A successor to Susan Meisinger, president and CEO of the Society for Human Resource Management, will be named later this summer—after Meisinger departs the organization on June 30.
At a press conference Sunday, June 22, Meisinger said that China Miner Gorman, SHRM’s chief operating officer, would assume chief executive responsibilities until a new CEO is appointed.
The search committee and board have set a goal of selecting a CEO by August 1, Meisinger said.
“It’s really far along,” she said of the search process,
Employers do not have the right to read the contents of employees’ text messages that are obtained from a third-party provider, says a federal appellate court decision.
A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco also held in its decision June 18 in Quon v. Arch Wireless Operating Co. Inc. that the city of Ontario, California, had violated the constitutional privacy rights of a police officer and the recipients of his text messages when it obtained copies of the messages from Arch Wireless Operating, a unit of Westborough, Massachusetts-based Arch Wireless Inc. Arch provided two-way alphanumeric pages under contract with the city.
According to the decision, Jeff Quon exceeded his monthly allotted characters in his text messages several times. He was told the Ontario Police Department would audit his messages unless he paid an overage fee, which he did. But the city still asked Arch Wireless to send it transcripts of his messages to ascertain whether they were work-related.
Quon and the recipients of his messages subsequently sued, claiming violations of the Stored Communications Act and the Fourth Amendment, which protects against unlawful seizure.
In a ruling that partially overturned a lower court’s decision, the appellate court said Arch is an “electronic communications service,” which, according to the 1986 Stored Communications Act, is prohibited from “knowingly [divulging] to any person or entity the contents of a communication while in electronic storage by that service” except to the intended recipient.
The appellate court also held that the plaintiffs’ Fourth Amendment rights were violated.
“Do users of text messaging services such as those provided by Arch Wireless have a reasonable expectation of privacy in their text messages stored on the service provider’s network? We hold that they do,” says the decision, which returned the case to the lower court.
Attorneys in the case could not be reached for comment.
Filed by Judy Greenwald of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
Arriving at the White House in 1861, Abraham Lincoln faced the enormous challenge of holding together a country that was fractured over slavery.
As everyone who has passed a high school civics course knows, Lincoln went on to lay the foundation for the modern United States and become a towering figure in American history.
What may not be as apparent is that Lincoln also serves a role model for executive leadership in talent management and team building.
If anyone could outline Lincoln’s HR gifts and how they can be applied in 2009, it would be historian and writer Doris Kearns Goodwin. Goodwin, author of the 2005 book Team of Rivals: The Political Genius of Abraham Lincoln, will be Tuesday’s keynote speaker.
Goodwin has written books about Presidents Lyndon Johnson, John F. Kennedy and Franklin Roosevelt. A former aide to Johnson, Goodwin later helped him prepare his memoirs. Goodwin also was an NBC political analyst, and earned her bachelor’s degree from Colby College, as well as a doctorate from Harvard, where she also has taught.
In addition to her penchant for politics, she loves baseball. Wait Till Next Year: A Memoir is her ode to the 1950s Brooklyn Dodgers, her favorite team. As a baseball writer, she became the first woman to enter the Boston Red Sox locker room. She was a consultant to Ken Burns for his PBS documentary The History of Baseball.
In her best-seller Rivals, Goodwin depicts how Lincoln, a two-time loser in races for a Senate seat in Illinois, emerged from the political wilderness to capture the Republican nomination against three political heavyweights—New York Sen. William Seward, Ohio Gov. Salmon Chase and Edward Bates, a St. Louis judge.
But unlike most presidents—and CEOs—Lincoln did not vanquish his competitors. He appointed them to Cabinet positions to take advantage of their policy and political skills, even though each of them initially was openly contemptuous of Lincoln.
Seward became secretary of state, Chase secretary of treasury and Bates attorney general. In his New York Times review of Goodwin’s book, James McPherson, professor emeritus of history at Princeton University, related the story of Joseph Medill, editor of the Chicago Tribune, asking Lincoln why he reached out to his enemies to fill critical posts.
