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Posted on October 1, 2009June 27, 2018

Preparing for a Hiring Frenzy—Protecting Your IT Talent

What can your company do to protect and support valued IT employees before recruiters come courting? Experts offer a mix of strategies:


Salary does indeed matter: Companies with IT talent—particularly those whose employees have health care expertise—should watch hiring trends closely in case they need to thaw any recession-related wage freezes, says John Stevenson, a Dallas-based information technology executive consultant. “Having a frozen wage base could harm them quickly,” he says.


Beyond pay: Re-examine your fringe benefits. While pay in the health care field may not necessarily be as high as in other industries, those jobs may offer better health insurance and longer-term career stability.


Be proactive: If you’ve laid off talented IT employees, start reconnecting with them to discuss upcoming opportunities, says Walt Zywiak, a principal researcher in Computer Sciences Corp.’s Healthcare Group. Health care leaders also should work hard to retain any employees with systems implementation skills, even if it’s on a consulting basis, he says.


Keep the work challenging: Bored employees may be enticed away by an emerging IT field, says Marty Witrak, who chairs the workforce subgroup of the National Rural HIT Coalition. “I would make the jobs in my own industry as exciting as possible, because I think they are going to be very exciting in health care.”

Posted on October 1, 2009June 27, 2018

A U.S. Training Upgrade

With partisan divides widening on health care reform and energy, most of the focus in Washington currently is on legislative battles.


But the Obama administration, Congress and the private sector actually do agree on something: U.S. workers need more education and training to fill jobs that increasingly demand higher-level skills. The House recently approved a bill that included funding for President Barack Obama’s plan to bolster community colleges, the American Graduation Initiative.


The $12 billion, 10-year program is designed to help the institutions improve their facilities and expand online education. The House measure would allocate $10 billion.


Obama asserted that an additional 5 million people would earn degrees and certificates from community colleges, a down payment on his effort to ensure that by 2020 the U.S. has the highest proportion of college graduates in the world. In a July 13 report, the White House Council of Economic Advisers projected that by 2016, occupations requiring an associate’s degree or advanced vocational training will grow twice as fast as jobs with fewer qualifications. Health care, education, transportation and construction will be the areas in highest demand.


If 5 million more people join the labor market with associate’s degrees, it could help transform notions of job training, according to Louis Soares, director of the economic mobility program at the Center for American Progress, a Washington think tank.


“That’s a material shift in how we view the workforce credential,” Soares says. The degree also falls in the “sweet spot” of one to two years of postsecondary education, which many employers require for hard-to-fill jobs.



Neither Congress nor employers have a good grasp of what the current system offers. “We understand very little of what we’re buying with [Workforce Investment Act] dollars.”
—Louis Soares,
director, economic mobility program, Center for American Progress

A recent Conference Board report, “The Ill-Prepared U.S. Workforce,” shows that nearly half of 217 employers surveyed provide remedial training to shore up employees’ writing, math and problem-solving deficiencies. The report was co-sponsored by the Society for Human Resource Management, the American Society for Training & Development and Corporate Voices for Working Families.


Although there’s not yet a Senate bill that includes Obama’s community college plan, the idea may provide fresh thinking about the Workforce Investment Act, according to Soares.


For the last six years, Congress has failed to reauthorize the measure, which governs the federal training system. Programs continue to function, but they have not been reformed since the bill was enacted in 1998.


A variety of political problems have created the bottleneck—from concerns about faith-based organizations providing services to worries about consolidating funding streams and protecting union jobs at federal employment offices. Democratic leaders on the House and Senate labor committees voice optimism that the act will be reformed by the end of 2010.


In advance of the Workforce Investment Act’s reauthorization, the Department of Labor is planning improvements to federal “one-stop” employment offices. The agency is seeking to deliver more services online, emphasize “green jobs,” reach underserved minority populations and create career pathways rather than just provide one-off skills training. “They are steps along the path to a reformed WIA that hopefully Congress will pass in the next year,” says Deputy Labor Secretary Seth Harris.


One of the biggest problems with the current federal workforce system is that neither Congress nor employers have a good grasp of what it offers, according to Soares.


“Right now, we understand very little of what we’re buying with WIA [tax] dollars,” Soares said. Nearly every witness who has testified at Workforce Investment Act reauthorization hearings has stressed the importance of collaboration among government, educational institutions and employers in identifying skills needed in regional economies.


