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HR for HR at Amex

American Express sees HR as such an important part of driving business performance that the company has assigned an executive specifically to the task of developing future HR leaders.HR for HR

” ‘HR for HR’ is one of our five ‘big bets’ for the HR function this year,” explains Patricia McCulloch, vice president for HR capacity and development. “It’s really elevated the importance of the subject. I’ve got a standing spot in every one of our town hall meetings for the HR group and in our HR leadership team meetings to talk about it.”

The company’s plan for developing HR leadership centers on a competency model with five components: applying knowledge of the American Express business; driving creativity and change; demonstrating value as HR professionals to internal partners and employees; leveraging HR expertise; and transforming ideas into tangible, measurable outcomes. American Express lists behaviors at different career stages that meet parts of the competency model, and uses these to plot an HR leadership candidate’s current proficiency level.

American Express recruits leadership candidates with business or HR degrees from a small number of core graduate schools and puts them through a program of three eight-month rotations—a position as an HR generalist partnered with a business unit, a stint in an HR functional area and a job outside of the HR field. “This way, they’ve started their career with a mind-set that it is OK to move around and experience various parts of HR,” McCulloch says.

At the end of the two-year program, they’re placed in an HR job somewhere in the company.

American Express also provides future leaders with Project Endeavor, a training program designed to build their financial and business acumen, with American Express itself as the case study. The company is developing additional programs to augment Project Endeavor and sustain the learning experience.

“There’s the piece around what people do in the two and a half days in the class,” McCulloch says. “But another part is what they do six months later to keep that knowledge alive.”

Workforce Management, June 25, 2007, p. 36 — Subscribe Now!

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Florida Allows Leave in Domestic Violence Cases

Victims of domestic violence can take up to three days’ leave from work under legislation that went into effect July 1 in Florida.


The legislation permits employees to take the leave in any 12-month period in order to take action in response to becoming a domestic violence victim, such as obtaining an injunction for protection or obtaining medical care or mental health counseling.


The law applies to employers with 50 or more employees and to employees who have been at the job three or more months.


Before receiving the leave, the employee must first exhaust all annual or vacation, personal and sick leave unless the employer waives the requirement, the law says. The leave may be with or without pay, at the employer’s discretion.


Except in cases of imminent danger, the employee must provide the employer with “appropriate” advance notice and sufficient documentation of domestic violence, according to the law.


The law also prohibits employers from discriminating against employees for exercising their rights under the law.


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

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Supplying Second Opinions

Sometimes, especially during complex, expensive medical cases or emergencies, doctors will misdiagnose an illness or mistakenly suggest a certain treatment. The result is poor but costly medical care. The reasons for errors are as varied and complex as the medical system.


    Many patients are not equipped to second-guess their doctor. Sometimes they seek another opinion; and sometimes that second opinion is given by a colleague of the first doctor who may not want to contradict his friend.


    Doctors have also been known to practice “defensive medicine” and over-prescribe treatments to avoid a malpractice lawsuit. Or, quite simply, doctors are overworked and don’t have enough time or information at hand to accurately assess a patient’s health.


    Such intricacies make it easy to understand why health care dollars are not spent wisely and why some employers want to cut costs by focusing on quality. The goal, to borrow a phrase from manufacturing, is to get the right treatment to the right patient at the right time.


    One strategy employed by companies like EMC Corp., ConAgra Foods and Waste Management Inc. is to provide employees the option of getting a second opinion from a company specializing in them.


    Best Doctors is a Boston-based company started by doctors affiliated with Harvard University School of Medicine who felt they could diagnose and treat illnesses accurately by having experts in their specialties exhaustively review patient medical data collected from doctors, labs, hospitals and pharmacies.


    “We’re not just saying to the patient, ‘Here’s a doctor. Good luck,’ ” says Best Doctors CEO David Seligman.


    Seligman says the second opinions given by the company’s stable of 50,000 physician specialists and nurses have altered people’s diagnoses 22 percent of the time and treatment in six cases out of 10, with 100 percent accuracy.


