Author: Site Staff

This 401(k) benchmarking study by Deloitte Consulting and Pension & Investments covers participation rates, investment options, automatic enrollment, matching formulas, expenses, loan availability and more.

The attached charts from Watson Wyatt show the percentage of 401(k) assets that are invested in company stock and whether employers require their employees to put matching funds in company stock.

Companies are measuring performance, but they’re not measuring the success or failure of their measurements.

It’s ironic, says Hewitt Associates, which found that 30 percent of companies don’t measure the success of their performance management programs at all. Hewitt’s study included 129 U.S. companies with median revenues of $2.5 billion.

Despite not measuring the success of the programs, 66 percent of companies rely on their performance plans to make pay-increase decisions. Another 47 percent use the plans to make bonus decisions.

Bob Campbell, senior consultant at Hewitt, says that when companies do track the results of their efforts, it’s usually to gauge employee satisfaction, or simply to determine if the paperwork is getting done on time.

Marc Nicolet, CFO and human resources director at the Children’s Cabinet in Reno, Nevada, says that while companies may not be actively measuring the success of their performance plans, it may be happening indirectly.

For one thing, he says, “most private companies directly tie compensation and bonuses to their success,” and the amount of bonuses provided are a good measure of whether the plans are working. On top of that, he says, most performance plans are built around company goals, and if a company is doing well, it’s an indication that the performance-management system is functioning as intended. “I’m a huge believer that the forces of capitalism and survival of the fittest will reward those companies that are doing it right,” he says.

Lastly, Nicolet says, if good employees don’t feel that they’re being rewarded for their efforts, they’ll eventually walk. “Top superstar performers are going to go where top superstar rewards are,” he says.

Nicolet adds that it’s important that a company’s culture bring out employees’ best skills and knowledge, rather than stifling it. For example, he says, “If you’ve got a real control freak at the top, he or she is not going to let people spread their wings and do what they’re good at because (the leader) is not good at delegating.”

An April decision by the agency that regulates Internet-address suffixes–the dot-coms, dot-orgs and other designations at the end of Web site names–could translate into millions in savings for corporate recruiters and change the sourcing landscape as profoundly as the launch of Monster did a decade ago.

The agency approved a request by the Society for Human Resource Management to create a new Internet extension for companies to use to post their jobs. The new extension would allow Internet addresses to end in the suffix “jobs”–Starbucks.jobs, Intel.jobs, Ford.jobs and so on. This would be in addition to the Web site address a company already has–Starbucks.com, Intel.com and Ford.com.

What makes this new naming much more than just a geek curiosity is its potential to reduce–or, some people say, eliminate entirely–the need to pay to post a job listing. For the time being, the fortunes of Monster and its competitors including CareerBuilder and HotJobs are unlikely to be affected. In the long run, the new extension could mean that jobs are posted only to corporate sites, with companies relying on brand advertising and search engines to drive applicant traffic.

Far-fetched? Not really. Sites like SimplyHired.com, WorkZoo.com and Indeed.com are already aggregating millions of listings from hundreds of job boards and making them accessible in a single search. This gives a free Craigslist posting the same visibility as a $300 Monster listing. As the dot-jobs designation comes into wide use, it will be easier for these sites to collect the listings: It’s less work to go to Intel.jobs than it is to comb through Intel’s main Web site trying to find the Intel job listings.

One recruiting expert predicts that the new naming system will change the recruitment landscape, giving job-seekers more control over the search and application process than they have previously had.

“This gives job-seekers their own customized, personalized job board,” says Gerry Crispin of CareerXroads. “It will give them exactly what they want. It could very easily take the (commercial) job boards out of the picture if they don’t figure out how to work with it.”

Mark Mahaney, a financial analyst with American Technology Research who follows the recruitment sector, is skeptical of the short-term impact but says that if job-seekers turn in sizable numbers to the search engines such as WorkZoo.com, it would force change upon the commercial job boards.

