Professional Documents
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HEALTH CARE REFORM
Set a compliance
timeline
ORGANIZATIONAL
DEVELOPMENT
Online courses open
training opportunities
Wayne Culbertson
Chief Human Resources Officer
Michelin North America
Invest in
Older
Workers
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August 2013 HR Magazine 1
Contents
Au0uST 2013 v0LuME 58, NuMEF 8
20
COVER STORY
20 Invest in Older Workers
Loyal and reliable, older workers
yield a generous return on
investment.
By Robert J. Grossman
FEATURES
26 FIRST-PERSON ACCOUNT
All for Tomorrows Leaders
Goodyears executive team initiated
and participates in an intense
leadership development process.
By Gary VanderLind and Amy Alexy
ORGANIZATIONAL &
EMPLOYEE DEVELOPMENT
SPECIAL REPORT
30 Are Massive Open Online
Courses in Your Future?
This professional development
option may be appropriate for you
and your employees.
By Robert J. Grossman
39 Upon Further Assessment
When selecting future leaders,
employers rely on results from
multiple tests and tools.
By Adrienne Fox
46 Q&A
Incentives for Executives
New research shows that long-term
incentives are often ineffective at
motivating senior executives.
Interview by Adam Van Brimmer
49 SPECIAL SECTION ON
HEALTH CARE REFORM:
ARE YOU READY?
AGENDAS
71 SOCIAL MEDIA
Polish Your Social Media Policy
Create a social media policy,
and train employees to behave
responsibly.
By Aliah D. Wright
75 COMMUNICATION
Its Not Too Late
Educate employees about health
care reform now.
By Nancy Hatch Woodward
ADVICE AND ANALYSIS
18 SOLUTIONS
Company sports teams, health
care coverage
By Margaret Fiester, SPHR-CA, and
Amber Clayton, PHR
79 HR TECHNOLOGY
Give Employees with
Disabilities an Assist
New technology offers many more
low-cost accommodation tools.
By Jennifer Taylor Arnold
89 LEGAL TRENDS
Collective Bargaining, Meet
Health Reform
Health care reform brings new
challenges to collective bargaining.
By Arthur Smith Jr.
MANAGEMENT TOOLS
is online. See this months issue at
www.shrm.org/hrmagazine.
Women Helping Women
Female leaders who pass on their
insights to other women beneft
from the relationships.
By Vickie L. Milazzo
HR Magazine (ISSN 1047-3149) is published monthly by the Society for Human Resource Management, 1800 Duke St., Alexandria, VA 22314, (703) 548-3440, to further the professional aims of the
Society and the human resource management profession. Members of the Society receive HR Magazine as part of their annual dues, $55 of which is allocated for the subscription to HR Magazine,
which is nonrefundable therefrom. Nonmember subscriptions are available from the Circulation Department at the following rates: Domestic (U.S. and its territories)$70 per year. Canada$90
per year. International (via airmail)$125 per year. Published articles do not necessarily represent the views of the magazine or the Society. Society for Human Resource Management 2013.
Periodicals postage paid at Alexandria, VA 22314 and additional mailing offces. POSTMASTER: Send address changes to HR Magazine, Circulation Department, 1800 Duke St., Alexandria, VA 22314.
Publications Mail Agreement No: 40041558. Please send returns to BleuChip International, P.O. Box 25542, London, ON N6C 6B2.
This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in
rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
NEWS YOU CAN USE
7 HR NEWS
Employer benefts obligations
expand for same-sex couples;
employer mandate delayed; more.
16 EXECUTIVE BRIEFING
Mixed emotions lead to wise
decisions; resume content helps
explain hiring disparity.
85 COURT REPORT
Reduction in force tainted by willful
age discrimination; teacher fred for
harassing student lacks bias claim;
more.
99 WHATS NEW
Employee recognition; health and
safety; HR management systems;
more.
PERSPECTIVES
4 FROM THE CEO
A Journey to Becoming More
By Henry G. Jackson
104 FUTURE FOCUS
Skills Gap Holds Back
Some Grads
College graduates are
underqualifed, some HR
professionals say.
By Jennifer Schramm
HR MAGAZINE BOOK BLOG
The blog is online. See www.shrm.
org/bookblog for summaries of
Quiet Infuence; Up, Down, and
Sideways; A Necessary Evil; and
Manager 3.0.
SHRM RESOURCES
95 INSIDE SHRM
Insight and inspiration at Annual
Conference; HR faces timeless
challenges; more.
SPECIAL SECTION
101 BENEFITS BUYERS GUIDE
30
COVER PHOTOGRAPHY
BY HEIDI HEILBRUNN FOR HR MAGAZINE
DONT MISS
THE HEALTH CARE
REFORM
SPECIAL SECTION
on page 49.
Health Care Reform:
Are You Ready?
SPECIAL SECTION
INSIDE
52 More Time to Get Strategic
57 What Will Brokers Do Now?
62 Employer Mandate Delayed
63 Lessons Learned from a Private Exchange
64 Small Businesses Still Waiting
66 A Part-Time Workforce
7/15/13 2:48 PM
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Copyright 2013 Korn/Ferry International. All Rights Reserved.
Realized.
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We know that when talent shines, business grows. Thats why Korn/Ferry
helps our clients design, build and attract the talent they need
to achieve their business goals. www.kornferry.com
Potential.
Click for More
August 2013 HR Magazine 3
How to Contact Us
Society for Human Resource Management
1800 Duke Street, Alexandria, VA 22314, USA
Phone (703) 548-3440; Fax (703) 836-0367;
TTY (703) 548-6999; E-mail: shrm@shrm.org
Web: www.shrm.org
The Society for Human Resource Management (SHRM)
is the worlds largest association devoted to human re-
source management. Representing more than 250,000
members in over 140 countries, the Society serves the
needs of HR professionals and advances the interests
of the HR profession. Founded in 1948, SHRM has
more than 575 affiliated chapters within the United
States and subsidiary offices in China and India. Visit
SHRM Online at www.shrm.org.
Join us on SHRM Connect: Interact with the HR
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publishing and click on Join Community.
Toll-free 800 Numbers
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article, contact the YGS Group at (800) 501-9571.
Subscription Information
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Join or Renew Online!
Save time and postage. Join SHRM or renew your
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shrm.org/infokitrequest. Out of work? SHRM offers
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information at www.shrm.org/members/transitioning.
Out of the Office
Work happens, even when employees are sick or on vacation. Here are resources for
managing absences and understanding their true costs. Find links to these and other
items at www.shrm.org/clickformore/outofoffice.
TOOLKIT: PAID-LEAVE
PROGRAMS
A SHRM How-to Guide helps you cre-
ate a plan that meets both your organiza-
tions and your employees needs.
PTO Q&A
Youve got questions about paid-time-off
rules? Weve got answers.
NAVIGATING THE LEAVE
MANAGEMENT MAZE
Coordinating leaves of absence under
various federal and state statutes is one
of the most daunting challenges faced by
HR professionals.
MEANWHILE, IN CALIFORNIA
The Golden State has its own unique
leave law rules. A SHRM toolkit pro-
vides guidance for staying compliant in
California.
THE COSTLY TRUTH
A new SHRM webcast looks at the real
cost of employee absences.
FLU SEASON
Put a plan in place that keeps your work-
place operational during flu and other
epidemics.
TRAIN YOUR SUPERVISORS
Download a presentation that you can
use to provide information to managers
about your organizations leave policies
and procedures.
Scan this code with
your mobile device
barcode reader to get
links to all of these
resources and oth-
ers available from the
SHRM website.
Follow HR Magazine on Twitter
@HRMagazineSHRM.
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From the CEO
4 HR Magazine August 2013
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By Henry G. Jackson
A Journey to Becoming More
A
s I write this column, its been only a few days
since the conclusion of the Society for Human
Resource Managements 65th Annual Confer-
ence & Exposition (hashtag #SHRM13). And Im
pleased to have participated in an event that many
who attended are calling the best conference in the
history of the Society.
Our first conference in 1948 attracted 67 attend-
ees. This year, we set an all-time record of more than
15,100 attendees from 78 countries and the United
States, and our exposition had 700 exhibitors.
The largest-ever gathering of HR profession-
als inspired more than 3,000 Instagram photos and
25,000 tweetsputting #SHRM13 among Twit-
ters top 10 globally trending topics for two straight
days. And, it prompted coverage in more than 1,100
blog posts, newspaper articles and television stories,
including from the Associated Press, NBCs Today
show, ABC News and The Wall Street Journal.
We promoted this conference as an opportunity
to become moreto find ways to be better at your
job, smarter in your work, savvier in your decisions
and bolder in your commitment to be an effective
business leader. Based on initial reports, we delivered
on that promise.
One blogger wrote, It was one heck of a confer-
ence, and another called it Epic what SHRM
accomplished was spectacular in every sense of the
word.
Our general session speakers, ranging from for-
mer Secretary of State Hillary Rodham Clinton, to
Captain Mark Kelly and former Rep. Gabrielle Gif-
fords, provided unique global perspectives. They
dared us to dream and they challenged us with ways
to improve our communities, our workplaces and
ourselves.
All of themplus speakers at more than 200
concurrent sessionsepitomize what it means to
become more.
There was something important happening every-
where I turned in Chicago. And it all demonstrated
what an incredibly engaged and thoughtful group
the SHRM community is. We joined with AARP
in honoring the 2013 winners of the Best Employ-
ers for Workers Over 50 award; hundreds of mem-
bers spontaneously pitched in to assemble 3,000
personal hygiene kits for underprivileged individu-
als in the Chicago area; and the bloggers even orga-
nized a kickball tournament that raised $11,000 for
NoKidHungry.
My point: Now, more than ever, the call to action
for HR professionals is to be innovative, creative and
proactive. We are expected to lead, and that is why
we must become more.
SHRMs job is to help you reach your goals. The
SHRM Annual Conference is a giant step forward in
that journey.
I invite you to join us next year and see for your-
self whats so special about the Societys annual con-
ference, and how SHRM can help you transform into
the business leader you want to be. Our organiza-
tions are counting on us to be more.
Well see you at SHRM 2014 in Orlando.
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Big Ideas drive business. But helping your people create, develop, and deploy the ideas that will drive your
business can be a real challenge. Distractions, frustrations, and inefciencies abound. That is what makes
UltiPro
perfect for you. UltiPro simplies complicated processes and day-to-day tasks that can bog you
down, clearing the way for workforce creativity and productivity. Which is in and of itself a pretty Big Idea.
UltiPro.
HR, Payroll + Talent Management for the human side of human capital.
PEOPLE ARE COMPLICATED. WHICH IS WHY YOU NEED A SOLUTION THAT ISNT.
#WhatMakesYouPerfect
Dene what makes you perfect at
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From FORTUNE Magazine, February 4, 2013 2013 Time Inc. Used under license. FORTUNE
100 Best Companies to Work For is a registered trademark of Time Inc. FORTUNE and Time
Inc. are not afliated with, and do not endorse products or services of, Licensee.
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________________
August 2013 HR Magazine 7
HR News
For the latest HR-related business and government news, visit www.shrm.org/hrnews.
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Employer Benefits Obligations
Expand for Same-Sex Couples
On June 26, the U.S. Supreme Court, in United
States v. Windsor, found unconstitutional Sec-
tion 3 of the federal Defense of Marriage Act
that had prohibited the federal government from
acknowledging marriages between same-sex
couples. Same-sex marriages were recognized as
legal by 12 states and the District of Columbia
at the time of the ruling.
In a related case, Hollingsworth v. Perry,
the court ruled that those challenging a Cali-
fornia state court decision that made same-sex
marriage legal in Californiaby overturning a
state ballot initiative known as Proposition 8
lacked the standing to do so. The finding will
restore legal same-sex marriage in the state.
Key Implications
Todd Solomon, a partner at law firm McDer-
mott Will & Emery LLP in Chicago, identified
the following as key benefits implications for
private-sector organizations.
For a legally married couple who live in a
state where same-sex marriage is recognized:
Federal laws governing employee benefit
plans will require companies to treat employees
same-sex and opposite-sex spouses equally for
purposes of the benefits extended to spouses.
Employers with self-insured health plans
may not have to extend spousal-benefit coverage
to same-sex spouses, because federal law does
not require spousal health-benefit coverage and
because state insurance law mandates do not
apply to self-insured plans. However, employers
that continue to provide benefit coverage only to
opposite-sex spouses are almost certain to face
legal challenges under federal discrimination
law, Solomon said.
Employees will no longer have to pay fed-
eral income taxes on the income imputed for an
employers contribution to a same-sex spouses
medical, dental or vision coverage. And a
worker can pay for a same-sex spouses coverage
on a pretax basis under a Section 125 plan.
Businesses will have to offer COBRA contin-
uation coverage to same-sex spouses.
Employers with pension plans will be required
to recognize same-sex spouses for purposes of
determining surviving-spouse annuities.
Employees must be permitted to take fam-
ily and medical leave to care for an ill same-sex
spouse.
The big open question is what happens
to same-sex spouses who live in states such as
Florida or Texasstates that dont recognize
same-sex marriage. No one can answer the
question until additional guidance is issued,
Solomon said.
Stephen Miller, CEBS
Employer
Mandate
Delayed
The Obama administration
surprised the U.S. busi-
ness community when
it announced a one-year
delay, until Jan. 1, 2015,
in the Patient Protection
and Affordable Care Act
mandate that employers
with 50 or more full-time-
equivalent employees
provide health care cover-
age that meets minimum
requirements or face
penalties.
The postponement
of the employer shared
responsibility cover-
age mandate is linked to
a delay (announced at
the same time) until 2015
in implementing two of
the acts penalty-related
information-reporting
provisions:
Section 6055 requires
reporting by insurers, self-
insuring employers and
other parties that provide
health coverage.
Section 6056 requires
reporting by certain
employers with respect
to the health coverage
offered to their full-time
employees.
Due to the delay,
employers will not face
penalties for another year
with respect to employees
who receive premium tax
credits to purchase cover-
age on a government-run
exchange.
For more about the
delay of the mandate, see
page 62.
Stephen Miller, CEBS
Activists opposing Californias Prop.
8 and the Defense of Marriage Act
await rulings by the U.S. Supreme
Court in Washington, D.C.
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8 HR Magazine August 2013
HR News
is The Hartford Financial Services Group, Inc. and its subsidiaries, including issuing companies Hartford Fire Insurance Company, Hartford Life Insurance Company and Hartford Life and
Accident Insurance Company. All property and casualty policies are underwritten by Hartford Fire Insurance Company, Inc., and its property and casualty afliates, Hartford, CT. All non-property and casualty
policies sold in New York are underwritten by Hartford Life Insurance Company. Home Ofce of Hartford Life Insurance Company and Hartford Life and Accident Insurance Company is Simsbury, CT 06089.
4728 NS (03/13) 2013 The Hartford Financial Services Group, Inc., Hartford, CT 06155. All Rights Reserved.
MANAGE ABSENCE. EMBRACE PROGRESS.
PLAY ON
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14 HR Magazine August 2013
HR News
, a
ComPsych
from SkillSurvey.
Te Q is a new talent portal where candidates references can join an invitation only network
that builds itselfyour own growing crop of candidates that are respected, qualied, and
already interested in your organization.
To learn more, go to www.intotheQ.com/hr5
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30 HR Magazine August 2013
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
S
tanford University professor
Daniel A. McFarland had been
teaching a class on organiza-
tional analysis for more than a
decade, reaching about 2,000 students.
Last year, he transformed the class into
a massive open online course (MOOC).
Instead of 25 or 30 students sitting in
his Palo Alto, Calif., classroom, almost
45,000 were checking in from four conti-
nents. It was daunting, like presenting to
an entire stadium, he recalls. He is now
preparing for a second session this fall,
this time with 51,000 registrants.
McFarland is at the forefront of the
MOOC movement. Some say the move-
ment will be a turning point in higher
education and corporate training. Will it?
Are MOOCs transformative or merely
innovative?
Designed for large-scale participa-
tion and free access via the Web, a typi-
cal MOOC lecture is self-paced, short
maybe 10 or 15 minutesand spiced
with multimedia components. Profes-
sors highlight issues as well as pose and
answer questions based on crowdsourc-
ing of information that participants
submit. After each session, students take
quizzes to verify that they understand
the material. They also discuss content
among themselves; interaction often
leads to Facebook and LinkedIn chats or
even face-to-face meetings. Students take
exams and a final, submit reports, and
grade other students essays.
Anyone can sign up, and there are no
prerequisites. MOOCs are free, although
some require fees for certificates of com-
pletion or charge tuition for college credit.
The Vision
Idealists envision MOOCs as changing
the face of higher educationmaking
college truly free and globally accessible,
opening the portals to millions of people
who currently are excluded. If the dream
is realized, employers will begin to see job
candidates who have completed a smor-
gasbord of targeted MOOCs and who
are as qualified as or more qualified than
those with traditional college degrees. In
addition, colleges and universities will lose
their near monopoly as kings of creden-
tials. For employees, MOOCs open vast
resources for professional development. I
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Future?
in Your
Massive Open
Online Courses
Are
Millions of students and workers are exploring
this option for professional development.