    In January, Boston-based data storage company EMC made Best Doctors available to its 19,000 U.S.-based employees after a trial run was deemed helpful in improving people’s medical care. Since then, 70 people on EMC’s health plan have used Best Doctors to get a second opinion; 88 percent have had their treatment plans changed and 12 percent have had a change in diagnosis, says Delia Vetter, senior director of benefits for EMC. So far the company has saved $80,000.


    Though EMC did not disclose the cost of the program—Best Doctors charges employers a monthly fee based on the number of employees with access to the service—Vetter says, “Ultimately, in the long term, we expect the program to pay for itself.”


    One patient’s severe dizziness was originally misdiagnosed as a rare disease caused in part by a swelling of fluids in the ear. Best Doctors’ specialist recommended repeating certain tests and consulting with a neurologist, who then re-diagnosed the illness as a type of migraine.


    Another patient was diagnosed with a pulmonary embolism, a condition that occurs when an artery in the lungs becomes blocked. The diagnosis was correct, but it turned out the prescribed surgery wasn’t needed, which saved the company $21,000.


    While the service is available free to all EMC employees, it’s particularly useful to the 6 percent of the workforce whose health care spending last year totaled half the company’s health care costs. EMC would not disclose how much it spent on health care, but its 2006 annual report shows that costs rose 9 percent last year, down from an increase of 11 percent in 2004.


    One EMC employee, Laura Aubut, a 44-year-old finance manager, had a particularly complex medical case. She says the in-depth assistance provided by Best Doctors, which she used during EMC’s trial run with the service, helped her make the right decisions along the way.


    In 2005, just days after giving birth to her second child, Aubut woke up with numbness in her right arm. Emergency room doctors told her she had had a small stroke. A blood clot in her leg slipped through a hole in her heart, into her bloodstream and up to her brain.


    “I was horrified,” she recalls.


    Around the time a specialist told her she needed to have the hole fixed, she learned of Best Doctors and decided to seek a second opinion.


    More than anything, Aubut was scared of surgery and overwhelmed by her circumstances. She wasn’t sure what to do.


    Best Doctors agreed that she needed to fix the hole. They also suggested seeing a neurologist. During this time, doctors told her she initially needed to treat a condition causing her internal bleeding. If she didn’t, she could bleed to death on the operating table, she was told.


    After treating that problem successfully, and satisfied she had done everything she could to make an informed decision, Aubut had the surgery. She praises Best Doctors for its guidance during a trying time.


    “I could have kept seeing one specialist after another,” she says. “But I said, ‘I’m comfortable with what I know now. I’m not scared now like I was before.’ “

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Will the Obese Be Penalized by Insurers Like Smokers

A small but growing number of employers charge smokers more for their health care than they do for nonsmokers. But as evidence continues to link unhealthy lifestyle choices to health care costs and lost productivity, another question arises: Are obese workers next?



If you ask employees, the answer is a “maybe.” In a recent survey by the National Business Group on Health, 65 percent of 1,619 employees at large companies said they believe smokers should be charged more for health care than nonsmokers. About 49 percent surveyed said they would support higher premiums for obese workers.



Smokers at JPMorgan Chase have for years been charged more for health care than nonsmokers. A smoker in New York with a plan through UnitedHealthcare pays about $85 every two weeks, compared with a discounted rate of $70 for nonsmokers. The policy is meant to encourage smokers to take cessation programs and receive the discounted fee, says Wayne N. Burton, JPMorgan’s corporate medical director.



“This motivates them to quit,” he says.



But Burton is doubtful that such a program for obese workers would pass legal muster. Federal HIPAA guidelines prohibit differentiating premiums based on medical conditions, with the exception of smoking. Employers can offer discounts to nonsmokers, as in the case of JPMorgan, if they offer smokers programs to help them quit.



“I can assure you there are no plans to do it outside of smoking at this time,” Burton says.



Part of the problem may be cultural. Smoking is no longer as widely accepted as it once was.



“Everyone is willing to penalize smokers,” says D.W. Eddington, director of the Health Management Research Center at the University of Michigan. “[Employees and employers are] not willing to penalize overweight people, but everyone is willing to penalize smokers because smokers irritate people even from six feet away.”



Some recognize the slippery slope that may result if more employers differentiate their premiums between smokers and nonsmokers.



