Five biggest mistakes when designing a supplemental disability plan
Originally published July 19, 2013 by Christopher R. Kristian on https://ebn.benefitnews.com
Supplemental disability income plans are so mainstream today they are thought of as plain vanilla. That’s all well and good until the other shoe falls. And it often does. When employers experience problems with existing voluntary disability plans, most of these issues can be traced back to when the plan was originally designed.
No one wants problems, particularly when they involve serious health or disability issues. As many an employer can attest, mistakes do occur and they often create unnecessary complications and unhappiness.
By avoiding the five most common mistakes, companies can increase the chances of having their plan run well and having it valued by employees.
Supplemental plans emerged from the need for increased disability protection from the income disparity between highly compensated employees and rank and file employees. This disparity can become particularly severe when employees are eligible for variable compensation such as bonuses. The industry calls this “reverse discrimination” since most employees are covered at 60% of gross compensation, while those with variable compensation are covered at a drastically lower replacement rate.
Most employers have made an effort to close this gap by offering a supplemental plan to cover this coverage gap. In effect, supplemental plans are individual disability products offered at deeply discounted rates. They usually are written on a guaranteed standard issue basis. Even so, when designing this coverage, employers should be aware of five common mistakes and how to avoid them.
1. Deciding not to offer a supplemental plan and opting to change the definition of earnings in the current plan, as well as raising the group plan’s long-term disability cap. This approach seems to make sense until one of two things occurs. By raising the cap to accommodate relatively few employees, the cost for that increase in insurance is spread over the entire population. When this occurs, it turns out to be anything but cost effective in the long run. In fact, it’s downright expensive.
If it happens to seem cost effective at the moment, just wait until there is a claim or two and your group rates go through the roof. That’s when most employers with this problem begin scrambling for a better solution. Typically, this particular scenario can be avoided by using a risk sharing or risk transfer approach with a supplemental plan.
2. Choosing a very good technology platform over a better guaranteed-issue offer.
Supplemental programs and the insurers that offer them are constantly improving technology so they’re able to deliver enhanced enrollment capabilities. Many companies opt for a lower guaranteed standard issue offer so they can obtain what they perceive as a state-of-the-art system. This has a strong appeal, but seems designed only to provide ready-made bragging rights at industry get-togethers.
If the guaranteed standard issue offers are close by perhaps a couple of hundred dollars, choose the technology. However, if there is a substantial cost differential, go with the larger guaranteed standard issue offer. If you do not, the covered employees will suffer during a claim.
3. Failing to develop a well thought out enrollment strategy. Enrollment strategies are critically important, particularly if a company is implementing a voluntary supplemental plan.
Ensure that the plan is well-communicated and that each participant is contacted not only through an enrollment packet, but also through a simple phone call so employees can have their questions answered. This is particularly important since most carriers usually expect 20% to 30% of the employee group to participate.
It is critical to reach the target to satisfy the guaranteed standard issue unlimited offer going forward. If this does not occur, it’s possible that new participants may be barred from obtaining coverage. Selecting a large firm doesn’t always mean it is competent. It’s almost always in your best interest to go with a firm with expertise in the supplemental disability coverage arena.
4. Settling for an inadequate guaranteed issue offer on an employer-sponsored program. The supplemental disability income market has changed with the addition of new products. Usually, if the company is paying for the coverage, carriers will issue guaranteed standard issue coverage. But it is possible to go a step further and layer an additional product, commonly referred to as high limit coverage, that will cover up to 60% of highly compensated employees’ total compensation and will cover an income up to $2,000,000.
5. Unnecessarily subjecting your employee group to underwriting. Companies continue to subject their employees to medical underwriting unnecessarily. Since disability income insurance is a complicated process, the risks of having an employee declined, rated or have coverage exclusion are almost assured. Subjecting employees to underwriting usually indicates a poor plan design or lack of innovation.
Supplemental disability income protection has a strong appeal today, particularly with the unpredictability of the economy. Offering a well-designed supplemental plan avoids unnecessary pitfalls and can help create employee satisfaction.
8 reasons for employers to keep their PPACA guard up
Originally published July 17, 2013 by Dan Cook on https://www.benefitspro.com
Now that the celebrations have died down over the one-year delay of penalties for employers who don’t meet the PPACA coverage requirements, it’s time to take a close look at what does remain in effect.
The very short answer to the question is that there’s still quite a bit on the books, and that, really, only the teeth have been (temporarily) removed.