By Robert J. Grossman
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August 2013 HR Magazine 31
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32 HR Magazine August 2013
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
It would unbundle the degree, pre-
dicts Dan LeClair, executive vice presi-
dent and chief operating officer of AACSB
International, The Association to Advance
Collegiate Schools of Business. Students
could take courses from different profes-
sors from anywhere and, if theyre success-
ful, get a certificate that companies can use
to validate their performance in the class.
So far, advocates are fighting to gain
acceptance for the MOOC model. In a
2012 survey of 2,820 academic leaders by
Babson Survey Research Group, about a
third said they thought employers would
accept MOOC instruction.
The Players
Last year, MOOCs catapulted onto the
world stage, generating feverish activity
and passionate commentary within higher
education and beyond. Several well-
financed companies associated with pres-
tigious universities, including Stanford and
the Massachusetts Institute of Technology,
emerged to produce and market MOOCs.
Now providers are scrambling to stake
claims. Theres a lot of risk taking and
different approaches, LeClair says.
Colleges and universities, professors,
employersanyonecan
enter the MOOC competi-
tion through free platforms
offered by companies such
as Blackboard Inc. Among
the providers are:
Coursera. The company
has partnerships with 62
colleges and universities. The
schools contribute profes-
sors and content; Coursera
adds technical expertise and
an online platform. If revenue
materializes, schools will receive a small
percentage plus 20 percent of gross profits.
Since launching in April 2012, Coursera
has registered 2.8 million students.
EdX. MIT and Harvard contributed
$30 million each in resources to this ven-
ture. Along with the University of Cali-
fornia-Berkeley, they offer 25 free credit
courses, with
plans to add as
many as 100 more.
This fall, classes from
Georgetown University, Uni-
versity of Texas and Wellesley
will be featured.
Udacity. This company began
as a Stanford experiment in which
160,000 students from more than 190
countries enrolled in an online class on
artificial intelligence. In January, the Amer-
ican Council on Education announced it
would evaluate whether four entry-level
Udacity courses are eligible for college
credit. As of February, Udacity had 20
active courses.
Quiet Evolution to E-Learning: A Paradigm Shift for Educators
While massive open online courses (MOOCs) are getting lots of
attention, traditional forms of e-learningthe kind students pay
for as they build credentials required for entry to and advancement
at workare leaving a bigger footprint. This suggests that higher
education already is changing significantly.
More Online Offerings
A survey by the Babson Survey Research Group, for example,
reveals that more than 6.7 million students took at least one online
course last year, an annual increase of 9.3 percent. Compared
to classroom courses, online courses were less costly to oper-
ate, more convenient and more accessible. Some led to degrees,
while others resulted in certificates in fields such as accounting.
Financially, the advantages of online versus in-person instruction
remain clear to administrators. More than two-thirds of the aca-
demic leaders who responded to the Babson survey said online
learning is critical to their long-term strategy.
Hence, e-learning is building a base in business and HR edu-
cation. According to AACSB International, The Association to
Advance Collegiate Schools of Business, 8.9 percent of accredited
schools offer online undergraduate programs, and 23.2 percent
of accredited graduate schools offer online programs. Over time,
migration to online study for graduate work has been substantial.
From 2005-06 to 2011-12, the number of accredited business
schools offering such study doubled from 41 to 82.
In a U.S. News & World Report survey of 628 schools, a third
said they offer online masters degrees in business administration.
Accredited business schools with online masters programs in
HR increased from three in 2005-06 to seven in 2011-12.
A February HR Magazine online survey of educators in a
Society for Human Resource Management database revealed
that 73 percent of the 85 respondents said their schools offer HR
courses online. Another 9 percent said they planned to do so the
following year.
Dwindling Quality Divide
How does e-learning stack up against face-to-face instruction in
terms of quality and outcomes? Very well, it seems. In the Babson
survey, more than three-quarters of academic leaders rated learn-
ing outcomes in online education as the same as or superior to
face-to-face instruction. A major academic analysis appears to vali-
date these perceptions.
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August 2013 HR Magazine 33
The Students
At this point, MOOCs seem to attract
primarily students who are cut off from
mainstream education by geography
or economics. The courses are popular
outside the United States, with students
everywhere drawn in by price, format and
convenience.
Providers are grappling with ways to
prevent identity fraud and other forms of
cheating, but technological advances have
made it harder to game the system.
McFarlands students explored 10
organizational theories via case studies.
Most registrants were international; only
18 percent came from the United States.
Eighty-five percent had at least a college
degree. Two-thirds were working full time
or were self-employed. Only 45 of the
45,000 were Stanford students.
Some of the registrants, such as Paul
Ledesma, channel sales manager at Cox
Communications in Las Vegas, were
encouraged to sign up by their employ-
ers. Ledesma completed the advanced
track requiring five to 10 hours of study
each week.
My leaders suggested that I focus
on organizational analysis. So when the
class came along, I took advantage of the
opportunity, he says. It was much bet-
ter than being stuck with 25 or 30 people
who were like me. Instead, I was engaged
with people from around the world
India, U.K., Philippines, Pakistan. It was
interesting to see how problems in the
workplace resonate.
Some 1,570 students finished the
10-week course. For the basic certificate,
1,451 students watched all videos, sub-
mitted quizzes, participated in an online
forum and passed the final. Another 129
advanced students and those earning
credit from Stanford met basic require-
ments, wrote two papers and peer-graded
eight others. McFarland says the 3.48
percent completion rate is typical among
MOOCs. Published reports claim about
10 percent of students finish such courses.
Retention can be expected to rise
if more colleges agree to grant trans-
fer credits for MOOCs. In California,
the Legislature is considering a bill that
would allow students who are unable to
find a seat in a required class or compa-
rable online class within their state school
to take a MOOC certified by the Ameri-
can Council on Education.
Apparently, few students take McFar-
lands course as a resume enhancer. They
dont care about the certificate, he says.
Most just want to dabble. However, the
professor says many who earn a certificate
list it on their LinkedIn page.
The Paradox
Any marketing professional will tell you
that free is a powerful driver. Put even a
small charge on a course and the market
declines precipitously. And free does not
apply only to money. People who get free
service often expect to be free from com-
mitment. Requiring them to demonstrate
performance by producing quality results
means many withdraw. Observers note
Accredited Business Schools
With Online HR Degree Programs
Undergraduate
University of Arkansas, Little Rock, College of Business
Graduate
State University of New York Institute of Tech, Utica, Department of Business
Management
Wayne State University, School of Business Administration
University of Wisconsin-Whitewater, College of Business and Economics
Tennessee Tech University, College of Business
University of Houston-Clear Lake, School of Business
University of Texas, Tyler, College of Business and Technology
Griffith University
Source: AACSB International.
Researchers at the U.S. Department of Defenses Advanced
Distributed Learning Initiative and the University of Tulsa ana-
lyzed dozens of studies comparing Web-based and classroom
instruction. Most of the 96 studies focused on knowledge of
facts, concepts and principles. E-learning and classroom learn-
ing were found to be equally effective when content and learn-
ers were the same in both types of courses.
The findings affirm the power of synergism. Learners
exposed to both e-learning and face-to-face instruction did
best. On average, the hybrid approach is the most effective,
outperforming the others by 26 percent, says Traci Sitzmann,
an assistant professor of management at the University of
Colorado-Denver and co-author of the study.
MOOCs are telling us theres a lot of potential for peer
learning and study groups, adds Dan LeClair, executive vice
president and chief operating officer of AACSB International.
Finally, e-learning does not work for all students. For exam-
ple, for a 2013 report, researchers at the Community College
Research Center studied results from nearly 500,000 courses
taken by more than 40,000 Washington state students. All
types of students performed worse in online courses than in
comparable face-to-face ones. The largest gaps in achievement
appeared for males, younger students, ethnic minorities and
students with lower grades.
Robert J. Grossman
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34 HR Magazine August 2013
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
that while expanding access to education
is laudable, you cant give it away forever.
There is no such thing as a free lunch.
So the race is on. When grants and
venture capital run out, it remains to be
seen if there will be robust business mod-
els. For now, theres experimentation.
Some colleges are exploring the free-
mium model. They say: Take a free
MOOC from us. If you like it, well give
you college credit for the course when we
admit you as a paying student. Other
providers expect to earn licensing royal-
ties from their courses.
In contrast, some professors couldnt
care less about the business case. Steal my
lectures; build on them, McFarland urges.
I want to do anything I can to get my
material out there. The more people who
have access to it in any form, the better.
A closer look suggests that MOOCs
simply extend e-learning. MOOC
designers take online technology and
pedagogy and package them into free
products that have appeal because of the
topics and prestigious teachers.
Yet iTunes U has been offering free
university courses for some time, librar-
ies loan copies of The Great Courses
series, and MIT has been providing free
access to course materials online since
2002.
So if MOOCs are an iteration of
online learning, why the hullabaloo?
We know higher education is likely
to change as a
consequence of
MOOCs, but we
also know that
MOOCs in their
present form will
not last for long,
LeClair says.
They offer a vehicle for talking about
the transition.
The Takeaway
MOOCs come up in the debate about
the wisdom of maintaining the status
quo in higher education. The discussion
was triggered by the confluence of three
problems with higher educationcost,
quality and accessnow reaching near-
crisis, explains Anne G. Zahradnik, a
professor of public administration at
Marist College in Poughkeepsie, N.Y.
The debate centers on an educa-
tion delivery system that, critics say,
is bloated, underperforming and self-
absorbed. Critics
complain about:
Costs. Accord-
ing to the College
Board, the net
amount in-state
students at public
colleges will pay
this year rose 4.6 percent to an average
of $16,510. Thats more than twice the
rate of inflation.
As a result, U.S. students drop out
before receiving four-year degrees at
higher rates than in other developed
countries. According to a Harvard study,
only 56 percent of U.S. students graduate
in six years. The main reason students
quit? Money and burgeoning debt. Stu-
dents, families, taxpayers and legislators
ask why costs continue to escalate.
Meanwhile, college and univer-
sity leaders see a threat to their already
shrinking revenue if education becomes
a free commodity. They cant afford
to give away credit, predicts professor
Wayne Cascio at the University of Col-
orado-Denver. They will resist unless
they can find a way for MOOCs to gen-
erate sufficient revenue.
And folks who have been paying the
tab to keep the higher education estab-
lishment afloat are growing restless and
demanding answers. To them, MOOCs
will yield practical alternatives.
Quality. Employers complain about
skills gaps among entry-level workers.
In a 2011 survey of more than 1,000
employers conducted by the Accredit-
ing Council for Independent Colleges
and Schools, more than half said finding
For links to the Babson survey, massive
open online courses and other resources,
see the online version of this article at
www.shrm.org/0813-MOOCs.
ONLINE RESOURCES
Not-So-Massive Online HR Curriculum
According to research by the Babson Survey Research Group, 2.6 percent of U.S.
higher education institutions have massive open online courses, and 9.4 percent plan
to offer them.
But what impact are MOOCs having on HR education and training? So far, not
much. A February HR Magazine online survey of educators in a Society for Human
Resource Management database revealed that all 85 respondents equated MOOCs
with traditional online courses at their schoolsoverlooking the fact that those cours-
es are neither massive nor free.
Officials at only one institution, Brigham Young University, said they reached as
many as 1,000 students online with a course on organizational effectiveness. The
entry-level organizational behavior class is open to anyone, but it is not free. Anyone
can take the course from anywhereBYU student or notas long as they pay the
tuition, says professor David Cherrington. Local students with access to the Provo,
Utah, campus can opt for a hybrid format and attend lectures. About 10 percent of
students who can attend do. Students take proctored exams in secure testing cen-
ters.
HR educators may be reluctant to sign on to distance learning because they
remain convinced that most HR learning should be grounded in face-to-face contact.
Direct exchanges help participants develop emotional intelligence skills. Nonverbal
communication can be lost online. HR educators see the value of basic courses such
as statistics being online, but when it comes to people subjects, they say syner-
gism within groups and interaction with the instructor remain essential.
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0313-JO9914 2013 The Bureau of National Affairs, Inc.
EXPECT
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CALL 800.372.1033 OR VISIT
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36 HR Magazine August 2013
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
qualified applicants remains difficult.
Just under half thought that students
should receive specific workplace train-
ing rather than broad-based education.
Access. Proponents of online educa-
tion find it unacceptable and unsustain-
able for higher education to be inaccessi-
ble to millions around the world because
of physical or financial limits.
The Jangled Nerves
Wherever you look, institutions and peo-
ple whose meal tickets are tied to the sta-
tus quo are nervous. To them, MOOCs
and change are threatening.
College administrators worry that
the professor will replace the insti-
tution as the main attraction. Some
believe the brand of the professor will
matter more than the brand of the
school, LeClair says.
Many professors fear retrenchment
and loss of status. They realize that with
MOOCs reaching tens of thousands of
students, a few charismatic professors
with star quality
and super platform
skills may render
other professors
nonessential.
Trainers and
consultants who
currently offer
courses and webi-
nars worry that they
will face increased
competition from
MOOC providers
who market and
license them in the training space.
Yet advocates for classroom instruc-
tion are retreating in the face of mount-
ing peer-reviewed evidence that e-learn-
ing, when done well, is no less effective
than face-to-face instruction.
The Business Uses
The catalog of available MOOCs
grows daily. Subjects include business,
accounting, strategy, leadership and self-
improvement. Employers are becoming
more aware of their potential value.
In 2012, when CORP/U surveyed 243
chief learning officers about drawing on
MOOCs to support
training, 75 percent
expressed interest.
Corporate train-
ers challenge: iden-
tifying MOOCs
that mesh with their
agendas. Trainers
like those at pub-
lisher Pearson North
America found such
a match in a free
Stanford course
on innovation that
became part of leadership development,
explains Alan Todd, chief executive offi-
cer of CORP/U. And, Todd says, Boe-
ing trainers are building a MOOC with
the University of Washington to attract
engineers.
Cox Communications Ledesma says
employers can plug in a tailored compo-
nent to an otherwise generic MOOC. I
would find MOOCs that meet my needs
through a company like Coursera, he
says, then form a separate employee
study group and monitor it.
Ten years from now, what will the
higher education landscape look like?
Will there be fewer universities and
more MOOCs? Will most learning take
place through e-learning, with class-
rooms playing a niche role? Will blended
instruction become the norm?
David Pottruck, chairman of Red
Eagle Ventures Inc. in Pittsburgh, has
been following MOOC mania. As the
former CEO of the Charles Schwab
Corp. who rebuilt Schwabs business
model around the Internet, Pottruck
understands change.
The race to upgrade quality and
access to education while reducing costs
through e-learning will produce winners
and losers, he tells business leaders and
educators. Slow-moving institutions and
those that add the least marginal value
will find it difficult to survive.
Robert J. Grossman, a contributing editor
of HR Magazine, is a lawyer and a professor
of management studies at Marist College in
Poughkeepsie, N.Y. Kyle Yantz conducted
survey research for this article; the Marist
College finance and accounting major
graduated in May.
75% of 243
chief learning officers said they
were very interested or interested
in exploring massive open
online courses for professional
development when surveyed by
CORP/U in 2012.
Use MOOCs for Professional Development
For some employers, massive open online courses may be too general to incorporate
into professional development. A better option may be a MOOC derivative, such as
those designed by CORP/U. Tailored to each customer, these courses are presented
by university professors and bundled together with online interaction and classroom
workshops.
For example, Scott Figura, Coca-Cola Co. global director of supply chain capability
development, has created a seven-week course for 8,000 facility managers at 1,200
sites. Managers in groups of 35 to 45 begin with virtual instruction for seven weeks.
They set their own schedules, usually logging on before and after work for a set num-
ber of hours a week. The course concludes with a week of classroom time at regional
sites. Instruction is in Spanish and English, with plans to add Japanese and Chinese
options.
Georgia Tech faculty members deliver the virtual component. Practitioners and
faculty facilitate live sessions. The approach gives us a chance to build a sense of
community and also deliver the content with examples and situations that apply
directly to our business, Figura says.
CORP/U developers have also been working with the International Red Cross to
offer a tailored MOOC to train 13.1 million volunteers.
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______________________________
CALL US AT 866.685.2187 OR VISIT PARTNERS.ASHFORD.EDU
Designed with modern professionals in mind, Ashford Universitys
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_________________
August 2013 HR Magazine 39
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
I
f you are in the market for a lead-
ership assessment tool, there is no
dearth of options. The sheer number
and variety of assessment toolsand the
vendors that provide themmake even a
seasoned HR professionals head spin.
Just some of the types of tools HR
professionals can employ to assess a can-
didate for a leadership positionor an
employee for leadership potential
include:
Self-assessments.
Knowledge, behavioral and personal-
ity testing.
In-basket simulations that test ability
to prioritize, plan and delegate tasks.
Multi-rater assessments, often called
360-degree assessments.
Structured interviews with trained
assessors.
Panel interviews.
Employee engagement surveys.
Job simulations.
Bersin by Deloitte values the
Future leaders
face rigorous
testing as
employers
strive to measure
their worth.
Upon
Further Assessment ...
