Newsletter and Management Articles

Thoughtful Preparation Important Regardless Of Interview Style

Dear Joan: I have been selected to participate in a "structured interview" for an internal position I have applied for with my employer. First off, what is a structured Interview and what is the best way to prepare for it?

Answer: The term has been used to describe a variety of interview processes. Here are a few possibilities and how you can prepare.

Your interviewer may be using the same structured list of questions to interview each person. Rather than meandering through your application and resume and using them as the source of questions, your interviewer is going to be more methodical and compare each candidate to one another based on how he or she answered the same questions.

The questions will likely be developed from the job description and list of qualifications. Review each of these documents carefully before the interview and be prepared to give a lot of examples that will illustrate how your past experience matches the current needs of the job.

Another interpretation of the structured interview is when a group of people split up the duties and each person takes a particular angle. For instance, in one company I worked with, a peer, several employees and an internal customer interviewed final candidates. This way, each interviewer could look at the candidate from his or her unique perspective. Afterwards, the group got together and rated each candidate on pre-established criteria.

In any event, the best way to prepare is to come up with several CAR stories for each job qualification. Interviewers are looking for behaviors you have exhibited in the past. CAR stands for Challenge, Approach, Results. If you can illustrate some of your past challenges and describe your approach and results, it will make for more compelling stories that will be remembered. It’s easy to say, "I’ve always enjoyed managing people." But it won’t be as powerful as telling a story about an employee you coached who turned his performance around or about the steps you took to reduce turnover and improve job satisfaction.

Finally, don’t forget the intangibles that are so important when applying for a new job. Besides job qualifications, interviewers are always looking for qualities such as enthusiasm, friendliness and a quest for challenge and growth. Saying that you have these things won’t do it. You need to prove it with your past actions and choices. Good luck!

Dear Joan: I’m a manager in a small business and I’ve been doing a lot of interviewing lately and I’m stuck in a rut. I get tired of asking the old standard questions such as, "What are your strengths?" "What are your weaknesses?" "Where do you want to be in five years?" There must be some contemporary questions I’m just not aware of. I realize that each job requires different questions but can you help me with some suggestions for some generic ones that get at some good insights about a person?

Answer: Your best bet is to develop questions that allow the candidate to describe his or her past experiences in each of the categories of the job. In addition, here are some general questions I like. They seem to illicit revealing responses that tell me a lot about a candidate.

"What objections do you think I have about hiring you?" "What have your peers said about you in your past jobs? Why?" "What is the best advice one of your managers has given you about your performance? What caused him/her to offer that advice?" "What would cause you to leave this job (if you got it)?" "Tell me a success story about one of your employees." "Tell me about an employee who didn’t work out. (Probe for what the person did to try to turn around the person’s performance)." "What do you see as the biggest downside to this job?" "What makes you laugh out loud at work?" "What has been your proudest moment at work so far?" "Describe a peer, whom you found irritating, and tell me how you managed the relationship." "What fantasy job have you always dreamed of?" "When you retire, what do you want your former colleagues to say about you?" "What has been your biggest disappointment in your career?" "Describe how you handled a new project that was out of your comfort zone."

Joan Lloyd & Associates

CEO, Think Your Behavior Has No Impact? Think Again.

What do you think goes on among a typical group of senior managers? Do you envision a group of smart, hard-driving executives engaged in open dialogue about the strategic issues affecting the bottom line of their company? Or, do you imagine a group of fifty-somethings with a mortgage to pay, kids in college, with a lot to lose if they don’t play along with the CEO? The reality is often somewhere in the middle. And if the organization is lucky, it has a CEO who realizes that his or her behavior determines, to a large degree, which way the pendulum will swing.

Regardless of the size of the company, there are critical cause and effect behaviors that CEO’s need to be aware of:

Don’t punish bad news. Leaders who go ballistic when things go south usually don’t realize how much their emotional volatility shuts down communication. Their management team will withhold negative events in the hope they can fix the problem before the leader hears about it. They will waste endless hours massaging data, wordsmithing memos, and rehearsing presentations until they are sanitized and guaranteed not to cause a stir. The problem, of course, is that the truth is always masked and issues go unresolved. Then, voila! The CEO learns about something too late, goes ballistic, and starts the vicious circle again.

Don’t trust the "Open Door" policy. Put yourself in an executive’s shoes. He has a lot of issues he probably should talk to the CEO about but he doesn’t want to bother the CEO because he is very busy. He knows he is expected to solve problems on his own, so he doesn’t want to look inept—or worse—needy. This can happen at every level of an organization when a leader relies on the Open Door to hear about issues. It’s a risky—no—lazy approach. Leaders need to get out of their office and walk around, have lunch with employees, have fireside chats, visit sales staff in the field and be visible and accessible.

Invite challenge and debate. Unless a leader encourages this, he or she may not get it. It’s often necessary for the CEO to be direct about it, "Let’s make sure this will work. I want to hear all the reasons why it won’t so we’re not surprised later." "I’m no expert in this matter. Charlie, you’ve seen how our distributors have reacted to new initiatives in the past. What are we missing?" Whether the leader is intimidating or not, direct reports will often hold back without a direct invitation.

Ask advice from a wide spectrum of excellent contributors. Leaders can run into trouble when they only rely on a few key advisors. Not only will the advice be limited in scope; it will create an unhealthy dynamic within the leadership group. For instance, executives and managers will quickly learn who is in the inner circle of confidants. If they are on the outside, they will resent being excluded, which may cause them to distance themselves from the "in" crowd and even withhold information from them. Political jockeying will begin, as people maneuver to gain access to the king.

Beware of rewarding loyalty over competence. We all see what happens in politics. The loyal one seems untouchable and is viewed through the rose colored glasses of the CEO. Because the loyal one has been granted this special safety, he or she would never risk jeopardizing this situation by challenging his or her benefactor. Unfortunately, this is also seen in private organizations. For example, successful entrepreneurs sometimes aren’t objective about the employees who were with them from the beginning, when times were tough. If the loyal one is a poor performer, good employees will become frustrated with this cog in the wheel of effectiveness and will lose respect for the leader. Great performers will not play on an uneven field and may take their ball to a company where competence is rewarded more fairly.

Beware of the outside ambassador role. Some CEO’s are so busy visiting customers, active in community affairs and shmoozing at the club; the mother ship begins to drift. Senior leaders have to make decisions without a CEO who can make the final decision and hold everyone accountable. Without the ultimate decision-maker, dissension can break out and politicking can eat up vast amounts of time. The vision becomes fragmented and momentum stalls. Every ship needs a captain.
Joan Lloyd & Associates

Long-Term Evaluation Documents Wellness Program Savings

A four-year study of Johnson & Johnson’s corporate wellness program has yielded the first-ever long-term evaluation of the financial and health impact of such initiatives, and the results are promising.

The study tracked employee medical expenditures for five years before and four years after the program began. Results showed the company saved an annual $225 per employee in reduced hospital admissions, mental health visits and outpatient services, averaging $8.5 million in yearly savings. In addition, Johnson & Johnson employees participating in the program showed reductions in eight of 13 risk categories, including hypertension, high cholesterol and sedentary lifestyle practices.

The increase in savings is almost certainly linked to increased worker participation in the program. More than 90% of eligible employees participated in 1999, compared to 26% in 1995. The increase is credited to financial incentives for employees who took part, including a $550 medical plan discount.

Employers should proceed with caution when calculating the ROI of disease management, as it is quite difficult to measure.
Source: BenefitsNews.com

Study Questions Hospital Accreditation Process

The accreditation status of a hospital does not necessarily translate into quality care, a study in the January issue of Quality Management in Health Care reveals.

Hospitals with above-average rates of deaths and complications receive positive scores from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the study co-authored by the University of Michigan School of Public Health found. JCAHO evaluates and accredits nearly 18,000 health care organizations and programs nationwide.

The report suggests that JCAHO relies almost entirely on a hospital’s structure and procedures to calculate accreditation status, rather than on deaths, complications and treatment standards.

JCAHO has rejected the findings of the study, arguing that researchers and other experts have dismissed mortality and complications indices as measures of the quality and safety of health care due to their global nature and difficulty in adjusting for risk.
Source: BenefitsNews.com

Downsized or Reorganized Out of a Job? Get Moving!

You still can't believe it. After all those years of dedicated service, this is what you get-fired. It wasn't supposed to be like this; you thought that someday you would retire from this company.

When the shock wore off, you got angry. Fantasies about `how badly they would suffer without you' faded and now the cold reality is beginning to sink in. Looking for a job was for other people. What now?

Here's a game plan for anyone who's been downsized or reorganized right out of a job:

• Before the ink is dry on your pink slip, go back and negotiate your reference. Talk to your manager and find out what he or she is planning to say about you when a potential employer calls. Get it in writing. If you were a great employee, ask for a letter of recommendation. Also, ask former managers to act as references and make copies of any letters or documents that could sell you to a future employer.

• Visit your human resources department and find out what's in your personnel file. Pay particular attention to performance reviews and attendance records, since this is the typical information that is shared during a reference check.

• Lick your wounds in private. Bitterness, anger and self-pity will make things worse. No one will want to be near you and people will be hesitant to help you. Rant and rave to a friend, counselor or support group, but stay positive and confident around everyone else.

• Draft a plan. Once you're over the first emotional hurdle, it's time to get on with your life. Get a good appointment calendar with lots of room to write notes. Set some goals--when the first draft of your resume will be finished; how many calls you'll make per day; how many appointments you will try to set up per week...

• Come out of the closet. Tell everyone you know that you're looking for a new job. The stigma attached to being laid off has faded. Everyone has a friend or relative who's in the same boat.

• Resolve to network like crazy. Write lists of everyone you know and where they work. Include people from professional organizations, former vendors and suppliers, customers, former co-workers. You never know who might be the link to your next opportunity.

• Rehearse a graceful answer to the question, "Why did you lose your job?" Make sure your answer is straightforward and neutral. For example, "The industry has been hurting and we were having a hard time competing. Cuts had to be made and I was one of many people whose job was eliminated."

• Make sure you let people know that it wasn't your performance that was the problem. You can do that by talking about factors outside of your control or about how you were among many who lost their jobs.

• Talk to other people who have been laid off to find out how they conducted their search. You will learn shortcuts that will keep you on track.

• Ask contacts to critique your resume...but then listen to their advice. Recently, I gave some advice to a woman whose resume wasn't getting results. She said, "But that sounds like I need to re-do it. I've worked so hard on my resume, I just want to leave it." She doesn't realize the wisdom of customizing your resume and changing it as you learn better ways to market your skills.

• Consider doing consulting or freelance work in your field, while you look for full-time employment. You can use your clients are references and it's always easier to find a job when you're working. Temporary or part-time opportunities can also lead to full-time work in your field.

• Take care of your personal life. Stay physically fit, live a balanced lifestyle and don't forget to have some fun. It will keep you out of the dumps and refresh you for the self-discipline needed to stay motivated.

Joan Lloyd & Associates

New OSHA 300 Recordkeeping

The new OSHA 300 recordkeeping requirements will be going into effect on January 1, 2002 to improve how the government tracks occupational injuries and illnesses. This new form will replace the OSHA 200 log, but the old OSHA 200 log still needs to be completed this year and posted during the month of February 2002. The new rules include new definitions of medical treatment, first aid and restricted work. The new rules also increase employee involvement, creates simpler forms, and gives employers more flexibility to use computers to meet the Occupational Safety and Health Administration's (OSHA) regulatory requirements. Some of the changes include:

· A summary log rather than the entire form must be posted.
· The form must be posted for a period of at least 90 days, including February, March and April.
· An owner or top company official must sign the form.