Here’s what the national law firm Bryan Cave had to say about which PPACA provisions remain in effect for employers in the year ahead.
1. Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value, as defined under the PPACA.
2. Exchange Notices: Employers must distribute PPACA exchange notices to employees by Oct. 1, 2013, and thereafter to new employees upon hire.
3. Application for Advance Premium Credits: Employers are required to complete a 12-page form entitled, “Application for Health Coverage and Help Paying Costs” when requested by employees who are applying for PPACA advance premium tax credits when purchasing coverage via an exchange.
4. PPACA fees: Patient-Centered Outcome Research Institute Fees (“PCORI Fees”) must be paid in July 2013 (that’s now!). The first Transitional Reinsurance Fee must be paid on or before Jan. 15, 2015. PCORI is a private non-profit corporation that gathers research-based information to assist patients, practitioners and policy makers in making informed health care decision.
5. W-2 reporting: Employers must continue to report the aggregate value of health coverage on Forms W-2.
6. Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014. It is not yet clear whether a short counting period will be available, which means that employers may be smartest to begin to track hours on a per-employee, monthly basis on Jan. 1.
7. Benefit Mandates For All Plans: Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, expansion of wellness incentives, dependent coverage to age 26).
8. Benefit Mandates for Non-Grandfathered Plans Only: Plan design requirements for non-grandfathered plans only continue to apply (e.g., preventive care coverage requirements, limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).
Retirement across America: Lessons learned
Originally published July 19, 2013 by Chad Parks on https://ebn.benefitnews.com
For six weeks last spring, I traveled across the country filming interviews for an upcoming documentary called Broken Eggs: The Looming Retirement Crisis in America. I am executive producing the film, which is an honest, unfiltered look at the state of retirement in our country.
We set out to learn more about how Americans view retirement and whether or not the looming retirement crisis is as serious as we feared.
It was an eye-opening experience that discovered some bright spots, as well as some really life-altering and depressing stories.
After having had a year to reflect on the initial trip as we near the film’s completion, I wanted to share with you, my industry colleagues, the four lessons I learned on this journey.
Lesson 1: People are aware of the problem
One preconceived notion I had before going on the trip was that Americans were blissfully unaware of the retirement crisis. I figured few knew that Americans are $6.6 trillion short of what they need to retire. In fact, most are acutely aware of the hurdles they’re facing. Unfortunately, that doesn’t mean they’ve changed. Most are unsure of what to do and are overwhelmed, which leads to inaction being their only action. But this crisis is on their minds — and they want a solution.
I’m encouraged to see this issue hasn’t fallen by the wayside, but the challenge is to get Americans to take action.
Lesson 2: Our industry is in a bubble
Sure, we all know what the terms “401(k),” “intelligent design,” “automatic enrollment” and “model portfolios” mean. But after this trip, I can say that it’s a foreign language to everyone outside our retirement industry bubble. We’ve done a fantastic job of complicating things, and the fallout is that there is a severe disconnect.
What are we trying to accomplish by hiding behind jargon? In order to begin to solve this problem, we need to simplify retirement and humanize it. Perhaps there’s a universal way to gamify this problem in order to engage more people. Some have proposed a retirement scorecard, while others suggest the “set it and forget it” plan. Regardless, we need to get out of our bubble and understand that people are busy and not experts in retirement.
Lesson 3: Retirement income is grossly misunderstood
Though I found that Americans are aware of the retirement crisis, many believe that Social Security will bail them out. I encountered far too many people who are counting on Social Security as their primary or only retirement income vehicle.
As you well know, Social Security exists to make sure our seniors aren’t destitute – not so they can comfortably retire. With Social Security slated to be insolvent in about two decades, our industry needs to educate plan participants on what Social Security can do – and more importantly, what it can’t do.
We must stress that the three-legged stool of retirement no longer exists, and the one leg that is left is not Social Security (or a pension); personal savings is what will fuel retirement now and in the future.
Lesson 4: There is not a single, simple solution
If there was a solution to this problem, it would have already been implemented. In addition to interviewing everyday Americans, I spoke to industry thought leaders and influencers from across the spectrum, including Brian Graff of ASPPA and Teresa Ghilarducci from The New School.
In order to curb the looming retirement crisis, we can’t rely on a one-fix solution. My hope is that putting forth a blend of ideas will ultimately become a reliable solution.
We can never get to that point, however, unless we start discussing this problem. And I’m not referring to talking amongst ourselves. We need to engage our customers, the American people, and drill this problem into their heads.