By Adrienne Fox
I
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A
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R
A
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D
Y
P
O
L
L
A
K
F
O
R
H
R
M
A
G
A
Z
I
N
E
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40 HR Magazine August 2013
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
assessment market at more than $800
million annually. Vendors range from
Korn/Ferry International, SHL, Mer-
cer, Center for Creative Leadership, and
Development Dimensions International
to thousands of smaller companies that
offer specialized assessments.
To help HR professionals sort
through the clutter, the Institute for Cor-
porate Productivity (i4cp) conducted
a leadership assessment survey of 610
business professionals from various
industries and company sizes. Fifty-four
percent reported to i4cp that they have
some kind of formal assessment process.
The 2012 survey also found that,
among the 25 tools respondents were
given to choose from, 360-degree assess-
ments were the most common, used by
77 percent of respondents organiza-
tions. This was followed closely by the
Myers-Briggs Type Indicator and DiSC
behavior and personality profiles. In
addition to being the most commonly
used, 360-degree assessments were
rated as highly effective by 40 percent of
respondents.
When assessing managers and execu-
tives, three-quarters of respondents
use 360-degree assessments in com-
bination with other tools, such as the
Myers-Briggs Type Indicator, Hogan
Personality Inventory, DiSC and psy-
chological assessments developed by
Lominger Ltd.
Fifty-one percent assess candidates
for virtually all management and super-
visory positions, and 64 percent employ
a mix of tests and interviews. The i4cp
researchers say assessment results are
more accurate when at least two tools
are used. Almost none of them were
designed to be used alone, the research-
ers stated, since they tend to look at dif-
ferent facets of leadership qualities.
Multiple Approaches
A 2011 Global Leadership Forecast
by Development Dimensions Interna-
tional also concluded that organiza-
tions using a mix of simulations, tests
and interviews have stronger leadership
benches. In general, a leadership assess-
ment uses one tool or a combination of
tools to measure a candidate against cri-
teria that the vendor chooses based on
years of validated data and the clients
leadership competency model.
Assessments capture personality
traits, preferred skills and behavioral
tendencies. For instance, DiSC measures
a persons dominance, influence,
submission and compliance. The
Hogan Personality Inventory looks at a
persons ability to remain calm and even-
tempered under pressure, ambition, val-
ues, social and interpersonal skills, and
communication skills.
In most cases, vendors administering
leadership assessments issue reports that
outline the candidates areas of strength
and weakness and that provide recom-
mendations for development.
Cost is a factor, but there are options
for most budgets. You can definitely get
an off-the-shelf online assessment that
is cost-effective, for instance, at $250
per person, says Kim Lamoureux, lead
analyst in talent acquisition at Bersin by
Deloitte.
Simple, low-cost assessments may
be sufficient for front-line supervisors,
but tests become more complex at
higher levels. For senior-level posi-
tions of director and above, a battery of
toolspersonality, behavioral-based
and simulation-basedis usually used,
Lamoureux says. At those levels, assess-
ment centerswhich test candidates in
many ways for four hours or longer
help determine how candidates per-
form under pressure. A 2007 survey of
180 business professionals by i4cp and
HR.com found that 44 percent of their
organizations used assessment centers.
Sending one candidate to an all-day
assessment center can cost $10,000 to
$20,000, according to vendors. For
some employers, the cost is worth it.
There is more at stake because selecting
the wrong person for a critical role can
have an enormous financial impact on
the organization, Lamoureux explains.
HR leaders working with smaller
budgets may create a lower-cost hybrid
approach that uses an online, vendor-
provided simulation followed by an
in-person presentation on that simula-
tion in the next room for the assessor
or hiring manager, says Jim Higgins,
principal in Mercers Talent Assessment
Solutions Group.
Thats the approach HR professionals
In the Toolbox
According to a 2012 survey by the Institute for Corporate Productivity, of the tools
available to identify, assess and develop future leaders, 360-degree assessments
are the most popular. However, three-quarters of respondents use 360-degree
assessments in combination with other tools. When presented with a list of
25 assessment tools, survey respondents indicated that the following are the most
commonly used :
Assessment Percentage of respondents
using this tool
360-degree assessments 77%
Myers-Briggs Type Indicator 68
DiSC 61
Lominger assessment instruments 47
Hogan Personality Inventory 43
StrengthsFinder 2.0 43
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42 HR Magazine August 2013
at Advance Auto Parts Inc. took in
finding leaders for its 3,900 stores and
55,000 employees. We looked into cre-
ating an assessment center, but we chose
a vendor who designed an in-depth pro-
cess using off-the-shelf assessments,
says Tonya Baker, the retailers director
of talent management systems.
Why Bother Testing?
HR professionals find value in leader-
ship assessment tools for three reasons:
New-hire fail rates. In a 2012 study,
Development Dimensions International
found that the success rate for front-
line managerial positions is 60 percent
when promoting internally and 50 per-
cent when hiring from outside. HR
professionals seek assessment tools to
improve their 50-50 chance of making
the right hiring decisions, says Kather-
ine Graham-Leviss, founder of XBIn-
Sight, a talent assessment firm.
Imperfect screening. It is hard to
gauge through interviews whether a can-
didate will succeed in your organization.
Interviewing is highly ineffective, Hig-
gins says. If you can put someone in a
situation and have him show his ability,
then the analysis will be more accurate.
Science. Well-designed, validated
assessment tools provide objective data
to inform a promotion decision. Based
on decades of neurological research,
the tools uncover values, motivators
and behaviors that otherwise may not
become apparent for months. Assess-
ments capture the soft skills that are
hard to glean, Graham-Leviss says.
Making an effort to ensure a match
between leaders and the organization is
worthwhile, according to the i4cp sur-
veyparticularly since it determined
that 89 percent of the time, new hires
fail because their attitudes dont match
up with the organizations values, not
because the individuals lack skills.
Its akin to a football player who under-
performs on one team and then goes on
to have a Hall of Fame career on another
team, Lamoureux explains. The skills
are the same, but the environment has
changed. When it comes to leadership, so
much of it is driven by potential within a
certain organization.
Employers should evaluate providers
to find assessments that fit their cultures,
Lamoureux advises, and should be
wary of vendors that say they can use the
same tool to assess everyone.
Mark Fernandes, chief learning offi-
cer at Luck Cos., a mining and crushed
stone supplier in Richmond, Va., looks
for such alignment. The major ven-
dors in this market are all competent,
he says. I want to know which one sees
things the way we do.
Once the choices are narrowed down,
the people involved in the decision
should take the assessments to ensure
that theyre user-friendly, relevant and
not overly time-consuming. A crite-
rion-related validation study shows a
Choosing the Right Assessment Tools
Before diving into the deep end of the assessment pool, HR professionals first
need to prepare for the plunge.
Understand whats driving the need for the leadership assessment, and
determine what the business wants from the assessment, says Mercers Jim
Higgins. Collaborate with the business leaders to find out what the leadership
profile is for your organization.
In the past five years, the content has shifted to assess leaders for ability to
innovate and manage change and complexity, he continues. In addition, global
competency has gained importance.
Good vendors have data to support general leadership traits, he notes, but HR
professionals can shed light on what specific traits work in their organizations.
The worst thing HR can do is to blindly go to vendors and say, We need a
leadership assessment. What do you have? Dont let the vendor tell you what
kind of leader you need, Higgins says.
Mark Fernandes knows exactly what type of leader is needed at Luck Cos. As
Lucks chief learning officer, Fernandes led a multiyear effort to develop a values-
based leadership model.
Once we had something to assess against, we became serious about using
leadership assessments, Fernandes says. All of the vetting becomes easier
once you codify the mission, values and supporting behaviors.
When meeting with vendors and assessing tools, employers should ask the
following questions about content, validity and scalability:
Is the tool compliant with U.S. Equal Employment Opportunity Commission
guidelines?
How is the tool validated, and how extensive is that validation?
What does the tool predict? Does it match with what your organization wants
to predict?
Is the tool intended to assess for competencies needed at the manager, direc-
tor, senior or executive levels?
What applicant volume can the tool accommodate?
Does the tool assess potential or immediate ability to do the job? Can it be
matched against a specific job or industry?
Does the vendor provide off-the-shelf or custom products? Does the vendor
adapt content or delivery methods?
Does the vendor charge a per-person rate or set prices?
ORGANIZATIONAL & EMPLOYEE DEVELOPMENT Special Report
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Citrix GoToTraining just added an entirely new dimension to your training sessions:
HDFaces high-denition video conferencing.
When your learners can see you, theyre more engaged and interested and when you
can see them, you can spot and react to looks of understanding, interest and confusion.
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Citrix Systems, Inc., or a subsidiary thereof, and is or may be registered in the U.S. Patent and Trademark
Ofce and other countries. All other trademarks are the property of their respective owners.
Online training is better with HDFaces video conferencing.
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44 HR Magazine August 2013
Special Report ORGANIZATIONAL & EMPLOYEE DEVELOPMENT
A
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Congratulations to the American Military University and American Public University
graduate student nalists for the 2013 Presidential Management Fellows program
one of the nations most prestigious and competitive government opportunities
in leadership development.
Michael Berry
Management (AMU)
Brandy Billie
Business Administration (AMU)
Sherri Burns
Environmental Policy and Management (AMU)
Andreia Farias
International Relations and Conict Resolution (AMU)
John Gill
Business Administration (AMU)
Andrea Grisham
International Relations and Conict Resolution (AMU)
Sharon Johnson
Public Administration (APU)
Pilar Lindstrom
Intelligence Studies (AMU)
Sharon Marcus
Public Health (AMU)
Matthew Mikaitis
Criminal Justice (AMU)
Michele ONeil
National Security Studies (AMU)
Curtis Rasmussen
Intelligence Studies (AMU)
David Roberts
Emergency and Disaster Management (APU)
David Robinson
Business Administration (AMU)
David Sandifer
Criminal Justice (AMU)
Brandon Wilson
Business Administration (AMU)
Each year, the program
seeks graduate students
who have demonstrated a
history of professional and
academic excellence, and
who are willing to undergo
a rigorous multi-stage
selection process. We are
extraordinarily pleased to
have our graduate students
recognized in this way.
APUS Executive Vice President &
Provost Dr. Karan Powell
Members of the regionally accredited American Public University System
statistical link between performance on
the assessment and performance on the
job, Higgins explains. Graham-Leviss
suggests using a sample of current lead-
ers representing high-, mid- and low-per-
formance to validate the tools.
The Experience
HR managers should not assume that
candidates will eagerly await testing.
The assessment process at Advance
Auto Parts takes candidates through
four hours of online testing for personal-
ity, behavior, critical thinking and finan-
cial acumen. Used for store managers,
district leaders, regional vice presidents
and senior vice presidents, the tests are
followed by a 45-minute interview with
an assessor. The vendor assesses each
candidate for job fit and capacity to lead.
Baker says hiring managers prepare
the top two or three candidates for the
extensive testing. Although most exec-
utive-level candidates have experience
with testing, Baker says some comment
on the duration or content of the assess-
ments. She pays attention to that feed-
back because she doesnt want to lose
good candidates as a result of testing.
Lamoureux adds that, in preparing
candidates, HR professionals should
stress that there are no right answers.
The tool is as much to help the candi-
date as it is the company, she explains.
Assessments typically ask the same
question multiple times in different
ways. The analyses will group similar
questions together to give broad indica-
tors of how people score. A lot of people
ask if users can game the test, Lamou-
reux says. But well-written assessments
ask a question so many ways that its
very difficult for the user to be inauthen-
tic on a consistent basis.
Make the Most of the Data
To get more bang for your buck, Gra-
ham-Leviss urges HR professionals to
mine assessment data for training and
development purposes as well as succes-
sion planning needs.
For links to a case study about a restaurant
chains internal assessment center and
other resources about leadership testing,
visit www.shrm.org/0813-leadership-
assessments.
ONLINE RESOURCES
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August 2013 HR Magazine 45
Earn your >>
Do you want to advance your career?
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Online
is projected to generate $5.50 per ton.
Do we know for sure that VBL and
these assessments directly caused these
numbers to improve? Yes. Can we prove
it? No, not directly, Fernandes says.
At Advance Auto Parts, We know
the assessment is valued by the leaders
because of the desire to expand its use to
other levels, Baker says.
Luck Cos. employs a 360-degree
assessment tool from the Hay Group pri-
marily for development purposes. All
leaders participate in annual 360-degree
assessments that measure them against
company values, leader competencies
and desired attributes. Annual engage-
ment surveys and performance reviews
further gauge how leaders perform
against a values-based leadership model
that Fernandes developed. For succes-
sion planning, Lucks HR team relies on
a VBL index, a score based on each
leaders 360-degree assessment, depart-
ment or team engagement survey, and
performance appraisal.
Fernandes and his HR team are
expanding the assessment to individual
contributors so that the data can feed the
leadership pipeline. We have 850 asso-
ciates, and were trying to develop 850
leaders, Fernandes says. In that hourly
workforce is an individual contributor
who can run this company someday.
Managers at Advance Auto Parts con-
tinue to use assessment data well after
hiring. The process generates one report
for HR and the hiring manager, and the
person hired receives a copy. The reports
highlight areas for improvement and
training. To plan for development, Baker
shares such test results with internal can-
didates who arent selected.
Assess Your Assessments
Even though i4cp recommends that
employers evaluate the effectiveness of
their efforts to identify suitable types of
leaders, only 20 percent of respondents
report that their organizations analyze
outcomes, according to i4cps 2012
survey.
Fernandes is working with research-
ers at the University of Richmond to for-
mally measure the return on investment
of Lucks VBL model. He cites figures
that he says demonstrate the assessments
are effective. For example, in 2004 prior
to the assessments and the VBL model,
Luck generated $2.50 in cash flow per
ton of stone sold; this year, the company
She adds that HR professionals
shouldnt get overwhelmed by choices
and options. There is no perfect assess-
ment process, she says. Find one that
works for your organization and can be
flexible to your needs.
Adrienne Fox is a contributing editor and
former managing editor of HR Magazine.
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Q&A
P
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C
ompensating corporate leaders
appropriately is a high-stakes
proposition. Top executives command
a financial premium. Putting together
compensation packages that attract,
keep and motivate executives to
perform their best with an eye toward
long-term profitability and business
growth remains a challenge.
A study published in January by the
Human Resource Management Jour-
nal explores the connection between
pay, performance and the alignment
of executives and shareholders inter-
ests. Based on surveys and interviews
with 90 senior executives at FTSE 350
companies, researchers found that com-
panies often place too high a value on
long-term incen-
tives, such
as stock
options,
in putting together executive compensa-
tion packages.
London School of Economics profes-
sor Alexander Pepper, a study co-author,
suggests that a more balanced compen-
sation approach would better motivate
executivesand better serve organiza-
tions. Pepper is an expert on employment
relations and organizational behavior
and a senior fellow at the university.
What do employers aim to achieve
through executive stock options and
other long-term incentives?
There is a strong body of theoretical
literature, developed in the 1970s and
known as agency theory. Proponents
argue that since owners and managers of
companies have different interests, it is
important to give incentives that encour-
age managers to act in ways beneficial to
shareholders. The objective is absolutely
right. Thats what boards of directors
want from their executives.
So what are the flaws in a long-term-
incentive approach?
Start with the argument that if some-
thing is good for you, more of it is better
for you. Stock options might be good,
but large amounts of stock options are
not necessarily proportionally better.
An aspirin is good for you if you
have a headache, but 100
aspirins are not 100 times
better. In fact, 100 aspirins
will probably kill you.
Human psychology
suggests the idea of a
direct relation-
ship between
pay and per-
formance
is flawed.
Start with
the notion of risk. Executives generally
do not evaluate risk the way accountants
and financial advisors do. Executives are
much more risk-averse and loss-averse
than financial theory would suggest.
The second flaw is that we dont deal
with uncertainty in a rational way. The
most significant flaw in agency theory
is the belief that we discount the future
at the rate of inflation. In reality, we dis-
count the future at much higher rates.
Executives discount the future at around
30 percent. So when you incentivize peo-
ple with rewards such as stock options
that will not pay out for three years or
more, the executive values that much less
than the theory would have you believe.
What adjustments should HR profes-
sionals make in formulating their execu-
tive compensation packages?
I am not arguing that long-term incen-
tives are bad. Nor am I arguing that
companies should pay top executives
bigger salaries and do away with long-
term incentives altogether. A better
strategy would be to offer smallerbut
much more balancedpackages: bigger
salaries, bigger short-term bonuses and
smaller long-term incentives. Evidence
suggests executives value short-term
incentives such as annual bonuses more
than long-term incentives because there
is a better line of sight between what
they do and how they are rewarded. Sim-
pler, more balanced reward packages
would be much more effective.
Stock options currently make up 58 per-
cent of the typical executive compensa-
tion package. How do you change the
mindset?
Government officials, regulators and insti-
tutions are already putting pressure on
corporate leaders to find different ways
Incentives for Executives
Research finds flaws in common compensation approaches.