Workforce Investment Boards include seats for business representatives. But many corporations don’t participate. CVS/Caremark is an exception. The drugstore chain uses the federal system to fill jobs in its pharmacy and photo-processing departments, as well as other store positions. The company also has located its own training centers at one-stop facilities.


“It’s our national employment office,” says Steve Wing, CVS director of workforce initiatives. “We want to help get more companies involved.”


But reforming the Workforce Investment Act—or bolstering community colleges—doesn’t go far enough in the view of some experts.


Grant Aldonas, former undersecretary of commerce for international trade, is calling for a summit of business, labor and education experts to chart a national human capital strategy that would overhaul the nation’s approach to education and training. Aldonas is the author of a new book, Globalization and the American Worker: Negotiating a New Social Contract.


“If we’re going to succeed as a society, this is the investment we have to make,” he says.


Workforce Management, September 14, 2009, p. 30-33 — Subscribe Now!

Posted on October 1, 2009June 27, 2018

How Business Can Improve Workforce Readiness

A recent Conference Board report, “The Ill-Prepared U.S. Workforce,” shows that nearly half of the 217 employers surveyed provide remedial training to shore up employees’ writing, math and problem-solving deficiencies. The report was co-sponsored by the Society for Human Resource Management, the American Society for Training & Development and Corporate Voices for Working Families.


In addition to defining the problem, the report also offers some solutions, summarized here:


• Be clear about what workforce readiness requires. A combination of basic and applied skills is best.

• Track the cost and quality of training programs, distinguishing between career advancement, job-specific training and workforce readiness training.

• Offer direct training or funding with corporate philanthropic dollars to encourage workforce readiness curricula in K-12, technical schools and colleges.

• Coordinate HR, community relations, corporate communications and corporate philanthropy departments. Establish strategic partnerships with schools and colleges to improve readiness skills.

• Make full use of publicly funded sources for workforce training, encouraging communities and employees to seek out support too.

• Use the organization’s corporate voice to focus public policy discussion on the need to link education with workforce readiness skills.


Workforce Management, September 14, 2009, p. 33 — Subscribe Now!

Posted on October 1, 2009June 27, 2018

Staffing Up the Sales Team

Whom should you hire to sell your staffing company’s services? Is it best to find people familiar with the staffing industry and teach them about the niche you serve? Or, if your customers are law firms, would it be better to seek out people who have worked for law firms and help them learn the ins and outs of staffing?


It depends—on your firm, your niche and the individual candidate.


“There is really no single model for a successful sales force,” says Mike Neidle, president of Optimal Management, a management consulting firm for staffing companies.


There are, however, pros and cons to each background. For example, many people would view someone who has sold staffing services to the same industry that their firm focuses on as the perfect candidate.


“I want to hire somebody who knows how to sell staffing,” says Frank Troppe, vice president of Providus Legal Staffing in Houston. “If you’re selling to construction sites, you’ve got to be familiar with the construction business. You have to understand the habitat of the customer.”


It may be difficult to find candidates who meet this exacting standard. And even if you do, that candidate with the perfect background may turn out to have drawbacks. Experts caution that because each staffing firm has its own unique culture, it’s critical to make sure the person’s work style will mesh well with your system.


“It’s very difficult to teach an old dog new tricks, to change them to do business your way,” says Lynne Mesmer, CEO of Creative Management Consultants, which consults to the staffing industry. “You need to make sure their old firm did business like you.”


For this reason, Neidle says, some companies actually prefer to hire people without extensive experience so they can train them to do sales their way.


“They don’t have things that they have to unlearn,” he says.


For these same reasons—or out of necessity—many staffing firms look beyond candidates who have done a similar job for a different company. Many suggest finding candidates who are experienced—and successful—at sales from another industry.


“The sales background is the foundation,” says David Pearson, vice president of sales for CLP Resources, a construction staffing firm.


Still, not all sales backgrounds are created equal. Brian Mangines, president and general counsel of Auslin Legal Staffing in Boca Raton, Florida, says he looks for candidates who have been through a sales training program. “When someone comes in to sell me something, I usually can tell if they’re a well-trained person or not,” he says.


Troppe says he focuses on business-to-business sales. And selling to a business is a bit different from selling to consumers.


Previous sales experience “is a possibility,” though not necessarily a sure sign that the candidate will do well at staffing sales, says Scott Wintrip, founder and president of StaffingU, which provides training, coaching and consulting for staffing and recruiting firms.


“Not all sales experience is transferable,” he says. “The staffing and recruiting industry is the hardest form of selling on the planet. It sells the only product or service on the market that can say no. That makes it unlike and more complicated than any other form of selling.”


