Workforce - July 2016

workforce.com

July 2016

Focus on Retirement

THE WOMEN HAVE THEIR SAY When it comes to saving for retirement, women are having a tougher time watching their savings grow.

RETIREMENT HISTORY

Responsibility has shifted from employers to employees.

ONE FOR THE AGES How each generation of women approaches saving for retirement.

r e g n a h C e m a G a Look to see who’s rkforce magazine! o W f o e u s s i t x e n e in th WHAT IS A GAME CHANGER?

Game Changers are high-potential young professionals, under the age of 40, who are making their mark on the HR profession.

Winners are featured in the August issue.

Follow #WFGameChangers for more information!

WORKFORCE.COM/GAME-CHANGERS

I could not be more pleased to introduce Jennifer Benz, our Benefits Beat columnist who joins Jon Hyman, Kris Dunn and Gary Kushner.

Jen, a 2013 Workforce Game Changers honoree, is founder and owner of Benz Communications and is among the most respected and knowledgeable thought leaders in the benefits space.

I would be remiss if I didn’t thank Rita Pyrillis for handling the column in recent months. Every manager should be so lucky to have a pinch hitter who knocks it out of the park every time like Rita.

Please join me in welcoming Jen to our roster of writers, our bullpen of bloviators, our … I’ll stop now.

— Rick Bell, Editorial Director 4

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SAM PHOTO COURTESY OF

Last month, I mentioned the talented staff members I work with at Workforce.

This month I want to highlight our columnists, a gifted group of people who make every issue of Workforce a must-read.

SUNG ELECTRONICS

AMERICA

From Our Editors

Ann Woo, center, Samsung Electronics America’s senior director of citizenship, works with children at the Taft Early Childhood Center in East Harlem, New York, in support of the Children’s Aid Society and its mission to help children in poverty succeed, during the company’s fourth semiannual Day of Service on May 13.

READER FEEDBACK Readers commented online regarding the May 2016 Workforce profile of former Yum Brands CEO David Novak, “Finger Lickin’ Meets Rubber Chicken,” p. 40. Said reader Michael Toebe: ‘This is an important article.Well done.Two points to briefly discuss: 1. Gregg Dedrick’s comment on David Novak:“He asked questions about you and cared about his team.”That’s caring about your people, it’s social awareness (emotionally intelligent), it’s empathy (emotionally intelligent) and effective relationship management (emotionally intelligent).The byproducts — heightened respect, liking (which equals influence), reciprocity (employees care about the company) and connection (people don’t care about how much you know until they know how much you care, says John Maxwell). 2.“If you don’t use recognition, you’re giving up one of the biggest advantages you have as a leader.”

Almost everyone wants to be noticed for work well done, appreciated and spoken well of to others. Choosing not to do this, and it is a choice, within an organization, is selfish and forfeiting the opportunity to derive a natural return on investment for doing so.’

Workforce.com/DavidNovak

Readers responded to Rick Bell’s “Editor’s Notebook” blog post titled “Millennials Cracking the Gender Pay Gap.” Said Janet Schlarman: ‘The takeaway seems to be that women

receive roughly 5 percent less than men according to Glassdoor, not the 24 percent used in news stories. Five percent sounds like a much easier hurdle to overcome, which is probably why it isn’t cited upfront.

If that 5 percent discrepancy can be attributed to women’s seeming reticence to ask for more money upfront, thereby leading to a shortfall throughout their working careers, it seems that educating women on how to be assertive in positive, persuasive ways is a good idea. Millennials have been raised in an atmosphere that has fostered high self-esteem throughout their school years. This may be leading to them finding it easy to ask for more money when they are hired as opposed to depending on the hiring manager to offer a fair wage. If it were really true that businesses knowingly and systemically pay women one-fourth less than men, it would seem to be in their best interest to hire only women because it would be cheaper.

Since millennials have cracked the code on how to start their working careers at a higher wage, then the studies should dig into how their upbringing and education has changed the way they approach getting a job so that women in all generations can be as effective.’

Workforce.com/millennialpaygap We welcome your comments on these stories and others on our website.

Be sure to follow us and give us a shout on Twitter at @Workforcenews, too.

Hope to hear from you! j u ly

2016

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To learn more, visit iCIMS.com. ©2016 iCIMS, Inc. All rights reserved.

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July 2016 | Volume 95, Issue 7 PRESIDENT John R. Taggart jrtag@workforce.com

ASSOCIATE EDITOR Sarah Sipek ssipek@workforce.com

EXECUTIVE VICE PRESIDENT, CREATIVE SERVICES Gwen Connelly gwen@workforce.com

COPY EDITOR Frannie Sprouls fsprouls@workforce.com

MANAGING EDITOR James Tehrani jtehrani@workforce.com CONTRIBUTING EDITOR Frank Kalman fkalman@workforce.com ASSOCIATE EDITOR Lauren Dixon ldixon@workforce.com ASSOCIATE EDITOR Bravetta Hassell bhassell@workforce.com

DIGITAL MANAGER Lauren Lynch llynch@workforce.com DIGITAL COORDINATOR Mannat Mahtani mmahtani@workforce.com

EVENTS MARKETING MANAGER EDITORIAL ART DIRECTOR Anthony Zepeda azepeda@workforce.com Anna Jo Beck

VICE PRESIDENT, CFO, COO abeck@workforce.com Kevin A. Simpson EDITORIAL INTERNS ksimpson@workforce.com AnnMarie Kuzel akuzel@workforce.com VICE PRESIDENT, GROUP PUBLISHER Sarah Foster Clifford Capone sfoster@workforce.com ccapone@workforce.com VICE PRESIDENT, VICE PRESIDENT, RESEARCH AND EDITOR IN CHIEF ADVISORY SERVICES Mike Prokopeak Sarah Kimmel mikep@workforce.com skimmel@workforce.com EDITORIAL DIRECTOR RESEARCH MANAGER Rick Bell Tim Harnett rbell@workforce.com tharnett@workforce.com GROUP EDITOR/ RESEARCH ANALYST ASSOCIATE EDITORIAL Grey Litaker DIRECTOR clitaker@workforce.com Kellye Whitney kwhitney@workforce.com

EVENT CONTENT MANAGER Ashley Collins acollins@workforce.com

RESEARCH ASSISTANT Kristen Britt kbirtt@workforce.com MEDIA & PRODUCTION MANAGER Ashley Flora aflora@workforce.com PRODUCTION COORDINATOR Nina Howard nhoward@workforce.com

LIST MANAGER Mike Rovello WEBCAST COORDINATOR hcmlistrentals@infogroup.com Alec O’Dell BUSINESS aodell@workforce.com ADMINISTRATIVE EVENTS GRAPHIC MANAGER DESIGNER Melanie Lee Latonya Harris mlee@workforce.com lharris@workforce.com LEAD GENERATION BUSINESS MANAGER ADMINISTRATOR Vince Czarnowski Nick Safir vince@workforce.com nsafir@workforce.com REGIONAL SALES MANAGERS Derek Graham dgraham@workforce.com Marc Katz mkatz@workforce.com Daniella Weinberg dweinberg@workforce.com ACCOUNT EXECUTIVE Brian Lorenz blorenz@workforce.com DIRECTOR OF BUSINESS DEVELOPMENT, EVENTS Kevin Fields kfields@workforce.com

CONTRIBUTING WRITERS Jennifer Benz Andie Burjek Liz Davidson Marty Denis Kris Dunn Sarah Fister Gale Jon Hyman Mark T. Kobata Patty Kujawa Rita Pyrillis Tom Spiggle

AUDIENCE DEVELOPMENT VICE PRESIDENT, EVENTS DIRECTOR Cindy Cardinal Trey Smith tsmith@workforce.com ccardinal@workforce.com John R. Taggart PRESIDENT

Gwen Connelly EXECUTIVE VICE PRESIDENT

Kevin A. Simpson CHIEF FINANCIAL OFFICER CHIEF OPERATING OFFICER

Norman B. Kamikow CO-FOUNDER (1943 - 2014)

WORKFORCE EDITORIAL ADVISORY BOARD Arie Ball, Vice President, Sourcing and Talent Acquisition, Sodexo Angela Bailey, Associate Director and Chief Human Capital Officer, U.S. Office of Personnel Management Kris Dunn, Chief Human Resources Officer, Kinetix, and Founder, Fistful of Talent and HR Capitalist Curtis Gray, Senior Vice President, Human Resources and Administration, BAE Systems Jil Greene, Vice President, Human Resources and Community Relations, Harrah’s New Orleans Ted Hoff, Human Resources Vice President, Global Sales and Sales Incentives, IBM Tracy Kofski, Vice President, Compensation and Benefits, General Mills Jon Hyman, Partner, Meyers, Roman, Friedberg & Lewis Jim McDermid, Vice President, Human Resources, Cardiac and Vascular Group, Medtronic Randall Moon, Vice President, International HR, Benefits and HRIS, Lowe’s Cos. Dan Satterthwaite, Head of Human Resources, DreamWorks Dave Ulrich, Professor, Ross School of Business, University of Michigan Workforce, ISSN 2331-2793, is published monthly by MediaTec Publishing Inc., 318 Harrison Street, Suite 301, Oakland, CA 94607. Periodicals Class Postage paid at Oakland, CA and additional mailing offices. POSTMASTER: Please send address changes to: Workforce magazine, P.O. Box 8712, Lowell, MA 01853. Subscriptions are free to qualified professionals within the U.S. and Canada. Nonqualified paid subscriptions are available at the subscription price of $199 for 12 issues. All countries outside the U.S. and Canada must be prepaid in U.S. funds with an additional $33 postage surcharge. Single copy price is $29.99.

Workforce and Workforce.com are the trademarks of MediaTec Publishing Inc. Copyright © 2016, MediaTec Publishing Inc. ALL RIGHTS RESERVED. Reproduction of material published in Workforce is forbidden without permission.

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FREE LIVE

ONLINE EVENTS

CONTENTS

Focus on Retirement 26 THE WOMEN HAVE THEIR SAY

36 THE HISTORY OF RETIREMENT BENEFITS

45 HOT LIST

28 MAKING UP THE DIFFERENCE

43 SPECIAL REPORT: 401(K) PROVIDERS

47 ROADMAPS

Women are finding a tougher path to retirement savings.

Companies are hoping to reach women of all ages with programs that teach them how to plan for the future.

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26-47

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Over the years, retirement responsibility has shifted from the employers to the employees.

As consolidation takes over, employers gain more opportunities to get the same service at a discount price.

401(k) providers.

How to plan, do and review your 401(k) plan.

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1000 B.C.

1850S

ON THE WEB SPEAK UP!

1970

The Workforce online community provides you with virtual meeting places to chat about issues and trends affecting you and your workplace.

2016

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LIKE US: facebook.com/workforce.magazine

FOLLOW US: twitter.com/workforcenews

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JOIN THE GROUP: workforce.com/LinkedIn

WATCH US: workforce.com/youtube

FOR YOUR BENEFIT COLUMNS 4

YOUR FORCE

Meet Workforce’s newest columnist.

13 WORK IN PROGRESS

Who to hire when your culture sucks.

18 BENEFITS BEAT

An automation nation.

24 THE PRACTICAL EMPLOYER

An A-E-I-O-You approach to leaves of absence.

50 THE LAST WORD

The tired scare tactics on retirement.

14 A TRANSGENDER TRANSITION

Some companies offer sex reassignment benefits as a way to attract LGBT workers.

15 SMILE WIDE FOR THE CAMERA

Teledentistry is increasing access to dental care for low-income individuals.

15 WORKPLACE DANGER ZONE

Workplace deaths and injuries reach highest levels since 2008, despite improvements in worker safety.

16 HEALTH CARE TRANSPARENCY TOOLS Until employers offer incentives for using the transparency tools, employees will be left in the dark.

CORRECTIONS

In the Workforce 100 list, June 2016, p. 27, the top ranking HR person for BASF, which ranked No. 51, should have been listed as Judy Zagorski, the company’s senior vice president of human resources.Also, the headquarters for Baptist Health South Florida, which ranked No. 77, should have been listed as Coral Gables, Florida.

In the June 2016 “The Debate Over HR Credentials,” p. 41, the organization Human Ressources Research Organization, or HumRRO, was misspelled.

In the June 2016 “Special Needs, Special Benefits,” p. 17, the National Business Group on Health conducted the survey of working parents with autistic children.The cost of the Rethink Benefits program should have said “several dollars” per head. j u ly

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TRENDING 10 CULTURE AND REMOTE WORKERS As remote working increases, so does the need for engagement.

11 FROM THE WEB, PEOPLE MOVES AND BY THE NUMBERS

Hooray for ‘Hamilton’; Lisa Butler at Manulife; zoo jobs.

12 INNOVATION INCUBATION

University of Chicago’s John Flavin talks innovation.

12 HR, IT AND CYBERSECURITY

The two departments need to team up to mitigate cyber threats.

LEGAL 22 POSTPARTUM DEPRESSION

Women with postpartum depression are covered under the ADA.

23 LEGAL BRIEFS

Test for age discrimination; trainee trouble.

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TRENDING

Culture, Cocktails and Remote Co-workers

By Sarah Fister Gale

A

t FlexJobs, the fact that all of the 70 employees work virtually doesn’t get in the way of culture-building. The leadership team for the telecommuting job service uses collaboration technology to come up with fun ways to help employees develop relationships outside of work.

“We have employees who have never met anyone on the team,” said Carol Cochran, FlexJobs’ director of people and culture who is based in Frisco, Texas.

“This gives them a way to connect.”

These connections include a twice-monthly virtual yoga class over Skype run by an employee with a yoga certification, and a trivia-themed happy hour using Sococo, an online virtual workplace, where employee teams gather in virtual rooms to brainstorm answers to questions posted by the CEO.

