August 7th, 2010

Gay Marriage


From an HR point of view – support full marriage rights for gay people.  It’s the market thing to do.

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Of course for most people the debate on same sex marriage is somewhere between a cultural, religious, political or human rights issues.  My personal opinion is not the point of the post but for transparency I will make it clear that I support gay marriage in every way as a fundamental civil right.  But that is not why HR people should support this institution. 

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Marriage is a really helpful idea for at least everyone who is not in a given marriage.  The two people in a marriage have a unique relationship.  Like snow flakes, finger prints and chocolate chip cookies, no two are the same.  In fact, it is likely that no marriage relations stays the same very long.  Like any other personal relationship it is organic.  Sometimes it is stronger; sometimes weaker; usually just stranger – it is always changing and in fact, it is likely changing and re-changing in complex way because each spouse is constantly re-evaluating their connection within the marriage and to their spouse.  Inside of a marriage is really, really, complex. 

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Outside of a marriage is pretty simple from a legal or market kind of view.  Either they are married or they are not married.  It is a simple bright line test.  The rest of us don’t need to know if you are lonely, happy, satisfied, despondent or anything else within your marriage relationship.  We don’t even need to know if you are faithful.  You is or you ain’t their baby.  Bright line tests reduce costs because they reduce the expense of information gathering, evaluation, investigation and adjudication.  You is or you ain’t.

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We typically only deal and only want to deal with the employee him or her self.  Sometimes becasue of benefits typically, or in the event of death or disability, we need to know with whom an employee is partnering.  We need to help get value created by the employee in our programs into the home or the family when the employee can’t do so on their own.   Sometimes regulation requires that we move some of that value to others in the family.  Imagine what all of this would be like without marriage.  It would be impossible with certainty or efficiency to sort through the various relationships that exist within society.  Marriage makes it clean because two people are signalling to the rest of us that they want to be treated as a family unit. 

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Two people can grow to hate each other, or worse, ignore each other, but that is not our concern if they don’t divorce.  Conversely, two soul-mates who are an integrated partnership in every way signal to the rest of us that in fact, they do not want to be treated as a unit by not marrying.  (For those who correctly say that they don’t need a piece of paper to prove their love, they are right; they just need that piece of paper to prove to me that you can exercise her stock options if she gets hit by a  bus tomorrow.)

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Bottom line – there are people who are gay.  They work in our organizations.  Marriage allows those people to signal to the rest of us in an efficient way how they want to be treated – that is, as a unit.  As HR people we should support rules and social structures that bring clarity and efficiency to the work place.

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And – it is a civil rights issue – but that’s just me.

3 Comments | In: Ethics, Multiple Markets, benefits | tags: . | #



November 26th, 2009

Charity


mother-teresa

          A few potential vendors have made sales calls on me lately offering  free stuff.  Wow.  Free stuff.  They must be beautiful human beings to be engaged in such altruistic, donative work.  And to think, they did not channel these impulses into feeding, clothing or housing the poor – they had the wisdom to provide charitable benefit administration work.  Are these tears of joy on my face or are the tears from my own guilt for not having chosen the path of “administering for those who can’t administer for themselves.”

 

The first offer was to offer free administration of our health and welfare plans.  The administrator would also provide access to their suite of voluntary benefits (auto, home, pet insurance and the like).  They say this with a straight face.

 

The second offer is even more insidious.  They will provide my employees discounts on electronics – their focus is on computers.  They will help our employees bridge the digital divide.  The employee can even pay for the merchandise over time.  How?  Through payroll deductions.  In a variation on this theme there is no direct purchase of merchandise but there is a debit type card set up.  Again the payments come directly through payroll deductions.

 

Reasonable people can disagree.  All of these pitches came with lists of current clients that are very impressive.  In my view however, this is a pretty clear market transaction.  I am selling these companies access to my employee base as a sales channel with a built-in collection agency.  The economics 0f this for the vendor seem amazing.  The employer does the heavy lifting of branding and marketing to a group of people with steady jobs and provides an authorative mechanism to provide payment.  The normal risks of extending credit and running a retail operation vanish.  By lowering the risk profile of the sale, the vendor gets a much more profitable operation.  As for the administration vendor – they provide a real service but also get marketing access to sell more services to the employee group.

 

I am all for profit.  I am all for selling goods and services that people pay to receive.  I am not good with pimping my employees so that I can save a couple bucks on H&W administration or so that I can claim to provide voluntary benefits with no administration costs.

