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Top 10 BestPractices inHR ManagementFor 2009

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Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

#1 Compliance Focus: ADAAA and FMLA . . . . . . . . . . . . . . . . . . . . . . . . . . .1How the Updated ADA AffectsYou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

FMLA Changes Are Here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

#2 Layoffs/Reductions in Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Worker Adjustment and Retraining Notification (WARN) Act . . . . . . . . . . . . . . . . . .7

OlderWorkers Benefits Protection Act (OWBPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Preventing Discriminatory Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Outplacement Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Alternatives to Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Best Practice: Preserving Employee Morale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

#3 Health Care in 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112009 Healthcare Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Mental Health Parity Legislation Becomes Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Cutting Healthcare Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Best Practice: Improve Employee Benefits Communication . . . . . . . . . . . . . . . . . .15

President Obama’s Future Plans on Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Best Practice: Cancer Screening Saves Lives, Money . . . . . . . . . . . . . . . . . . . . . . . . .16

Wellness Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

#4 Retirement of Baby Boomers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Survey: Few Employers Capture Boomer Know-How . . . . . . . . . . . . . . . . . . . . . . . .18

Transitioning into Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Predicting the Future of Retiree Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Persuading OlderWorkers to Stay: Is It the Money that Matters? . . . . . . . . . . . . . . . .20

Succession Planning to Fill the Baby Boomer Gap . . . . . . . . . . . . . . . . . . . . . . . . . .21

Integrating a MultigenerationalWorkforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

#5 Recession Help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Best Practice:MandatoryVacations at HP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Best Practice:TeachWorkers Economics 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Benefits and Retention Strategies in a Recession . . . . . . . . . . . . . . . . . . . . . . . . . . .25

#6 Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27No-Match Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

SSA No-Match Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

DHS No-Match Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Antidiscrimination Guidance for Employers Following the No-Match LetterSafe Harbor Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Federal Contractors Must Now Use E-Verify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

#7 Privacy and Identity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

New Federal Privacy Law Barring Genetic Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Employer Procedures for Handling Address Discrepancies onConsumer Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Identity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

MostWorkers Trust that Employers Protect Personal Info . . . . . . . . . . . . . . . . . . . . .37

#8 The Green Movement and Corporate Social Responsibility . . . . . . . . .39Commuter Benefits Bring Financial and Environmental Relief . . . . . . . . . . . . . . . .39

Corporate Social Responsibility and Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

#9 HR Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44What to Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

Types of Metrics Available to HR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Strategic Alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

MeasuringYour Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

#10 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48Tools for Better Communicating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Organizational Success Through Honest, Ethical Communication . . . . . . . . . . . .50

Best Practice: Ethical Culture at All Levels of Organization . . . . . . . . . . . . . . . . . . .51

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52


Introduction

The role of Human Resources is changing as fast as technology and the globalmarketplace. Historically, the HR Department was viewed as administrative over-head. HR processed payroll, handled benefits administration, kept personnel filesand other records, managed the hiring process, and provided other administrativesupport to the business. Those times have changed.

The positive result of these changes is that HR professionals have the opportunity toplay a more strategic role in the business. The challenge for HR managers is to keepup to date with the latest HR innovations—technological, legal, and otherwise.

This special report will discuss the top 10 best practices in HR management for2009—in other words, how HR managers can anticipate and address some of themost challenging HR issues this year. This report will give you the information youneed to know about these current HR challenges and how to most effectivelymanage them in your workplace.

#1 Compliance Focus:ADAAA and FMLA

The recent issuance of the ADA Amendments Act of 2008 and new regulations cov-ering the Family and Medical Leave Act (FMLA) can affect your company in 2009.

How the Updated ADA Affects YouThe ADA Amendments Act of 2008 (ADAAA), passed by the House and Senate inSeptember, was signed by President Bush on September 25. The changes enactedby the ADAAA affect the core of the Americans with Disabilities Act (ADA) byexpanding the definition of disability.

The stated intent of the ADAAA is to restore the ADA’s definition of disability and toensure that the amended ADA provides a“broad scope of protection.” Since theADA’s enactment in 1990, the definition of disability has been narrowed through aseries of U.S. Supreme Court decisions. The ADA defines a disability as:

� A physical or mental impairment that substantially limits one or more majorlife activities

� A record of such an impairment

� Being regarded as having such an impairment

The Court narrowed the definition with strict interpretations of the terms thatdetermine whether an individual has a disability. The ADAAA expressly rejects theU.S. Supreme Court’s interpretations of the terms“substantially limits”and“major

1©Business & Legal Reports, Inc. 30610800


life activity.” It also rejects the standard set by the Court that required the considera-tion of the effect of“mitigating measures”in the analysis of a qualifying disability.

In addition, the ADAAA broadens the definition of“regarded as having an impair-ment” and allows an episodic impairment to be considered a disability under cer-tain circumstances. The ADAAA expressly seeks to shift the focus from whetherindividuals have a disability to“whether covered entities have complied with theirobligations.” Under the amended ADA, many more employees will be deemed tohave a protected disability, and employers will need to make sure they engage in theinteractive process and provide reasonable accommodation to qualified individuals.

Definition of disability. Under the ADAAA, the definition of disability is to beconstrued“in favor of broad coverage of individuals under this Act, to the maxi-mum extent permitted by [its] terms.” This will likely result in a sharp increase inthe number of individuals found to have a covered disability.

Substantially limits a major life activity. In Toyota Motor Manufacturing v.Williams (122 S. Ct. 681 (2002)), the Court held that an impairment must“preventor severely restrict”an individual in tasks that are of“central importance to mostpeople’s daily lives,”rather than simply restricting the individual’s ability to performtasks in a particular job. The ADAAA calls this interpretation“an inappropriatelyhigh level of limitation”and mandates an interpretation of the term“substantiallylimits”in a manner consistent with the findings and purposes of the ADAAA (i.e.,to reinstate a broad scope of protection under the ADA). The ADAAA also rejectsthe EEOC’s definition of“substantially limits”as“significantly restricted.” (Note: TheADAAA also gives the EEOC authority to issue binding regulations consistent withthe purpose of the amended ADA.)

The ADAAA expands the term“major life activity”by adding activities to thosealready enumerated in EEOC regulations. The new activities include eating, sleep-ing, standing, lifting, bending, reading, concentrating, thinking, and communicat-ing. Significantly, a major life activity also now includes the operation of a majorbodily function, including functions of the immune system, normal cell growth,digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine,and reproductive systems.

Episodic impairments. Under the ADAAA, an impairment that is episodic or inremission is a disability if the impairment would substantially limit a major lifeactivity when active.

Mitigating measures. In Sutton v. United Air Lines (119 S. Ct. 2139 (1999)), theCourt held that mitigating measures must be considered in determining whether anindividual has a disability. Under the ADAAA, disability determination is made with-out regard to ameliorative effects of mitigating measures including hearing aids,medication, medical supplies, auxiliary aids and services (such as qualified inter-preters for individuals with hearing impairments), reasonable accommodations,and“learned behavioral or adaptive neurological modifications.” It is likely that thislast measure is intended to address the Court’s ruling in Albertsons, Inc. v. Kirking-burg (119 S. Ct. 2162 (1999)), where the employee’s brain subconsciously learnedto compensate for his monocular vision. That compensation was found by theCourt to be a mitigating measure, and using the Sutton analysis, the Court ruled thatthe employee did not have a disability under the ADA. The ADAAA excludes ordi-nary eyeglasses and contact lenses from the list of mitigating measures. Under theADAAA, the employers may no longer take into account an individual’s use of

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mitigating measures when considering whether an impairment substantially lim-its a major life activity.

“Regarded as.” Sutton also held that“regarded as”means an individual wasregarded as being unable to perform a broad range of jobs, not just the job in ques-tion. Under the ADAAA, an individual meets the requirement of being“regarded as”having a disability if he or she has been subjected to an unlawful employmentaction because of“an actual or perceived physical or mental impairment whether ornot the impairment limits or is perceived to limit a major life activity.” In other words,if an employee is fired because he or she is perceived to have an impairment, theemployee meets the requirement of being regarded as having a disability under theADAAA. An impairment that is“transitory and minor”is not covered. A“transitoryimpairment”has an actual or expected duration of 6 months or less.

The threshold issue of whether an individual has an ADA disability will no longerbe the focus of most litigation. Instead, it is likely that the focus will be on the indi-vidual’s ability to perform the essential functions of a job and whether the employerhas met its obligations to engage in the interactive process and provide a reason-able accommodation. In addition, there will probably be an increase in“regardedas”litigation, with employees claiming an adverse employment action was basedon an employer-perceived impairment.

FMLA Changes Are HereThe U.S. Department of Labor’s (DOL) new regulations covering the FMLA andaddressing new military family leave entitlements for employees were designed toclarify the requirements that the FMLA imposes on both employees and employersand to improve the communication between employers and employees. Here aresummaries of some of the significant revisions included in the final rules.

Serious health condition. While the rule retains the six individual definitions of“serious health condition,”it adds guidance on some regulatory matters. First, itclarifies that if an employee is taking leave involving more than 3 consecutive cal-endar days of incapacity plus two visits to a healthcare provider, the two visitsmust occur within 30 days of the period of incapacity. The first visit must occurwithin 7 days of the onset of incapacity. Second, it defines“periodic visits to ahealthcare provider”for chronic serious health conditions as at least two visits to ahealthcare provider per year.

Intermittent leave. The final rule clarifies that employees who take intermittentFMLA leave have a statutory obligation to make a“reasonable effort”to schedulesuch leave so as not to unduly disrupt the employer’s operations.

Employee notice. The final rule states that when an employee becomes aware ofa need for FMLA leave less than 30 days in advance, it should be practicable forthe employee to provide notice of the need for leave either the same day or thenext business day. When the need for leave is not foreseeable, an employee mustcomply with the employer’s usual and customary notice and procedural require-ments for requesting leave, absent unusual circumstances.

Gaps in service. The final rule adds a new paragraph that addresses the require-ment that employees are eligible to take FMLA leave only if they have beenemployed by the employer for at least 12 months and have at least 1,250 hours ofservice in the 12-month period preceding the leave. The final rule states that



although the 12 months of employment need not be consecutive, employmentbefore a continuous break in service of 7 years or more need not be counted.

Light duty. Under the final rule, time spent in“light duty”work does not countagainst an employee’s FMLA leave entitlement, and the employee’s right to jobrestoration is held in abeyance during the light duty period. If an employee is vol-untarily doing light duty work, he or she is not on FMLA leave.

Perfect attendance awards. The final rule changes how perfect attendanceawards are treated to allow employers to deny a“perfect attendance”award to anemployee who does not have perfect attendance because he or she took FMLAleave—but only if the employer treats employees taking non-FMLA leave in anidentical way.

Medical certification. In the final rule, DOL adopted a change that allowsemployers to contact the employee’s healthcare provider directly. An employermay contact the employee’s healthcare provider for two purposes only: clarifica-tion and authentication of the medical certification. The employer may request noadditional information beyond that included in the certification form.

In response to privacy concerns expressed by employees, DOL added a require-ment to the final rule that specifies the employer’s representative contacting theemployee’s healthcare provider must be a human resources professional, a leaveadministrator, or a management official, but in no case may it be the employee’sdirect supervisor.

The revision also specifies that the employee is not required to permit his or herhealthcare provider to communicate with the employer. However, if the employeedenies the employer permission and doesn’t otherwise clarify an unclear certifica-tion, the employer may deny the designation of FMLA leave. However, before mak-ing any contact with the healthcare provider, the employer must first provide theemployee an opportunity to resolve any deficiencies in the certification.

Fitness-for-duty certification. The final regulation also clarifies that employersmay require a fitness-for-duty certification to address an employee’s ability to per-form essential job functions. However, if the employer does have such a require-ment, the employer must provide the employee with a list of those essential jobfunctions no later than the“designation notice”and specify in the designationnotice that the fitness-for-duty certification must address the employee’s ability toperform those essential functions.

Military caregiver leave. The regulation implements the requirement to expandFMLA protections for family members caring for a covered service member with aserious injury or illness incurred in the line of duty on active duty. These familymembers are able to take up to 26 workweeks of leave in a 12-month period.

Leave for qualifying exigencies for families of National Guard and reservesmembers. The law allows families of National Guard and Reserve personnel onactive duty to take FMLA job-protected leave to manage their affairs—“qualifyingexigencies.” The rule defines“qualifying exigencies”as: (1) short-notice deploy-ment, (2) military events and related activities, (3) childcare and school activities,(4) financial and legal arrangements, (5) counseling, (6) rest and recuperation,

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(7) postdeployment activities, and (8) additional activities where the employerand employee agree to the leave.

Intermittent leave. As previously mentioned, employees who take intermittentleave for planned medical treatment have an obligation to make a reasonableeffort to schedule such treatment so as to not unduly disrupt the employer’s opera-tions. This is a change from the old regulations. The old regulations said that theemployee had only to“attempt”to do so.

The rules clarify that temporary transfers are allowed for employees taking onlyplanned intermittent leave (the Department declined to expand temporary trans-fers to unplanned, unscheduled, or unforeseeable intermittent leave).

The final rule also clarified that accounting for leave need not be in the smallestincrements that the employer’s timekeeping system can handle, but rather in thesmallest increments the employer accounts for in other types of leave, provided itis not greater than one hour. This is a change from proposed regulations.

The new rules prohibit employers from charging employees for the period of timethat they are working (e.g., stop working ½ hour before end of shift, cannot becharged for 1 hour of leave).

Substitution of paid leave. The rules clarify that an employee’s right to substituteaccrued paid leave is limited by the terms and conditions pursuant to which theapplicable leave is accrued, as long as those terms are nondiscriminatory. Anemployer may limit substitution of paid sick, medical, or family leave to those situ-ations for which the employer would normally provide such paid leave (e.g., suchpolicies may restrict the use of paid leave only to the employee’s own health condi-tion or to specific family members). Employers must allow substitution of paidvacation, personal leave, or“paid time off”for any situation covered by the FMLA.In all cases, however, the normal procedural rules subject to which the leave wasaccrued apply—unless waived by the employer—regardless of the type of paidleave substituted. For example, if an employer’s paid sick leave policy prohibits theuse of sick leave in less than full day increments, employees would have no right touse less than a full day of paid sick leave regardless of whether the sick leave wasbeing substituted for unpaid FMLA leave. Similarly, if an employer’s paid personalleave policy requires 2 days’notice for the use of personal leave, an employee seek-ing to substitute paid personal leave for unpaid FMLA leave would need to provide2 days’notice. Employers, of course, may choose to waive such procedural rulesand allow an employee’s request to substitute paid leave in these situations, butthey are not required to do so. Additionally, employers may choose to waive proce-dural requirements even in the absence of an employee request to do so.

