Why Employers Should Consider Mindfulness Training as an Employee Benefit
Original post benefitsnews.com
Some previous blogs have noted the research supporting the benefits of mindfulness for both individual performance and workplace relationships. Research also finds that mindfulness improves employee well-being and resilience.
Resilience gained attention in the 1970s as psychologists and trauma researchers began to articulate the amazing ability of many people to bounce back following a devastating event, crisis or injury. Over time, researchers have identified the characteristics of resilient people, and have identified how to train people to develop skills to increase their resilience. Hence, resilience has evolved to reflect a coping style that allows someone to endure during difficult times and emerge more competent and skillful in dealing with challenges.
A growing body of evidence suggests that mindfulness is particularly important for developing resilience at work, through its effects on employee physical and psychological health, absenteeism, turnover, and in-role performance. Here are some of the findings:
- In workplace samples, mindfulness has been linked to reduced levels of reported burnout, perceived stress, work-family conflict, and negative moods, along with better sleep quality.
- In studies where employees were randomly assigned to a self-directed mindfulness intervention or a control group, those in the mindfulness intervention reported greater job satisfaction and less emotional exhaustion. Similar effects have been found in a range of occupations, including doctors, soldiers and teachers.
- Mindfulness has been linked to increased psychological capital and resilience in managers and entrepreneurs.
- Mindfulness training predicted employee engagement among employees at the Mayo Clinic. Additional studies have further shown that such engagement may be mediated by greater authenticity, positive emotions, hope and optimism.
Developing a formal mindfulness practice is thought to increase resilience in three ways:
1. Flexible cognition. Practicing mindfulness may actually rewire our brain circuitry, improving our ability to think flexibly, more easily perceiving different perspectives and generating novel solutions to problems. This same skill may allow one to observe potentially toxic workplace events while adopting a “decentered perspective,” making perceived stressors appear less threatening.
Imagine an employee witnesses verbal aggression directed at a fellow co-worker, which causes the employee to feel physiological reactivity and psychological stress. Experiencing the event with mindful attention could decouple this automatic link between the toxic experience and emotional reactivity, leaving them feeling less depleted. This reinterpretation of events actually starts to form new habits of thinking, which may involve perception of stressors as challenges that elicit growth, rather than as hindrances. In addition, application of mindfulness skills may elicit compassion for the fellow co-worker.
2. Growth in the face of adversity. Research shows that exposure to a threat without being overcome by that threat can result in higher levels of well-being than not experiencing the threat at all. In other words, experiencing but quickly recovering from workplace stress may indeed make an employee stronger.
So where does mindfulness fit in? Mindful individuals show an ability to perceive stressful and adverse situations from different angles, and demonstrate a willingness to behave more flexibly in response to them. As workers successfully experiment with new coping behaviors, they experience increased confidence and stronger self-efficacy, improving their ability to deal with many types of challenging situations and developing greater resilience.
3. Positive thinking. Positive emotions play a crucial role in one’s ability to recover physically from adverse events, as well to facilitate better emotion and behavior self-regulation. Mindfulness not only enhances regulation of negative emotions, but also cultivates positive emotions. It’s not that resilient people don’t experience negative emotions like anyone else; they do. Resilient people, however, do not dwell on them. Rather, they have learned how to use their attention and other internal resources to notice and amplify pleasant experiences and meaningful events as well.
To summarize, mindfulness may improve employee resilience by training the mind to reinterpret stressors as less personally threatening, empowering workers to take new perspectives and try new behaviors, which may actually result in growth in the face of challenges, and cultivating positive thinking, which is especially important during hardships. A new wave of resilience research is supporting the idea that mindfulness practice may lead to improved workplace outcomes like job satisfaction, retention, and employee health.
Why Do Some Workers Get Away with Bad Behavior?
Original post benefitspro.com
Researchers from Baylor University are seeking to explain why some workers get away with sleazy behavior on the job.
After three studies that included over 1,000 employees, they are convinced they have found an answer: You can get away with breaking the rules or acting less-than-honorably as long as you’re productive. A valuable worker can afford to cross the line occasionally, while those whose performance lags cannot.
It’s an intuitive answer, but one that is no doubt often overlooked by disgruntled employees who wonder why they are being disciplined by their superiors or ostracized by coworkers while others have not.
The study’s lead author, Dr. Matthew J. Quade, a Baylor professor of business, wrote that productive workers who ignore rules or act unethically present a dilemma to employers because of their “contrasting worth.”
“The employees’ unethical behaviors can be harmful, but their high job performance is also quite important to the organization’s success,” he explained in the study, which was published in Personnel Psychology. “In this vein, high job performance may offset unethical behavior enough to where the employee is less likely to be ostracized.”
But that calculus is often flawed, argued Quade. If a worker is regularly engaging in unethical behavior, the employer will likely pay a big price for it down the road. As any observer of the subprime mortgage crisis might say, the short term gains of crooked business are often more than offset by major losses later on.
Unsurprisingly, the study authors concluded that employers should establish that they have no tolerance for unethical behavior from employees, no matter how good they are at their jobs.
Furthermore, they argue, employers should make clear that workers can come to organization leaders with complaints about unethical behavior from colleagues. This point is aimed not only at stopping poor behavior, but to prevent divisions among coworkers.
