SHRMingham

Expensive Trips for High Performers in a Recession - Ditch Them Even if Someone Else Is Paying?

Most folks agree that in the middle of a recession and with the stinky reputation investment banks have garnered for all-expense junkets lately, incentive trips costing a company hundreds of thousand of dollars are a bad idea.  After all, how could you spend all that money while so many people are hurting in today's economy?

Of course, it's never that simple.  If it were simple, everyone could agree.

For example, here's the toughest question regarding travel rewards from my perspective as a VP of HR.  What do you do with "somewhat extravagant" reward trips for high performers when someone else is paying? (a company whose products you sell and needs access to your sales force, etc.)

Paul Hebert weighs in with his view, and remember, he's a rewards and incentive expert:

"The biggest misconception that is being propagated in the news is that these "junkets" are only for the top executives within a company.  I'm guessing the public has visions of fat, half-naked old men, sitting on pillows with young ladies dropping grapes in their mouths.  Nothing could be further from the truth. 

Most incentive participants are:

• The rank and file sales person whose job depends on ever-increasing levels of performance and contains risk most of us desk-jockeys couldn't imagine.  (Do you want your continued employment predicated on your prospect being in a bad mood after spilling hot coffee on his/her lap in the Starbucks drive-thru?)
• Employees who have exceeded, by a wide margin, the constraints of their job description and have increased the competitiveness of their company
• Members of a company's distribution channel who have stuck with the company to become top producers and advocates for the product, service, brand or company - people the company needs to remain competitive and innovative.
• The spouses, children, significant others, who attend with the person who earned the trip - providing much needed reward for the sacrifices they have made to allow the earner the time and attention being one of the best requires.

Incentive and meeting travel is a critical element in building relationships - especially in this predominately electronically connected world.  These relationships will help companies weather this economic storm, create new business ideas from collaborative conversations, foster innovations that will drive business, and reduce the costs of turnover within organizations.

Do not perpetuate the false information that is filling the airwaves, newsprint and electrons." 

Paul raises some good points related to travel rewards.  Travel rewards most commonly go to PRODUCERS - the sales pros who bring home the bacon, so the company can fry it up in the pan.  And if there's a group out there you want to keep motivated, it's the sales force.

So, why not continue rewards travel for that group, especially if someone else is buying, or the funding comes from the difference in revenue once a sales rep goes over 100% quota against an already aggressive plan?  The counter to this view is the employee relations cost.  After all, the regular folks don't get access to the quota spreadsheet, and they don't know if an affiliate/channel partner is paying for the outing.

They just see the trip, the cost and the brand of the hotel, which decidedly did not find your top sales performers staying at a Holiday Inn Express during the last junket.  With that in mind, my call would be to shelf the extravagant trips for 2009 company-wide, regardless of who pays or how critical the trip is said to be to sales force morale. 

After all, like the saying goes - salespeople can give themselves a raise by selling more.  Most of our employees who see the extravagant trip can't perform their way into being included on the junket, and it stings to see the trip going off as planned when they lost 2 people from their 8 person department last Friday.

Lose the junket for 2009.  I'm betting you won't lose your top sales performers. 

Employee Generated Videos - If You Want to Make a Hit, You've Got to Make it Quick...

We've been experimenting a good bit on our company-based social network (affectionately named "Sourceapolooza") and I'm becoming increasingly convinced that the killer app for any internal social network is video.  After all, YouTube rocks the casbah, and it's what people now expect/want in any web offering.

The only thing better than video on your internal flavor of Facebook?  EMPLOYEE generated videos.  When employees care enough to create their own videos, in my eyes that's pretty much the definition of engagement. 

Which is why the recent 401k contest sponsored by Best Buy is such a great idea.  More on the contest at BestBuy via HR Marketer:

"Last week one of our team members attended a Webinar about the power of Web 2.0 in talent management. One of the highlights was how Best Buy increased their 401k participation by 30%.

30%? How the heck did they do that?  With a contest. A video contest. They asked employees throughout the retail chain to submit motivating videos that would help increase overall 401k participation. They did just that and the winner is below."

You have to admit, that's pretty sweet, and if you're not the type of HR pro who has their wheels spinning as a result, then... well, you probably need to take a break and find your motivation or consider another career.

If I had to split hairs on the video, I'd say it's too long - if you want people to watch the whole thing, you have to bring a length no longer than a movie trailer - 2:30 tops. 

Still, that's mindless quibbling vs. the impact of employees caring enough to cut a video like this.  What can you do early in 2009 to give control to employees and empower them to get creative on video?

January Meeting Recap - The Mental Health Parity Act...

If you missed the January meeting, you missed a great rundown of the Mental Health Parity Act, which goes into effect on 1/1/10 and will have many companies scrambling to ensure their mental health and substance abuse benefits are equal to coverage in other areas of healthcare.  Our speaker at the January meeting, Maureen Gleason, VP of Operations for American Behavioral, gives you the one minute version below: 

(Email subscribers - click through to website for video if you don't see it below)

Special thanks to American Behavioral for sponsoring our January meeting.  Meanwhile, if you are wondering who American Behavioral is, here's a rundown from Bobby Harris, AB's Director of Sales....

The Medical Records of Paris Hilton - Would Your Team Violate HIIPPA and View Them?

New reports out of LA show that the UCLA Medical Center employees love looking at the medical records of celebrities.  Nice!

So, the employees got caught looking and now they're paying the price.  I get that.  I'm supportive. More interesting to me is that in a small, medium or large HR shop, HR people have access to a lot of PHI data, often without the login security and tracking that an EMR provides.  Also, a lot of data exists in medical files related to PHI.  Here's the $64K question.  If given the chance, would your HR people look at that data and maybe look up a code on the treatment provided?  Are you sure?

More on the UCLA Medical Center situation from the LA Times:

"Even after UCLA Medical Center warned employees that it was cracking down on unauthorized access to medical records, the privacy of a "well-known individual" was breached by two nurses and an emergency room technician who called up the patient's computerized records in mid-April, according to a critical state report released Monday.

Monday's report was the fifth by the public health agency following articles in The Times this year about UCLA employees' prying into the records of celebrities and prominent patients, including California First Lady Maria Shriver, actress Farrah Fawcett and singer Britney Spears.

State regulators continue to fault the hospital for failure to take adequate steps to maintain patient confidentiality. After the April violations, the report said, one nurse was fired and the two other employees received warnings.

The latest findings detail how one employee -- a former administrative specialist who faces federal criminal charges for violating Fawcett's privacy -- looked at the records of 939 patients "without any legitimate reason" from April 2003 to May 2007. In previous reports, the state had linked her to viewing the records of about 60 patients. She also looked at other personal information, including Social Security numbers, the state now says."

Now, that's what I call an admin gone bad... Do you even know what your employees have access to?  How do you protect access to this type of information on Joe Schmoe?  The same procedures/systems that protect Schmoe protect Paris. 