The new OSHA 300 log will be a standard size piece of paper, 8-1/2 x 11. It will include both a case identification and description column. Group cases will be divided into three classes, including deaths, with days away and without days away. There will also be an employer use column and summary that includes the number of employees and hours worked.
Associated Employers, SYNOPSES, November 2001

Hiring Employees
Employee or Independent Contractor

An employer must generally withhold income taxes, withhold and pay social security and Medicare taxes, and pay unemployment taxes on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to independent contractors.

Common-law rules. To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. All evidence of control and independence must be considered. In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered.

Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control , financial control, and the type of relationship of the parties.

Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

IRS help. If you want the IRS to determine whether a worker is an employee, file Form SS–8, Determination of Employee Work Status for Psurposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

Industry Examples

Individual Taxpayer Identification Number (ITIN). Form W-9 is used by persons required to file information returns with the IRS to get the payee's correct TIN. For individuals, the TIN is generally a social security number (SSN).

Show the full name and address as provided on Form W-9 on the information return filed with the IRS and on the copy furnished to the payee.

An employer must generally withhold income taxes, withhold and pay social security and Medicare taxes, and pay unemployment taxes on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to independent contractors.

Important References:
Publication 15A
Employer’s Supplemental Tax Guide Form SS–8 Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding Form W-9 Request for Taxpayer Identification Number and Certification
Internal Revenue Service

Alternative Ideas For Encouraging Employee Initiative, Beyond The "Suggestion Box"

When I was growing up, my neighbor used to reward her children with food every time they did something good. Clean their room: a bag of M&M’s. Behave in church: a trip to the ice cream stand. They struggled in school because they didn’t have a good sense of internal motivation. Without a carrot, why perform?

Most of us learn about self-motivation at an early age. It feels good to be good and it feels good to do good work. When we start fooling around with what comes naturally, we get ourselves in trouble. Unfortunately, the reward systems we create in our organizations can often backfire.

Consider this letter from a reader:

"I may have read in one of your articles that you think a suggestion box is a bad idea. However, we are committed to having one and have recently been more generous with our rewards for suggestions.

As you might have guessed, we are now getting more "suggestions" than ever, which is good and bad. My question to you is what is a good way to define "suggestion" so we don’t keep getting things that should be brought to the attention of their manager instead of waiting to put it in the box so they can get a reward. As an extreme—and hypothetical—example, "We’re out of toilet paper in the men’s room. Where’s my $50?"

Answer: Suggestion boxes were started years ago as a way to get input from employees. It seems like a good way to get employees’ ideas. The problem is most people ignore them. In other cases, disgruntled employees drop in nasty comments. Companies have to up the ante with more money to get employees’ attention.

"So what’s wrong with that?" you might ask. The fatal flaw is exactly what you pointed out in your letter. Instead of encouraging more communication and employee participation with their managers, employees are encouraged to go around their boss to get a reward.

Ideally, employees should be generating ideas within the context of their jobs. The more initiative they show, the greater the rewards. Those with the most ideas and creative energy to implement them should get more money at raise time (or spot bonuses) and more chances to get involved on task forces and other career enhancing opportunities. It’s the manager’s job to find ways to tap his or her employees for positive suggestions.

I think a suggestion box lets the managers off the hook. It says, "Don’t tell me your ideas. Go tell the system. Then sit and wait for the bureaucracy to push your suggestion to a person or a committee to evaluate. The more suggestions the committee gets, the longer it will take, so be patient. And don’t be surprised if you’re not happy with their response, since they don’t have the ability to get into a two-way dialogue with you about the pros and cons of the idea or how it could work."

With all of that said, if you are still going to have a suggestion box, here are some suggestions. Spell out that the suggestion box is only for suggestions outside of the scope of an employee’s job. Explain that suggestions that can be implemented by the manager/ employee, working within or across departments, will be sent back to the employee, with a copy to the manager.

Some companies now have "Workouts," where employees propose ideas to management in a face-to-face setting. At Workouts, decisions are made on the spot to pursue the idea or scratch it. Perhaps a spin you can put on your suggestion box is to invite all the people who have submitted ideas to come to a Suggestion Session with the Suggestion Committee, so individuals can present their ideas and hear immediately if the idea is worth taking to the next level. This would also be a quick way to sort through the volume of ideas and educate employees about what kinds of ideas qualify for a reward. In addition, it would discourage frivolous or sarcastic suggestions.

If you don’t have a committee, and there is someone who is assigned to wade through the suggestions and route them to appropriate people for a response, the program is probably doomed. Overworked people don’t spend much time on a routed suggestion they are not vested in and will find ways to avoid approving it.

As an alternative, why not create a pot of money for managers to use for rewarding employees throughout the year for their contributions. At the same time, tie part of managers’ raises and promotions to their ability to generate and implement new ideas from their employees.
Joan Lloyd & Associates

Link Between Rx Ads and Prescriptions Confirmed

Pharmaceutical companies spent some $2.5 billion last year for ads pushing prescription medications for everything from heartburn to birth control, and the investment is paying off handsomely: new research shows that nearly one-third of adults have spoken with their personal physicians about drugs they saw advertised.

Moreover, a national survey of some 2,500 people released today by the Kaiser Family Foundation also reports that one in eight adults (13%) has received a specific prescription in response to a drug advertisement.

Kaiser Family Foundation also reports that prescription drug spending has almost tripled since 1990 to an estimated $116.9 billion in 2000 and that utilization is increasing an average of 6% annually.

Increased utilization and shifts in use from older to new, more expensive drugs continue to account for most of the growth in drug spending. However, in recent years manufacturer price increases have contributed to a growing proportion of the increase in prescription drug spending, accounting for 24% of the increase from 1997 to 2000.

For more info, go to www.kaisernetwork.org.
Source: BenefitsNews.com

Strategies To Consider During Tough Economic Times

The company president sat slumped in his chair. His company faced another flat month of sales and bleak prospects in the months ahead. "I’m going to have to lay people off," he said. "I’ve tried everything else I can think of to cut costs but my back is to the wall. I have a small company and every one of these people is like family to me. I’m having a tough time dealing with this. I don’t know how long I can hold out before the company is in serious trouble, so I’m going to have to do something soon."

Thousands of small business owners are facing a similar scenario. The questions are stark: How can I cut employees without destroying employee morale and trust? If my employees know how much the company is hurting, won’t they all want to leave? What if the economy bounces back?

Here are some strategies to consider:

• Make it a practice to tell your employees how the company is doing, during good times and bad. This may seem counterintuitive to some leaders. They fear the worst. "If I tell them how much money we are making, they will all want a raise and if I tell them we are in trouble, they will all want to leave." Surprisingly, the facts don’t support this common belief. Employees who are educated about the company’s financial position feel respected because the owner is treating them like "owners." They are motivated to help where they can. They know that many companies are in the same boat they would rather stay with a company that trusts them with honest information and asks for their help.
• If you make cuts in areas that aren’t obvious to employees, make sure you inform them. Too often, the place where leaders cut first is employee head count, so employees are much more willing to reduce expenses when they know the leaders are doing everything they can to avoid laying off employees.
• Set parameters on where you don’t want to cut costs. For example, employees may make some well-intentioned cuts in marketing or sales…just the cuts you don’t want them to make. For instance, cutting the mileage expense account is the wrong thing to do if you need sales professionals to make twice the number of sales calls.
• Cut non-essential services first but weigh each choice against employee morale. For instance, employees may be willing to pick up the slack when you get rid of the office cleaning service but this may not be the right time to cut the cherished holiday party.
• The president needs to take a pay cut before he or she asks others to do so. This is not the time for the president and key officers to take an end of year bonus and buy themselves fancy cars and exotic vacations.
• Reconnect with the company’s best customers and find out how you can keep their business or add new business. During tough times, many companies start chasing new customers and take their old customers for granted. Not only is it critical to keep these good customers happy, it is a golden opportunity to discover what services and employees are most important to their satisfaction.
• This may be a good time for the president to get out of the office and do some selling. Chances are the small business owner is a great sales person, since he or she built the business in the first place. It also sets a clear example for everyone—selling is everyone’s business.
• You may want to create some creative sales and/or payment policies. Perhaps you can offer a 5 percent discount on new business or prompt payment of old receivables.
• Meet with employees to brainstorm creative ways to find sales in new places or position your product in different ways. I know of a company president who ignored his wife’s idea for a new product for years. Desperation made him a more open listener and that product now accounts for one third of the company’s total revenues.
• If you must cut labor costs, consider going to the employees first and ask for their help. One company president was astounded when the employees volunteered to take unpaid time off.
• If you must cut employees, let them know as early as possible. Treat them with respect and give them as much severance pay as you can afford. How you treat laid off employees will have a direct impact on the morale and loyalty of the survivors. In fact, one company went so far as to offer each laid-off employee a $7500 rehiring bonus, if they were to be rehired within 18 months. If the economy recovers, they want their former employees back. They reasoned that $7500 is much cheaper than rehiring and retraining new employees with no history of the company or its customers.

Talk to employees about the financial situation the company faces. In good times and bad, employees want to know how the company is doing.
Joan Lloyd and Associates

Employees To Dig Deeper For Pharmacy Benefits

Mounting evidence confirms that employee copays are getting steeper as companies step up multi-tiered prescription drug formularies.

Findings from a study commissioned by the Pharmacy Benefit Management Institute (PBMI) show that in 2000, first-tier copays increased by about 2%, second-tier copays by 10% and third-tier copays nearly 17%. Additional trend-supporting data is scheduled for release later this week by the Kaiser Foundation, and next week by the Pharmaceutical Care Management Association.

PBMI President Michael Deskin says the shift reflects employers’ desire to increase not only patients’ financial responsibility for medical care, but also their education levels about their health. Multi-tiered systems are more successful if patients “learn about treatment options and know what to look for.”
Source: BenefitsNews.com

2002 IRS Mileage Reimbursement Rate
The Internal Revenue Service (IRS) has already released its standard mileage rate to be used in computing the value of the business use of an automobile for the year 2002. The IRS standard mileage reimbursement rate has been increased for 2002 from 34.5 cents per mile to 36.5 cents per mile. The standard mileage rate is adjusted annually by the IRS. This rate is used to figure tax deductions for business travel as an alternative to deducting the actual costs.

For medical and moving expense purposes, the rate will increase to 2002 to 13 cents per mile from this year's 12 cents per mile. According to the IRS, the main reason for these mileage rate increases is the rise in gasoline prices during the past year. The standard mileage rates for business, medical and moving purposes are based on an annual study conducted on behalf of the IRS of the fixed and variable costs of operating an automobile. In any event, the 2002 standard mileage rate (36.5 cents per mile) for all miles used for business purposes becomes effective on January 1, 2002.
Capital Associated Industries, Management Newsletter, November 12, 2001

Skills That Earn Promotion To Manager, Trip Up New Managers
If you are a solo performer, a.k.a. individual contributor, who has become a new manager, it’s a little like moving from single life to life as a parent. The focus shifts from individual needs to the needs of others and it’s a much steeper learning curve than anyone ever imagines.

It’s exciting for me to work with new managers because they are usually eager to learn new skills and establish themselves as leaders. They are usually skilled in their specialty and have been promoted because they achieved superior individual accomplishments. But that is exactly the thing that trips them up in their new role.

Within a few months, they are often feeling overwhelmed by their staggering To Do lists. As the pages of tasks mount, they put on a brave face and put in more hours. They try to make themselves available to all the employees, who stop by with personnel issues, questions, or just want to chat. They drag mountains of work home each night because they can’t get any of their tasks done during the day.

They want to make a good impression on their boss and their employees, so they want everyone to be happy. The problem is that they are miserable. What they are about to learn is one of the most important lessons in leadership: you need to shift your focus to leveraging others instead of doing it all yourself.