Interview by Adam Van Brimmer
Alexander Pepper
46 HR Magazine August 2013
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August 2013 HR Magazine 47
* 62% of households own a pet. Source: American Veterinary Medical Association U.S. Pet Ownership Demographics Sourcebook, 2012 Edition. 2012 Consumer A&U
Insurance plans are offered and administered by Veterinary Pet Insurance Company in California and DVM Insurance Agency in all other states. Underwritten by Veterinary Pet Insurance Company (CA), Brea, CA, an A.M. Best A rated company
(2012); National Casualty Company (all other states), Madison, WI, an A.M. Best A+ rated company (2012). 2013 Veterinary Pet Insurance Company. Veterinary Pet Insurance and the VPI logo are service marks of Veterinary Pet Insurance Company.
Nationwide Insurance is a service mark of Nationwide Mutual Insurance Company. 13ADV2397
Finally, a voluntary benefit thats
easy.
Veterinary Pet Insurance
LI FE
ACCI DENT
SPECIAL SECTION
INSIDE
52 More Time to Get Strategic
57 What Will Brokers Do Now?
62 Employer Mandate Delayed
63 Lessons Learned from a Private Exchange
64 Small Businesses Still Waiting
66 A Part-Time Workforce
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Health Care Reform is radically changing
the direction of medical benet oferings
and while this segment of health care
will experience the greatest reformation
employers can also expect an opportunity
to ofer increased value through specialty
benets, which is expected to grow
substantially in the coming years. This
trend is not likely to change anytime soon.
Employers will continue to need to attract
and retain the best talent and competitive
benet packages play a key role.
Specialty benets such as vision, dental,
long-term disability, and critical illness
are going to become more crucial
as employers will use these types of
benets to attract key employees. Why
is that? Due to the new marketplaces
coming on board, employers will need
to make sure they are ofering benets
that provide maximum value, while
nding a balance in consuming less of
their own budget toward core medical
coverage. If employers choose to ignore
the importance of integrating all aspects
of their benets ofering they may see
their decisions afect their overall bottom
line, as well as employee satisfaction, and
talent retention. It will be important that
employers reassess their total benet
oferings to improve their nancial
outcome. One way this can be improved
is by placing more attention on an array
of health care solutions such as vision
benets.
The Patient Protection and Afordable
Care Act (PPACA) will also impact the
method in which employers will seek
benets for their employees. Pediatric
vision services are one of the 10 essential
health benets that all qualied health
plans need to ofer. We can expect to see
more coverage for children as a result of
the required pediatric vision benet.
Celina Burns, President of Davis Vision
noted, In the current health care
reform environment there is a dened
contribution movement underway that
is translating into higher cost share
and decision making responsibility
for consumers. This trend is driving a
signicant interest by employers and
members in understanding the true
value and cost in all facets of health care,
including vision. Having a diverse array
of specialty benet options tailored to
an individuals need is consequently
becoming increasingly important.
Additionally under the new law, children
up to the age of 26 may remain on their
parents medical plan, though they lose
access to the pediatric benet at age 19.
Vision benet plans have traditionally
replicated similar dependent rules to align
with medical plan benets, and as a result
it appears very probable this trend will
continue.
As voluntary products become more
familiar to the consumer and medical
core plan coverage diferentiations
are diminished, it will be increasingly
important for employers to clearly
communicate benet and funding options
through a greater exibility in choice of
oferings across the benet spectrum.
We understand the demand for
transparency, and will be taking a lead
position in educating consumers on the
true eyewear and eyecare value and cost
components, said Burns, and because
of our platform and end-to-end delivery
capability we believe we have the highest
value and choice ofering in the industry.
With all the new changes to take efect
with the PPACA combined with the rapidly
changing demographics, we can expect
voluntary benets to continue to be an
increasingly important supplement for
employers to manage their benets.
he isien ef eaIth 0are 8eferm
by Kris Knopf,
Vice President of Marketing,
Davis Vision
IncIusive
eaIth 8enets
All individual and small
business health plans must
ofer a comprehensive benet
package that includes:
(beginning January 1, 2014)*
- Emergency Services
- Hospitalizations
- Vision and dental care for
children
- Maternity Care
- Mental health and substance
abuse treatment
- Outpatient, or ambulatory,
care
- Pediatric care
- Preventive care
- Rehabilitative and
habilitation services
- Laboratory Services
*Source: Consumer Reports Health
Care Reform: Seven Things
You Need to Know
by Kris Knopf,
ADVERTISEMENT
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Take a new look at eyecare.
Davis Vision delivers an unbeatable combination of cost savings, unmatched
product choices and a variety of convenient independent optometrists,
ophthalmologists and retail options. Our end-to-end process ensures quality
vision care and afordable rates for our members and clients. For more
information on how Davis Vision can help you see savings visit us at:
www.davisvision.com
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E
mployers that were
scrambling to comply
with the Patient Pro-
tection and Affordable
Care Act by Jan. 1,
2014, caught a break when the
Obama administration delayed
for one year the requirement
that many must provide their
full-time employees with health
insurance. So the next several
months present an ideal opportu-
nity for business leaders to take a
hard strategic look at how their
By Gary B. Kushner, SPHR, CBP
HEALTH CARE REFORM SPECIAL SECTION
52 HR Magazine August 2013
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August 2013 HR Magazine 53
HEALTH CARE REFORM SPECIAL SECTION
4
health plans fit with organiza-
tional and HR strategies.
For many employers, it has
been a long time since they con-
sidered these basic questions:
Will we offer benefits?
Who will be offered benefits?
How rich will the benefits be?
Employers deciding not to
offer health benefits should con-
sider the impact that decision
could have on the organization
and whatif anythingthey
would replace the value of the ben-
efits with. How would the decision
affect recruiting and retention, not
just for leaders and top managers
but throughout the organization?
The impact will depend on the
employers marketits industry,
workforce size and geographic
regionand the answer may dif-
fer for certain employee groups.
A big-box retailer may not
care about retaining benefits for
greeters, though it might want to
do so for managers. On the other
hand, a high-end retailer whose
salespeople represent its com-
petitive advantage may need to
offer health benefits to attract and
retain the right talent. So, though
both employers operate in the
retail industry, their strategies will
be different.
Or a fast-food restaurant might
not care about offering health
insurance to an employee who
works the counter because, if that
person leaves, there is a large avail-
able talent pool for that position
and training time for a new hire
will be minimal. A tech company
interested in hiring and retain-
ing a programmer, however, will
need to consider its entire rewards
package, including compensa-
tion, health insurance and other
benefits.
These are all important consid-
erations, but employers should not
stop here. This years open enroll-
ment period demands that they
dig deeper.
Issues to Consider
If leaders decide they will provide
employee health insurance, there
are a number of qualitative issues
to consider. For starters, if the plan
has retained its grandfathered sta-
tus, is it worth keeping? While
most of the health care reform law
applies to both grandfathered and
nongrandfathered plans, there
are seven requirements that apply
only to nongrandfathered ones.
Employers that keep their
grandfathered plans cannot
change the co-insurance percent-
age employees pay or increase
deductibles or other plan design
elements beyond a certain point.
So, the trade-off for staying grand-
fathered is that the organization
will have to maintain an overall
richer plan design.
Next, consider other plans
that are subject to the health care
reform laws requirements. If den-
tal and vision plans are wrapped
into the health plan, they are cov-
ered by the law. If, however, both
plans are separate from the health
plan and have separate plan doc-
uments, even if they are with the
same carrier, they are not subject
to the health care reform law.
Then, depending on the size
of the company and how covered
plans are funded, the plans must
meet specific requirements. They
must:
Most Employers Will Continue Coverage
In 2013 Employer-Sponsored Health Care: ACAs Impact, the Interna-
tional Foundation of Employee Benefit Plans reports on a survey of 966
company representatives, including benefits and HR professionals, who
predicted the likelihood of continuing health care coverage for all full-time
employees in 2014. The survey was conducted before the employer man-
date was delayed.
Meet actuarial value require-
ments and pay at least 60 percent
of the allowed costs for covered
services.
Comply with the requi re-
ments to provide essential health
benefits if the plans are sponsored
by a small employer.
Provide coverage to all full-
time employeesthose regularly
scheduled to work 30 or more
hours a weekand their children,
Percentages do not total 100 percent due to rounding.
Definitely will
69%
Very likely
25%
Somewhat likely
4%
Somewhat unlikely
2%
Very unlikely
1%
Definitely wont
1%
Requirement for Nongrandfathered Plans
Seven requirements under the health care reform law apply only to
nongrandfathered plans:
New insured plan nondiscrimination rules. Fully insured health
plans will be prohibited from favoring highly compensated employees.
Minimum design requirements. Plans must cover essential
health benefits and deductible limits. For 2014, this requirement
applies only to small employers.
Appeals process standards. Employees have a right to appeal
their health insurance plan decisions. If payment is still denied, they
have the right to external reviews.
Preventive benefit cost-sharing requirements. There is no
cost sharingno co-payments or co-insurancefor immunizations or
preventive care.
Emergency services prior authorization. Employees may seek
emergency care at a hospital outside the plans network without prior
approval from the health plan.
Emergency services out-of-network cost sharing. Health
plans may not require higher co-payments or co-insurance for out-of-
network emergency room services.
Participants choice. Plan participants may select as a primary
care physician a pediatrician or gynecologist without getting a referral
from another doctor.
59%
The percentage of
organizations that are
developing or plan to
develop a new health
care strategy plan in
response to reform.
Source: Health Care Reform
Challenges and Strategies, based on
a survey of 818 HR professionals,
Society for Human Resource Man-
agement, 2013.
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_____________________
____________
56 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
up to a childs 26th birthday. Em-
ployers do not have to offer cover-
age for spouses.
Meet affordability require-
ments, which state that the em-
ployees share of the cost of an
individual premium may not ex-
ceed 9.5 percent of household in-
come. A safe harbor provision
allows employers to use the em-
ployees income as listed in Box 1 of
the W-2 as a substitute for house-
hold income.
Play or Pay
The health care reform law applies
only to employers with 50 or more
full-time equivalents (FTE), so
employers must first calculate
how many FTE they have to deter-
mine whether they must comply
with the laws employer responsi-
bility provisions. Employers with
50 or more FTE could face a pen-
alty if any full-time employees
buy coverage through a health
insurance exchange and receive
a government subsidy. Penalties
can vary:
If the employer does not of-
fer health benefits, it will face a
penalty of $2,000 a year times the
number of full-time employees it
has, minus the first 30 employees.
If the company offers a health
plan, but the plan does not meet
applicable rules, the penalty will
be the lesser of the $2,000 penalty
described above or a $3,000-a-year
penalty for each full-time employ-
ee who buys coverage through an
exchange and receives a subsidy.
Some employers look at the
fines and believe it makes more
economic sense to pay the pen-
alties instead of offering health
care, but this can be shortsighted.
Heres why.
Jeff, chief f inancial off icer
of Slant Lines, a hypothetical
architectural firm with 75 full-
time employees, knows that his
employees make the company a
marketplace leader. Even so, Jeff
decides to stop offering health
insurance and just pay the penalty.
Currently, Slant Lines fam-
ily health coverage costs $15,000 a
year; employees pay $3,000 of that
amount. Susan, an up-and-coming
designer, walks into HR and asks
about receiving replacement com-
pensation for the $12,000 the busi-
ness had been paying toward fam-
ily coverage.
Slant Lines leaders want to
retain Susan, so they agree to
pay her the $12,000 difference.
But Susan points out that she will
now have to pay Social Security
and FICA taxes as well as federal
and state income taxes on the
$12,000. In addition, the com-
pany will have to pay its share
of FICA taxes. Suddenly, Slant
Lines leaders realize that the lia-
bility for discontinuing the health
care plan for Susan aloneinclud-
ing penalties, additional compen-
sation and taxeswill cost the
company $17,609. Thats a 47 per-
cent increase above what they pay
when offering health benefits.
Another issue employers need
to consider: the so-called Cadil-
lac tax. This new federal excise
tax will be assessed on insur-
ance companies for costly health
plansthose that are in excess of
$10,200 for individuals and $27,500
for family coverage. Even though
the tax will not go into effect until
2018, employers would be wise to
do projections, based on current
health care benefits costs and rea-
sonable inflation estimates, to see
if they may be subject to the tax.
If the impact will be substantial,
employers can begin to make the
necessary changes to their plans
during the next two or three years
rather than all at once for the 2018
plan year.
Plan Designs
When considering health plan
designs, HR professionals should
go back to those basic strate-
gic questions concerni ng the
organizations objectives. If you
are looking for best-of-the-best
employees and have be en provid-
ing health care coverage as part of
a total rewards strategy, you will
conduct the same analyses you
did before health care reform:
Will you offer in-network and
out-of-network benefits; a health
maintenance organization, pre-
ferred provider organization or
consumer-directed health plan;
a health reimbursement arrange-
ment or a health savings account;
wellness incentives? Will the plan
be fully insured or self-funded?
You must also make certain your
plans meet the laws requi re-
ments, based on your size and
funding.
In addition, a good communi-
cation plan will be essential to edu-
cate employees about the changes
coming and to remind them about
the value of their health benefits
and the fact that you provide those
benefits because you value them.
Gary B. Kushner, SPHR, CBP, is
president and chief executive officer of
Kushner & Co., an international HR
strategy consultancy in Portage, Mich.
The Price of Dropping Health Care
Slant Lines represents a fictional architectural firm with 75 full-time
employees. Currently, the company pays $12,000 toward health care
coverage for Susan, a valued employee. If the company drops cover-
age, it will cost Slant Lines:
$12,000
2,500
1,109
2,000
$17,609
+
+
+
Susans replacement compensation
Source: Kushner & Co.
Social Security and FICA taxes plus
federal and state income taxes on
Susans replacement compensation
Additional employer payroll taxes
Penalty
Cost for not providing
coverage for one employee.
WEB
For links to more information on
health care reform, including a
tool to calculate the number of
full-time equivalent employees
an organization has, see the
online version of this article at
www.shrm.org/0813-health-
care-reform.
74%
The percentage of
organizations that
define part-time
employees in the same
way as the health care
reform law.
Source: Health Care Reform
Challenges and Strategies, Society for
Human Resource Management, 2013.
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______________
______
Health Care Reform Resource Page
August 2013 HR Magazine 57
HEALTH CARE REFORM SPECIAL SECTION
By Joanne Sammer
A
s leaders of a rap-
idly growing com-
pany, executives at
American Advi-
sors Group have
faced challenges when it comes
to employee health benefits. We
currently have only about 20 per-
cent of our employees enrolled in
the coverage the company offers,
says Rebecca Pacillas, vice presi-
dent of human resources. The
affordable coverage and shared re-
sponsibility requirements under
the Patient Protection and Afford-
able Care Act have the potential to
create unpleasant financial conse-
quences unless the Orange, Calif.-
based company makes significant
changes to its health benefits.
Thats why Pacillas is working
closely with a benefits broker
to quantify those financial con-
sequences while also shopping
for a new health plan to offer
employees.
American Advisors Group
specializes in reverse mortgages.
It has grown from 200 employees
in February 2012 to more than
550 employees today; it projects
a workforce of 700 employees by
the end of the year. The employer
strives to offer competitive com-
pensation and benefits to attract
the right employees. However,
Pacillas recognizes the need for
hard financial data to sell senior
management on the need for bet-
ter employee health benefits.
For benefits brokerage firms,
this type of close client relation-
ship represents an ideal scenario.
Brokers are working to find new
ways to add value to these relation-
ships and, frankly, to generate rev-
enue in a postreform health insur-
ance marketplace.
Yet, Paci l las throws some
cold water on the situation: Our
broker is helping us prepare for
2014, but I would say they become
less important after that, she
says. Once the company follows
through on its plans to add a full-
time employee benefits manager
and takes more benefits-related
work in-house, she estimates that
the brokers role will be cut to half
its current level.
Uncertain Times
The idea of employers reducing or
eliminating the benefits brokers
role in negotiating and managing
employee health benefits keeps
brokers up at night. Brokers who
are going to survive the health
care shift understand the group
benefits brokerage business model
as it stands today is in the process
of drastically changing.
A 2011 study by the Boston
Consulting Group projects that
brokers market share of health
i nsurance distribution chan-
nels will drop from 47 percent
of insured individuals in 2011 to
29 percent in 2019. Meanwhile,
direct purchase by individuals
will increase from 18 percent to
27 percent of insured individuals,
and health insurance exchanges
will rise from 3 percent to 10per-
cent of the market during the same
period.
The role of the benefits bro-
ker is transforming into much
more of an advisory role, and
brokering the coverage is just a
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58 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
WEB
For more information about
benefits brokers, see the
online version of this article at
www.shrm.org/0813-benefits-
brokers.
small piece, says Joseph DiBella,
executive vice president at Con-
ner Strong & Buckelew, a benefits
brokerage and consulting firm in
Marlton, N.J.
In this environment, employ-
ers can expect far more from their
brokerscompliance assistance,
stronger client service, and ideas
and innovations. And if employers
are not getting this kind of atten-
tion from their current brokers,
they have an open marketplace
to find what they need. As Pacil-
las puts it, Our broker is work-
ing harder for fear that the com-
pany might go to another broker
or start shopping the market
ourselves.