Human nature is at work here.  We're imperfect.  Name a privacy officer in your department and route all system access, dealing with Medical vendors, FMLA certifications, etc. through them unless someone has the need to know or is working the case.

I mean, can you imagine how many HR people would take a peek at David Hasselhoff's medical history?   The life-event section of the employee file alone probably requires one of those book-size rubber bands.... 

Dropping Labor Day for Muslim Holiday? The Case for Floating Holidays....

A Tyson plant in Tennessee has decided to offer the Muslim holiday Eid al-Fitr -- which marks the end of Ramadan -- as a paid holiday instead of Labor Day.  Almost 700 of the plant's 1,200 employees are Muslim.  Somehow, I think this is going to be an emotional one...

More details from MSNBC:

"Workers at the Tyson Foods poultry processing plant in Shelbyville will no longer have a paid day off on Labor Day but will instead be granted the Muslim holiday Eid al-Fitr. According to a news release from the Retail, Wholesale and Department Store Union, a new five-year contract at the plant included the change to accommodate Muslim workers at the plant.

Tyson's director of media relations Gary Mickelson said the contract includes eight paid holidays -- the same number as the old contract.

Eid al-Fitr -- which falls on Oct. 1 this year -- marks the end of Ramadan, the Muslim holy month of fasting.  Union leaders said implementing the holiday was important for the nearly 700 Muslims, many of them Somalis, who work at the plant that employs a total of 1,200 people.

Nineteen-year plant veteran William Pentecost doesn't agree with the decision. "I don't think it's right. I really don't think it's right," he said.

Tyson company spokeswoman Libby Lawson said by phone that, "This isn't a religious accommodation, this is a contractual agreement. The majority asked for it."   The change didn't bother some workers.

"I think it's fine. I don't have any problem with it. There's a whole bunch of them here, so they've got to do something for them," said worker John Smith.   Nineteen-year plant veteran William Pentecost doesn't agree with the decision.  "It shouldn't happen. I mean, I think, we're in America, you're in America, I think that they should go with our holidays," Pentecost said."

Lots of stuff imbedded in this one.  America, religion, etc.  For most work locations, the standard operating procedure of Amercian and Christian holidays satisfies the majority.  When that's challenged or no longer makes sense in a mutil-cultural environment, doesn't it make sense to move a large portion of the fixed holidays into floating holidays to offer employees the flexibillity to identify the days most important to them to be away from work?

Just thinking out loud.  The other issue embedded in this one is workforce planning, in that the plant needs to know when they are going to shut down for full days to plan production. 

Is it ever easy?  The answer is most certainly no, but we'll see the standard idea of Christian holidays challenged more and more in the future, as the Amercian workforce continues to diversify. 

If This Were a Division, You'd Shut It Down Tomorrow - The Cost of Health Care to Double By 2017...

Hey dude... The light at the end of the tunnel?  It's a freaking train, and it's coming to run you over....

Seriously, can there be a more desperate situation than the state of US Healthcare?  The population is aging, the mostly good capitalist society creates drug companies that create billion dollar markets out of vapor, and you are in the middle of the fray, trying to be the Daddy Warbucks of healthcare by providing medical and Rx to your workforce.  That's what you're supposed to do as an employer, right?

Sure, that's been part of the employer role.  But, it's getting ready to be very painful.  From the Associated Press:

"By 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends, the federal government projects.

The 6.7 percent annual increase in spending — nearly three times the rate of inflation_ will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011."

That means total health-care spending in the year 2017 will average out to $13,101 per person.  By contrast, that spending in 2006 worked out to an average of $7,026 per person. 

WOW... 6.7% actually sounded OK to me, until I realized that compounding, which is good for my 401k, really hurts when it impacts the expense side of the P&L.

If it were a division, you'd shut it down tomorrow.  But it's not...

Hey dude... The light at the end of the tunnel?  It's a freaking train, and it's coming to run you over....

Seriously, can there be a more desperate situation than the state of US Healthcare?  The population is aging, the mostly good capitalist society creates drug companies that create billion dollar markets out of vapor, and you are in the middle of the fray, trying to be the Daddy Warbucks of healthcare by providing medical and Rx to your workforce.  That's what you're supposed to do as an employer, right?

Sure, that's been part of the employer role.  But, it's getting ready to be very painful.  From the Associated Press:

"By 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends, the federal government projects.

The 6.7 percent annual increase in spending — nearly three times the rate of inflation_ will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011."

That means total health-care spending in the year 2017 will average out to $13,101 per person.  By contrast, that spending in 2006 worked out to an average of $7,026 per person. 

WOW... 6.7% actually sounded OK to me, until I realized that compounding, which is good for my 401k, really hurts when it impacts the expense side of the P&L.

If it were a division, you'd shut it down tomorrow.  But it's not...

42% of Tampa Bus Drivers Have Signed Up for Intermittent Leave..(!)

WOW.  It's been a few years since I supported a big consumer call center as part of my practice, so I had really forgotten about the pain that Intermittent Leave under FMLA can cause employers. 

The desire for maximum flexibility and at times, the avoidance of accountability, can cause Intermittent Leave to spread like a virus through an operating unit of a company.

For me, I thought bad news in this area would be about 3-4% of all employees in a division or company being approved for Intermittent Leave (10-12 employees in a call center of 300 would cause a big impact to scheduling, etc.).

But 42% of all employees?  You're kidding me, right?  Apparently not - from the Tampa Tribune:

"...Case in point is HARTline, the county's(Tampa metro) public transit service. Forty-two percent of the bus drivers have signed up for a benefit the federal law calls "unscheduled intermittent leave." Many of them are using the law to extend weekends and go home "sick" to avoid unwanted assignments.

The law designed to cost nothing is costing HARTline and other employers many millions of dollars. The family leave act was intended to cost little or nothing while providing 12 weeks of job security to help workers through challenges (sic) times - such as bringing home a new baby, recovering from illness, or helping an incapacitated relative.

Some workers, including many HARTline drivers, have discovered that minor ailments also qualify, such as back pain and headaches. A one-time doctor's certification can give a worker a perpetual excuse for going home early, sleeping late, or not showing up at all.

Lawmakers were wrong in thinking that two features would minimize employee abuse and employer expense: One, the worker on leave under the act gets no pay and thus has no incentive to malinger, and two, the law applies only to organizations with 50 or more workers, which seems to be ample manpower to make up lost productivity."

But employers like the bus agency can't make up in the afternoon for a bus that doesn't run in the morning. In many businesses, schedules must be kept.

To keep its buses on time, HARTline is spending $2 million a year on overtime, an agency spokesman says, and 39 percent of that cost is attributed to FMLA absences."

42% of all employees.  Maybe it would be easier for that HR Team to certify the people who don't need intermittent leave....

Ralph Kramden would never approve...

