Baby Boomers are to Blame for Skills Gap

Friday, April, 27 2012

It is no secret that 78 million of Baby Boomers, born between 1946 and 1966, are facing retirement over the next 20 years. And when they do, many organizations will face a shortage of skilled workers. Every job family, from the shop floor to the C-suite will face a significant exodus of employees. So significant is this threat that no less than the AARP, that would be the Association of Retired Persons, has partnered with SHRM, the Society for Human Resource Management to look into the matter.

The good news is that many Baby Boomers plan to postpone retirement or at least shift from full time to part-time employment. This being the case, employers may be given enough of a breather to start developing succession plans and training programs. Many Baby Boomers want to remain active in their trades and professions, thus re-employment of retirees could be one way to bridge a seasonal or production need. While employers may perceive this delaying of retirement as a sign of loyalty, it has more to do with financial need. Like others, many Baby Boomers have not saved enough to start retirement at their normal age. The only way to bridge the savings gap is to worker longer.

The bad news is that many Boomers will start a second life, including a second career and they may be your competition. The difference between Boomers and earlier generations is that with a longer life expectancy, Boomers have the ability to start a second life and a second career. Consider that even after 25-35 years as a teacher, attorney, accountant, truck driver or factory foreman; Boomers can go on to learn a new trade or profession and put in another 15-20 years. Some go back to school, others go home to run the family farm and many other avail themselves of the many voluntary services needs that are out there. Do not expect Boomers to go quietly into the night.

Many individuals fall into their life’s work with little or no planning. Others know from day one what they want and where they can get it. As Baby Boomers look at semi-retirement, phased retirement or whatever it is called; employers have an opportunity to fill that skills gap with just a little bit of ingenuity and innovation. Boomers are healthier than previous generations and will live longer. That means that even at 60 or 65 a Boomer can start a new career and make significant contributions on the shop floor or the head office.

Retaining Boomers just like retaining any worker is going to require significant planning by any organization to avoid the risk of interruption to a business. That interruption will come from the loss of 20 plus years of knowledge stored in Boomer employees. So the real issue becomes “Knowledge Management”, even if they do not jump ship to your competitor, can you afford losing their knowledge?

Where Has All the Talent Gone?

Friday, April, 20 2012

Or is the question, “Where has all of my talent gone?”

Matt Lynley, witting for the Business Insider on April 7th, reported that employees are jumping ship at Apple. Running a search on LinkedIn, a professional social media site, Lynley looked for individuals whose past employer was Apple. Lynley found 17 of those former Apple employees at Zynga, a social gaming leader.

Where did other Apple employees go? According to Lynley here is where a sizable group of former Apple employees landed.

● Facebook, 73................● VMWare, 118......● IBM, 130
● Adobe, 154...................● Dell, 157.............● Oracle, 163
● Hewlett-Packard, 216.....● Microsoft, 300.....● Google, 315
● Cisco Systems, 329

Apple has over 62,000 employees, so what if 1,900 of their employees jump ship? Even if Apple has the most ironclad non-compete clause ever written, it’s their knowledge, skill, and talent that is being bought.

So I will rephrase the question, “Where has all of your talent gone?” So maybe you are a small business, that makes it even more imperative that you manage the talent you have to ensure it does not walk out the door to you competitor. It also becomes essential that when you do hire, you hire the top talent available. They will not be cheap and they will be hard to find.

If you are a small business, maybe you are the talent, maybe the only talent in your organization. If your goal is to grow, you are going to have to acquire additional talent either because your own knowledge, skill, and talent, while great, does not extend into all areas. Organizations like Apple were once small, as they grew; they allowed employees to share in that growth either through phantom stock if privately held or shares of actual publicly traded stock. One attraction, for the likes of talent at high tech firms that may go public in the future, is the possibility that employees will be able to cash in on that success. And there are many examples of talent who do just that, not only at Apple, but others as well.

Kate Lister, a writer and small business owner provides a number of suggestions on how small businesses can succeed in the competition for talent. Writing for American Express’ Open Forum on August 4, 2011, Lister points out 7 ways that small businesses can find and retain talent. One way is to become an “an employer of choice”. To be an employer of choice is more than paying the highest wages. It means that the entire culture of the organization creates an environment where employees want to work and want to come to work every day. In such organizations, there is no “checking your brain at the door” frame of mind.

Employer of Choice, Inc. certifies organizations that meet and/or exceed 10 criteria designed to separate out employer of choice from others:

● The Company
● The Culture
● Enlightened Leadership
● Care of People
● Growth and Opportunity
● Meaningful Work
● Compensation & Benefits
● Making a Difference
● Employee Loyalty
● Performance Results

Maybe you are not the next Apple, Goggle or Facebook; but at some point they did not think there were either.