“Where do you draw the line?” says Edward Kaplan a consultant with the Segal Co. “In closed circles, clients ask me if we should rate premiums based on income, BMI [body mass index used to gauge obesity] and whether they smoke.”



But, he adds, employers are usually chastened by any legal implications and possible bad publicity.



More likely, these experts say, are programs that try to use incentives to get people to change behavior. It’s possible, though, that as employee attitudes begin to shift, so will employers’ willingness to charge unhealthy people higher premiums.



“There’s a lot of momentum around individualized health plans and more accountability within the population,” says Kaplan, “so maybe we’ll see more of it.”


Tell us what you think. Discuss this article in the Workforce Management Community Center or e-mail your comments to editors@workforce.com




—Jeremy Smerd


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Top 5 Ways to Know if Your PM System Bails Out Your Managers

1. There are no “does not meet” or below-average ratings: If your managers aren’t delivering some bad news, they don’t feel compelled to be candid about performance. Change the expectation.


2. Employee pay increases are clustered around the budgeted average merit increase percent: Everyone getting 3 percent means rewards are being withheld from high performers to avoid tough conversations with low performers.


3. High performers are leaving your organization for better opportunities: If they can’t get feedback differentiating their performance from others and/or more than 3 percent increases from you, they’ll go somewhere else. That’s not good.


4. Your performance management system has no individual goal setting: Socialist countries don’t bother attempting to define individual contributions. Don’t encourage employees to be mediocre.


5. You have no employee relations issues that are related to frank and honest feedback about low performance: If you don’t have at least a few employee relations issues related to low review scores, you have a culture reinforcing that being average is OK. Is that going to help you make your revenue number?

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Applauding the End of Americas Job Bank

Some workforce and recruiting experts agree with the U.S. Labor Department’s decision to retire America’s Job Bank at the beginning of this month.


    Among them is Peter Weddle, recruiting analyst and executive director of the International Association of Employment Web Sites industry group. Weddle, whose association includes the major job boards CareerBuilder, Monster and Yahoo HotJobs, says the free public job site replicated services offered by a range of private-sector sites. These include sites targeted at lower-wage and blue-collar workers, he says.


    But Weddle’s, the recruitment consulting and publishing firm that Peter Weddle heads, gave America’s Job Bank one of its 30 “2007 User’s Choice Awards.” These are based on ballots cast by recruiters and job seekers, and “recognize the Web sites that provide the best level of service and value to their visitors.”


    Weddle also notes that the closing of America’s Job Bank “has been fraught with confusion.”


    Still, he thinks the Labor Department’s move was sound. “Why should the government duplicate what the private sector is providing already?” Weddle says.


    America’s Job Bank was the United States’ first national job site on the Internet and, until its shutdown, was still one of the biggest. The Labor Department last year announced its plan to close the site. But the decision has come under fire, in part because of evidence the site was a cost-effective, appropriate government service. There’s also widespread concern that the phase-out will cause harm to employers, job seekers and states, despite at least two private-sector efforts to replace America’s Job Bank.


    The end of America’s Job Bank is likely to result in short-term problems but a long-term payoff, says Mike Chamberland, a fellow at research group the American Institute for Full Employment. Chamberland hopes that private-sector efforts to replace America’s Job Bank will be able to make improvements quickly and to address what had been some of the major flaws in the site. Among these, he says, is a user interface that has lived a long life with little updating. America’s Job Bank crammed more information onto its home page than do some major commercial job sites. Chamberland says other sites have been able to adapt quickly and learn from private-sector sites like Google.


    The primary weakness of America’s Job Bank was its high cost, Chamberland says. In a memo last year, the Labor Department said the cost of operating the site “has been as high as $27 million per year, with a current operating budget for maintenance-only of $12 million per year.”


    JobCentral National Labor Exchange, one of the private-sector services that aims to replace America’s Job Bank, is expected to cost less than $6 million annually, says Bill Warren, executive director of the DirectEmployers Association, which launched the JobCentral service.


    In addition, Chamberland says, other sites in recent years have built tools that go beyond keyword searches to match job seekers with employers, using artificial intelligence to find better fits. “Someday you will be able to put your résumé out on one of these sites and get good job leads instantly, even if the posting isn’t on the same site you are,” he says.