WOW.  It's been a few years since I supported a big consumer call center as part of my practice, so I had really forgotten about the pain that Intermittent Leave under FMLA can cause employers. 

The desire for maximum flexibility and at times, the avoidance of accountability, can cause Intermittent Leave to spread like a virus through an operating unit of a company.

For me, I thought bad news in this area would be about 3-4% of all employees in a division or company being approved for Intermittent Leave (10-12 employees in a call center of 300 would cause a big impact to scheduling, etc.).

But 42% of all employees?  You're kidding me, right?  Apparently not - from the Tampa Tribune:

"...Case in point is HARTline, the county's(Tampa metro) public transit service. Forty-two percent of the bus drivers have signed up for a benefit the federal law calls "unscheduled intermittent leave." Many of them are using the law to extend weekends and go home "sick" to avoid unwanted assignments.

The law designed to cost nothing is costing HARTline and other employers many millions of dollars. The family leave act was intended to cost little or nothing while providing 12 weeks of job security to help workers through challenges (sic) times - such as bringing home a new baby, recovering from illness, or helping an incapacitated relative.

Some workers, including many HARTline drivers, have discovered that minor ailments also qualify, such as back pain and headaches. A one-time doctor's certification can give a worker a perpetual excuse for going home early, sleeping late, or not showing up at all.

Lawmakers were wrong in thinking that two features would minimize employee abuse and employer expense: One, the worker on leave under the act gets no pay and thus has no incentive to malinger, and two, the law applies only to organizations with 50 or more workers, which seems to be ample manpower to make up lost productivity."

But employers like the bus agency can't make up in the afternoon for a bus that doesn't run in the morning. In many businesses, schedules must be kept.

To keep its buses on time, HARTline is spending $2 million a year on overtime, an agency spokesman says, and 39 percent of that cost is attributed to FMLA absences."

42% of all employees.  Maybe it would be easier for that HR Team to certify the people who don't need intermittent leave....

Ralph Kramden would never approve...

Does Your Company Sponsor Employee Clubs? Not Even a Wine Club?

Kristina Shevory has a cool article up at the New York Times about employee clubs.  From her article at the NYT:

"Fat paychecks, pensions and health insurance are not enough to recruit and keep employees these days. Companies are again finding that adding a bit of social context to work is crucial to keeping employees happy and productive. That is where employee clubs come in. Workplace specialists say clubs are a way to build camaraderie and help people get to know fellow employees away from work. Companies benefit, too. Clubs help create loyal employees, reduce turnover and improve morale while costing very little."

Interesting stuff.  I should know because she called me last year (found me from the HR Capitalist) and we talked about the challenges for employers who aren't Boeing or Google.  It was good conversation, and we talked about things that cash-challenged companies can do.

We talked for about 30 minutes.  What she quoted me on serves as a cautionary tale.  Here's my quote from the story.  Get ready to channel the Grinch:

"Still, perks can be impermanent. During the technology boom in the 1990s, companies piled on the benefits to attract talent and then promptly got rid of them when the economy soured. Many companies, whether they are battling bankruptcy or are flush with cash, have rolled back benefits, eliminated pensions and increased health care premiums to reduce expenses. Any nonessential perk, like an employee club, is also fair game.

“If they ever existed, the first thing that goes is the frilly, frilly stuff,” said Kris Dunn, vice president for human resources at SourceMedical, a Birmingham, Ala., software company, and author of the blog The HR Capitalist."

Bah Humbug... So my quote is true, but Mercer and the consultants get the fun quotes.  I get the fiscal hawk quote.... The HR person's trying to take all the fun out of the workplace...

Check out the article, it's a good read.  Finding out that Boeing funds over 100 employee clubs at seven locations nationwide is kind of like finding out that a Massage Therapist from Google is now a millionaire from her stock options.

It's hard to relate to from the trenches.... Boeing has a VP of Wine....

Kristina Shevory has a cool article up at the New York Times about employee clubs.  From her article at the NYT:

"Fat paychecks, pensions and health insurance are not enough to recruit and keep employees these days. Companies are again finding that adding a bit of social context to work is crucial to keeping employees happy and productive. That is where employee clubs come in. Workplace specialists say clubs are a way to build camaraderie and help people get to know fellow employees away from work. Companies benefit, too. Clubs help create loyal employees, reduce turnover and improve morale while costing very little."

Interesting stuff.  I should know because she called me last year (found me from the HR Capitalist) and we talked about the challenges for employers who aren't Boeing or Google.  It was good conversation, and we talked about things that cash-challenged companies can do.

We talked for about 30 minutes.  What she quoted me on serves as a cautionary tale.  Here's my quote from the story.  Get ready to channel the Grinch:

"Still, perks can be impermanent. During the technology boom in the 1990s, companies piled on the benefits to attract talent and then promptly got rid of them when the economy soured. Many companies, whether they are battling bankruptcy or are flush with cash, have rolled back benefits, eliminated pensions and increased health care premiums to reduce expenses. Any nonessential perk, like an employee club, is also fair game.

“If they ever existed, the first thing that goes is the frilly, frilly stuff,” said Kris Dunn, vice president for human resources at SourceMedical, a Birmingham, Ala., software company, and author of the blog The HR Capitalist."

Bah Humbug... So my quote is true, but Mercer and the consultants get the fun quotes.  I get the fiscal hawk quote.... The HR person's trying to take all the fun out of the workplace...

Check out the article, it's a good read.  Finding out that Boeing funds over 100 employee clubs at seven locations nationwide is kind of like finding out that a Massage Therapist from Google is now a millionaire from her stock options.

It's hard to relate to from the trenches.... Boeing has a VP of Wine....

Confused About Who's Engaged? Try This Handy Engagement Test to Sort It All Out...

My posts last week regarding the concept of engagement and subsequent research on the topic clarified a couple of things to me. 

-First, trying to get everyone to agree on a definition of engagment is harder than trying to get Britney Spears to settle down and work it all out with K-Fed.   

-Second, my take on the best way to have an engaged workforce is to a) ensure you hire talent that is already predisposed to be engaged, and b) figure out the best way to create an environment where "engagement fence straddlers" (those who might be engaged if placed in the right type of environment) elect to become engaged...

Of course, being the scientific, progressive manager you are, you want a way to baseline the current engagement level of your team before you start tinkering with the environment.   WOW - you are an achiever, and if I might add, an engaged one at that...

At the risk of being savagely attacked by the engagement community, here's my back of the napkin, "let's wing it" test to determine the engagment level of your current team:

1.  Tell your team that if they can find a way to get their current workload complete in less time, you would like to support the use of 4 hours per week at work to pursue any work-related, professional development project that interests them.  The only rules are that the project has to be work-related and potentially have a payoff to the business - but if the process leads to them developing new skills that adds value to them as professionals, so be it.