Brokers agree. In fact, many
concede that the willingness and
ability of a brokerage to meet
employers expanding needs has
become the price of admission into
this marketplace. These develop-
ments have forced the more trans-
actional brokers to get out of the
business and allowed brokers
that have invested in their own
tools and compliance resources to
assume much more of an advisor
role, explains Thomas Mangan,
chief executive officer of United
Benefit Advisors, which offers
brokerage services. One example
of this expanded role would be
brokers providing actuarial calcu-
lators to help employers consider
the potential costs of a play-or-pay
decisionthat is, whether to pro-
vide benefits or pay the penalties
under the shared responsibility
provision of the health care reform
law.
More from Brokers
If health care reform is putting the
future of some benefits brokers in
doubt, the laws complexity may
be their saving grace. The law is
so complex that employers have
turned to brokers for support in
understanding and complying
with the requirements.
When Jason McMillan, hu-
man resources director at Tides,
a San Francisco-based nonprofit
with 700 employees, needs help
with benefits, he relies on his bro-
kers resourcesfor example, the
brokers in-house counsel so we
dont have to go to our own out-
side legal counsel. In addition,
the organization relies on its
broker to provide a range of ser-
vices such as a financial analysis
of plan costs and various levels of
employee contributions, as well
as benchmarking against health
plans offered by other nonprofits
and organizations in the San Fran-
cisco Bay area.
Our broker plays a very
hands-on role when it comes to
how we manage and strategize
about our plan and look at vari-
ous cost options, McMillan says.
For example, the organization
has always offered preferred pro-
vider organization plans and has
avoided high-deductible account-
based plans. However, with the
so-called Cadillac tax on high-
cost health plans scheduled to
take effect in 2018, Tides leaders
are rethinking that decision out
of concern that the companys
relatively rich health plans could
be hit by the tax. At the brokers
suggestion, they developed a plan
to phase out some of the more
expensive plans while rolling out
lower-cost options, including a
high-deductible plan with a health
savings account.
Employers that purchase
health benefits without using a
broker will quickly find that addi-
tional services such as planning
and analysis are no longer free.
MJ Insurance Inc. serves as an
example. It is working with cer-
tain clients to develop different
types of health-related programs,
such as onsite health clinics. Most
of our clients are self-insured,
so these clinics are designed to
reduce claims costs while also
providing enhanced benefits in a
cost-effective manner, says Andy
Vetor, a partner.
He notes that his Indianap-
ol is-based company does not
charge brokerage clients for plan-
ning and development because it
considers the services part of the
value the company provides as a
broker. However, MJ Insurance
does charge fees to employers
Brokers Could Face Decline in Customers
These figures represent the estimated market share of health insur-
ance distribution channels as a percentage of insured individuals. The
table is based on a 2011 survey of 120 health insurance executives
by the Boston Consulting Group.
Brokers, Agents Seen as Knowledgeable
Insurance brokers and agents indicated that their clients consider
them a source of information on health care reform, based on their
responses to this question:
How often do clients ask questions of you about the health care
reform law?
0 10 20 30 40 50
Brokers
Benefits consultants
Direct purchase
from insurers
Exchanges
Other
2011 2019
Source: Survey of Health Insurance Agents, Kaiser Family Foundation, 2012.
Often
43%
Sometimes
30%
Rarely
19%
Never
8%
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____
August 2013 HR Magazine 59
HEALTH CARE REFORM SPECIAL SECTION
that are looking for such services
on an ad hoc basis but are not inter-
ested in developing a brokerage
relationship.
As brokers look to solidif y
their client relationships and de-
velop new revenue streams from
nonbrokerage clients, new bene-
fits services are likely to become
more commonplace. For exam-
ple, offering voluntary health
benefits to employees could be
a win-win for brokers and em-
ployers. Voluntary plans allow
employers to provide employees
with various types of insurance
coverage at group rates and with
no underwriting. These plans
tend to be fully paid by employ-
ees and are a low-cost way for em-
ployers to offer a broader array of
benefits at a time when they may
be scaling back on core health in-
surance. For brokers, voluntary
benefits offer a significant source
of revenue.
Services Evolve
Even as brokers offer new ser-
vices, the evolving approach many
employers are taking to health
benef its under the health care
reform law could significantly cur-
tail or end these relationships over
time. Even though Kristin Berdel-
man, director of benefits at Acco
Brands Corp. in Lake Zurich, Ill.,
sees the companys broker as a key
partner when it comes to health
benefits, she still expects the bro-
kerage firm to evolve and keep
up with whats happening in the
marketplace and within her orga-
nization. If brokers are going to
become true benefits advisors,
they need to have a full suite of
both legal and administrative
resources and expertise to support
their clients, she says.
Acco Brands relies on its bro-
ker for insurance renewals and
contract negotiations, compliance
support, post-merger and acquisi-
tion integration, vendor manage-
ment, benefits communication,
and global benefits management.
In addition, the broker has helped
the company develop a strategy
for revisiting basic health benefits
questions with senior leaders each
year.
We ask three key questions
each year, Berdelman says:
Do we conti nue providi ng
health benefits in the same or a
similar way as we have in the past?
Should we migrate to a defined
contribution approach to health
benefits?
Should we eventually move
away from providing health ben-
efits and direct our employees to
the public health insurance ex-
changes or some other vehicles?
Acco Brands plans to continue
its current approach to offering
health benefits, but that could
change in the next few years based
on the companys situation and
what its competitors do.
The annual review illustrates
brokers current bind: If Acco
Brands leaders ever decide to
make a change in the companys
benefits strategy and stop offer-
ing health benefits, the broker will
have played a role in eliminating
part of its own revenue by devel-
oping this decision-making pro-
cess for its client.
In the Marketplace
In this environment, employers
need to choose brokers wisely.
Although brokers are eager to
attract and retain clients, not all
will be able to meet every employ-
ers needs. For example, employ-
ers should beware of any broker
who treats the business as trans-
actional or a commodity, says
Nicole White, senior vice presi-
dent of ABD Insurance & Financial
Services Inc. in San Mateo, Calif.
With more of an advisory rela-
tionship, brokers are better able
to work with the client to achieve
Health Care Reform Draws Pessimism
Insurance brokers and agents are pessimistic about the potential effects
of health care reform, based on their responses to this question:
Do you think the following will be better off or worse off under
the health care reform law, or dont you think it will make much
of a difference?
100
80
60
40
20
0
Your business Health insurance
brokers generally
Source: Survey of Health Insurance Agents, Kaiser Family Foundation, 2012.
Responses from those who said they didnt know or declined to answer are not shown.
Worse off
Better off
Wont make
much of a
difference
the clients objectives and deliver in
terms of price.
However, as brokers look to
bring in as much new business as
possible, employers need to make
sure they continue to get ade-
quate attention. You want a roll-
up-your-sleeves partner who can
allocate the necessary resources
and time to your account, Berdel-
man says. We are being asked to
do a lot more with less staff, so bro-
kers are going to need to change
their models to meet our needs.
Some will, and some wont.
Charles Dayton, busi ness
manager wit h 60- employee
RVKArchitects Ltd. in San Anto-
nio, agrees that employers should
take advantage of what brokers
offer. In fact, Dayton sees this
level of support as a make-or-
break element of the relationship.
If you are not getting the kinds
of answers or information you
need, that, at the very least, gives
you a pretty quick heads-up that
you might need to use a different
broker.
Indeed, a primary reason em-
ployers use brokers is to have an
advocate in the purchasing pro-
cess. For that reason, Dayton
expects to continue to rely on a
broker even when the health in-
surance exchanges and Small
Business Health Options Pro-
gram are up and running. The
human element and focused at-
tention are selling points.
I dont know how an exchange
that is automated on the computer
will be able to do anything more
than present you with various
health plans available, he says.
You are not going to be able to
push back and ask for a better
offer.
Joanne Sammer is a New Jersey-based
business and financial writer.
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Now is the time to take advantage of the governments
delay in implementation of the Health Care Reform
employer tax through 2014.
During this one year tax-free period, you can improve
your companys bottom line and your employees
confdence and enthusiasm by transitioning your
company away from costly, high deductible, proft
devouring Major Medical plans, to the new
Contribution Advantage (DCA) program.
DCA enables you to drop your current Major Medical
plan and install a stable, cost efective, fully insured
health plan with no waiting periods, no deductibles,
and no co-pays, that is designed to cover 84% of the
average employees annual Health Care expenses
with no employee contribution.
DCA enables you to retain and recruit quality
employees. Your workforce will be happier with
immediate access to quality health care providers
with no deductibles or co-pays. Employees will still
have access to the exchanges and federal subsidies
to obtain low-cost Major Medical or catastrophic
health coverage.
With DCA you will have retained the inherent bond
between employer and employee by providing
for their health and welfare, while adapting to the
changing health care marketplace.
(July 2, 2013):
Most importantly, the delay of the mandate means
that more people will want to enroll in Obamacares
subsidized insurance exchanges. Every year, fewer
and fewer employers ofer health coverage; given
one more year to restructure their workforces, this
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_____________
62 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
P
lay or pay has been
postponed. The
health care reform
laws mandate that
employers with
50 or more full-time-equivalent
employees provide health care
coverage that meets minimum
requirements or face penalties
has been delayed until Jan. 1,
2015. Many observers welcomed
the Obama administrations July
announcement.
The sheer complexity of the
law was reason enough for the
delay, according to Paul Ham-
burger, an attorney at Proskauer
Rose in Washington, D.C.
The law was resulting in work-
force realignment and restructur-
ing. In some cases employees were
laid off or saw their hours reduced.
Now employers have more breath-
ing room and, with more time,
might not restructure their work-
forces, Hamburger says.
Helen Darling, president and
CEO of the National Business
Group on Health, calls the delay
terrific news for large employers
all across the country.
The delay will most likely
have the greatest effect on employ-
ers in industries with large num-
bers of part-time workers and with
workforces whose hours fluctu-
ate, including retail, hospitality,
entertainment, agriculture and
restaurants.
Attorney Tom Christina
at Ogletree Deakins in Green-
ville, S.C., says: The delay gives
employers more time to coordi-
nate the roles of their vendors,
their payroll systems, their human
resource information systems and
other key players so that they will
be ready for compliance in Janu-
ary 2015. Employers might even
consider a dry run during part of
2014 to find any weak links in their
systems.
Christina cautions, though,
An employer that assumes the
delay is the first stage of repeal or
a major legislative overhaul could
find itself playing catch up by this
time next year.
Looking Ahead
The pos t ponement of t he
employer shared responsibility
coverage mandate is linked to a
delay until 2015, announced at the
same time, of two of the laws pen-
alty-related information-reporting
provisions:
Section 6055 requires reporting
by insurers, self-insuring employ-
ers and other parties that provide
health coverage.
Section 6056 requires reporting
by certain employers with respect
to the health coverage offered to
full-time employees.
Employers will not face penal-
ties for another year with respect to
employees who receive premium
tax credits to purchase coverage on
a government-run exchange.
However, many provisions of
the law are unaffected by the delay,
and employers must continue to
implement and comply with them,
advises an analysis by consultancy
PricewaterhouseCoopers.
From the report: New indi-
vidual and group health plan
requirements taking effect for 2014
plan years include a ban on annual
dollar limits on essential health
benefits, a 90-day limit on eligibility
waiting periods, new out-of-pocket
limit maximums, the elimination
of preexisting conditions exclu-
sions for adults, and coverage of
clinical trial participant costs.
New fees and assessments
including for the Patient-Centered
Outcomes Research Institute,
transitional reinsurance fees and a
health insurer taxare unaffected
by the delay.
Also unaffected are the require-
ment that most employer-provided
health care include coverage for
recommended preventive care
including contraceptive services
for women with no cost-sharing
and the requirement for employ-
ers subject to the Fair Labor Stan-
dards Act to provide written notices
about government-run exchanges
to each employee and all new hires
by Oct. 1, 2013.
Stephen Miller, CEBS,
and Allen Smith, J.D.
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August 2013 HR Magazine 63
HEALTH CARE REFORM SPECIAL SECTION
Why Consider Exchanges?
In Aon Hewitts 2012 report The Time Is Now: Rethinking Health Care Cover-
age, which reflects survey results from more than 560 companies, employ-
ers identified the following as important features of an exchange model:
Goals of a Private Exchange
Private exchanges have the following objectives, according to Aon
Hewitt:
Create a competitive market in health care benefits at a retail con-
sumer level.
Drive efficiency and mitigate cost increases through competitive forces.
Consolidate purchasing power in the private sector to drive systemic
reforms of the health care delivery system.
Facilitate movement to a defined contribution model for those
employers who choose this approach.
Provide an alternative to public state or federal exchanges that com-
plies with health care reform requirements while allowing employers to
subsidize employee coverage and avoid penalties.
Slow health care cost inflation to a compensation-like rate of
increase.
Treat health benefits as an element of total rewards.
Expand choice, allowing consumer selectionsof networks, formu-
laries, premiums and deductibles, for examplethat could not be driven
unilaterally at the employer level.
Lessons from a Private Exchange
0 20 40 60 80 100
PERCENTAGE OF EMPLOYERS
Reduce cost
Improve access to quality plans
Enhance health and wellness programs
Increase choice
Lower employer accountability, risk
Percentages do not total 100 because multiple responses were allowed.
C
hoice drives sat-
isfaction on the
first large private
health insurance
exchange for U.S.
employers. Enrollees chose health
plans they decided offered the
best value for themselves and
their families, and they liked
being able to select among mul-
tiple carriers.
When given more options,
employees become empowered
to make individual choices based
on value, provider network,
price and health status, says Ken
Sperling, Aon Hewitt national
health exchange strategy leader.
Employees are not limited to a
predetermined plan and insur-
ance company.
New Model
The multi-i nsurer private, or
corporate, exchange created by
consultancy Aon Hewitt began
operating in the fall of 2012 for
plan year 2013.
Someti mes referred to as
def i ned contribution health
care, private health exchanges
allow employers to give eligible
employees fixed dollar amounts
for either individual or family
coverage, regardless of the plan
the employee chooses. Workers
add their own salary-deferred
contributions, choose among dif-
ferently priced plans from com-
peting health insurers and deter-
mine how much money they will
contribute to their eligible health
savings accounts if they have a
high-deductible plan.
Aon Hewit ts Cor porate
Health Exchange enrolled more
than 100,000 U.S. employees from
companies including Sears Hold-
ings Corp. and Darden Restau-
rants Inc., which owns and oper-
ates restaurant chains such as
Olive Garden and Red Lobster.
The exchange offers health, den-
tal and vision benefits options from
multiple national and regional car-
riers including UnitedHealthcare,
Kaiser Permanente, HealthNet,
Floridas Blue Cross and Blue
Shield Plan, and Health Care Ser-
vice Corp., which operates Blue
Cross Plans in several states.
Choices Change
Aon Hewitts postenrol lment
analysis for plan year 2013 showed
that:
More employees enrolled in
the exchanges consumer-driven
health plan than had enrolled with
their employers plan in 201212
percent of enrolled employees in
2012 vs. 39 percent of enrollees on
the exchange in 2013.
Participation in preferred pro-
vider organizations decreased
from 70 percent of enrolled em-
ployees in 2012 to 47 percent of
exchange enrollees in 2013.
Thirty-two percent of em-
ployees enrolled on the exchange
chose a plan similar to their em-
ployer-sponsored coverage, while
26 percent of employees opted
up for broader coverage. Forty-
two percent of exchange enroll-
ees chose to reduce their regular
payroll contributions by selecting
a less-comprehensive plan.
Almost 80 percent of employ-
ees enrolled on the exchange said
they were confident they chose
the health plan that offered the
best value for them and their fam-
ilies, and 93 percent indicated that
they liked being able to choose
among multiple carriers.
This model lets employees
decide which plan and which
insurance company is best for
them, and they are free to modify
that choice on an annual basis,
Sperling says.
Stephen Miller, CEBS
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64 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
M
any small busi-
nesses will have
to wait a little
longer to use a
health insurance
exchange.
An exchange program for
small businesses that was set
to launch in October has been
put on hold for one year by the
U.S. Department of Health and
Human Services. The Small Busi-
ness Health Options Program
(SHOP) wi l l provide a state-
specific marketplace for small
group plans (those covering up
to 100 employees) within each
of the public exchanges that are
a hallmark of the Patient Protec-
tion and Affordable Care Act.
The del ay means publ ic
exchanges that are fully or par-
tially run by the federal govern-
ment on behalf of 33 states in 2014
would be required to offer only
one plan for small businesses,
rather than a range of competing
options. The 17 states that have
opted to run their own exchanges
could choose to order a similar
delay or implement the program
in full for 2014.
A Monkey Wrench
The announcement t hrew a
wrench into the plans of many
small businesses that were count-
ing on SHOP as a way to offer
employees more options with
more-competitive pricing and
lower administrative costs.
It is a big deal, says Josie Mar-
tinez, senior partner and general
counsel at EBS Capstone, an insur-
ance brokerage in Newton, Mass.
Smaller employers had been
looking forward to being able to
offer employees some choices
in the form of more options with
more-competitive rates. Now
those employers will have to fig-
ure out Plan B.