SHRM stands to make a good chunk of change off the project, based on fees paid by companies to reserve a dot-jobs extension. SHRM’s application–and the address agency’s endorsement–puts more restrictions on the dot-jobs name than on any of the others generally available, such as dot-com. For instance, a company can post only its own job openings on a dot-jobs Web site. At Monster.jobs, only jobs with Monster Worldwide could be listed, not listings from Monster clients. Additionally, only human resources professionals will be permitted to be issued a dot-jobs address. Requests for Internet addresses are required to have the name of a specific individual making the application.

The rules permit the designation to be issued only to a member of SHRM or to human resources professionals who either: “(i) possess salaried-level human resource management experience; (ii) are certified by the Human Resource Certification Institute; (iii) are supportive of the SHRM Code of Ethical and Professional Standards in Human Resource Management.”

While the Internet address agency–called the Internet Corporation for Assigned Names and Numbers–has final say over the issuance of addresses, SHRM and Employ Media, the company created to administer the granting of the designation, will handle the applications.

According to the schedule submitted by SHRM, new names will be issued starting in the fall. Companies may be able, however, to start reserving the extension as soon as May or June. The schedule is tentative and the exact start date will be announced later.

—John Zappe

Dear Headcounter:



You can make incremental improvements by asking all department heads to create a plan for how they would reduce headcount by 10 percent. In the end, you’ll probably be able to cut 5 percent with this method.

Taking a re-engineering approach gives you a more significant impact. It generates greater results than focusing on one department at a time. Assign an executive–someone not in human resources–to lead the re-engineering effort. The major objective is to eliminate unnecessary work through process redesign, automation and redesigning/reassigning jobs.

This enables you to identify the high-caliber talent you need for higher-level performance. Those who don’t find a fit in the new organization should be provided assistance to find a job outside the organization.

Expect to reduce the amount of administrative and non-value work by 40 to 60 percent, while doubling performance. You most likely won’t need as many people in the end, and will experience cost savings by eliminating waste and achieving outputs that are faster, less costly and more efficient.

To ensure that your efforts generate the desired outcome, consider hiring an experienced consultant with a proven track record to work alongside the executive leading your initiative.

SOURCE: Carl Nielson, principal, The Nielson Group, Dallas, May 5, 2004.

LEARN MORE:87 other articles and tools related to downsizing.

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.

Brookshire grocery co. sent its employees to the movies to help them better plan their retirements. Using the slogan “We’re planning a blockbuster … and you’re the star” to launch its in-house defined-contribution investment program, the company mailed new employees faux movie ads featuring hits such as “Mission: Possible.” Employees who did not opt into the retirement plans were invited to the “Night of the Living Defaulted.” But help was always close at hand with “The Maximator … He’s back … to help you save for your future.”

The creative campaign, prepared with help from MFS Retirement Services, won Texas-based Brookshire first-place honors in the initial education category for corporate plan sponsors at the annual Eddy Awards, sponsored by Pensions & Investments and Workforce Management. The competition recognizes corporate, public and union defined-contribution plan sponsors for the best and most effective investment education programs in several categories.

Successful defined-contribution investment education hinges on branding and the ability to deliver powerful investment education messages in a creative way that ties back to the plan sponsor, rather than the service provider, according to the competition’s judges. Twenty-one Eddy Awards were given to 19 companies at the conclusion of the two publications’ Defined Contribution/401(k) Conference in Miami. Starwood Hotels & Resorts Worldwide Inc. won two first-place trophies. Smithfield Foods Inc. won two third-place awards.

Phillips-Van Heusen Corp. won the category for companies with fewer than 5,000 employees. “The World Series of Retirement” was a special project that celebrated 401(k) Day. The campaign included an invitation/raffle ticket for “Section 401, Row K” and baseball cards featuring Johnny Benchmark, Barry Stocks and Bonds and Sammy So-So Saver. Company officials turned the headquarters’ atrium into a baseball diamond, where concession goodies included Baby Ruth candy bars, Dubble Bubble gum and popcorn.

Tammie Palchanes, corporate manager of retirement plans at Phillips-Van Heusen, says the idea came from service provider Strong Retirement Plan Services, which is now part of Wells Fargo Retirement Plan Services. “When your record keeper goes to the trouble of providing a great idea, it’s up to the plan sponsor to take the idea and run with it,” Palchanes says.