2.  Answer your team's questions about what is appropriate related to the project.  You might also get questions about how you will measure whether their current workload is being maintained.  Answer all questions to the best of your ability, without telling them how to do it.

3.  Once you've answered all the questions, don't do anything for 3 weeks.

4.  At the 3 week mark, check back in with everyone on your team in brief 1-on-1 sessions.  Have they started the project time?  What are they working on?

Here's how to score your findings:

-Associates who have taken advantage of your offer and are aggresively moving forward with a project - ENGAGED

-Associates who have developed some thoughts about what they might do, but have not taken action yet - NOT ENGAGED, BUT POSSIBLY COULD BECOME ENGAGED WITH THE RIGHT ENVIRONMENTAL TWEAKS FROM YOU

-Associates who have done nothing, or have excuses for why they didn't take advantage of the offer - NOT ENGAGED AND NOT PROBABLE TO BECOME ENGAGED, regardless of your efforts.

Remember, this is only a test, and an informal one at that.  You might actually have to start being engaged yourself to create the environment where your direct reports are engaged.  One of the things I learned from the engagement community is that according to Gallup, on average, 29% of employees are engaged and 71% are either unengaged (neutral) or disengaged (opposed).

PS - my take on this as a nice informal test of engagement is based on the engagement traits listed in this post...

How many members of your team would you expect to take the offer and run with it? 

Just as important - Would you? 

My posts last week regarding the concept of engagement and subsequent research on the topic clarified a couple of things to me. 

-First, trying to get everyone to agree on a definition of engagment is harder than trying to get Britney Spears to settle down and work it all out with K-Fed.   

-Second, my take on the best way to have an engaged workforce is to a) ensure you hire talent that is already predisposed to be engaged, and b) figure out the best way to create an environment where "engagement fence straddlers" (those who might be engaged if placed in the right type of environment) elect to become engaged...

Of course, being the scientific, progressive manager you are, you want a way to baseline the current engagement level of your team before you start tinkering with the environment.   WOW - you are an achiever, and if I might add, an engaged one at that...

At the risk of being savagely attacked by the engagement community, here's my back of the napkin, "let's wing it" test to determine the engagment level of your current team:

1.  Tell your team that if they can find a way to get their current workload complete in less time, you would like to support the use of 4 hours per week at work to pursue any work-related, professional development project that interests them.  The only rules are that the project has to be work-related and potentially have a payoff to the business - but if the process leads to them developing new skills that adds value to them as professionals, so be it.

2.  Answer your team's questions about what is appropriate related to the project.  You might also get questions about how you will measure whether their current workload is being maintained.  Answer all questions to the best of your ability, without telling them how to do it.

3.  Once you've answered all the questions, don't do anything for 3 weeks.

4.  At the 3 week mark, check back in with everyone on your team in brief 1-on-1 sessions.  Have they started the project time?  What are they working on?

Here's how to score your findings:

-Associates who have taken advantage of your offer and are aggresively moving forward with a project - ENGAGED

-Associates who have developed some thoughts about what they might do, but have not taken action yet - NOT ENGAGED, BUT POSSIBLY COULD BECOME ENGAGED WITH THE RIGHT ENVIRONMENTAL TWEAKS FROM YOU

-Associates who have done nothing, or have excuses for why they didn't take advantage of the offer - NOT ENGAGED AND NOT PROBABLE TO BECOME ENGAGED, regardless of your efforts.

Remember, this is only a test, and an informal one at that.  You might actually have to start being engaged yourself to create the environment where your direct reports are engaged.  One of the things I learned from the engagement community is that according to Gallup, on average, 29% of employees are engaged and 71% are either unengaged (neutral) or disengaged (opposed).

PS - my take on this as a nice informal test of engagement is based on the engagement traits listed in this post...

How many members of your team would you expect to take the offer and run with it? 

Just as important - Would you? 

Pharma Rep Playbook - 4 Minutes with Doctors = 52% Jump in Scripts Written...

I want all of our employees to have the medical care they need.  Let's start there before anyone brands me as a fiscal hawk looking at numbers rather than employee well-being...

If there's one area of Medical care that drives me crazy, it's got to be big Pharma vs. doctors, patients, and yes, your local company medical plan. 

Big Pharma gets paid off of blockbuster drugs that they hold exclusive rights to.  That part of the system I get, since there are development costs tied to the R&D effort.  It's the repackaging of brand name drugs, once generics are available, that drives me crazy.  Hey, why take that generic every day?  We've just revamped the brand name equivalent with enough potency to last 5 days.   Uh, yeah... It'll cost your medical plan $1,000 more per year, but who cares?  Your employee contribution is the same regardless.

In case you needed more examples of the power of the Pharmaceutical Rep over most doctors, consider this article in a recent BusinessWeek entitled "Just Say No to Drug Reps":

"Dr. Adriane Ugh-Beman wishes more doctors would greet marketing pitches from drug companies with skepticism. So she is taking her message to medical schools. An associate professor of physiology and biophysics at Georgetown University, she has spent the past six months lecturing med students at Georgetown and neighboring schools on how to resist sales reps' overtures, such as doling out free drug samples to physicians and bringing lunches for office staff.

Often, the audience starts out belligerent, Ugh-Beman says, protesting that they're "too smart to be bought by a slice of pizza." But that changes when "we correct them with the numbers," she says. A doctor who spends just one minute with a sales rep typically ends up prescribing 16% more of that rep's product than he or she was prescribing before. And a four-minute encounter is likely to prompt a 52% jump in prescriptions, says Ugh-Beman."

I didn't dig around on the net for the white-paper behind Ugh-Berman's claims, but I am assuming if it made BW, it's legit research.

Let's assume programs like this can prepare doctors for the drug rep pushing product.  No sweat to Big Pharma, because they've got an even more powerful marketing tool.   It's called the demands of their patients after watching 20 Pharma ads every night during American Idol... What's a busy M.D supposed to do when someone brings him an ad for Paxil during a routine visit?  Prescribe (gasp) exercise? 

Every seen a Viagra ad?   All they have to do is create a market with a couple of Billion dollars worth of ads, and all of a sudden the pressure is on to pick up the full tab for each new class of drugs that's introduced... 

Man, am I tired of scrambling for the remote during a basketball game on the weekend or during prime time when the Viagra ads come on (hello? kids are watching when these things run!).  But those guys throwing the football sure are accurate throwing it through that tire in the back yard... 

I want all of our employees to have the medical care they need.  Let's start there before anyone brands me as a fiscal hawk looking at numbers rather than employee well-being...

If there's one area of Medical care that drives me crazy, it's got to be big Pharma vs. doctors, patients, and yes, your local company medical plan. 

Big Pharma gets paid off of blockbuster drugs that they hold exclusive rights to.  That part of the system I get, since there are development costs tied to the R&D effort.  It's the repackaging of brand name drugs, once generics are available, that drives me crazy.  Hey, why take that generic every day?  We've just revamped the brand name equivalent with enough potency to last 5 days.   Uh, yeah... It'll cost your medical plan $1,000 more per year, but who cares?  Your employee contribution is the same regardless.