All in the family
Another approach is to look for someone familiar with the industry, someone who knows what the customer wants and can speak the customer’s language. This can work, but it’s critical to remember that this is a sales job, and the person needs to somehow demonstrate an aptitude for sales.


Troppe suggests talking to your customers and asking whom they buy from—whether the person is selling staffing or other products. Ask, “Who calls on you? Who made a good presentation?” Then approach those individuals and recruit them.


For example, a staffing firm that sells to law firms might talk to attorneys and administrators at the firms for recommendations. In addition to buying from staffing firms, they may be buying the services of firms that do electronic discovery.


But not everyone who sells to law firms would fall into this category. Some may make their sales pitch to the IT director or the facilities manager.


“My buyers in a law firm are not buying a plant-watering service,” Troppe says.


Mangines, the immediate past president of the Florida Staffing Association, says he focuses on people with an aptitude for sales, but familiarity with the industry is a plus.


“We took a woman out of a paralegal program who was a bartender,” he says.


She was familiar with the legal field, but her bartending experience showed that she had personality traits that would serve her well in sales. “She did very well,” Mangines says.


On the other hand, he says, “a lot of paralegals are more paper-driven.”


Not everyone who enjoys the detailed work of preparing legal cases would be successful in sales.


In technical fields such as IT and medicine, it’s very helpful for the people selling staffing services to understand those services.


“It would certainly be an asset if you could speak the language,” Neidle says.


However, technical knowledge and sales skills don’t always go together, he says. “Someone could be a fantastic IT programmer, but that’s usually not a very good profile for being a sales rep.”


Sales requires more than a simple understanding of the industry. In fact, Troppe says hiring people from the industry you serve may be more successful on the placement side than for sales. He has seen people assume—incorrectly—that since they have been customers of staffing firms, they understand how to sell staffing.


“Just because someone has been a patient doesn’t mean they’d be a good doctor,” Troppe says.


Focus on character
Many staffing experts recommend focusing less on the precise job experience a candidate brings and more on certain personality traits that indicate they will be successful at sales. Wintrip says his research indicates turnover is lower among employees who are hired for their fit with the company and fully trained than for those who are hired based on previous staffing industry experience.


Others have also found advantages to that approach.


“I would rather have a competent, capable salesperson who we can teach the fundamentals of IT to than a programmer who cannot relate to people,” Neidle says. “You can’t learn personality—that’s what it comes down to. But you can learn the fundamentals of the jargon relatively easy in most situations.”


Pearson says his company had tried several strategies for hiring.


“At one point at our company, we hired people who had construction backgrounds and taught them the staffing side,” Pearson says.


Then they switched to looking for people who were familiar with staffing and could be taught about the construction industry. Now, he says, he looks for people with “very specific characteristics around sales. We’ll teach them both the construction and the staffing.”


Pearson and others offer this list of characteristics to look for in a candidate:


• Great people skills. “They can meet a potential customer and find a personal connection in record time,” says Pearson, who is co-author with Troppe of Cross-Sell/Up-Sell. “They do it without distracting from their goal on the sales call.” Making conversation and making a sale are not the same thing—and it’s not always easy to tell in an interview whether someone who is personable will also be able to sell. Mesmer says it’s too easy for interviewers to “fall in love” with a candidate who is friendly—but who may not be able to close the deal with customers.


• Lots of connections. Pearson looks for people who are “highly social” and good at keeping in touch with others, the people whose cell phone memory is filled with contact names and numbers. The connections themselves may come in handy, and it’s also a sign that they will be able to keep in touch with potential and former customers.


• Organizational skills. The best candidates are “incredible planners,” Pearson says, mapping out several days in advance whom they will call on. And they’re “absolutely meticulous with follow-ups.”


• Confidence. It takes a certain fearlessness to strike up a productive conversation with a stranger. Pearson says of his top candidates, “You could put them in front of the president of the United States and they would probably find out that they both fish in the same spot every summer.” These candidates are able to talk to anyone—and they’re not afraid to press them for details. “They don’t accept vague responses from customers—they always drill down to make sure they clearly understand the needs,” Pearson says.


• Quick thinking. An ability to think on one’s feet is essential for any salesperson. Customers are more likely to trust the salesperson who can answer questions—correctly—during the sales call. This is part of what Neidle calls “native sales ability.”