USING COLLABORATION TECHNOLOGY TO BUILD RELATIONSHIPS IS A GREAT WAY TO MAKE WORKERS FEEL LIKE FAMILY. “You would be surprised by how well it all works,” Cochran said. “It gives people an opportunity to get to know their co-workers and have some fun.”

Such efforts to engage remote workers are becoming increasingly important as the rate of remote working increases. Gallup Inc. estimates that 37 percent of U.S. workers telecommute, while the U.S. Government Accountability Office reports, that as of 2015, 40 percent of the U.S. workforce is now made up of contingent workers.

If business leaders want these virtual employees to stick around, they need to find new ways to connect with them, 10

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said Katie Evans, senior communications manager at Upwork, an online talent marketplace formerly known as Elance-oDesk. When Evans joined Upwork in 2015, she was initially concerned about working for a company where most of the 300 employees worked virtually.

“I had reservations about whether I’d be able to form meaningful connections with my teammates,” she said.

Despite being continuously connected to them via technology, she felt personally disconnected, and she worried that others in the fast-growing company felt the same.

She thought a virtual holiday party might help bring people together. She researched a variety of technology options, including virtual meetups, an online gaming platform and virtual reality, but ultimately decided to keep it simple, using Google Hangouts to play some games.

Evans chose a “get to know you” theme, and had employees submit three facts about themselves. She shared the facts anonymously with the team, then employees met using Google Hangouts video to guess which facts went with which person. “I thought it would last for 30 minutes, but it lasted two hours,” she said.

The party made her realize that you don’t need to be live and in person to build company morale, and you don’t need to use complicated technology to make virtual celebrations fun.

Now she hosts quarterly all-company parties and smaller teams have begun using collaboration tools for team coffees and weekly “rocks and roses” meetings where everyone shares their best and worst moment of the week.

Along with building camaraderie, virtual events can also be a cost-effective way to celebrate big news, said Michelle Markus, communications director for Point B Inc., a management consultancy.

Point B had been striving for years to become 100 percent employee-owned, and when it achieved that goal, the CEO wanted to celebrate with the

whole team — but the company couldn’t afford to fly everyone to Seattle.

Instead, Markus set up party rooms in each market, complete with food, drinks and party favors, and then broadcast the announcement via a live feed.

Bringing remote employees together for a little team bonding doesn’t have to be complicated, but you do need to be thoughtful about how the technology will work — and how it might get in the way, Cochran said.

In the yoga class, for example, participants found the music, which was meant to be soothing, was actually quite jarring via Skype so they got rid of it; and activities that could be done in a desk chair made the most sense.

Cochran also encourages talent leaders to gather feedback from employees on what they want to do, and whether the virtual events are working, she said.

She recently canceled an annual cookie exchange because employees lost interest. Instead, they added a belly dancing class when someone suggested it and others showed interest.

Whether it’s a weekly chat, an evening cocktail party or a fitness program, using collaboration technology to build personal relationships is a great way to make workers feel like family.

“Put these events on the agenda,” Evans said. “That’s how you make people feel like they are part of the corporate culture.” j u ly

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TRENDING

FROM THE WEB HOORAY FOR ‘HAMILTON’ Former Workforce editor Kate Everson adds her take on the “Hamilton” casting situation in a guest post. While Workforce blogger Jon Hyman wrote that race is not a bona fide occupational qualification when the hit Broadway show advertised for “nonwhite men and women” in an open casting call, Everson responded that it was just a “legalese gaff” and that “Hamilton” does not exclude white actors. She added that we should be praising the show for employing minorities in major acting roles.

Workforce.com/ Hamilton_Kate PRINCE HAD, NURTURED TALENT The world was shocked when Prince died in April at the age of 57. In his “Whatever Works” blog, James Tehrani remembers Prince the innovator and the man who knew how to share the spotlight and develop talent, such as notable 1980s personalities Sheila E., Sheena Easton and Apollonia Kotero.

Workforce.com/Prince COUNTRY ROAD Rick Bell writes that he was blown away by Sturgill Simpson’s comments in a recent interview about needing total control of his latest album. While complete control worked for Simpson, Bell says sometimes workers, even creative types, need a second person to offer another perspective.

Workforce.com/Sturgill j u ly

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PEOPLE

moves

LISA BUTLER International financial services company Manulife Financial Corp. named Lisa Butler as chief talent and diversity officer. In this newly created global role, Butler will be responsible for ensuring Manulife attracts, develops and retains a high performing global workforce. Butler has held several senior positions in human resources during her 12 years with Manulife.

By the Numbers compiled by Rick Bell

It’s All Happening at the Zoo Honolulu and San Diego are celebrating the centennial anniversary of their zoos. What’s it like working in the animal kingdom?

Zoo News

10,000 ‘Animal exhibitors’ licensed by the U.S. Agriculture Department

212

Zoos worldwide

2,400

Animal exhibitors that are members of the American Zoo and Aquarium Association

Source: American Zoo and Aquarium Association

CARMEL GALVIN Glassdoor Inc. named Carmel Galvin as chief human resources officer. Galvin is responsible for building the company’s people strategy and infrastructure as it continues to expand globally. Galvin brings nearly 25 years of HR experience at multinational companies including Advent Software, Barra Inc. and Deloitte. She has also served as the global head of HR for Barra and Moody’s KMV. Galvin is a native of Ireland.

ROBYNNE SISCO Workday Inc. named Robynne Sisco as chief financial officer. Sisco joined Workday in 2012 as chief accounting officer, bringing more than 25 years of corporate finance experience to the role.

Before Workday, Sisco held senior finance roles at VMware, VeriSign, Visa and Ford.

To be considered for People Moves, email a brief announcement and a high-resolution color photo to editors@workforce.com. Include People Moves in the subject line.

If I Could Talk to the Animals 5 cool job titles at various zoos Curator of Primates and Small Mammals Philadelphia Zoo

Animal Care Professional I – Predators Birmingham Zoo (Alabama)

Spray Toad Assistant, Herpetology Bronx Zoo (New York) Outreach Conservation Educator Philadelphia Zoo

Lead Commissary Keeper Palm Beach Zoo (Florida)

Source: Various

Zoo Median Salary by Job Zoo veterinarian

$87,590

HR manager

$69,919 (3 salaries)

Education director

$52,000 (3 salaries)

Zoologist

$50,000 (3 salaries)

Zookeeper

$26,000 (12 salaries)

Source: Payscale.com, LearningPath.org

Love Bugs Tiger by the Tail Pros of being a zoo veterinarian

– High job growth (employment expected to increase 12% between 2012 and 2022)* – High salary – Likely to work with exotic animals – Variety and challenge in daily tasks Source: LearningPath.org

Cons of being a zoo veterinarian

– Significant schooling – Field is competitive, both professionally and academically – Irregular hours – Dangerous patients

*U.S. Bureau of Labor Statistics

workforce.com | w Workƒorce orkforce.com 10| Workƒorce

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TRENDING

INNOVATION INCUBATION

By James Tehrani The University of Chicago has a long history John Flavin, University of of innovation. Without a doubt, the most Chicago powerful and influential one that ever came out of the school had nothing and everything to do with a borough in New York: research for the Manhattan Project.

Fast forward to 2016.Two years ago, the university opened its Chicago Innovation Exchange as an outlet for getting ideas up and running. The exchange currently has 2,000 members and 20 companies in its incubator space. Workforce recently spoke with John Flavin, the executive director of the exchange, about innovations that have come out of the exchange and promoting an innovative culture. An edited transcript follows.

Workforce: Do you have any examples of success stories from the Chicago Innovation Exchange?

John Flavin: We’re starting to see successful ventures get incubated that are not only web-based or software-based, but now they’re getting into things like energy storage. There’s a company called NETenergy that’s done very well at the CIE, and a company called Reliefwatch that’s grown from startup … and under our stewardship [is] up to 15 employees, and they’re graduating out of the space. They’re developing a technology using the cloud that you can use ‘dumb phones’ in emerging places around the world, where computing technology is not available, to manage inventory. So it’s a very inefficient process right now. Everything is done by hand in places like Africa and parts of India. So with this ‘dumb phone’ technology … these regions are better able to manage how medicine gets distributed to locations so that it stays fresh and available and effective.

WF: What best practices can you tell companies about promoting an innovative culture?

Flavin: We start with transparency. So when we think about translating a good idea — we have many of them at the university. Think about it: Academicians, it’s really their life’s work is coming up with ideas and talking about those ideas and in many cases, historically, that’s been through publishing a paper. But an increased number of those faculty want to take the idea that’s in the paper and make it real and get it out to the world. … The main thing that we use to be able to do that, in addition to providing the resources I described, is: To create a culture of innovation, you need transparency. Transparency enables momentum.

WF: How do you balance promoting innovation vs. ‘if ain’t broke, don’t fix it’?

Flavin: We’re moving in a direction where our world is rapidly evolving. You’re seeing large companies being disrupted. You’re seeing even higher education being disrupted. Thinking about it from the vantage point of the University of Chicago, if we took the mentality that ‘If it ain’t broke, don’t fix it,’ then you’d constantly stay in a state of isolation. And isolation in this day and age will mean that you will have a deterioration in your product deliverable. … So, I think it’s a greater risk to not be aware, be isolated and take the mentality that if it ain’t broke, don’t fix it.

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HR and IT Can Team on Cybersecurity

By Andie Burjek

C

ompanies have undergone significant changes in the past few years.

Before, employees would come into the same workspace and be connected via the same on-premise system. Now people can work from almost anywhere, bring their own devices, use cloudbased applications and access work files on their mobile devices.The result? An increase in threats to cybersecurity.

However, just because cybersecurity threats affect, well, cyberspace, doesn’t mean a human element isn’t necessary to mitigate them.

The information technology and human resources department, together, make a smart team in fighting these risks because most cybersecurity threats come from inside the company, said David Meyer, vice president of product management at OneLogin.

The HR department has the skills necessary to mitigate two potential insider threats, Meyer said, including well-intentioned employees who make a mistake by opening a phishing email or the actions of a disaffected employees who have ill will toward the company.

Meanwhile, the IT department has the technical skills to put certain systems in place such as OneLogin and others that can detect when employees access or download documents they normally don’t and alert HR. The connection between HR professionals and security professionals needs to be the closest it has ever been in history, said Pete Metzger, vice chairman at executive search firm DHR International. The chief human resources officer and the chief information security officer, for example, should communicate with each other about important security issues, he added.

“If it’s not an important relationship, it certainly should be,” Metzger said. j u ly

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TRENDING

Wo r k i n P r o g r e s s

WHO TO HIRE WHEN YOUR CULTURE SUCKS

By Kris Dunn

I

f there’s anything we love as HR/talent pros, it’s talking about culture.We love talking about how the culture at our company is different, what we value and how we reward people according to our cultural norms.

But the dirty little secret is most people are either actively looking or open to moving to a different opportunity. If you believe a recent 2016 CareerBuilder poll, 3 out of 4 employees would leave your company if the right opportunity came around.

But that’s not you, it’s them. Right?

Sure it is, Sparky.

That stat means one of two things: Either your culture sucks or it doesn’t matter as much as you think it does.

The aforementioned CareerBuilder stat leads to turnover in a good economy, resulting in the blame game inside your company. Who does the company want to blame for rising turnover?

HR! Who should be blamed?

Probably someone else!

But most HR pros don’t have the time or organizational clout to blame others, so we start to try to stop the bleeding by building a case that our culture is different. We do this in an attempt to differentiate our company on the recruiting and retention trail.

The path is pretty standard. Upgrade workspace and make it cooler. Insert pingpong, foosball and a pool table — in that order — and start recruitment marketing activities designed to compete in a hot market for talent.

Of course, your culture isn’t struggling because you don’t have good ideas or a road map on what you want your real culture to be built on.Your culture struggles because you’ve got mediocre managers.

Crappy managers lead to all kinds of bad outcomes. The most obvious one is a lack of leadership across teams of all sizes and specialties in a company. An absence of leadership leads to team dysfunction, infighting and yes — turnover.

That’s why you probably should stop competing in the superficial culture wars and start getting focused on how you select people to join your company. Whether your culture truly sucks or is just bruised a bit doesn’t really matter — selecting the type of talent who can survive the challenges that exist inside your company is key.

You don’t have to hire superheroes to deal with the cultural challenges inside your company, but you do need to have a road map in mind related to the behavioral strengths

that a new hire needs to have to deal with ambiguity, uncertainty and a lack of organizational consensus that accompanies weak culture.

Simply put: Hire the right type of person who can deal with the downside of your culture, and they’ll thrive. If they thrive, odds are they’ll stay.

While it’s impossible to give you notes based on the specific cultural challenges you face, there are some common elements to candidates who can survive in crappy cultures.

First up, star employees in mediocre corporate cultures tend to have low sensitivity; inconsistency or even outright hostility doesn’t fluster them. They take each day as it comes, remaining level-headed and calm when others around them are melting.

Low sensitivity doesn’t mean someone doesn’t care.

It simply means you don’t have to talk someone off the ledge when things don’t go as planned. Without the norms of a strong corporate culture, inconsistency in outcomes, feedback and internal politics is the rule rather than the exception.

Another common behavioral characteristic is the ability to deal with chaos. Dealing with chaos requires someone with low-rules orientation.

An employee with low-rules orientation wants to help determine the best possible solution for each circumstance.

Inconsistent company culture maximizes that circumstance for all employees, so it stands to reason that the person who can create new solutions on the fly is going to be a winner.

Finally, these employees are almost always more aggressive than their peers. Uncertainty leads to a natural advantage for those with high-assertiveness levels. While no one likes an asshole, there are jerks, sharks or whatever name you want to give assertive people who almost always get more done than passive employees. That reality is even truer when cultural norms aren’t there to guide the way for the masses.