In case you needed more examples of the power of the Pharmaceutical Rep over most doctors, consider this article in a recent BusinessWeek entitled "Just Say No to Drug Reps":

"Dr. Adriane Ugh-Beman wishes more doctors would greet marketing pitches from drug companies with skepticism. So she is taking her message to medical schools. An associate professor of physiology and biophysics at Georgetown University, she has spent the past six months lecturing med students at Georgetown and neighboring schools on how to resist sales reps' overtures, such as doling out free drug samples to physicians and bringing lunches for office staff.

Often, the audience starts out belligerent, Ugh-Beman says, protesting that they're "too smart to be bought by a slice of pizza." But that changes when "we correct them with the numbers," she says. A doctor who spends just one minute with a sales rep typically ends up prescribing 16% more of that rep's product than he or she was prescribing before. And a four-minute encounter is likely to prompt a 52% jump in prescriptions, says Ugh-Beman."

I didn't dig around on the net for the white-paper behind Ugh-Berman's claims, but I am assuming if it made BW, it's legit research.

Let's assume programs like this can prepare doctors for the drug rep pushing product.  No sweat to Big Pharma, because they've got an even more powerful marketing tool.   It's called the demands of their patients after watching 20 Pharma ads every night during American Idol... What's a busy M.D supposed to do when someone brings him an ad for Paxil during a routine visit?  Prescribe (gasp) exercise? 

Every seen a Viagra ad?   All they have to do is create a market with a couple of Billion dollars worth of ads, and all of a sudden the pressure is on to pick up the full tab for each new class of drugs that's introduced... 

Man, am I tired of scrambling for the remote during a basketball game on the weekend or during prime time when the Viagra ads come on (hello? kids are watching when these things run!).  But those guys throwing the football sure are accurate throwing it through that tire in the back yard... 

Lie on the Job Like Ferris - Is It OK to Use Sick Days for Job Interviews?

Everyone loved Ferris except for Ed Rooney.  How about you?   Do you look the other way when people use sick days to kick back?  Do your feelings depend on what the person is using the sick days for?

A BusinessWeek Interactive Case Study recently asked the following question - Is it OK for a solid, high-performing employee to use sick time, for non-illness related events, in order to save their vacation and personal days, for other uses?

Here's the crux of the case from BusinessWeek:

"In this case scenario, we visit a senior IT director at an insurance corporation. Although he has a  great relationship with superiors and subordinates alike, he wants a new job (BusinessWeek.com, 10/16/07). The top brass consistently skimps on the funds needed to upgrade the company's technology to the state of the art, and he fears he will get stale in his present position. Plus, he's moving out of the city and buying a house in the suburbs. The commute would be an hour-and-a-half each way. He owes it to himself to move on.

When his first interview comes up—with the human resources department, at a corporation 50 miles from his office—our executive can't stomach the thought of using his little remaining vacation or personal time. The morning of the interview, he calls his supervisor and says he's not feeling well, that he suspects it's bronchitis, and he'll need to use a sick day to see a doctor.

His boss is understanding, of course. The man rarely calls in sick, so there must be a good reason for it now. But did our executive do the right thing?"

This case hits you with an extreme from the start- not only is the guy telling a lie, but he's doing it to take time off from work to get another job.  That's an emotional powder-keg for the people charged with enforcing policies.  Bad style point #1 on his part.

Here's my take on bad style point #2.  He's a mid-to-upper level manager.  Since he's answering his blackberry in the shower (details from the case study when you click through), I'm assuming he's not a 9 to 5 guy, nor is he viewed as that.  With that, and the fact that he's a technology professional, I'd hope that he could wrangle the ability to work remotely for the half-day he needs for the interview (hour to and from, 2 hours for the initial process at the company).  I'd also hope that he could remain productive and do this occasionally without anyone getting anxious. 

If he can't figure that out, I probably don't want him as my Director of IT - with new technologies leading the charge for IT professionals and all...  As a HR person, I want to manage performance - not office hours here and there for a solid, well-regarded professional.

Of course, if he can't work remotely when he has to in his current culture, maybe that type of inflexibility is the real reason he's looking.

PS- From the HR perspective, I like to be liberal with the use of sick time.  Use it for anything related to illness - including the care of others.  Just do me the solid of not showing up at Outback that night.  Or me seeing you walk in a corporate office park across town where I have a meeting.   Also, to my PTO friends out there who never have to deal with this scenario, track the Healthy Families Act closely, because you may be tearing down your PTO policy if the HFA becomes law...

And you're correct - it's never OK to lie about that type of thing.  Unless you have the max cool factor like Ferris.  Then you'd make the HR people chasing you look like Ed Rooney...

Everyone loved Ferris except for Ed Rooney.  How about you?   Do you look the other way when people use sick days to kick back?  Do your feelings depend on what the person is using the sick days for?

A BusinessWeek Interactive Case Study recently asked the following question - Is it OK for a solid, high-performing employee to use sick time, for non-illness related events, in order to save their vacation and personal days, for other uses?

Here's the crux of the case from BusinessWeek:

"In this case scenario, we visit a senior IT director at an insurance corporation. Although he has a  great relationship with superiors and subordinates alike, he wants a new job (BusinessWeek.com, 10/16/07). The top brass consistently skimps on the funds needed to upgrade the company's technology to the state of the art, and he fears he will get stale in his present position. Plus, he's moving out of the city and buying a house in the suburbs. The commute would be an hour-and-a-half each way. He owes it to himself to move on.

When his first interview comes up—with the human resources department, at a corporation 50 miles from his office—our executive can't stomach the thought of using his little remaining vacation or personal time. The morning of the interview, he calls his supervisor and says he's not feeling well, that he suspects it's bronchitis, and he'll need to use a sick day to see a doctor.

His boss is understanding, of course. The man rarely calls in sick, so there must be a good reason for it now. But did our executive do the right thing?"

This case hits you with an extreme from the start- not only is the guy telling a lie, but he's doing it to take time off from work to get another job.  That's an emotional powder-keg for the people charged with enforcing policies.  Bad style point #1 on his part.

Here's my take on bad style point #2.  He's a mid-to-upper level manager.  Since he's answering his blackberry in the shower (details from the case study when you click through), I'm assuming he's not a 9 to 5 guy, nor is he viewed as that.  With that, and the fact that he's a technology professional, I'd hope that he could wrangle the ability to work remotely for the half-day he needs for the interview (hour to and from, 2 hours for the initial process at the company).  I'd also hope that he could remain productive and do this occasionally without anyone getting anxious. 

If he can't figure that out, I probably don't want him as my Director of IT - with new technologies leading the charge for IT professionals and all...  As a HR person, I want to manage performance - not office hours here and there for a solid, well-regarded professional.