Here are some quick lessons for the new manager:

• Delegating is not the same as dumping your work on others. This is the first mental hurdle you have to jump. People in your department want to help you get the work done. Your job is to fashion the work in ways that fit the strengths and talents of your employees.
• Delegating work to a few trusted stars will create a stew of discontent. The stars will burn out and the under-utilized will accuse you of favoritism. Your job is to balance the work and that means challenging the skilled and helping the less skilled.
• You are accountable for the work but that doesn’t mean you have to do it yourself. You are accountable for helping employees deliver results but you are not supposed to jump in and do it for them—which will take all the fun away. Remember how much you enjoyed the challenge of working on a project without a manager breathing down your neck?
• Don’t think that just because a person e-mails or voice-mails a question to you that you have to answer it yourself. As an individual contributor, you were ultra careful to be responsive to everyone. You feel a loss of control when you ask someone else to respond. Nevertheless, learn to use the "Forward" function.
• Every time you pick up your pen to add to your personal To Do list, ask yourself, "Who would be a better person to give this to?"
• Use your electronic tools to follow up on delegated tasks. For instance, flag yourself on your electronic calendar to check with an employee on a project. When you "forward" an important issue to an employee on e-mail, ask him or her to copy you on the response.
• Don’t be afraid to close your door or go to a quiet place to get some quiet time to work on a project or presentation. You don’t have to be available 24/7.
• Set up one-on-one meetings with each employee, to hear about their individual projects. It puts you in a good position to coach them on problems or redirect them if needed. It also cuts down on constant interruptions.
• Frequently ask yourself, "Is this the best use of my time right now?" Ask your employees to ask you the same question. (For example, my staff asks me that question when I’m standing at the copy machine or straightening the storeroom when they know I’m swamped with work.)
• Talk with each employee about what his or her career interests are. If you know what their goals are, you will be able to delegate work that will develop the skills they need to reach those goals. Delegating won’t seem like dumping, when you realize you can help employees achieve their career dreams.
Joan Lloyd & Associates

Inclement Weather - To Pay or Not To Pay
With upcoming icy and snowy weather, employers would be wise to revisit their inclement weather policies. Employers should address two key questions:
    • How are you going to notify employees if you are open or closed?
    • How will you pay employees if you are closed all day, or if you close for only a partial day?
The method of payment for your hourly employees when they miss work due to inclement weather is quite simple. If a nonexempt, hourly paid employee does not work, the company is under no obligation to pay the employee. This is true regardless if the company is open for business or if it is closed due to the weather. The Fair Labor Standards Act (FLSA and also commonly known as the Wage/Hour Act) says that you must pay nonexempt employees only for time "actually worked." The same holds when an hourly, non-exempt employee comes in late or leaves early due to the weather - you only have to pay for actual time worked.
 
For salaried exempt and non-exempt employees, the method of payment is more complicated. For salaried, nonexempt employees, the method of payment depends on what has been communicated. If they are paid a set salary based on a set schedule (ie. $400 for a 40 hour workweek), they are essentially being paid by the hour. They can be treated like an hourly employee as outlined above. Yet, if they are paid a set salary for all hours worked, then they are treated more like a salaried exempt employee. Salaried exempt employees must be paid if they miss work due to weather, if the company is closed a day or so for business. The FLSA states that "an employee will not be considered to be on a salaried basis if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business." If the business is closed for an entire week, and an employee performs no work, then the employer does not have to pay for that week. In both cases, it would be permissible for a company to require a salaried employee to exhaust days of paid vacation/sick/personal leave for the number of days the business was closed. Yet if the employee has exhausted all available vacation/sick/personal leave, it is not permissible to dock the salaried employee's pay, unless he misses the entire week.

If the business is open, and a salaried exempt/non-exempt employee does not report for work and performs no work at home, then the company may require the employee to exhaust a day of paid vacation/sick/personal leave. In this case, if the employee has no available vacation/sick/personal leave, it is permissible to dock their pay for the day, because work was available. If the salaried employee reports for part of the day, they must be paid for the entire day. It is not permissible to dock a salaried exempt employee for a partial day absence.

If a company chooses to set up a system like this, they should make their policies known to all employees in advance and in writing. Therefore, you should communicate your policy now to prepare for the next inclement weather situation. Keep in mind that companies should balance the legal requirements under the FLSA as compared to the "employee relations" issue of paying/not paying employees for inclement weather days. 
 
Below is a sample inclement weather policy.
You may customize it to match your company's notification and pay procedures. Please note that the last paragraph is really geared toward non-exempt employees. If the business is closed, exempt employees would need to be paid, although you may require them to use any available paid time off days.

Inclement Weather Policy - Sample
Because of our responsibilities and obligations to our customers, it is YOUR COMPANY'S NAME policy to remain open if at all possible. If severe weather conditions exist, forcing the facility to shut down, we will try to inform you of this before you leave to come to work.

If you have any questions as to whether or not the facility is open, it is your responsibility to call the company. If the office is open, then employees will be expected to report to work. However, on occasion employees have been unable to get to work due to conditions caused by bad weather. You must call and speak with your supervisor within the first hour of the workday, if at all possible.
This paragraph is geared toward non-exempt employees
If the facility is open, and you do not report to work, you will not be paid for this absence. You must use a [sick/personal/vacation] day if you wish to receive pay for this day. If the facility is not open, you will not receive pay for each day of absence. You may, however, use a [sick/personal/vacation] day.
The Employer Association

Calculator Links Cost SavingsTo Accredited Health Plans

A potentially useful if perhaps self-serving online tool from the National Committee for Quality Assurance (NCQA) promises to help benefit managers show high-quality health plans are also the most cost effective.

Called the Quality Dividend Calculator, the free Web-based application helps employers measure cost savings from choosing NCQA-accredited plans over non-accredited plans. The calculations are based in part on Health Plan Employer Data and Information Set (HEDIS) scores, used by more than 90% of U.S. health plans to assess performance. It measures average HEDIS scores of accredited versus non-accredited plans, in addition to data on worker productivity. Results are used to determine potential savings in terms of sick days and wages under an accredited plan.

The differences are “dramatic,” maintains NCQA President Margaret O’Kane, who says the calculator takes the "disparity we already know exists between accredited and non-accredited plans and translates it into bottom line value for employers.”

The calculator is available through NCQA’s Web site, www.ncqa.org
Source: BenefitsNews.com

Tips On Dealing With Suspicious Packages and Letters

Suspicious Packages
The Postal Service delivers approximately 208 billion pieces of mail per year. Presently, there have been numerous incidents involving anthrax bacteria being sent through the mail. Some of our members have called asking what they should do to prepare their staff should they receive a suspicious package. At the back of this newsletter is the Special Report that details what you should do should you receive a suspicious parcel. You may want to share these tips with anyone who handles mail or packages. You need to strike a balance between raising awareness and causing undue alarm. What does a suspicious package look like? Some typical characteristics Postal Inspectors have detected include:

• An unexpected parcel or one that is unfamiliar to you.
• Addressed to someone no longer with your organization or otherwise outdated.
• No return address, or has one that cannot be verified as legitimate.
• Of unusual weight, given their size, or are lopsided or oddly shaped.
• Have protruding wires, strange odors or stains.
• Show a city or state in the postmark that does not match the return address.

If you would like more information regarding anthrax and the postal threat, visit the following websites: www.usps.com  and www.bt.cdc.gov

Dealing with a Suspicious Letter
Many facilities in communities around the country have received anthrax threat letters. Most were empty envelopes; some have contained powdery substances. The purpose of these guidelines is to recommend procedures for handling such incidents. The Center for Disease Control (CDC) has issued the following guidelines when dealing with a suspicious unopened letter:
1. Do not shake or empty the contents of any suspicious envelope or package.
2. PLACE the envelope or package in a plastic bag or some type of container to prevent leakage of contents.
3. If you do not have a container, then COVER the envelope or package with anything (e.g., clothing, paper, trash can, etc.) and do not remove this cover.
4. Then LEAVE the room and CLOSE the door, or section off the area to prevent others from entering the affected area.
5. WASH your hands with soap and water to prevent spreading any powder to your face.
6. What to do next…. . If you are at home, then report the incident to the local police. . If you are at work, then report the incident to the local police, and notify your building security offical or an available supervisor.
7. List all people who were in the room or area when this suspicious letter or package was recognized. Give this list to both the local health authorities and law enforcement officials for follow-up investigations and advice.
”If the envelop or package should spill onto a surface, then you should do the following: ! DO NOT try to clean up the powder. COVER the spill with anything (as listed above) and do not remove this cover.
• Leave the room and close the door to prevent others from entering the area.
• Wash your hands with soap and water to prevent it from spreading.
• Remove heavily contaminated clothing as soon as possible and place in a plastic bag or some container that can be sealed.
• If possible, list all the people who were in the room or area, especially those who had actual contact with the powder.

Give this list to both the local public health authorities and law enforcement officials. (www.bt.cdc.gov)
Source: The Employer Association

Medical Costs Show Resistance To Managed Care

Perhaps even more disturbing than the rate of health care inflation is evidence that weapons to combat it are growing less effective.

New findings such as those from The Segal Company suggest a growing immunity to managed care. For example, in 1998, the difference in cost trend (change in per-person claims costs) between non-network fee-for-service plans and HMOs was 8%. In 2002, that difference is projected to shrink to just 3.6%.

Next year’s costs for non-network FFS plans, PPOs, POS plans, and HMOs are expected to rise by 16.4%, 14%, 13.5%, and 12.8%, respectively, according to the survey. The 2001 trend rates for FFS plans and PPOs fell below expectations, while those for HMOs exceeded expected cost increases by 6.7%.

Among the culprits are prescription drug costs, which are projected to rise by 19.4% in 2002. Survey analysts cite “consumer-directed prescription drug marketing, higher provider reimbursements, liberalization of plan rules, increased regulation and the aging of the workforce” as factors contributing to the increased costs.
Source: BenefitsNews.com

Hospitals Outpace Rx as Source of Cost Inflation September 28, 2001
Prescription drugs might no longer have to take the lion’s share of the blame for double-digit increases in health care costs plaguing employer plans.

A new study points the finger at hospital spending as the main driver of those hikes. Of the 7.2% total increase in health care costs in 2000, hospital spending accounted for nearly half, at 47%, according to research released Wednesday by the Center for Studying Health System Change.

And while drug costs are still high and rising, they accounted for only 27% of the total health care cost increase last year, HSC found, dropping dramatically from 41% in 1999.

Study co-author and HSC President Paul Ginsburg attributes the increases in hospital spending to a retreat from managed care. “Plans are loosening prior authorization requirements, and increasing patients’ access to hospitals and physicians,” he says. “This increases demand for hospital services and increases labor costs.”

Hospital staff shortages and an effort to recoup squeezed payments from the tight managed care trend of the early and mid-1990s also account for last year’s increases, Ginsburg says, adding the decrease in drug prices is largely due to a shift to multi-tiered benefits.

Employers don’t have “a lot of options left” to ease the financial burden says Chamber of Commerce Director of Health Policy Kate Sullivan. “Shifting more of the costs to employees is still an option, but most companies are still paying the same percentage of premiums they always were,” she says. “The only difference is employees are paying more out of pocket.”
Source: BenefitsNews.com

Most Employers to Raise Worker Health Contributions
Among employers trying to handle the estimated 13.6% increase in health care costs predicted for 2002, more than half (56%) will raise employee contributions as much or more than the cost increases, and more than 71% are considering benefit reductions or copay increases.

As costs continue to rise and the economy continues to sink, cost-shifting is the predictable response, observe Watson Wyatt survey analysts. Employers also revealed that while cost-shifting will serve its purpose in the short-term, helping workers to become better educated as health care consumers will have long-term effects on reducing costs. In fact, 75% of employers said they plan to take this approach in the coming year.