“We needed the strongest men of the party in the Cabinet,” Lincoln replied. “These were the very strongest men. Then I had no right to deprive the country of their services.”
The Charleston, South Carolina, Mercury wrote this about Lincoln’s staffing decisions, according to Goodwin’s book: “He has called around him in counsel the ablest and most earnest men of his country. Where he has lacked individual ability, experience or statesmanship, he has sought it and found it. Force, energy, brains, earnestness he has collected around him in every department.”
But when they joined his government, Lincoln’s rivals did not immediately become his friends. Lincoln endured criticism and squelched power plays, holding his politically fractious but talented Cabinet together. Over time, Seward became one of his staunchest allies.
For the past two years Linda A. Hill has traveled thousands of miles around the globe studying innovative managers and the roles they play in the success of their companies. This means going deeper into organizations than the CEO level. And so most of her subjects aren’t household names. “We’re trying not to simply write about CEOs,” Hill says. “We’re also looking at people in the midst of organizations.”
Hill, the Wallace Brett Donham Professor of Business Administration in the Organizational Behavior Area at the Harvard Business School, has been collaborating on a book on the subject of business innovation with Greg Brandeau, the senior vice president of technology at Pixar, and Emily Stecker, her research assistant. She figures it should be ready for publication by year’s end.
With a working title of Leadership as Collective Genius, Hill’s book looks at 12 company leaders worldwide who have fostered innovation at their companies. She’ll talk about what those successful business leaders do on a daily basis during her Masters Series session.
Not all the leaders are in the U.S. and Europe.
“I wanted to make sure we have [cited] leaders from around the world,” Hill says, “to show we have a global perspective.”
One leads an Islamic bank in Dubai. Another, Brandeau, manages technology at Pixar. Another runs India-based HCL Technologies, a notably innovative high-technology outsourcing company. Others include the architect of eBay’s success and the successful leader of IBM’s investment strategies to help underdeveloped countries.
What Hill has learned is that the most successful business leaders call upon the various “slices of genius” among their employees. The goal, she says, is to “unleash and harness the creative talents of a diverse group.” Doing this well is a leadership style she learned from Nelson Mandela: “leading from behind.”She cites it in a passage from Mandela’s autobiography, Long Walk to Freedom, in which Mandela recalls how a leader of his tribe talked about the talent to lead:
“A leader, he said, is like a shepherd. He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind.”
The successful business leaders she has studied, she adds, “Don’t all have the same style. But they’re fundamentally more comfortable leading from behind, rather than leading from the front.” They let their specialists do their jobs. And that means leaders “have to get out of the way,” Hill says.
Knowing that style, she adds, is key to identifying leadership traits among those in the business world, which has been dominated by the “leading from the front” model. People who have the traits to lead innovative efforts are often overlooked, she says, because they don’t fit the stereotypical front-and-center boss.
One aspect of innovative leadership, she adds, is “amplifying differences rather than minimizing them” among underlings. “Once you unleash people’s talents, you have to harness it to serve the collective good,” Hill says. “A lot of companies never unleash people’s talent.”
Whether you’re staying for a whole week or just trying to visit a few places in between conference activities, you will want to get a taste of the best of Chicago. The third-largest city in America is also one of the country’s most popular convention spots, and Chicago always has its welcome mat out. Family-friendly attractions, distinctive neighborhoods, upscale shopping and a vibrant nightlife are sure to please your family, significant other and even your boss.
Attractions As the city’s official visitor center, the Chicago Cultural Center is a great place to begin your visit to Chicago.
Daily programs and exhibits highlight the city’s performing, visual and literary arts. The center also boasts the world’s largest Tiffany stained-glass dome among its must-see features.Chicago Cultural Center, 78 E. Washington St., (312) 744-6630.