Of course, if he can't work remotely when he has to in his current culture, maybe that type of inflexibility is the real reason he's looking.

PS- From the HR perspective, I like to be liberal with the use of sick time.  Use it for anything related to illness - including the care of others.  Just do me the solid of not showing up at Outback that night.  Or me seeing you walk in a corporate office park across town where I have a meeting.   Also, to my PTO friends out there who never have to deal with this scenario, track the Healthy Families Act closely, because you may be tearing down your PTO policy if the HFA becomes law...

And you're correct - it's never OK to lie about that type of thing.  Unless you have the max cool factor like Ferris.  Then you'd make the HR people chasing you look like Ed Rooney...

San Francisco Universal Healthcare - They're Going To Need More Ca$H....

There's been a lot of coverage lately about San Francisco and Universal Heathcare, namely the city's Health Benefits Ordinance, which would provide coverage for 73,000 uninsured adults in the city.    Lately, there's been some volleys back and forth whether the plan is legal.

Not sure if the plan is going to make it or not, but I am assuming it eventually will.   If it does make it and the city implements the plan, my layperson math indicates their best case assumptions will result in a plan that is dramatically underfunded. 

Check out these notes From SF Gate:

"As written, San Francisco’s ordinance would require private employers with at least 20 employees, and nonprofits with at least 50 employees, to provide health coverage at certain minimum levels or to pay a fee to the city. The fee would pay part of the cost of a $200 million-a-year program of care for the 73,000 uninsured adult city residents.

Without the employer fee, city officials say they will limit enrollment to those making no more than three times the federal poverty level, or about $32,000 a year for an individual."

Here's what I don't get.  By math, the city is planning on spending about $2,800 per covered individual annually.  That's great, but there's no way that's going to cut it, right?

Why won't it cover it?  By the very nature of the risk pool, the cost per covered individual is going to skew higher than average.  The uninsured includes people who can't work or are otherwise deemed uninsurable due to heath concerns.

A similar program for universal coverage in Connecticut failed, in part because the legislators were shocked about what the cost was (from Managed Care Matters):

"An effort in Connecticut to implement a single payer, universal coverage program is just about dead, after the state's Office of Fiscal Analysis determined it would cost as much as the entire state budget.

Politicians were shocked by the estimated total cost, which ranged from $12 billion to $18 billion (cost range per covered individual - $4,000 to $6,000).

I'm shocked that they were shocked."

That's why I don't get the plan in San Francisco.  The State of Connecticut runs the entire risk pool for the state and comes up with 4k to 6k per covered individual, and SF handles a risk pool that skews more severe and they're only going to pay $2,800?

When people underestimate things, I also think of that great line in the original "Jaws" - "We're going to need a bigger boat..."  That seems to fit here.... 

There's been a lot of coverage lately about San Francisco and Universal Heathcare, namely the city's Health Benefits Ordinance, which would provide coverage for 73,000 uninsured adults in the city.    Lately, there's been some volleys back and forth whether the plan is legal.

Not sure if the plan is going to make it or not, but I am assuming it eventually will.   If it does make it and the city implements the plan, my layperson math indicates their best case assumptions will result in a plan that is dramatically underfunded. 

Check out these notes From SF Gate:

"As written, San Francisco’s ordinance would require private employers with at least 20 employees, and nonprofits with at least 50 employees, to provide health coverage at certain minimum levels or to pay a fee to the city. The fee would pay part of the cost of a $200 million-a-year program of care for the 73,000 uninsured adult city residents.

Without the employer fee, city officials say they will limit enrollment to those making no more than three times the federal poverty level, or about $32,000 a year for an individual."

Here's what I don't get.  By math, the city is planning on spending about $2,800 per covered individual annually.  That's great, but there's no way that's going to cut it, right?

Why won't it cover it?  By the very nature of the risk pool, the cost per covered individual is going to skew higher than average.  The uninsured includes people who can't work or are otherwise deemed uninsurable due to heath concerns.

A similar program for universal coverage in Connecticut failed, in part because the legislators were shocked about what the cost was (from Managed Care Matters):

"An effort in Connecticut to implement a single payer, universal coverage program is just about dead, after the state's Office of Fiscal Analysis determined it would cost as much as the entire state budget.

Politicians were shocked by the estimated total cost, which ranged from $12 billion to $18 billion (cost range per covered individual - $4,000 to $6,000).

I'm shocked that they were shocked."

That's why I don't get the plan in San Francisco.  The State of Connecticut runs the entire risk pool for the state and comes up with 4k to 6k per covered individual, and SF handles a risk pool that skews more severe and they're only going to pay $2,800?

When people underestimate things, I also think of that great line in the original "Jaws" - "We're going to need a bigger boat..."  That seems to fit here.... 

"An effort in Connecticut to implement a single payer, universal coverage program is just about dead, after the state's Office of Fiscal Analysis determined it would cost as much as the entire state budget.

Politicians were shocked by the estimated total cost, which ranged from $12 billion to $18 billion (cost range per covered individual - $4,000 to $6,000).

I'm shocked that they were shocked."

Why the Girl Scouts Think HR People Hate Them...

Stop me when you've heard one of these scenarios before:

-HR Team huddles to determine what to do about Mary, who has posted a flyer in the break room touting the fact she's now selling Amway on the side, and her prices are great...

-HR Managers debates how to handle the request by a local credit union to come in and do a workshop on the benefits of Credit Unions....

-HR Team gets a complaint from the floor about Fred, who is selling Girl Scout Cookies out of a suitcase located in his cube and actively approaching employees and asking for their patronage.

Why are we forced to think long and hard about these situations?  Everyone say it with me - NON-SOLICITATION POLICY!!  Everyone has one in their handbooks, and I'm always surprised that a lot of HR people don't fully comprehend why those policies are there.

Still, the execution of the non-solicitation policy is more art than science.

First up, of course we don't want employees to face a daily barrage of closet entrepreneurs selling stuff in the workplace.  More importantly, the non-solicitation policy is grounded in a desire to remain union-free.  If you have a non-solicitation policy in place and enforce it, the NLRB will generally uphold your ability to prevent unions from being on your property to solicit support from employees.

If you don't have that policy, or more common, don't enforce it, the NLRB will likely allow unions to come on your property to solicit employees, since you are allowing others to solicit your employees on site as well.

The scope of the non-solicitation policy has been expanded to include email based on a recent court decision. From CBS4.com in Miami:

"Employers can prohibit workers from using the office e-mail system for union activities, so long as they prohibit solicitations from any outside organization, the National Labor Relations Board has ruled.

The board said its 3-2 decision sets a new labor relations standard that allows employers to prohibit union activity through the company's e-mail system while at the same time permitting office chitchat and personal messages.

The decision, released Friday, upheld the management of the Eugene Register-Guard newspaper in a case involving e-mail messages sent by Suzi Prozanski, a copy editor and Newspaper Guild leader, during contract negotiations in 2000 and the warnings the company gave her.