Great HR pros are pragmatic to a fault, which leads to our ability to understand we might be working for companies with room to grow related to culture.

While you’re helping build a culture you can be proud of, do yourself a favor: Start recruiting the type of person who can thrive in that freak show you call a company.

YOU SHOULD PROBABLY STOP COMPETING IN THE SUPERFICIAL CULTURE WARS AND START GETTING FOCUSED ON HOW YOU SELECT PEOPLE TO JOIN YOUR COMPANY.

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Kris Dunn, the chief human resources officer at Kinetix, is a Workforce contributing editor. To comment, email editors@workforce.com.

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FOR YOUR BENEFIT

A Transgender Transition Some companies offer sex reassignment benefits as a way to attract LGBT workers.

By Rita Pyrillis

W

hile legal campaigns targeting the rights of LGBT people seem to be mushrooming across the country, a growing number of employers are leading the way in supporting the rights of transgender people in the workplace.

From Target Corp.’s recent announcement about allowing transgender employees and customers to use the bathroom that matches their gender identity to companies like Facebook Inc., Kroger Co. and Visa Inc. offering coverage for gender reassignment surgery, more employers are looking for ways to attract and retain lesbian, gay, bisexual and transgender workers. Offering comprehensive insurance coverage of procedures and therapies related to sex reassignment is one way of doing that.

The number of major U.S. companies surveyed by the Human Rights Campaign Foundation offering transgender-inclusive health care coverage has spiked from 49 in 2009 to 511 in 2016, according to the organization’s annual Corporate Equality Index.

But what may seem like a dramatic shift is the result of a long and concerted effort by activists and large employers to make the workplace more welcoming to LGBT workers, according to Beck Bailey, deputy director of employee engagement at the Washington, D.C.based foundation.

“There is a new public awareness of transgender folks with Laverne Cox and Caitlyn Jenner, but corporate America has been committed to and leading in the area of basic nondiscrimination protections for gender identity BECK BAILEY for 15 years,” he said.

The HRC index rates companies based on their LGBT anti-discrimination policies and practices, whether they offer health coverage for transgender individuals and domestic partner benefits, and other measures.

Despite a wave of anti-gay backlash sparked in part by last year’s U.S. Supreme Court ruling in favor of marriage equality, LGBT advocates at Chicago’s Rush North Shore Medical Center found widespread support for their push to offer transgender inclusive health benefits. In January, Rush became the first hospital in Illinois to do so, covering mental health counseling, hormone therapy, surgery and all other treatments related to gender transitions. Last year, the city of Chicago began offering similar coverage.

“The winds were definitely in our favor,” said Christopher Nolan, manager of community benefit and population health and chair of Rush’s LGBTQ health committee. “The director of benefits was working with us and our general 14

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counsel is a sponsor, so we had legal in our corner as well. You need a champion to do something like this, and we had lots of support.”

Hospital administrators believe the decision will benefit not only employees, but also the hospital and patients as well, according to Drew Elizabeth McCormick, Rush’s associate general counsel.

“We want to be a desirable place for people to work, and by being more CHRISTOPHER NOLAN diverse and inclusive, we’re better able to relate to and provide services to all sorts of patients,” she said. “The cost is so minimal and the cultural value of offering these benefits is so high that we felt very comfortable making this decision.”

HRC’s Bailey said that offering these benefits has little effect on overall employee health care costs because the number of transgender people in the workforce in so small.

“By all accounts, this is a rare condition, and everyone’s journey is different,” he said. “Not all transgender people use the medical treatments available to them, so the utilization rate is quite low.”

While employers have been supportive, getting insurance companies to offer coverage to transgender people was an uphill battle, according to Bailey. Today, denying coverage to people who identify as transgender is illegal under federal law.

“Historically, when we look at transgender inclusive health care, the insurance industry has had broad blanket control,” he said. “In some cases, the exclusions were so broadly stated that we would find a transgender woman seeking treatment for migraines having coverage denied because it was deemed related to her transexualism.”

The Affordable Care Act, which was passed in 2010, prohibits insurers and providers from discriminating against patients because of their gender identity.

Currently, 14 states and the District of Columbia have issued similar policies aimed at private insurers, according to Anand Kalra, health program manager at the Transgender Law Center in Oakland, California.

“This is an important time for people in HR to pay attention to these things and to make sure that they have fair and equal treatment when it comes to company health care policies,” he said. “People may not be aware that what’s in their insurance contract is unlawful. It’s important for HR to understand what constitutes discrimination.” j u ly

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FOR YOUR BENEFIT

Smile Wide for the Camera Teledentistry is increasing access to dental care for low-income individuals and sometimes preventing expensive procedures down the road.

By Sarah Sipek t may be the latest trend in health care delivery services, but telemedicine inherently makes sense.Teledental is less intuitive.While hard to conceptualize, teledentistry is a real program, and it’s coming to a state near you.

“At its core, teledentistry is a way to provide affordable preventive care to the public, particularly low-income individuals,” said Dr.Terry O’Toole, vice chair of the American Dental Association Council on Dental Practice.

“It costs so much less to prevent a problem in the long run than it does to pay for major procedures such as root canals.”

According to a study conducted by the Robert Wood Johnson Foundation, dental out-of-pocket expenses constituted 27 percent of overall health care out-of-pocket costs. The average for dental out-of-pocket costs was $873.

Dental out-of-pocket costs exceeded the average amount of prescription out-of-pocket costs, which were $700.

Unlike telemedicine where there is no face-to-face patient interaction, teledentistry allows hygienists and dental assistants to perform procedures while supervised by a “virtual dentist,” O’Toole said.The hygienists and dental assistants work from temporary clinics that are set up in schools, community centers or nursing homes and perform routine procedures such as cleanings or fillings.

O’Toole said teledentistry can take a variety of forms, including live video feeds, sharing images and patient information over a secure electronic communications system, and remote patient monitoring.

The technique was developed in the 1990s by the U.S. military to treat troops who did not have direct access to a licensed dentist, according to the U.S. Army Center of Military History. High-resolution digital images taken in the field could be sent to a specialist for review. They would then make a diagnosis and a necessary procedure would be performed by a general doctor at the nearest base.

California became the first state to launch a teledentistry program in 2014 when Gov. Jerry Brown signed a bill into law that would require Medi-Cal, the state’s insurance program for the poor, to pay for dental services delivered electronically, according to a news release from the governor’s office.The legislation took effect on Jan. 1, 2015.

The legislation was the byproduct of efforts by Dr. Paul Glassman, a dentist at the University of the Pacific in San Francisco. He started the Virtual Dental Home demonstration project to prove that teledentistry could increase access to care and end up saving the state money. His efforts were successful, and in 2015, he testified before Congress that telemedicine services should be covered by dental benefits plans at the same level as if the services were being delivered in person.

“As long as the dentist is licensed in the state the patient resides in, it should be covered. If we treat the root of the problem and prevent decay, we’re going to be saving people money in the long run,” Glassman said.

I

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Workplace Deaths Spike Despite Safety Upgrades

By Rita Pyrillis orkplace deaths and injuries are on the rise, having reached their highest levels since 2008, despite dramatic improvements in worker-safety practices over the past few decades.

According to a recent study by the National Safety Council, a nonprofit organization that promotes health and safety, 4,132 workers died of unintentional injuries in the workplace in 2014, up 6 percent from the previous year, reflecting the largest spike in 20 years, according to safety expert John Dony.

“Forty years ago, we had lots of people dying from doing very dangerous work, but we realized that we need to put people in harnesses when they’re working on tall buildings, and we need to develop a system for reporting accidents,” said Dony, director of the Campbell Institute, the research arm of the National Safety Council. “We still have a good story to tell around workplace safety in the United States, but the fact that we’ve had a long history of maturity and improvement and yet we are seeing an increase in deaths and injuries is troubling.”

According to the council’s report, which is based on federal data, certain industries have seen a sharper rise in unintentional injuries such as falls, motor vehicle accidents, machinery accidents and exposure to harmful substances.

For employers, this can mean higher workers’ compensation costs and more indirect consequences like lost productivity, higher training costs to replace injured workers, lower employee morale and greater absenteeism. According to a 2016 study by the Liberty Mutual Research Institute for Safety, U.S. businesses spend about $1 billion a week in workers’ compensation costs for the worst occupational injuries. These include overexertion because of lifting, pulling or throwing, falling, being struck by an object and roadway accidents.

Older workers are being killed or injured in greater numbers.

According to the U.S. Bureau of Labor Statistics, there were 1,691 fatalities among workers 55 and older — a 4 percent increase over 2013. A recent report by Washington state’s department of labor found that more than half of workplace deaths in 2015 involved people over 50.

An aging workforce is likely one factor contributing to the increase in workplace deaths and injuries, Dony said, adding that it’s not clear if physical limitations associated with aging are to blame.

Whatever the reasons, employers need to do a better job of making their workplaces safer, he said.

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FOR YOUR BENEFIT

If You Build It, They Won’t Always Come Transparency tools are popping up across the marketplace, but until employers offer incentives for their use, employees will be left in the dark when it comes to making important health care decisions.

By Sarah Sipek

M

ore and more employers are shifting their employees to high-deductible health plans. According to the PricewaterhouseCoopers Health Research Institute, in the next three years, 44 percent of employers are expected to offer a high-deductible health plan as the only benefit option for employees.

And it makes sense.

With these types of plans, employers are able to reduce their health care spending by 5 to 14 percent, according to a Robert Wood Johnson Foundation survey.

But cutting costs doesn’t mean that employers can wash their hands of employee health care all together.

“There is a lack of education out there about health care benefits,” said Marcia Otto, vice president of pricing and transparency applications at Health Advocate Inc. “There is a huge disparity between costs and quality of care, and employees need to be cognizant of it.”

The lack of education is quantifiable.

The Public Agenda released a report in March 2015 that said 57 percent of Americans don’t believe that some doctors listed under the same insurance plan charge more than others.

The problem, Otto said, is that employees are not used to making their own health care decisions. They don’t know what questions to ask or where to look for infor mation to make sure they’re getting the best deal on care, and, as a result, they often end up overpaying.

Health advocacy and assistance agencies, such as Health Advocate, offer transparency tools that allow employees to compare costs and physician ratings to select a doctor that is right for their procedure. The problem, however, is that 16

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very few employees take advantage of the service.

“But transparency tools alone are not enough,” said Tevi Troy, CEO of the American Health Policy Institute.“It must be meaningful, and companies must have the tools and proper benefit design to help manage employee health care spending.”

The way that benefits programs are designed often discourages employees from seeking out different physicians and hospital systems, Otto said.

“Take colonoscopies as an example,” Otto said. “The price with health insurance nationally for a diagnostic colonoscopy is between $1,300 and $4,000. If an employee’s deductible is $1,300, they’re not incentivized to shop around for a less expensive option.”

Reference-based pricing provides a solution. According to the model, employer groups provide a cap on pricing for what insurers will pay for a certain procedure that cannot be exceeded. If employees go over that total, then they forfeit the right for the insurer to pay any of the cost.

The California Public Employees’ Retirement System follows this model.

Joint replacements for seniors in California can cost between $15,000 and $150,000, Otto said. CalPERS set a cap of $30,000 for the procedure. Every dollar spent over the cap would be paid by the participant out-of-pocket and that cost would not count toward their out-of-pocket maximum. In addition to saving $2.8 million, the state

found that it made an impact on the public health system.

“The number of hospitals offering joint replacements for under $30,000 rose from 46 percent to 72 percent after the cap was put in place,” Otto said. “They actually changed the health care system.”

In addition to changing program design, incentives are key when trying to get employees to use transparency tools.

“Putting more skin in the game will help employees embrace price transparency and start using these tools,” Troy said.

Try rewarding employees with gift cards for opening up transparency tools and playing around with the technology, Troy recommended. The more familiar they are with the tool before they need to use it, the more likely they are to return to it when a nonemergency medical situation arises.

Investing a small amount of money upfront has the potential for big payoffs.

The American Health Policy Institute did an independent analysis of Castlight Health data and found that if 3 percent more employees used employer-provided transparency tools each year, employers could save $16 billion in total health care costs from 2016 to 2020. More importantly, individual employees can expect to save $3.6 billion in out-ofpocket expenses in 2016.

“Employers have asked employees to shoulder a greater percentage of their health care costs,” Otto said. “In return, they need to act to ensure that employees are capable of making the health care decisions that are best for their physical and financial well-being. Offering a tool alone is not enough. Employees have to know how to use it.” j u ly

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FOR YOUR BENEFIT

Benefits Beat

AN AUTOMATION NATION

By Jennifer Benz

I

was so fortunate to graduate from college debt-free. But I never put pen to paper as to how my starting salary would stack up against the cost of living in Hoboken, New Jersey. In no time, I had five-digit credit card debt and seemingly no end in sight to the monthly payments.

Despite recklessly spending money I didn’t have, I did make one incredibly wise financial decision: enrolling in my company’s 401(k) plan the moment I started working.

I reflect on this story often, especially when I’m talking about and working on financial wellness projects. What my employer did at the time set me on the right course. If I was starting my career today, that same 401(k) guidance might also come with smart budgeting tools that may have kept me out of debt. Maybe!

But few people start their careers working for companies with a generous 401(k) plan and hands-on newhire orientation, let alone with a crash course in employee benefits. (Yes, my first job was doing employee benefits communication!)

And few people have rising income levels that allow them to recover from bad financial decisions as I was able to.

For far too many Americans, financial success is left up to chance. And, for many people, the cards are just plain stacked against them. This is why financial wellness has captured employers’ attention the past few years — why we’re seeing it in the headlines, and why, as an industry, we should be doing so much more to help.

