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. 

Lack of Top Talent Linked to Failure to Innovate

Friday, March 30, 2012

If there was ever a time when innovation was and is crucial to the success of organizations, it is during the worst economic times in the last half century. Certainly the times they are improving without question. However, Europe is continuing to struggle with debit, Asia’s economies are beginning to soften, and the US is still facing what may be considered long-term structural unemployment. What are needed are governmental and business leaders who are capable of innovative thought and vision. In other words, organizations must focus on acquiring new talent and they must retain the top talent they have or they will not be able to innovate to success.

Like so many other traits, is innovation learned or is it somehow engrained into leaders and top performers. Can innovation be spread across the cloud in some distributive process or is the purview of some vaulted few? What is innovation and will organizations know it when they see it? Are top performers universally innovative? Can everyone, anyone be innovative? From where does innovation come?

According to Steve Tobak writing for CBS Money Watch, innovation is about seeing things differently than how others might see them. He cites a number of household names as examples of innovation in how technology and services are delivered. So if one man sees a pile of trash, another would see recyclable resources. If one organization sees production waste, their competitor may see a new product. Take the smart phone, it was not always smart, but somewhere along the product development line someone decided that a phone had to be more than a phone. Someone saw something that was not just a phone but a browser, game console, recorder, camera, personal assistant, … etc.

A web search brings phrases up such as “seeing” things differently, “listening”, and “connecting” to create innovation. Creativity and innovation are linked in a dance where neither one leads nor follows. Innovation is married to change, while change may not bring innovation, innovation certainly brings about change. Innovation is both tied to the current state of the environment as well as standing on the shoulders others. Over 150 years of communications technology development began with the electric telegraph and Morse code in 1840. By the way, Morse code is a binary system of “dots” and “dashes” which dates back to 1828 and Harrison Dyar. That same binary system in the form of “0s” and “1s” is the backbone of today’s communications and computing technology.

Apple, Nokia, and Research in Motion did not invent the smart phone, but they did take fundamental communications and computing technology and “innovate” how it was used by the consumer.

Amazon was not the first price discounter, however it successfully innovated how consumers search for and purchase books and other products. Mark Zuckerberg did not invite social networking, he made it feasible, user friendly, and economically viable. Henry Ford did not build the first practical automobile, however he innovated how it was built and marketed.

Jim Stikeleather, Dell’s Chief Innovation Officer speaks to three points of innovation:

1. “Rapid Prototyping”
2. “See the total picture”
3. See “great ideas … no one has recognized”

Stikeleather concludes that “social media and crowdsourcing” are tools of innovation.

Retirement Prospects Post Great Recession

Friday, March 23, 2012

Lowered 401(k) accounts balances, declining home values, lay-offs, reduced earnings, increased debt levels, all devastated the confidence of many near-retirement age workers following the 2008-2009 financial crash. The natural reaction for many workers is to remain in the labor force and attempt to recoup losses, pay down debt and somehow make-up for their diminished financial status. Postponing retirement age does have the potential value of an increased monthly social security benefit amount. Remaining in the work force does provide an opportunity to re-build 401(k) accounts and pay down debt. Unfortunately, time is both the friend and enemy of those attempting to plan and save for retirement.

The Employee Benefit Research Institute reports that in spite of financial and employment prospects improving, many workers still have a low level of confidence in their ability to retire.  A recent CareerBuilder study found that 22% of workers believe that they will never be able to retire, another 22% are planning to postpone retirement by 5-6 years, and 18% think it will be 7 or more years before they can leave the workforce.  A 2011 Towers Watson Retirement Attitudes Survey, pointed to an increase in the desire by older workers for more security in their retirement health care and savings plans. Over 50% of the employees surveyed reported they would trade take-home pay for more security in their retirement benefits. One positive note from the survey is that workers appear to be more engaged in the retirement planning and are paying closer attention to their retirement needs.  The Mercer “What's Working” survey, which was conducted from Q4 2010 to Q2 2011 found that for US and Canadian employees, an adequate retirement plan ranked as second in value, after base pay. Even outside North America, retirement plans are in the top 5-7 value positions for workers.  A June 21, 2011 report on National Public Radio hosted by Neal Conan related that many older workers want to retire but are financial able to do so. The result is that many younger workers are unable to move up as older workers have postponed retirement. This result also has a dampening affect on entry level jobs as current workers have few opportunities to advance.

While this may seem like a lose-lose game, but consider that organizations are now is a position to use this time to transfer knowledge and skills from long-term older workers to their up and coming younger cohorts. Yes, many older workers may elect to postpone retirement for 5-10 years, however, they will eventual retire. Many of these same workers have been trained and operated technically sophisticated machine tools, this would be an opportunity to implement apprentice programs designed to train younger workers. The ironic issue is that faced with naggingly high unemployment, many organizations continue to struggle to fill vacant positions with skilled workers, as reported by a survey by the ManpowerGroup.

FMLA: Potential for Abuse

Friday, March 16, 2012

If your role in a business requires that you oversee others either in a direct supervisory or administrative capacity; you should have an understanding that many employees are eligible for protected time off under The Family and Medical Leave Act of 1993 (FMLA). FMLA was designed to provide eligible workers with up to 26 weeks of unpaid time off to care for themselves or eligible family members who had a “serious health condition”. The law was later expanded to cover certain situations dealing with certain active and reserve military activities. So when is an illness serious?

In general, a serious health condition includes any situation which prevents the employee from working, attending school, or performing other routine activities and includes continuing treatments for chronic conditions such as chemotherapy or similar treatment regimens for themselves or eligible family members. Is it possible that a common everyday cold, flu, headache, or malady can meet the FMLA’s definition of serious health condition? Yes, it is possible. A cold or the flu can be a precursor to a severe respiratory condition. An ongoing headache may be an indication of an undiagnosed neurologic disease. Even an extreme sunburn could require several days of hospitalization and follow-on treatment.

Confronted with any potential FMLA situation, the FMLA Medical Certification Form is the basis for the employee to “certify” their medical situation is serious. Section III of the form is the employee’s personal physician’s attestment as to the employee’s medical condition and its estimated duration. SHRM, the Society for Human Resource Management also recommends a number of ways that employers can manage FMLA and remain within the law.

Training for supervisory and managerial employees is essential to FMLA compliance, as well as training for internal staffs that are required to administer human resource and payroll functions. As with most regulatory compliance, non-compliance can be expensive, time consuming and result in unnecessary employee relations issues. Key to FMLA compliance is annual and on-going training not only to refresh existing staff but for newly hired and promoted supervisors and managers. 

Tantamount to training supervisors and managers and administrative staffs; is employee training and communications to cover both FMLAS notice requirement as well as organizational absence management policies and procedures.  Many potential FMLA abuse situations can be avoided if both supervisors and managers and employees understand their roles and responsibilities when it comes to the company’s leave policies.