• Competitiveness. “You want to make sure that somebody is an achiever, that they’re competitive, that they’ve got that inner drive to go out there,” Mesmer says. Some people look for evidence of competitiveness in other areas of a candidate’s life, such as athletics. But others say success in sports may not translate to success in sales. Mangines, for example, says he has found that some highly successful athletes wanted to compete only if they were sure they could win, making them less likely to take the risks necessary to make sales. Troppe says he prefers candidates who have been successful in individual sports to those involved with teams. “As much as we’re all part of a team in staffing, good salespeople in staffing also have to be strong individual performers,” he says. Troppe has seen people whose experience with competition comes from team sports struggle to “get things going on their own” when things aren’t going well for the team.


• Ethics and integrity. This is a very difficult quality to instill in someone who doesn’t have it. “Communications skills can be enhanced,” Wintrip says. “The industry can be learned. You can learn how to talk IT, but you can’t teach somebody to be somebody they’re not.”


Discerning the right traits
It’s relatively simple to tell if a candidate has experience in sales, or has worked in the industry you’re targeting. But how do you know if the person is competitive, well connected or confident?


Mesmer suggests conducting different interviews at different times of day (not necessarily with the same person each time).


“You want to see them in the morning versus the afternoon,” she says. Watching how they react in a social setting, such as at a dinner, is also a good idea.


Experts also recommend using behavioral interviewing questions, since past behavior is a good predictor of future performance. Pearson asks candidates how they manage their time on a typical day to see how well they plan and what their priorities are.


He also asks them, “Tell me about a time when you were in front of a customer, and they didn’t want to talk to a salesperson. Tell me what you did, and how you broke the ice with them.”


In the end, you may find it helpful to have salespeople with a variety of backgrounds on your team. In fact, Troppe says, it’s worth considering, when you start the hiring process, whether you need a sales representative at all. For example, someone who is great working the phones could be hired to set up meetings for the sales reps, saving them time.


Still, even as you consider these possible creative solutions, or candidates’ varied backgrounds and character traits, it’s important not to forget your goal: to sell staffing services.


“Some variety can be helpful, but customers want to work with people who know what they’re doing,” Troppe says. “They’re coming to us with a staffing need because they think we’re experts in the staffing business.”

Posted on September 30, 2009June 27, 2018

Sears Settles Discrimination Lawsuit for $6.2 Million

Sears Roebuck & Co. has agreed to pay $6.2 million to settle a federal lawsuit that claimed the retailer violated the Americans with Disabilities Act by firing disabled employees instead of accommodating them on the job.


The settlement, approved Tuesday, September 29, by a federal judge, is the largest obtained by the Equal Employment Opportunity Commission for a single suit, the agency said. Sears does not admit any guilt as part of the settlement.


“This will provide relief to a lot of people,” said John Hendrickson, a regional attorney for the EEOC. “People are going to get some monetary compensation for the discrimination they suffered.”


Sears Holdings Corp., the parent of Sears Roebuck, said in a statement that it chose to settle the suit “because the factually intense nature of the case would take quite some time and considerable expense” to litigate.


“Despite the settlement, Sears continues to believe that it reasonably accommodates its associates on leave due to work-related illnesses or injuries under the Americans with Disabilities Act,” the company said in the statement. “We have always proceeded and will continue to proceed in good faith when considering and making reasonable accommodations for our associates.”


The EEOC suit, which sought class-action status, was filed in November 2004 in federal court on behalf of John Bava of Barrington, Illinois, and other employees. Bava took workers’ compensation leave after being injured on the job, but he says he was fired at the end of his one-year leave and his attempts to return to work were never accommodated.


Bava said he learned he had lost his job “for medical reasons” when he called Sears’ corporate offices to determine why his employee discount card was rejected during a store purchase.


The EEOC claimed in its suit that Sears’ workers’ comp leave policy was inflexible and violated the ADA by failing to work with disabled employees.


The settlement also requires Sears to amend its workers’ comp leave policy and train its employees in ADA compliance.


“I’m very happy with it,” Bava said of the settlement.


A February hearing has been scheduled to determine how the $6.2 million will be distributed. 


Filed by Lorene Yue of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on September 30, 2009June 27, 2018

Lawsuits Target Testing for Legal Drugs

An automotive parts distributor is the target of lawsuits over its drug-testing policy, including one filed by the U.S. Equal Employment Opportunity Commission alleging that workers’ rights were violated when they were tested for legally prescribed drugs.


The EEOC filed a complaint last month in U.S. District Court for the Middle District of Tennessee against Rochester Hills, Michigan-based Dura Automotive Systems, which tested all of its production employees for certain legally prescribed drugs in addition to illegal, controlled substances in 2007.