Employer notice requirements. The final rule consolidates all employer noticerequirements into a“one-stop”section of the regulations to clear up some conflict-ing provisions and time periods.

� The new regulations contain a new general notice prototype. If an employerhas no handbook or other written materials, it must provide the general noticeto new employees when they are hired.

� Absent extenuating circumstances, the time frame for an employer to respondto an employee’s request for leave is extended from 2 business days to 5 busi-ness days of the employee’s request for leave or of the employer acquiringknowledge that the leave may be FMLA qualified.



� A list of essential job functions must be provided with the designation notice ifthe employer will require that the fitness-for-duty certification addresses theemployee’s ability to perform the essential functions of the position.

� Only one designation notice is required for each FMLA-qualifying reason perleave year, regardless of whether the leave is taken as a continuous block ofleave or on an intermittent or reduced leave schedule basis.

� In situations in which the amount of leave to be taken is not known at the des-ignation stage (e.g., when unforeseeable intermittent leave will be needed),the employer is to inform the employee of the number of hours countedagainst the FMLA leave entitlement only upon employee request and no moreoften than every 30 days if FMLA leave was taken during that period.

� The employer may notify the employee of the hours counted against the FMLAleave entitlement orally and follow up with written notification on a pay stubat the next payday (unless the next payday is in less than 1 week, in whichcase the notice must be no later than the subsequent payday).

Employer failure to provide notice. The updated rule contains technicalchanges to be consistent with the U.S. Supreme Court’s decision in Ragsdale v.WolverineWorldWide Inc. In light of the Court’s decision in Ragsdale, the Depart-ment stated that an employee isn’t automatically FMLA-eligible just because theemployer fails to provide the required eligibility notices to employees or providesincorrect information. The rule clarifies that if an employee suffers individualharm because the employer fails to follow the notification rules, the employermay be liable.

Military family and caregiver leave. In January 2008, President Bush signed alaw that allows employees to take leave because of any qualifying exigency arisingout of the fact that the spouse, son, daughter, or parent of the employee is onactive duty (or has been notified of an impending call or order to active duty) inthe armed forces in support of a contingency operation. In the new regulations, aqualifying exigency leave is limited to service members called up to duty inNational Guard and/or reserves, and certain retired members of service (not regu-lar career service or state). It mimics the leave provision in 10 USC 101(13)(B)’sdefinition of“active duty.” The rule defines“qualifying exigencies”as: (1) short-notice deployment, (2) military events and related activities, (3) childcare andschool activities, (4) financial and legal arrangements, (5) counseling, (6) rest andrecuperation, (7) postdeployment activities, and (8) additional activities where theemployer and employee agree to the leave.

The new law also allows eligible employees to take up to 26 workweeks for leaveduring a single 12-month period if the employee is the spouse, son, daughter, par-ent, or next of kin caring for a military service member recovering from an injuryor illness suffered while on active duty in the armed forces. Under the new regula-tions for military caregiver leave, the term“active duty”includes members of theregular armed forces (not just Guard/reserves)—this differs for exigency leave.Similarly, for caregiver leave, the term“active duty”is more expansive than for exi-gency leave. Whether or not an injury or illness arose from active duty is a determi-nation to be made by the treating healthcare professional as part of certification.

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#2 Layoffs/Reductions in Force

A layoff is a termination of employment at the will of the employer. It may be tem-porary or permanent and can occur for a number of reasons, including downsiz-ing, changes in market conditions, or new technology.

Worker Adjustment and Retraining Notification(WARN) ActTheWARN Act imposes restrictions on the way layoffs are handled. It is designedto give employees advance notice of the layoff in order to find another job, to seekretraining in a new occupation, and to give state dislocated-worker units adequatepreparation to assist affected workers.

Who must comply with the WARN Act? Employers must comply with theWARN Act if they have:

� 100 or more full-time employees, or

� 100 or more employees, including part-time employees who regularly work atotal of 4,000 hours per week, exclusive of overtime.

The Act defines part-time employees as those who work 20 or fewer hours perweek and temporary employees as those hired with the understanding that theirjobs will end when a specific project ends. Workers on temporary layoff who havea reasonable expectation of recall are counted as employees. An employee has areasonable expectation of recall when he or she understands, through notificationor industry practice, that his or her employment has been temporarily interruptedand that he or she will be recalled to the same or a similar job. In addition, anemployer may have several sites of employment under common ownership orcontrol, yet there is only one“employer”for purposes of the Act.

60 days’ notice. The law requires covered employers to give their affectedemployees 60 days’notice of a“mass layoff”or a“plant closing”that is expected tolast 6 months or longer. Employers must also notify local government officials andtheir state dislocated-worker unit.

When all employees are not terminated on the same date, the date of the first indi-vidual termination within the statutory 30-day or 90-day period triggers the 60-daynotice requirement. A worker’s last day of employment is considered the date ofthat worker’s layoff. The first and each subsequent group of affected employees areentitled to a full 60 days’notice. The point in time at which the number of employ-ees is to be measured for purposes of determining coverage under the Act is thedate on which the first notice is required to be given.

Employers must provide different types of information to employees dependingupon whether they are unionized. Employers must always notify the state. Noticemay be sent by any method designed to ensure receipt at least 60 days before sep-aration, e.g., first-class mail, personal delivery, or insertion of a notice into payenvelopes.



Union employees. If employees are unionized, only the chief elected unionrepresentative must be given notice. The notice must contain:

� The name and address of the employment site where the plant closing or masslayoff will occur, and the name and telephone number of a company officialto contact for further information;

� A statement as to whether the planned action is expected to be permanent ortemporary and whether the entire plant is to be closed;

� The expected date of the first separation and the anticipated schedule formaking separations;and

� The job titles of positions to be affected and the names of workers currentlyholding these jobs.

Nonunion employees. Employees who may reasonably be expected to experi-ence an employment loss and who are not represented by a union must be noti-fied individually in writing. While part-time employees are not counted indetermining if a plant closing or mass layoff had occurred, these workers must geta notice if they will experience an employment loss. The notice must include:

� A statement as to whether the planned action is expected to be permanent ortemporary and whether the entire plant is to be closed;

� The expected date when the plant closing or mass layoff will begin and theexpected date when the individual employee will be separated;

� An indication of whether bumping rights exist;and

� The name and telephone number of a company official to contact for furtherinformation.

State notification. Employers must always notify the state dislocated-worker unitand the chief elected official of the local government unit within which the clos-ing or layoff will occur. The notice must include:

� The name and address of the employment site where the plant closing or masslayoff will occur;

� The name and telephone number of a company official to contact for furtherinformation;

� The nature of the planned action including whether it is a plant closing or amass layoff, and whether it is expected to be permanent or temporary;

� The expected date of the first separation and the anticipated schedule for mak-ing separations;

� The job titles of positions to be affected and the number of employees in eachjob classification;

� An indication of whether bumping rights exist;and

� The name of each union representing affected employees and the name andaddress of the chief elected officer of each union.

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Older Workers Benefits Protection Act (OWBPA)OWBPA, a 1990 amendment to the Age Discrimination in Employment Act(ADEA), prohibits age-based distinctions in the structure and administration ofemployee benefit plans, severance packages, and separation agreements includ-ing in cases of layoffs. The law protects individuals over the age of 40.

Preventing Discriminatory LayoffsEmployers should always avoid unlawful discrimination when considering layoffs.Each layoff decision should be made according to objective, business-related crite-ria and be well-documented. Layoffs following seniority are generally not discrimi-natory under the federal Civil Rights Act.

Outplacement ServicesAs a matter of goodwill, some companies provide outplacement services to laid-off employees. Outplacement counseling is designed to help terminated employ-ees prepare themselves for a new job or a new career, to lend assistance inproviding outside resources, to receive training, and to help employees cope withthe stress of leaving the company.

Outplacement services include assistance in rewriting résumés, job placements,career counseling, conducting employee skill surveys, and providing pre-layoffemployment service registration. Larger organizations may hire outplacementservices to assist employees, whereas smaller organizations may hire a singlecounselor or use existing resources to assist employees. Employers should con-sider providing outplacement services if employees have been working at thesame company for a long period of time and may not have the tools necessary tosuccessfully find another job.

Alternatives to LayoffsThere are alternatives to layoffs that employers can consider:

Work sharing. Work sharing allows employees to share the work that remainsafter some jobs are lost due to adverse economic conditions. Under a work-shar-ing arrangement, employees may work a reduced week or work every other week.Their hourly pay remains the same, but reflects the reduced hours. In some states,the unemployment compensation laws allow employees to collect partial unem-ployment benefits during a work-sharing period.

Reduced pay. A reduction in pay works best if it is shared by all employees,including management. It may be acceptable to employees if their unemploymentbenefits during a period of layoff would be less than the reduced pay.

Early retirement. Some employers reduce their workforce by offering attractiveincentives to employees who are about to reach retirement age. The advantage ofretirement incentives is that they allow employers to cut costs without requiringemployees to leave their jobs involuntarily. However, the employer may lose someemployees it would prefer to keep.



Best Practice: Preserving Employee MoraleThere’s no escaping that the country is officially in a recession, and unfortunatelyfor many businesses, that means having to lay off employees. No one enjoys theprospect of having to tell employees that the company is going to have to let themgo, but it is important to stay well focused at a time like this and make certain thatyou handle the situation the best way you can.

“This is such a tough job for managers to deal with,”says Patricia Berg, generalmanager for the Career Management Services division of Personnel DecisionsInternational (PDI). Clear heads, however, need to prevail when laying people off,says Berg. “You need to take time to plan the layoff carefully and to meet with andprepare your managers for the process. It’s smart to hire a good outplacement serv-ice or career transition firm to help you through the process, and get theminvolved early on.”

Berg and PDI have suggestions for handling the process well. The first is to pro-vide notification training for your managers because this is such a difficult talk.You also need to allow adequate time to prepare for all the necessary contingen-cies, such as:

� Giving as much warning as possible for mass layoffs,

� Conducting a threat assessment to ensure the safety and security of allemployees, and

� Having information prepared in advance to give to employees regarding theirseverance, benefits, outplacement, or other information that will be importantto them.

Berg suggests that after you have put together your plan of action, the next step isto talk with employees. “You want your meetings to be one-on-one as much aspossible, though that doesn’t always work,”she notes. The best idea is to sit downface-to-face, in a private office, with the individual and a Human Resources profes-sional. Acknowledge the employee’s contributions to the company, and thank theemployee for those contributions.

If possible, have your outplacement company or career transition firm on-site tomeet with employees. Explain to the employees the logistics of leaving the com-pany, and make certain that you have clarified the separation date to make surethe news sinks in. Explain to employees the type of services you have available forthem, including any outplacement services that are appropriate for the level of theemployee. You should also provide references for them, if applicable.

A few other general pieces of advice from Berg include:

� Inform employees at the beginning of the workday, rather than at the end ofthe day.

� Treat people with respect.

� Use good listening skills and acknowledge employees’ reactions.

“Survivors.” “You need to be as aware of the people remaining as you are aboutthe people you are letting go,”says Berg. Employers“need to make sure they getinformation to the survivors about how they are supporting their colleagues whohave departed. Then they need to stay very close to these employees in the weeks

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that ensue in terms of focusing on the redistribution of work and redefining rolesand responsibilities. They also need to be there to answer questions and to absorbsome of the emotional impact the employees are feeling.”

The survivors are wondering if there will be another round of layoffs and will theirjobs be the next ones cut. Berg points out that“managers need to be prepared todeal with those questions without making any guarantees. Being there to answerquestions, support the employees, and absorb some of the emotional impactreally helps the survivors work through the process as well.”

TrainingTheWorkforce Investment Act of 1998 (WIA) reformed the federal job training sys-tem by consolidating about 70 federal programs into an integrated whole. Thereformed system is intended to be customer-focused in order to help workersaccess the tools they need to manage their careers and to help employers findskilled workers. WhileWIA is a federal program, it will differ in how it is imple-mented by each state.

The cornerstone of theWIA is the“One-Stop”service delivery system, which isdesigned to make information about and access to a wide array of job training,education, and employment services available for workers and employers at a sin-gle neighborhood location. “Core services”are provided at each One-Stop locationand include:

� Intake and orientation to the One-Stop approach

� An eligibility determination

� Initial assessment of skills and abilities

� Access to job vacancy listings and job search and placement assistance

� Information on providers of vocational rehabilitation activities and access toeligible training providers

� Information on filing for unemployment insurance and availability ofsupportive services

Through the One-Stop approach, employers have a single point of contact to pro-vide information about current and future skills their workers need to possess andto list job openings.

#3 Health Care in 2009

The American economy is in trouble, and many people can’t afford health care.Employers are worried about their ability to compete on the global market whenhealth care is costing them so much. Even before the fall, when some major banksfailed or were bought and the stock market experienced dramatic downswings, amajority of American workers expressed concern about their financial situationsand economic futures, according to the Rockefeller Foundation/TIME survey,Campaign for AmericanWorkers Survey.



Some survey results. When comparing survey results from 2008 to 2007, sev-eral categories illustrated increased problems for workers who participated inthe survey:

� 25% did not go to a doctor because of cost (18% in 2007).

� 23% went without health insurance (20% in 2007).

� 23% did not fill a medical prescription because of the cost (17% in 2007).

For GenerationY (survey respondents between the ages of 19 and 29), the futureseems even more problematic. Of this group, 49 percent said that America was abetter place to live in the 1990s, and 56 percent were worried about their own per-sonal economic security. Also, 79 percent agreed that America was a lot lesssecure or somewhat less secure today than 10 years ago.

“Americans want to work hard and improve their financial situations; 80 percentbelieve they are responsible for their own financial security,”according to the exec-utive summary. Some solutions that survey respondents thought would help themsecure their economic future include:

� The government and employers providing basic necessities such as healthcareor retirement programs (70%)

� New policies and programs that will create jobs (82%)

� Initiatives to provide more access to family health care (77%)

� Support to make it easier for people to work such as more paid family leave(68%) and government-funded child care (66%)

2009 Healthcare TrendsIn the words of Samuel H. Fleet, president and CEO of AmWINS Group Benefits, in anarticle that he wrote for BLR, the country’s job-based system for health insurance istoo entrenched to disappear. The healthcare industry generates about $2 trillion—that’s trillion, with a“T”—in economic activity annually, which means it has a stronginterest in preserving the status quo. That means employers will be forced to continuedown the path of using consumer-directed strategies and cost-sharing plans to escapethe expensive, anticompetitive burden that health benefits have become.