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GE Unions Ratify New Contract

Members of the two largest unions representing General Electric Co. employees have ratified a new contract that improves health care benefits for employees but will eliminate coverage that supplements Medicare for future retirees, the company and the unions said.



Seventy-nine percent of the voting members of the International Union of Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America and the United Electrical Radio and Machine Workers of America approved the deal, the unions said in a statement late last month.



The new contract’s terms will be extended to nine other unions that have local contracts with GE and will affect about 20,000 workers nationwide, according to a GE statement.



The contract includes added coverage for preventive care—such as routine checkups, vaccinations and screenings—and increases outpatient mental health visits from 30 to 45 per year. New coverage was also created for a halfway house to treat mental health and substance abuse. The medical lifetime maximum benefit was increased from $2.5 million to $3 million per worker.



The contract also boosts dental coverage, enlarging both the restorative and prosthodontic allowance (from $2,000 to $2,500 per two years) and the orthodontic lifetime maximum (from $2,000 to $2,500).



The new agreement, though, raises employee premium contributions for health insurance. The proportion paid by workers, now between 18 percent and 19 percent, will rise to 20.5 percent for individual and family coverage, according to a union spokeswoman.



Additionally, GE will no longer provide health insurance for retirees eligible for Medicare. This change will apply to employees hired after December 31, according to the contract.



The employee co-payment for a brand-name prescription drug obtained through a retail pharmacy will be increased to $22 from $16 and to $50 for brand-name prescriptions obtained through mail order. The annual prescription drug out-of-pocket maximum increases by 12.5 percent, to $2,250 for individual coverage and $4,500 for family coverage, according to the contract.



Eligible retirees and surviving spouses stand to receive a larger pension based on their year of retirement and length of employment. The biggest increases will be given to those who have been retired the longest and will take effect in December, according to the contract.



Additionally, employees will contribute 3 percent of pay—after the first $70,000 of compensation—toward their pension benefits. This change will begin in 2008. Under the expired agreement, contributions were applied on compensation above $60,000.



The new contract is retroactive to June 18 of this year and will remain in effect until June 19, 2011.


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

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Companies Move to Ward Off Fee Suits

Defined-contribution plan executives are beefing up disclosure to participants about plan fees well ahead of regulatory guidance expected by the end of the year.



Duke Energy, American Electric Power and Allete Inc. are taking steps to enhance disclosures on fees, prompted by last year’s enactment of the Pension Protection Act, which sets new disclosure and funding requirements for private plans. The Department of Labor is expected to issue guidance clarifying fee disclosure requirements later this year.



“The DOL guidance will impact all employers. Even if they’re not subject to [federal pension law], they will try to follow the guidelines. You will see changes made in the corporate and public markets ahead of the guidance,” says Bill McClain, principal at Mercer Human Resource Consulting.



Officials at Duke Energy are reviewing their 401(k) plans’ fee structure in light of the company’s April 2006 acquisition of Cinergy Energy Solutions, as well as the pension law mandates, says Sherry Love, assistant treasurer. Duke Energy has yet to decide whether it will merge Cinergy’s 401(k) plans into its own 401(k) plan.



“We knew we needed to look into [fees] after the acquisition, and with the PPA and the various lawsuits, it became a higher priority,” Love says.



In October, participants filed lawsuits against corporate sponsors of several large 401(k) plans alleging the companies failed to monitor and disclose fees under so-called revenue-sharing arrangements.



Duke Energy, which has $2.3 billion in 401(k) assets, employs a separate account structure, while Cinergy used retail mutual funds for its $1.1 billion in 401(k) assets, Love says.



Plan officials want to simplify how fees are communicated, he adds.



“We have a proposal for a new structure for investment options for all employees,” Love says. “As a result of the PPA, there’s no question that Duke will provide full disclosure of fees.”



He declined to give details on the new structure and would not disclose names of managers.



McClain said plan executives should consider incorporating education on plan fees into current communications so participants have some background on any new information that might be required by the upcoming guidance.



William Schneider, managing director of DiMeo Schneider & Associates, said plan executives have approached his firm for assistance on what to disclose. The PPA is driving plan sponsors to act now, he said.