“The rapidly emerging Web capabilities hold the promise to promote consumerism and employee responsibility – an attempt to bring employees back into the picture in purchasing health care services,” says Watson Wyatt practice director Maureen Cotter.
Source: Watson Wyatt

Important Family and Medical Leave Act (FMLA) Update
Three recent court decisions require you to establish written policies, procedures and notices to meet the requirements of the federal Family and Medical Leave Act (FMLA).

1. Your Company or organization must select one of four FMLA prescribed methods to determine the 12-month period during which an employee may take up to 12 weeks' leave. After your organization has made this selection, the organization must inform employees via your employee handbook, or if you don't publish a handbook, include such information in your written leave policy. If you as a company or organization don't inform employees of your choice, a court will choose the method that's most favorable to the employee (Bachelder v. American West airlines, 9th Cir, August 8, 2001)

An employer may choose:
• Calendar year; or
• Any fixed "leave year," a year required by State law or a year starting on employee's anniversary date; or
• 12-month period measured forward from the date of employee's first FMLA leave; or
• "Rolling" 12-month period measured backward from date employee uses any FMLA leave.

2. An employee need not request FMLA leave formally, or submit a written request or complete a company form in order to be eligible for FMLA leave. The employee need only give you sufficient verbal information to establish that the need for leave satisfies one of the FMLA's qualifying events (Shivakumars v. Abbott Laboratories, ND Ill, July 9, 2001)

3. In letters that designate FMLA leave, you must inform employees of their obligations and responsibilities (e.g., provide a medical certification). You must also tell them the consequences for failure to meet the obligations. This letter is in addition to placing a notice in an employee handbook or leave policy. If you fail to provide a "penalty" notice in the designation letter, you may not penalize an employee for failing to meet the obligation(s) (Wilson v. Lemington Home for the Atged, WD Pa, June 5, 2001). Tip for Employers: To administer FMLA properly, publish the right information in your leave policy, employee handbook, and letters that designate leave. Audit your FMLA policies and procedures to ensure they comply with the statute and regulations. Most FMLA lawsuits involve employees who have logged a significant number of absences or tardies. Avoid any disciplinary action until you're sure that the FMLA or state laws do not protect any of the absences or tardies, and that you have followed all procedures properly.
 Associated Employers, SYNOPSES, September 2001

Many Employers Will Implement Differential Pay Policies For Reservists

Sixty percent of employers plan to institute differential pay policies for military reserve employees who are activated due to the Sept. 11 attacks, according to a new poll on efforts to minimize the gap between military and career compensation.

Of the 51 surveyed employers representing some 500,000 workers, 80% have compensation policies and 74% have medical policies in place for reservists, say Watson Wyatt researchers. Many companies currently are considering a revision of these plans.

Nearly half (47%) of employers indicate they will exceed the COBRA statutory minimum coverage for reservists and their dependents by offering full medical benefits for an extended period.

Forty-five percent of companies do not know what financial impact the Sept. 11 attacks will have on their firm. Thirty-one percent do not anticipate a negative impact and 24% do expect their company to experience financial loss.

For further information on related employment laws, visit the Uniformed Services Employment and Reemployment Rights Act (USERRA) Web page.
Source: BenefitsNews.com

Hospitals Outpace Rx as Source of Cost Inflation

Prescription drugs might no longer have to take the lion’s share of the blame for double-digit increases in health care costs plaguing employer plans.

A new study points the finger at hospital spending as the main driver of those hikes. Of the 7.2% total increase in health care costs in 2000, hospital spending accounted for nearly half, at 47%, according to research released yesterday by the Center for Studying Health System Change.

And while drug costs are still high and rising, they accounted for only 27% of the total health care cost increase last year, HSC found, dropping dramatically from 41% in 1999.

Study co-author and HSC President Paul Ginsburg attributes the increases in hospital spending to a retreat from managed care. “Plans are loosening prior authorization requirements, and increasing patients’ access to hospitals and physicians,” he says. “This increases demand for hospital services and increases labor costs.”

Hospital staff shortages and an effort to recoup squeezed payments from the tight managed care trend of the early and mid-1990s also account for last year’s increases, Ginsburg says, adding the decrease in drug prices is largely due to a shift to multi-tiered benefits.

Employers don’t have “a lot of options left” to ease the financial burden says Chamber of Commerce Director of Health Policy Kate Sullivan. “Shifting more of the costs to employees is still an option, but most companies are still paying the same percentage of premiums they always were,” she says. “The only difference is employees are paying more out of pocket.”
Source: BenefitsNews.com

Bracing For An Emergency
In light of the recent events that took place on September 11, 2001 in New York City and Washington D.C., employers should prepare an emergency plan. This is necessary in many situations, including hurricanes or inclement weather, terrorist activities and workplace violence. A corporate emergency-survival plan must reflect a thorough analysis of all of its business functions. A key step in developing a crisis response plan is the formation of a management team that can handle the task at hand. A crisis response plan should define the steps an employer will take in the first 24 hours and full week following an incident in the workplace.

Specific questions that should be addressed in the plan include the following:
• What is the chain of command for dealing with an emergency situation?
• What emergency notification should occur?
• Who will notify medical, fire and police authorities, as well as necessary company managers?
• What is our evacuation route to get all employees safely out of the building? Do we have an alternative evacuation route?
• What public relations concerns should be immediately addressed? What procedures are in place for dealing with reporters?

Additional steps include:
• Assess the Company's Vulnerabilities and Resources
• Look at available resources. What is available in the community? Consider doing a skills inventory. Are there any individuals with medical expertise, CPR training?
• Itemize what you will need to retrieve if you are forced out of the building. Examine Communication Options
• Do not rely on one means of communication. Inventory your communication tools and know how they will function in a disaster. Know what goes through the switchboard and what does not.
• What kind of communication back-up exists? Do you have in-office cellular phones or amateur radios?
• Determine how you are going to communicate with employees. Know how to tell them what the business is going to do and what is expected of them.
• Create a plan to track employees who travel. Who is responsible for knowing their itinerary, and how can they be contacted while away on business?
• Consider whether or not and how long you will pay employees if they are unable to come to work or if the office closes temporarily. How will you provide paychecks?
• Consider implementing a liberal leave of absence policy for extreme circumstances.
• Consider creating a family-notification program. Do you have current emergency contacts on file for each employee? Explore Alternative Locations
• Think about an alternate location where you can conduct business if you are unable to use your normal site.
• Store back-up records off site where you can access them from your regular place of business.
• Determine who is responsible for getting the mail or informing the postmaster where to send mail. By developing such a plan, a company has to think through all aspects of the company, including its daily operations.

Finally, one of the most important resources during such times is an Employee Assistance Program (EAP). Remind your staff how to contact the EAP. In the next newsletter, we will outline tips for how to help employees cope during stressful events.
Personnel Journal

Application Questions
Employers have to be very careful regarding the kinds of questions they can ask prospective employees. There are several laws which prohibit discrimination against people in specific protected classes. The Equal Employment Opportunity Commission (EEOC) has issued guidelines for preemployment inquiries. The general rule is that employers may ask only questions that actually relate to the job. In other words, be sure that your questions are asked for a legitimate, nondiscriminatory reason.

Here are several preemployment inquiries that are found on some applications which should be avoided:
• Age or date of birth. Do not ask for the applicant's age or date of birth, either directly or indirectly. You may, however, ask "Are you at least 18 years old?"
• Arrests. An arrest, as opposed to an actual conviction, is no indication of guilt.
• Convictions. You may ask about convictions, but make sure you have a clause that states convictions will not automatically exclude them from consideration. You should follow-up to examine the recency and the relevancy of the conviction.
• Saturday or Sunday work. Questions about an applicant's willingness to work on weekends may discourage those whose religions prohibit working on Saturday or Sunday. Only ask these questions for jobs for which it is truly a requirement.
• Citizenship or place of birth. This could be considered discriminatory based on the applicant's national origin.
• Eye or hair color. Neither are related to job performance and may unnecessarily reveal something about an employee's protected status, such as race or ethnicity.
• Height or weight. Should only be asked if it is a requirement of the job. Few jobs could have such a requirement.
• Gender. It is better to delete this question from general applications and reserve it for specific jobs. Very few jobs have gender as a "bona fide occupational qualification."
• Marital status. Historically, some employers declined to hire married women for certain jobs, a violation of Title VII.
• Medical history and/or disabilities. The Americans With Disabilities Act (ADA) and the laws of many states make preemployment inquiries about medical history illegal. However, you can ask, "Can you perform the essential functions of the job as described in our position description?"
• Type of military discharge. Decisions based on this information have been challenged as having disparate impact against protected groups. In order to create the right application form, here are several ways to avoid problems with application questions:

Train employees how to ask the right questions. Let hiring managers and supervisors know what they can and cannot ask. # Use properly designed application forms. You need to balance your need for information about an applicant's ability to perform a specific job against the risk of asking a discriminatory question.
Treat the interview process with the same formality as the application. Avoid trying to obtain information in interviews by covertly asking questions that you would not ask on an application form.
Pose questions correctly. For example, if working extra hours or weekends is a requirement, you may ask if the applicant can work overtime or weekends. However, avoid asking the person if he or she needs daycare or if he/she has religious reasons for not working weekends. These types of questions could lead to a discrimination suit if you decide not to hire the person.
The Employers Association September 25, 2001

Aetna Launches Consumer-Directed Health Plan
Aetna announced today it is rolling out what it calls a defined contribution health plan that gives employers more flexibility in product design and employees more control over their benefits.

Spokesman Walt Cherniak claims Aetna is the "first national player" to offer this kind of plan, which is geared toward businesses with 300 to 3,000 employees. "There's a trend toward greater choice," he says. "Plan sponsors are looking for other options based on value and choice."

The program, called Aetna HealthFund, couples a PPO-style plan with an employer-funded health savings account that will go toward the deductibles and can be rolled over at the end of the year. Annual PPO deductibles are expected to run from $1,500 to $3,000, while savings account maximums would start from about $500.

A flexible spending account, funded with employee pre-tax dollars will also be available, as is an online navigator allowing members to manage health and track expenditures on a personalized Web site.

Source: BenefitsNews.com

Health Benefits Data Yield Few Surprises, Little Good News
Premiums for employer-sponsored health insurance rose an average 11% this year, the largest increase in nearly a decade, according to annual survey results released this morning from the Kaiser Family Foundation and the Health Research and Educational Trust.

The scapegoats for the increase include the usual suspects – surging prescription drug costs coupled with the sagging economy. “Health costs are rising while the economy is sputtering, and it looks like workers are going to pay the price,” says Kaiser President Drew Altman.

Straining to keep up, 42% of employers surveyed say it’s “very likely” they will increase employees’ share of the burden to pay for health insurance next year. Altman says the loosening job market gives employers a little more leeway than previously, as they worked to recruit and retain quality staff with affordable yet comprehensive health packages.

In other findings, while premiums saw their biggest hike since 1992, HMO enrollment experienced its biggest loss since 1993, falling further to 23% from 29% last year.

In the search for solutions, employers interested in shifting coverage to a defined contribution option remain in the minority; 46% say it’s “very unlikely” they will pursue it in the next five years.

Source: BenefitsNews.com

EEO/AA News-Harassment Investigation Tips
One way employers can reduce their liability when it comes to harassment complaints is by conducting a prompt, thorough investigation. Often times it is the Human Resources Manager who conducts the investigation. Many companies choose to hire a neutral, outside party. Whoever conducts the investigation should be well-trained in the skills that are required for interviewing witnesses and evaluating credibility. The employer should ensure that the alleged harasser does not have supervisory authority over the individual who conducts the investigation and should not have any direct or indirect control over the investigation.