A recent cover story in The Atlantic led with a survey from the Fed, which asked people how they would pay for a $400 emergency.“The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all.”

Four hundred dollars.

These statistics, along with what employers are seeing firsthand from employees, depict the financial stress people are facing. There is tremendous interest among employers to affect change through financial wellness programs: • Eighty-three percent of all employers, and 97 percent of large employers, say they feel at least somewhat responsible for the financial wellness of their employees, according to the Bank of America Merrill Lynch 2015 workplace benefits report.

• Of the 250 large employers surveyed in Aon’s 2015 “Hot Topics in Retirement” study, more than 90 per-

cent said they want to introduce or expand financial wellness programs this year.

But where to invest? And which financial wellness programs will be effective? For answers to these questions, many companies are starting with an audit of their existing benefits and looking for ways to better promote the tools and resources already at employees’ fingertips. This is a good place to start. Many benefits go unused, and the majority of employers struggle to communicate their programs more than a couple of times a year, which leads to low engagement. Taking a fresh look at how you name programs and how you help employees understand their value can go a long way.

Additionally, there’s been an explosion of new “financial wellness” companies vying for your attention and benefits dollars. Many have incredibly smart, user-friendly products and services.

While financial wellness is getting so much attention, we also have the opportunity as an industry to ask: What else can we automate? It isn’t enough to look at which new programs or ideas can help educate employees; we should also be looking for ways to take the guesswork out of financial wellness and create paths that lead to the best financial outcomes.

We need only to look at the tremendous success of auto-enrollment and auto-escalation in 401(k) plans as a model for improving short-term decision-making and long-term outcomes. This model has shown — and behavioral economists have proven — that changing the defaults and automating good decisions is a very effective way to change outcomes.

Plenty of other financial areas would benefit from automated systems and programs. For example, how could automatic budgeting and bill pay help people manage dayto-day finances? Could we automate emergency savings to help employees get the cushion that so few have? What about automatic emergency loans that keep people out of debt and away from predatory check-cashing lenders?

Could we automate the confusion out of flexible spending accounts, health savings accounts and other plans?

As the interest in financial wellness gains momentum, let’s look to build a system that sets up everyone for success.

WE SHOULD BE LOOKING FOR WAYS TO TAKE THE GUESSWORK OUT OF FINANCIAL WELLNESS AND CREATE PATHS THAT LEAD TO THE BEST FINANCIAL OUTCOMES.

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Jennifer Benz is CEO and founder of Benz Communications, a San Francisco-based employee benefits communications agency.

She was named one of Workforce’s Game Changers in 2013. To comment, email editors@workforce.com.

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a d v e r t i s e m e n t

BEST PRACTICES IN INSURANCE

Why employers need a COBRA alternative B Y S C OT T OSL E R, SVP BUS I N E S S D E V E L O P M E N T , G E T I N S U R E D

Imagine this. You’re a self-insured employer with 500 former employees enrolled in COBRA. With an average claim cost of $10,589 per person, you have a $5.3 million expense on your balance sheet. That’s right—$5.3 million, for people that don’t even work for you. This isn’t a hypothetical. One employer I met with had this exact scenario. The amount of COBRA costs often ignored by employers can be staggering.

By moving just 20 percent of those employees off of COBRA, this employer could save $1.5 million in a matter of weeks.

Now imagine you could save millions and barely lift a finger?

Someone would get a hug from his or her CFO, right?

Thanks to the Affordable Care Act (ACA) and a little help from us, you don’t have to imagine anymore.

How the Affordable Care Act impacted COBRA The ACA opened up alternate, oftentimes much less expensive, options for Americans. With help from tax credits, many qualify to save even more on their monthly premiums, making the Marketplace a much more viable option than enrolling in COBRA coverage, which is known for its high premiums. Marketplace plans have the potential to be 80 percent less than COBRA. Let’s take a look at how COBRA pricing compares to the average Marketplace plan for an individual: • The average premium for single coverage through an employer in 2015 was $521 per month.1 • Add a 2% administrative fee and an individual is looking

at $531 a month for COBRA coverage.

• The average Marketplace plan in 2015 was $374 with a $272 subsidy, making the average monthly premium $102 per month2 As you can see Marketplace pricing can be much more attractive than COBRA premiums. So it’s not hard to see why consumers would be drawn to the Marketplace and opt out of COBRA. But what about the employer?

Unlike the individuals enrolled, most companies don’t realize how much COBRA enrollees can actually cost them and leave their COBRA program on autopilot. It’s estimated that 87 percent of large employers are self-insured. For these companies, the potential savings of former employees transitioning to the Marketplace shouldn’t be ignored.

COBRA enrollees cost their employers around 54 percent more in claims costs than active employees.3 That’s partly because those that opt into COBRA generally do so because they have a pre-existing condition, or other health issues, so they need the insurance, which drives the claims rates and costs up.

• According to Spencer’s Benefit survey, the average COBRA enrollee costs employers $11,000 in annual claim costs (vs. $7,204 for the average active worker3).

• Average rate of COBRA uptake by terminated employees: 10%

a d v e r t i s e m e n t

BEST PRACTICES IN INSURANCE

It’s also true that up to 60 percent of Americans don’t even know an alternative to COBRA exists.4 And if they did, 46 percent would decline COBRA.5 And that could mean a lot of money going back to your bottom line.

Illustrative Example Let’s take a look at Company ABC that, due to a tough year, has to do a reduction in force (RIF). Here are the facts: • Company ABC has 5,000 employees.

• The reduction will affect 10 percent of the employee population, or 500 individuals.

• We assume a 10% uptake of COBRA, or 50 individuals.

• For each individual, $521 a month will go towards their premium, totaling $6,252 a year.

• If each of these individuals has $11,000 in claims for the year, the employer loss is $4,748.

• For the 50 COBRA enrollees, ABC’s total loss for the year is $237,400.

That added up fast, didn’t it? All of that is money that can be saved simply by educating your workforce and transitioning them to the Marketplace. You don’t just need a RIF for a COBRA transition to make sense. The average workforce attrition rate is 14 percent, and that can add up just as quickly.

1

http://kff.org/report-section/ehbs-2015-section-one-cost-of-health-insurance/

2

CMS.gov: March 31, 2015 Effectuated Enrollment

3

Spencer’s Benefits Report, 2009

4

4eHealth survey, 2008

5

GetInsured internal data

Making the transition Are group plans more robust? They can be, depending on the plan. But one of the common misconceptions is that Marketplace plans don’t at all hold their own when compared to group insurance. But that’s hardly the case. All plans must offer minimum essential coverage, which includes services like coverage for prescription drugs, doctor visits, emergency care and more. Ensuring that individual insurance is comprehensive was one of the tenants of the Affordable Care Act. Trading in COBRA for a Marketplace plan is a win-win.

How do we start the conversation? With those directly and immediately impacted. At the time of separation, be it reductions in force, ongoing attrition, employees leaving on their own, employers need to be informing former employees about their options.

With ten years of experience, GetInsured is an expert in the individual health insurance market with solutions that help employers replace COBRA. We’ve developed ways to make educating former employees simple and effective with a guaranteed a return on your investment. Want to learn how we can help your company save big on COBRA costs? Visit solutions.getinsured.com/cobra to get started.

COMPANY PROFILE GetInsured has been revolutionizing the way Americans shop for health insurance for more than a decade. Now, we’re revolutionizing the ways employers can cut their healthcare spend. Our individual health insurance solutions for parttime, retiree, COBRA and other non-sponsored employee populations connect employees with the health insurance coverage they deserve while increasing employers’ bottom line.

Legal Complications From Postpartum Depression Under certain circumstances, women with postpartum depression are covered under the ADA, so employers need to be prepared.

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ostpartum depression can cause problems for employees — and painful lawsuits against employers.

In 2008, Congress passed amendments to the Americans with Disabilities Act — the ADA Amendments Act, or ADAA — greatly expanding what impairments are covered as disabilities under the statute.The ADA has always covered both mental and physical disabilities that interfered with a major life activity.

Prior to 2009, however, the U.S. Supreme Court took a very restrictive view of what facts constituted interference with a major life activity, in particular finding that impairments that were episodic or of short duration did not qualify for coverage under the Americans with Disabilities Act. In enacting the amendments, Congress explicitly rejected the approach. Now, under the newly amended ADA, courts are instructed to give the definition of disability a broad interpretation, which means that many conditions — even ones of short duration — enjoy protection under the ADA. There have been numerous decisions since passage of the regarded her as depressed and therefore having a disability. amendments in which courts have found that postpartum de- (Nayak had in fact been diagnosed with postpartum depression pression can be a disability under the amended ADA. but did not tell her supervisors, claiming that she was afraid to One recent example is Seema Nayak, M.D. v. St. Vincent Hos- do so.) pital and Health Care Center. In Nayak, the plaintiff was a medical When St.Vincent later filed a motion asking the court to kick doctor employed by St.Vincent as a resident in the OB/GYN out Nayak’s disability claim, the court declined finding that the program. Following a difficult multiple pregnancy in which statements about her mood and the hospital’s admission that it one of her twins died, Nayak returned to her residency pro- fired her because of “a medically complicated pregnancy” were gram where she, according her supervisors, experienced nu- sufficient to support this claim.The court further found the fact merous performance problems.The program director, in raising that, according to the hospital, Nayak had performance probthis concerns with Nayak, said that others on her team were lems before her pregnancy was not sufficient for the hospital to concerned because she “appeared distracted, sad and tearful.” establish that it fired her for performance reasons.

When the director later declined to renew Nayak’s contract, he However, it is important for employers and employees to note notified the American Board of Obstetrics and Gynecology that a diagnosis of depression — postpartum or otherwise — that, “Due to a medically complicated pregnancy and signifi- does not insulate an employee from lawful termination.The case cant concerns regarding her academic progress, our program Eisner v. New York City Law Department, et al. provides employers decided not to extend her contract beyond this academic year.” an example of both the potential liabilities under the Americans Nayak sued the hospital on numerous grounds, including that with Disabilities Act as well as an example of how to successfully it had discriminated against her because, among other things, it handle a termination under the statute.

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PHOTO COURTESY OF ADOBE STOCK

By Tom Spiggle

In this case, plaintiff Susan Eisner, who worked as an attorney for the city in its appellate division, filed an EEOC charge in 2009 when she received a negative performance review after being diagnosed with “major depression, severe, single episode … induced postpartum following the birth of a child.”

Eisner claimed that her supervisor at the time had said that Eisner was “not high-functioning” and that “no magic pill can fix you.”The city settled the case with Eisner, who remained in the appeals division.

Citing performance reasons, the city terminated Eisner in 2013. Eisner sued claiming discrimination based on disability and retaliation. In denying all of Eisner’s claims, the court found that she had to prove that her disability was the “but for” cause of her termination.

The Supreme Court in two cases Gross v. FBL Financial Services Inc. and University of Texas Southwestern Medical Center v. Nassar found that the appropriate standard of proof under the Age Discrimination in Employment Act and Title VII of the Civil Rights Act is the “but for” standard rather than the arguably lower “motivating factor” test. The Supreme Court, however, has not opined on the proper standard of proof under the Americans with Disabilities Act. The court in Eisner reasoned that the language in the act is sufficiently similar to both the ADEA and Title VII to warrant applying the same standard. (Eisner has appealed the court’s ruling.)

Though, given the court’s analysis of her Americans with Disabilities Act claim, it appears the court would have dismissed her claim regardless.

As the court noted, “Eisner has failed to adduce any facts that would give rise to an inference of disability discrimination. She contends that ‘every single adverse action against [her] flows from her initial disclosure of her disability.’ Such a temporal argument is unavailing.” The court noted that her initial request for accommodation occurred in 2009, some four years earlier.

The lesson of these two cases is that postpartum depression can be covered by the Americans with Disabilities Act, so employers need to be prepared to provide reasonable accommodations when requested.

However, just because an employee suffers from postpartum depression does not mean she is immune from lawful termination. Still, in those situations an employer needs to proceed with extreme caution and strong evidence that the disability was not the factor driving the termination decision.

Tom Spiggle is author of “You’re Pregnant? You’re Fired: Protecting Mothers, Fathers, and Other Caregivers in the Workplace.” He is founder of the Spiggle Law Firm with offices in Arlington, Virginia, and Nashville, Tennessee.

To comment, email editors@workforce.com.

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Legal Legal Briefings ‘SUBSTANTIALLY YOUNGER’ TEST FOR AGE DISCRIMINATION Martha Knotts worked for the Grafton City Hospital until she was terminated at age 65. The hospital hired replacements who were 12 and 24 years younger than Knotts, but were over 40 years old. Knotts filed a lawsuit in state court under the West Virginia Human Rights Act alleging age discrimination. The state circuit court held that Knotts could not establish a prima facie case of discrimination because her replacements were both over 40 and part of the protected class. The West Virginia Supreme Court overturned its own “over 40/under 40” precedent, and reversed the circuit court’s decision. Instead, the state Supreme Court adopted the U.S. Supreme Court’s ruling in O’Connor v. Consolidated Coin Caterers Corp., holding that a prima facie age discrimination case’s focus should be on whether the discrimination occurred, rather than on whether a replacement’s age falls outside the protections for those 40 and older. A determination of whether a replacement is “substantially younger” than a terminated employee is a more “reliable indicator” of age discrimination than whether the replacement is not a member of the protected class. Knotts v. Grafton City Hospital, Case N. 140752, Supreme Court of Appeals of West Virginia (April 14, 2016).

IMPACT: Given today’s trend of “older” workers remaining in the workforce, it is not unusual for individuals 40 or older being hired and/or replacing older employees. Significant age disparity can be evidence of age discrimination even if the comparative employee is over 40, if that employee is substantially younger than the employee allegedly being discriminated against.

