areas, says David Gregory, a labor law professor at St. John’s University in New York.

But whether these two men are just figureheads or will actually accomplish something remains to be seen, says Ken Goldstein, an economist at the Conference Board.

“I’m skeptical that they can get beyond all of the inertia right now,” he says.

—Jessica Marquez

A U.S. guest worker program is vulnerable to abuses, says a recent federal report, and if Congress agrees, reforms could affect tech employers in particular.

The controversial L-1 visa program, which allows companies to import overseas employees, could potentially be misused in a number of ways, the Department of Homeland Security’s Office of the Inspector General says in a report released this year.

Among its findings, the report spots possible trouble in both varieties of the intracompany transfer visa. L-1A visas are reserved for managers or executives. According to the report, federal officials “often find it difficult to be confident that a firm truly intends using an imported worker in such a capacity.” L-1B visas are for employees who possess “specialized knowledge.” According to the report, government officials believe they have little choice but to approve almost all L-1B petitions because the term “specialized knowledge” is so broadly defined.

Some vulnerabilities of the program can only be reduced through “legislative action to redefine the category,” the report says. It suggests greater clarity is needed for both the L-1A and L-1B categories.

More than 40,000 L-1 petitions have been approved each of the past four years, according to the study. L-1 visas have come under fire in recent years from critics who claim the program has been used to undermine U.S. information technology workers and make it easier to send work overseas. L-1 defenders say guest worker visas help slow offshoring and give U.S. employers vital access to foreign talent.

The new study states, “Foreign IT workers may indeed have affected employment opportunities for American IT workers, but the L-1B visa would appear to be only a very small element of the problem.”

Technology companies may have the most at stake, should Congress decide to tinker with the visa program. The report finds that from 1999 to 2004, nine of the 10 firms that petitioned for the most L-1 workers were computer and IT-related outsourcing service firms that specialize in labor from India, including IBM Global Services, Hewlett-Packard and Wipro Technologies.

—Ed Frauenheim

A long road remains ahead before Congress reaches an agreement on immigration reform, but it’s almost certain that if final legislation is approved, it will require employers to verify the identity and immigration status of each employee. If the bill goes beyond enforcement, companies may benefit from higher ceilings on employment-based visas and green cards.

Tension between these two dimensions permeates the debate. Conservative Republicans, especially in the House, zero in on border protection. Moderates in the GOP and most Democrats favor augmenting enforcement with guest worker programs designed to help the country’s approximately 11 million undocumented workers become citizens—a move conservatives pejoratively label “amnesty.”

The House approved a bill in December that dealt exclusively with cracking down on illegal immigration, in part by making illegal status a felony and sanctioning a 700-mile fence along the U.S.-Mexico border. Senate efforts to produce a bill failed during the first week of April, clouding the prospects for congressional approval of immigration legislation this year.

Sen. Mel Martinez, R-Florida, asserts that a guest worker program is needed to help his state’s agricultural, construction and hospitality industries fill open positions. “A border-security-only bill would leave their workforce needs unmet,” he says.

Bills in both the House and Senate would require companies to verify the identity of each of their employees and would impose hefty fines and criminal penalties for hiring illegal immigrants. Included in the Senate Judiciary Committee bill are provisions for 10,000 new work site enforcement agents (2,000 each year for the next five years) and 5,000 new fraud detection agents (1,000 each year for the next five years).

Such provisions indicate that the days of reviewing a résumé, interviewing and hiring without investigating residency are nearing an end.

“The question is, when does the verification take place—during or after a hire?” says Terrence DeFranco, CEO of Edentify, a provider of fraud detection technology. Further, “It’s a very, very expensive proposition,” he says.

Building an electronic employment verification system to screen 54 million new hires annually as well as the rest of the 146 million U.S. workforce would cost $11.7 billion, according to the Government Accountability Office. Businesses would pick up most of that bill. And the larger the workforce, the more a company will have to invest in the process. The cost per employee may range from $10 to $50, according to Bonnie Gibson, managing director of operations and cross-border employment law at Littler Global.

Immigration reform may make another proposition easier—finding enough skilled workers for high-tech positions. The Senate was expected to pass a bill that would increase the annual cap on H-1B visas for high-tech workers to 115,000 from 65,000.

It also would exempt workers with advanced degrees in science and math from green card caps and make it easier for foreign students with high-tech majors to stay in the country. It also would more than double the cap on employment-based green cards, while exempting spouses and children from counting against the limit.

With H-1B slots filling up, companies are pleading for more visas. When an engineering firm recruits on a college campus, usually at least half its interviews are with foreign-national students who need work visas to stay in the country, says Rodney Malpert, director of immigration services for Littler Global.

But increasing employment visa caps may fall by the wayside during what will likely be a contentious House-Senate conference in the middle of a volatile election year.

“This is a crucial time for companies to get involved in the debate,” says Gregory Wald, an attorney with Squire, Sanders & Dempsey. “On many levels, companies should be pushing for comprehensive immigration reform as opposed to enforcement only.”

—Mark Schoeff Jr.

Time period	Participation	Plan benefit formula	Retirement benefits
Until April 1993	All employees	One-third of benefits accrue using a traditional defined-benefit plan formula, and two-thirds of benefits accrue using a variable-benefit formula in which retirement benefits can vary and participants bear investment risk.	Full retirement benefits at age 62.
April 1993-January 2005	Employees hired before April 1993 remain in the original plan. New hires are enrolled in a defined-contribution plan.	Original plan is unchanged. Eight percent of pay is contributed to a defined-contribution plan on employees’ behalf.	Full retirement benefits at age 62 for employees in the original plan. Retirement benefits available as governed by federal regulations and tax law.
Current plan	Employees hired after April 1993 have a choice between participating solely in the defined-contribution plan or participating in a new plan that provides a mix of defined-contribution and defined-benefit plan participation.	Original plan remains unchanged for employees hired before April 1993. New plan allows employees a choice between: –Continuing to receive a company contribution to the defined-contribution plan equal to 8 percent of salary or –Receiving a company contribution to the defined-contribution plan equal to 4 percent of salary and a benefit accrual in the defined-benefit pension plan designed to equal 4 percent of employees’ pay*. The same ratio of fixed and variable benefits used in the original pension plan applies to the defined-benefit pension plan.	Full retirement benefits at age 62 for employees in the original plan. Employees participating solely in the defined-contribution plan can take retirement benefits at any time subject to federal regulations and tax law. Employees hired after April 1993 and participating in the defined-benefit pension plan can get full retirement benefits from that plan at age 65.

*Because a portion of the defined-benefit pension plan is accrued using a variable-benefit formula in which benefits vary based on investment performance and participants bear investment risk, the 4 percent figure is calculated using an assumption of “acceptable investment performance,” according to company representatives.