Patrick Cutshall, retirement fund manager for Allete’s $300 million 401(k) plan, said that while the company has always tried to stay on top of fees, executives have become more aggressive because of the PPA.



“We have always known what the fees are that we pay. As for participants, we struggle to get them to participate, and that is a challenge in itself. The PPA has changed that focus,” Cutshall says.



“We’ve become really aggressive on where all the fees are paid and communicating that. It is now all put together into a report that participants can see,” he says. Allete, which offers participants 13 investment options, now includes information on operating fees as well as the previously disclosed revenue-sharing fees.

Debate regarding proper fee disclosure has stepped up in recent months.

A congressional hearing led by Rep. George Miller, D-California, chairman of the House Education and Labor Committee, resulted in calls for greater fee disclosure, while the Labor Department said it will issue guidance later this year, and the Securities and Exchange Commission said it will seek to require improved disclosure by mutual funds.

Additionally, the recent lawsuits against major employers—including Lockheed Martin, United Technologies and Northrop Grumman—allege that current fee disclosure is inadequate and that participants lack sufficient information to make appropriate investment decisions.

McClain said Mercer is working with a number of clients on improving disclosure, but he declined to provide names.

“We try to piggyback what they’re getting from their provider. We try to find ways we can help,” he says.

McClain said that despite uncertainty about the content of new fee disclosure requirements, plan executives can begin preparing now.

To start, plan executives should make sure they understand their current fee and revenue-sharing arrangements, including hard-dollar fees, asset-based fees and expenses such as trading costs, McClain said.



Plan executives should know where they stand “by documenting fees from all sources and then benchmarking those fees against the current marketplace,” he says. They should also make sure the monitoring and oversight processes of plan fees are thorough and up to date, including documentation of fees paid from plan assets and efforts to review and reduce fees, he added.



McClain said there is concern from plan sponsors that additional disclosure might deter employees from participating in defined-contribution plans, if it makes the plans look too expensive.



“The biggest challenge is two major costs—the investment costs and the administrative costs,” McClain says. “Almost all plans these days are in a bundled or quasi-bundled arrangement, and these two expenses are intertwined.”



Filed by Jenna Gottlieb of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Bill Would Provide Pensions for Workers

Companies that provide “lavish” executive benefits would also have to provide defined-benefit pensions for all employees under a bill introduced Thursday, June 29.



“At a time when employees’ retirement security is anything but secure, things are looking rosy in the corporate board room, where our nation’s corporate elite make sure that they have pensions, higher incomes and other benefits so generous that Midas would have been embarrassed,” said Sen. Tom Harkin, D-Iowa, who proposed the bill, in a statement.



Despite rising corporate profits in recent years, many workers have had their pensions frozen, the statement said.



Many companies have said they cannot afford pensions while at the same time awarding top executives lucrative non-pension benefits that function much like pensions, the statement continued.



The legislation would also create an Office of Pension Participant Advocacy in the Department of Labor that would develop recommendations to improve pension policies and give technical assistance to plan sponsors about their obligations to pension plan participants.



People who retired before companies cut back on pension benefits would be shielded from cuts under the bill.



Companies that change ownership would not be able to revoke employees’ pension benefits, as is currently the case, under another provision of the bill.



Pension beneficiaries who received overpayments by mistake would be allowed to keep them if it would be a hardship for them to repay them under the legislation as well.



Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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FMLA Working as Intended, Comments to DOL Show


In most situations, the Family and Medical Leave Act is working well and is providing valuable benefits to employees, according to a Department of Labor report released Wednesday, June 27.

The report, based on more than 15,000 comments the DOL received, said that sections of the 1993 law that allow employees to take blocks of unpaid leave for the birth or adoption of a child or because the employee or an immediate family member has a serious health care condition, “appears to be working as anticipated and intended, and working very successfully.”

In those areas, the DOL report said there is “near unanimity” among those filing comments that the FMLA is beneficial to employers and employees.

However, there is considerable tension between employers and employees in the use of unscheduled intermittent leave. “This is the single most serious area of friction between employers and employees seeking to use FMLA leave,” the report said.

While many employers used words such as “abuse and misuse” to describe employee use of unscheduled intermittent leave, the DOL said it could not assess how much of that category of leave-taking is actual abuse and how much is legitimate.


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