Navy Pier is the No. 1 tourist destination in the Midwest. Free concert performances, sightseeing boat tours, a family pavilion with restaurants and shops, and a 3-D Imax theater are among its attractions. Other highlights include the Chicago Children’s Museum, Crystal Gardens indoor botanical park, the Smith Museum of Stained Glass Windows and the Skyline Stage for concerts and plays. The highlight of the pier is a 15-story Ferris wheel. Cap off a Chicago visit with fireworks, held on Wednesdays and Saturdays throughout the summer.Navy Pier, 600 E. Grand Ave., (800) 595-PIER.
There is no shortage of parks—or beaches—in Chicago. Situated beside Lake Michigan, the city offers 29 miles of walking, jogging and cycling paths along with 15 miles of beaches. Two of the most popular beaches offering fun for adults and children alike are Oak Street Beach and North Avenue Beach. Oak Street Beach, 1000 North Ave., (312) 742-5121. North Avenue Beach, 1603 N. Lake Shore Drive, (312) 742-PLAY.
Millennium Park is Chicago’s latest addition to its repertoire of parks and arts venues. The beautifully landscaped 24.5-acre park is home to several works of art and the Frank Gehry-designed Jay Pritzker Pavilion, featuring free concerts by the Grant Park Orchestra and Chorus, and a variety of performers representing the city’s diversity.Millennium Park, 201 E. Randolph St., (312) 742-1168.
Zoos and conservatories Nothing says “family friendly” better than the words “free admission,” and if you’ve brought your family to the conference you’ll want to visit the city’s top-notch presentations of flora and fauna.
Lincoln Park Zoo is one of the last public zoos in the country that offers free admission. Located in Lincoln Park along Chicago’s lakefront, the zoo is home to more than 1,000 mammals, birds and reptiles. A newly expanded lion house holds Siberian tigers, African lions, leopards and other big cats. The African Journey section features giraffes, elephants and other African animals living in lush surroundings similar to their native habitat. A working replica of a Midwestern farm is among the featured exhibits at the zoo. Lincoln Park Zoo, 2001 N. Clark St., (312) 742-2000.
In the heart of Lincoln Park, adjacent to the zoo, is the Lincoln Park Conservatory. Take a break from the hectic convention pace and stroll through the gardens.Lincoln Park Conservatory, 2391 N. Stockton Drive, (312) 742-7736.
One of the largest indoor gardens in the nation is the Garfield Park Conservatory. The conservatory is celebrating its 100th birthday with yearlong events as part of “CHICAGOASIS: The Greenest Show on Earth.” Let your pocketbook rest while the family visits the children’s garden and you take in one or all of the five permanent collections at this free, city-owned garden under glass. Garfield Park Conservatory, 300 N. Central Park Ave., (312) 746-5100, www.garfieldconservatory.org.
Sports Chicago is a sports town, no doubt about it, with 16 professional teams and four major American sports. The SHRM Annual Conference lands in Chicago during baseball, women’s basketball and soccer season, so check the home schedules of your favorite team:
Chicago Cubs, Wrigley Field, 1060 W. Addison St., (773) 404-CUBS.
Chicago White Sox, U.S. Cellular Field, 333 W. 35th St., (312) 674-1000.
Chicago Fire (men’s soccer), Toyota Park, 7000 S. Harlem Ave., Bridgeview, Illinois, (888) MLS-FIRE.
Chicago Sky (women’s basketball), UIC Pavilion, University of Illinois at Chicago, 525 S. Racine Ave., (866) SKY-WNBA.
Neighborhoods Sample the best that the world has to offer, right in Chicago’s ethnic enclaves. Some are more obvious, such as Little Italy and Chinatown in the city’s South Loop and Greektown in the West Loop.
Others have developed their ethnic identities based on the immigrants who settled in those neighborhoods, such as the Beverly neighborhood on the South Side of Chicago, home to one of the largest Irish-American communities in the United States; and Andersonville, which touts a Swedish contingent among its ethnically diverse residents.