The board said two of the messages were "solicitations to support the union," and the company was justified in enforcing a policy that forbade the use of e-mail for "non-job-related solicitations." It ruled against the paper on a third message, saying it was "simply a clarification of facts surrounding a recent union event."

I hate saying no to the sale of girl scout cookies, school sales, etc.  I'm usually a "no-harm, no-foul" type of person, but every time I see one of these cases it always perks up my sensitivity to solicitation in the workplace.

I won't come out against girl scout cookies, lest I get blown out in the workplace version of the Iowa caucus.  I prefer to say yes to informal bumps in the parking lot between employees with business that gets done verbally, and no to posted flyers, the use of email to solicit, etc.      

You have to say no to some organizations you like (credit union, formal girl scout cookie marketing?) to keep the ones you don't want around your organization at bay.  That kind of stinks.... 

Stop me when you've heard one of these scenarios before:

-HR Team huddles to determine what to do about Mary, who has posted a flyer in the break room touting the fact she's now selling Amway on the side, and her prices are great...

-HR Managers debates how to handle the request by a local credit union to come in and do a workshop on the benefits of Credit Unions....

-HR Team gets a complaint from the floor about Fred, who is selling Girl Scout Cookies out of a suitcase located in his cube and actively approaching employees and asking for their patronage.

Why are we forced to think long and hard about these situations?  Everyone say it with me - NON-SOLICITATION POLICY!!  Everyone has one in their handbooks, and I'm always surprised that a lot of HR people don't fully comprehend why those policies are there.

Still, the execution of the non-solicitation policy is more art than science.

First up, of course we don't want employees to face a daily barrage of closet entrepreneurs selling stuff in the workplace.  More importantly, the non-solicitation policy is grounded in a desire to remain union-free.  If you have a non-solicitation policy in place and enforce it, the NLRB will generally uphold your ability to prevent unions from being on your property to solicit support from employees.

If you don't have that policy, or more common, don't enforce it, the NLRB will likely allow unions to come on your property to solicit employees, since you are allowing others to solicit your employees on site as well.

The scope of the non-solicitation policy has been expanded to include email based on a recent court decision. From CBS4.com in Miami:

"Employers can prohibit workers from using the office e-mail system for union activities, so long as they prohibit solicitations from any outside organization, the National Labor Relations Board has ruled.

The board said its 3-2 decision sets a new labor relations standard that allows employers to prohibit union activity through the company's e-mail system while at the same time permitting office chitchat and personal messages.

The decision, released Friday, upheld the management of the Eugene Register-Guard newspaper in a case involving e-mail messages sent by Suzi Prozanski, a copy editor and Newspaper Guild leader, during contract negotiations in 2000 and the warnings the company gave her.

The board said two of the messages were "solicitations to support the union," and the company was justified in enforcing a policy that forbade the use of e-mail for "non-job-related solicitations." It ruled against the paper on a third message, saying it was "simply a clarification of facts surrounding a recent union event."

I hate saying no to the sale of girl scout cookies, school sales, etc.  I'm usually a "no-harm, no-foul" type of person, but every time I see one of these cases it always perks up my sensitivity to solicitation in the workplace.

I won't come out against girl scout cookies, lest I get blown out in the workplace version of the Iowa caucus.  I prefer to say yes to informal bumps in the parking lot between employees with business that gets done verbally, and no to posted flyers, the use of email to solicit, etc.      

You have to say no to some organizations you like (credit union, formal girl scout cookie marketing?) to keep the ones you don't want around your organization at bay.  That kind of stinks.... 

George Bush is no Scrooge - Federal Employees off on Christmas Eve...

George Bush can't be called Scrooge this year.  He just gave all non-essential Federal employees Christmas Eve off...

From the Washington Post coverage:

"President Bush Thursday issued an executive order closing the federal government on 2007 Christmas Eve, a Monday.

Federal employees are "excused from duty" that day, except for those employees who agencies determine should be at work "for reasons of national security or defense or other public need," the order says.

E-mails have whizzed across the government in recent days as employees tried to figure out whether Bush would grant them a day off on Christmas Eve, as he did in 2001, when Dec. 24 also fell on a Monday. The topic even popped up Wednesday on Federal Diary Live, a discussion session on http://washingtonpost.com.

Presidents Eisenhower, Kennedy, Nixon and Carter also gave employees the entire day off when Christmas Eve landed on a Monday. Ronald Reagan approved three hours of excused absence, and George Bush the Elder gave employees a half-day holiday in 1990."

Good for Bush and the Federal employees.  Is there a day on the calendar where less gets done in the workplace than Christmas Eve?

I wonder how they handle this at CTU?  Is Jack Bauer off or does he have to work?  If he has to work, does he get a comp day off when his workload slows down a bit?

George Bush can't be called Scrooge this year.  He just gave all non-essential Federal employees Christmas Eve off...

From the Washington Post coverage:

"President Bush Thursday issued an executive order closing the federal government on 2007 Christmas Eve, a Monday.

Federal employees are "excused from duty" that day, except for those employees who agencies determine should be at work "for reasons of national security or defense or other public need," the order says.

E-mails have whizzed across the government in recent days as employees tried to figure out whether Bush would grant them a day off on Christmas Eve, as he did in 2001, when Dec. 24 also fell on a Monday. The topic even popped up Wednesday on Federal Diary Live, a discussion session on http://washingtonpost.com.

Presidents Eisenhower, Kennedy, Nixon and Carter also gave employees the entire day off when Christmas Eve landed on a Monday. Ronald Reagan approved three hours of excused absence, and George Bush the Elder gave employees a half-day holiday in 1990."

Good for Bush and the Federal employees.  Is there a day on the calendar where less gets done in the workplace than Christmas Eve?

I wonder how they handle this at CTU?  Is Jack Bauer off or does he have to work?  If he has to work, does he get a comp day off when his workload slows down a bit?

The Tony Soprano 401k Loan....

I saw a defaulted 401k loan from earlier this century (sounds cool to say that) and thought Paulie Walnuts was going to walk around the corner and start asking me for the weekly payment for "protection"...

More on that after the jump.  For now, let's review your role as a HR pro regarding 401k Loans.

Where's your head as a HR pro on the wisdom of 401k loans?  Do you talk to employees who are asking about the procedure about the downside of the 401k loan, or do you zip it and consider it none of  your business?    How does your responsibility as a fiduciary come into play?  Does that responsibility mean you speak up or shut up?

As with all things in life, balance is probably the best approach.  For some employees, taking out a loan against their 401k may be the only source of cash they have in an emergency.  That's hard to argue with.  Employees looking to finance the second waverunner may need a financial consultant. 