 

There is something that just doesn’t smell right when the economics of a deal are presented under a cloak of “free”.  You want free?  Have dinner at the soup kitchen with the Missionaries of Charity.

1 Comment | In: How to do HR, benefits | tags: . | #



March 9th, 2009

401(k)s and Ethics


I had a conversation the other day with a pretty sophisticated CFO of a big non-profit (about half a billion dollars in assets under management). The conversation was about what to say to people about investing in the 401(k). In so many words, is the market so bad that people should stop contributing to their account.

My advice was that while, it may not be the time to twist arms to get new participants or higher deferral rates, it was not the time to tell people to put their money in their matteress either.  Here’s a quick list of some things to consider when you are asked by executives or line employees about whether or not the 401(k) is still a good idea:

  1. This is an ethical question, then a human capital one, then a legal one, then a “I want to be able to go into the cafeteria without being pelted with food one.”
  2. The ethical issues for you to consider is that these are peoples’ lives and security you are talking about. You need to be fully competent to discuss this. If you need help – get it. It is immoral for you to take opinions that are made up on the fly. If you don’t know what you are taling about – be quiet.
  3. There are legal issues. You need to protect yourself and your employer. If the plan does not give investment advise, and it probably doesn’t and shouldn’t, then don’t start now. It is not a great time to initiate that policy. 
  4. Consider the impact of your employer match. First if you still have one that is a happy thing. Second do the math. If you even have a modest match of say 50% of the first 6% of compensation deferred, you are doing well. The employee defers $1000.  The match is half of that or $500. If the $1,500 in total drops by 30%, or $450, the employee is still ahead at $1,050 on principle alone. If there is a better match the math is really compelling.
  5. If your employee is paying some income taxes, the math improves.
  6. If you have not done a professional review of your investment alternatives, that is a bad thing. Get on that now.
  7. President Barack Obama said falling share prices may mean bargains for investors with a “long-term perspective.” (Bloomberg.com 3 March 2009).  Before you tell people to not invest, you should be pretty sure that you know that they will in fact not make money – money they will need to retire.
  8. Does your play offer some type of professional investment advice – maybe your administrator, maybe a third party like Ayco? If you are in a position of offering the professional services of a Fidelity or Vanguard, a bank or an insurance company that is running the plan – market the hell out of it. They will have the best advice for you and your participants – better than mine.

What did I miss? What is on your list? What are you telling people? The retirement investment market is among the murkiest of all. We should all be thinking about this.

2 Comments | In: benefits | tags: , , , . | #



June 29th, 2008

Before The Tee Shirts


 Recently I made the point that I am not a big fan of “non-cash rewards” – tee shirts, mugs, parking spots, bagels, and stuff. I like them. In fact I have great Lands End polo shirts from two employers ago! My kids regularly hydrate with water bottles from several employers. What I am not a fan of really, is using them in lieu of good management.

Here is my list of ten things that you should have in the work place before you fire up the silk screen.

  1. Be an ethical workplace and management team.
  2. Have integrity – meaning, have a firm hold on reality and run your organization based on what is real (See post on “Integrity“
  3. Communicate clearly, honestly, often (combine with the next one on the list)
  4. Show your team respect.
  5. Hold them to high expectations, articulate them a priori, and help them achieve them. (Note: setting high expectations after the fact, is called “scapegoating”, or being an “A – Hole”.
  6. Be good at doing the thing that is the reason you exist (making money, making honey, being homey – whatever it is)
  7. Pay competitively, reward success lavishly. Offer decent benefits (just between us, I know, that you know, that I know, that you and me know more about benefits than employees do – use that knowledge for good not evil) at decent prices including their paycheck deductions and what they take out of their pockets when getting care.
  8. Say thank you if you mean it. If you don’t mean it, get out of the way and hire a manager between you and them who does (before someone else does it for you. Everybody has a boss, or EFCA.
  9. Have fun as often as possible. Be angry when it is appropriate. Show compassion and responsibility.
  10. Cover your expenses and if you are a for-profit company – make money.

If you do not have a decent employment environment your gifts will ring hollow and in the market for employee attention and affection, you will be a loser. Lack of credibility never helps a market player. If you have made the investment to create a great work place, you have conditioned the market. Your brand as an employer in the market (yes, even the internal market place of your organization) will reduce your expenses. The gifts become super symbols of how wonderful you are.