Nightlife Chicago’s diversity is evident on the night scene too. From blues to jazz, soul to salsa, gospel to house music, Chicago remains the scene setter. The Uptown neighborhood is home to nightclubs, restaurants and other music venues, but other popular clubs are scattered throughout the city. Among the favorites: Blues: Blue Chicago, 736 N. Clark St., (312) 642-6261; Buddy Guy’s Legends, 754 S. Wabash Ave., (312) 427-0333; Kingston Mines, 2548 N. Halsted St., (773) 477-4646; House of Blues, 329 N. Dearborn St., (312) 923-2000.
Jazz: Andy’s Jazz Club and Restaurant, 11 E. Hubbard St., (312) 642-6805; The Back Room, 1007 N. Rush St., (312) 751-2433; The Green Mill, 4802 N. Broadway Ave., (773) 878-5552.
Piano bars: Howl at the Moon, 26 W. Hubbard St., (312) 863-7427; Jilly’s Piano Bar, 1007 N. Rush St., (312) 664-1001; Red Head Piano Bar, 16 W. Ontario St., (312) 640-1000. [
Theater and Concerts The vibrant theater community offers bound-for-Broadway shows and Broadway hits such as Wicked. Original productions and classics can be seen at the famous Steppenwolf Theater, the Royal George Theater and the Apollo Theater.
Improv and comedy go hand in hand in Chicago. Second City Theater has produced some of the great comic geniuses of the past half-century, and the actors at ComedySportz deliver the quick quips and gibes in unscripted fashion.
To find out what’s playing, who’s on stage and where, go to the League of Chicago Theater’s Web site, which covers the Chicago theater community.
And check the Charter One Pavilion at Northerly Island and the Grant Park Music Festival for a schedule of free summer concerts in the warm Chicago evenings. Charter One Pavilion at Northerly Island, 1300 S. Lynn White Drive, (312) 540-2668. Grant Park Music Festival, Jay Pritzker Pavilion at Millennium Park, 205 E. Randolph Drive, (312) 742-7638.
Architecture Chicago is the birthplace of the skyscraper, and its architectural markers offer a timeline of the history and development of this diverse city. Its notable buildings date to the 1893 World’s Columbian Exposition and the mid-20th century Frank Lloyd Wright Robie House, while the latest examples of modern skyscrapers are exemplified by such structures as the minimalist Federal Center courthouse building, designed by Ludwig Mies van der Rohe. Robie House, University of Chicago, 5757 S. Woodlawn Ave., (773) 834-1847; Chicago Federal Center, 219 S. Dearborn St., (312) 435-5850.
The landmark Sears Tower is the tallest building in the Western Hemisphere and the third-tallest building in the world. From its Skydeck observatory, viewers can see into the neighboring states of Indiana, Michigan and Wisconsin. No wonder it has its own ZIP code! Sears Tower Skydeck, 233 S. Wacker St., (312) 875-9447.
Hop to the top of the John Hancock Center in 39 seconds on North America’s fastest elevator. When you arrive at the Hancock Observatory on the 94th floor, step out onto the Skywalk, a caged open-air observatory with 3-D talking telescopes that speak in four languages.John Hancock Center, 875 N. Michigan Ave., (312) 751-3681.
Shopping The expression “Shop till you drop” takes on new meaning in a town that employs an official director of fashion. The Magnificent Mile, a portion of lake-hugging Michigan Avenue and neighboring Randolph Street, is a destination location for shoppers. A collection of 460 stores offers everything from high-end boutiques to name-brand retailers. The Greater North Michigan Avenue Association, (312) 642-3570.
But there’s more. Oak Street, just off Michigan Avenue, continues the upscale shopping experience; State Street Retail Historic District boasts the world’s second-largest department store (a Macy’s outpost); the famed boutiques of Armitage Avenue in Lincoln Park; and Wicker Park-Bucktown, recently spotlighted for its shoppers’ delights in Vanity Fair.
Tours So much to see, so little time?