There are several people who should be contacted during an investigation, including the complainant, the alleged harasser, and other parties who could have relevant information. The interviewer should refrain from offering his or her opinion during the investigation. Below are questions which are recommended by the Equal Employment Opportunity Commission in their official guidance on sexual harassment. These tips can be used for any type of harassment investigation.
 
Questions to ask the complainant:
• Who, what, when, where and how?
• Who committed the alleged harassment?
• What exactly occurred or was said?
• When did it occur and is it still ongoing?
• Where did it occur, how often?
• How did you react?
• What response did you make when the incidents occurred or afterwards?
• How did the harassment affect you? Your job?
• Are there any persons who have relevant information?
• Was anyone present during the alleged harassment?
• Did you tell anyone about it?
• Did anyone see you immediately after episodes of alleged harassment?
• Did the person who harassed you harass anyone else?
• Do you know whether anyone complained about harassment by that person?
• Are there any notes, physical evidence or other documentation regarding the incidents?
• How would you like to see the situation resolved?
• Do you know any other relevant information?

Questions to ask the alleged harasser:
• What is your response to the allegations?
• If the harasser claims the allegations are false, ask why the complainant might lie?
• Are there any persons who have relevant information?
• Are there any notes, physical evidence or other documentation regarding the incidents?
• Do you know any other relevant information?

Questions to ask third parties:
• What did you see or hear?
• When did this occur?
• Describe the alleged harasser's behavior toward the complainant and towards others in the workplace. • What did the complainant tell you?
• When did he or she tell you this?
• Do you know any other relevant information?
•Are there other persons who have relevant information?

The investigator should be objective when gathering the facts of the case and consider all the relevant information. It is only after a complete investigation that appropriate actions

The Employers Association

Retirement Planning Help Falls Short of Demands

Participants keep clamoring for help with their 401(k) investment decisions, but plan sponsors are less than thrilled with what their providers are offering.

Some 1,700 sponsors studied by Boston Research Group gave their providers good marks for routine chores such as recordkeeping. But less than half of the 19% that hire their 401(k) providers to also deliver employee education and investment advice are "very satisfied" with those services.

Nevertheless, another 12% of pension plan sponsors said they plan to hire 401(k) providers to deliver employee education and advice in the future, perhaps owing to strong participant demand. For example, more than 75% of 546 employees surveyed by ING Aetna Financial Services (www.aetnafinancial.com) said they would take retirement planning advice if it was provided by their employer.

One Congressional attempt to bridge the advice gap would update ERISA to allow employers to provide access to professional investment advice with less fear of liability. An article in the current issue of Employee Benefit News details the bill. Click here for more.

Other disconnects remain, however: Boston Research has found that three-fourths of plan sponsors provide education/advice via the Internet, yet only 15% of participants say that's their preferred method for receiving it.

Source: BenefitsNews.com

Study: U.S. Employees Work Longest Hours

As Americans return to work after Labor Day weekend, new study results show that, despite the recent three-day respite, American workers log more hours than any other country in the industrialized world.

Statistics from the United Nations’ International Labor Organization show that last year the average American worked nearly an additional week of work, compared to 1990. What’s more worrisome, beefs ILO analyst Lawrence Johnson, is that “the increase in the number of hours worked within the United States runs counter to the trend in other industrialized nations” where “we’re seeing a declining number of hours worked annually.”

Data show the average Australian, Canadian, Japanese and Mexican worker was on the job about 100 hours – almost two and a half weeks – less than the average American. In addition, other research has shown workers abroad have significantly longer vacations. The average European worker is given four to six weeks of vacation time, compared to Americans’ two.

Source: BenefitsNews.com

Friend or Foe? Exit Interviews are Priceless
Do employers really know what former employees are saying about the organization after they leave their employment? Did employers ever consider that these same people are in the unique position to make a huge difference to an organization by serving as unofficial recruiters on the employer's behalf, or becoming potential adversaries with unflattering messages based on their personal experiences? Like it or not some degree of employee turnover is a reality for all organizations regardless of size, industry, or location. It is what employers do about this reality that will either benefit or harm them as they continuously strive to grow their businesses, practice their organization's mission statements, and achieve strategic initiatives.

Since information is power, it is imperative for employers to take a proactive approach to effectively manage their workforce turnover by conducting thorough and consistent exit interviews. A well developed and consistently administered exit interview process is a valuable source of quality information from which to evaluate and analyze internal policies and practices, supervisory personnel, job content, work environment, and career development issues, to name a few. It is also an opportunity to benchmark practices of other employers by asking the question, "What did you find attractive about your new employer when compared to us?" Oftentimes, employers assume the reason for turnover and implement changes only to find out it is not solving the problem.

It is easy for exiting employees to cite, and for employers to believe, compensation is the primary reason for turnover. Departing employees feel "safe" in not disclosing the real underlying reason for leaving. Employers that may not be in the financial position to pay more salary dollars walk away believing there is nothing they can do about the turnover situation. This is actually an easy out for both parties. According to the Saratoga Institute's Workforce Study, 85 percent of people leave an organization for reasons other than pay, with the number one reason identified as poor supervisor skills and attitudes.

Turnover, especially involving high performers at any level within an organization is expensive when factoring all the costs involved, both direct and indirect. The key to lowering turnover, and the subsequent associated costs, is to understand and meet the motivators of the workforce, and implement appropriate retention initiatives that address them. As part of a formal exit process, ask departing employees, "What is your primary reason for not staying" or "What made you start looking for a new job in the first place?" You will get a good idea whether the person walking out of the door is a professional friend or foe.

MRA The Management Association, Inc. HUMAN RESOURCE DIGEST, August 2001

Please note: CVI is your local resource to conduct face-to-face or telephone exit interviews with department employees. Past employees will often be more forthcoming and give the "real" reason for leaving if a confidential, non-threatening and non-company person conducts the exit interview. Please call to discuss this CVI service.

Employees Feel Short-Changed by Health Benefits
Most employees consistently underestimate the cost of their health benefits, overestimate their own contributions and are generally dissatisfied with the quality and performance of their plans.

The main reason for dissatisfaction is poor communications, according to Watson Wyatt, which recently studied 10,000 employees at 18 companies. Surging costs and poor plan performance also cause dissatisfaction, notes senior consultant Steven Richter.

A separate report issued today by Kaiser Family Foundation and Harvard University finds employees are increasingly grumpy. While 62% of some 1,200 survey respondents give their plans an "A" or "B" grade, 48% report problems with billing or obtaining necessary services. Thirty-nine percent say managed care plans do a “bad job” serving customers, compared to 32% who believe the plans do a “good job.”

“Employers could improve return on investment by helping employees better understand their plans and the value of their benefits,” surmises Watson Wyatt’s Richter.

Watson Wyatt finds 43% of respondents expressed satisfaction with their health benefits, while 63% underestimate the value of the benefit and 47% believe better plans are available at the same cost. Less than half (48%) trust their employer to design a benefit with adequate coverage.

Source: BenefitsNews.com

Managed Care, Indemnity Plans Expense Admin Costs Evenly
HMOs, PPOs and indemnity plans appear to be on the same page when it comes to administration costs, according to an analysis from Gwynedd, Pa.-based Sherlock Co.

Researchers found that each type of plan spends an average of 14% of monthly premiums on administration costs. POS plans spent an average of 16%.

For all publicly traded plans, the total administration expense-to-premium ratio has declined slightly from one year ago (13.7% to 13.1%), says Douglas Sherlock, Senior Healthcare Analyst with Sherlock Co. Sherlock attributes this drop to two trends.

“As growth has slowed, particularly in managed care type products, marketing-related functions tend to be under greater scrutiny,” he says. “And inflation rates for administration costs don’t grow as fast as administration costs for health care.”

The report also found that health plans lose an average of 19 cents per dollar on TPA contracts.

Source: BenefitsNews.com

401(k)sters Seek Higher Ground, Lower Risks
Though nobody's jumping out the window, that sinking feeling many 401(k) participants get when they look at recent statements is translating into a shift of funds to lower-risk investments.

The Hewitt 401(k) Index, which tracks fund transfers of nearly 1.5 million U.S. plan members, shows stable value fund holdings increased 57% between January and April of 2001. Although well over 70% of contributions still flow to equity asset classes, the drift toward reduced risk continues to show in data this summer.

Meantime, AEGON Institutional Markets Inc., the top U.S. provider of stable value products, says its sales doubled during the first six months of this year. The firm received $5.5 billion in new stable value deposits from January through June, compared to $2.6 billion in the first six months of 2000.

"We think investors have begun to realize they must make more realistic choices, especially when it comes to long-term retirement savings," says Aruna Hobbs, head of AEGON's stable value unit.

Stable value investments, also known as guaranteed investment contracts (GICs), total about $250 billion and represent about 25% of all retirement plan assets.

Source: BenefitsNews.com

NLRB Gives "Green Light" To Employee Committees
In a long awaited decision by employers, the National Labor Relations Board (NLRB) last week gave its stamp of approval to the prevalent practice of use of joint employer-employee committees in the work place. Employers in the past several decades have moved more and more towards utilizing employees in the decision making process at work as "employee involvement" and "teams" became an accepted way of seeking to improve both productivity and employer-employee relationships in the work place. Labor unions had challenged the practice of using such committees in the decision making process as illegal, claiming it violated the National Labor Relations Act in that such committees were according to the unions, nothing more than company sponsored unions which are illegal under the Act. Unions said that employee committees with decision making authority were nothing more than an attempt by employers to do an end run around

labor unions by establishing their own company dominated unions in the form of employee committees, thereby eliminating the opportunity for employees to have their own bona fide unions. The NLRB ruling said that employee committees were not labor organizations under the Act even though such committees may make binding decisions that carry supervisory authority. The ruling follows years of confusion and controversy beginning back in the 1980s when many American companies began adopting Japanese employee involvement style management techniques. In the early 1990s during the Clinton Administration, a liberal union prone NLRB began ruling against a number of companies using employee committees. Congress in 1996 passed the Team Act to permit such committees and over ride the union prone NLRB rulings only to have the Team Act legislation vetoed by unions' ally President Clinton, thereby killing the Team Act legislation and preventing it from becoming law. The decision last week from the NLRB establishing the legitimacy of joining employee-management committees came in a ruling involving Crown Cork & Seal where an employee at the company had filed a complaint with the NLRB alleging that the existence of such committees at the company were the equivalent of a company sponsored union. The NLRB decision in Crown Cork & Seal is a major win for both employers and employees and should open the door for even more joint cooperative efforts in the work place between management and employees without fear of violating the National Labor Relations Act.

Capital Associated Industries, Management Newsletter, July 30, 2001

Job Descriptions: Are Yours Updated?
Employers that are rapidly expanding their business may have difficulty finding time to update job descriptions. The job description is the core statement describing the relationship of the employee and the job. Courts regularly examine job descriptions when there are discrimination charges. Look at the descriptions - Are they accurate? Were they reviewed/revised before an opening was filled? Do you have a description to give an employee at the time of hire or orientation? The more specific job descriptions are, the less uncertainty there will be in the workplace. If the explanation of duties and responsibilities is incomplete, the employer cannot assume the employee will know the tasks the employer wants performed. However, current and accurate job descriptions are essential for both employer and employee success.

Effective job descriptions should include:
· Position title · Position requirements (education experience, physical requirements, travel, and licenses)
· Essential duties and functions of the position
· Marginal or secondary duties
· Responsibilities for supervision
· Reporting structure

Quotas and standards such as sales or productivity may change regularly, but should be defined, either in the job description or in the annual performance goals. CVI's  Resource Center contains several resources that can provide members with sample job descriptions to be adapted to your specific needs.