The EEOC contends that Dura violated “various provisions” of the Americans with Disabilities Act by testing for legally prescribed drugs without having just cause. According to the complaint on behalf of employees of Dura’s Lawrenceburg, Tennessee, plant, the employer “tested without reasonable suspicion that such medications were affecting the employees in performance of their jobs.”


Further, the lawsuit states that Dura practiced “unlawful” employment practices, including suspending employees in excess of 30 days if they tested positive for certain legally prescribed medications. Dura also required that employees disclose medical conditions for which they had to take the drugs and required workers to forgo taking their medications as a condition of returning to work, according to the suit.


If workers failed at their job duties without the benefit of their prescribed medications, they were fired, the suit alleges.


The EEOC is seeking to end Dura Automotive’s drug-testing policy, which allows for the testing of legally prescribed drugs, and to collect back pay and compensatory damages as well as punitive damages.


The EEOC’s lawsuit is in addition to a class-action lawsuit alleging discrimination by Dura Automotive that was filed by individuals who claimed they were suspended or lost their jobs as a result of the company’s drug testing policy.


Robert Boston of Nashville’s Waller Lansden Dortch & Davis, who is representing Dura, did not return a call seeking comment.


Leslie E. Silverman, a Washington-based partner for Proskauer Rose’s labor and employment department practice and former vice chair of the EEOC, says Dura allegedly has violated multiple EEOC guidelines and cannot see how, if the allegations are proved, the court would rule against the EEOC. Silverman is not involved in the case.


Silverman says a drug test is lawful if it screens for illegal drugs, but said such a test for legally prescribed drugs is regarded as a medical exam under ADA guidelines. She says there are specific requirements that an employer must meet to conduct a medical exam; specifically, it must be job-related and consistent with “business necessity.”


“What makes this case unusual is the employer is looking for both illegal and legally prescribed drugs,” Silverman says. “Under EEOC guidelines, employers are allowed to test, but [the guidelines] exclude the use of prescription medications.”


Silverman also says that, based on the EEOC’s complaint, Dura screened all employees and didn’t limit it to those who affect public safety—a person driving a forklift, for example.


Todd Bromberg, Washington-based attorney for Wiley Rein’s employment practice, agrees. He says the alleged testing by Dura for legally prescribed drugs is uncommon and “improper.” While some employers may conduct such a drug screening if it is allowed by state law, he noted the practice is not common. Tennessee does not have such a law.


“The question is: Did the employer have good reason to test for legally prescribed drugs?” Bromberg says. “Obviously, illegal drugs and alcohol pose a threat in the workplace, and it’s possible that some people can abuse legal drugs if they take too much or the combination of drugs causes [a problem]. However, it’s not an absolute that legal drugs pose a threat in the workplace.”


Both attorneys agree that most employers would have a hard time proving that testing all employees at a plant for legal prescription drugs was necessary.


“The ADA allows employers to test employees for controlled substances, but testing for legally prescribed medications and forcing employees to disclose their medical reasons for taking them clearly exceeds what the ADA allows an employer to do,” Katharine W. Kores, director of the EEOC in the Memphis, Tennessee, district office, said in a statement.


“The situation at Dura Automotive was aggravated by the company’s humiliating those who tested positive by conducting its tests in a manner that immediately made their identities known to its entire workforce,” she said.

Posted on September 24, 2009June 27, 2018

Is It Important for 401(k) Fees to Be Equitable

Who should pay, and how? This is a debate Americans are having on many fronts—from health care to taxes. It is also a question that more and more 401(k) plan sponsors are asking about plan fees.


There are numerous ways that 401(k) fees can be paid: Plan sponsors can pay them; participants can; or fees can be shared between the two.


When participants pay for plan administration expenses, it is most commonly done through revenue sharing and other fund allocations. Under revenue-sharing arrangements, a portion of the expense ratio is allotted to the plan’s record keeper in order to offset administrative expenses. Not all revenue-sharing arrangements are created equal, though. And while some funds may offer revenue sharing, others may not. Indeed, according to a recent Callan Associates survey, nearly two-thirds of plan sponsors with revenue-sharing funds in their plan say that not all of the funds offered revenue sharing. Nearly 30 percent say that revenue sharing was offered by half of the funds or less.