TRAINEE TROUBLE An employer can find itself on the hook for unpaid wages and benefits when it allows individuals to work in exchange for training and experience rather than compensation. This issue arose when the plaintiffs voluntarily participated in an uncompensated training program intended to prepare them to work as dealers at casinos. The defendant provided the training in conjunction with a local community college. The plaintiffs sued, claiming that they should have been paid as employees during the 12-week training program. The trial court sided with the defendant, and the plaintiffs appealed. The U.S. Court of Appeals for the 4th Circuit reversed and remanded, holding that the plaintiffs’ allegations raised the question of who was the primary beneficiary of the training. Employment status under the Fair Labor Standards Act depends in part on this “primary beneficiary” test. Where the company providing the training derives the primary benefit and the individual trained is an employee rather than a trainee. The appeals court ruled that the allegation that the training program resulted in the casino-defendant having appropriately trained potential employees was enough to state a claim. Harbourt v. PPE Casino Resorts Maryland LLC, case number 15-1546 (April 25, 2016).

IMPACT: When establishing unpaid training or internship programs, employers must consider who derives the “primary benefit” from the relationship.

Any program, regardless of title, that involves an individual performing work that benefits the company without compensation poses risk of liability.

Mark T. Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago. To comment, email editors@workforce.com.

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Legal

An A-E-I-O-You Absence Jon Hyman |

The Practical Employer

C

onsider the following example. ABC Co. has a policy cess” with the employee, a discussion that focuses on the that states that an employee is entitled to a 12-week reasons for the leave, whether it’s blocked or intermittent, leave of absence for any medical reason, and thereafter the and its expected duration, which may include confirming company cannot guarantee a job upon an employee’s ability information from the employee’s health care provider. to return to work. Does this policy pass muster under the 4. Maximum leave policies. Policies that place a hard Americans with Disabilities Act? cap on an employee’s leave of absence, without considerOpinions differ sharply on whether an employer can satisfy ation of modifications or extensions as reasonable accomits obligations under the ADA modations, are unlawful unby implementing a neutral der the ADA. leave of absence policy that 5. Return to work and caps a maximum allowable reasonable accommodaleave (for example, a policy tion (including reassignthat says,“Employees who do ment). Avoid “100 percent not return to work following healed” policies, which mana maximum of six months date that an employee must leave will be presumed to be fully recovered before rehave resigned,” or “Employturning to work. They are ees will be entitled to a maximum of six months of unpaid unlawful. Instead, consider reasonable accommodations that medical leave in appropriate circumstances, and thereafter the will enable an employee to return before 100 percent healed, company cannot hold the employee’s position open or guar- which might include transfer to a vacant position. antee a position to which the employee can return.”).

6. Undue hardship. Depending on the duration and One opinion that is clear, though, is that of the EEOC. frequency of the leave and the effect on the employer’s According to the commission, in its recently published guid- business, the leave of absence might be an undue hardship ance titled “Employer-Provided Leave and the Americans that an employer need not offer. An open-ended, indefinite with Disabilities Act,” the answer is likely “no.” According to leave is always an undue hardship. the EEOC, “the prevalence of employer policies that deny Employers need to be practical and tread very lightly or unlawfully restrict the use of leave as a reasonable accom- around the issue of leaves of absences until the EEOC softmodation,” which the agency believes “serve as systemic ens its position.The agency is aggressively pursuing businesses barriers to the employment of workers with disabilities.” that enforce these neutral leave policies to the detriment of In my experience, employers deny leaves because they are employees with disabilities. Unless you want to end up in simply trying to do the best they can to balance the opera- the EEOC’s crosshairs, I recommend adopting the following tional needs of their business against the medical needs of an “A-E-I-O-You” approach to employee medical leaves: employee. Sometimes the business wins. The EEOC is try- • Avoid leave policies that provide a per se maximum ing to level the playing field by making sure that employers amount of leave. consider leaves in all cases when appropriate.

• Engage in the interactive process with an employee The guidance is broken down into six key areas, which who needs an extended leave of absence. highlight various issues for employers to consider when • Involve your employment counsel to aid in the process employees need medical leaves of absence not covered by, of deciding when an extended leave crosses the line from or in addition to, the Family and Medical Leave Act. a reasonable accommodation to an undue hardship.

1. Equal access to leave under an employer’s leave • Open your workplace to employees with disabilities policy. Employers must provide employees with disabilito demonstrate to the EEOC, if necessary, that you ties access to the same leaves of absence rules as employees take your ADA obligations seriously. without disabilities.

• You should document all costs associated with any ex2. Granting leave as a reasonable accommodation. tended unpaid leaves to help make your undue hardAn employer must consider providing unpaid leave to an ship argument, if needed. employee with a disability as a reasonable accommodation Remembering “A-E-I-O-You” will help you avoid the if the employee requires it, and so long as it does not create defense of a costly disability discrimination lawsuit. an undue hardship for the employer.

3. Leave and the interactive process generally. After Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in an employee requests leave as a reasonable accommodation, Cleveland. To comment, email editors@workforce.com. Follow the employer should promptly engage in an “interactive pro- Hyman’s blog at Workforce.com/PracticalEmployer.

The EEOC is trying to level the playing field by making sure employers consider leaves in all cases when appropriate.

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Focus on

Retirement

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hen planning this special issue on retirement in the workplace, something caught our attention: There were no shortage of horror stories we could tell about retirement. But there had to be an aspect of retirement that wasn’t getting as much attention. It wasn’t hard to find: women and retirement.

Women tend to get lost in the shuffle of retirement reporting.

But why? According to the 2010 census, women make up almost 51 percent of the U.S. population.

Of those women, the U.S. Labor Department says 57 percent participate in the workforce, and 70 percent of women with children under age 18 are in the workforce.

In many ways, women have a rougher route to retirement than men. And it shows in the confidence level women have that they’ll even be able to retire. As Patty Kujawa writes, a recent report said just 12 percent of women said they are very confident they will retire comfortably. j u ly

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The facts are: Women tend to outlive men, often make less money than men, take on more part-time positions than men and are more likely to be away from the workforce for months or even years to care for family members young and old.

While retirement worries obviously affect both genders, women are clearly falling behind.

It’s a problem that doesn’t discriminate between younger and older women.

Only 2 out of 3 (68 percent) millennial women participate in their company’s 401(k) plan compared with 80 percent of millennial men, Kujawa reports. Boomer women are taking part in retirement plans almost as much as their male generational counterparts, but have on average $107,000 less in their retirement savings than the men their age.

Are your eyes open yet?

It makes you wonder what can be done about it. We hope to answer some of your questions in the following pages.

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68%

80%

millennial women

millennial men

$73,000

baby boomer women

$180,000

baby boomer men

w o r k f o r c e . c o m | Workƒorce

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Making Up THE

Difference Research shows that women, regardless of age, are further behind when it comes to saving for retirement. Some companies are hoping to change that by offering programs specifically designed to teach women how to plan for the future.

BY PATTY KUJAWA

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C

hristi Koke has been putting in 40 to 60 hour weeks in the retail industry for more than 25 years.

She works at the designer handbag and clothing store Coach in Leesburg,Virginia, and she’s taking out just enough from her paycheck to get the employer match in her 401(k) plan. She also has an individual retirement account on the side, but is constantly wondering whether she is on track to retire in 12 years at age 62, which is her goal.

“I never think I am doing well enough,” Koke said. “I think about what I live on for a year, and I see that I’m going to need a lot of money” in retirement.

Koke, who is 50, said she hasn’t used any of the online tools available through her 401(k) plan to calculate how much she will need in retirement or checked to make sure her investments are suitable for a woman her age.

Her father is a financial adviser and has helped her with her money and budgeting.

She thinks things are going well though. She is single, so she went in with a family member to buy her home. They share living expenses, which helps keep her daily budget in check. With nearly $500,000 in her retirement funds, Koke thinks she has a good handle on her finances but still questions whether she is doing enough.

“I worry about that one thing that might come up and ruin everything,” Koke said.

Koke’s story is not unusual. Only 12 percent of women are very confident that they will retire comfortably, according to the Transamerica Center for Retirement Studies’ 16th Annual Survey of American Workers. Plus, the same study shows that women are less likely than men to have access to a 401(k) plan, participate in a plan if it is offered and contribute to one.

Combine this with earning less money, working part time, hopping in and out of the workforce to take care of family members, and expecting to live longer, and a bleak financial picture for women starts to emerge.

Transamerica’s data found that women’s median household retirement savings is woefully behind their male counterparts: $41,000 vs. $88,000.

“Women have so many circumstances that they face,”

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said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Women need to be more aware of the risks out there and what they can do about them” to become better savers for retirement.

TRANSAMERICA FOUND THAT WOMEN’S MEDIAN HOUSEHOLD RETIREMENT SAVINGS IS WOEFULLY BEHIND THEIR MALE COUNTERPARTS. Today, the reality and the perception of women being less prepared for retirement is hitting a crossroad, and the industry and plan sponsors are waking up and looking at why women do not engage when it comes to retirement planning.

“Women are not being serviced well by the financial industry today,” said Carla Dearing, CEO for Sum180, a web-based advisory firm. “When a huge chunk of users choose not to use a product, it’s the industry’s fault.”

What’s the Problem?

Aside from all the previously mentioned factors, women of all ages sabotage themselves by not talking about finances, said Meghan Murphy, a director at Fidelity Investments.

“Women are more likely to talk about their sex life than finances, and that’s not OK,” Murphy said. “It’s kind of taboo to talk about money.”

Fidelity’s 2015 “Money FIT Women” — FIT being short for “Focus, Invest and Time” — study showed that while 77 percent of women are happy to talk about medical issues with a doctor, less than half would want to talk to a financial adviser. Plus, 4 in 5 women say they don’t want to talk about money with people they are close to.

Millennials are the largest offenders at 86 percent.

But there is another problem: Only 35 percent of WOMEN AND RETIREMENT continued on page 32 j u ly

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ONLINE ONLY

Wise Investing

has a totally different list of priorities than a

Q&A with Kim Mustin, BNY Mellon

be thinking about managing her time. They have an entirely different set of short-term needs that are in front of them. I think that

Make sure to check out these retirementrelated articles as well only on Workforce.com.

Viable Solutions to Dealing With a Volatile Market Here are a few ideas from a veteran market “roller coaster rider” that may help retirement plan participants make better long-term decisions and be more likely to reach a secure retirement.

Retirement Plan Education Programs Can Foster More Productive Workplaces A company can regain productive hours from workers by helping their employees work toward a retirement solution that puts their minds at ease.

whenever you are talking to a group of investors, you have to understand where they are in the spectrum in the short-, mediumand long-term.

WF: One of the main problems women face when saving is access. Many have parttime jobs and don’t qualify for a retirement plan at work. How can women’s inability to save affect their employers?

Mustin: There are a number of professions Women are different investors than men,

where the plan sponsors are very concerned

and have different needs when it comes to

about the workforce’s ability to execute on

learning about finances. That’s the news

the things they need to for their particular

from BNY Mellon and sister company Persh-

business. If you have women who can’t re-

ing’s white paper, “The Retirement Chal-

tire because they don’t have enough money,

lenge, Dilemmas and Decisions Through Ev-

then that is going to create a more top-heavy

ery Decade.” Workforce sat down with Kim

organization. You want to have diversity

Mustin, co-head of global distribution and

within your organization of ages, skills, pay

head of Americas distribution at BNY Mellon

rates, ethnic backgrounds, etc. There will be

Investment Management to talk about how

a whole bunch of older people who are more

employers can elevate their approach to the

expensive workers, and you won’t be able

challenges women face.

to afford to hire newer people. If I don’t feel

Workforce: How important is it that plan sponsors and their providers know women?

Kim Mustin: I think it’s incredibly important.

I’ve saved enough, my propensity to leave will be quite low. It’s important for employers — for their own sustainability — to make sure that they are bringing in fresh thinking.

Women educate themselves in different ways. They take in and digest information in different ways, and they have just different likes and dislikes about the way that something gets presented to them. It’s not to suggest that women are one homogeneous investor group either. Within the female investor population, I think every woman is a snowflake. It’s important to understand that from a plan sponsor standpoint.

HSAs, the New 401(k) For Your Employees Getting employees to think about retirement savings is important, but so is thinking about saving for health costs down the road.

woman that might be in her 50s who may

WF: Are there generational differences that

—Patty Kujawa Feeling of Discomfort

Four out of 10 women say they aren’t confident they will be able to retire with a comfortable lifestyle.

14% 14%

46%

HR folks need to be aware of when helping women with education for retirement?

26%

Mustin: If you go to a woman in her 20s and start talking to her about purchasing a long-term-care policy … her eyes are probably going to roll back in her head because

Somewhat Not too confident

Very confident Not at all confident

she is just in her first job, maybe starting to think about marriage, children and balanc-

Source: Transamerica Center for Retirement Studies’ Retirement Survey of Workers, 2015

ing her career and all of those things. She

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WOMEN AND RETIREMENT continued from page 30 women use financial advisory services offered at their workplaces.

Gen Z: Annelise Boland Annelise Boland is a world traveler. At just 20 years old, this Carthage College junior spent the spring 2016 semester living and learning in Nice, France, as part of the Kenosha, Wisconsinbased school’s study abroad program. For five months, she has spoken almost entirely in French. The cultural knowledge she has amassed is incalculable, and the life skills she has learned are invaluable — especially when it comes to finances.

Boland said she was hesitant to make the journey at first. She was not sure if she would be comfortable being that far from family and friends for so long. Almost as soon as she realized that the opportunity outweighed her fears, cost became an issue.