As an industry, we need to do a better job of setting the pace for this discussion, which must be personalized. And instead of just talking at people, we must listen, and ultimately educate. Part of the solution is to use Americans’ first-hand experiences planning for retirement to help craft solutions.
My hope is that Broken Eggs ignites a conversation among all American to solve the problem. It’s raw. It’s honest. And these stories deserve to be heard.
First round of employers’ ‘PCORI fees’ due July 31
Originally published July 19, 2013 by Garrett Fenton and Fred Oliphant on https://ebn.benefitnews.com
Most employers that sponsor self-funded group health plans, and insurers of fully-insured group health plans, will need to file and pay by July 31 their first round of federal comparative effectiveness research fees imposed under the Affordable Care Act. ACA established the annual fee -- which is known as the “PCORI fee” -- in order to fund comparative clinical effectiveness research to be conducted by the newly-established, non-profit Patient-Centered Outcomes Research Institute.
The amount of the fee is $1 for each individual covered under the group health plan, for the first plan year ending on or after October 1, 2012 (i.e., 2012, for a calendar-year plan), and must be reported on IRS Form 720 and paid by no later than July 31 of the calendar year following the end of the relevant plan year (i.e., by July 31, 2013, for a calendar-year plan). The amount of the fee will increase to $2 per covered individual for the following plan year, and will be increased further for inflation in subsequent years.
The fee is scheduled to expire with the last plan year ending before October 1, 2019, meaning the last fee for a calendar-year plan will need to be filed and paid (for the 2018 plan year) by July 31, 2019. The IRS Office of Chief Counsel recently confirmed that PCORI fees paid by an employer or insurer are tax-deductible, as ordinary and necessary business expenses, under section 162 of the Internal Revenue Code.
The IRS issued final regulations implementing the PCORI fee last December. The regulations include detailed rules regarding the methods by which an employer or insurer may count enrollees under a group health plan for each year, and provide exemptions for certain types of plans and special rules for employers that sponsor multiple plan options. We understand that there has been some confusion among employers regarding the application of the PCORI fee to health flexible spending arrangements and health reimbursement arrangements.
As an initial matter, most employer-sponsored health FSAs (but not necessarily HRAs) qualify as “HIPAA-excepted,” and are therefore exempt from the PCORI fee. But in some instances -- generally, where the employer makes additional, substantial “non-elective” or “matching” contributions to its employees' health FSAs (or does not offer its employees a primary, major medical plan option in addition to the health FSA) -- the HIPAA-excepted exemption does not apply, meaning the fee will be imposed on the health FSA (perhaps subject to additional, special rules set forth below).
Where an employer offers a fully-insured primary group health plan along with an “integrated” HRA (or non-HIPAA-excepted health FSA), two separate PCORI fees will be imposed: the employer/plan sponsor will owe one fee for the HRA or health FSA, and the health insurer will owe a separate fee for the fully-insured primary plan. By contrast, where an employer offers a self-insured group health plan along with an integrated HRA (or non-HIPAA-excepted health FSA), a single fee will generally be imposed on the employer, for each employee covered under both the primary plan and the HRA (or health FSA), provided that the primary plan and HRA (or health FSA) have the same plan year.
The IRS recently updated the Form 720 (and related instructions) -- which some employers already file, on a quarterly basis, to report certain federal excise taxes -- to reflect the PCORI fee. Third party service providers, such as third party administrators, will not be allowed to file the Form 720 on behalf of a responsible entity. Therefore, employers sponsoring calendar year, self-funded group health plans (and insurers of calendar-year, fully-insured plans) must be prepared to complete and file the Form 720, and pay their first round of PCORI fees, by July 31.
Red-meat eaters increase risk of diabetes with more portions
Originally posted by Nicole Ostraw on https://ebn.benefitnews.com
(Bloomberg) -- Eating more red meat over time raises the risk of getting Type 2 diabetes, while cutting back reduces the danger, research shows.
Consuming an additional half-serving a day of red meat during a four-year period increased a person’s chance of developing diabetes by 48% in the subsequent four years, according to a study this month in JAMA Internal Medicine. Reducing red meat consumption lowered diabetes risk long term, says lead study author An Pan.
The study is the first to look at changes in red meat consumption over time and how that affects diabetes risk, Pan says. The results confirm previous research that had linked red meat intake to diabetes risk and suggests that limiting the amount of beef, pork and lamb people eat is beneficial, he says.