Expect continued pressure on healthcare providers to make their charges more trans-parent so that consumers can make choices based on real-cost comparisons. In addi-tion, Medicare’s recent decision to force hospitals to absorb the cost of opportunisticinfections, caused by pathogens at the hospital that compromise an unhealthyimmune system, should raise consumer awareness of quality-of-care issues.

The bottom line is that one-size-fits-all healthcare plans are a luxury of the past.Employer-provided health benefits will continue to become more customized ascompanies struggle to balance the competitive advantage of offering employeesgood, affordable health care with the increasing drag on their bottom line.

Now, more than ever before, benefits professionals will have to become careful,discriminating shoppers who can sort through sales pitches to identify partnerswho can deliver value-enhanced offerings. What should you look for? Here are afew ideas:

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� Deep discounts don’t add up to much if the underlying prices are inflated.Look beyond the promises of large insurers and examine the track record ofthird-party administrators who are eager for your business. Expect—in fact,demand—a partnership that focuses on synergies that drive down cost whilesimultaneously improving patient care by reducing the inappropriate andoften wasteful use of resources.

� Focus on proactive measures that rein in medical costs, rather than relyingsolely on controlling premium costs. Eighty percent of the average premiumgoes toward paying claims, providing a large target for money-saving strategies.Explore behavior management, such as wellness incentives and educatingemployees about the impact of their choices.

� Demand accountability for claims management. Pharmaceutical and medicalbilling audits can reveal patterns of mistakes and process flaws that can beaddressed to lower costs without affecting the quality of care.

Mental Health Parity Legislation Becomes LawInsurance companies must cover mental and physical illnesses equally under aprovision included in the so-called“bailout”legislation signed into law by Presi-dent Bush (Emergency Economic Stabilization Act, HR 1424). The provision is theculmination of years of effort by legislators to expand on the 1996 Mental HealthParity Act, says Sen. Pete Domenici (R-New Mexico), who co-authored the 1996Act and was a lead sponsor of the current parity legislation. “No longer will weallow mental health to be treated as a stepchild in the healthcare system,”Domenici said. “If you have insurance, then your mental-health care must beequal to the benefits you get for any other disease.”

The new law expands parity to include:

� Deductibles,

� Copayments,

� Out-of-pocket expenses,

� Co-insurance,

� Covered hospital stays, and

� Covered out-patient visits.

Companies with fewer than 50 employees are exempt.

Cutting Healthcare CostsKnowing that healthcare costs will not decrease in coming years, the challenge foremployers becomes learning how to keep the increases to manageable levels.

There are a variety of strategies for cutting program costs. Among these are makingchanges in the areas of plan design, financing, purchasing, vendor management,care management, pharmacy, and retiree medical management. Consider the fol-lowing specific steps in cutting program costs:



HSAs. Many companies are implementing health savings accounts (HSAs), whichare a cost-effective way to co-fund health care. HSAs are designed to help individu-als save for future qualified medical and retiree health expenses on a tax-freebasis.

Network management. Also recommended are high-performance networkswhere experts analyze cost and practice patterns, weeding out from the networkspecialists who cost much more than others. These are specialists who tend toorder more tests and require more doctor visits than others. By removing them, thetotal cost of health care for employers decreases.

Surcharges. Another strategy for cost-cutting is introducing“dependent sur-charges.” These are charges levied by companies to cover employees’workingspouses who could be covered under their own plan. The surcharge creates anincentive for the spouse to switch to his or her own plan.

Volume discounts. Joining a coalition of employers that leverages volume to pur-chase health coverage on a group basis can also help employers reduce costs. Vol-ume purchasing power when negotiating with community providers leads to loweroverall costs.

Consumer-driven health care. In order to curb rising healthcare costs, moreemployers are implementing consumer-driven healthcare plans (CDHPs). Dozensof concepts can hide under the trendy title of consumer-driven healthcare plans,from smoking-cessation, weight-loss programs, and health club memberships tothree-tier pharmacy plans. But here’s a definition offered by theWashington, D.C.-based National Business Group on Health:“Most plans include cost-sharing provi-sions, high deductibles, a health reimbursement account or health savingsaccount (HSA), and tools and resources to help workers become more educatedhealthcare consumers.”

BLR asked Steve Kraus, principal-in-charge of Deloitte Consulting’s Human Capi-tal practice and leader of the study, for his reaction to that definition. He gener-ally agreed with it, stressing that plans vary widely from employer to employer.The core principle, Kraus says, is“enabling employees to understand the true costof healthcare services and the options available to them for receiving care whilerequiring [them] to take on increased financial responsibility for managing theirhealth care.”

These are the basic features, Deloitte Consulting’s Steve Kraus reports, for each par-ticipant in a consumer-driven healthcare plan.

� A fixed annual allowance to cover“wellness benefits”preventive care such asphysical exams and health screenings.

� Enrollment in a high-deductible medical plan, such as a $1,500 deductiblewith coverage by a preferred-provider organization.

� In larger companies, those with at least 1,000 employees, an employer-fundedhealth reimbursement account (HRA), say of $1,000, for use in covering thedeductible.

� In smaller companies, an HSA that acts like a 401(k)-type retirement plan.Employees save their own money, which may be fully or partially matched bythe employer.

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� With either HRAs or HSAs, the employee pays $500 of his or her own moneyfor the rest of the deductible. In theory, participants are more likely to ask ahealthcare provider whether a test or treatment is really necessary or whetherit can be obtained less expensively.

� Unspent funds in both HRAs and HSAs can be rolled over from year to year.

These are other features that either the insurer or the employer may add:

� Third-party-provided pharmacy benefit management

� Disease management, usually by nurse practitioners, for such chronic condi-tions as asthma, diabetes, heart disease, or cancer

� Wellness benefits, such as a gym on the premises, and weight-loss andsmoking-cessation programs

� Behavioral health benefits that especially target depression

Use a variety of methods. Not surprisingly, the experts maintain that no singlemethod will reduce costs dramatically. Rather, implementing a variety of methodscan help employers save money over the long term.

Best Practice: Improve Employee BenefitsCommunicationNinety percent of employers that offer a consumer-directed health plan (CDHP)cited employee communication as their greatest challenge in introducing theCDHP and during the plan’s first year, according to a study conducted byWatsonWyattWorldwide and the RAND Corporation. The study included 42 large employ-ers that offer a CDHP to their workers.

The study found that employers agree that getting employees to enroll in theseplans can be difficult when they also have more traditional health plan options.Employers were most likely to achieve high levels of CDHP enrollment when theydevoted additional time and resources to communication, forced employees tomake an active choice at open enrollment, and offered financial incentives inways that enhanced the appeal of the CDHP, according to the study.

Another challenge that employers face when offering a CDHP is providing workerswith information they need to help make good decisions about healthcare costand quality, according to the study. The study found that employers are generallypleased withWeb-based, out-of-pocket cost calculators for employees. However,they find that specific resources needed to help workers evaluate the cost andquality of care from specific providers are often lacking.

Just 2 percent rated cost information about healthcare providers as excellent,and 5 percent rated it as good. Only 10 percent rated information on the quality ofcare as good, and none rated it as excellent. “Provider cost and quality tools thathelp employees make smart, cost-effective decisions need to be part of the con-sumer-directed health plan package,” says Melinda Beeuwkes Buntin of the RANDCorporation. “Better information tools would promote employee engagement andhelp workers select the health plan that is best for them.”



President Obama’s Future Plans on Health CarePresident Obama proposes a healthcare plan that would require employers tooffer healthcare insurance to employees or pay a percentage of payroll to supporta public healthcare plan. Small employers would be exempt. President Obamawould also give a tax credit to small businesses to encourage them to offer health-care insurance.

All children would be required to have healthcare insurance, and the new presi-dent’s plan calls for subsidies for people who are unable to afford insurance. Presi-dent Obama also has a plan that he says will reduce healthcare costs, including achange to allow Americans to purchase less expensive prescription drugs fromother countries.

Best Practice: Cancer Screening Saves Lives,MoneyC-Change, a national cancer coalition of key leaders from the government, busi-ness, and nonprofit sectors, recently launched an initiative designed to encourageemployers to add cancer prevention and screenings to their health insurance poli-cies and programs. Its white paper, “Making the Business Case for Cancer Preven-tion and Early Detection,”is available in its entirety at www.c-changeprojects.org/MakingTheBusinessCase.

With more than half of Americans covered by health insurance provided throughemployer plans, the costs associated with cancer have a direct impact on business’bottom lines. Cancer is the second leading cause of death in the United States,after heart disease. Proper screenings can prevent cancer and improve outcomeswhere cancer is found. As such, screenings lead to lower costs and, of course, bet-ter outcomes for individuals, families, and businesses.

C-Change says there are four prevention areas that can have the most impact:tobacco-cessation programs, breast cancer screening, colorectal cancer screen-ing, and cervical cancer screening. A study by America’s Health Insurance Plansand the Kaiser Permanente Center for Health Research found that investing intobacco-cessation programs reaps immediate results.

“By investing 18 cents to 79 cents per member, per month, an employer can gener-ate a cumulative savings of $1.70 to $2.20 per member per month after 5 years,”says C-Change. Death rates are reduced by about 16 percent in women over theage of 40 who have mammograms every 1 to 2 years. And the U.S. Department ofHealth and Human Services says that the death rate from colorectal cancer can bereduced by at least 30 percent with regular screening for the disease.

Educating employees about when and why they should quit smoking or bescreened for cancer is important, and there are simple, low-cost ways to do that.Invite a mobile screening unit, such as a mammography van, to come to the work-place. Send reminder cards around employees’birthdays to encourage them to getscreened. Include notices in newsletters, on the company intranet, and in breakrooms about when and why employees should be screened. Offering time off totake advantage of cancer screenings can also encourage early detection.

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Wellness ProgramsThere is little question that employers can have a positive impact on employeebehavior. Done well, employer-sponsored wellness programs have been successfulin helping employees make better choices. Some such activities are full-blown pro-grams. Others are small, finite activities that are part of overall HR and safety. Well-ness programs include:

� Exercise and fitness

� Smoking cessation

� Blood pressure management

� Weight management

� Stress management

� Cholesterol management

� Nutrition

Studies of the wellness plans of 200 companies completed by the AmericanJournal of Health Promotion conclude that the return on investment (ROI) foremployee wellness programs can be as high as 348 percent in 3 to 6 years. Thisfigure certainly suggests taking a closer look at instituting a wellness program ifyou don’t already have one in place at your company.

When wellness programs are not successful, it’s often because there’s a lack of sen-ior management support and/or the original planning wasn’t as comprehensive asit should have been. Senior leadership must communicate the importance of thewellness initiative to employees up front. They should also participate in the pro-gram once it is up and running to set an example for other staff.

#4 Retirement of Baby Boomers

Are you prepared for the retirement of lots of your older workers? Never mindwhether you can find warm bodies to replace them (and even that may be tough),but how will you fill the knowledge gaps left by their departures? There’s beenmuch talk about phased or delayed retirement programs, but two topic expertsprovide a fresh perspective on surviving the brain drain.

Misconceptions on both sides. Alan Bernstein and John Trauth, co-authors ofYour RetirementYourWay (McGraw-Hill, 2006), since publishing their book, haveshifted their focus to include both older employees and their employers. On thelecture circuit, they explain their recommendations, based on a good deal ofresearch, for hanging onto the much-needed knowledge and talent of older work-ers. Employers, they say, have these wrong impressions about older workers:

� Older workers can’t handle the physical demands of their jobs. Intoday’s service and knowledge economy, most employees can do most of thejobs they’ve always done.



� Older workers are just coasting to retirement. In fact, they can be justas—or more—productive than younger workers. Their work tends to be moreaccurate and their decisions more thoughtful.

� Older workers get hurt more often and heal more slowly. Instead,they’re less reckless than younger workers and subject only to repetitive strain,which can be eased.

� Older workers can’t or won’t learn new skills. Instead, they do learndifferently but continue to enjoy chances to learn something new.

� Older workers are short-timers, so not worth the investment. The truthis that they are more loyal, have lower turnover, and have positive work values.

Bernstein and Trauth think they have an effective answer to the looming talentcrunch in which employers won’t be able to find enough workers with the rightkinds of skills to fill needed positions. Here are elements of their program, MORe(Mutually Optimized Renewal), “a new retirement paradigm”for retaining olderworkers.

The first step is to prepare a 5-year plan of business objectives for change andgrowth, including the employee skills that will be needed to get from here to there.Next, assume that all workers aged 59 or over now will retire before the end of the5 years. Do any have skill sets and/or institutional knowledge that will be essentialto keep? The answer is likely yes, and Human Resources should approach thosepeople to discuss their retirement needs and wishes.

Bernstein and Trauth see real problems with the phased retirement programs somelarge employers have used:There’s low enrollment, too-brief tenure, and failedmentoring processes. The authors believe the reasons are that older employees areburned out from doing their current jobs, they’ve not thought enough about whatthey want out of work and life in the future, and they haven’t been properlytrained for mentorship. What should happen, Bernstein and Trauth advocate, isthat chosen older workers take a 1- to 6-month sabbatical to assess their needs andwishes. That renewal break should be accompanied by completing a reliable per-sonality profile that reveals the kinds of work they like best and what job aspectslead to stress. Based on those activities, the worker and the employer togetherstructure a new, part-time job tailored to the worker’s personality and interests.

The other part of the bargain is the one or more mentoring relationships that willaid the organization in transferring the older worker’s skills and knowledge tofuture leaders in the firm. Not only should the potential mentor be thoroughlytrained in how to carry out the responsibility but the personalities and interests ofpotential mentees should be carefully assessed to find the right match or matchesfor the mentor.

Survey: Few Employers Capture BoomerKnow-HowOnly one quarter of large organizations are making an effort to transfer knowledgefrom retiring Baby Boomers to other employees, according to a survey of 2,046Human Resources executives by Novations Group, a global consulting and train-ing firm based in Boston.

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The survey found that just 4 percent of respondents said they have created a for-mal process to pass on know-how, while 23 percent report doing so informally.Twenty-nine percent of respondents said that while they currently have no processfor transferring knowledge from retiring Baby Boomers to other employees, theyplan on developing one. Forty-four percent of employers said they have no processand have no plans to develop one.

Transitioning into RetirementAccording to a recent survey by AXA Equitable Life Insurance Company, there is adisconnect between how you view the next step in the retirement process andhow employees view it. In fact, they’re waiting for you to help them with the transi-tion into retirement.According to Bill McDermott, executive vice president at AXA(www.axa-equitable.com), “71 percent of the employees we surveyed said theybelieve it is their employer’s responsibility to prepare them for retirement.