Get the highlights of this great American city by taking one of several tours around town. There are various architectural tours, including the Chicago River cruise and the “Devil in the White City” Tour, hosted by the Chicago Architecture Foundation and based on Erik Larson’s best-selling book.
The Chicago Theater Tour and the Behind the Emerald Curtain Tour, which takes place on the set of Wicked, take you backstage in the heart of the city’s theatrical community to explore its most famous theaters. The Chicago Public Art Tour leads visitors through the city’s parks and neighborhoods where works of art are displayed for public enjoyment and to discuss why Chicago is often referred to as “an open-air museum.” (The Public Art Tour takes place on Wednesdays only, so carve out some time from your conference schedule on June 25 if you would like to take this tour.)
For the unconventional travelers, there are these unconventional tours:
Chicago Chocolate Tour: This guided walking tour takes guests to several of the city’s most popular chocolate shops.
Watson Adventures Scavenger Hunt: Gather up to six colleagues and set out on an adventure through Chicago.
Bobby’s Bike Hike: It’s tough to exercise while traveling on business, but this tour provides cruiser-style bicycles for participants to pedal through the city.
Chicago Food Planet: Get off the beaten path and eat where Chicagoans eat. This tour includes food tastings at specialty food shops, ethnic eateries and other nontraditional venues.
Other tour options include a free personal greeter, available by reservation through the Chicago Visitors Center, who will take you to the top places on your list, as well as on-your-own audio tours that can be downloaded into your MP3 player before you leave your hotel room.
The SHRM chief’s successor will be named later this summer—after Meisinger departs the organization on June 30.
Pre-Show Guide and Feature Stories
Whether you’re staying for a whole week or just trying to visit a few places in between conference activities, you will want to get a taste of the best of Chicago. The third-largest city in America is also one of the country’s most popular convention spots.
The Last Word: SHRM 101 San Diego. Washington. Las Vegas. Chicago. The cities may change and the venues may differ, but there is a comfy familiarity I always feel at the Society for Human Resource Management’s annual conference.
After more than 20 years as a Society for Human Resource Management executive, Sue Meisinger has plenty of annual conference anecdotes from which to draw her most memorable moments.
What stands out for her, though, is not a specific speaker, dinner or session. Instead it’s the atmosphere created when about 15,000 HR professionals gather.
For a function that is often characterized by silence surrounding sensitive office matters like personnel moves and salary determinations, the annual conference provides a demilitarized zone where its practitioners can speak freely and know that that they’re not alone on the HR front lines.
“The high point has always been the sense of community when you walk into conference,” says Meisinger, 55, who is retiring at the end of June following six years as the organization’s president and CEO. “There’s an energy to it that I just love.”
Meisinger’s role at the conference has evolved as she has moved from being a vice president to COO to CEO.
As SHRM’s chief executive, she’s in constant motion. Going from event to event means traversing hallways full of friends from her career at SHRM and in the government. Her assistant is always at her side, keeping her on schedule and not letting her linger too long.
“I’ll stop and catch up until the cows come home,” Meisinger says.
Her peripatetic approach has both drawbacks and benefits. It can be physically draining. But getting out and about also provides opportunities for rewarding interaction.
“It is not good for my feet, but it’s great for my spirit,” Meisinger says.
She also has gotten a charge out of meeting the keynote speakers for the opening sessions. Former Secretary of State Colin Powell, who appeared at the 2006 conference in Washington, stands out.
Powell combined a confident military air with a down-to-earth personality. “He made sure he shook hands with everyone behind the stage—all the crew, all the staff,” Meisinger says.
Another keynoter, Bill Cosby, spoke at the San Diego conference in 2005 on Father’s Day. When Meisinger was talking with her dad, the comedian walked over, asked for the cell phone and began chatting with him.
“For my father, who was in his 80s, that was great,” Meisinger says.
Meisinger’s impact on the conference goes beyond meeting and greeting. She has added elements that help make a huge conference a little smaller by creating more networking opportunities for first-time attendees and more educational events for HR executives.