Their alternatives will vary
based on their organi zations
Small Businesses in Holding Pattern
SHOP Enrollment
Expectations
Year Number of employers
expected to apply
2014 200,000
2015 133,333
2016 200,000
Source: U.S. Centers for Medicare &
Medicaid Services.
circumstances. The health care
reform laws shared responsibil-
ity provision mandates a certain
level of employer-provided health
coverage. Organi zations that
have never offered health ben-
efits to their employees, but that
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August 2013 HR Magazine 65
HEALTH CARE REFORM SPECIAL SECTION
And our ACA Fu is strong.
In fact, theres nothing stronger.
ALEX Does Health Care Reform tells
employees everything they need to know
about the individual mandate, guaranteed
issue, Medicaid expansion, and health
insurance marketplaces while helping them
make the best choices for themselves and their
families. ALEX is fast, fun, and easy to use.
Weve mastered
Health Reform.
www.meetalex.com/HCR
are subject to the shared respon-
sibility provision, could simply
reconsider the benefits question
later, when the federal program
is fully operational.
Smal ler employers t hat
already offer health benefits have
a more complicated task. Taking
away benefits is different from
simply delaying new benefits, and
a decision to do away with bene-
fits could damage a companys
culture and ability to attract and
retain employees.
The i mportant thi ng to
remember is, smaller employers
do have options, Martinez says.
Some employers will have
more options. Employers in states
that run their own exchanges
should find out specifically what
options will be available, says
Sheila Burke, senior public policy
advisor at the law firm of Baker,
Health Care Coverage by Small Employers
Smaller companies are less likely to offer health benefits to their
employees, according to the Kaiser Family Foundations Employer
Health Benefits Annual Survey 2012, which is based on survey
responses from 2,121 employers.
Number of
employees
Percentage of
companies offering
health coverage
3 to 9 50%
10 to 24 73
25 to 49 87
50 to 199 94
Donelson, Bearman, Caldwell
& Berkowitz PC in Washington,
D.C.
Small employers purchasing
coverage through the federal pro-
gram might be eligible for a tax
credit of up to 50 percent of their
premium payments if:
They have 25 or f ewer
employees.
They pay employees an av-
erage annual wage of less than
$50,000.
They offer all full-time em-
ployees coverage.
They pay at least 50 percent of
the premium.
No matter what they decide,
employers need to keep employ-
ees informed about SHOP and the
companys business reasons for
offering or not offering benefits.
Stephen Miller, CEBS,
and Joanne Sammer
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66 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
Antoinette Pilzner, an attorney at
McDonald Hopkins PLC in Bloom-
field Hills, Mich. The number of
days worked in the week is pretty
much irrelevant; its the average
number of hours actually worked
that matters.
Finally, some companies might
limit all but 30 employees to an
average of fewer than 30 hours per
week, because organizations do not
pay the penalty on their first 30 full-
time workers, Pilzner says. But, she
cautions, The employers business
must be adaptable to having more
employees doing the same amount
of work as a smaller number of
employees.
Morale Can Suffer
According to a May poll by Lee
Hecht Harrison, an overwhelm-
ing 74 percent of workers pre-
fer full-time employment over
part-time work, contract work
or self-employment. So a switch
away from full-time work can be
problematic.
The biggest problem I have
seen is the morale issue this cre-
ates in the workforce, says Patri-
cia Wise, an attorney at Niehaus
& Associates Ltd. in Toledo, Ohio,
noting that the law will have min-
imal impact on employers that
already offer coverage.
Oppenheim disagrees, saying,
The law is negatively impacting
those its intended to help, and we
will be faced with a part-time work-
ing society that will permanently
change the employer-employee
relationship.
The costs of the health care
reform law are substantial and
very difficult to absorb, says
Oppenheim.
Allen Smith, J.D.
S
ome small businesses
have cut workers
hours because of the
health care reform
law, and more could
follow suit. In a 2013 Gallup poll of
603 small-business owners, nearly
one in five said thats their strategy.
Republ i c Foods I nc. , a
750-employee Burger King fran-
chise based in Bethesda, Md.,
is moving away from full-time
employment. All new positions
and employees hired will be con-
sidered part time and will be guar-
anteed no more than 29 hours
per week, says Eric Oppenheim,
SPHR, Republic Foods chief oper-
ating officer.
Some Options Risky
The health care reform laws defi-
nition of a full-time workweek
30 hours or moremay cause
employers to slash weekly hours
below 30 to avoid providing health
care benefits to part-time employ-
ees, but management attorneys
arent sure this plan will hold up in
court.
The idea is popular but risky,
says Paul Hamburger, an attor-
ney at Proskauer Rose LLP in
Washington, D.C. There are
rules in [the Employee Retire-
ment Income Security Act], for
example, that prohibit employers
from taking employment-related
actions against employees to pre-
vent them from being eligible for
benefits.
Other employers are consider-
ing a four-day workweek. But that
strategy is also questionable.
Simply shifting employees to a
four-day workweek, by itself, would
not enable an employer to avoid
the pay-or-play requirement, said
The RISE of the
Part-Time
Society
I
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A
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A
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Is your company
prepared for the
changing health
care landscape?
Only 21% of
companies are
extremely or
very prepared to
address changes
coming to our
health care
system in 2014.
*
How will you be prepared?
Get our Employers Guide: aac.com/HealthCareReformGuide
*Source: 2013 Aac WorkForces Report Z130498b 6/13
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68 HR Magazine August 2013
HEALTH CARE REFORM SPECIAL SECTION
78% of organizations use an insurance
broker to navigate the health care reform law.
Source: Health Care ReformChallenges and Strategies, Society for
Human Resource Management, 2013.
Health Care Reform Highlights
After
2014
2014
Jan. 1
2015 2017 2018
The so-called Cadillac tax will
be assessed on insurance com-
panies and employers that self-
insure for costly health plans.
Individuals and small businesses can purchase coverage
through the public health insurance exchanges.
Employers that offer health care coverage must let employ-
ees know that they may remain on the employers plan and must
inform them of the consequences of opting out of the plan.
Employers must provide employees with information on avail-
able exchanges and possible subsidies.
Employers must provide each employee with a summary of
benefits and coverage at open enrollment for 2014.
Coverage begins through the public exchanges.
Most individuals who can afford it must obtain basic health insur-
ance coverage or pay a penalty.
Tax credits are available for people with income between 100 per-
cent and 400 percent of the poverty line to purchase coverage.
The small-business tax credit increases to up to 50 percent of a
qualified employers contribution for employee health insurance.
All limitations for pre-existing medical conditions must be removed.
Fully insured nongrandfathered health plans
are subject to nondiscrimination rules. Appli-
cable date to be determined.
Employers with 200 or more employees
must automatically enroll newly hired or newly
eligible full-time employees in an affordable
health plan. Applicable date to be determined.
Employers with 50 or more
full-time-equivalent employees
must offer health coverage or
pay a penalty.
Small employers have more
health insurance options through
Small Business Health Options
Program marketplaces.
Larger employers may
buy affordable and
qualified health plans
through the exchanges.
2013
Oct. 1
Health Insurance Exchange Status by State
State-based exchange
State-federal partnership exchange
Federally facilitated exchange
Source: Kaiser Family Foundation, June 20.
Toughest Reform Hurdles for HR
A 2013 Society for Human Resource Management survey report, Health Care
ReformChallenges and Strategies, reveals the responses of 818 HR profes-
sionals to the following question about health care reform:
What is the main implementation barrier to health care reform for
your organization?
Complexity of the law
Lack of understanding the details of the
law and its impact on the organization
Not applicable; there is no implementa-
tion barrier for my organization
Cost of implementing
Employee out-of-pocket expense
Other
+
Employers Not Embracing Private Exchanges
Has your organization considered using private health insurance exchanges?
No, we have not
considered
62%
Yes, but we are unsure
26%
Yes, but we have
decided not to use
10%
Yes, we are currently
using or plan to use
2%
Source: Health Care ReformChallenges and Strategies, Society for Human
Resource Management, 2013.
41%
27%
10%
10%
5%
7%
Health Care Reform Timeline
Nancy Hatch Woodward, a freelance writer based in Georgia, contributed to this health care reform special section.
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________________________
________________
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August 2013 HR Magazine 71
SOCIAL MEDIA Agenda
H
aving a social media policyand
training employees to follow it
are critical practices for every organiza-
tion. Even if your company is not using
social media, you still need a policy
because your employees are using it in
their private lives and they need guide-
lines to protect your interests and your
organizations reputation.
Before creating a social media policy,
employers should decide what they want
to get out of social media, advises Eric
Meyer, a partner in the labor employ-
ment law group of Dilworth Paxson LLP.
He says companies social media poli-
cies should speak to every type of com-
munication employees publish on the
Internetincluding comments on Face-
book, LinkedIn, Twitter, Foursquare,
blogs, wikis, online discussion boards,
Google Groups, Tumblr, and video- and
photo-sharing sites such as YouTube
and Flickrbecause any of that could
impact the company.
Considerations
If your company is going to use social
media, decide who will use it and for
what purposes. Will it be restricted to
just a few peoplesay, those in mar-
keting, HR or media relations? Are you
going to require supervisors or depart-
ment heads to know the networks that
their staff members are using?
Draw up the policy with the com-
panys culture and industry in mind.
Some industries (finance and health, for
example) have rules about social media
engagement and what company or client
information can or cannot be divulged.
Align a policy with your companys cul-
ture, whether it is formal or informal.
Tap different divisionsmarket-
ing, information technology, HR, media
and legalto help craft the policy.
Take a look at the employee handbook,
and identify existing rules that can
be applied to use of social media. For
example, rules in the code of conduct
or those regarding disclosure of propri-
etary information, sexual harassment or
equipment use may be applicable. Make
sure the social media policy is consis-
tent with and works in tandem with the
handbook, and that it covers postings on
social media platforms or technologies
that already exist as well as those that
have yet to be created.
Dont Overreach
Be careful not to infringe on the employ-
ees right to engage in what the National
Labor Relations Board (NLRB) calls
concerted activities for the purpose of
collective bargaining or other mutual aid
or protection.
For example, the NLRB has had
a problem with companies that say
you are not allowed to disclose confi-
dential information without defining
what is confidential information,
says Michael Schmidt, an attorney with
Cozen OConnors labor and employ-
ment group and author of the Social
Media Employment Law Blog.
Some companies consider salary
and wage information confidential, and
the NLRB has said employees can talk
about wagesso a company would be
overreaching by prohibiting employees
from discussing wage-related informa-
tion, Schmidt says.
Under the National Labor Relations
Act, Meyer explains, employees have
the right to engage in protected con-
certed activity. In a nutshell, when two
or more employees discuss the terms and
By Aliah D. Wright
Polish Your Social Media Policy
Set clear expectations about social media use, but beware of being intrusive.
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72 HR Magazine August 2013
SOCIAL MEDIA Agenda
Inform employees
as to whether they
need approval
before posting
information and
identify whom
they should get
approval from.
conditions of employment in a way thats
designed or intended to effect change ...
they have the right to do that.
Social Screening
A policy should cover whether employ-
ers can use social media to screen can-
didates or employees and the inherent
risks involved. The Society for Human
Resource Management (SHRM)
unveiled research in 2013 showing that
57 percent of companies do not have a
policy relating to screening potential
employees social networking sites. Of
those that do have a policy, 21 percent
prohibit the use of the sites and 21 per-
cent allow use.
SHRM research from 2011 revealed
that most HR professionals (66 percent)
do not conduct online searches about
candidates or employees or sift through
their social media sites. Why? Because
they are fearful they may discover infor-
mation they are not supposed to know.
In 2008, 54 percent of HR profession-
als surveyed by SHRM said they did not
screen candidates by looking at their
social networking sites because they
were concerned about the legality of
doing so; in 2013, that number rose to 74
percent.
Employers may discover information
on Facebook about an individuals pro-
tected status under federal, state or local
law. This information might include the
individuals age, gender, religion, race,
political affiliation, national origin,
disabilities or sexual orientation. Or,
employers may discover information that
state laws prohibit them from knowing
about employees activities when they
are not at work. About 28 states and the
District of Columbia have laws that pro-
tect applicants from employers that may
discriminate against them for engaging
in lawful activities such as smoking.
There is a danger, too, that informa-
tion found online may be untruea
recruiter might find a fake profile for
a person, for instance. Or, employers
may not be consistent when checking
social media sites for all candidates. Of
course, there may be exceptionssay,
if a candidates job would involve work-
ing with social media. In those cases, a
third party instead of a hiring manager
could be used to scrutinize a candidates
accounts.
A policy should define the kinds of
employees or candidates who will have
their social media presences checked,
when they will be examined (for exam-
ple, during background checks) and
what information will be scrutinized.
State that only publicly available infor-
mation will be reviewed. Do not ask for
passwords; six states have passed laws
prohibiting this practice. Being consis-
tent is essential.
More to Do
In addition, a social media policy should:
State that employees are not to
divulge trade secrets or confidential or
proprietary information, and provide
examples of policy violations.
State that employees can be held
accountable for content they post on the
Internetwhether in the office, at home
or on their own timeparticularly if
something they post or share violates
other company policies.
Cover the legal consequences for
employers and disciplinary ramifications
for employees if rules are not met.
State that the policy is not a static
document. It may have to be revised as
laws and usage change, new platforms
are introduced, and existing platforms
expand. SHRM reports on such changes
regularly.
State that the policy relates to social
media use by the organizations entire
staff, not just those who use social media
in official capacities.
Clearly and succinctly educate
employees about social networkings
benefits as well as its pitfalls.
Set forth employee productivity
expectations in conjunction with their
social media habits.
Inform employees as to whether they
need approval before posting certain
types of information and identify whom
they should get approval from.
Convey to employees that they are
essentially ambassadors for the organi-
zations corporate brand, because what
they write on social media sites may be
disseminated to the worldeven if they
only share it with their friends.
Encourage employees to think twice
before posting comments they would not
say out loud or that they would not want
their chief executive officer, spouse, sig-
nificant other or grandparents to see.
Finally, do not just give employees
the policy and have them read it. You
have to have some form of training and
education because you cant always trust
that everyones going to read the policy,
Meyer says.
Aliah D. Wright is an online editor/manager
for SHRM. This article was adapted from
her book A Necessary Evil: Managing
Employee Activity on Facebook, Twitter,
LinkedIn and Hundreds of Other Social
Media Sites (SHRM, 2013).
For more information about creating a
social media policy, see the online version
of this article at www.shrm.org/0813-social-
media-policy.
ONLINE RESOURCES
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August 2013 HR Magazine 75
COMMUNICATION Agenda
H
ealth care reform is here, and
employers are working to comply
with the Patient Protection and Afford-
able Care Act. Yet 42 percent of Ameri-
cans are unaware it is the law of the
land, according to a Kaiser Health
Tracking Poll from April.
New health insurance rules are sched-
uled to kick in soon, so employee com-
munication about the reform law and any
benefits changes should start now.
Do not despair, however, if your com-
munication plan is at the starting line,
says Dani McCauley, senior vice presi-
dent of marketing at Univers Workplace
Solutions, a benefits administration and
communications provider in Hammon-
ton, N.J. Brokers, consultants and other
vendor partners can help.
A Strategic Plan
Employers should have a strategic com-
munication plan in place as early as
possible. By Oct. 1, all companies must
provide employees with information
about state health insurance exchanges,
where individuals and small businesses
will be able to shop for insurance.
If you know you are making changes
to your health plan, you need to figure
out what those changes will be before
you can communicate them, says R. Pep-
per Crutcher Jr., a partner in Balch &
Binghams Jackson, Miss., law office.
This is a very complicated topic, and
your communications should not be
rushed, he adds.
Careful planning is essential for fram-
ing difficult communications, such as
telling employees the company will not
offer benefits; will not pay as much (or
anything) for spouse or dependent cover-
age; or will reduce the number of hours
employees work, making them ineligible
for health care coverage.
Never give people bad news at the
last moment, Crutcher says. Dont
corner employees by springing some-
thing like this on them and then saying
Merry Christmas.
For organizations that are keeping
health care benefits, it is a great time to
remind workers how valuable these ben-
efit are and that the employer provides
coverage as an investment in employees.
We have heard from some clients
that their employees believe the govern-
ment is now giving them their health
care, and they no longer understand their
employers role, McCauley says. If an
employer does not stay active in the con-
versation, it is going to be very easy for
that employer to lose the perceived spon-
sorship. HR professionals have their
work cut out for them. The Kaiser poll of
1,203 adults living in the U.S. found that
about half of those surveyed said they
did not have adequate information about
the law, and only 11 percent said they
had received any information from their
employer. This puts a burden on HR.
Start with the Basics
HR has been immersed in health care
for the last several years, but the public
has not, says Heidi tenBroek, a princi-
pal at Milliman, a benefits consultancy
in Seattle.
Start by telling employees whether
the company plans to continue offering
coverage in 2014. Theres been enough
speculation out in the news about
employers dropping coverage, tenBroek
notes.
Jennifer Benz, founder and chief
executive officer of Benz Communica-
tions in San Francisco, notes additional
basic questions that employees will have
if their employer is continuing to offer
By Nancy Hatch Woodward
Its Not Too Late
Theres time to begin educating employees about health care reform.
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76 HR Magazine August 2013
COMMUNICATION Agenda
health care coverage:
Could I get a better deal on the health
insurance exchange?