Is this list right? What is your top ten list of things to do before non-cash rewards, or do you think this is nuts and you have the killer top ten list of non-cash rewards.

13 Comments | In: Compensation, Employee Relations, HR Strategy, How to do HR, Multiple Markets, Talent Management, benefits | | #



June 21st, 2008

Non-cash rewards – ehhh… not so much.


The local SHRM chapter was nice enough recently to invite me to keynote at their annual professional development program. My topic was “How to Give Them What They Want (Without Breaking the Bank)”.

I don’t think that non-cash rewards are very useful unless you first operate a work environment that otherwise makes you proud. Apparently I was supposed to give a speech about the glory of the non-cash reward. I didn’t but the group and me seemed to have fun and enjoy a pretty lively conversation.

My best example of the issue is flowers. Husbands giving wives flowers is generally, even iconicly, seen as a nice gesture. For the point of this post, let’s call it a “non-cash reward” So, how do you think flowers would play in the situations below:

At this point will even 5 dozen long-stems work?

Yeah, not so much. What about this couple? Could FTD’s greatest bouquet of all time turn the mood at this moment?

OK, you get the idea. My point is that without an underlying good relationship, what might look like a great free tee-shirt; or coffee mug with the new corporate slogan, or even the “Co-Worker of the Month Parking Only” parking spot, can ring hollow. Worst of all, it can be negative because people take it for what it is. An easy fix without any sincerity or thought or link to the business and the employment relationship.

Giving the quick “non-cash reward” in the wrong environment tells your employees that you don’t get the market dynamic for internal labor markets or employee engagement. They know, that you think they are mechancial and you think that you will manipulate them with a pen that has a neon light in it.

Flowers are great; but not when you are at that podium.

In the days to come, my list of Ten Things That Have To Precede Non-Cash Rewards.

4 Comments | In: Compensation, Employee Relations, HR Strategy, How to do HR, benefits | | #



May 31st, 2008

Why Subrogation Could Make Sense


In the last post, we saw an example of a Benefits group whose policies and decisions got their employers name dragged through the mud. So they are stupid, right? Well, maybe not so much.

A couple of quick points, from my view, about insurance.

Insurance does not create money or financial power - it shares risk – that’s it. When people think that the health care crisis (whatever that is) will be solved by more people having health insurance, it always sounds naive to me. The implication seems to be that by having more people insured, people who other wise cannot pay for health insurance will have it paid for them. That really makes no sense.

The insurance company, or an employer provided plan doesn’t create money or economic power. If the insurance arrangement pays out more in health care claims and administrative costs than it takes in through premiums, the arrangement goes broke. Over the course of time, we should all expect to pay for our own health care – nickel for nickel. The point of insurance is not to have the magic insurance fairies pay some portion of the bill for us. The insurance arrangement only affects the timing. Insurance is really a financing mechanism to allow me to pay my own way, and you, your own way, along the way. Way cool.

Now, we still need a couple of adjustments. Big successful health care insurance arrangements do other things that are helpful. The negotiate discounts with health care providers. So one part of having insurance is being in the purchasing club. If you are not in, you pay full freight. But is that true? My sense is that if you are not in the insurance club. you are just not paying at all, You are getting free care through a government or charitable program or you just are not paying your bill. (Yes, that is a gross over generalization. Some people go to extraordinary means to pay their uninsured bills – but I think fewer than there used to be doing so.)

So the “Insurance Discount Club” is more like the Fuzzy Pricing Math Club where the cost of the uninsured (non-club memebers) gets passed on to the insured but with the window-dressing of discounts. Insurance plans provided by an employer also give those employers a vehicle to subsidize health care costs. This is compensation for your work. It is not free money, you worked for it. Take away the tax benefits of employer provider health care and see what happens. Never confuse insurance with compensation or with charity. Compensation or charity provided through the form of insurance is still what it is – it just isn’t really insurance.

What about subrogation though? Insurance doesn’t print money; it spreads out risk to help in the financing of health care. Subrogation comes into play around the idea of “what risk”. Insurance figures out the risk of you getting sick during a particular period of time. It adds up those calculations for all of the people in the plan. It then figures out what everyone has to kick in at any given point. What it is not calculating, is the risk that you will be injured by another party through that party’s negligence.