 Associated Employers, SYNOPSES, July 2001

Balancing Act
On track to double again, prescription drug costs push employers to seek tighter controls, greater cost-sharing

The golden years might require lots of gold indeed. As the nation's massive baby boom generation ages, its members are increasingly turning to expensive prescription medications to deal with such common conditions as allergies, gastrointestinal disorders, depression and hair loss.

This trend is partly responsible for an 84% increase in prescription drug benefit costs between 1996 and 2000, according to Merck-Medco, the nation's largest pharmacy benefit manager (PBM).

In its latest drug trend report, Merck-Medco estimates employer spending on drug benefits will double again over the next five years as manufacturers bring newer, more expensive therapies to market and consumers continue increasing their utilization of medications. The report is based on drug utilization and spending of Merck-Medco's 65 million pharmacy benefit plan members.

The greatest growth in drug spending occurred among consumers in the 40 to 55 age group, where greater awareness of pharmaceuticals for the treatment of common conditions has stimulated an early transition to long-term medications, the report states.

Drugs treating cardiovascular and central nervous system ailments will fuel more than half of the increase, the report says. Cardiovascular drugs include those that treat hypertension and lower cholesterol; central nervous system medications include psychiatric and neurological drugs as well as new medications that treat arthritis and other pain.

Average drug spending per member per year for retirees increased 96% between 1996 and last year, while drug spending for active employees rose 84%. However, the rate of increase year over year during this period was greatest for employees aged 40 to 55, states Robert Epstein, M.D., Merck-Medco's chief medical officer.

Drug price inflation was responsible for 22% of the five-year increase in benefit costs. Merck-Medco estimates drug price increases will continue to increase between 4% and 6% annually for the next three years. Rising utilization, driven both by the number of new users of drugs and an increase in the number of days of drug therapy, account for about half of the drug benefit cost surge.

There are indications that greater employer controls on prescription drug benefit plans are already alleviating some of the cost increases. After surging an average of 16.4% in 1999, prescription drug costs for Merck-Medco clients increased an average of 14% last year.

Significantly, one-third of Merck-Medco's largest employer and health plan clients were able to reduce their drug benefit cost increases to 10% or less in 2000 through cost-control measures.

Merck-Medco finds that over the next three years several blockbuster name-brand drugs will become available in generic versions that will cost one-third to one-half the retail price of brand medications. As medications representing about 11% of yearly drug expenditures go off patent, plans that effectively promote generic substitution can offset from 3% to 5% of their total annual drug benefit costs, Merck-Medco reports.

"We do not expect drug spending to decrease significantly any time in the near future," Epstein says. "However, many tools can be deployed to manage the rate of growth and at the same time improve the quality of care.

"The fact that one-third of the largest businesses and health care organizations have reduced their drug trend to half the national average proves this is not a problem without a solution."

Effective strategies
Drug manufacturers have more than 500 new medications currently in advanced stages of clinical development. A major PBM responsibility is monitoring the development of new drugs to model their impact on prescription benefit plans.

With prescription drug spending responsible for a significant portion of medical inflation, employers should expect their PBMs to use claims data and their knowledge of new medications to accurately forecast future drug benefit plan cost increases.

In addition, PBMs should also partner with employers to develop management strategies for new drugs before they become available on the market, based on member demographics and drug utilization patterns.

Clients have had much success reducing yearly drug benefit cost increases by encouraging the use of mail order pharmacies and lower-cost generic substitutes. Many employers have also increased their plan co-payment structures and modified formularies to encourage appropriate drug utilization.

"There are still some employers out there who have flat co-pays that charge the same cost to members for branded and generic drugs," Epstein notes. But tiered formularies are now considered the industry norm because they more accurately reflect the true cost of the benefit.

In fact, with new research showing that nearly half of all HMO enrollees will have a three-tiered prescription drug plan by the end of next year, pharmacy manager Express Scripts has announced a new five-tier plan that could cost employees as much as $50 per prescription.

Under the Express Scripts plan, patients would pay $3 for most generic drugs but could see the hefty co-pays for brand-name medications $20 for preferred brand-name drugs, and $35 for nonpreferred brand-names. The $50 co-pays would be for drugs needed for "symptomatic relief," such as certain allergy medications.

Express Scripts CEO Barrett Tone says that within a year of using multi-tiered plans, employers see 10% to 20% of patients switching to lower-cost drugs.

Such steps might be an eye-opener to employees who are largely insulated from the true cost of their prescriptions, but employers are looking at a variety of ways to drive the message home.

"Many employers have asked us for ways to demonstrate to employees what their contribution for prescription drug benefits is compared to individual employee costs. Merck-Medco now has Internet resources and other communications materials that can display that information for each member in a plan," Epstein explains.

While this strategy certainly communicates the value of drug benefits to employees, the PBM still hasn't determined what affect, if any, this information has on individual decision-making.

Studies show that cost-share increases between 2% and 10% can lower drug utilization. When cost-share increases exceed 10%, however, the utilization of essential medications for chronic conditions such as hypertension and diabetes is reduced, which could lead to higher health care costs and negative outcomes.

Some large employers are also turning to advanced software-based medical and prescription drug programs to identify potential medical errors and ensure the accuracy of prescriptions. These systems can reduce drug costs by up to 3% and cut hospital spending by as much as 5% while improving health outcomes, Merck-Medco data show.

With new drugs, new technologies and advances in genetic research inevitable, experts predict spending for prescription drug benefits should continue doubling every few years for the foreseeable future. Most employers are not in a position to keep up with this trend.

"If employers don't employ new tactics, they will face a doubling of costs every five years," Epstein states. "There's no single silver bullet. It really requires em
Source: BenefitsNews.com

HMO renewal rates set new records
Although the year is only half over, few would argue that health care coverage costs won’t meet projections of double-digit increases. As health plans await the final damage report for 2001, renewals for fully insured HMO business are coming in at higher than expected rates, say consultants at William M. Mercer.

In a preview of its annual health plans survey, Mercer says premium increases of 20% are the norm, while some employers are experiencing rate hikes in excess of 50%. Overall, health care coverage costs are expected to go up by an average of 11% this year.

Mercer points the finger at several factors for the upsurge, including a delivery system fighting back against years of discounted services, an aging population and 10-year gains in managed care that have reached maximum return.

The likely passage of patients’ rights legislation will only worsen matters for the health care system, Mercer predicts.

Source: BenefitsNews.com

Morgan Stanley Joins Consumer-Driven Health Care Movement
As financier Morgan Stanley guides clients in customizing their investments, the company will offer its employees a customer-designed health care benefit.

Morgan Stanley employees in Ohio, Utah and Arizona will be offered a fully customizable health benefit option accessible online using technology developed by Choicelinx, a New Hampshire-based benefits technology firm. The technology lets employees view line-item medical costs and customize them to meet their individual or family needs.

Using the benefits configuration tool, employees can weigh the costs of selecting a $5 copay option for physician visits compared to selecting a $10 or $15 copay, thus actively controlling their health care costs and allocating their copay dollars to fit specific medical needs.

With a rapidly diversifying workforce, “it is extremely difficult to design a standard plan that is right for everyone,” says Morgan Stanley HR director Michael Torre. “We are pleased to be at the forefront of the movement toward consumer-driven health plans.”

Source: BenefitsNews.com

What Is Your Policy On Personnel Files?
If you have not already done so, we strongly suggest that you develop and communicate to your employees your company's policy on maintaining, retaining, and obtaining access to employee personnel files. Your policy should address: § The kinds of records maintained; § Whether employees will have access to the personnel files; § The confidential nature of the personnel records; and § How your company will respond to third-party inquiries.

You should periodically audit your company's personnel files and remove irrelevant, outdated, misleading, or inaccurate information.

The Americans With Disabilities Act (ADA) imposes strict limitations on the acquisition and use of information obtained from medical examinations and inquiries. Medical information obtained from a post-offer medical examination must be collected and maintained on a separate form, in a separate medical file, and must be treated as a confidential record. It should never be included in the personnel files. Your company should limit access of such medical information and records to staff members who have a "business need" for this information. These individuals may include supervisors or managers who may be informed about necessary restrictions on an employee's work or duties and necessary reasonable accommodations.

Succession planning information and I-9 forms should not be a part of employee personnel files. Consider filing I-9 forms for current employees in an alphabetical file. I-9 forms must be retained for three years after the employee's employment date or one year after the employee's termination, whichever is later.

In addition, notes or information collected as a result of a company investigation (i.e. discrimination, harassment, or theft) should not be included in the employee's personnel file. That information should be kept in a separate file, and access to that file should be restricted to management personnel with a business need to review those investigative notes.

In North Carolina and South Carolina, only employees in the public sector have a statutory right to have access to their personnel records. Employees in the private sector have no right to see their personnel records or files. Personnel files are company property. However, to promote positive employee relations, consider permitting your employees to review the contents of their personnel files. If employees are not allowed to see their files, it may raise more questions than necessary as to what is in the file.

Permit the review under the following conditions:
• Have employees make an appointment with the human resources department for the file review.
• Remove reference letters and responses requested and obtained before employment.
• Require that the view of the file be done in the human resources department with a representative of that department present.
• Do not permit employees to remove, alter, or photocopy the contents of the file.
• Finally, most companies do not provide access to personnel records to former employees for obvious reasons. Business Writers' Corner

Employers Resource Association, BRIEFS, February 2001

Communication Tips in the Technology Age
We periodically look at various aspects of writing and ways to improve your business writing. This month, we will examine a new but growing problem. There was a time when most business communication happened in the form of letters and memos--which were carefully dictated, typed, reviewed, edited, polished, and then finally sent.. To a large extent, this more formal and careful communication has given way to the efficiency of e-mail. We think nothing of sending the most formal communications via this new system - even requests for employment ("cover letters") and resumes are making their way to employers' desk via the Internet.

Is this acceptable? Absolutely. Business today demands responsiveness, and that means speed. However, the problem is that e-mail has no built in checks and balances. A writer can dash off a message without spending the time to edit or run it by another colleague for review. It will most likely arrive on a customer's computer screen within seconds of the writer finishing his or her final thought.

So, here are a few tips for communication in the Technology Age:

• Grammar, punctuation, capitalization, and spelling certainly "do" matter. While e-mail is less formal, this need not be an excuse for sloppiness. Right or wrong, people still judge us by our ability to communicate in a written format.
• Keep it simple. Most of us are inundated by e-mail. We find ourselves scanning long messages, or putting them off for later. So if you want someone's attention, shorter may be better.
• Realize that your reader is receiving no non-verbal cues - not just with e-mail, but in any written communication. This means it is even more important to say what you mean, and to be very careful about how you express yourself. § One non-verbal that "is" communicated through e-mail: ALL CAPS SIGNIFIES SHOUTING! You probably wouldn't yell in someone's office; don't yell over the computer either. It is considered "rude." • Avoid the use of "emotion symbols" like smiley faces or cute acronyms (like LOL to mean "laughing out loud"). They are cute, and that's just the point - would you want to be described as "cute" at your retirement dinner?
• Avoid profanity or substitutes for it (#*^$%@$%). You may find yourself wishing you could cancel that message after you've cooled off, but it will be too late by then.
• One punctuation mark will suffice!!!!!!! § Finally, and you've heard it before…don't send anything you wouldn't want to be public knowledge. You never know who is reading, or to whom your intended recipient may forward the message.

Do you remember all that stuff you learned in high school English class? Most of it is still important. We're not advocating being stuffy-just professional. The beauty of correct writing is that people will not notice it; they will just notice your message.

Employers Resource Association, BRIEFS, February 2001

Consumer Price Index
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in April, before seasonal adjustment, to a level of 176.9 (1982-84=100), the Labor Department's Bureau of Labor Statistics reported May 16. For the 12-month period that ended in April, the CPI-U increased 3.3 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.5 percent in April, prior to seasonal adjustment. The April level of 173.5 was 3.3 percent higher than the index in April 2000.