The first Masters Series session more than a decade ago drew about 2,000 people. Standing in the room, Meisinger says she felt that “we nailed this one. This was a direction that was welcome and effective for our members.”
Meisinger will have “mixed emotions” while in Chicago for her last annual conference as SHRM chief executive. “It’s been a great run,” she says.
At future shows, she says she will “probably have more fun because I’ll be able to chat and catch up” with friends. She’ll still have to do a lot of walking.
More and more employees are working with their managers to design jobs that fit their aspirations or better conform to their life circumstances, according to a researcher and award-winning author slated to address the SHRM Annual Conference & Exposition.
Denise Rousseau, H.J. Heinz II Professor of Organizational Behavior and Public Policy at Carnegie Mellon University, calls these arrangements idiosyncratic deals. Rousseau will discuss the implications of this trend at her Masters Series presentation on Wednesday at 10 a.m.
The agreements employees strike with their supervisors typically involve development, stress reduction and flexibility, Rousseau says.
For instance, an employee might negotiate to work from home, exercise greater latitude in choosing assignments, maintain an odd-hours schedule, increase or decrease travel or participate in training programs.
What they’re not doing is negotiating for more money.
“Most I-deals have nothing to do with salary,” says Rousseau, author of I-Deals: Idiosyncratic Deals Workers Bargain for Themselves.
But the nuance involved requires greater understanding between an employee and manager than a typical workplace relationship.
“You’ve often had a higher-quality conversation with your boss about what’s going to go down than the regular employee,” Rousseau says. “It heightens the quality of the agreement.”
As these pacts proliferate, they put new demands on the HR department. They force HR to deal with many different work rules but they also provide an opportunity for innovative people management.
Corporate efforts to keep women in the workforce, for instance, are now routine but were once carve-outs for a special group of employees, Rousseau says.
HR must “take the learning you get from I-deals and turn it into broader policy that can benefit the company,” she says. “A lot of HR policies start out as I-deals.”
Another challenge posed by the arrangements involves evaluating employees who are working to their own beat.
What tends to happen, Rousseau says, is that people who bargain for development opportunities are seen as more valuable to the organization and receive higher ratings. Those who negotiate flexible schedules or reduced work loads are less valued over time.
But the person working a nontraditional schedule may be as productive as someone who comes into the office every day from 9 to 5.
“We haven’t built our HR systems for the non-conforming person who’s a high performer,” Rousseau says.
Those employees will respond to a boss who they see as their ally. Their immediate supervisor is the person who will want to invest the most in their future and help them understand and cope with sometimes stifling corporate policies.
“Local managers oftentimes try to make up for the inconsistencies from top management,” Rousseau says. “They do a lot to patch up the gaps. They’re the buffer and protection.”
They’re also, in large part, the reason that the vast majority of employees believe that they’re being treated well by their companies. Rousseau says that 75 percent to 85 percent of the workforce believes that the “psychological contract” has been most fulfilled by their employer.
Legislation that would ensure a broad interpretation of a law that bans discrimination against people with disabilities sailed through two House committees on Wednesday, June 18, and could soon get a vote on the House floor.
The measure, which would amend the Americans With Disabilities Act, passed the House Education and Labor Committee, 43-1, and the House Judiciary Committee, 37-0.
In a rare show of cooperation, both employer and advocate groups support the bill. They hope strong approval by the full House will generate momentum to push it through the Senate and get President Bush to sign it this year. President George H.W. Bush enacted the original ADA in 1990.
The bill clarifies that Congress meant for the ADA to encompass anyone “with a physical or mental impairment that substantially limits one or more major life activities,” regardless of whether it is episodic, in remission or being controlled through medication.
The measure responds to Supreme Court decisions in 1999 and 2002 that narrowed the scope of the law. Following those rulings, courts have been applying a strict standard for defining disability and have held that “mitigating measures” like treatment can limit protections.
