The New Total Compensation Picture

Friday, May 16, 2014

 

For some time now the picture of Total Employee Compensation has been changing and evolving.  Few, if any, organizations maintain the concept of cradle-to-grave paternalism which existed prior to and following World War II.  That evolution is best described as a shift in the focus point of those roles and responsibilities of the employer vs. the employee.  This shift is currently best illustrated in the area of retirement as employers have moved from traditional defined benefit pension plans to defined compensation retirement plans, e.g., 401(k), 403(b), and similarly styled arrangements.  However, emerging are the unmistakable signs of a change in the roles and responsibilities of employer sponsored health care benefits.  As with the development of defined compensation retirement plans, the employee has taken on a greater role in selecting and maintaining their health care benefits.  This has and will continue to change the image of Total Employee Compensation.

 

Fundamental to the employer-employee contract is an exchange of value in return for services provided; value may be in the form of direct cash payments, indirect payments for benefits, in-kind values such discounted products and services, and even the value of an organization’s public image.  In the end, the employer-employee relationship is a mutual bond, a co-dependent bond based on a series of reciprocal promises; both parties perceive that such a relationship will benefit each of them respectively.  Total Employee Compensation is that value offered to employees in return for their initial and continued services.

 

The latest influence on the shape of Total Employee Compensation is the on-going role out of national health care reform in the form of the Affordable Care Act.  The opening statement on a Department of Health and Human Services web page reads, in part, “The Affordable Care Act puts consumers back in charge of their health care”.  As a “consumer”, employees have for the last few years begun to move into the environment of Consumer-Directed Health Care Plans.  Such plans remove a significant decision making role from the employer and transfer it to the employee by requiring the employee-consumer to decide when and how to spend their own monies in the form of higher out-of-pocket costs.  As with the growth of defined compensation retirement plans after the 1980’s, Consumer-Directed Health Care Plans are expected to continue their current replacement of more traditional health care plans.

 

Total Employee Compensation is a toolbox employers employ to attract and motivate their talent.  Health care benefits are a major tool through which organizations appeal to and motivate individual to join and support the organization’s mission.  Anything which detracts from an organization’s ability to accomplish that goal may impact the ongoing profitability and viability of an employer.  While most large employers are expected to maintain sponsored health care benefit plans, smaller organizations and those in highly competitive business sectors may find themselves pressured into dropping health care or adopting a strictly defined contribution approach to health care.

Redefining Where Work is Done

Friday, May 09, 2014

 

According to the 2014 National Study of Employers sponsored by the Families and Work Institute, 38% of employers allow some employees to “Work some regular paid hours at home on a regular basis”.  Meghan Biro, writing for Forbes, claims, “Telecommuting Is The Future of Work”.  Despite Yahoo’s Marissa Mayer, The New York Times proclaims, “It’s Unclearly Defined, but Telecommuting Is Fast on the Rise”.  So if everyone is working from home and telecommuting, where are all those drivers headed this morning I saw on my way to the office?

 

With all of the excitement about working from home and telecommuting, a.k.a., “distance employment”, where’s the data security.  If our credit and ATM cards are not safe at major retailers, how can our security be any better around corporate proprietary information and employee data?  It is almost a routine occurrence that an unencrypted laptop is stolen from some unsuspecting employee’s locked car.  The U.S. Department of Health and Human Services’ Office for Civil Rights has oversight authority for data breaches of HIPAA violations associated with protected health information (PHI) and routinely collects hundreds of thousands and even millions of dollars in fines for data breaches.

 

Oh, you’re safe you said because your laptop did not contain PHI.  Increasingly, states are passing personal data breach laws involving other kinds of data.  Florida just passed (awaiting signature) a law covering the unlawful release of Social security numbers, driver’s license numbers, Florida Identification Card numbers, account numbers, credit card numbers, debit card numbers, security codes, access codes, and passwords.  And Florida is not alone, in fact, according to the National Conference of State Legislatures, “Forty-seven states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands …” have some form of personal data breach notification law on their books.

 

So, before your organization sends Bob off to work remotely at his home with a laptop or remote connection, not only must you consider the work rules but you need to have secured any data on that laptop and any Internet connection he may use.  Consider that Bob may decide to work remotely from his local coffee shop and take full advantage of their free Wi-Fi while he polishes that spreadsheet on employee health care claims, or that acquisition or analyzes data on your customer’s credit card transactions.  Unprotected public Wi-Fi networks have the potential; to steal more that your credit card number.

 

As employers struggle to meet the demands for top talent, they struggle to find ways to attach and retain such talent with flexible work arrangements.  Working from home and telecommuting makes for an attractive incentive to entrance that top talent to join the organization.  Being seen as an “employee and family friendly” workplace is important to many employers today.  However, a careless moment can result in a stolen laptop, or a discovered back door into your organization’s otherwise secure network.

Work, It’s Just a Job!

Friday, May 02, 2014

 

It’s Just a Job!  That is how many employees perceive their employment and their relationship with their employers.  Looking around, many see there are few, if any, advancement opportunities available to them and their co-workers.  With no apparent growth prospects it is not hard to understand why such employees become disenchanted with and disengaged from their organizations.  It is also not hard to understand why employers struggle to retain talent and to get and keep their workforces engaged.  Even for workers who are highly talented, motivated, engaged, and making significant contributions, it often seems their employment has little in the way of true opportunities.

 

If a worker perceives there are no advancement opportunities abounding within their employer, the problem is they have not looked hard enough.  The door of opportunities may not be labeled; it may not have a sign post or arrows panted on the floor, pointing the way.  Opportunities must be sought.  Sometimes workers must create their own opportunities by finding a problem and offering up a solution.  By identifying a problem and finding a solution, thus creating their own opportunities, employees begin to think like owners, like entrepreneurs.

 

Organizations may facilitate the pairing of employees and opportunities but they cannot make that relationship solidify.  Matching the right employee with the right opportunity is helpful but it takes more than a set of skills to achieve the appropriate and workable employee-opportunity mix.  Flour + Sugar + Leveling + Eggs + Milk, does not a cake automatically make.  The ingredients must be carefully bended and emulsified, then placed in the correct environment.  Leave out any ingredient, mix improperly, place in the wrong environment and there will be no cake.  Baking, employees, and organizational opportunities are all investments, some are short term, and some are of a longer duration.  The first requires the development of culinary skills, the later requires employee development.

 

Few investors, other than maybe Warren Buffett, have millions to invest in a single project; the same can be said for organizations.  Most are unwilling to turnover a high value, high visibility project to a completely untested employee.  Most employees do not come to an employer fully formed and fully developed with all of the skills desired to shepherd a new system implementation, integration of a new acquisition or rescue a failing business.  Long before we are permitted to take on that break-out project or assignment, most employees must invest their time in acquiring the project, communications, and technical skills needed.  This is the rate-of-return for their investment.

 

It is easy to understand how any employee can be impatient, even frustrated at having to play supporting roles, when in their mind they are ready for the spotlight.  But just like any star, talented employees must be honed through a successive series of assignments for them to develop.  Underprepared employees are not just an issue for the employee.  Failure to develop a talented employee reflects on both their first line manager and the organization as a whole.  Even a diamond has to be polished to bring out its inner brilliance.