Why does this matter? Take the case of a participant in hypothetical 401(k) Plan A. The administrative fees for Plan A are paid primarily through revenue-sharing agreements with the plan’s mutual funds. For example, Plan A’s International Equity Fund generates 35 basis points of revenue sharing, while the Stable Value Fund in Plan A generates 15 basis points. If a participant were to invest $50,000 in the International Equity Fund, he or she would contribute $175 annually to pay plan administrative expenses. However, if that same participant elected to invest in the Stable Value Fund, he or she would only contribute $75 annually to offset administrative expenses.


Like many plans, Plan A also could have funds with no revenue sharing at all. In this case, the participant could potentially invest in the 401(k) plan without contributing anything to plan expenses (although, of course, he or she would still pay the investment expenses of the fund). In short, because of variability in revenue-sharing arrangements across funds within a single plan structure, the payment of plan administration fees in Plan A isn’t likely to be equitable among participants. Depending on investment choices, in fact, some participants are undoubtedly subsidizing others within the plan.


Increased fee disclosure to plan participants that may result from pending regulatory and legislative initiatives has the potential to bring the issue of fair fee payment to the forefront. Uneven administrative fees can leave plan sponsors open to uncomfortable questions by participants, or may even bias participants against funds that carry the lion’s share of the administrative burden.


However, creating an investment menu with equitable administrative fees can be challenging. As we just saw, revenue-sharing arrangements—which are negotiated between the record keeper and the investment managers—are usually not consistent, and plan sponsors may have no control over share classes that are available to them.


For example, it may be that the international equity mutual fund in the example above has only one share class—the one that pays 35 basis points. That means that if the plan sponsor wishes to reduce or eliminate the fund’s revenue sharing in order to align it with that of the plan’s other funds, the plan sponsor’s only option is to replace the fund with a different international equity fund.


However, replacing a fund simply because of higher-than-average revenue sharing is hardly sensible if the fund’s overall expense ratio is reasonable relative to other funds in its category—and/or if the fund is meeting its performance objective. The various 401(k) fee disclosure bills that are making their way through Congress acknowledge that performance, not just fees, is important when it comes to 401(k) investments.


Another approach to reducing or eliminating revenue sharing is to replace funds with collective trusts or separate accounts. Indeed, fully unbundling the plan and eliminating all revenue sharing through the use of institutionally priced (non-revenue-sharing) mutual funds, collective trusts and separate accounts effectively eliminates the problem of uneven fee payment altogether. Administrative fees in the unbundled situation are then paid through a dollar-based per participant fee (e.g., $100 annually per participant); a percentage-based add-on administrative fee (e.g., a 10 basis point fee is assessed against every fund in the plan); or some combination of both.


The rationale for the dollar-based fee is that 401(k) administrative costs are largely fixed costs, so all participants should pay the same amount, regardless of account size. The rationale for the basis-point fee is that it would be unreasonably burdensome for an individual with a $1,000 account balance to pay the same $100 annual fee as someone with a $100,000 account balance.


According to Callan’s survey, 21 percent of plans are in a fully unbundled structure. Plan sponsors that unbundle their plans often find other benefits. Beyond making the plan’s administrative fee payment more equitable, unbundling can reduce overall plan cost. It can allow the plan sponsor to incorporate a broader array of institutional investment managers (including those within the defined-benefit plan). In general, unbundling the 401(k) plan can result in much greater fee and investment flexibility.


Of course, just as not all mutual funds are available in non-revenue-sharing share classes, not all have collective trust or separate account versions available. Also, the plan might be too small to qualify for the collective trust or separate account version of the fund. Even if the plan did have the economies of scale necessary, the plan sponsor might find the effort required to coordinate among the investment managers, record keeper and custodian daunting. In addition, the plan sponsor will need to be aware of potential additional costs associated with unbundling that are not factors in bundled solutions (such as separate account setup charges or fees for custom fund fact sheets).


If creating level administrative fees through the implementation of a fully unbundled approach is not possible, plan sponsors can still consider creating a more even playing field by selectively reducing or eliminating revenue sharing, and introducing a small per participant fee to offset administrative expenses. At a minimum, plan sponsors may wish to evaluate their comfort level with how revenue-sharing levels vary by fund within the plan. They may also wish to look into the possibility of greater participant disclosure around this topic.


Of course, communicating anything about fees and revenue sharing to plan participants can require a great deal of finesse—the last thing the plan sponsor wants to do is create confusion about or distrust of the plan. For that reason, the simpler and more concise the communication, the better.

Posted on September 24, 2009June 27, 2018

Employers Target Women With Financial Education

Every few months or so a new study is published that indicates how women need more help planning for retirement than men do.