On a seasonally adjusted basis, the CPI-U rose 0.3 percent in April, following an increase of 0.1 percent in March.

The number of unemployed persons rose by more than 300,000 in April to 6.4 million, while the unemployment rate increased from 4.3 to 4.5 percent over the month, BLS said May 4.

Both total employment (135.4 million) and the employment population ratio (64 percent) fell in April.

The average workweek for production or nonsupervisory workers on private nonfarm payrolls was unchanged in April at 34.3 hours, seasonally adjusted.

Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls increased by 5 cents in April to $14.22, seasonally adjusted.

The Bureau of Labor Statistics of the U.S. Department of Labor

The Cost of Memos
Next time you begin to write a memo, consider a quick meeting instead. Studies show that routine memos are written once, and then rewritten 4.2 times. They also show that 54 minutes are spent planning, composing, and editing the memo. Here's the outcome: If an employee earns $35,000 a year ($17.50 an hour, based on a 50-week work year, 2000 hour work year), the 54 minutes it takes to write a memo cost $15.75. If the memo is rewritten 4.2 times, that's $81.90. If one memo a week is written, that's $4,095 a year.

What To Do When A Team's Morale Suffers
Your employees constantly experience changes in their working conditions due to shifting priorities and deadlines, the losing and gaining of key staff members, etc. An occasional decline in employee morale is a natural result of this constant change. When morale is suffering, take immediate action to get your team back on track. Consider these ideas….

 Prepare an opinion survey
• Develop strategic questions.
• Explain the purpose of the survey. Tell them "who," "what," "when," and why."
• Focus on anonymity. If team members feel the survey is not anonymous, they will not be as accurate in their responses.
• Analyze and diagnose results. Identify any trends, opportunities for improvement, and weaknesses.
• Share results with everyone.

 Hold roundtable discussions
 • Take notes. What is the team saying?
 • Explain the need for the employees to speak what is on their minds. Stress that no personal attacks or issues are allowed.
 • Summarize by identifying findings and any corrective actions to be taken.

Inspire enthusiasm!
• Share your goals, milestones, and deadlines.
• Relate team goals to each person. Write out what you perceive their role to be. Assist them in keeping track of their goals.

Keys To Effective Documentation
Written documentation is vital to maintain and improve employee performance and to provide justification for management actions whenever these actions are challenged through the regulatory process. Subsequently, establishing a regularly followed system of documentation is essential. Following are guidelines which, if followed, result in effective documentation.

• Immediacy - documentation should be prepared as soon after an occurrence as practical. Memory provides a shady defense.

• Accuracy - informative, detailed, contemporaneous observations, which address specific information objectively, give credibility to the documentation. Always date documentation.

• Agreement - to the extent possible, obtain agreement on the details. This helps insure the message gets across.

• Regularity - make documentation a daily habit, part of a regular routine, not an intermittent occurrence. A calendar, journal or notebook helps documentation, and spots trends as they develop.

• Balance - document both positive as well as negative behaviors.

• Multiple sources - where appropriate, gather supporting documentation from third parties or supporting records.

Employers Resource Association, BRIEFS, February 2001

Company Sponsored Events
With the summer upon us, many employers will begin making plans for company picnics. Often, alcohol will be served and if there is an alcohol-related accident following the event, is the employer at risk?

Social Host Liability: The courts increasingly are recognizing the legal responsibility of a host who serves excessive alcohol at a social event. Employers are not immune to lawsuits arising from post-party auto accidents in which alcohol has played a role. Accordingly, employers should take steps to minimize their risks in this area.

To serve or not to serve: Some employers avoid potential liability by making their events alcohol free. For example, a number of companies have moved to family-oriented affairs in which employees' children are invited, clowns appear and NO alcohol is served.

Other employers attempt to put the liquor liability risk onto a third party by holding the function at a facility where the alcohol is served by a licensed party. For example, some employers rent rooms at a restaurant or club where the alcohol is served by the restaurant or club.

Another approach used by some employers is to provide everything except the alcohol and utilize a cash bar. This further removes the employer from the act of providing alcohol.

Protective Steps:
• Make sure all employees know your workplace alcohol and substance abuse policy and that the policy addresses the use of alcoholic beverages in any work related situation and office social functions.
•  Post the policy. Prior to the event, use break room bulletin boards office e-mail and paycheck envelopes to communicate your policy and concerns.
•  If you do serve alcohol, make sure employees know that they are welcome to attend and have a good time, but that they are expected to act responsibly.
•  Make sure there are plenty of alternative, non-alcoholic beverages available.
•  Eat … and have fun! Have plenty of food on hand.
•  Distribute free taxi passes permitting an employee and/or their family members a ride home.
•  Designate a member of your management team to "monitor" employee drinking and assist anyone who has a need for special transportation.

Special Points of Interest:
•  Make attendance voluntary.
•  Do not keep records or lists of attendees.
•  Avoid holding events during regular working hours.
•  Hold events off site.
•  Do not hand out awards or bonuses at the event.
•  Do not conduct business at the event.
•  Get employees involved in planning the event.
•  If you sponsor sport activities, consider "waivers".

Source: The Management Association of Western Virginia

Health Care Cost-What is it? Where is it headed? Why is it so high? And what can be done about it? (Part I)
 The cost of employee benefits is a major expense for American employers. According to the most recent U.S. Chamber of Commerce survey, benefits cost an average of 41.3% of payroll when the cost of statutory benefits is included. This percentage translates to $6.80 per hour, or $14,659 per year. The cost of health insurance has historically been one of the largest of these cost items, averaging around 10% of payroll. Healthcare, often funded in the form of medical insurance, is the most common non-statutory benefit. The Labor Department's Bureau of Labor Statistics com-pletes a review of employee benefits for the full-time em-ployees of firms with 100 or more employees and found that 76% of all employers offered medical insurance to their employees 

Health Care Cost – What is it? According to one study, the blended average of all types of health plans, per employee per year, topped $4,350 in 1999, up 11% from 1998. According to an-other study, the average cost of health care in the United States in 1999 was $3,837 per employee per year for Preferred Provider Organization Plans (PPO’s) and $3,596 for Health Maintenance Organization Plans (HMO’s). Managed Care plans are now the most common type of health insurance, offered by nearly eight of ten employers. The highest cost for health insurance is in the North-east and the lowest cost is in the South. The Midwest experiences cost near the national average. 

Health Care Cost – Where is it going? According to the Health Care Financing Administra-ion (HCFA), national health care spending is expected to double from $1 trillion in 1996 to $2.1 trillion in 2007— from 13.6 percent to 16.6 percent of gross domestic product. In spite of some savings in managed care, however the raw numbers are huge. The projected cost of health care represents an average increase of 6.5% between 1998 and 2001. Health care cost began to accelerate in late 1998. The average cost of health care is expected to grow from $4,053 in January of 1999 to $7,100 by the year 2007 according a HCVA study. Over the past two decades, the growth rate for health care has been twice the rate of increase of the gross national product (GNP). If this trend continues, we could be spending our entire GNP on health care by the year 2062. 

Health Care Cost – Why is it so high? A number of legislative initiatives have been introduced in the past few years, which affect healthcare cost. The cost impact of these measures is just now beginning to be felt in terms of cost increases to health care plans. For instance, Medicare financing changes resulting from the Balanced Budget Act of 1997 are now being added to bottom line cost of health plans. The most significant piece of benefit legislation is the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA contains provisions designed to improve portability and continuity with respect to group health plan coverage provided in connection with employment. These provisions include limitations on pre-existing condition exclusions, rules prohibiting discrimination on the basis of any health status-related factor, and rules requiring special enrollment. These provisions are generally effective for group health plans and group health insurance coverage for plan years beginning on or after July 1, 1997, however some of the most stringent provisions of the act take effect in 2002. A survey of plan sponsors by Charles D. Spencer & Associates indicates that the number of employers without pre-existing condition exclusions almost doubled after HIPAA implementation. In addition, The Newborns’ and Mothers’ Health Pro-tection Act of 1996 (NMHPA) was signed into law in September of 1996. This law requires health care plans to offer coverage for maternity, minimum hospital stays, and other protective features to the health care rights of a mother and newborn child. Because the act extends medical coverage beyond that previously required by law, health care cost is expected to increase as a result. The Mental Health Parity Act (MHPA), 1996, re-quires health care plans to provide generally the same limits for mental health care as are provided for other benefits. Although the MHPA is not expected to increase actual plan costs more than 1% (if so, the plan sponsor may ask to be exempted from the law), all of these new laws are requiring plan sponsors to redraft plan docu-ments, modify communication materials, and to add new levels of administration. Perhaps the greatest cost increase is in the area of prescription drugs. Pharmacy costs went up 25.6% in 1999 accounting for 12.5% of the total cost of healthcare spending. An increase in the use of prescription drugs has been confirmed as a reason for high health care costs, accord-ing to a study in the March/April 2000 issue of Health Affairs, a journal published by Project HOPE, an international health education foundation. "The underlying drivers of spending trends can be classified into two categories: new science and better practice," the Health Affairs article said. 

This information was excerpted from an article written by Eric M. Parmenter, CLU, ChFC, LUTCF, REBC, RHU Vice President, Sr. Consultant, Employee Benefit Outsourcing, Benefit Planning Consultants, Inc., an EA Member Company 

Health Care Cost - What can be done about it? (Part II)
There are many ways in which to control employer cost of health insurance but in a tight labor market few employers are favoring traditional cost-shifting methods. Only 44% of employers surveyed have utilized higher employee contributions, cheaper health plans or fewer choices to control costs. The most popular, and probably the most effective, way to control cost has been through plan design. Forty-eight percent of employers surveyed are opting for this approach.

However, the root cause of high health cost is high health care utilization. Until employees stop going to doctors and hospitals and stop using prescription drugs, the cost will remain relatively high. Thus, the most effective long-term method to controlling healthcare cost is to manage utilization, reducing unnecessary utilization and encouraging positive use of the healthcare delivery system by:

• Driving utilization with multiple plans.
• Reducing duplicate coverage. A cost effective way to reduce duplicate coverage is to offer a small sum of money ($600 to $1,200 per year) for those who opt out of the plan with proof of spousal coverage.
• Setting up Café Plans.
• Utilizing prescription drug cost management techniques.
• Developing a comprehensive wellness program.

Conclusion: Although employers and employees alike enjoyed a brief reprieve from double-digit health care cost increases in the mid-to-late 90s, costs are once again rising significantly. Healthcare consolidation, managed care penetration, government intervention, and prescription drug costs all contributed to this increase in cost. These projections are broad averages. The actual cost increase or decrease will vary from employer to employer and is largely affected by the claims experience of each group, which is a function of utilization. Groups with adverse claims experience will be hit with cost increases well above the standard projections.

Some employers will take a reactionary approach to the escalating cost of health care and unfortunately may be left with few options other than cost shifting to employees. Other employers will take a proactive approach and attempt to influence the utilization patterns of their employees. In addition, the employers who take a holistic approach to workers' financial needs will have a better opportunity to control cost while providing financial security of their employees.

This information was excerpted from an article written by Eric M. Parmenter, CLU, ChFC, LUTCF, REBC, RHU Vice President, Sr. Consultant, Employee Benefit Outsourcing, Benefit Planning Consultants, Inc., an EA Member Company

Rising Health Care Cost Passed On To Employees
According to Hewitt Associates, U.S. employers will get hit with double-digit health care cost increases in 2001, marking the third year in a row of major health care hikes. This comes after last year's rate hike of 9.4 percent, the highest increase since the early 1990's. Rate hikes of at least 10 to 13 percent will affect nearly every major U.S. metropolitan area next year, after most experienced significant increases in 2000.