“Study abroad students are required to attend a series of meetings to prepare for the trip the semester before they go abroad,” Boland said. “After safety, the next biggest topic was spending.”

And Carthage wasn’t just concerned with the immediate need to stick to a budget to avoid pestering parents for extra spending money. They thought long term.

“We were given rough estimates of what other students had spent during previous semesters, which was helpful for planning, but they talked a lot about long-term saving, too,” Boland said. “It was kind of an opportunity to get us thinking about value and not just blowing through whatever money we have on a whim.”

So why don’t women engage? Fidelity found that more than half of the women they talked with said money matters were too personal. More than a third said they didn’t even want to give family members this information.

That boils down to confidence, experts say.

Financial Snapshots by Generation Getting the magical 15 percent of salary into a 401(k) account is a struggle for many women no matter what their age is, experts say.

Transamerica crunched numbers exclusively for Workforce and found that, last year, millennial women reported a median $19,000 saved for retirement vs. $31,000 for men in the same age group; Generation X women held $37,000 in their retirement accounts compared with their male counterparts who had $73,000; and baby boomer women show a median $73,000 in their accounts while same-aged men had more than twice that amount at $180,000.

In its survey, “The Real Deal,” HR consultancy Aon Hewitt graphed out how much workers in general need to save by generation and by income. Aon Hewitt says that workers need to have saved about 11 times their final pay at retirement to have enough to maintain their lifestyle. More than half of workers at large companies are either below or significantly below what they need, Aon Hewitt reported.

For a lot of students who are just beginning their careers and undoubtedly aren’t giving much thought to retirement, preparing for a trip abroad is the first venture into long-term savings. Boland admitted that she had never really thought about setting aside money each month until she was encouraged to do so by Carthage.

Of all the generations, Gen X women keep her up at night, Transamerica’s Collinson said. While they have the highest 401(k) participation rate of all working women at 80 percent, they are only contributing 7 percent of pay compared with the 8 percent Gen X men are putting into their accounts. That might be because money could be going to other areas like college savings, health care or other household budget needs.

“I think a lot about wanting to get a good job after graduation so I can pay off loans and find a place to live, but this experience was different,” Boland said. “It took a lot of discipline at first, but I think it was really good practice for the future.”

“Gen Xers are more likely to be taking care of everyone else’s needs when they should be focused on this,” Collinson said. “In many ways, Gen Xers are like ostriches sticking their heads in the sands.”

—Sarah Sipek

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back college loans and battling credit card debt.They are seriously lagging behind their male colleagues’ participation and contribution levels; only 68 percent of millennial women participate in their plans compared with 80 percent of millennial men; these women contribute only 6 percent of pay compared with 10 percent for these men.

Collinson said this is because more women work part time in this age group than men. Part-timers, she added, are less likely to have access to a retirement plan at work.

FIDELITY FOUND THAT MORE THAN HALF OF THE WOMEN THEY TALKED WITH SAID MONEY MATTERS WERE TOO PERSONAL. “While the median household income is similar between millennial women and men, millennial women are more likely to cite paying off debt and just getting by as their greatest financial priority right now compared to men” at 46 percent vs. 38 percent, Collinson said.

Female baby boomers also lag behind their male counterparts. Only 79 percent participate in their plans compared with 85 percent of men. Both genders put 8 percent of their paychecks into their retirement accounts.

The difference here is pretty much the same as the younger group — more women work part time. The real concern, Collinson added, is baby boomer women’s total household retirement savings:Those women have a median of $73,000 in savings compared with $180,000 for men.

There Is Hope Investment management company Vanguard Group looked at its databases and found encouraging information: More women are saving and investing for retirement, and while their account balances might be lower than men, plan design features like automatic enrollment and instant annual bumps in contributions are helping to close that gap.

Millennial: Chelsea Hollenkamp Millennials aren’t good at saving. Some would say this is a stereotype perpetuated by a desire for work-life balance and their propensity to job hop. According to a survey of 2,585 people ages 18 to 35 conducted by finance site HowMuch.net, it’s rooted in the truth as well.

According to their findings, more than 50 percent of those surveyed currently had less than $1,000 in savings. And women accounted for 57 percent of that group.

But just because the majority aren’t saving doesn’t mean that many women aren’t thinking ahead and planning for a future rainy day.

Chelsea Hollenkamp, an associate at MidCap Financial, a middle-market finance firm in Chicago, grew up learning the importance of spending wisely and always saving.

“My dad works in the finance and wealth management field, so from a young age I was aware of how much things cost and that if I wanted something, I had to save,” the 25-year-old said.

That early training led her to a career in finance. Hollenkamp majored in economics with a minor in corporate strategy at Vanderbilt University. When she was going on job interviews during the fall of her senior year, retirement savings was one of her top questions to potential employers.

“I remember practicing for interviews with my dad over the phone and being worried about what questions I should ask at the end of the interview,” Hollenkamp said. “My dad always said to ask about 401(k) programs and how much an employer would match.”

Hollenkamp accepted a job at JPMorgan Chase & Co., and as soon as the option became available, she began paying into a 401(k) account. Having that account even played a role in her decision to leave the company for another opportunity.

“Last year, I had a lot of friends who were making the move into financial startups and investment firms,” Hollenkamp said. “And even though they were making great money and loved the benefits, I held off really looking until after the new year because I wanted to make sure JPMorgan would match my 401(k). I’m going to need that money in the long run, so it was worth the wait.”

—Sarah Sipek

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Overall, men’s account balances were 50 percent higher than women’s, mostly because men earn more money on average.Vanguard found that when it looked at when men and women earned equal pay, women actually saved more and had higher account balances.

Gen X: Angela Adolf As the daughter of two Iowa schoolteachers, Angela Adolf grew up in a frugal household. Her parents worked hard, rarely vacationed, and saved.

“My parents are very practical people,” said Adolf, 40. “My sister and I understood from a young age that we had to work for what we wanted.”

Adolf never really worked in a traditional sense. She has served as the president of the school board for the Homer Community Consolidated School District 33C in Homer Glen, Illinois, and has acted as the executive director and producer of the DuPage (Illinois) Conservatory of Fine Arts. While each role is voluntary and therefore does not include the option of a 401(k) or other financial planning advice, each has required her to be aware of budget and planned expenses.

“As school board president, I had to help assess performance and help in the hiring and firing decisions,” Adolf said. “I also helped balance the budget. Long-term planning was basically part of my job description.”

Adolf volunteered her time to help these organizations run because she knew she was up to the task. That experience has helped shape her approach to long-term retirement savings.

As the mother of two boys, Ryan, 13, and William, 10, Adolf and her husband, Joe, have been planning for college tuition for her sons and retirement for her and her husband since they started their family. He has a steady job at Colorado Technical University, which affords him a 401(k) match option. And she has recently completed her teaching certificate and has been student teaching in Orland Park, Illinois. Adolf hopes to find a job as a middle school teacher. When she begins earning her salary, a portion will undoubtedly go to savings.

“My boys are getting bigger, so I have the opportunity to go out and work at something I’m good at and be paid for it,” Adolf said. “Two incomes doesn’t mean wasteful spending. It still means investing in savings.”

—Sarah Sipek

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Automatic features are helping lower-wage women the most when it comes to participation and saving, according to Vanguard.

“There are two things that are important for everyone: You have to save enough and invest appropriately, and auto-features help people do this,” said Jean Young, senior research analyst at Vanguard. “Everyone’s success in 401(k) plans hinges on design.”

Is There a Solution?

Because the chances of women succeeding in the retirement savings game on their own are pretty low, service providers are coming in full-force with seminars, online tools and other ideas specifically tailored for women to help demystify the investment world and make it easier to understand.

The focus of many campaigns is to help women see that financial planning is possible, and that saving and investing is not just for highly paid workers.

Dearing’s Sum180 is an online financial planning retail service currently targeting women ages 45 to 65. The company launched in November 2015, and gives users three goals to accomplish after they input their financial information and write out what they hope to achieve.

“The language that is being used today is not even beginning to talk the way women are thinking,” Dearing said. “Finances are not this big, tangly, snarly thing you can’t understand. We are telling women you can tackle this, you just can’t do it in one big lump.”

Human resources managers at Blue Cross and Blue Shield of Florida Inc. noticed that participants were not taking full advantage of the company’s 401(k) plan. According to Brightscope Inc., a 401(k) financial information company, the health insurance group — better known as Florida Blue — had great participation, but contribution levels were lacking. The 7,600 participants had an average $81,000 account balance, which Brighj u ly

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scope ranks as average.

Because about 70 percent of the health insurance company’s workforce is composed of women, Florida Blue decided to partner with its provider, Fidelity, to sponsor a series of workshops called Women and Investing.

Nearly 700 people attended the events, which ran from August until October of last year. Florida Blue reported 80 percent of attendees went to all four programs, which spanned issues from getting organized to building a financial blueprint to retirement planning. Webinars were also offered for workers who were unable to attend.

‘WE ARE TELLING WOMEN YOU CAN TACKLE THIS, YOU JUST CAN’T DO IT IN ONE BIG LUMP.’ —CARLA DEARING, SUM180

Baby Boomer: Laura Ward Laura Ward has always been a hard worker. She took her first job at age 16 at an Egg Store near her Garfield Ridge neighborhood on the South Side of Chicago so she could save up to buy a 1967 Pontiac GTO. “I wasn’t really focused on doing well in school back then,” the 54-year-old said. “But I didn’t mind working if it meant getting paid. There were things I wanted.”

Unfortunately, the immediate satisfaction of making a purchase took precedence over the discipline needed to save. Ward held down a part-time job until she graduated high school. Then, instead of pursuing college as her parents wanted, she took a fulltime job at the Egg Store.

As a result, 50 percent of the attendees increased their 401(k) savings, 57 percent reviewed their investment lineup, 41 percent prepared a budget, and the same percentage said they planned to contact a Fidelity adviser to build a financial plan, according to Florida Blue.

“There is a significant appetite for more,” said Melissa Fiscor, the learning and development manager for Florida Blue. “A number of women came up to us asking what was next. It was incredibly encouraging.”

“I continued to live with my parents, and they made me pay rent,” Ward said. “So I set aside $200 a month to give to my father, and the rest went to hanging out with friends.”

Long-term savings didn’t cross her mind until she met her husband, Ron Ward. They were just 20 years old when they got engaged.

“That’s when I started thinking savings,” Ward said. “I wanted a wedding. I wanted a house. I knew children would be expensive. I

Fidelity’s financial programs have been good for women because they give a starting point, Murphy said. Fidelity data show that 40 percent of millennial women don’t know how to get started saving for retirement compared with 19 percent of men in that age bracket.

was thinking long-term, but not retirement long-term.”

“Confidence is definitely climbing, and a lot of that is due to proactive steps that employers are taking,” Murphy said.

at the Egg Store and at the garden center during the summers, but

Thankfully, Ward’s husband, a carpenter in a Chicago union, was already setting aside a portion of each paycheck for retirement.

“I let ‘Big Ron’ take care of that,” Ward said. “I continued to work my money always went to the immediate. I bought groceries and paid for hockey and Irish dance for my kids. I counted on him for the savings.”

Patty Kujawa is a writer based in Milwaukee. To comment, email editors@workforce.com.

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1000 B.C.

The History of

RETIREMENT

BENEFITS Over the years, retirement responsibility has shifted from the employer to the employee.

How can benefits managers help employees retire smarter and more financially secure?

1970

BY LIZ DAVIDSON

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O

ur retirement is not our parents’ retirement. For many American employees in their generation, a good job meant access to a secure retirement income they could not outlive. Employers took center stage, assuming most of the financial risk of funding that retirement with employees largely removed from the process. Today, employers are far more likely to be facilitators of retirement saving, playing a critical supporting role while the employee is the star planner of the retirement show.

How did the idea that employers should offer secure retirement benefits through defined benefit plans, or pensions, evolve? How and why did this change over time to put more of the responsibility on employees to save through defined contribution plans such as 401(k)s? And how can benefits managers use new savings tools and employee benefits available today to help their employees retire smarter, happier and more financially secure?

The U.S. Retirement System Retirement is a fairly modern concept with origins in military history. Until the late 1800s, those who had to work to earn their living worked their entire lives. His-

torians credit the Roman Empire with conceiving the idea of an income that continued after work service by offering pensions to retiring soldiers during the first century B.C. While this initiated a long tradition of military pensions, the concept of ceasing to work in later life didn’t begin to spread to the rest of the workforce until the 19th century.

Today, we think of a pension as a series of payments to be made to workers after the end of their working years.

In the United States during the mid-1800s, a “pension” also referred to disability and survivor benefits. During the middle of that century, larger cities began to offer disability and retirement income benefits to police and firefighters. This trend expanded over time among public sector workers.

In 1875, The American Express Co. created the first private pension plan in the U.S. for the elderly and workers with disabilities. According to the Pension Research Council, by 1926 approximately 200 private pensions had been established by larger employers in the United States. Early pension benefits were designed to pay out a relatively low percentage of the employee’s pay

History of American Retirement Benefits 1935

1875

1961 Social Security enacted, full retirement age 65

American Express offers first corporate pension plan

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ERISA law enacted Social Security is amended to allow reduced benefits at 62

1978

Revenue Act, section 401(k) allows pretax retirement plans

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at retirement and were not designed to replace the employee’s full final income.

The idea that employees should have some kind of a defined benefit in retirement gained traction during the boom decades that followed World War II. Large corporate employers took a paternal approach to their workers and offered pensions as part of their talent recruitment and retention efforts.

And it worked. It was not uncommon for workers to spend their entire careers at the same company back then. Compare that to 2014 when the U.S. Bureau of Labor Statistics reported the average employee tenure was 4.6 years.