The reasons include the fact that on average women are expected to live longer than men (to age 80 versus 74), they work an average of 12 years less than men over the span of their lifetimes, their earnings are 77 percent less than men’s earnings on average, and rates of divorce have risen and are expected to further increase.


As a result of these and other factors, women’s median income post-retirement is expected to be 58 percent of what it is for men, according to the Women’s Institute for a Secure Retirement, based in Washington.


And even more concerning is the fact that many women seem to be aware of their predicament. A recent survey conducted by Financial Finesse, a Manhattan Beach, California-based financial education company, found that only 12 percent of women know that they are on target to replace at least 80 percent of their income in retirement.


Despite these facts, many employers are wary of targeting women with financial planning education, experts say. “They feel like if they do something separate for women, they will be subject to criticism for singling them out,” says Anna Rappaport, a Chicago-based retirement planning consultant.


But that has started to change. As the entire retirement benefits industry increases its focus on how people, particularly the baby boomers who are now retiring, will be able to live off their savings, the issues that women face seem even more daunting, experts say.


As a result, many employers are asking their providers to craft retirement planning seminars targeting women, employers and plan providers say.


“Companies are just now talking about longevity risks—or the risks of people outliving their retirement—and it’s a great avenue to address women,” says Barbara Hogg, senior retirement consultant at Hewitt Associates. “We are seeing more companies saying they want to do financial education that weaves in women’s issues.”


Diversified Investment Advisors, a Purchase, New York-based 401(k) plan provider, has just started doing retirement seminars for women in the past couple of years. To date, the company has conducted sessions for 28 clients but also has started to include many of these issues in its mainstream seminars, says Scott Coopersmith, vice president of participant communications at Diversified Investment Advisors.


“Many employers may not want to advertise sessions as for female employees only because they don’t want to be seen as excluding male employees,” Coopersmith says. “But they do say these are issues that tend to be of interest to working women.”


Although many employers are hesitant to do women-only retirement planning seminars, many providers and educators are increasingly being contacted by women’s groups within companies to do sessions, experts say.


“We get pulled in by the women’s initiatives within a company to do presentations quite often,” says Cindy Hounsell, president of the Women’s Institute for a Secure Retirement.


Given the fact that 75 percent of Aetna’s workforce is female, the Hartford, Connecticut-based company often keeps women’s needs in mind when crafting financial education workshops and materials, says Carol Klusek, head of retirement and financial benefits.


But in May, Aetna went beyond that to target women by offering its Mothers at Work resources group a workshop on personal financial basics.


“These women are busy taking care of their kids—and between motherhood and their jobs, financial matters can take a back seat,” Klusek says. “We have heard from young mothers that they know they have to save more.”


Reaching out to working moms is also why Annette Grabow, manager of retirement benefits at M.A. Mortenson, is looking to offer financial education seminars targeting women. The Minneapolis-based construction company, which has 2,700 employees, has a number of single mothers in its workforce, and Grabow would like to reach out to them, she says.


“They really have a harder time and it appears to me that often they are scared of not being able to survive now and sort of stick their heads in the sand about the future,” Grabow says. She hopes to find a provider that can work within the company’s budget to offer seminars early sometime next year.


Wooing women
Companies that want to target women need to understand how they process information is often different from how men do it, experts say.


“I have found women are visual learners,” Hounsell says. “They want concrete information of what to do, not the history of 401(k) plans.”


When crafting materials targeting women, Hewitt focuses on appealing to emotional themes, rather than just providing information, Hogg says.


Financial Finesse, which has seen a pickup in interest from employers wanting to target women with education, tries to emphasize big life themes that appeal to women, president Liz Davidson says.


“Women think bigger picture about finances, which means they want to send their kids to colleges, and they want to retire when they are ready,” she says. As a result, Financial Finesse often uses children in its marketing materials targeting women and tries to keep it light, Davidson says.


“We make it about changing their lives,” she says.


Financial Finesse has also found that women tend to call in more than men and prefer one-on-one assistance rather than online tools. Twice as many women call Financial Finesse for assistance than men do, Davidson says.


“If your workforce has a lot of women, don’t discount in-person education,” she says. “You might think you are saving money by just doing things online, but you may not be getting to where you need to be.”

Posted on September 22, 2009June 27, 2018

Dropping Golden Parachutes Among Pay-Reform Recommendations

The elimination of golden parachutes and overly generous severance packages for top corporate executives were among executive-compensation reform recommendations made recently by the task force on executive compensation of the Conference Board, a business membership and research association.