Could someone in my family get a
better deal on the exchange?
Am I eligible for a subsidy on the
exchange?
Answering these questions is criti-
cal because employers may face penal-
ties if their employees migrate to public
exchanges. HR professionals will want
to do all they can to keep employees in
their employers health plans.
Because the health care reform law is
so complex, the best approach is to focus
on the most critical information, com-
municate it simply and try not to get too
far ahead of yourself, Benz says.
Deliver bite-size pieces of informa-
tion, McCauley says, but try to frame
the information in the larger context of
the ongoing shift that is
occurring as a result of
the health care reform
law.
Try to provide person-
alized information, says
Denise Foster, a princi-
pal and practice leader at
Milliman. Tailor messages to the appro-
priate audiences, especially if only some
of your employees will be in the employ-
ers health plan.
Next Up: Leaders
Educate business leaders and get them
involved. The HR team at Intrust Bank,
based in Wichita, Kan., spent March and
April informing senior leaders about the
health care reform law, the banks health
care risks and claims data, and the lead-
ers role in the communication process,
says Jill Beckman, divi-
sion director of people
services. In May, the
president headed to bank
locations for all-employee
meetings to explain the
laws requirements and
that the bank already
offers many of those benefits.
HR professionals at Legacy Health
System in Portland, Ore., used e-mail
and other messages from their CEO to
employees that explained the organiza-
tions health plan in the context of health
care reform. They met with the organi-
zations leaders to detail how the leaders
could support and explain the changes
the hospital group was making to its
health plans, says Sonja Steves, SPHR,
senior vice president, human resources.
Use Your Entire Arsenal
Use a variety of tools in your education
campaign, experts advise. Try a little
bit of everything, and do not rely on
just one method, Steves says. Legacy
Healths HR professionals have used
home mailings and articles in newslet-
ters to educate the organizations 9,700
employees. They recently launched The
Future, a bimonthly e-mail on health
care reform. At first, it was a little mys-
terious to employees because no one
knew who wrote it, she says, but they
have come to rely on it.
At Intrust, managers encourage the
banks 880 employees to read mailings
and articles and come to meetings. HR
developed Q&As and, in May, began
putting out a series of newsletter articles
that focus on topics such as the health
care reform laws impact on the employer,
public health insurance exchanges or pos-
sible future health care benefits.
The HR department at Darden Res-
taurants Inc., headquartered in Orlando,
Fla., started employee communication
early. In 2012, employees had the oppor-
tunity to sign up for their 2013 health
insurance through a private exchange
offered by Aon Hewitt.
Communicate Key Reform Topics
Depending on its situation, an employer may need to cover the following topics
before the new plan year begins:
State exchanges. On Oct. 1, all employers must provide information to
employees about the public health insurance exchanges. Explain that if they decline
employer coverage, they may not be eligible to buy subsidized coverage through an
exchange for the same coverage period.
Play or pay. Employers need to announce whether they will continue to offer
health care coverage or whether they will elect to pay applicable taxes and give
employees the option to buy coverage, which might be subsidized, through an
exchange.
Plan-design changes. Some employers may offer plans and features that are
unfamiliar to employees and that need to be explained for example, a high-deduct-
ible health plan paired with a health savings account, a skinny med plan that pro-
vides limited benefits, or wellness program incentives.
Coverage changes. Employers must offer coverage to full-time employees and
their dependents; however, because spouses are not defined as dependents, cov-
erage for them is optional.
Cost-sharing changes. The employees coverage must be affordable, but
there is no such requirement for dependent coverage.
Medicaid expansion. In states that have signed up to expand Medicaid cover-
age, employees with household incomes up to 133 percent of the federal poverty
level may be eligible for Medicaid.
Reduction in regularly scheduled hours. Some employers, especially in retail,
hospitality and other service industries that employ hourly workers, have begun to
convert full-time jobs to part-time jobs to minimize their play-or-pay expenses.
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August 2013 HR Magazine 77
For more information about employee
communication, including links to model
notices about employees health coverage
options under health care reform, see
the online version of this article at www.
shrm.org/0813-health-care-reform-
communication.
ONLINE RESOURCES
Darden moved from one health plan
with one provider to five medical plans
and up to five carriers on the exchange,
depending on the location. Danielle Kir-
gan, senior vice president of total rewards
and HR shared services, says the com-
pany prepared for this change on ste-
roids by approaching its communication
and change process in three stages:
Build awareness. Last August,
Dardens HR team started educating
leaders and reaching employees through
videos, home mailings and text messages
about some new and interesting ben-
efits that would soon be rolled out.
Educate employees. In October, the
team held employee training sessions
facilitated by their benefits profession-
als and provided on-demand videos
employees could watch at their desks.
The videos detailed the companys new
high-deductible health plans and other
plan changes. Employees also had access
to video testimonials from colleagues
who had experience with different plan
options before joining Darden and from
actors portraying fictional employees
who explained why they chose a specific
plan option.
Encourage decision-making. Open
enrollment in October included elec-
tronic tools that were popular with
employees and that helped them model
their medical needs and choose the plan
best suited for them.
Handling Questions
Considering the complexity of the health
care reform law, HR professionals
should expect to be peppered with ques-
tions from employees.
Last year at Darden, HR received
many calls from employees regarding the
reform law. In response, the companys
benefits professionals created talking
points for managers, set up a call center,
and created a website where employ-
ees could submit questions and have
live chats with an HR representative to
get answers, Kirgan says. During open
enrollment, the company provided live
sessions to walk employees through the
process of signing up.
Intrust set up a team of four HR
professionals who were prepared for
a barrage of questions. HR developed
a two-page document listing all the
main points about the health insur-
ance exchanges, the waiting periods, the
affordability requirement and more. The
information was also made available to
senior leaders so they could provide sup-
port as well.
When it comes to health care reform,
Glassdoor Inc.s HR director, Amanda
Lachapelle, PHR, strives to communi-
cate one-on-one with 160 employees
of the jobs-and-career network based
in Sausalito, Calif. Because thats not
always possible, Glassdoor has a dedi-
cated intranet site on the topic, and the
professional employer organization that
manages the companys health insurance
benefits provides employees with infor-
mation about health care reform.
HR professionals would be well-
advised to keep the outreach and educa-
tion coming. When companies launch
something new, they tend to put a lot of
energy into the launch and think their
communications role is over, Steves says,
but not every employee is listening. If
Im personally impacted by the change,
then you have my attention, she says.
If Im not, I probably wont pay atten-
tion. Employers need to keep a steady
drumbeat of communication all the
time; then, as the need arises, people
know where to go for information.
Nancy Hatch Woodward is a freelance writer
based in Georgia.
Reform Terms
Your Employees
Should Know
A quick primer on health care
reforms key terms from R. Pepper
Crutcher Jr., a partner in the
Jackson, Miss., law office of Balch &
Bingham:
Full-time employee. Employees
are considered full time if their aver-
age service hourswork time plus
paid nonwork time plus certain
unpaid leave hoursare at least 30
per week or 130 per month.
Essential health benefits.
Individual and small group policies,
whether or not they are sold through
the health insurance exchanges,
must include certain core benefits,
such as emergency care, prescription
drugs and preventive services.
Exchanges. Beginning Oct. 1,
individual and small group policies
will be available through state and
federally operated health insurance
exchanges, with some individual pur-
chasers qualifying for premium and
cost-sharing subsidies.
Minimum actuarial value. A
plan must pay at least 60 percent
of the allowed costs for covered
services.
Affordability. The employees
share of the premium for individual
coverage under the employers least
expensive compliant plan may not
exceed 9.5 percent of the employ-
ees household modified adjusted
gross income.
Subsidies. Individuals and fami-
lies with annual incomes between
100 percent and 400 percent of the
federal poverty level may be eligible
for a subsidy to help them pay for
coverage they purchased through an
exchange if they were not offered
compliant, affordable coverage by an
employer.
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Copyright 2011, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates.
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HR Technology
Give Employees with Disabilities an Assist
A new generation of tools offers a variety of low-cost accommodation options.
E
li Hinson has worked for consulting
giant Booz Allen Hamilton for 13
years, so she was surprised when her
manager approached her last fall with
a concern: Hinsons manager and co-
workers at headquarters in McLean,
Va., had noticed an increasing number
of spelling, grammar and syntax mis-
takes in her writing. What they didnt
know was the causedyslexia, a lan-
guage-processing disorder that can
affect reading, writing and spelling.
Hinson was diagnosed in college but
had never disclosed her disability to her
employer. I really didnt like to tell peo-
ple that I have dyslexia, Hinson says.
Its only just recently that I felt comfort-
able enough to tell my manager.
Once she did, Hinson was connected
with Booz Allen Hamiltons disability
accommodations and workplace adjust-
ments team. Within a few weeks, the
team set her up with technology tools
that help improve her writing and read-
ing comprehension. Managers and
co-workers have seen a difference in
my e-mails, says Hinson, a SharePoint
administrator. The technology tools
gave me confidence. I dont need to have
a third party look over my work; I can do
it on my own.
Turnkey Solutions
The Americans with Disabilities Act
(ADA) of 1990 brought disability aware-
ness into the spotlight across the country.
Now, more than 20 years later, tech-
nology is ushering in a second wave of
consciousness about employees with dis-
abilitiesand the availability of simple,
affordable tools to accommodate them.
Solutions used to be costly and
cumbersome. Tony Stephens, public
policy and advocacy manager for the
National Industries for the Blind, based
in Alexandria, Va., has been blind since
birth. When he was in school, a screen
reading program and scanner cost thou-
sands of dollars, he says. Today, these
functions are features of off-the-shelf
operating systems or downloadable
add-ons.
By upgrading your operating sys-
tem, you get built-in speech recogni-
tion, speech output, magnification, icon
and graphic upgrades, word prediction,
color-contrast ability, and alternate key-
board and mouse controls. What main-
streaming means is that these technolo-
gies are becoming cheaper and more
cost-effective, says Beth Loy, Ph.D.,
principal consultant for the Job Accom-
modation Network, a grant-funded proj-
ect of the U.S. Department of Labors
Office of Disability Employment Policy.
Ten years ago, someone might have
had a dozen different devices such as
a screen magnifier, a currency reader, a
talking calculator and a GPS, says Chris
Frank, a team leader for employment and
technology services at the Association for
the Blind and Visually Impaired-Good-
will of the Finger Lakes, headquartered in
Rochester, N.Y. Now they might all just
be apps on a persons smartphone.
According to the U.S. Census
Bureau, about 56.7 million people in
the United States had some type of diag-
nosed disability in 2010, and more than
40 percent of them were working age.
Although the unemployment rate for
people with disabilities is higher than
the overall average unemployment rate,
experts say its not due to lack of skills.
This is a very solid untapped work-
force, Stephens says.
While the ADA has helped raise
awareness, misconceptions about people
with disabilities persist. According to
By Jennifer Taylor Arnold
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80 HR Magazine August 2013
HR Technology
Stephens and his colleague Doug Goist,
some managers think that employ-
ees who use assistive technology are
somehow less capable. I like to say to
HR managers, How many of you use
reading glasses? Can you read with-
out them? explains Goist, an assis-
tive technology specialist. Glasses are
assistive technology. It doesnt mean you
cant perform in your job.
Beyond Compliance
In fact, people at all levels of education
and skill use adaptive technology in their
work. At Rosicki, Rosicki & Associ-
ates PC, a mortgage banking law firm in
New York, about 23 percent of its 425
employees have a disability. The firm
uses adaptive software and hardware
to accommodate those with vision and
hearing impairments, cystic fibrosis, and
spina bifida. There are certain assump-
tions that a person with a disability can
only handle the lowest-level work, says
Craig Wolfson, associate partner and
director of human resources. People
are surprised when we tell them we have
attorneys, managers, paralegals, employ-
ees at all levels who have disabilities.
While some disabilities are apparent,
the legal definition includes a range of
conditions, especially after the ADA was
expanded through the ADA Amend-
ments Act of 2008. ADA regulations
now include sensory, cognitive, physi-
cal and psychiatric conditions as well as
chronic diseases.
We have a significantly higher per-
centage of people covered by the act
as a result of the ADA Amend-
ments Act, says Michele
Magna, disability special-
ist at Booz Allen Hamilton.
We want to have employees
that can be as successful and
productive as possible. If
you arent providing those
types of tools, the individu-
als are at a disadvantage,
and youre not going to get
maximum productivity.
Amped Up
Today, adaptive technol-
ogy goes far beyond screen magni-
fiers and sound amplifiers. Interestingly,
many functions are familiar to a wide
audience, thanks to popular tools like
autocorrect, spell check and iPhones
Siri.
Speech recognition software (simi-
lar to Siri) allows users to speak their
thoughts and have them translated into
text in a program file, and can also read
text from a program file aloud. Word-
prediction software like autocorrect
uses context clues and user history to
complete words after just a few key-
strokes. And literacy programs such as
spelling and grammar checks catch mis-
takes in written communication. Adap-
tive technology versions typically have
beefed-up capabilities. Such tools can
help employees with challenges from
learning disabilities like dyslexia to
fatigue caused by conditions like mul-
tiple sclerosis.
At Booz Allen Hamilton, Hinson
uses a tool called WhiteSmoke to help
her write e-mails and Read&Write for
help with Word documents and Power-
Point presentations. When you start
typing, [WhiteSmoke] pops up and
reviews your sentences for you and
grades you before you can send out the
e-mail, she explains.
She benefits from the tools text-
to-speech capabilities to improve
comprehension. She says she processes
information better when it is
read to her than when she sees
it on a page or screen.
Adaptive hardware can
help employees with dexterity
limitations: A half-QWERTY
keyboard can help users who
have carpal tunnel syndrome,
one hand or limited fine-motor
skills. When a blind person uses
it along with a Braille display, it
can read text aloud as he or she
types. And smartpens allow
employees to transfer recorded
notes or audio to computer files,
so they can take adaptive technol-
ogy with them to meetings and
outside appointments in a convenient,
portable way.
Considering Cost
Employers should not be afraid of
price, Goist says. A 2012 Job Accom-
modation Network survey of 1,905
organizations that had provided accom-
modations for employees found that
57percent of the accommodations were
available at no cost, while the rest cost
$500 or less. In many cases, local gov-
ernment and nonprofit agencies can
provide adaptive technology tools to
employers for free or at reduced rates.
There is little to no cost for the
employer, Wolfson says. There might
be a little startup cost, [but] the employees
you are getting are so worth it. Manag-
ers at Rosicki, Rosicki & Associates have
worked with The Rehabilitation Institute,
Goodwill, New York states Adult Career
and Continuing Education Services-
Vocational Rehabilitation, and Helen
Keller Services for the Blind to identify
candidates with disabilities and appropri-
ate accommodations for them. Many
agencies will provide short-term or long-
term job coaches or onsite support to
help with the transition at no cost to the
employer, Wolfson says.
In addition, some state and federal
programs offer tax credits to employers
Some state and
federal programs
offer tax credits
to employers that
invest in adaptive
technologies.
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SHRM Photo Gallery
SHRMs biweekly video news
program for HR professionals.
Available on SHRM Online
and SHRMs YouTube channel.
Find current and archived episodes at
shrm.org/focusonhr
WATCH. LISTEN. GO!
August 2013 HR Magazine 81
that hire employees with disabilities and
invest in adaptive technologies. Employ-
ers should check with state or local agen-
cies that offer services for disabled resi-
dents to identify programs in their areas.
Tailored to the Job
When trying to identify the best adap-
tive technology solution for an employee,
HR professionals need to consider the
big picture. You cant just look at a dis-
ability in isolation, Magna says. Look
at it in conjunction with the essential
functions of their job. You could have
two individuals with the same diagnosis,
but, because their duties are different,
their accommodations packages might
look very different.
Plus, there is a range of variation
within each disability diagnosis. For
example, one person with limited vision
may prefer changing the color and font
display on her computer, while another
may prefer screen magnification.
Ask employees who need accommo-
dations lots of questions, advises Linda
Gillis, PHR, SPHR, Red Roof Inns hir-
ing and training manager. The Spring-
field, Ohio-based company has three
employees with visual impairments in
its customer contact center who use
screen reading and magnification tools.
Our goal is to make each agent the
best he or she can be at their job, Gil-
lis says.
Often, the employee or candidate
can be a valuable source of informa-
tion on adaptive technology options.
Vicki Minter, an agent in Red Roof Inns
customer contact center, has used the
Assistive Technology
Some widely used adaptive technology:
Screen readers and magnifiers
JAWSJob Access with Speech
Window-Eyes
ZoomText
Speech recognition
Dragon NaturallySpeaking
Kurzweil 3000
SpeakQ
Literacy programs
WhiteSmoke
Read&Write
WordQ
Keyboard
Matias
Smartpen
Livescribe
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SHRM
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DO YOUR
EMPLOYEES LOOK
FORWARD TO
MONDAY?
82 HR Magazine August 2013
HR Technology
screen reading tool JAWSJob Access
with Speech softwareat a variety of
jobs since the early 1990s. I always
let [employers] know upfront that I
use adaptive equipment, Minter says.
Sometimes they are a little apprehen-
sive. I try to help them feel free to ask me
about it. The program Minter uses con-
verts text on a computer screen to speech
or a Braille display.