Benefits grew richer over time, with many pension plans offering replacement incomes that covered more of the employees’ average pay. By 1970, 26.3 million private sector workers (45 percent of all private sector employees) were covered by some kind of pension plan. Participation held steady for several decades with 43 percent of private sector employees still covered by 1990.

2006

With a traditional defined benefit plan, employees had little direct control over their retirement. To earn higher lifetime benefits in the plan, they could work longer, make a higher salary or live longer — but the employer controlled the contribution formula and the investments, and generally made all the contributions to fund the plan.

The ’70s brought America staggering inflation, disco, and legislation that changed retirement forever. In 1978, Congress passed The Revenue Act of 1978 in which Section 401(k) cleared the way for the establishment of defined contribution plans. The idea was revolutionary: Employees would be able to contribute their own money in a tax-advantaged way to an account to supplement any other retirement benefits they had with tax incentives for the employer to also contribute. The upshot? Over the past 38 years for the typical U.S. employee, the responsibility for developing a sustainable retirement income has shifted from the employer to the individual.

A “defined contribution plan” takes its name from the ability of the employee and/or employer to contribute a fixed sum to the plan. Over time, different types of plans

2011 2009

2000 Roth 401(k) plans emerge

American Express halts pension plan

93% of employees in employer-sponsored plans have access to defined contribution plans

Social Security Act amended to reward individuals who work past 67

Design courtesy of Financial Finesse

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evolved to serve different types of employees: 401(k) plans for private sector employees, 403(b) plans for nonprofit and public education employees, 457 plans for state and municipal employees and the Thrift Savings Plan for federal employees.

them to better understand their role in retirement preparation and freeing up more funds for contributions toward their retirement goals. Integrating plan design enhancements with employee benefits education and communication can improve retirement preparedness.

ONLY 46 PERCENT OF MALE EMPLOYEES AND 36 PERCENT OF FEMALE EMPLOYEES ARE CONFIDENT THEIR INVESTMENTS ARE ALLOCATED APPROPRIATELY IN THEIR RETIREMENT ACCOUNTS.

Today, the traditional pension is an endangered species. For the past decade, employers have been terminating defined benefit plans in record numbers and moving toward defined contribution plans.

According to the Employee Benefits Research Institute, by 2011 69 percent of employee participants in a retirement plan at work were participating in a defined contribution plan, 24 percent were participating in both a defined contribution and a defined benefit plan, and just 7 percent were in a defined benefit plan only.

Employees are Unprepared or Underprepared for Retirement Employees are largely unprepared to shoulder the risk of saving adequately to fund retirement and making wise investment choices with those savings. According to the Financial Finesse 2015 Year in Review research on employee financial trends, only 22 percent of employees are confident that they are on track for retirement, even though 84 percent contribute to their retirement plan. (Editor’s note: The author is the CEO of Financial Finesse.)

When it comes to choosing appropriate investments in their retirement accounts, employees are also falling short.

Only 46 percent of male employees and 36 percent of female employees are confident their investments are allocated appropriately in their retirement accounts. Problems with cash flow management and debt have a cascading effect on suppressing retirement savings rates.

Recent enhancements in retirement plan design, such as auto-enrollment and auto-escalation, are not enough to increase preparation. Employers must address cash management and overall financial wellness, educating 40

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Employers can increase the likelihood that employees will be better prepared for retirement by integrating retirement education into an overall financial wellness program that looks at cash flow, employee benefits and long-term financial goals.

When in place, Financial Finesse’s research shows repeat users of workplace financial wellness benefits have shown a 88 percent improvement in the percentage of workers who are on track for retirement. Forward-thinking employers can take these six steps to improve employee retirement preparedness: 1. Increase the default deferral rate.

2. Automatically enroll employees in auto-escalation of their retirement savings.

3. Implement re-enrollment in the plan’s qualified default investment alternative, also known as a QDIA, an investment that may be used by retirement plan sponsors in the absence of direction from the plan participant.

4. Offer benefits planning to help employers understand and maximize the value of their benefits.

5. Enhance employee communications.

6. Develop a comprehensive financial wellness program.

More — and More Complex Benefits Choices Employers and employees are also navigating major changes in health insurance benefits, including the move to high deductible health plans in conjunction with health savings accounts, which were created in 2003. Employees in general do not yet fully understand the advantages of HSAs in preparing for retirement, and employers have a high hurdle in helping them maximize this benefit.

Additionally, since the Roth individual retirement account was introduced in legislation sponsored by the latej u ly

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On average, people will need 11 times their annual pay at age 65 to retire and maintain their standard of living, but the numbers fluctuate when factoring in taxation and medical costs by age.

Source: “The Real Deal: 2015 Retirement Income Adequacy at Large Companies,” Aon Hewitt

Current Age

The Age of Save

2014 Pay <$30K

$30K–$60K

$60K–$90K

$90K–$120K

$120K+

60+

8.0

7.5

6.9

8.1

9.6

50–60

9.5

8.7

8.3

9.4

10.6

40–50

11.0

10.0

9.9

10.8

11.8

30–40

12.2

11.0

10.8

11.7

12.5

<30

13.4

11.6

11.1

11.9

13.1

Sen. William Roth Jr., R-Delaware, in 1997, Americans within certain income limits have been able to save after-tax contributions in an account that grows tax-free for retirement. The Roth 401(k), allowed by legislation passed in 2001, gave those employers who sponsor retirement plans the option to offer employees after-tax/taxfree distributions within the 401(k) structure. While slow to gain adoption, recently employees have been choosing Roth options in greater numbers.

Healthy Confusion Employees generally remain confused over which health insurance and retirement plan options are best for their situation. They look to their employers to offer guidance on how to choose what’s right for them. Employers may consider offering targeted educational workshops or webcasts, print or email communications and personal financial coaching to help employees understand and maximize these benefits.

For health care, this includes ways to review the health coverage and out-of-pocket costs they have today, understand and compare plan options, decide which option is best for their unique situation and prepare for changes they’ll need to make in their cash management to take full advantage of the value of an HSA. Employers can also offer workers retirement plan education on the differences between pretax and after-tax contributions, and the general types of situations where one or the other makes sense.

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to help employees be the star planner of the retirement show so they can meet the challenges of improving retirement preparedness and make wise benefits decisions.

According to a TIAA survey, 81 percent of respondents said they trust financial information from their employer.

Financial Finesse’s 2015 Retirement Preparedness Research shows that the number of employees who say they are on track for retirement doubled with repeat usage of workplace financial wellness programs. While technology such as online financial education can play a supporting role, employers will gain the most influence and employee satisfaction with offering interaction with a financial coach who can help employees through the decision-making process.

Employers who offer support, guidance and education to assist employees in taking center stage throughout their careers in order to retire comfortably will have loyal, more financially confident employees. As reporter Emily Brandon said in “Pensionless:The 10-Step Solution for a Stress Free Retirement,” “Although you may never receive a pension from a former employer, you can do a lot to make the most of the retirement benefits you do have.”

With employers leading the way in prepping workers for the future, 21st century employees can still have a comfortable, secure retirement.

Liz Davidson is the author of “What Your Financial Advisor Isn’t Telling You” and founder and CEO of Financial Finesse, which provides financial education to more than 600 companies nationwide. To comment, email editors@workforce.com.

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SPECIAL REPORT

401(k) Providers

Fewer in the 401(k) Field As consolidation takes over the 401(k) plan record-keeper marketplace, employers gain more opportunities to get the same service at a discount price.

By Patty Kujawa

T

he limbo bar is set lower and lower each year for not continue to provide the highest levels of service if profit 401(k) record-keepers. Several providers have exited margins are nonexistent.” the game, merged or been acquired by larger providers So what happens? Consolidation. Last year’s big deals because they haven’t been able to keep pace with “how included John Hancock Financial purchasing New York low can you go?” fees or expanded services that plan Life Retirement Plan Services; Transamerica Retirement sponsors have been demanding.

Solutions acquired Mercer’s defined contribution re“Plan sponsors want more,” said Jamie McAllister, cord-keeping business; and OneAmerica Financial Partvice president of defined contribution practice at Chi- ners bought BMO Financial Group’s U.S. record-keeping cago-based consulting firm Callan Associates. “They services business. Earlier this year, Xerox Corp. said it want more services, more technology and lower pric- would spin off its record-keeping business into a separate ing. It’s hard for everyone to keep up. It’s resource-in- public company. tensive and investment-intensive.”

Many of the acquisitions were made so the acquirer Plan sponsors feel the heat from U.S. Labor Department could broaden its ability to serve plans of all sizes. By rules and in turn are continuing to put pressure on their purchasing New York Life’s expertise in the mid- to providers for more or better services at lower costs. A few large-plan market, John Hancock has been able to round years ago, the Labor Departout its small-plan capabiliment required plan sponsors ties, said Fred Barstein, to know how much they founder and executive diwere spending on their plans, rector of The Retirement and in turn provide that inAdvisor University and The formation to participants.

Plan Sponsor University.

Over the years, participants “As a record-keeper, you have brought lawsuits against have to sell to all” segments companies saying the providof the market, Barstein said. ers they hired were receiving “As plans grow and get more unreasonably high fees. sophisticated, some reOn top of this, a newly cord-keepers lose out because minted rule, which takes efthey either don’t have the fect next year, redefines the right people or the bells and definition of fiduciary. Now whistles that are now standard.”

—JAMIE McALLISTER, CALLAN ASSOCIATES any service provider that gives Record-keepers are the investment advice to a plan nuts and bolts of defined must put the plan’s best interests ahead of its own. contribution plans. They manage the daily operations, As a result of plan sponsor demands, fees paid for re- like processing enrollments, tracking and handling incord-keeping services have been squeezed, hitting record vestment elections, contributions and payouts as well as lows each year. The median record-keeping fee was $64 per producing plan statements for employees. plan participant in 2015 down from $70 in 2014, according About 10 years ago, record-keepers needed to service to data from investment consulting firm NEPC. When 1 million participants to stay alive. Today, providers need NEPC started tracking fees 10 years ago, it was $118.

2.5 million to 3 million participants, said Jim O’Shaugh“This erosion in fees leaves little wriggle room for more nessy, managing partner for Sheridan Road Financial, a cost savings,” NEPC’s 2015 October survey on defined con- Northbrook, Illinois-based consultant and retirement tribution plans and fees reported. “Plan record-keepers can- plan advisory firm.

PLAN SPONSORS ‘WANT MORE SERVICES, MORE TECHNOLOGY AND LOWER PRICING. IT’S HARD FOR EVERYONE TO KEEP UP. IT’S RESOURCE-INTENSIVE AND INVESTMENT-INTENSIVE.’

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SPECIAL REPORT

401(k) Providers

“The industry has changed a lot,” he said. “In the record-keeper industry, we expect to see consolidation continue down to maybe six total providers. That’s probably an aggressive number, but there is still an enormous amount of consolidation to occur.”

Fidelity Investments continues to dominate the field, serving 24,000 plans with 18.9 million participants with $1.5 trillion in assets.

Scale is what these players have in common, industry experts say. Things like mobile apps, automatic features and other online educational tools used to be the specialties that got record-keepers noticed. Today, these providers can’t survive without top-line technology and services. In many ways, record-keeping has become a commoditized service — meaning that there is little that differentiates the options on each providers’ menu.

Because the market is changing so rapidly, plan advisers are working with plan sponsors to evaluate record-keeping services more frequently. Robert Lawton, founder and president of Lawton Retirement Plan Consultants in Hales Corners,Wisconsin, works with midsize to smaller plans. He said plan sponsors that haven’t taken record-keeping services out to bid in three to five years can see fee reductions of up to 50 percent.

That is good news for plan participants, who are usually the ones paying service fees. The Labor Department points out that an employee with 35 years until retirement with $25,000 in a 401(k) account could grow that balance to $227,000 at retirement using a 7 percent return on investment and a 0.5 percent fee reduction. Using a 1.5 percent fee on the same account would bring the balance down over time to $163,000.

Plan sponsors and their advisers are looking for providers with staying power and the ability to provide the best service to suit their needs. Kathleen Kelly, managing partner with Compass Financial Partners in Greensboro, North Carolina, said her firm works with 20 different record-keepers and benchmarks provider services annually for plan sponsor clients to make sure the record-keepers they use are competitive.

“If you see a gap which shows the record-keeper isn’t keeping pace, they are likely not to continue being in the business,” she said.

About 67,000 401(k) plans could very likely switch record-keeping providers within the next 12 months, a Cogent Reports study showed from Market Strategies International.

While this number is statistically the same as last year’s report, more plan sponsors (57 percent) are in that middle ground of “maybe land” compared with last year. Fees continue to be the main reason plans consider switching providers.

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Cogent’s May “Retirement Planscape” study noted the top five plan providers most likely to be considered by all plan sponsors: Ascensus, Fidelity Investments, Vanguard Group, Empower Retirement and Wells Fargo & Co. Linda York, vice president at Market Strategies noted that some providers, like Aon Hewitt, only cater to larger companies, and would not be considered by smaller clients.

“Consolidation is definitely on the mind of plan sponsors,”York said. “It’s not the be-all-to-end-all that is causing the [consolidation] action, but it is certainly something worth noting.”

Meanwhile, some plan advisers are beginning to narrow the number of record-keepers they will recommend to clients. Cogent Reports data show plan advisers work with about three providers on average. Plan advisers managing $50 million or more in defined contribution assets work with about four providers.

Sheridan Road’s O’Shaughnessy said his company is trying to get bigger, and needs to whittle the number of record-keeper relationships in half from the 25 they currently recommend. The company currently manages $10 billion in assets for 200 defined contribution clients and is shooting for $50 billion in assets with 500 clients.