“People have three critical decisions to get ready for retirement,”says McDermott.“The first is to save; the second is to invest, and the third is the distribution—howyou’re going to live off of your savings.” Most companies are doing well at helpingemployees with the first two by providing a plan, encouraging saving, educatingabout investments, and even matching contributions. But when it comes time tothink about the third decision, many companies are lacking.

How to help employees near retirement prepare. There are several thingsnear-retirees need to think about during the last few years of their working life. Youcan access tools through organizations such as AARP, the company that providesyour retirement plan administration, or via the Internet. Many are low- or no-cost.AARP recommends that people start by thinking about how they want their retire-ment to look. The organization’s self-assessment tool, Retirement Roadmap, isavailable online (www.aarp.org) and leads people through a variety of questionsin a dozen categories designed to guide the process. The answers help theemployee think through possibilities and learn how much money those possibili-ties might take. AARP also suggests starting early to determine how much moneyto expect from Social Security and from the corporate plans. You can make thateasier by providing benefit statements regularly.

How to invest retirement funds. One of the critical decisions employees mustmake when retiring is how to invest their retirement nest egg so it will last their life-time. HR can take steps in the right direction without having everything figured outat once.

� Assess how you are doing in preparing employees to live off their retirementsavings;

� Contact your retirement administrator and ask if it can provide a speaker for abrown-bag lunch for employees over age 50;

� Make sure employee benefit statements are provided regularly;and

� Ask employees what they need from you.



Predicting the Future of Retiree Health CareEducating employees may be the most important thing you can do to help themplan for retirement health costs, says Robert Schmidt of Milliman. He expects thatan unmarried employee retiring at age 60, with an initial insurance premium costof $227 per month (subsidized by a generous employer) and assuming an opti-mistic health cost trend of 8 percent per year, can expect to need $205,000 for thepurchase of health insurance if he or she lives to age 85. That’s a present value of$95,000 using a 5 percent discount rate.

Of course, for married people, or those retiring from an employer that doesn’t sub-sidize part of the cost of coverage, the amount would be substantially more. Thatmeans retirement savings are more important than ever before. “Plan to just chopoff $100,000 of your retirement savings to pay for health care,”Schmidt advises.

Not only do employees and retirees need education about the cost of health insur-ance, they also need to be on board with wellness and disease management initia-tives, says Schmidt.

In a recent survey, Kaiser and Hewitt asked companies sponsoring retiree healthbenefits about their future plans. In the Kaiser/Hewitt Survey on Retiree HealthBenefits, the highest percentage of respondents pointed to changes in their plandesigns that will mean increased costs to retirees. For example, 80 percent saidthey will likely increase retiree premium contributions; 40 percent will increasecost-sharing requirements; 36 percent are likely to increase drug co-pays or coin-surance; and 30 percent will increase out-of-pocket limits. Fortunately for retirees,just 2 percent said they are likely to terminate all subsidized health benefits forcurrent retirees.

Robert Schmidt believes early retirees are more likely to maintain some form ofemployer-sponsored benefits. “I’m seeing a trend,”he says. “If companies are goingto provide retiree health care, they’re providing it to early retirees, and letting post-65 retirees go on their own. There are so many more options for them now.”

Persuading Older Workers to Stay:Is It the Money that Matters?The Employee Benefit Research Institute (EBRI) asked workers who had retired in2003 or later about company policies, practices, and incentives that would haveencouraged them to delay retirement. The 4,981 respondents worked in the aero-space and defense industries and at the time of the survey, were between the agesof 55 and 65. Most (79 percent) were men, and 83 percent were married whenthey retired.

Just ask. Nearly two-thirds said they would have seriously considered an offerfrom their employer asking them to stay on.

You need me? Almost half (48 percent) of the retirees said that if they had felttruly needed for an assignment, that would have been extremely or very effectivein encouraging them to delay retirement.

Money please. However, money does enter the equation. Half of the respondentswho had a defined benefit pension plan said that if they had been able to receivea full pension and still work part time, it would have been effective in getting them

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to delay retirement. A partial pension had the same effect for 44 percent of respon-dents. EBRI points out, however, that this would require a change in federal law.

Other compensation-related incentives may be almost as compelling, withoutrequiring legal changes. One-third of the retirees said that a pay increase wouldhave been an effective way to get them to stay, with 56 percent ranking it amongthe top two incentives. And nearly half (46 percent) said that they would beencouraged to continue working part time if the company continued to subsidizetheir health insurance benefits at the same level as full-time workers.

Communicate early. If you’d like to encourage workers to stay with you a littlelonger, start your efforts early. According to the EBRI survey, the timing of the offeris important. Almost two-thirds (63 percent) of the survey respondents said thatthe offer would have been much more effective if they had known about it in the2 years before they communicated their intention to retire.

Succession Planning to Fill the Baby Boomer GapEmployers rightly fear the aging of the workforce and the significant“brain drain”many companies will experience as Baby Boomers begin to retire. Companiesmust plan not only for staffing needs at the top of the company, but must also iden-tify and plan for future human capital needs at all levels—planning for the futuregrowth and success of the company. If the company is not prepared and has notinvested in its key employees, when the need to fill a position arises, the companywill likely find itself paying top dollar to attract talent from outside the organiza-tion in a fierce competition with other public and private employers.

Study the demographics. Early in the process, it is important to analyze the cur-rent workforce. Is brain drain going to present a significant problem for the com-pany, and if so, when and in what areas or jobs? Knowing when and where therewill be key vacancies or a need to replace accumulated skills and knowledge willhelp focus on future needs, as well as current vacancies when new employees arerecruited and hired.

Link strategic goals with human capital needs. Identify the talent, skills, andexperience the company will need over the next 5 to 10 years in order to achievegoals and continue to be successful. This will include the knowledge, skills, abili-ties, experience, education, core competencies, and even personality traits thatwill be needed to fill top management positions and other positions that will beessential to the company’s long-term success.

Senior management must play a role. Human Resources managers need toinvolve senior managers in the planning process so that succession planning andthe development of employees are adopted as strategic goals. Senior managementwill be more likely to participate in the process if it is linked to the long-term strate-gic goals of the company.

Succession planning as a retention strategy. In a highly competitive labor mar-ket such as the one predicted over the next 10 years, a working succession plancan have a significant impact on staff retention. Employees who feel the companyis making an investment in their development and career planning are more likelyto be committed to the organization long term.



Measuring success. One way to keep the focus on succession planning anddeveloping employees is to track and measure the success of the plan at thedepartment and company level. One way to do this is through the use of metricsand another is to make sure managers are evaluated on how well they implementthe plan. Suggestions include:

� Measuring the total number of open positions identified as key positions in thesuccession plan that were filled by high-potential employees.

� Using 360-degree reviews for evaluating the mentoring process by having thementor evaluate the employee and vice versa.

Integrating a Multigenerational WorkforceAs your“Radio Babies”(approximate ages 62 to 77) and Baby Boomers (roughlyages 43 to 61) retire or begin to phase out, Generation X (ages 30 to 42, give ortake) simply can’t fill all the workforce gaps:That cohort is too small. So, despiteproblems your older staffers may think they’ve had in adjusting to Gen X, you’d bet-ter get ready to hire GenYs. They’re the biggest cohort since the Boomers, andyou’re going to need them. How do you cope?

In order to increase the amount of workplace interaction among employees of dif-ferent ages, consider taking some of the following action steps:

� Establish a series of mentor relationships that pair older workers with youngerones; encourage pairs to meet at least monthly for a year or more to work oncareer goals set by the younger workers.

� Create focus groups of mixed generations to brainstorm ideas about achievingcompany objectives.

� In populating ongoing project teams, strive for age diversity as well as diversityof levels, race, and gender in addition to appropriate functional and depart-mental representation.

� Make it easy for older workers to obtain either in-house or external training innew technologies or methodologies. Pair older workers with younger workerswho may have more experience with new technologies.

#5 Recession Help

Across the nation, employers find it nearly impossible to ignore dropping revenuesand profits. A recent study by consulting firm Hay Group found that more than 30percent of respondents are freezing or planning to freeze base salaries, with halfthat number doing so for all employees. And some 20 percent will either freezeworkforce size or conduct layoffs in the near future. Respondents also reportedthey will change training and development programs (28 percent), change health-care benefit plans (27 percent), or change retirement savings plans (20 percent).

Furthermore, another survey done by Career Protection predicts a 37 percentincrease in layoffs this year compared to last, making this year’s forecast the worst

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in 5 years. Survey respondents were nearly 1,400 corporate executives nationwide.And DOL reported that the U.S. economy scuttled 80,000 jobs last March, boostingthe unemployment rate to 5.1 percent from 4.8 percent. BLR subscribers have toldus they’re considering such moves as suspending their company’s 401(k) matchand whether they should warn employees that layoffs may be necessary.

There’s a big contradiction here. The same Hay Group respondents who saidthey were considering layoffs and benefit reductions also said that their number 1concern about the recession was how to retain and motivate their top performers.Clearly, then, employers have conflicting needs: they feel pressure both to cutcosts, with human capital usually being the biggest drain on expenses, and also tohang onto the talent they really need.

Manny Avramidis, senior vice president of Human Resources for the AmericanManagement Association (AMA), advises organizations to cope with the possibilityor the reality of recession in several ways. Avramidis points out that a rising rate ofunemployment doesn’t necessarily mitigate the war for talent;many availableworkers lack the skills that employers seek. After all, you’re not just looking forwarm bodies. And, companies tend to be leaner than in past recessions becauseof outsourcing, global mergers and acquisitions, and layoffs they may have con-ducted in the early 2000s. “Companies should approach this downturn by continu-ing to invest in human capital,”says Avramidis.

The first step in preparedness is a vibrant and accurate performance assessmentprocess that identifies where every employee stands in terms of the organization’sgoals, the employee’s contributions, and where he or she may need to improve.That process will inform both front-line supervisors and HR pros about the keyplayers in the company, as well as who’s in line for important positions in terms ofsuccession planning.

Avramidis has been through at least one other recession, the one that began in2001, in his tenure with AMA. He firmly believes that layoffs should be“resisted”because talent is so scarce that if a firm downsizes, it may not be able to rallywhen the recovery comes. The foundation of his approach to this recession iscommunication. “Be transparent,”he advises. Not only do employees need theirindividual feedback from the company’s performance management system butthey also need to know virtually everything that top management knows about theorganization’s ongoing results.

Armed with that information, employees need to be engaged in developing strate-gies for the corporate response. Are there less profitable product lines that shouldbe dropped, or should marketing efforts at least be cut back for them? Do workershave ideas about redundant processes or other kinds of activities that could beeliminated to save money?

Given detailed and up-to-date information on their employer’s financial results,employees will be more prepared for news of layoffs should they be necessary.However, Avramidis suggests that employers go further by explaining beforehandexactly what will happen if layoffs are conducted. Are they expected to be tempo-rary or permanent?Will outplacement services and/or severance packages beprovided to those laid off?What services will be available for those not laid-off—the survivors?



In addition, Avramidis recommends that the first candidates for layoff be chosenbased on where they work in the organization. That is, target first the employees inless-profitable lines of business or activities the company may eliminate. Eventhen, don’t let a top performer go simply because he or she is in the wrong line ofbusiness. Then, if a second layer of jobs may need to be cut, shift the focus towhere employees stand in terms of their performance.

In order to resist layoffs, should employers take such preliminary measures asfreezing salaries and/or reducing such benefits as healthcare coverage or retire-ment plans? Avramidis is reluctant to endorse such moves, because they penalizeall employees the same way rather than differentiating among them based on theirperformance and their organizational roles. “Don’t force out your best peoplebecause they can no longer afford to stay with you,”he cautions. Only an employerthat has developed significant credibility and employee loyalty may be able to getaway with such across-the-board penalties, Avramidis believes. “Do your best toprotect your most valuable human capital,”he concludes.

Best Practice: Mandatory Vacations at HPCompanies caught between a need to cut costs and a desire to avoid layoffs areturning increasingly to forced vacations, according to the Christian Science Monitor.These employers reduce their employees’work hours by asking them to take vaca-tions that are either paid or unpaid, depending on the company’s financialcircumstances. “I’m advising companies that it’s an excellent idea,”says BruceKatcher, president of The Discovery Group, a Boston-based consulting firm. “Theadvantage for the organization is that you still keep people around for when busi-ness turns around. And you’re telling employees that you still want them to be avital part of your organization, that you’re committed to them.”

Work slowdowns and subsequent cuts in employees’workweeks are nothing newin the manufacturing sector. Yet experts tell the Monitor that this recession marksthe first time a wide variety of businesses, both large and small and from many dif-ferent sectors of the economy, have used employees’ time as a cost-cutting tool.

Hewlett Packard (HP) asked its employees last April to voluntarily take an addi-tional 6 days of paid vacation time off before the end of the fiscal year in October.In June, it asked them to voluntarily forfeit some earned vacation time, take asmall pay cut, or do a combination of the two through the end of the fiscal year.And in December, HP closed all of its offices for a week at Christmas, whichincluded 3 days off with no pay.

HP tells the Monitor that 95 percent of its workforce joined in the June cost-cuttingmeasure, saving the firm $130 million. The other measures also saved an undis-closed sum of money on two fronts. First, closing saved HP the cost of keepingoffices open. Second, asking employees to take paid vacation time—instead ofrolling it into another year—helped in accounting terms because paid vacation isa funded liability that carries over from year to year on the company’s books.

Experts say the key to successful implementation of a time-off cost-cutting meas-ure is in how it’s communicated to workers. The plan needs to be presentedclearly, in advance, with assurances that the company is committed to its staff.

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Best Practice: Teach Workers Economics 101Amid all the bad economic news, some companies are giving their workers crashcourses in basic economics and personal finance, so they will understand thetough decisions managers must make these days.

One such employer, the Outokumpu American Brass factory in Buffalo, NewYork,is showing that giving employees the big picture can bolster their morale and evenproduce bigger profits, according to The NewYork Times. The factory was almostshut down in 1984 because of flagging sales and labor unrest. Local investorsbought the plant and quickly turned it around. However, in 1990, they sold it toOutokumpu Oyj, a Finnish mining and metals conglomerate.

Outokumpu had given the local investors a healthy profit, and it knew that itwould have to raise workers’productivity over the long haul to make the invest-ment pay off. One way to do that:Teach workers the economic and financialbasics of the company’s markets. When company-hired instructors from CornellUniversity’s School of Industrial and Labor Relations arrived, they found a highlevel of hostility toward Outokumpu.

The workers“saw it as us against them, a takeover by this evil foreign company,”recalls Lou Jean Fleron, the school’s director. However, the Cornell instructors per-sisted and ended up teaching on everything from the impact of technology on theworkplace and the dynamics of international competition to the intricacies of cor-porate income statements and the factors that influence the pricing of commodi-ties. Before long, workers were seeing connections between the classroomdiscussions and their working conditions. After learning about manufacturingcosts in other countries, for instance, they came away with a more sophisticatedunderstanding of how their own wages were set.