“If possible, try to reduce red meat and replace with other healthy choices like beans and legumes, nuts, fish, poultry, whole grains, etc.,” says Pan, an assistant professor at the National University of Singapore.
The meat contains high amounts of an iron that can cause insulin resistance, which may raise the risk of diabetes, he says. The food is also high in saturated fat and cholesterol and processed forms have nitrates and high levels of sodium that may also increase the danger of developing the disease, he says.
Researchers analyzed data and followed up with 26,357 men in the Health Professionals Follow-up Study, 48,709 women in the Nurses’ Health Study and 74,077 women in the Nurses’ Health Study 2. They assessed their diets through questionnaires every four years.
There were 7,540 cases of type 2 diabetes over the study.
The research showed that reducing red meat consumption by more than a half a serving per day from the start of the trial through the first four years of follow up resulted in a 14% lower risk of diabetes over the entire time period.
In an accompanying editorial, William Evans, vice president and head of the Muscle Metabolism Discovery Performance Unit at London-based GlaxoSmithKline Plc and an adjunct professor of geriatrics at Duke University Medical Center in Durham, N.C., writes that it may not be the type of meat but the fat that can raise diabetes risk.
“There’s no reason why the color of meat itself is the thing that results in an increased risk in diabetes,” he says. “The overwhelming data would tell us it’s the amount of saturated fat. A chunk of cheddar cheese has as much fat and saturated fat as a T-bone steak.”
He says another study looking to find similar links between dairy, which can be high in saturated fats, and diabetes is needed to determine if the fats are the culprits.
Saturated fats increase inflammation in the body, leading to heart disease and insulin resistance.
2013 MLR Rebate Process Follows Similar Path
Original article posted on https://broker.uhc.com/articleView-11448
The second year of reporting Medical Loss Ratio (MLR) is underway, as required by the Affordable Care Act. All health insurance companies are required to spend a certain percentage of premium dollars on health care claims and programs to improve health care quality.
Individual and small group markets must achieve an MLR of 80%. There are limited exceptions where states have set a higher MLR threshold (Massachusetts and New York). The large group market is required to reach an 85% MLR.
As happened in 2012 with the rebate calculation, fully insured policyholders are grouped in Aggregation Sets according to three criteria: group size, situs state and legal insurance entity.
Small group market size is generally up to 50 average total number of employees (ATNE), but 12 states have elected to follow the federal MLR standard of up to 100, with large group being those with an ATNE over 100. In 2016, all small group markets will follow the federal standard of up to 100.
The process and timetable is very similar to last year’s first Rebate Reporting Year. UnitedHealthcare has conducted its preliminary review and sent an April mailing to select customers seeking Written Assurance as to how they may use a potential premium rebate.
A critical date for brokers and customers is June 1, when the final MLR Rebate Report will be filed with the Department of Health and Human Services (HHS) detailing the states and Aggregation Sets eligible for premium rebate, along with the final total premium rebate payout.
After the June 1 filing with HHS, reports for sales and brokers listing the customers receiving rebates will be available in the mid-June time frame. Rebate checks will be issued in staggered mailings beginning the first week of July, with August 1 the deadline for all rebates to be paid to policyholders.
Policyholders receiving premium rebates will receive their checks with the rebate notification. Their subscribers also will receive a notification that their employer has received a premium rebate.
Rebates will be distributed in the following ways:
- For ERISA plans, in most cases, the rebate will be paid to the group policyholder. The exception to this are those groups for which coverage is terminated at the time of the rebate payment and cannot be located by the applicable issuer. Each group policyholder receiving a rebate will generally have an obligation to use a portion of the rebate to benefit the subscribers of the relevant plan consistent with Department of Labor requirements.
- For Federal government plans, the rebate will be paid directly to the group policyholder as well.
- Non-federal governmental plans, the rebate will be paid to the group policyholder, with the policyholder having an obligation to use the portion of the rebate attributable to the premium paid by subscribers in one of the following three ways:Non- ERISA and non- government plans, the rebate will be paid to the group policyholder provided the issuer received a Written Assurance that the group policyholder will use the rebate according to standards applicable to non-federal government plans (details above). Customers needing to provide Written Assurance were sent a form in April and have until the end of May to return it.
- To reduce the subscribers’ portion of the annual premium for the following policy year for all subscribers covered under any group health policy offered by the plan;
- To reduce the subscribers’ portion of the annual premium for the following plan year for only those subscribers covered by the policy on which the rebate was based;
- Provide a cash rebate to subscribers covered by the policy on which the rebate was based.
