ROUNDTABLE FORUM FOR SENIOR HR PROFESSIONALS

HR TRENDS -- REVAMPING BENEFITS PROVIDED TO EMPLOYEES

Karen Dobbyn from Portland Newspapers, Liz Needleman from Pierce Atwood and Tamara Spoerri from Bowdoin College, facilitated by Ernie Lebel.

1. In your opinion, where, in general, is your organization on this issue?

Liz Needleman, Pierce Atwood --We are exploring the possibility of transitioning from offering ‘traditional’ medical benefit plans (indemnity, PPO, HMO) to offering Health Savings Accounts (HSA’s). We are in the midst of researching whether this move will yield positive results. A further complication is that we cannot design a program exclusively for our firm—we are members of the Maine State Bar Association benefits program, so we have to accept their offerings or change vendors (which we would like to avoid). HSA’s require a lot of upfront education of employees in order to implement successfully, and typically employers need a lot of lead time (4-6 months) to accomplish that.

Tamara Spoerri, Bowdoin College--We have 800 employees and are self-insured. It is a low cost option but it takes incredible time to manage. It is a challenge to get employees to think of all their perks as benefits. We are one of the last organizations that provide retiree health benefits and our co-pays are extremely low and employees feel pretty entitled to their benefits.

Karen Dobbyn—Portland Press Herald is a unionized organization. We have over 400 employees in our plan. A significant number of our employees are enrolled in our indemnity plan. The company pays at least 80% of the costs. We are partnering with the largest union to help educate their membership. Their leadership is interested in a health care savings account and knows only a little bit about how they work. Human Resources is trying to lead the effort to address our escalating health insurance costs with the largest union. We hope they will agree to a plan less costly to the employees and the employer. It could be a less comprehensive plan and as part of our negotiations it is never the only item on the table for the union to consider. Health insurance benefits are always one of the most important issues we discuss during negotiations.

Tamara (Bowdoin)--One of the efforts we initiated to raise the awareness of employees was a benefits survey. After the survey we did some consumerism communication to let employees know about their benefits. We also implemented a total compensation letter to employees and it was an eye-opener to employees to learn the cost of all their benefits.

One of the things about Bowdoin is that managers historically have not tracked employees’ sick leave and vacation. Administrators have 6 months of sick leave and four weeks vacation but it is not tracked. In fact, I received nasty emails when I told managers we had to track vacations. Some managers do but some just ignore it.

However, I feel we have made some great strides in educating employees, but that we have a long way to go. One thing we definitely need to look at doing better and more cost effectively is the retiree medical benefits. We need to start the review of the plan to still deliver the benefit, but somehow do it more cost efficiently. This perk is big and fairly common in higher education. At least 1/3 of small liberal arts colleges still provide health care benefits to retirees. Any employee who has fifteen years of service after the age of forty is eligible. This helps attract and retain a tenured faculty a key group to the successful college or university. We would certainly grandfather those employees already at the college and then change the policy for new employees.

2. Do you feel communication is the secret to making changes in your benefits go smoothly? How do you communicate to your employees about these issues? How are messages received? How should it be done differently?

Liz—A survey I read recently said that many companies fail because the communication they create is company focused and not employee focused. Furthermore, many employees are still not realizing the impact of benefit costs on the bottom line. One thing that helps our firm is participating in local compensation and benefits surveys—we report that information to our employees. We also present our annual benefits enrollment forms along with a memo from our Managing Partner. If we move to another type of plan we will plan to use multi-media communication to help employees understand plan changes.

Karen—We work closely with the union leadership to allow us to communicate directly with employees. Top management is out front more to share their thoughts. We are also working to help the union and non-union employees understand better the entire company structure. We are owned by the Seattle Times and we want employees to understand that what we do here can have an affect in Seattle as well as in Central Maine.

Tamara—We have 338 support staff, 200 faculty members and 300 administrators and each group is effective at communicating in their own style of communications. We also have 120 buildings and 200 acres so the geography makes meetings very difficult. We have found that the best way to communicate is for HR to go out to employee meetings. It is interesting that the faculty is concerned about the welfare of the lower echelon of the house, but they are reluctant to give up any of their benefits to help balance the benefit costs. In the past, like most organizations, there was a closed culture and information was not shared with middle managers. Now we are very transparent and readily share information. After management meetings we insist that the information is shared with middle managers and all concerned. We have found that just keeping the message to three points really helps. Communicating benefits to employees is often challenging because they need that money in their paycheck.

One of our best vehicles to help our communication about benefits is our Wellness Program. We had no budget but have done an incredible job of making a broad-spectrum program. We have done programs on identify theft, financial workshops, weight watchers, and many other topics. We brand all our messages about Wellness with the “benefits” look. We use marketing techniques like ”branding” to get the message across as part of benefits.

We also use the on-line Faculty Digest as a benefits communication piece.

To deal with answering benefits questions for employees we have cross-trained all HR People so that now we have three people in our HR Department who are well versed in the program and can answer questions. We used to do group benefits orientation but it did not work because of the differences in benefits. So we do it all individually now and it works much better.

3. What Role Do Benefits Play in Recruiting?

Karen—It is a big factor. Especially our health insurance benefit. The majority of people we recruit ask about this.

Liz—It is becoming more of an issue with recruiting for associates. Many times they have moved here from someplace else and they are shocked when they learn how expensive benefit costs are in Maine. This makes benefits an even bigger issue.

Tamara—In higher education you have to have a good benefits package to recruit. When individuals come to investigate a job they cannot believe how expensive Maine is. Many non-tenured people will say “I can’t afford to live here”. The administrative staff definitely comes because of the benefits that other similar jobs would not provide them. The mid-level administrators have sticker shock at the cost of living in Maine and the benefits often make the difference in their decision.

4. If you had a chance to tell other HR people how they should prepare for this growing trend what would you say?

Liz—I would say they better become experts on this issue and know it inside out, or the financial people will take it over from HR. They need to realize that it takes a lot of time and effort in order to understand benefits and communicate them to employees. People coming into HR must understand benefits because of its huge financial impact on the company.

Tamara—HR really needs to understand benefits. They need to understand the importance and how it affects the bottom line. They have to be data miners. They have to know what is driving the numbers. HR people can also have this implied influence when they know benefits. HR can get the respect of senior management when they know benefits and their cost impact on the organization. In a small company HR really has to be the benefit expert—big firms can hire consultants.

It is a changing role for HR. The typical HR person is changing –they are moving more to the financial side and understanding numbers. It is changing who is coming into the field.

I think HR brings both perspectives though. Financial people can forget the impact of how rapidly changing benefit issues can affect the culture of the organization. HR people think about all the ramifications on culture when they manage benefits.

Karen—I would tell HR people they need to think long term and strategically. They cannot go from vendor to vendor. They also need to know the demographics of their company and also what top management thinks.

5. What are some of the future trends you predict in benefits?

Some of the ideas the group came up with were:

• In a few years employer paid healthcare costs may be a recruiting tool.
• Healthcare premiums may be a graduated scale of base pay—the less compensated would pay less of the costs.
• Flex time may be used as a benefit. It would have to be used in jobs where productivity can be measured and could be used as part of the reward system. It may need to be used to be able to recruit non-traditional employees.
• Phased retirement will be a big issue in the years to come