Here's your checklist of talking points if you want to advise a member of your tribe of the downside of a 401k loan, provided by the 401khelpcenter:

1. There are "opportunity" costs. According to the U.S. General Accounting Office, the interest rate paid on a plan loan is often less than the rate the plan funds would have otherwise earned.
2. Smaller contributions. Because you now have a loan payment, you may be tempted to reduce the amount you are contributing to the plan and thus reduce your long-term retirement account balance.
3. Loan defaults can be harmful to your financial health. If you quit working or change employers, the loan must be paid back right away. It's not uncommon for plans to require full repayment of a loan within 60 days of termination of employment. If you can't repay the loan, it is considered defaulted, and you will be taxed on the outstanding balance, including an early withdrawal penalty if you are not at least age 59 ½.
4. There may be fees involved.
5. Interest on the loan is not tax deductible, even if you borrow to purchase your primary home.
6. You have no flexibility in changing the payment terms of your loan.

That's a pretty strong list, especially the one saying that if an employee leaves the company, they must payback the loan in the short term.  If an employee is taking out a loan from the 401k in the first place, they probably don't have the means to do that, which likely means default.

So back to the loan that made me flinch from visions of Tony Soprano and Paulie.. Here are the specs of the loan from 2000, which was part of another plan, a long time ago, in a land far away (enough disclaimers?):

-Original Loan Amount - $8,600 and change...
-Interest Rate - 11.5% (ouch)
-Total Payments Needed to Retire Loan - 390 (15 years)
-Total $$ Needed to Retire Loan - $18,000 and change (Meaning over 9K in interest expense beyond the $8,600 principle)..

Again, some employees won't have access to any funds other than their 401k in emergencies.  That's OK.  But coach everyone who asks about the realities related to a 401k loan, especially if the loan must be paid back immediately after the employee leaves the company. 

I saw a defaulted 401k loan from earlier this century (sounds cool to say that) and thought Paulie Walnuts was going to walk around the corner and start asking me for the weekly payment for "protection"...

More on that after the jump.  For now, let's review your role as a HR pro regarding 401k Loans.

Where's your head as a HR pro on the wisdom of 401k loans?  Do you talk to employees who are asking about the procedure about the downside of the 401k loan, or do you zip it and consider it none of  your business?    How does your responsibility as a fiduciary come into play?  Does that responsibility mean you speak up or shut up?

As with all things in life, balance is probably the best approach.  For some employees, taking out a loan against their 401k may be the only source of cash they have in an emergency.  That's hard to argue with.  Employees looking to finance the second waverunner may need a financial consultant. 

Here's your checklist of talking points if you want to advise a member of your tribe of the downside of a 401k loan, provided by the 401khelpcenter:

1. There are "opportunity" costs. According to the U.S. General Accounting Office, the interest rate paid on a plan loan is often less than the rate the plan funds would have otherwise earned.
2. Smaller contributions. Because you now have a loan payment, you may be tempted to reduce the amount you are contributing to the plan and thus reduce your long-term retirement account balance.
3. Loan defaults can be harmful to your financial health. If you quit working or change employers, the loan must be paid back right away. It's not uncommon for plans to require full repayment of a loan within 60 days of termination of employment. If you can't repay the loan, it is considered defaulted, and you will be taxed on the outstanding balance, including an early withdrawal penalty if you are not at least age 59 ½.
4. There may be fees involved.
5. Interest on the loan is not tax deductible, even if you borrow to purchase your primary home.
6. You have no flexibility in changing the payment terms of your loan.

That's a pretty strong list, especially the one saying that if an employee leaves the company, they must payback the loan in the short term.  If an employee is taking out a loan from the 401k in the first place, they probably don't have the means to do that, which likely means default.

So back to the loan that made me flinch from visions of Tony Soprano and Paulie.. Here are the specs of the loan from 2000, which was part of another plan, a long time ago, in a land far away (enough disclaimers?):

-Original Loan Amount - $8,600 and change...
-Interest Rate - 11.5% (ouch)
-Total Payments Needed to Retire Loan - 390 (15 years)
-Total $$ Needed to Retire Loan - $18,000 and change (Meaning over 9K in interest expense beyond the $8,600 principle)..

Again, some employees won't have access to any funds other than their 401k in emergencies.  That's OK.  But coach everyone who asks about the realities related to a 401k loan, especially if the loan must be paid back immediately after the employee leaves the company. 

Smoking Discrimination - Truth or Fiction for HR Departments?

If you're like me, one of the things that keeps you up at night is the cost of healthcare.  So much so, I've followed the recent news that companies have begun to penalize smokers and employees with other risk factors (high cholesterol, high blood pressure, etc.) with great interest.  It seems like an eventual fact that those who display voluntary risk factors will pay via higher employee contributions/premiums than employees who don't engage in the same risky behavior.

Of course, smoking's the easy one, since it's safely classified as voluntary.  The other health metrics (blood  pressure, etc) are more problematic, since heredity and other factors are at play.

So, Open Enrollment season is upon us.  I didn't take the leap and consider raising employee contributions for those that smoke, and certainly didn't raise them for poor scores in the health metrics.

The biggest issue for me?  I'm at a startup, and I know all the people who work at our company.  It's one thing to mandate increased premiums for smokers when you are sitting in the Death Star of a Fortune 500, it's another thing all together when you see those that smoke every day.  Much tougher to make the business decision that probably will ultimately be necessary or routine as an early adapter when you are at a place where everybody knows your name...

So, it's no to increased premiums for smokers this year, and yes to finding a toehold for a cessation program sometime soon. 

Then I see the following information - Health Populi puts the true cost of smoking at $222 per pack over a lifetime...

Maybe I'm doing no one a favor by waiting another year to be more aggressive.....

If you're like me, one of the things that keeps you up at night is the cost of healthcare.  So much so, I've followed the recent news that companies have begun to penalize smokers and employees with other risk factors (high cholesterol, high blood pressure, etc.) with great interest.  It seems like an eventual fact that those who display voluntary risk factors will pay via higher employee contributions/premiums than employees who don't engage in the same risky behavior.

Of course, smoking's the easy one, since it's safely classified as voluntary.  The other health metrics (blood  pressure, etc) are more problematic, since heredity and other factors are at play.

So, Open Enrollment season is upon us.  I didn't take the leap and consider raising employee contributions for those that smoke, and certainly didn't raise them for poor scores in the health metrics.

The biggest issue for me?  I'm at a startup, and I know all the people who work at our company.  It's one thing to mandate increased premiums for smokers when you are sitting in the Death Star of a Fortune 500, it's another thing all together when you see those that smoke every day.  Much tougher to make the business decision that probably will ultimately be necessary or routine as an early adapter when you are at a place where everybody knows your name...

So, it's no to increased premiums for smokers this year, and yes to finding a toehold for a cessation program sometime soon. 

Then I see the following information - Health Populi puts the true cost of smoking at $222 per pack over a lifetime...

Maybe I'm doing no one a favor by waiting another year to be more aggressive.....