“For us to build that kind of scale in our business, I have to create efficiencies,” O’Shaughnessy said. “From the [plan] advisory end, we see a massive amount of consolidation going to happen, too.”

As a way to make money, several providers sell proprietary investments alongside their record-keeping services. But many plan sponsors are taking a second look at that relationship because they want to make sure that when selecting investments and service providers, they are fulfilling their fiduciary responsibility in acting in the best interest of their plan participants.

Only 14 percent of defined contribution plans used the record-keeper’s investment funds last in 2015, according to consulting firm Callan Associates’ 2016 Defined Contribution Trends survey, which tracks larger plans. In 2014, nearly 20 percent of plans fit that strategy.

“There is a higher bar out there,” said Callan’s McAllister.

In terms of separating investments from the record-keeper, “it keeps things cleaner.”

Some advisers, like Compass’ Kelly, prioritize the investment menu before helping a plan sponsor choose a record-keeper. There can be cost savings if a plan sponsor uses the record-keeper’s brand-name investments, but often the fee for the investments gets tangled with the record-keeping cost.

SPECIAL REPORT continued on page 49 j u ly

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HOT LIST 401(k) Providers Listed alphabetically; compiled by Andie Burjek; editors@workforce.com Number of unbundled participants

Number of unbundled clients

Average number of participants (unbundled and bundled) per plan

Number of staff members dedicated to 401(k) services

5.7 million

345

10,424

3,500

13.9 million*

21,800*

638

Would not disclose

2.7 million

56,300

49

1,800

MASSMUTUAL retiresmart.com

620,969

19,126

70

2,176

PRINCIPAL FINANCIAL principal.com

544,931

9,631

115

3621

TRANSAMERICA RETIREMENT SOLUTIONS transamerica.com

2.6 million*

23,082*

113

Would not disclose

VOYA voya.com

2.2 million

20,935

106

1,461

WELLS FARGO INSTITUTIONAL RETIREMENT AND TRUST wellsfargo.com

3.3 million

3,588

920

2,235

Company name & web address AON HEWITT aonhewitt.com FIDELITY fidelity.com JOHN HANCOCK RETIREMENT PLAN johnhancock.com

*These figures include both bundled and unbundled participants and clients Note: Great-West and Prudential either declined to participate or did not respond to requests for information.

Source: Companies

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Make Your 401(k) Plan Better Than OK

By Daniel R. Saeedi We all know that 401(k) plans are an attractive option for a company’s workforce. It allows employees to plan for retirement and promotes financial security, which in turn leads to high morale. They also put employers who offer them in a better position to attract and retain talented employees. But how can these plans be improved for their current and potential employees? Here are five ways:

DATA BANK Very Rewarding Two-thirds of companies include 401(k)s as part of their total rewards compensation package.

68% Source: Human Capital Media Advisory Group’s 2016 Workforce Compensation survey

1. Increase employer contributions.

This is probably the easiest way to attract top job applicants and increase employee morale. There are different ways that an employer can make 401(k) contributions. The standard method is for an employer’s contribution amount to be dependent on the amount that an employee contributes.

Employers can also make “nonmatching contributions,” which are lump-sum contributions that are not dependent on the amount an employee contributes to the plan.

Very Important?

About a third of respondents cited 401(k)s as one of their three most important employee benefits.

34%

2. Create an automatic enrollment plan.

According to the U.S. Labor Department, 30 percent of employees who work for an employer with a 401(k) plan do not contribute to it. However, the Labor Department estimates that this number would shrink by half if the employer had an auto-enrollment 401(k) plan. Here’s how it works: A small amount of an employee’s salary is automatically defaulted into a particular 401(k) investment, and the employee is provided notice and an opportunity to opt out of this automatic enrollment. In practice, few employees opt out of automatic enrollment.

Source: Human Capital Media Advisory Group’s 2016 Workforce Compensation survey

Very Much Participating Most companies offer a defined contribution benefit.

Most say their workers say their retirement benefits are one of their three most popular nonhealth benefits.

3. Make sure your plan offers target-date funds.

A target-date fund is an investment vehicle with an asset allocation that becomes more conservative as the employee approaches a given target date, usually the employee’s desired retirement year. These types of plans are popular, and employers are even using these funds as default investments for automatic enrollment.

81%

81%

Source: Human Capital Media Advisory Group’s 2016 Workforce Compensation survey

4. Shorten or eliminate eligibility periods.

The increasing trend is to eliminate eligibility restrictions and allow employees to start contributing to their 401(k) plans from the first day.

This allows the employee to invest earlier and take advantage of tax benefits.

Very Steady Just about 1 in 10 companies said they increased their defined contribution offering vs. the year before.

5. Communicate about the plan details.

There can often be many details regarding an employer’s 401(k) plan, including the types of investments offered, investment fees and more.

Employees appreciate having as much information as possible, and employers who take the time to communicate to their employees about the 401(k) plan will likely see more investment in the plan and more content employees.

Daniel R. Saeedi is an attorney at Taft, Stettinius & Hollister. To comment, email editors@workforce.com.

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13%

6% And just 6 percent expect an increase for 2017.

Source: Human Capital Media Advisory Group’s 2016 Workforce Compensation survey

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ROADMAPS Roadmaps is a practical guide for HR leaders on how to plan, implement and review key talent management programs. This Roadmap offers advice on how to plan and implement a successful retirement plan. To learn more about this and other Roadmaps, visit Workforce.com/Roadmaps.

Planning for Retirement Effectively

By Andie Burjek

Y

ep, they’re worried.

Fewer than 1 in 3 U.S. adults — 30 percent — is confident they will achieve their retirement goals, according to a recent PlanSponsor survey of 1,035 adults conducted in March.

To ensure employees stay on track and save enough for retirement, employers should be prepared to set up comprehensive, automatic plans to communicate with employees on an ongoing basis. How much are they saving? How much should they be saving? And if they’ve fallen behind, how do they get to where they need to go?

Because a strong retirement plan is an important factor in employee attraction and retention, employers should seriously consider how they could make saving for retirement simple and manageable.

This Workforce Roadmap offers guidance on how to formulate a plan to help your workers achieve their retirement goals. j u ly

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Plan, Do, Review Plan •

Figure out your goal as an employer. What do you want employees to get out of their retirement plan? Employers should set up goals focused on what employees will likely need when they retire.

•

Know your employees’ blind spots. A tool such as a target-date fund is perfect for this, said Katie Taylor, director of thought leadership at Fidelity Investments. Target-date funds manage a person’s investments and decide how much should be weighted in stocks and bonds based on how many years until an employee retires.

•

Embrace automatic features. The automatic enrollment features allow an employee to automatically be signed up for a plan upon hire, and auto-increase is a way for people to add to the percentage they save each year.

Employees can either use these features or choose to opt out.

Do •

Offering the plan is the first step. It’s important to make sure the way the plan is set up makes it easy for employees not only to get enrolled but also to save out of their paycheck into a plan.

•

It’s a match! Employer match allows employees to save a recommended percentage of their income. The general rule of thumb is 15 percent over an employee’s career, Taylor said. If both you and an employee put in 6 percent, they’re at 12 percent and close to the 15 percent goal.

Review •

Communicate with employees on an ongoing basis. What’s important is that, as employees’ lives change, the amount of money they put into their accounts and what they invest in is appropriate for their stage of life.

•

Reassure employees that ups and downs are to be expected. “Retirement is more of a marathon than a sprint,” said Mike Shamrell, director of corporate affairs at Fidelity. “We try to reassure people that the market’s going to go up and down possibly 10 times between now and the time they retire.”

•

Consult some rules of thumb. For example, the 10-times-savings rule is a way to keep employees on track. Another rule is saving one times your current salary by age 30 and three times by age 40. These numbers don’t apply to everyone, but they’re useful as a rule of thumb, Taylor said.

•

Review the plan occasionally. When employees evaluate job offers, a huge consideration is the workplace plan. Ask yourself, does your current plan attract and retain employees?

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Modern HR in the Cloud Core HR for the Global Enterprise Talent Management with Social Sourcing Predictive Analytics and Big Data Insights On Desktop, Tablet, and Smartphone

#1 in Human Capital and Talent Management

oracle.com/hcmcloud Copyright Š 2016, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates.

SPECIAL REPORT continued from page 44 “Considering the investment menu before the record-keeper helps to take those unknowns out and makes it a more transparent process,” Kelly said.

Even though providers are exiting the market, robo record-keepers are coming on the scene. Last year, robo-adviser Betterment entered the record-keeping space with its Betterment for Business line. The company launched in January with 50 plans.

Betterment’s main selling point speaks to plan sponsors’ major concern: cost. Management fees range from 0.1 percent to 0.6 percent, depending upon the size of the plan. Betterment is a full-service provider, offering web-based fiduciary advisory services for participants, plan sponsor support, and professionally managed accounts that use passive or indexed investments.

The company certainly has skeptics. Sev-

eral experts said the business model only works for smaller plans or for those plans that don’t have sophisticated users who want to invest in specific stocks.

“For those companies just starting plans, this may be a decent solution,” said retirement adviser Lawton. “The problem with robos is the executive of a $1 million plan probably isn’t interested in getting investment advice from an automated answer or a 23-year-old kid on the line.”

Others, like Barstein, are interested in seeing what Betterment can do with its low fees in this cutthroat record-keeping space.

“The world is changing and robos are creating a new paradigm,” Barstein said.

Patty Kujawa is a writer based in Milwaukee. To comment, email editors@workforce.com.

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LAST WORD

J a m e s Te h r a n i

THE TIRED SCARE TACTICS ON RETIREMENT

T

o maintain my, ahem, lavish lifestyle, I’ll need to put away $2.2 million by the time I’m ready to retire at age 67, according to the retirement calculator on CNN Money.

And with all those Social Security benefits promised to me, I’ll have it made.

As a longtime journalist and editor who torches fifty-dollar bills to light cigars, I scoff at this declaration about my retirement and any fearmongering from the financial experts out there, like this little rant on neglecting saving for retirement from Dave Ramsey: “You’re going to be so bad, you’re going to be ordering the cookbook ‘72 Ways to Prepare Alpo and Love It.’ ” Well, that’s pretty ruff. I mean, rough.

“I could pawn my new Ferrari F60 for more than that,” I shout at my computer screen, adding a juicy raspberry and “na-na, na-na, boo-boo” for good measure.

Then reality hits.

Huh? Wait, I must have been daydreaming.

“Oh, crap,” I say to myself as I snap back to reality.There’s a better chance of Trump, Cruz, Clinton and Sanders singing “The hills are alive with the sound of music” together in a picturesque meadow than I being able to set aside more than $2 million to retire. Of course, my wife will have to fend for herself under this maddening retirement scenario. Love you, honey, but the “you” in CNN’s “Will you have enough to retire?” tool is second-person singular as far as I can tell, and there’s an “I” and a “me” in “retirement.” So …

But there is a ray of hope. If I hang on to my job until age 76, the calculator tells me I should be on track to have just enough money to retire. That is as long as I plan on being healthy for the rest of my days and I expire at age 92.

If I beat expectations and go for the century mark, or spend the last years of my life regretting those hot dogs and cheeseburgers I ate at backyard barbecues over the years, or those Bombay Sapphire martinis I imbibed at various social gatherings, or if my asthma catches up to me from the summers I spent breathing in smoke and coughing up black junk while grilling ribs at outdoor festivals, I could be hurting even more.

Medical bills: expensive. And playing bridge for money with people who are much better at cards than I am is expensive, too. Unfortunately, I’ve heard bad things about the “I’m gonna strike it rich” by playing the lottery every week strategy for retirement.

It’s not going to be easy for me to save enough for retirement for sure, but women have it even harder, writes Patty Kujawa in our retirement feature,“Making Up the Difference,” p. 28. She cites a Transamerica report that found women are less likely than men to have access to a 401(k) and are also less likely to participate in one or even contribute to one.

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Workƒorce | w o r k f o r c e . c o m

Furthermore, in its 2016 Retirement Confidence survey, the Employee Benefits Research Institute found that 40 percent of unmarried women have less than $1,000 stashed away for retirement.Twenty-two percent of married women were under $1,000 as well.

The EBRI survey also offered this grim analysis: “Despite the fact that women tend to face higher expenses in retirement due to their greater longevity, unmarried women (36 percent) are more likely than their unmarried male counterparts (25 percent) to think they will need to accumulate less than $250,000 for retirement.”

Two hundred and fifty grand? What is this 1950?

If you had a quarter of a million dollars back then, it would be the same as almost $2.5 million today. Problem is it hasn’t been 1950 for, oh, 66 years.

THERE’S A BETTER CHANCE OF TRUMP, CRUZ, CLINTON AND SANDERS SINGING ‘THE HILLS ARE ALIVE WITH THE SOUND OF MUSIC’ TOGETHER THAN I BEING ABLE TO SET ASIDE MORE THAN $2 MILLION FOR MYSELF TO RETIRE. Our friends at the Social Security Administration tell us that if you’re a female millennial born Jan. 1, 1982, you are expected to live almost 86 years, and if you make it to age 70, you’re on pace to live till 89.

That’s great, but we are going to start seeing more people work to 100 and beyond just to pay the bills.

It’s nice to know there are some organizations like Cedars-Sinai that offer a choice in retirement benefits. Employees at the Los Angeles-based health care facility can choose — yes, choose — between a defined contribution plan and a defined benefit plan.

While we can’t “turn back time to the good old days,” it’s important to know there are a lot of workers who are “stressed out” about retirement. Is there anything you, the HR community, can do to communicate differently about retirement? Clearly the scare tactics just aren’t working.

Let’s figure this out soon. I’m almost out of Alpo.

James Tehrani is Workforce’s managing editor. To comment, email editors@workforce.com.

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2016