Benefits and Retention Strategies in a RecessionThe impact of current economic conditions is being felt in the workplace. In abreakout session at the 21st Annual Benefits Forum & Expo held in National Har-bor, Maryland, HR and benefits professionals were given some valuable tips forretaining and engaging their workers during tough economic times.

In the face of slow growth, that some organizations would take measures such asa reduction-in-force (RIF) is understandable, explains George Lane, principal atMercer, and an RIF will have a near-term impact on the bottom-line. However, youmust be careful not to lose valuable people that“you’ll need when you start upagain,”he explains.

According to Mercer’s 2008“Report on Human Capital Management for SlowGrowth Times,”employers should:

� Be looking for new ways to generate sustainable reductions in benefit costsusing innovative strategies that do not adversely affect perceived value;

� Implement creative, highly-targeted strategies to recruit and retain the optimalworkforce for long-term success;and

� Communicate often and honestly to employees to bolster flagging engagementand productivity.



Lane asserts that you should be doing these three things all of the time, but arecession underscores the importance of such actions.

Maia Lucier, director of compensation and benefits for Dimension Data, a globalspecialist IT services and solutions provider, explained how her company hasadded no- and low-cost ways to beef up its benefits in creative ways while continu-ing to strive to attract and retain talent against the backdrop of a troubled econ-omy. Lucier emphasized the importance of frequent and effective communicationto employees when it comes to their benefits, noting that the extent to whichemployees value and understand their benefits package impacts job satisfactionand loyalty to the organization.

With this in mind, Dimension Data has leveraged its relationship with a financialadvisor from its 401(k) plan, asking him to participate in new monthly“ThinkFinancialWellness”conference calls for employees. These 30-minute conferencecalls were created to address economic uncertainties for employees and consist ofthe following:

� A 10-minute recap of recent economic developments (in plain English),

� A 10-minute interpretation of“what does this mean for me,”including retire-ment and personal financial planning implications, and

� 10 minutes of Q&A.

Dimension Data is also providing health expense communications for employees,such as an“around the office”feature in its monthly newsletter. This feature pro-vides a profile of an employee and might explain, for example, how he or shesaved money by using mail order drugs. Showing how a specific employee utilizeda benefit program that saved him or her money is much more effective than justexplaining the benefit, Lucier has found.

The company has also created“What you should know as a Dimension Dataemployee”webcasts which communicate to employees by promoting learning anddevelopment opportunities, showing them how they can utilize their benefits tothe fullest extent, and communicating Dimension Data’s 401(k) investment reviewprocess and due diligence (something more employees ask questions about dur-ing tough times).

Lucier also avidly supports the use of total compensation statements. She says thatby providing detailed information regarding the value of their benefits, you maybe able to hold onto valuable employees who would otherwise be tempted to takea job elsewhere for a small base salary increase.

Finally, in terms of communication, Dimension Data has a“Leading Talent”pro-gram for its line managers. Dimension Data wants their managers to have the abil-ity to manage the relationship between the employee and the company. In thisprogram, managers are taught how they can help attract, engage, develop, andretain talent for high performance. They are also educated about company bene-fits so that they can communicate benefits value to employees.

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#6 Immigration

Immigration was a hot topic in the recent presidential primaries and national elec-tion, and complying with immigration laws continues to be a challenge in HumanResources management.

No-Match LettersThe Immigration Reform and Control Act of 1986 (IRCA) makes it illegal for anemployer to knowingly hire or to continue to employ an individual who is or maybecome an unauthorized alien. On August 15, 2007, the Department of HomelandSecurity (DHS) issued regulations that defined the term“knowing”to mean havingactual or constructive knowledge. In a no-match letter, the Social Security Admin-istration (SSA) or DHS informs an employer that the name and Social SecurityNumber (SSN) reported for an employee or the immigrant status or employmentauthorization documents do not match their records. A“no match”does not meanthat an individual is undocumented, but it could, in certain circumstances, consti-tute constructive knowledge that an individual is undocumented.

DHS regulations set out steps that an employer may take after receiving a no-matchletter from DHS or SSA. If these steps are followed, an employer may avoid beingconsidered as having constructive knowledge that a particular individual is anunauthorized alien based on a no-match letter from one of these agencies.

Regulations on hold. A federal district court judge has barred SSA from sendingno-match letters on the grounds that DHS exceeded its authority in issuing the reg-ulations. The bar will last at least until there is a full trial on the question or theorder is reversed by a higher court. On November 23, 2007, DHS filed a motionasking the judge to suspend this case so that it could rewrite the regulation toaddress the court’s concerns, including conducting a survey of the impact of theregulation on small business.

Regulations reproposed. In response to the lawsuit and the court order, DHShas issued a supplemental proposed rule that leaves the August 15, 2007, regula-tions intact. The preamble to the supplemental proposed rule includes an analysisof DHS’s authority to issue the regulation and an analysis of the impact of the regu-lation on small business intended to address the court’s concerns. The preambledoes clarify that the obligation of an employer to provide prompt notice to anaffected employee after the employer has completed its internal record checksand has been unable to resolve the mismatch will ordinarily be satisfied if theemployer contacts the employee within 5 business days after completing its inter-nal records review. In addition, DHS has made it clear that the regulation does nothave application to no-match letters that reference employees hired beforeNovember 6, 1986, because the statutory bar against continuing to employ unau-thorized workers does not apply to such employees.

The Suspended/Reproposed No-Match Letter Regulations

The status of the no-match letter regulations will likely be resolved by a finalcourt ruling either barring DHS from implementing the reproposed regulationor that the reproposed regulations do address the court’s concerns and may go



into effect. The following is an analysis of the reproposed regulation that DHSplans to implement.

Safe harbor. The DHS regulations provide that by taking“reasonable steps”afterreceiving a no-match letter, the no-match letter may not serve as the basis for find-ing that the employer has constructive knowledge that an individual is workingillegally. The DHS regulations set out the specific steps that, if taken, are automati-cally deemed to be such reasonable steps and provide the protection of a“safeharbor”from liability for violating IRCA based on a no-match letter.

Note: Employers may come upon information that an SSN might be invalid inother ways—for instance, if two or more newly hired employees have the same orconsecutive numbers. In such situations, employers should also follow the safe-harbor procedure. However, knowledge that an employee is unauthorized mustnot be inferred from an employee’s foreign appearance or accent.

Procedures for Avoiding Liability

To qualify for the safe harbor, an employer must follow the procedures set out inDHS regulations. The procedures, while similar, vary somewhat depending onwhether the no-match letter came from SSA or DHS.

SSA No-Match LetterAfter receiving a no-match letter from SSA, employers should do the following:

Step 1—SSA No-Match Letter

� Check the employer’s records immediately to see whether the discrepancy wascaused by a typographical, transcription, or similar clerical error in theemployer’s records or in the employer’s communication to the SSA.

� If there are no typographical, transcription, or similar clerical errors, move onto Step 2 immediately.

Warning: Time is critical because if the employee confirms that the recordsare incorrect, the deadline to correct them is 30 days from receipt of the no-matchletter.

If there is a typographical, transcription, or similar clerical error:

1. Correct the records;

2. Inform the SSA;

3. Verify with the SSA that the discrepancy has been resolved;

4. Make a record of the manner, date, and time of the verification (this includesdocumentation of telephone conversations, correspondence, computer-gener-ated printouts, e-mails, and Social Security NumberVerification System screenshots);and

5. Store the record with the employee’s Form I-9.

In the safe harbor. If these five steps are completed within 30 days of receipt ofthe no-match letter, the employer qualifies for the safe harbor.

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� If the discrepancy is not resolved by following the procedures in Step 1, notifythe employee promptly (ordinarily within 5 business days after completing theinternal records review) of the no-match problem and request that theemployee confirm that the employer’s records are correct.

� If the employee confirms that the records are not correct, take the followingsteps within 30 days of receipt of the no-match letter:

1. Take the actions needed to correct the records;

2. Inform the SSA;

3. Verify with the SSA that the discrepancy has been resolved;

4. Make a record of the manner, date, and time of the verification (thisincludes documentation of telephone conversations, correspondence,computer-generated printouts, e-mails, and Social Security NumberVerification System screen shots);and


In the safe harbor. If these five steps are completed within 30 days of receipt ofthe no-match letter, the employer qualifies for the safe harbor.

� If the employee confirms that the records are correct, ask the employee to pur-sue and resolve the matter personally with the SSA within 90 days of receipt ofthe no-match letter. (Be sure to give the employee the date by which this mustbe completed.) The employee may pursue the matter by visiting a local SSAoffice and bringing original documents or certified copies required by SSA,such as documents that prove age, identity, citizenship or alien status, andother relevant documents, such as proof of a name change, or mailing thesedocuments or certified copies to the SSA office, if permitted by the SSA.

� The employer should then take the following steps to verify the employee’sinformation with the SSA:

1. Verify with the SSA that the employee’s name matches the numberassigned to that name in the SSA’s records;

2. Make a record of the manner, date, and time of any such verification, as theSSA may not provide any documentation. (This includes documentationof telephone conversations, correspondence, computer-generated printouts,e-mails, and Social Security NumberVerification System screen shots);and


In the safe harbor. If these three steps are completed within 90 days of receipt ofthe no-match letter, the employer qualifies for the safe harbor.

Note: Employers may verify an SSN with SSA by telephoning toll-free 800-772-6270weekdays from 7 a.m. to 7 p.m. EST. For information on SSA’s online verificationprocedure, go to www.ssa.gov. Employers should make a record of the manner, date,and time of any such verification, as SSA may not provide any documentation.



If the discrepancy is not resolved within 90 days of receipt of the no-match lettereither by the employer correcting the mistaken records or the employee pursuingand resolving the matter with SSA, the employer should move on to Step 3.


If the discrepancy is not resolved within 90 days of receipt of the no-match letter,the employer should complete a new Form I-9 for the employee as if the employeewere newly hired, except that no document containing the SSN that is the subjectof the no-match letter may be used, and no receipt for an application for a replace-ment of these numbers may be used to establish employment authorization, oridentity, or both; and no document without a photograph may be used to establishidentity or both identity and employment authorization. If a new I-9 is not com-pleted within 93 days of receipt of the no-match letter, the employer should termi-nate the employee.

In the safe harbor. If the new I-9 is completed or the employee is terminatedwithin 93 days of receipt of the no-match letter, the employer qualifies for the safeharbor.

DHS No-Match LetterAfter receiving a no-match letter from DHS, employers should do the following:

Step 1—DHS No-Match Letter

After receiving a no-match letter from DHS, employers should do the following:

� Contact the DHS and attempt to resolve the discrepancy within 30 days;

� Verify with the DHS that the employee’s name matches the number assigned tothat name in the DHS records, or verify the authorization with the DHS thatDHS records indicate that the immigration status document or employmentauthorization document was, indeed, assigned to the employee;

� Verify with the DHS that the discrepancy has been resolved;

� Make a record of the manner, date, and time of the verification (this includesdocumentation of telephone conversations, correspondence, computer-generated printouts, e-mails, etc.);and

� Store the record with the employee’s Form I-9. You have now completed theprocess.

In the safe harbor. If these steps are completed within 90 days of receipt of theno-match letter, the employer qualifies for the safe harbor.

If the discrepancy is not resolved within 90 days of receipt of the no-match letter,move on to Step 2.

Step 2—DHS No-Match Letter

If the discrepancy is not resolved within 90 days of receipt of the no-match letter,the employer should complete a new Form I-9 for the employee as if the employeewere newly hired except that the alien number that is the subject of the no-matchletter and no receipt for an application for a replacement of these numbers may

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be used to establish employment authorization, or identity, or both; and no docu-ment without a photograph may be used to establish identity or both identity andemployment authorization. If a new I-9 is not completed within 93 days of receiptof the no-match letter, the employer should terminate the employee.

In the safe harbor. If the new I-9 is completed or the employee is terminatedwithin 93 days of receipt of the no-match letter, the employer qualifies for thesafe harbor.

Antidiscrimination Guidance for EmployersFollowing the No-Match Letter Safe HarborProcedureThe U.S. Department of Justice (DOJ) Civil Rights Division’s Office of Special Coun-sel for Immigration-Related Unfair Employment Practices (OSC) has issued guid-ance for employers explaining how to avoid being charged with discriminationwhile following the safe-harbor procedure. If an employer follows all of the safe-harbor procedures outlined in DHS’s no-match rule but cannot determine that anemployee is authorized to work in the United States, and, therefore, terminates thatemployee, and if that employer applied the same procedures to all employees ref-erenced in the no-match letter(s) uniformly and without the purpose or intent todiscriminate on the basis of actual or perceived citizenship status or national ori-gin, OSC will not find reasonable cause to believe that the employer has violatedthe INA’s antidiscrimination provision. On the other hand, an employer thatreceives an SSA no-match letter and terminates employees without attempting toresolve the mismatches, or treats employees differently or otherwise acts with thepurpose or intent to discriminate based on national origin or other prohibitedcharacteristics, may be found by OSC to have engaged in unlawful discrimination.

OSC is required to investigate charges of discrimination and determine whetherthere is reasonable cause to believe that the charge is true. OSC may, on its owninitiative, also conduct investigations of unfair immigration-related employmentpractices. The guidance document notes, however, that it is OSC’s long-standingpractice to examine the totality of relevant circumstances in determining whetherthere is reasonable cause to believe that an employer has engaged in unlawful dis-crimination. OSC will not act on an allegation of discrimination by an employer inapplying the safe-harbor procedures until it determines that the alleged victim isan authorized worker who is protected from discrimination. Employers that canshow that they followed the safe-harbor procedure uniformly and without intend-ing to discriminate won’t be subject to discrimination charges by OSC.

Federal Contractors Must Now Use E-VerifyEffective January 15, 2009, many federal contractors and subcontractors arerequired to use the E-Verify system to verify their employees’eligibility to legallywork in the United States. The Federal Acquisition Regulation (FAR) has beenamended to implement Executive Order 12989 as amended on June 6, 2008,directing federal agencies to require that federal contractors agree to electroni-cally verify the employment eligibility of their employees (48 CFR Subpart 22). Theamended regulations require federal contractors to agree, through languageinserted into their federal contracts, to use E-Verify to confirm the employment



eligibility of all persons hired during a contract term, and to confirm the employ-ment eligibility of federal contractors’ current employees who perform contractservices for the federal government within the United States.