The recommendations also include:


• Creating a link between pay and performance


• Demonstrating board oversight of executive compensation


• Maintaining transparency with respect to compensation


“Shareholders of American companies and the public deserve to see executive- compensation programs that serve shareholders’ interests and are explained to shareholders in thoughtful dialogue. Implementing the compensation principles we recommend is an important step in restoring the damaged trust in American companies,” Robert E. Denham and Rajiv L. Gupta, task force co-chairs, said in a news release.


“At the same time, we believe compensation committees and boards must be free to develop compensation programs that reflect their shareholders’ interests and fit their companies’ business objectives.”


The full report on the recommendations can be found at http://www.conference-board.org/ectf. 


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Posted on September 22, 2009June 27, 2018

Flu Outbreak Could Give Momentum to Paid-Sick-Days Bill

An outline posted at www.flu.gov recommends that employers “establish policies for employee compensation and sick-leave absences unique to a pandemic.”
 
Such directives could boost momentum for legislation requiring employers to provide paid sick days as preparations ramp up for an outbreak of the H1N1 flu virus this fall. 


Even with the government urging companies to keep sick workers at home, the measure faces significant legislative obstacles.


But advocates are using the flu scare to promote the bill. Titled the Healthy Families Act, it would enable workers to accrue one hour of paid sick leave for every 30 hours they work up to a total of 56 hours, or seven days.


Providing days off is exactly what the government is asking companies to do if their employees catch the flu. An outline posted at www.flu.gov recommends that employers “establish policies for employee compensation and sick-leave absences unique to a pandemic.”


Guidance from the Centers for Disease Control and Prevention states, “Regardless of the size of the business or the function or services that you provide, all employers should plan now to allow and encourage sick workers to stay home without fear of losing their jobs.”


Advocates of paid sick leave couldn’t have written it better themselves.


“What they said was tailor-made for passing the Healthy Families Act,” said Lisa Maatz, director of public policy and government relations at the American Association of University Women. “We’re taking advantage of that statement.”


Supporters also are making the case on Capitol Hill that the workers least likely to have paid sick days are those in the food service, child care and health care sectors.


“This new outbreak is highlighting the public health risk of so many people not having job-protected paid sick days,” said Steffany Stern, policy coordinator for the work and family team at the National Partnership for Women and Families.


Stern said government flu guidance doesn’t reflect the reality of the workplace. Many employees fear losing their jobs or income if they stay home.


“They’re very fearful of taking time off without pay,” Stern said.


Opponents of the paid-sick-leave bill acknowledge that the public health argument can be compelling. But they point to the economy as a reason not to move forward with the bill, which they say would place a mandate on companies trying to cope with the recession.


“You have to balance [flu concerns] against a pretty tenuous job situation,” said Victoria Lipnic, an attorney and consultant and former assistant secretary of labor for employment standards. “Is this the right time to impose what would be an additional cost on them?”


The legislative calendar is another impediment. Health care and energy reform as well as appropriations bills presumably would all come before paid sick days.


The measure has had a hearing in the House.


But action in the Senate may be further delayed by a change in leadership at the Health Education Pensions and Labor Committee, where Sen. Tom Harkin, D-Iowa, has taken over from Sen. Edward Kennedy, D-Massachusetts, who died in August. Kennedy was the Senate champion of the paid-sick-days bill.


As a practical matter, even if the measure were approved this fall, it would likely take months for the Department of Labor to issue regulations to implement the law.


“Paid sick leave is in no way the answer to the H1N1 scare,” said Lisa Horn, manager of health care at the Society for Human Resource Management. “The Healthy Families Act is the wrong approach at the wrong time.”


In her Capitol Hill meetings, Horn is stressing that the bill could present problems for companies that already provide paid time off. It’s not clear whether PTO days would meet the requirements of the sick-leave bill.


The U.S. Chamber of Commerce says that more than three-quarters of employees receive some form of paid leave. But advocates for the bill say that about half of private-sector workers lack paid sick days.


SHRM is proposing a safe harbor from federal leave mandates for employers that have paid-time-off programs.


Although talks about that idea have yet to begin in earnest, advocates say that the current version of the paid-sick-days bill was modified from previous iterations to meet corporate concerns. For instance, the time off is now accrued and absences of more than three days require medical certification.


“We’ve been engaging with the business community and listening to what they’re saying,” Stern said.


—Mark Schoeff Jr.


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