“These court rulings have effectively made the very workers Congress intended to cover nearly two decades ago subject to legal employment discrimination today,” said Rep. George Miller, D-California and chairman of the labor committee. “Workers with diabetes, cancer, epilepsy—the very workers ADA had intended to protect—can be legally fired or passed over for promotion just because of their disability.”
Republicans on the panel were satisfied that the previous version of the bill had been modified to address concerns of the business community. For instance, the final measure retains language that requires an ailment to impede a major life activity in order to qualify as a disability.
The groups “were able to come together and refine a product that represents the best chance I think we have to see legislation enacted this year,” said Rep. Howard “Buck” McKeon, R-California and the ranking member of the labor committee.
Business and disability advocates say that they have been working together for weeks with congressional staff to hammer out a compromise.
The bill “would maintain the functionality of the workplace while providing important protections for individuals with disabilities,” wrote Jeffrey McGuiness, president of the HR Policy Association, a lobbying group representing 250 large employers, in a letter to Miller and McKeon.
Miller praised the interest groups for cooperating rather than butting heads, and noted that the final product won’t completely please everyone.
“They’ve been exacting negotiations,” Miller said. “They’ve been difficult.”
Tom Donohue, president of the U.S. Chamber of Commerce, described the final measure as “something we’re all going to be able to live with.”
He warned members of Congress not to significantly revise the bill as it wends through the legislative process.
“If they do, it’s going to be hard for this coalition moving forward,” he said.
The fact that the disparate groups have united could catalyze Senate action, according to Nancy Zirkin, executive vice president of the Leadership Conference on Civil Rights.
“Senate members, once they see the deal, once they see the historic nature of the communities coming together, we think it will pass quickly,” Zirkin said.
Disabled individuals who want to work are another strong force pushing the bill.
“It’s about fairness in the workplace,” said former Rep. Tony Coelho, the primary author of the original ADA and past chairman of the board of directors of the Epilepsy Foundation. “A job is our dignity.”
The cost of providing health care coverage for workers is expected to rise substantially next year. According to research conducted by the PricewaterhouseCoopers Health Research Institute, employer medical care costs will increase by 9.9 percent in 2008. The auditing firm also expects a 9.6 percent bump up in medical coverage costs for businesses in 2009.
Those increases should worry employers, who have seen the growth rate of medical coverage costs slow down in recent years.
“While the continued slowing of medical cost growth is welcome, the fact that the rate of growth may no longer be declining as sharply is worrisome,” said David Chin, leader of the institute. Chin said that rising inflation could easily cause cost increases in medical care, which already exceed the overall inflation rate, to surge.
The reasons for the projected increases? The boom in the health care industry has triggered the construction of replacement facilities, the expansion of private hospital rooms and the development of outpatient venues. The cost of construction is adding to the overall medical costs for employers, PricewaterhouseCoopers found.
Underfunding of public medical insurance programs is also adding to the bulging health care spending by employers. According to a report from the Employee Benefit Research Institute, under the current law, Medicare updates to physician payment rates are projected to be negative each year from 2009 to 2016—this is in spite of the fact that health care costs are expected to increase.
Employers, who are already struggling to manage the cost of providing health care to workers, are expected to continue the trend of cost-shifting some or all of the cost of paying insurance premiums to workers, the study said. While companies have tried to control the cost of premiums by switching to lower-cost plans or increasing co-payments or deductibles, Michael Thompson, principal in PricewaterhouseCoopers’ global human resources services unit, expects those strategies to decline. About one-third of the employers surveyed said they expected to increase cost shifting in their medical plans for 2009.
The report also said employers will try the relatively new strategy of relying on prevention and disease management programs to keep premiums lower, rather than shift more costs onto workers.
“Increasingly, employers are adopting plan designs that help workers ‘earn’ discounts or bonuses for behavior that keeps them healthy, productive and engaged,” Thompson said.
Filed by Matthew Scott of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