Federal contracts awarded and solicitations issued after January 15, 2009, mustinclude a clause committing government contractors to use E-Verify. The sameclause is also required in subcontracts over $3,000 for services or construction.The final regulation is designed to lighten the burden on small businesses thatdecide to accept federal contracts and provide contractors with flexible meansof complying with the basic requirement that all persons working on federalcontracts be electronically verified.

Contract requirements. Covered contracts must include a clause that requiresfederal contractors to:

� Enroll as federal contractors in E-Verify;

� Use E-Verify to verify employment eligibility of all new hires working in theUnited States;

� Use E-Verify to verify employment eligibility of all employees assigned to thecontract;and

� Include these requirements in subcontracts for commercial or noncommercialservices, except for commercial services that are part of the purchase of acommercially available off-the-shelf (COTS) item (or an item that would be aCOTS item, but for minor modifications), performed by the COTS provider,and are normally provided for that COTS item; and construction.

Enrollment and verification requirements. If the contractor is not enrolled asa federal contractor in E-Verify at the time of contract award, the contractor must:

� Enroll within 30 calendar days of the contract award;

� Verify all new employees within 90 calendar days of enrollment and begin touse E-Verify to initiate verification of employment eligibility of all new hireswho are working in the United States, whether or not assigned to the contract,within 3 business days after the date of hire; and

� Initiate verification of each employee assigned to the contract within90 calendar days after the date of enrollment or within 30 calendar daysof the employee’s assignment to the contract, whichever is later.

If the contractor is enrolled as a federal contractor in E-Verify at the time ofcontract award, the contractor must:

� Either initiate verification of all new hires who are working in the UnitedStates, whether or not assigned to the contract, within 3 business days after thedate of hire if the contractor has been enrolled for 90 days or more or within90 calendar days after enrollment as a federal contractor in E-Verify, or

� Initiate verification of each employee assigned to the contract within 90 calen-dar days after the date of contract award or within 30 days after assignment tothe contract, whichever is later.

Coverage. The federal contractor E-Verify requirement applies to prime contractsthat exceed $100,000, but does not cover those that:

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� Are only for work that will be performed outside the United States;

� Have a period of performance of fewer than 120 days;

� Are only for COTS items;

� Are only for items that would be COTS items, but for minor modifications;

� Are only for items that would be COTS items if they were not bulk cargo;or

� Are only for commercial services that are part of the purchase of a COTS item(or an item that would be a COTS item, but for minor modifications), per-formed by the COTS provider, and are normally provided for that COTS item.

Exception from requirement to verify all new hires. A contractor maychoose to verify only new hires assigned to the contract if the contractor is:

� An institution of higher education,

� A state or local government or the government of a federally recognizedIndian tribe, or

� A surety performing under a takeover agreement entered into with a federalagency pursuant to a performance bond.

Option to E-Verify all employees. Contractors may elect to verify employmenteligibility of all existing employees working in the United States who were hiredafter November 6, 1986, instead of just those employees assigned to the contract.In such as case, the contractor is not required to verify employment eligibility of:

� Employees who hold an active security clearance of confidential, secret, ortop secret;or

� Employees for whom background investigations have been completed andcredentials issued pursuant to Homeland Security Presidential Directive(HSPD) 12.

The contractor must initiate verification for each existing employee working in theUnited States who was hired after November 6, 1986, within 180 calendar days ofenrollment in the E-Verify program, or notification to E-Verify Operations of thecontractor’s decision to exercise this option, using the contact informationprovided in the E-Verify program memorandum of understanding (MOU).

Enforcement. A contractor must comply with the requirements of the E-Verifyprogram MOU for the period of performance of this contract. DHS or the SSA mayterminate a contractor’s MOU and deny access to the E-Verify system if the MOU isviolated. In such case, the contractor will be referred to a suspension or debar-ment official. During the period between termination of the MOU and a decisionby the suspension or debarment official, a contractor is excused from the enroll-ment and verification requirements. If the official decides not to suspend or debarthe contractor, the contractor must reenroll in E-Verify.

Individuals previously verified. A contractor is not required to perform addi-tional employment verification using E-Verify for any employee:

� Whose employment eligibility was previously verified by the contractorthrough the E-Verify program;



� Who has been granted and holds an active U.S. government security clearancefor access to confidential, secret, or top secret information in accordance withthe National Industrial Security Program Operating Manual;or

� Who has undergone a completed background investigation and been issuedcredentials pursuant to HSPD 12, Policy for a Common Identification Standardfor Federal Employees and Contractors.

#7 Privacy and Identity Theft

The increased role and use of computers in the workplace has presented employ-ers with an entire set of new problems to worry about in the form of privacy issues,identity theft, and security breaches.

PrivacySeveral states have enacted statutory or constitutional provisions guaranteeingtheir citizens the right to privacy from certain intrusions. In the absence of a stateconstitutional provision or existing law, however, private employees enjoy relativelylittle freedom from workplace intrusion. Therefore, private employees must look tocommon or judge-made law to find privacy protections. There are essentially fourcommon-law privacy claims available to private employees. These are:

1. Intrusion into an individual’s private solitude or seclusion. Anemployee may allege this form of privacy invasion when an employer unrea-sonably searches (e.g., a locker or desk drawer) or conducts surveillance (e.g.,dressing rooms) in areas in which an employee has a legitimate expectation ofprivacy. An employer’s improper questioning of an employee (e.g., sexualhabits or orientation) may also give rise to this type of claim. Under this claim,the employer’s intrusion into the employee’s private affairs must involve a gen-uinely private matter and must also be of such a nature that a reasonable per-son would deem the intrusion to be“offensive.”

2. Public disclosure of private facts. An employee may claim this form of pri-vacy invasion when an employer publicly discloses private and arguablyembarrassing facts about an employee to a wide audience without his or herpermission. In order to sustain such a claim, however, an employee must beable to show that the information was genuinely private, the employer’s publi-cation of the information was offensive by reasonable standards, and theemployee suffered a resulting injury.

3. Portraying an individual in a false light. Under this theory, if an employerattributes a false or offensive conduct or characteristic to an employee that isnot true (e.g., criminal activity), the employee may claim invasion of privacy.

4. Use of an individual’s name or likeness. When an employer uses anemployee’s photograph, likeness, or attributes specific statements to anemployee without his or her permission, an individual may have a validmisappropriation claim (e.g., the employer publishes an employee’s

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photograph or likeness on company brochures without first obtaining theemployee’s consent).

New Federal Privacy Law Barring Genetic BiasThe new Genetic Information Nondiscrimination Act (GINA) protects the confi-dentiality of individual genetic information. Under the law, “genetic information”isdefined to include information about an individual’s genetic tests, genetic testsof family members, and a disease or disorder in the family. GINA applies to bothinsurers and employers.

Group and individual health insurers are prohibited from using genetic informa-tion to determine insurance eligibility. Increasing an insurance premium based ongenetic information is also prohibited.

GINA prohibits employers from discriminating against employees or applicants basedon genetic information. The law applies to all public employers, private employerswith 15 or more employees, employment agencies, and labor organizations.

Both insurers and employers are prohibited from requesting or requiring individu-als to undergo genetic testing. However, an employer can collect information tomonitor the biological effects of toxic substances in the workplace if: (1) writtennotice is given to the employee; (2) the individual gives written informed consentin advance or the monitoring is required by law; (3) the individual receives theresults; (4) the monitoring is in compliance with federal or state regulations; and(5) the employer receives only aggregated monitoring results without informationabout specific individuals. There are other exceptions, including one for bona fidewellness programs that protect individually identifiable information.

GINA also has confidentiality requirements. Any genetic information that anemployer lawfully possesses must be treated as a confidential medical record.GINA’s requirements for confidentiality are the same as the requirements under theAmericans with Disabilities Act (ADA). Therefore, if employers comply with theADA’s confidentiality requirements and keep medical information on separateforms and in separate medical files, they’ll be in compliance with GINA.

Covered employers should update their nondiscrimination policies to reflectGINA’s provisions. In addition, requests for information from healthcare providersshould be reviewed to avoid obtaining genetic information from care providers.Specific language that reminds the provider not to send genetic information canbe added, depending on the type of request. The law’s provisions for insurers takeeffect in June 2009 and for employers, in November 2009.

Employer Procedures for Handling AddressDiscrepancies on Consumer ReportsUnder the federal Fair and Accurate Credit Transactions Act of 2003 (FACTA)(15 USC 1681c), two rules dictate how employers must handle address discrepan-cies on consumer reports.

Section 113 applies to all employers. When providing a consumer report to anemployer (or any consumer report user), a nationwide consumer reportingagency (CRA) must provide a notice of discrepancy to the employer if the address



provided by the employer in its request for the report“substantially differs”fromthe address CRA has on file. All employers must develop and implement policiesand procedures for verifying the identity of the consumer when there is an addressdiscrepancy. These policies and procedures could include:

� Verifying the address with the consumer about whom it has requested thereport

� Verifying the consumer’s identity in accordance with the requirements of theCustomer Information Program (CIP) rules

� Reviewing the employer’s own records (such as applications, change ofaddress notifications, customer account records, or retained CIP documenta-tion) to verify the address of the consumer

� Verifying the address through third-party sources

� Using other reasonable means

After reconciling the address, an employer must send a confirmed address back toCRA if the following three conditions are met:

1. The employer has formed a reasonable belief that the consumer is in fact thesame person as the person identified in the consumer report;

2. The employer has a continuing relationship with the consumer;and

3. The employer regularly and in the ordinary course of business providesinformation to CRA.

FACTA Section 114 contains additional requirements for financial institutions andcreditors. Financial institutions and creditors must also develop and implement awritten Identity Theft Prevention Program that is designed to prevent and mitigateidentity theft by detecting and responding to red flags that indicate there may beidentity theft occurring in one or more of a company’s accounts (15 USC 1681m).

Identity TheftThe Federal Trade Commission (FTC) estimates that as many as 9 million Ameri-cans have their identities stolen each year. Identity theft has been the fastest grow-ing crime in the United States for the past 3 years, according to the FTC, whichpredicts that in 5 years, the majority of Americans will have been victimized byidentity theft.

Much of the identity theft that occurs in the workplace happens when employeessteal personal information of the company’s co-workers, customers, or clients viatheir employer’s computer system. Identity theft also threatens enterprise security,enabling corporate espionage and fraud, and theft of hard assets and intellectualproperty. Large scale or frequent identity thefts also result in significant negativepublicity, impacting sales, partnerships, and employee recruiting and retention.Therefore, employers need to carefully control access to employee and customerfinancial information (via password protection); carefully control the transferof such information; and carefully control the destruction and/or recycling ofcompany documents.

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Employers also suffer other significant costs when their employees experienceidentity theft. Conservative calculations based on current identity theft figuresindicate that an employer with 1,000 employees, who make an average salaryof $40,000 per year, should expect to incur productivity losses of more than$600,000 per year.

Employers who are concerned about identity theft hire outside consultants toperform a“penetration test”to assess the security of their computer systems.Such consultants will try to hack into your computer system (and will most likelysucceed) and in doing so, will discover your weak points and help you fix them.

Identity Theft Law Requires Employer Compliance

A provision of FACTA states that any employer whose action or inaction results inthe loss of employee information can be fined by federal and state governmentand sued in civil court. An employee is entitled to recover actual damages sus-tained if his or her identity is stolen because of the employer’s inaction or statutorydamages up to $1,000. Employees may also bring class action suits against employ-ers for actual and punitive damages. In addition, federal fines of up to $2,500 peremployee and state fines of up to $1,000 per employee also may be levied.

Protection as an Employee Benefit

One solution that provides an affirmative defense against potential fines, fees, andlawsuits is to offer some sort of identity theft protection as an employee benefit.An employer can choose whether to pay for this benefit. The key is to make theprotection available and have a mandatory employee meeting on identity theftand the protection you are making available, similar to what most employers dofor health insurance.

Most Workers Trust that Employers ProtectPersonal InfoEighty-eight percent of employees are confident their company protects their per-sonal information from identity theft, according to a survey by the American Pay-roll Association. The online survey asked respondents:“How confident are you thatyour employer adequately protects your vital personal information from databreaches/identity theft?”Nearly 40,000 of the 45,180 respondents indicated theywere either confident or very confident that their employer adequately protectstheir personal information.

When choosing the best alternative for protecting your employees and your com-pany from identity theft, consider the four types of protection available:

1. Computer protection. Antivirus, antispyware, wireless security, etc.

2. Guidance on protecting against a variety of exposures of personal datafrom shredding documents, to opting out of marketing databases, to trackingdata in Social Security, driver’s license, medical, and financial databases

3. Credit monitoring at varying levels of frequency, sometimes with alertservices in the event of credit inquiries or changes



4. Insurance coverage, sometimes including assistance with identity recoveryactivities

A common theme to all of the“state of the art”issues discussed in this section isthe balance between a company’s interest in operating a profitable and safe work-place and the employee’s interest in maintaining his or her privacy in an increas-ingly public world.

When formulating policies that balance the employer’s interest with theemployee’s interest in privacy, consider the following suggestions:

� Create appropriate notifications to employees about what you will monitorand when you will have the right to search or conduct surveillance. Dissemi-nate your policies frequently to reduce employees’expectations of privacy.

� Tell employees specifically how you will protect their personal healthinformation.

� Adopt a“minimum necessary”standard for monitoring, searching, or collect-ing medical information. Avoid using a baseball bat if a flyswatter wouldaccomplish what you want. If you’re concerned only about computer visits toporn sites, say so, and don’t penalize people who shop online unless you notelow productivity.

� Implement other safeguards, beyond those for personal health information,to protect personal information such as Social Security numbers, homeaddresses, and other data that can be used in identity theft.

� Train your supervisors and managers to abide carefully by your privacypolicies. For example, remind them not to disclose a subordinate’s medicalcondition to co-workers or other supervisors without the employee’s expresspermission. Tell them to ask Human Resources should questions arise.

� Review not only federal privacy protections but also, more importantly, thelaws particular to the states where you do business.

State Data Breach Notification Laws

Most states now have laws requiring employers to give notice to affected residentsin the event of a security breach. This is important in the context of HR recordsbecause these records often contain the personal information these laws aimto protect.

Providing notice under these security breach laws is both time consuming andexpensive. One way employers can help prevent identity theft and unauthorizedaccess to confidential records is encryption software. Many state security breachlaws provide an exception for records that have been encrypted, or renderedunreadable. The cost of purchasing and installing this type of software may saveemployers many headaches down the road.

State data breach notification laws started in California, as so many trends,legal and otherwise, do. When most of us were just beginning to worry aboutidentity theft, California passed a“breach of security”law. It required any businessor industry that collects personal information about individuals to notify allaffected individuals if it learns that those data have been stolen or accessed byan unauthorized person.