If health care plans also had to factor in the chances of you being hurt by someone else that would be higher costs for everyone. The cost of injury caused by neglience, should be borne by the negligent person. There is insurance available for that purpose, auto insurance, property and casualty insurance and others. There is a judicial system paid for through our taxes to help us get the damages from the negligent people. Our legal system is relatively efficient at policing negligence.

Just saying that an employer should pick up the tab of the medical costs of an employee hurt by the fault of another person is too simplistic. The employer’s plan doesn’t print money, it spreads the risk of getting sick. We are really saying the employer should give more compensation to that person.

So, would I have handled the subrogation case in the post below any differently – frankly yes. Certainly now with the hindsight of what happened to them, I would. However, is it so obvious to me from an economic perspective that they were wrong?  Not so much. It is easy to say, “it’s a few pennies for such a big company”. The hard part is when you muliply an exception to policy by a large number of participants. Bad economic policy; bad risk management looks like humane altruism in the single case; it can look like disaster when it is institutionalized over a large population. (I think that I know that this employer from the last post insures about 1,000,000 lives.)

Good HR people can look at the individual case; argue from an employee’s perspective and from management perspective. Great HR executives can extrapolate the individual example and understand how it fits into the broad systems of economics, finance, risk, regulation at scale.

What do you think?

2 Comments | In: How to do HR, benefits | tags: , , , . | #



May 29th, 2008

Third Party Subrogation – what the hell is that?


If you have any responsibility for benefits or for HR generally – your answer should be only “I know what that is.”

This insurance concept has been in the news recently and has created problems for very sophisticated employers. Companies are being absolutely brutalized by the press over this very common plan provision.

Quickly – third party subrogation is the provision of an insurance policy that says if some other party (the third party) pays a participant for the same claims as your plan – the plan will get their money back from the participant.

Easiest example: My employee is hit by a bus; he goes to the hospital. Our medical benefit plan pays his medical expenses. The employee then sues the bus company and receives damages in the law suit that cover, among other things, those same medical expenses. (At this moment the employee is “double dipping” he has been paid twice for the same claim.) The employer’s medical plan will then seek to be reimbursed by the employee for the dollars the plan used to originally pay the benefits. (No more double dipping.) (Before you start clicking over to EvilHRLady or HRMinion in response to the sheer boredom of insurance theory, please hang on one more moment.)

Third party subrogation has recently hit the news when a large national employer exercised it’s rights under it’s plan. In short form, a woman had a tragic accident. She will suffer from life altering injuries and handicaps. As you would expect she sued the party responsible for the accident and won $700,000 in money damages. The very sad part is that the amount of damages were not very much relatively speaking.

After paying off her lawyers for handling the case, she was left with about $417,000. Problem was, the past health care claims had already run up to about $470,000. Now her employer wanted to make a suborgation claim in that amount. The family fought the company in a very public manner including law suits. Eventually the case was presented to the Supreme Court of the United States (yeah – that Supreme Court). The company “won” there in that the Court declined to hear the case of the family on appeal. The interesting part was that the media has indicated that after winning at the highest legal level in the country the company gave in any way and walked away from the claim.

  • A couple of thoughts – I have not mentioned the name of the company. The point is not who they are and their identity really shouldn’t matter. I will not bash them – I think that they were in a tough spot. I don’t know that I would have handled it any better a priori.
  • This plan design is similar to just about every company health care plan that I am aware of. It probably is the way yours is set up as well. If you don’t know if yours is set up this way – I would find out if I were you.
  • There is also a legal problem the other way. When the plan is set up in a given way, the plan administrators typically have a legal obligation – a fiduciary duty – to operate the plan in accordance with its provisions.  Not doing so can come up on an audit by the government, or if you want to sell your organization and you have to warrant or represent that you are operating the plan in accordance with its provisions. You can evaluate for yourself if that is a risk worth taking or not. The point is that you should know.

Biggest risk however – how about being the Benefits Manager that gets your company dragged through the mud by Keith Olbermann AND the Wall Street Journal. HR is about risk management. Sometimes the risk you manage is the reputational risk of the company. (The Wall Street Journal Health Blog nicely tells the end game story.)

More in a day or so about why this plan provision may be useful to you. In other words, why you might want to keep just the very plan provision that triggered this human and public relations disaster. Until then – what do you think – run the plan or run the gauntlet. Which would you have done?

 

4 Comments | In: How to do HR, Uncategorized, benefits | tags: , , . | #