Hewitt's data reveals that cities in the Central United States were hit particularly hard in 2000, with rate increases of 12.6 percent in Denver, 12.2 percent in Dallas/Fort Worth, 12.1 percent in Cincinnati, 10.9 percent in Houston, and 8.6 percent in Chicago. Other cities that experienced major increases include Newark with 10.1 percent, along with Boston and San Francisco with 9.7 percent. For 2001, Hewitt is projecting average increases of 10 to 13 percent, depending on the type of health plan. On average, Hewitt forecasts that companies will receive 2001 cost increases of at least 10 percent for preferred provider organizations (PPOs) and point-of-service (POS) plans, 12 percent for traditional indemnity plans, and 13 percent for health maintenance organizations (HMOs). According to the Hewitt Health Value Initiative, a cost and performance analysis of more than 2,0000 health plans in 139 U.S. markets, the average cost per person for most major companies will increase as follows:

• From $4,059 to $4,586 for HMOs
• From $4,249 to $4,674 for PPOs
• From $4298 to $4,727 for POS plans, and
• From $4,996 to $5,595 for indemnity plans.

Some companies will absorb the majority of next year's rate hikes, but many will pass along at least 25 percent of the increase to employees, according to Hewitt's study. With the average health plan projected to cost $4,707 per employee next year, up from $4,222 in 2000, which means most employees will pay an additional $125 for their health coverage next year. In addition to passing along part of the increase to their employees, Hewitt Associates finds that companies also are doing the following to deal with rate hikes:

• Making design changes for prescription drug plans,
• Tightening up managed care plans,
• Eliminating "cost inefficient" plans,
• Moving toward PPO plans,
• Standing strong in negotiations, and
• Contracting with plans that offer specialized programs.

West Group, HR Policies & Practices

Five-tier Rx plans are next dimension for cost concerns
With new research showing that nearly half of all HMO enrollees will have a three-tiered prescription drug plan by the end of next year, pharmacy manager Express Scripts has announced a new five-tier plan that could cost employees as much as $50 per prescription.
Under the Express Scripts plan, patients would pay $3 for most generic drugs but could see the hefty co-pays for brand-name medications – $20 for preferred brand-name drugs, and $35 for non-preferred brand-names. The $50 co-pays would be for drugs needed for “symptomatic relief,” such as certain allergy medications.
Express Scripts CEO Barrett Tone says that within a year of using multi-tiered plans, employers see 10% to 20% of patients switching to lower-cost drugs. But critics of multi-tiered plans say, despite their popularity among employers, such plans are confusing and irritating to patients.

Source: BenefitNews.com CONNECT

National Association of Manufacturers Letter to the Senate on Patients' Bill of Rights
			The Honorable Trent Lott
                  Minority Leader
                  United States Senate
                  Washington, DC 20510 

                  Dear Senator Lott:

                  On behalf of the 14,000 members of the National Association of Manufacturers (NAM), including 10,000 small and
                  mid-sized companies, and the 18 million people who make things in America, I urge your vote in opposition to the
                  McCain-Kennedy-Edwards "Bipartisan Patient Protection Act" (S. 283/S. 1052). Opposition to the Bipartisan Patient
                  Protection Act and related amendments that drive up costs and drive down coverage will be considered for
                  designation as Key Manufacturing Votes in the NAM voting record for the 107th Congress. Support for amendments
                  that limit liability or cost increases or help make coverage more affordable will also be so considered.

                  NAM members are strongly committed to the provision of health benefits: 98 percent of NAM members voluntarily
                  provide health benefits to their workers and dependents. The employer-based health-care system is, however, under
                  significant pressure today from double-digit cost increases, the increased complexity of benefit administration, and
                  the potential threat of health care liability. The manufacturing sector is also under great duress from the present state
                  of the economy and the rising cost of energy and health-care coverage.

                  The McCain-Kennedy-Edwards bill does nothing to reduce this burden on employers, but instead greatly exacerbates
                  these pressures. This legislation will drive up the cost of health coverage and drive down the number of workers
                  covered through their employers – a clear prescription for disaster.

                  The bill’s lethal combination of federal and state liability and benefit mandates will force employers to consider
                  whether to reduce benefits, increase their employees’ share of coverage costs or, in some cases, drop coverage
                  altogether. It is worth noting that a worker who can’t afford his share of the cost of coverage is just as uninsured as a
                  worker whose employer doesn’t offer coverage. The only apparent "compromise" is the prospective increase in trial
                  lawyers’ coffers and physician autonomy at the expense of affordable coverage for working Americans.

                  The NAM supports reasonable managed-care reforms that will ensure quality health-care coverage and fairness to
                  beneficiaries through a binding external review conducted by independent physicians. We also support any necessary
                  administrative financial penalties to ensure compliance with the external panel’s determination. We do not support
                  new state or federal legal remedies to challenge benefit determinations, whether based on the extent of coverage or
                  determinations of whether a particular covered benefit is appropriate to an individual. Those questions should be
                  resolved between the treating physician, the health plan’s physician and the independent physicians who will conduct
                  the external review. 

                  Health-care liability has been the leading issue during Congress’ interminable debate over this so-called patients’
                  rights legislation. Congressional supporters have variously argued that these bills did not expand liability or did not
                  expose employers to liability. We continue – incredibly – to hear these same myths to this day.

                  Employer sponsors of health coverage will be subject to direct and indirect liability under the Bipartisan Patient
                  Protection Act. The bill purports to shield employers by imposing liability only where the employer "directly
                  participates" in a benefit determination that results in an injury or death. Unfortunately, "direct participation" is
                  defined as including the act itself or the actual exercise of direct authority over benefit determinations – a standard
                  that employers will certainly meet under ERISA’s fiduciary responsibility obligation. In addition, this bill imposes strict
                  liability on employers for failure "to exercise ordinary care in the performance of a duty under the terms and
                  conditions of the plan."

                  Employers will be forced to litigate over the extent of their involvement in benefit determinations and may be
                  pressured to settle rather than face the prospect of virtually unlimited punitive and unlimited compensatory damages.
                  Further, this bill does absolutely nothing to shield the health-coverage purchaser – whether employer or individual –
                  from the indirect downstream cost consequences of HMO and insurer liability. This legislation is hostile to affordable
                  health coverage and the continued participation of employers in sponsoring coverage. 

                  We are also greatly concerned by provisions that allow the external reviewer to disregard contract provisions in
                  employer health plans. Employers simply cannot cover every conceivable benefit and must be assured that covered
                  benefits are appropriate to a given beneficiary in order to continue to provide health coverage. Alternative systems
                  seen in other countries are not much different on this point; in fact, cost pressures in these countries create more
                  explicit rationing of coverage and delays in treatment that would create an incredible uproar in this country.

                  The question of the appropriate balance between federal and state regulation is also a difficult one. Employers have
                  relied on the uniformity fostered by the federal ERISA law (Employee Retirement Income Security Act) to provide
                  quality and affordable coverage to millions of working Americans. On the other hand, the governors are proud of
                  their prerogatives and health care reform accomplishments, and are wary of ceding oversight and authority to the
                  federal government. In our view, the best approach would retain both ERISA’s uniform structure for health-benefit
                  plans and the state regulation of insurance. Above all else, benefit determinations should remain in the province of
                  ERISA and no employer should be subjected to liability for adverse benefit determinations in state courts.

                  The NAM also supports the addition of amendments to address the affordability of health coverage. All sides agree
                  that the McCain-Kennedy-Edwards bill will increase the cost of coverage; surely all senators can also agree to take
                  steps to mitigate those cost increases and to make that coverage more affordable to both workers and individuals.
                  Employers have experienced double-digit cost increases in the past two years and both employers and workers will
                  find future cost increases even harder to bear. Appropriate steps to consider include refundable health insurance tax
                  credits that individuals can use to purchase coverage either inside or outside the workplace and allowing
                  flexible-spending-account funds to roll over from year to year. 

                  The NAM, our members and their workers have been united in opposition to the most extreme versions of these bills.
                  Our members are watching these votes carefully and will be encouraged (as they have in the past) to inform their
                  employees which senators’ votes will contribute to cost increases, benefit reductions or the ultimate loss of their
                  health benefits.

                  This proposal could not come at a worse time. Health-care inflation has returned in earnest, rising at a double-digit
                  rate for the past two years. Coverage costs are increasing, on average, 13 percent this year, though smaller
                  employers are experiencing much higher increases. Our economy is soft, with 500,000 manufacturing jobs already
                  lost. Higher energy costs have effectively exacted a $120 billion tax on American workers and their employers.
                  Increasing health-care costs on top of the existing health-care inflation will only exacerbate our problems.

                  We hope that a more reasonable and rational approach will prevail. We urge Congress to consider consensus reforms
                  that ensure fairness and accountability without expanding health-care liability or disregarding contract provisions of
                  employers’ health plans. 

                  Sincerely,

                  Michael E. Baroody
                  Executive Vice President

                  cc: Members of the United States Senate

Source: National Association of Manufacturers

The Workforce Investment Act: Putting Training Resources Where They Belong
Background
More than 36 million Americans lack high school diplomas. Sixty percent of manufacturers report that they typically reject half of all job applicants as unqualified. The Workforce Investment Act (WIA), passed by Congress and signed by the President in 1998, addresses these and other worker training and education issues. States and communities now have a far greater say in how they provide training to current workers and future employees. The WIA consolidates more than 60 federal job-training and education programs into four block grants to the states.

The WIA is good news for business
It moves the money for training from those well-meaning but ineffective federal job programs, focused solely on the disadvantaged and dislocated, to the state and local level, focusing on the entire workforce. It puts more decision-making power into the hands of those who know what's needed: local businesses, their workers, job-seekers and educators. It removes the frustrating barriers that impede efforts - distant bureaucracy - to build a skilled workforce.

How the Law Works
By July 1, 2000, each state is scheduled to have in place its own worker-training plan, which is to be designed as a "one-stop" employment-training system for persons needing to enhance their job skills or train for new skills. The heart of the new system is at the state and local workforce boards, populated with a 51-percent business majority. These boards will be responsible for implementing the new system.

Training and employment programs must be designed and managed at the local level, where the needs of businesses and individuals are best understood. Customers (job seekers and businesses) must be able to conveniently access the employment, education, training and information services they need at a single location in their neighborhoods. Customers should have choices in deciding the training program that best fits their needs and the organizations that will provide that service. Individual job seekers should have control over their own career development. Customers have a right to information about how well training providers succeed in preparing people for jobs. Training providers will provide information on their success rates and will be accountable.

Businesses will provide information, leadership and play an active role in ensuring that the system prepares people for relevant current and future jobs.

Why this Is Good for Business
Businesses control the state and local workforce investment boards. The new nomination rules for board seats and the operation standards to deliver customer-focused services are the responsibility of business. Businesses control one-stop centers. Service providers, one-stop centers and states must be held responsible for results. Businesses are accountable. Employer-led boards will result in meaningful new performance measures. Businesses provide leadership. Businesses are the leaders and resources for state and local boards.

What You Can Do
Make sure the job-training programs in your state will be effective - and will provide you with what you need. Take advantage of the power the WIA gives you:

Get on the state and local WIA boards to help make sure the new system works.

Participate in national, state and local employer groups, so that the business community speaks with a common voice.

Contact your local state representative and let him or her know your concerns as your own state hones its WIA plan.

Source: National Association of Manufacturers

Survey Finds Company Picnics in Vogue
This summer, the majority of companies will fire up the grill and string up the volleyball net. According to the CFO Corporate Outlook Survey of more than 200 CFOs, 54% of employers plan to sponsor a company picnic this year, at an average cost of $40 per guest.

Last year, however, was more picnic-popular, with 60% of respondents planning to throw burgers on the barbee.

Source: BenefitsNews.com

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Last revised: February 28, 2002