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Although California’s law was passed in 2002, most other states didn’t begin enact-ing similar legislation until 2005 or later. There was a much-publicized trigger: Earlyin 2005, Georgia-based ChoicePoint confessed that it had inadvertently sold dataon approximately 145,000 U.S. consumers to Nigerian thieves during the secondhalf of 2004. But the company, which conducts background checks and drug testsand verifies identity and credentials for thousands of people, followed the onlybreach of security law that existed then—California’s. Individuals around that statewhose data had been stolen were individually notified. That got the attention oflegislators in other states, who have been rushing ever since to put their own notifi-cation laws in place.

These statutes cover companies that maintain confidential data containing per-sonal information, including an individual’s name accompanied by, for instance, aSocial Security number, driver’s license number, credit or debit card or financialaccount information, and access code or password. Once the firm is aware thatsuch data are no longer secure, it must determine whether there is a reasonablepossibility that the data will be misused. If that’s possible, the company must notifyall affected state residents as promptly as possible.

In most states, notice must be given in writing, by telephone, or, if that’s the way thefirm usually communicates with the consumer, by e-mail. Many statutes providethat if the number of individuals involved makes the notification overly burden-some, or the firm doesn’t have enough consumer contact information to handle thetask, other media can be used—usually e-mail, posting on the company’s website,and notice in major statewide media.

#8 The Green Movement andCorporate Social Responsibility

While corporate social responsibility (CSR) plays an increasing role of importancein companies today, incorporating“green”environmental assurance functions intoCSR programs will be a focus in 2009.

Commuter Benefits Bring Financial andEnvironmental ReliefWhile the definition of the word“green”has expanded in recent decades, if youprovide your employees access to commuting benefits, you’ll actually be usingtwo definitions of the word:You’re helping keep the environment cleaner, andyou’re putting some cash back in employees’wallets. Larry Filler, president andCEO of TransitCenter, Inc., says that you can provide commuter benefits at littlecost, which goes a long way toward environmental and employee relations goals.

TransitCenter (www.transitcenter.com) has been around for about 22 yearsand was originally intended as a way to reduce congestion in NewYork City.“There was a lot of driving coming into the central business district of NewYork,Manhattan really. We were looking for an incentive to get people to commute.”



The program evolved from transit vouchers of $15 per month to include otherforms of commuting benefits, and from transportation only in and around NewYork City to cities across the entire United States.

Along with its role as an advocacy group for commuter benefits, TransitCenter isalso a provider. TransitChek is the name of their nationally available program.“There are two basic parts of the commuter benefit,”says Filler. “There is thetransit/vanpooling benefit, which is a tax-free amount up to $120 a month thatemployees can use to pay for expenses associated with either transit or vanpool-ing. The other part is commuter parking. Parking is set at $230 a month tax-free, tocover the cost of commuter parking”[dollar amounts for 2009].

If you’re wondering why the parking benefit, which after all, encourages peopleto drive, is set at a higher limit than is the transit/vanpooling benefit, Fillerexplains the history. Originally, the parking benefit was unlimited and there wasno transit benefit. By 1993, the cap on parking was set at $155, and the transitbenefit was $60 per month. The disparity continues, even as the figures areadjusted for the cost of living.

“We’ve tried to narrow the gap,”says Filler. “We’ve been working the last 2 or 3 yearswith various members of Congress to equalize the benefits to promote transit overdriving.” In the meantime, though, the allowable uses of the parking benefit arebroader than you might expect. “It includes not only parking at a facility at or neara location where an employee works, but also it includes parking at a facility fromwhich an employee commutes by transit, vanpools, or carpools. That is a result ofour hope to support transit and ridesharing.”

Study on commuter benefits. Many Americans are concerned about the highcost of gas continually inching upward, as well as global warming and how com-muting by car contributes to the problem. Perhaps that’s why tax-free commuterbenefits have risen to the number one new benefit that employers are planning toadd to their employee benefits program, according to a recent study.

The 2007 Commuter Impact Survey results state that the percentage of employersplanning to add the benefit grew from 5 percent of respondents in 2006 to 17 per-cent in 2007. This survey of HR professionals throughout the United States at the2007 Society for Human Resource Management’s annual conference also reportedthat in major U.S. metro markets, the number of employers offering tax-free com-muter benefits has grown from 28 percent in 2006 to 44 percent in 2007.

Want to Attract More Generation Y Job Candidates? Go Green!

According to an April survey conducted by Experience, Inc., a provider of careerservices for college students and alumni, “84 percent of GenerationY individualsare actively concerned about the climate crisis—and many say the green move-ment relates to their career choices.” Other highlights from the survey include:

� Eighty-one percent of respondents said it is important to work for a greencompany—meaning they are green-friendly, green-conscious, or green-certified.

� Seventy-nine percent reported that they would be more likely to accept a joboffer at a green company over another company when evaluating two similarjob offers.

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GenerationY respondents also noted that they wanted more green productoptions (20 percent) and wanted more education about actions they could take tohelp the green movement (19 percent). Also, 16 percent said they need to be bet-ter educated about the issues.

Corporate Social Responsibility and EthicsAfter the recent publicity about the ethics and social responsibility of banks, bro-kerage houses, and mortgage corporations, companies will find these topics ofincreasing importance.

Employees Continue to Criticize Leaders’ and Staff’s EthicalBehavior

According to the Ethics Resource Center’s (ERC) 2007 National Business Ethics Sur-vey® (NBES) released at the end of November 2007, “Six years after high-profile cor-porate scandals rocked American business, there has been little if any meaningfulreduction in the enterprisewide risk of unethical behavior at U.S. companies.”

The ERC conducts a survey every 2 years of U.S. public and private companyemployees; there were almost 2,000 for the last survey. According to the surveyreport, “More than half (56 percent) of employees surveyed had personallyobserved violations of company ethics standards, policy, or the law. Many saw mul-tiple violations. More than two of five employees (42 percent) who witnessed mis-conduct did not report it through any company channels.”

Why Ethics Programs Fail and How to Help Yours Succeed

Lack of leadership buy-in, limited resources, and a misconception that certaindecisions are solely business issues are among the common problems that derailworkplace ethics programs, says Dr. Patricia Harned, ERC president. Harned saysthe generally accepted definition of an effective ethics and compliance programencompasses six key components outlined in the Federal Sentencing Guidelines,used by federal judges to evaluate whether a company has an effective program inplace:

1. Written standards of ethical workplace conduct

2. A way for employees to report ethical misconduct anonymously

3. Ethics training for all employees and board members

4. A specific office, telephone line, e-mail address, or website where employeescan ask ethics-related questions

5. Evaluation of ethical conduct as part of employees’ regular performanceappraisals

6. Discipline for those who commit ethics violations

In a recent study by ERC and the Society for Human Resource Management, “TheEthics Landscape in American Business,”only 23 percent of HR professionals indi-cated that their companies have implemented a comprehensive ethics and com-pliance program, and 7 percent said their organization did not have such aprogram. Harned offers a few tips to help HR and ethics professionals worktogether to promote an effective program:



� Make sure the program is well implemented. Provide training and tailorthe ethics message to different segments of the workforce. For example, seniormanagers need to understand that they set the tone for the entire organization;supervisors need to reinforce management’s ethics message; and nonmanage-ment employees should understand the company’s standards and theresources available to them.

� Focus on the culture. Only 43 percent of HR professionals in the surveyreport that their organizations include ethical conduct in employees’perform-ance appraisals, but Harned says such accountability drives compliance.“What gets rewarded, gets done.” In addition, she says managers and supervi-sors can reinforce ethical conduct daily. For example, if employees ask hardquestions during a staff meeting, managers can thank them for their courage.In cases where employees cut corners, she recommends making sure othersunderstand that such behavior is not acceptable.

Establish a Code of Ethics

For senior management and HR executives of many small companies, it may seema formidable task to undertake the development of a code of ethics. However, con-structing one may have long-lasting, positive effects on the business culture in yourorganization. It may also enhance your employees’dedication and commitment totheir work and positively influence their behavior in the workplace.

A code of ethics illustrates for customers, employees, and the community yourorganization’s expectations for corporate conduct. The code of ethics becomesthe game plan from which employees can develop appropriate business strategies,and managers can implement work policies and procedures.

The basis for the code of ethics should be the standard to which the organizationaspires to reach and wishes to be measured against. For example:

Our organization will put its customers first in respect to bothservice and the quality of the products that we sell.

A code of ethics can be specific—denoting purposeful, detailed statementsrequiring adherence on the part of management and employees. Or, it can bemore general. For example:

We will respect every customer and every employee as a val-ued and equal individual with whom we interact every day,regardless of the rank of the employee or the amount of thecustomer’s business that we can expect to fulfill. We will standbehind the quality and value of the products that we produceand will be honest and forthright in our communication withcustomers, employees, and the community.

One helpful resource that can be used by employers in developing their own codeof ethics was developed by the U.S. Department of Commerce nearly a decadeago. This document encourages businesses to“adopt a code of conduct for doingbusiness around the world.” The basic principles suggested by the Departmentwere the following:

� Provision of a safe and healthy workplace

� Fair employment practices, including avoidance of any type of discrimination

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� A maintained responsibility for environmental protection and practices

� Compliance with laws promoting good business practices and ensuring faircompetition

� Maintenance of a corporate culture that respects free expression consistentwith legitimate business concerns and does not condone political coercion inthe workplace; that encourages good corporate citizenship and makes a posi-tive contribution to the communities in which the company operates; andwhere ethical conduct is recognized, valued, and exemplified by all employees

Promoting the code. The CEO may introduce the new company code of ethicswith great fanfare to all staff at an employee meeting, and HR may post it in promi-nent areas throughout the firm’s location(s). After the initial introduction of thecode, it should be presented to all new employees during employee orientation,or even to employment candidates during the recruitment and interviewingprocess. Senior management should require that each employee review the codeof ethics and sign a statement that requires him or her to agree to follow the code.

Reviewing the code. Once a code of ethics has been put into place, HR execu-tives and senior leadership should review the code on an annual basis and solicitemployee feedback with a mechanism such as an anonymous employee survey ordiscussion facilitated by an outside objective resource. Such practices allowemployees to share their experiences with adhering to the code of ethics and theirobservation of other employees and managers regarding their ethical behavior.

Adjustments and changes to the code may be implemented as necessary to reflectany changes in the firm’s structure, business strategies, or in response to changesin the business environment. In addition, regular conversation about the codeshould be commonplace in department meetings and ongoing employee training.A code of ethics should not be a statement that is developed and put on the shelf.It should become a living document that is followed every day.

Other statements on ethics. In addition to an ethical code, employers may wishto integrate ethics standards into other company messages and policies. The fol-lowing are some other ethical messages your company might want to communi-cate in company publications, handbooks, and training and orientation sessions:

� All company stakeholders (employees, management, stockholders, vendors,etc.) share the common goal of delivering the highest quality product or serv-ice on time and on budget.

� Individuals are responsible and accountable for their actions and behavior asthey relate to colleagues and the organization as a whole.

� Fairness is a company focus requiring commitment and cooperation amongall interest groups.

� Illegal, immoral, and questionable behavior in the workplace will not be tolerated.

� Good manners and respect for all other employees and customers areexpected at all times.

It is important to note that just saying that the company is committed to highethical standards isn’t enough; the standards must be communicated frequently,clearly, and consistently.



#9 HR Metrics

Metrics are not unique to the HR profession. They are used in almost every area ofbusiness, in government, and in education. A metric is simply a way to measureand track key performance indicators. In education, the key metric is often stu-dent performance on standardized tests, which is then used to drive educationalpriorities to improve performance on the next round of tests.

In Human Resources, metrics are used to measure and track the performance of acompany’s largest investment, its investment in human capital. More to the point,HR metrics measure the performance of a company’s investment in hiring, train-ing, and retaining employees.

What to MeasureDeciding what to measure is very important. Metrics should be tied directly to thebusiness issues facing the company. These might include a need to cut costsbecause of price competition, improve customer satisfaction, or develop newtechnology to keep pace with competitors.

To be effective, the metric should not just report results, but should show a causeand effect relationship. In addition, to the extent possible, the HR professionalshould try to use formulas, ratios, and language commonly used by the organiza-tion’s other business leaders. For instance, ROI, or return on investment, is univer-sally understood in the business world. A company’s investment in human capital(its employees) is usually its largest investment. And the HR professional needs totake the lead in identifying where these resources can best be allocated to meetthe company’s goals and how to hire, develop, and retain the human capital thecompany needs to stay competitive now and in the future.

A good metric is one that provides decision makers with the data needed to makefact-based decisions. One example of a metric is measuring turnover in an organi-zation. It is helpful to know what percent of the total number of employees left thecompany during the year. However, it is probably more useful to know how manyof those people left voluntarily as opposed to those who left involuntarily.

When choosing what to measure in your organization, consider the following:

� Use data that are readily available and can be gathered at regular intervals.

� Use the ratios, formulas, key performance measures, and language used bybusiness leaders.

� Include measures of results and don’t limit the focus to costs.

� Tie metrics directly to the key challenges facing the business and the resultsthat must be achieved.

� Use only metrics that add value in making decisions.

� Keep it simple. Metrics don’t have to be complicated.

� Identify and compare results to key competitors whenever possible.

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� Measure ROI, cost/benefit ratios, and impact on problems identified by busi-ness leaders.

� Avoid soft metrics based on feelings or intuition about a program, and usehard metrics or data to drive fact-based decision making.

Types of Metrics Available to HRMetrics generally measure one of the following:

� Increased job performance (e.g., new recruiting program resulted in newemployees with first year job performance ratings that are 30 percent higherthan under the old program)

� Return on investment (e.g., new commission plan resulted in $100 ofincreased sales for each additional commission dollar paid)

� Impact of a program on revenue

� Decreased costs

A potentially endless number of metrics are available to the HR professional. Thekey is to pick metrics that focus on key issues and tell the story. It may be that aseries of single metrics when viewed together tell the story better than a singlemetric examined in isolation.

Following are some of the metrics the HR professional may want to consider foreach functional area of human resources:

Metrics for the Recruiting Function

The recruiting or employment area is focused on hiring the employees the organi-zation needs to meet its goals. Measurements include:

� Time to fill a vacancy

� Quantity and quality of applications based on recruiting source

� HR cost per hire

� Voluntary turnover rate of new hires during first year of employment

� Percent of new hires performing above average by the end of the first year

� Percent of new hires performing below expectations by the end of the first year

� Involuntary turnover rate during the first year of employment

� Satisfaction of managers with the hiring process based on survey of hiringmanagers

� Quality and retention rates of new hires by recruiting source

� Diversity ratios of new hires

In most cases, no single metric will adequately gauge the performance of therecruiting function. Rather, some combination of the metrics listed above alongwith others created by the organization will provide the information necessary tomeasure performance and effectiveness. The use of several individual metrics to



measure a function is often referred to as an HR scorecard and will provide amore complete story of how the recruiting function is meeting goals.