Written Assurance forms are “evergreen,” meaning that customers with a Written Assurance on file from a previous rebate reporting year are not asked to complete another one. If customers do not return a completed Written Assurance by the required deadline, we are required by the federal rules to divide any rebate equally among all applicable subscribers.
Unlike last year, there will be no notifications in 2013 to either the applicable policyholders or subscribers if the group was not included in an Aggregation Set that qualified for a rebate.
The insurer notice that will be sent when the rebate is paid to the employer is here:
What hasn't changed for employers in 2014?
Originally posted by Keith R. McMurdy on https://ebn.benefitnews.com
In a move that was generally applauded by employers, the Obama administration announced last week that it would delay implementation of the employer health coverage mandate under the Affordable Care Act until January 1, 2015. The good news is that this gives employers another year to prepare for the so-called pay-or-play mandate that requires employers with at least 50 full-time-equivalent employees to offer affordable health coverage to those who work at least 30 hours a week. The bad news is that it remains unclear what compliance still means for employers.
While the employer mandate is suspended, a variety of key provisions that go into effect on January 1, 2014 remain in play. Subject to any future adjustments, plans are still obligated to comply with a number of specific changes. These include:
- Waiting periods cannot exceed 90 days
- Caps on annual out-of-pocket maximums and elimination of lifetime and annual limits
- Revised Summary of Benefits and Coverage notices and a required notice of availability of exchanges
- Excise taxes and fees, such as the PCORI fee and the reinsurance program fee
While we are awaiting further guidance, and any additional changes, plan sponsors should continue to take the necessary steps to make sure their plans are in compliance. Even though the pay-or-play mandate is suspended, plan sponsors could still be found to have non-compliant plans and face penalties around the ACA. So while you might be able to postpone changes relating to eligibility and affordability, you still have to revise your plan to make sure it complies. This delay only effects who you might have to offer coverage to, not the nature of the coverage that will ultimately be offered.
So employers as plan sponsors should take this delay as an opportunity to focus on making their plans 100% compliant. Consider 2014 a “measurement” year where you can implement those employment structures you might have already discussed to make sure your part-time and full-time employees are clearly defined. Consider this a brief reprieve and not an excuse to ignore ACA completely. Employers might have been given some breathing room on the final due date, but the project still has to be completed.
Used with permission from Fox Rothschild LLP. Keith R. McMurdy is an employee benefits attorney at the firm’s New York City office. To contact the author: kmcmurdy@foxrothschild.com. This Legal Alert is not intended to be, and should not be construed as, legal advice for any particular fact situation.
Majority of employers already PPACA-compliant
Originally posted by Dan Cook on https://www.benefitspro.com
More than half of private companies surveyed about their readiness for the Patient Protection and Affordable Care Act said they were already in compliance with the law.
Moreover, three-quarters of them considered themselves prepared to meet the law’s requirements when they become the law of the land.
That’s the conclusion from a PwC (aka PriceWaterhouseCoopers) survey of 210 large private employers, nearly all of which offer their employees health coverage.
While the survey revealed a modest level of uncertainty among companies about just how they will comply, overall, private employers expressed confidence in their ability to offer employees a health plan that meets the letter of the law.
The PwC survey was conducted prior to the administration’s announcement that it would postpone for a year the penalty portions of the PPACA that apply to large employers.
Highlights from the survey include:
- 56 percent of companies already comply with the PPACA.
- 72 percent say they are prepared to comply.
- 35 percent believe they are well prepared.
- 74 percent say the cost of coverage to employees already meets the 9.5 percent-or-less of household income standard the law will require.
- 70 percent don’t think the act will help them reduce the cost of coverage.
- 58 percent say paying for employee health coverage hasn’t slowed their growth.
The survey revealed that many companies (70 percent) plan to take their own measures to try to control health care coverage costs, including shifting more of the cost to employees. That could lead them to run afoul of the 9.5-percent standard, warned PwC’s Ken Esch, a partner with PwC’s Private Company Services practice.
“Companies that plan to shift more healthcare costs to employees should be careful to calculate whether such cost-shifting could cause the company to fail the PPACA’s affordability test,” cautions Esch. “Companies that offer wellness incentives also should remember to take those incentives into account when calculating the minimum value of their healthcare coverage plans.”
Navigator, broker roles sealed in final CMS ruling
Originally published by Gillian Roberts on https://eba.benefitnews.com
July 15, 2013
The U.S. Department of Health and Human Services remains steadfast in its plan to hire navigators to assist and guide people through their options on the exchanges. It will also maintain a relationship with brokers and agents to provide their own recommendations to people considering or entering exchanges.