The judges also recognized entries devoted to training trainers instead of educating participants. Starwood took top honors for its use of a deck of oversized cards to help to train district human resources managers at each hotel. The education cards contained answers to questions frequently asked by participants. Plan promotion cards suggested ways to promote the 401(k) plan. A wild card gave managers who came up with promotion ideas a chance to win a Palm Pilot.

“We needed the directors of human resources to understand the plan for us and to champion it for us. And we wanted to make it fun for them,” said Frank Shanny, Starwood’s benefits manager.

For a complete list of Eddy Award winners, go to workforce.com/eddys.

—Phyllis Feinberg

As part of its pension reform proposal, the Bush administration is seeking a ban on so-called “shutdown” pension benefits, and employers should start thinking about alternatives to offer unions during contract negotiations if the measure is passed, consultants and labor attorneys say.

These benefits, which are most common in the steel, tire, automotive and auto parts industries, are promised in employment contracts by companies in the event of a plant or division closure that displaces workers. The pension benefits are invaluable to workers who are too young to retire but too old to start a new job, experts say.

The benefits are a concern to the federal government because they cannot be prefunded under current laws. And by the time shutdown benefits are triggered, the company is often already in financial trouble, so the Pension Benefit Guaranty Corp., which insures private pensions, often winds up paying the pensions. The PBGC already is facing a $23.3 billion deficit, and in an apparent effort to limit further liabilities it has refused to pay out the benefits.

Observers say that a proposal for an all-out ban came as a bit of shock. “It’s surprising because the employees that are going to be affected by this will lose benefits, and typically the administration does not come out with proposals that obviously hurt some employees,” says Jan Jacobson, director of retirement policy at the American Benefits Council.

The shutdown-benefits controversy came to a head in 2002. That’s when the PBGC went up against the United Steelworkers by pre-emptively terminating four pension plans at Republic Technologies International, a Fairlawn, Ohio-based steel maker, says Tom Gigot, a partner at Washington, D.C.-based Groom Law Group who is representing the steelworkers in the case.

The agency projected that paying pensions to the estimated 2,500 workers would have cost it $170 million. The union filed suit against the PBGC and won at trial, but the decision was reversed in an appeals court last year. In March, the Supreme Court declined to hear the case, and the appellate decision stands.

Employers should now start figuring out what else they can offer up to unions if shutdown benefits are banned, pension experts say.

“From a union’s perspective, taking away the shutdown benefit is taking away something of value that will have to be replaced,” Gigot says. “I think their first choice would be an increase in the traditional side of the benefit formula rather than an increase in take-home pay.”

Jacobson, however, believes that employers should consider increasing severance packages for these workers.

Yet another option for employers is to work with Congress on a way to prefund shutdown benefits, says Bill Beyer, an attorney at Washington, D.C.-based Keighton & Ashner. Beyer is part of an American Bar Association task force that is working to help Congress analyze the issues involved with reforming the pension system.

Actuaries and members of Congress could develop a new type of vehicle that provides relief, Beyer says. Congress is concerned, however, that if it allows for prefunding of shutdown benefits, companies will use it to gain tax deductions.

“Maybe actuaries will be able to come up with a way of developing a funding formula that would appear to be not just an opportunity for tax deductions,” Beyer says. “I think it is worth it to be creative to find a way to cover the individuals that would be affected by a ban.”

—Jessica Marquez

Growth is nothing new to Aqua America Inc., one of the nation’s largest US based publicly-traded water utility companies. Throughout the past decade, the company has taken aggressive measures to acquire 120 companies in 13 states. Because of these acquisitions, the company achieved record earnings and high shareholder return.

As pleased as Aqua America was with their financial performance, they realized they needed to make some adjustments in other areas of the company in order to accommodate the expansion. One area was the human resource department. Here’s how Aqua America’s human resource team handled the growth.