Metrics for the Employee Relations Function

The employee relations function is different from the other HR functions in that itis a little harder to quantify. However, if the employee relations professionals aredoing the job right, the company should see fewer lawsuits and complaints filedwith state agencies, lower settlements when complaints are filed, and better out-comes when there are performance issues and/or conflicts in the workplace.

Some of the metrics that can be used to measure employee relations include:

� Number of complaints filed by employees

� Percent of complaints that proceed to a state agency, court, or other externaldispute resolution

� Amount of time taken to resolve an internal complaint

� Percent of cases resolved with no money paid out by the company

� Percent of cases where large financial settlements or awards were made

� Breakdown of the types of complaints made by employees by department(e.g., sexual harassment, race)

� Costs associated with employee relations as percent of total operating costs

� Percent of cases where documentation was inadequate

� Number of sexual harassment complaints

� Number of complaints of unfair treatment

� Number of hours spent on training managers on employee relations issues

� Data from employee surveys on various employee relations issues such asunderstanding of policies

� Dollars spent on attorney’s fees

� Dollars spent on attorney’s fees as a percent of total employee-relations costs

As with recruiting, companies will probably want to use some combination ofthese metrics as their employee relations dashboard. Comparisons from year toyear will help evaluate the effectiveness of the employee relations function.

Metrics for Compensation Programs

Compensation programs are all about the numbers and, as a result, metrics arerelatively easy to apply. Measurements may include:

� Compensation costs per dollar of profit

� Compensation costs per dollar of revenue

� Analysis of performance and production levels of employees paid in thetop 30 percent of their salary range

� Total compensation costs as a percent of total company operating costs

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� Analysis of compensation levels to the marketplace and key competitors

� Forecast compensation needs based on future plans

� Compensation mix, meaning fixed salaries versus performance-drivencompensation

Metrics for Training Programs

Training is another area that can be difficult to quantify. However, it may be help-ful to look at metrics that target the type of training and what it was intended toaccomplish.

For instance, metrics for training programs can include:

� Cost of sales training as a percent of total sales

� Increase in hours of sales training compared to increases in sales

� Changes in performance levels of employees who received training

� Percentage of employees that cite lack of training or advancement as a reasonfor leaving

� Identification of key employees and percent that have received training

� Percent of performance appraisals that include training goals for employees

Strategic AlignmentThe role of HR is changing as fast as technology and the global marketplace. Histor-ically, the HR department was viewed as administrative overhead. HR processedpayroll, handled benefits administration, kept personnel files and other records,managed the hiring process, and provided other administrative support to the busi-ness. These functions were viewed as administrative necessities but not as integralparts of the core business. Today, many of these old administrative functions havebeen automated and/or outsourced. The positive result of these changes is that HRprofessionals have the opportunity to play a more strategic role in the business.

Business leaders focus on revenue, profit growth, market share, new products,and increasing capacity. These can all be measured using metrics that describethe current situation, compare current numbers with previous years’ or with acompetitor’s position, and quantify goals and measure progress. By measuringthe current situation compared with quantifiable goals, business leaders makedata-driven decisions. In order to be a business leader, the HR professional mustutilize a similar approach to decision making, one based on data and facts. Deci-sions related to the allocation of resources, technology purchases, successionplanning, hiring and retention, training, employee performance, compensationprograms, and outsourcing HR functions can all be based on data compiledthrough the use of appropriate metrics.

Measuring Your ResultsDon’t forget that the quality of results is as important as quantity or cost. CalculateROI whenever possible to make the business case for HR. Use metrics to identify



trends and head off problems on the horizon. Don’t be afraid of data or of measur-ing results. Metrics can add to the HR professional’s credibility and garner supportfor HR programs.

#10 Communications

In most instances, when employees are asked what they like least about their jobs,they will cite a problem with communication. In fact, in BLR’s 2007 NationalEmployee Attitudes Survey (NEAS), participating organizations across the boardwere rated lowest on questions related to communication, while at the same time,employees who took the survey said communication was very important to them.Because communication is a very important factor in employee satisfaction andengagement, making sure the right information is communicated effectively isvery important to human resources professionals and managers.

It is important to understand what types of information employees feel they aren’tgetting. It might be that employees don’t have a good understanding of what isexpected of them or how they fit in the organization. In other cases, it might bethat management does not provide employees with information about how theorganization is doing or the direction in which it is heading. Employees might feelthey aren’t well compensated because they don’t have any information on thevalue of benefits and their total compensation package. They might feel they arenot being acknowledged for their hard work. Another problem area related tocommunication is how conflict is handled in the workplace, which requires aunique set of communication skills.

Effective communication is the foundation of positive and cooperative working rela-tionships. Good communication benefits the workplace in many ways, including:

� Improving the flow of vital information

� Improving employee morale by making sure employees know what isexpected and what the rewards are for a job well done

� Serving as the basis of effective teamwork

� Ensuring accountability in a department because all employees know who’sresponsible for what

� Providing greater consistency, because all employees have gotten the samemessages about procedures and work rules

� Leading to better quality because mistakes are avoided

� Improving productivity

Tools for Better CommunicatingIt is important to consider your audience when you determine what communicationtools you will use to communicate a certain piece of information. Do all of youremployees have access to e-mail? Are all of your employees on-site? Do some of youremployees work only on specific days? Do some of your employees have jobs on the

48

line that prevent them from attending meetings? Keeping these things in mind, thereare a variety of methods for enhancing communication in the workplace.

Intranet. A company intranet is a great place for posting information on a varietyof topics for employees, particularly if most employees have a computer. For thoseemployees without a computer, consider having one or a few computers, depend-ing on the number of employees without computers, centrally located and avail-able for employees to check the intranet.

Company newsletter. Company newsletters are a great way to communicatechanges, successes, and important information to your employees. Traditionallyprint newsletters are still used, but more and more companies are leaning towardelectronic newsletters to either replace or supplement their print newsletters. Elec-tronic newsletters are less expensive and information can be dispensed in almostreal time if needed. Newsletters can be published daily, weekly, monthly, etc. Onceagain, it is important to make sure all employees have access to newsletters distrib-uted electronically.

Meetings. Meetings are an effective way to bring employees face-to-face, which isparticularly appreciated when the news is good and the purpose of the meeting isto show employees they are valued. Meetings are also a good forum for allowingemployee questions or discussion on a topic and for obtaining employeethoughts, concerns, and ideas. Meetings can be companywide, or held at thedepartment, team, or individual level, depending on the nature of the informationto be communicated. Meetings can be a difficult method of communication whencertain employees are unable to leave their post—for example, employees work-ing on an assembly line or on a customer service hotline.

Telephone and conference calls. Telephones and conference calls are effectivetools for communicating with individuals or groups of employees who are notpresent at the worksite. If materials or printed information will be distributed at ameeting, arrangements will have to be made to ensure access to the material forthose participating by phone.

Web conferencing and webinars. Web conferencing and webinars allowemployees to hold live meetings or presentations over the Internet. Employees cansit at their computers at different office locations and attend aWeb conference.This type of conference can be very effective when members of a team are work-ing at different locations, or for those employees who telecommute.

E-Mail. E-mail is an easy way to disperse information to a large group of people atonce. Unfortunately, the overuse of e-mail can make employees feel isolated, lack-ing face-to-face contact. In addition, many people consider e-mail to be a casualform of communication and don’t take the time to make sure the information theyintend to convey is actually conveyed. Often, a short, succinct e-mail is interpretedby the reader as a sign that the sender is unhappy. Because neither the sender northe recipient of the e-mail can see or hear the other, there are no cues that wouldhelp them interpret the message. For this reason, the sender of an e-mail musttake care to consider how the message might be received and whether it is betterdelivered in person or by telephone.

Bulletin boards. Well-organized and up-to-date bulletin boards are an effective,convenient, and inexpensive way to communicate with employees, especiallyworkers who do not have access to a computer at their workstations. Whether or



not an organization provides separate bulletin boards for employees’use, thereshould be a written policy on the type of information that may be posted andwho must approve any information before it is posted.

Internal podcasts. Daily, weekly, or as-needed podcasts can provide a venue formanagers and executives to talk to their employees via the intranet. Employeescan listen to the podcasts from their computers. While this is a great way to com-municate with all employees at once, it shouldn’t be a complete substitute forface-to-face communication.

Letters or memos to staff. Letters and memos to staff are a good way to docu-ment that a communication has been made. It is important that the communica-tion be very clear. An unclear message provided in a letter or memo might leaveemployees feeling they have no way to ask questions or clear up any concerns.

Employee surveys. Employee surveys can be an effective and efficient way toobtain information from a large group of employees. A well-written survey pro-vides feedback on how employees feel about the organization, their role in theorganization, their compensation and benefits, and communication at each levelof the organization. For larger organizations, it may be possible to look at andcompare results for different parts of the organization. In addition, conducting thesurvey year after year provides information on how management is doing in areasin which the survey results showed improvement was needed.

Organizational Success Through Honest,Ethical CommunicationHow can an organization become a place where everyone is focused on the bestsuccesses and outcomes for the entire organization, instead of every individualbeing out for him or herself? Honest, ethical communication between leaders andemployees and among peers is the basis for a more successful organization. Thiscommunication, framed as adult-to-adult communication and described by JamieShowkeir and Maren Showkeir in their book, Authentic Conversations:Moving fromManipulation to Truth and Commitment, replaces the traditional parent-to-child (ormanager-to-employee) type of communication generally found in organizations,which does not bode well for organizational success.

In many organizations, there are so many rules that workers may feel that they arenot empowered to make any decisions at all. They may be inclined to pass everyissue and customer concern up the ladder to someone else in a higher-level job.They may feel powerless.

Human Resources can lead by example, making a fundamental shift in bringingpeople together by moving to adult-to-adult relationships within its own workforce,providing a role model for the rest of the organization, notes Jamie. Your organiza-tion or department can start changing its environment to become a more truthful,ethical, open one where adult-to-adult relationships reign. An important beginningis probably to create a more transparent environment.

Maren suggests that the more transparent an organization, the better, and that HRcan be instrumental in moving the organization in the direction to achieve adult-to-adult relationships and communication. “The more people learn about each otherand the organization’s place in the marketplace, the more powerful the organization

50

will become. Tell your employees how the business works; its place in the market-place; and what risks there are,”Maren added. That provides staff with the back-ground to make suggestions to improve business processes and serve customersbetter; empowers them to make important frontline decisions regarding customer orclient service;and solidifies their feelings of being part of the organization’s team.

Jamie suggests, “If we want to move toward a more ethical environment in ourcommunity [the organization], a fundamental element is to tell the truth. The sec-ond most important element is to try to get a good handle on what other points ofview are and understand where other people are coming from so you can keepthe [overall] good of the organization in mind.”

In adult-to-adult communication, all opinions and ideas are sought, no matterwhat a person’s position is in the company hierarchy or what their functional role.The people closest to the front line, the customers, and the actual work are oftenthe most knowledgeable and often have the best ideas that will positively impactthe bottom line, help to solve business problems, and move the company to ahigher level of success.

Best Practice: Ethical Culture at All Levels ofOrganizationTough economic times are a true test of a company’s ethics program, says AllanMcKisson, vice president of Human Resources for Manpower, Inc., in the UnitedStates. “It’s easy to be ethical and philanthropic when you’re making tons of money.”

In spite of the economy, Manpower has not strayed from its commitment to ethicsand social responsibility, according to McKisson. The global company, which wasrecently named to the second-annualWorld’s Most Ethical Companies list by theEthisphere Institute, offers permanent, temporary, and contract recruitment;employee assessment and selection; training; outplacement; outsourcing;and consulting.

Manpower was recognized because of its“impressive and meaningful ethical busi-ness practices”and because it goes“well beyond legal minimums, opting insteadto bring about innovative ideas that contribute to the public well being,”saysAlexander Brigham, executive director of the Ethisphere Institute. “We take apretty visible stance on different issues. One is human trafficking,”McKissonexplains, noting that Manpower has worked with the United Nations to preventpeople from being moved from one country to another against their will. “We arevery specific about clients we won’t work with that may, in fact, participate in that.”

In addition, under the company’s“Right Clients, Right Terms”strategy in the UnitedStates, Manpower will not work with a client that, for example, operates an unsafefactory or that sells unsafe products, he says.

Message relayed in various ways. Manpower’s commitment to ethics is relayedand reinforced during interviews and throughout employees’careers. For example,during interviews for most management positions, Manpower uses a questionnaireto assess applicants’honesty and integrity, asking what choices they would makein certain situations, McKisson says. The company plans to make that standardprocedure in interviews for all positions.



During the onboarding process, new hires learn about Manpower’s Code of Con-duct and hear from senior leadership about the company’s“commitment to beingethical and doing the right thing,”McKisson says.

Among other things, managers are trained on decision making and treating peo-ple appropriately, and each of Manpower’s approximately 30,000 internal employ-ees is required to complete an online ethics training course annually. The onlinetraining addresses such topics as not compromising decisions based on personalgains, treating people fairly, avoiding harassment, and complying with the com-pany’s Code of Conduct, according to McKisson.

Although the company had considered offering the online training in alternateyears, it decided to continue training annually. “It doesn’t take that long,”McKissonsays, estimating that the course takes about 20 to 30 minutes to complete, and it’s agood way to reinforce ethics within the culture and demonstrate that Manpower isserious about it.

The Code of Conduct, which is posted on the company’s website, addresses a vari-ety of issues, including conflicts of interest, confidentiality, fair dealing, proper useof company assets, compliance issues, ways to report violations, and penalties.Employees who believe that a violation of the Code has occurred are encouragedto talk to their supervisor or HR representative for guidance on how to proceed,McKisson says. Those who believe that their supervisor or HR rep is involved in aviolation, or those who are not comfortable talking with either of them first, areencouraged to call an anonymous hotline.

Since the ethics message is so strong and so integral to Manpower’s culture,employees at all levels of the organization reinforce it and encourage newemployees to make ethical decisions, too.

Conclusion

We hope that you have enjoyed this special report, and that you found the informa-tion contained in this report useful. BLR strives to provide Human Resources pro-fessionals with practical and easy-to-use information on a wide variety of topics. Ifyou would like to see the complete library of publications available through BLR,please visit our website at www.blr.com or call our Customer Service Departmentat 800-727-5257.

52 Top 10 Best Practices in HR Management for 2009

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