COBRA Non-Compliance: Potential Risks

Friday, April, 13 2012

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to provide employees and eligible covered dependents access to continuation of coverage following the loss or eligibility due to certain events. These events include, voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Eligible individuals may be required to pay 100% of the premium for coverage plus a 2% administrative charge. COBRA applies to group health plans sponsored by employers with 20 or more employees in the prior year. Depending on the exact reason for the loss of coverage and the covered member impacted, COBRA may be continued for up to 36 months.

COBRA contains numerous notification requirements for both the employer and covered individual.

1. The plan sponsor must provide notice of CORBA rights to covered individuals, at the time coverage commences. The plan’s SPD must also contain COBRA information.

2. As soon as the plan’s administrator learns of a qualifying event, it must notify each qualified beneficiary of their ability to continue coverage.

3. Qualified beneficiaries are allowed 60 days to elect continuation coverage.

4. Qualified beneficiaries have the responsibility to inform the plan of events which may impact their COBRA eligibility such as, divorce, legal separation, disability or a child losing dependent status under the plan.

5. Employers and plan sponsors must notify the plan’s administrator of the employee’s death, termination of employment or reduction in hours, or Medicare entitlement.

6. Qualified beneficiaries must notify plan’s administrator of changes marital status or changes addresses.

If employer notifications fail to occur within the prescribed time frames, the employer, plan sponsor, and plan administrator maybe subject to significant penalties. In addition, the plan may be required to allow the qualified beneficiaries to enroll, cover medical costs previously not paid, and/or otherwise make the qualified individual whole.

While COBRA is the responsibility of the Dept of Labor, the DOL and IRS do coordinate enforcement activities; thus there is exposure to penalties from both agencies for non-compliance. In fact the IRS recently issued new COBRA audit guidelines to its auditors designed to specifically uncover COBRA violations.

These guidelines include suggestions such as:

“To determine what procedures are in place, obtain the following information from the taxpayer:

• A copy of the health care continuation coverage procedures manual.

• Copies of standard health care continuation coverage form letters sent to the qualified beneficiaries.

• A copy of the taxpayer’s internal audit procedures for health care continuation coverage.

• Copies of all group health care plans (If necessary, reconcile the books to the amount of health care expense deduction claimed on the return to confirm that all plans are listed.).

• Details pertaining to any past or pending lawsuits filed against the taxpayer for failing to provide appropriate continuation coverage.”

Single and multi-employer plans could face excise tax penalties as high as $500,000, third party administrators such as insurance companies and TPA’s are exposed to excise tax penalties as high as $2,000,000. And this is just from the IRS.

Health Care Reform: A Tale of Two Points of View

Friday, April, 06 2012

The Patient Protection and Affordable Care Act (PPACA) has the potential for nothing less than revolutionary changes in how health care is paid for and is delivered. Parallels can be found in the passage of the Social Security Act of 1935 and the Employee Retirement Income Security Act of 1974, which created similar changes in how old-age, health, welfare, and retirement benefits were administered and financed. Regardless of how the Supreme Court rules on PPACA, its passage is impacting the administration of health care and the practice of medicine.

Kelly Kennedy, writing for USA TODAY, reports that costs for preventative screenings such as colonoscopies and other preventative procedures vary widely. The passage of PPACA required that most health care plans offer such screenings with no co-payment or co-insurance requirements. Quoted in the same article, Doug Ghertner, Change Healthcare’s president, stated that “consumers will see a direct correlation between premium increases and their choice of health provider.”  While the public may perceive that having no co-payment or co-insurance translates into free health care, costs not covered by those payments are transferred directly into next year’s rate increases. HHS estimates that preventative screenings with no co-payment or co-insurance payments will raise insurance premiums by 1.5%.

In its 24th National Health Care Trend Survey, Buck Consultants, a human resource and benefits consulting firm, predicts health care costs to increase by 9.9%, down from a 2011 trend rate of 11%. Daniel Levin, an FSA and Buck’s principal and consulting actuary stated that, “The reduction also reflects lower expected costs as a result of the economic slowdown.” While the decrease in the health care cost trend will be welcomed by employers and employees alike, the rate at which health care is increasing is still several multiples of general inflation. One distributing factor of the survey was that the cost trend for all plans, PPO, POS, HMO, and high deductible plans were all 9.9%, possibly indicating that plan design has little to do with costs. To determine the cost trend in health care, analysts generally include factors such as; medical inflation, benefit utilization, changes in medical technology, the mix of services utilized, changes in pharmaceutical costs, and governmentally mandated benefits.

It is an axiom of economics that when demand, in the form of increased utilization of preventative services increases, all other variables being held constant; costs has to increase.  Where and how the health care consumer chooses to receive health care preventative and other services does and will impact the cost to both the plan and the consumer.  Price is not always an indicator of quality.  If price comparison shopping is appropriate for a new car, surely it is appropriate for a colonoscopy.  While no one can argue the value of appropriately timed preventative screenings; nevertheless, it is important that health care consumers understanding that noting is free.