As the company began to expand into new territory, HR faced a flood of new employees and applicants—they were tracking close to 7,300 active, terminated, and retired employees and over 17,000 applicants. Another concern for the HR team was communicating with staff located in different office locations, as Aqua America has over 100 locations scattered across the US. The HR team also wanted to reduce their administrative time and paperwork by automating and customizing several features to become more efficient. Additionally, they wanted a system to track affirmative action responsibilities and to generate customized reports for managers and officers.

Choosing the right HRIS proved to be a simple task for Aqua America. For the past 14 years, they had partnered with Spectrum Human Resource Systems who provided Aqua America with their first DOS and desktop-based HRIS. Since Aqua America already had a good relationship with the company, they were confident that Spectrum’s web-based system, iVantage®, would be a perfect fit.

One of Aqua America’s main concerns was managing the 17,000 existing applications and the new applications coming through the door. According to Carrie Panetta, Assistant Manager of Employee Relations of Aqua America, iVantage Connect™, an applicant and employee self-service module, is especially useful for applicant tracking. The module enables her team to easily post job openings to their company website, lets applicants apply online and makes the entire applicant process virtually paperless.

“Legally, we have to track applicant flow,” Panetta said. “With 17,000 applicants to date, we never could have kept up. The system saves my staff an unprecedented amount of time because they no longer have to key in all of those applications. Before iVantage, we had to key in resumes one at a time and then send out individual mailings to each applicant requesting sex and race data. This system has saved us an exceptional amount of time and money!”

Not only does the web-based HRIS assist the HR team in managing applications, it also helps them to easily create complex reports for managers and officers in a matter of seconds.

According to Panetta, HR often pulls important company data including organizational charts for succession and new position planning, employee terminations for stock option planning, and workers’ compensation reports for managers. Additionally, standardized email templates in the base system assist HR in keeping in constant communication with employees and managers at any of the 100 plus office locations.

Additionally, Aqua America wanted to be able to easily tailor the system to fit their needs. One system customization they have lets them track the employees covered by a pension plan, over 75%, because they needed to track vesting rules.

“Employees with 5 years of service are vested in the pension plan,” Panetta said. “So, if an employee works for us from the age of 20 to 26, they are vested in the plan, but are not eligible for another 40 years. We use the same screen to track employees who have participated in the plan and have retired because we need to keep their beneficiary information for long periods of time as well. Figuring out a way to track this process was imperative to Aqua America.”

Another system customization enables Aqua America to track medical benefits for retirees.

“The majority of our employees qualify for continuation of medical benefits when they retire,” Panetta said. “How much the employee pays toward this continuation of coverage is different for almost every retiree.”

Prior to using iVantage, the continuation of medical benefits for retirees created a lot of extra work for the HR staff. A special customized ‘Retiree Medical’ page shows how much the retiree must pay, how much the company pays, the percentage Aqua America pays towards a predetermined cap and from what account to deduct the payment.

One last concern for Aqua America was the system conversion process. During the conversion process, Aqua America interacted with a Spectrum client service representative on a daily basis. This was key to successfully implementing their system and building a positive relationship.

“Our client service representative is both an HR and Spectrum technology expert—she really strives to understand what we are trying to accomplish on a daily basis,” Panetta said. “Spectrum goes above and beyond to make sure we stay satisfied.”

Aqua America continues to expand into new territories, all while providing exceptional customer service and quality drinking water to their clients. The HR team continues to use iVantage on a daily basis. With the use of features like applicant tracking, employee self-service, pension planning, and the ability to generate key reports for executives, the HR department at Aqua America continues to exceed expectations for its 7,300 active, retired, and terminated employees.

***

About iVantage
iVantage is Spectrum’s fully web-native, human resource information system. iVantage provides complete HR functionality in the base system and additional modules for value added capabilities. Using leading technology, the system delivers robust reporting and analytical capabilities. Available for license, ASP, or a subscription model, the system is affordable for organizations of all sizes and budgets.

About Spectrum
Spectrum, founded in 1984, is a leading provider of high functionality web and desktop-based HR and workforce management software. As a full system and service provider, Spectrum delivers the full range of product related services including system planning, implementation, training, system customization, data conversion and system consulting. Spectrum, headquartered in Denver, Colorado, can be reached at 1.800.334.5660 or on the Internet at www.spectrumhr.com.