The Centers for Medicare and Medicaid Services late Friday released a final rule the navigator program, confirming that the role of navigators will be assistance-oriented and stating, as the group has on numerous occasions, that brokers and agents can be navigators if they choose to do so, but otherwise remain separate from navigators.
“We expect that agents and brokers will continue to play an important role in educating consumers about their health coverage options and, unlike navigators and non-navigator assistance personnel, will also be able to sell consumers health insurance coverage,” according to the ruling.
If brokers and agents do choose to become a navigator, “they would not be permitted to receive any direct or indirect consideration from a health insurance or stop-loss insurance issuer in connection with the enrollment of any individuals or employees in QHPs or non-QHPs,” the ruling states.
In April, Gary Cohen, director of CMS’s Center for Consumer Information and Insurance Oversight, elaborated on this sentiment to EBA: “They are not making recommendations, they’re not selling,” he said of navigators. “Some things are the same; they will [both] provide education and inform people about options available to them. But I think you go to an agent because you want to ask the agent sort of the bottom-line question, ‘What do you think I should do?’ And if a navigator is asked that question they’re going to say, ‘I can’t tell you what to do.’”
"NAIFA remains concerned that consumers will be confused about the limitations of navigators," Robert Smith, president of the National Association of Insurance and Financial Advisors, said in a statement today. "Brokers do much more than sell insurance ... Brokers explain critical differences in plan options and coverage. This may involve substantial research and fact-finding about the client’s needs."
The federal government and states that are operating their own exchanges are expected to release a training portal for both navigators and brokers/agents who plan to aide people on the exchanges. A marketplace timeline provided by CCIIO for the rollout of the Affordable Care Act says that this training will be complete by August. However, CMS officials said Monday that the training portal will be developed now that the navigator ruling is final. They did not comment on timing.
The final rule also establishes that certified application counselors are “another type of assistance personnel available to provide information to consumers and facilitate their enrollment in QHPs and insurance affordability programs,” the rule states.
The National Association of Health Underwriters said this morning that they are still evaluating the full regulation, which is 145 pages. At the NAHU conference last month brokers told EBA that they understood navigators were a reality but are confident that their role, advising people on their options, will remain invaluable.
Job satisfaction beats salary
Workers willing to exchange money for being happy on the job
Originally posted by Andrea Davis on https://ebn.benefitnews.com
Even in the face of a turbulent economy and competitive job market, 68% of working Americans would be willing to take a pay cut to work in a job that better allowed them to apply their personal interests to the workplace. Moreover, almost one-quarter of workers (23%) would take a pay cut of 25% or more. The results come from a survey of 1,000 working Americans conducted by Philips North America. (see the infographic on page 41 for more survey results.)
Old paradigm gone
"Seven percent were willing to take a 50% pay cut. That's a life changing number but it's something people were willing to give up to have a career opportunity that was really consistent with their passions and goals," says Russell Schramm, Philips' head of talent acquisition for the Americas. "The whole paradigm of getting your degree, getting a job, making money regardless of what you're doing, is gone."
Forty-eight percent of workers who are able to leverage personal interests in the workplace say they are very satisfied, according to the survey.
"In talent acquisition, we talk a lot about what makes a person accept a position or leave a position and we're seeing, more and more, that meaningful work and work that is relevant to them and their personal passions is becoming more prominent," says Schramm, adding that one of his biggest challenges is being able to identify those personal passions and interests in the candidates who come in for interviews.
"Empowering my team to look at not just what's on the résumé, but [to] look at beyond what's on the résumé [is important]," he says. "What is the motivating driver? What is this person interested in? How are they going to apply that to Philips?"
Talent acquisition is rapidly shifting, he says, "from a transactional, requisition-based process to a much more qualitative process where we're looking for people with a deeper set of skills above and beyond the hard skills that are just required to do the job."
Career path regrets
Forty-one percent of those who don't apply personal interests through their work regret their career path, whereas only 23% of workers who are able to do so regret theirs. More than half (51%) of those surveyed have never changed career paths to integrate their work and personal life in a more meaningful way.
"The survey was our way of understanding what motivates people in the labor market," says Schramm, of the reasons for conducting the survey. "We wanted to understand some of those things that really drive talented individuals in the labor market so we could develop and deliver a workplace reality that would be attractive to those folks."