The per-
son knows their
impairment bet-
ter than anyone,
Stephens notes.
Dont be afraid to
ask What do you
need to do your job 100 percent?
At Booz Allen Hamilton, employees
request accommodations by submitting
a form through the companys intranet.
Adaptive services are covered in the
onboarding process, so new hires can
self-identify and request them.
At other employers, the process is less
formal. Red Roof Inn employees sim-
ply inform managers of their needs. The
two then work together to accommodate
those needs. We have an open-door
policy where peo-
ple can have those
conversations,
Gillis says.
Experts rec-
ommend that
HR profession-
als learning
about adaptive technology try out some
of the tools themselves. Employers
often have a lack of awareness of what
solutions are out there and how they
function, Goist says. If an employer
sits down and sees the unbelievable
things the technology is able to do, that
will remove any hesitation. There is
nothing you cant do when using this
type of technology.
Jennifer Taylor Arnold is a freelance writer
based in Baltimore.
Dont be afraid to
ask What do you
need to do your job
100 percent?
For more information about assistive
technology, see the online version of this
article at www.shrm.org/0813-assistive-
technology.
ONLINE RESOURCES
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2013 Kronos Incorporated. Kronos and the Kronos logo are registered trademarks of Kronos Incorporated or a related company. All rights reserved.
KRONOS
IN THE
CLOUD
INNOVATION
IN YOUR
WORKFORCE
Today, organizations of all types and sizes from Fortune 500 companies
to small- and medium-sized businesses are transforming their workforces
into strategic assets. And theyre taking advantage of innovative Kronos
cloud technologies to help drive this change. With Kronos you can leverage
your entire workforce as never before, using it
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instead of seeing labor as a cost, Kronos is showing them how to use their
workforce as one of their most important assets to impact the bottom line.
Go to www.kronos.com/cloudhr for a free white paper on new technology
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THE KRONOS CLOUD DELIVERS
WORKFORCE INNOVATION THATS
EASY TO DEPLOY, EASY TO MANAGE.
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For more information and to try the free demo, visit shrm.org/learning/August
The 2013 SHRM Learning System features an enhanced
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Prep Tool
August 2013 HR Magazine 85
Court Report New cases are posted online each week. Visit www.shrm.org/law.
Reduction in Force Tainted by Willful Age Discrimination
Miller v. Raytheon Co., 5th Cir., No. 11-10586 (May 2, 2013).
An employer that purported to follow
facially neutral layoff procedures termi-
nated an employee because of his age,
the 5th U.S. Circuit Court of Appeals
ruled, upholding a jury finding of a will-
ful violation of the Age Discrimination
in Employment Act (ADEA).
Richard Miller worked for Raytheon
Co. or its predecessor for almost three
decades in a variety of roles, primarily
in supply chain management. In 2006,
Miller was moved to special projects,
where he reported to Robert Lyells.
Miller initially performed well in his
new position. After failing to meet some
deadlines, however, he received a needs
improvement rating on his 2007 mid-
year review.
Raytheon initiated a reduction in
force (RIF) in early 2008. The com-
panys policy dictated that Lyells evalu-
ate his employees, subdivide them into
decisional units, rank them based on
a four-factor analysis and develop a list
of employees to recommend for reduc-
tion. Lyells placed the then 53-year-old
Miller in a decisional unit with four
other employees (ages 34, 49, 54 and
55) to be considered for termination. A
46-year-old woman who worked in the
same organization as Miller and had
similar job responsibilities was placed in
a decisional unit that was not considered
for the RIF.
Lyells recommended that Miller be
included in the layoff after determining
that his job function was nonessential
and that other employees could absorb
his duties. Although Miller was purport-
edly targeted for the RIF because of a
budgetary shortfall, at that time his job
was not charged to Lyells budget. The
only employee in Millers decisional unit
not recommended for termination was
the 34-year-old, to whom Lyells offered
retraining.
Because Miller had more than 20
years of service, Raytheons human
resources director and Lyells searched
for job opportunities for Miller. Lyells
contacted colleagues in other groups at
Raytheon to determine whether there
were any positions
that fit Millers skills,
but he was told there
were none. The com-
pany terminated Mill-
ers employment on
March 13, 2008.
Miller then met
with HR and com-
plained that he would be unable to get
another job at Raytheon because of his
needs improvement rating. Miller
was told to apply for jobs at a lower
salary grade and in a different group.
When Miller asked why he would not
be considered for a job in the supply
chain group, he was told, Because you
wouldnt be considered. Miller applied
for four jobs at Raytheon, but he was not
rehired.
Miller asserted that Raytheon termi-
nated him because of his age. The dis-
trict court held that the evidence was suf-
ficient to support the jurys finding that
Raytheon terminated Miller in willful
violation of the ADEA. The 5th Circuit
concurred.
The ADEA prohibits employers from
discharging or otherwise discriminating
against any individual because of his or
her age. A violation of the law is willful
when an employer must have known or
shown reckless disregard for the matter
of whether its conduct was prohibited by
the ADEA.
The 5th Circuit found sufficient evi-
dence for the jury to disbelieve the com-
panys argument that Miller was treated
the same as younger employees. The
court noted that Miller was told not to
apply for jobs in supply chain manage-
ment and was not
selected for a new job,
despite Raytheons
policy of exhausting
all opportunities to
place the individual
before releasing an
employee pursuant to
a RIF. Additionally,
Miller presented evidence that at least
two similarly skilled, younger employ-
ees (ages 34 and 46) were not terminated
despite being eligible for the RIF.
Moreover, the court cautioned, fol-
lowing facially neutral RIF procedures
does not necessarily insulate an employer
from ADEA liability or from a sustain-
able finding of a willful violation. Even
if Raytheon superficially applied its non-
discriminatory RIF standards to Miller,
the 5th Circuit stated that there was
considerable circumstantial evidence
that Raytheon went out of its way to
avoid rehiring Miller, in contravention of
its usual procedures, and to obscure the
reasons for its decisions.
By Roger S. Achille, an attorney and
professor at Johnson & Wales University,
Graduate School of Business, in Providence,
R.I.
An employer found to have
willfully violated the ADEA
can be liable to the aggrieved
person for liquidated
damages or double damages.
Professional Pointer
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86 HR Magazine August 2013
Court Report
Teacher Fired for Harassing Student Lacks Bias Claim
Smiley v. Columbia College Chicago, 7th Cir., No. 10-3747 (April 30, 2013).
Third-Party Retaliation Claim Fails
Underwood v. Dept of Fin. Servs. State of Fla., 11th Cir., No. 12-14711 (April 25, 2013).
A college instructors employment dis-
crimination claim failed because her
employer fired her for her unprofessional
behavior, not for her race or national
origin, the 7th U.S. Circuit Court of
Appeals ruled.
Suriya H. Smiley, who is of Pales-
tinian and Lebanese descent, taught
a Radio Student Operations class at
Columbia College Chicago from 1994
until January 2009.
In late 2008, the school received a
complaint from one of Smileys students.
The student said Smiley harassed him
because he is Jewish and alleged that
Smiley said she could tell he was Jewish
by his nose and last name. He claimed
that she said, Damn, those Jews know
some good food.
The schools anti-discrimination
and harassment policy requires an
administrator to interview the com-
plaining student and the instructor
and then determine
whether the policy
was violated. When
the administrator
interviewed Smiley,
she admitted that she
goofs around with
students and that
she knew she hurt the
students feelings but
added, Its not going
to hurt a regular stu-
dent. The school
concluded that Smiley violated the policy
and was unprofessional, and it decided
not to have her teach more classes.
Smiley sued the school for racial and
national-origin discrimination under
Title VII of the Civil Rights Act of 1964.
The college contended that even if Smi-
ley had not actually harassed the student
for being Jewish, she
engaged in unpro-
fessional conduct by
teasing him.
The trial court
dismissed Smileys
claims, and the 7th
Circuit affirmed.
The court found that
the school treated
Smiley no less favor-
ably than non-Arab
instructors and fired
her because it believed she had acted
unprofessionally.
By Jason W. Palmer, an attorney at
Denlinger, Rosenthal & Greenberg Co.,
the Worklaw
877-630-401k
www.greatwest.com
www.gwrs.com
Great-West Financial, headquartered
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billion in assets for its 5.2 million
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customers. Great-West Financial is
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plan record keeper (Plansponsor,
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COMPENSATION
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Delta Dental Plans Association
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As the countrys largest dental
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dentists to provide more than 59
million people nationwide with
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Since 1988, Flex has continued
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offer the InsureXSolutions private
insurance exchange that features
an online marketplace for employers
to offer health, dental, vision and
retiree benefits.
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___
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Buyers Guide BENEFITS
102 HR Magazine August 2013
HEALTH & WELLNESS
hubbub health
100 SW Market St.
Portland, OR 97201
sales@hubbubhealth.com
www.hubbubhealth.com
hubbub is a technology-driven
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employers.
HR MASTERS DEGREE
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HR TECHNOLOGY
Ceridian
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877-552-5669
www.ceridian.com
Put Ceridian KnowHow
to work for you.
From payment solutions to benefits
and health and productivity
services, you can count on Ceridian
KnowHow to take the guesswork out
of choosing proven solutions that
assure your company will thrive, and
take the guesswork out of making
smart decisions for your bottom line.
HR TECHNOLOGY
Ultimate Software
2000 Ultimate Way
Weston, FL 33326
800-432-1729
Fax: 954-331-7300
ultiproinfo@ultimatesoftware.com
www.ultimatesoftware.com
Ultimate Software is a leading cloud
provider of people management
solutions. The companys UltiPro
solution provides a comprehensive
approach to human capital
management. Web-based features
include recruitment, onboarding,
benefits, payroll, performance
management, succession
management, business intelligence,
compensation planning, time and
attendance, and 24-7 direct access for
executives, managers, and employees.
COMPLIANCE
Bloomberg BNA
1801 South Bell Street
Arlington, VA 22202
800-372-1033
www.bna.com/HR
Bloomberg BNAs HR products help you
make decisions with confidence by
having the information you need right
at your fingertips. Youll find the most
up-to-date federal and state policies,
laws, and regulations, as well as expert
analyses and guidance that support
and complement the goals of your
organization.
HEALTH & WELLNESS
American Council on Exercise
ACE is a nonprofit organization
dedicated to empowering people
to live their most fit lives through
physical activity, better nutrition
and healthy habits. Lead change
in your workforce using thousands
of solutions, including: exercise
libraries, expert articles and videos,
healthy recipes, and interactive
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Contact 800-825-3636 x820 or
HealthyWorkplace@ACEfitness.org.
HEALTH & WELLNESS
ComPsych Corporation
455 N. Cityfront Plaza Drive
Chicago, IL 60611-5322
www.compsych.com
800-851-1714
Info-sales@compsych.com
ComPsych Corporation is
the worlds largest provider of
employee assistance programs
and is the pioneer and leader of
fully integrated EAP, behavioral
health, wellness, work-life, HR
and FMLA administration services
under the GuidanceResources
brand. Providing services to more
than 15,000 organizations covering
40 million individuals in more than
100 countries, ComPsych creates
Build-to-Suit programs which help
employers improve productivity.
SHRMs Focus on HR
1800 Duke Street
Alexandria, VA 22314
1-800-283-7476
Fax: 703-535-6468
FocusonHR@shrm.org
www.shrm.org/FocusOnHR
Want to stay up to date when you
are on the go? SHRMs bi-weekly
video program, Focus on HR, offers
news, insights and information in
a 10-minute update you can watch
from your phone, tablet or computer.
Past interviews have included noted
business thinkers such as Patrick
Lencioni, Deepak Chopra, Theresa
Amabile and Tom Brokaw.
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August 2013 HR Magazine 103
HUMAN CAPITAL MGMT LEGAL SERVICES TRAINING & DEVELOPMENT
HR
VENDOR
DIRECTORY
SHRM HR Vendor Directory
1800 Duke Street
Alexandria, VA 22314
703-535-6289
Fax: 703-535-6468
hrvendordirectory@shrm.org
http://www.shrm.org/
hrvendordirectory
Find the right HR product or service
right away. The premier vendor
directory for HR professionals,
SHRMs HR Vendor Directory
highlights more than 3,000 of the
foremost companies offering
products and services to the human
resource profession. Post your
online listing on our site today.
Ultimate Software
2000 Ultimate Way
Weston, FL 33326
800-432-1729
Fax: 954-331-7300
ultiproinfo@ultimatesoftware.com
www.ultimatesoftware.com
Ultimate Software is a leading cloud
provider of people management
solutions. The companys UltiPro
solution provides a comprehensive
approach to human capital
management. Web-based features
include recruitment, onboarding,
benefits, payroll, performance
management, succession
management, business intelligence,
compensation planning, time and
attendance, and 24-7 direct access for
executives, managers, and employees.
Ogletree Deakins
Ogletree Deakins is a labor and
employment law firm representing
management in all types of
employment-related legal matters,
with more than 650 lawyers located
in 44 offices across the United States
and in Europe. The firm also focuses
on business immigration, employee
benefits, and workplace safety and
health law.
Bloomberg BNA
1801 South Bell Street
Arlington, VA 22202
800-372-1033
www.bna.com/HR
Bloomberg BNAs HR products help you
make decisions with confidence by
having the information you need right
at your fingertips. Youll find the most
up-to-date federal and state policies,
laws, and regulations, as well as expert
analyses and guidance that support
and complement the goals of your
organization.
13-0411
The universal benchmark for undergraduate and graduate-level HR students.
SHRM ASSURANCE OF
LEARNING
ASSESSMENT
FOR GRADUATES OF HR DEGREE PROGRAMS
After passing the exam, students receive
a Cert|cote ol |eorn|ng that states they
|uve suttc|eut |uow|edqe to euter t|e
|uauu resource protess|ou bused ou
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start preparing at shrn.org/ossessnent/
ougust.
QUESTIONS?
2013 FALL EXAM WINDOW
OCTOBER 15 NOVEMBER 15
s|ra.orq/ussessaeut/uuqust
APPLICATION PERIOD
AUGUST 16 OCTOBER 5
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104 HR Magazine August 2013
Future Focus www.shrm.org/trends
By Jennifer Schramm
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ntrants to the labor market face a mixed
outlook. Those without college degrees are up
against a difficult environment. College graduates
and postgraduates are seeing improved conditions,
but challenges remaineven for the most edu-
cated. HR professionals report that there is a skills
mismatch between applicants and available posi-
tions, according to the Hiring 2013 College Grad-
uates survey from the Society for Human Resource
Management (SHRM).
The March survey of 468 randomly selected HR
professionals found that more than half of their
employers plan to hire 2013 college graduates,
mostly for full-time positions. However, economic
conditions continue to hinder hiring. A lack of cur-
rent openings was the most common reason cited by
respondents whose organizations had not yet hired
or dont plan to hire graduates.
A lack of key skills is another factor. One-fifth
of the HR professionals in the survey said they had
not yet hired graduates or dont plan to because
the graduates are underqualified for the open posi-
tions at their organizations. Though this may be
partially due to lack of experience, nearly half the
HR professionals said 2013 college graduates lack
basic writing skills, including grammar and spell-
ing skills. HR professionals also cited a lack of math
and speaking skills.
Finding college graduates with the needed
applied skills is even more difficult. Half the HR
professionals surveyed said 2013 graduates are defi-
cient when it comes to work ethic and professional-
ism. Respondents said new graduates lack business
acumen and written communication skills.
Companies in specific pockets of the economy
are having a particularly hard time finding new
graduates with needed skills. HR cited the following
professionals as the most difficult to find: engineers;
high-skilled technicians and programmers; skilled
trades workers, such as electricians, carpenters and
plumbers; and managers and executives.
Shortages in these fields have not yet translated
into higher wages for graduates. Most organiza-
tions are offering about the same compensation,
including salary and benefits, as they offered during
the past three years.
This could all change if the labor market
improves. A Business Roundtable survey of 141 U.S.
chief executive officers in June found that about
one-third of them expected to hire more workers in
the next six months, representing a small improve-
ment from prior surveys. In addition, data from
SHRMs Jobs Outlook Survey Report show that
HR professionals are growing slightly more opti-
mistic about the job market.
Meanwhile, the U.S. Bureau of Labor Statistics
found that more Americans quit their jobs in April
and May than in March, representing another sign
of confidence in the job market. Jobless claims are
also down.
If the positive trends continue, the picture could
become even brighter for new graduates. The down-
side will be that job seekers without the skills and
education employers need will continue to struggle.
And those skills shortages that HR profession-
als are concerned about? They could become even
worse.
Jennifer Schramm is manager of the Workplace Trends and
Forecasting program at SHRM.
Skills Gap Holds Back Some Grads
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GIFT CARD INCENTIVES
Recognize your star employees with Best Buy gift cards or personalized e-gift
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EMPLOYEES WHO
ROCK DESERVE
REWARDS
THAT ROCK
Reward their hard work with a fun gift from Best Buy
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No fees. No expiration dates. Just happiness.
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R E A L - T I M E C H A N G E S E V E R T H | N G I N S T A N T P A Y C A L C U L A T I O N W I T H N O B A T C H E S
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