Another recent study found that employees are more likely to be stressed and unhappy at work when they perceive a lack of “organizational justice,” meaning that rules are not applied consistently or fairly.
In Case of: Effective Responses to Workplace Emergencies
Within sixty seconds of its launch on November 14, 1969, the Apollo 12 spacecraft was struck twice by lightning, which caused critical navigation systems and fuel cells to shut down.
A N.A.S.A. engineer who remembered his training for a similar scenario immediately recommended a fix, which saved the entire mission and quite possibly the lives of the Apollo 12 astronauts.
Four months later, those same engineers faced and successfully responded to challenges that they never anticipated with the ill-fated Apollo 13 mission.
Emergencies can and do happen in every workplace, but it does not take a rocket scientist to plan for them or to fashion an intelligent response when they do happen.
Emergencies and Violence: The Stats
Workplace emergencies are not limited to high-tech or high-risk operations light rocket launches. Statistics compiled by the Occupational Safety and Health Administration (OSHA) and the Bureau of Labor Statistics (BLS) reveal more than 23,000 employee were injured in 2013 solely from workplace assaults.
The latest data available from the BLS show that the annual rate of workplace violence has held steady for more than twenty years, and violence continues to be the second leading cause of employee fatalities after transportation accidents.
This does not even account for injuries or fatalities that result from other workplace emergencies, including fires, natural disasters, chemical spills and contamination, or civil disturbances or terrorism. In 2010, more than three million workers suffered injuries following workplace emergencies. How a business responds to emergencies is typically a function of the nature of the emergency itself.
What Is Categorized as an Emergency?
OSHA defines a workplace emergency as an “unforeseen situation that threatens your employees, customers, or the public; disrupts or shuts down your operations; or causes physical or environmental damage”.
Most individuals might limit their concept of a workplace emergency to newsworthy, large-scale evacuations caused by natural or man-made causes, but lesser-scale emergencies are far more common. One employee might suffer an injury or a sudden medical event.
A small fire might be easily contained by sprinkler systems, but that fire will be no less disruptive of business operations than a larger conflagration. A single disgruntled individual can start an emergency situation that shuts a business down for days. If that individual is armed, the emergency becomes a national tragedy.
OSHA has issued Emergency Action Plan standards for workplace emergencies that are codified in the Federal Regulations. Those standards define, for example, when and where businesses need to have fire extinguishers, building evacuation plans, and medical emergency response protocols.
The New Focus: Armed Shooter Scenarios
Because of high-profile publicity and responses, businesses are also becoming more attuned to armed shooter scenarios. Although not without objection or controversy, some workplaces are training employees in a run/hide/fight protocol that was popularized by a video produced by the City of Houston.
The gist of that protocol is to train employees first to run from an armed assailant. If running is not possible, the employees should hide, and if hiding is impossible, only then should employees attempt to fight the assailant.
Technology can be a boon during a workplace emergency if it is used as a tool and not a solution. The Federal Emergency Management Agency (FEMA) places a high priority in communication technology in emergencies. Excessive reliance on technology can be a downfall, however, if an emergency removes the option to use technology. Businesses should consider deeper contingency plans in the event that the emergency takes down their communication networks.
A Wireless Emergency Alert (WEA) is a notification that is sent to mobile devices in cases of tornadoes, hurricanes, tsunamis and other serious emergencies. These emergency alerts are complimentary public safety service provided by participating wireless service providers. But, if employees have trouble with cellphone reception inside their workplace, they may or may not receive these alerts.
If workplaces were able to plan for all possible workplace emergencies, then to the extent that they were anticipated those events would not be emergencies. The responses by the NASA engineers in the Apollo program are more instructive in developing an effective workplace emergency response plan.
The Apollo 12 lightning strike shows the efficacy of contingency planning for potential emergencies and trusting an employee to implement his or her training when the emergency happens.
The engineer who recommended the solution after the lightning strike was in his early twenties, but his co-workers and the ship’s crew had developed enough of a cohesive relationship and a sense of trust among themselves that they did not hesitate to implement his solution.
During the Apollo 13 mission, the entire workforce again worked cohesively toward a common purpose to develop an effective response that, almost fifty years later, remains one of NASA’s finest efforts.
A workplace will not always have the luxury of implementing thorough contingency training to prepare for an emergency. A business’s ability to survive a workplace emergency is on a par with the conduct of its regular business operations. As with other aspects of those operations, the most effective emergency response requires mutual employee trust and cohesiveness.
Wellness: Get a Lunchtime Workout, Even if You Can't Leave the Office
Original post washingtonpost.com
It can be one of the most exhilarating things you do during the workday, but nailing the lunchtime workout can be tricky. Should you eat before or after? How much should you pack? Shower? No shower? And most important, how much exercise can you pack in during a lunch hour?
The good news is that there are all sorts of tricks for getting the most out of your midday workout and several products that make it easier to navigate.
The key is to have a plan. The night before, pack a light bag of just the essentials: a change of underwear, travel-size deodorant and wet wipes — if you won’t have time for a shower.
Need to shower no matter what? Consider throwing in a bottle of dry shampoo to cut down the amount of time you spend away from your desk, said Tami DeVitis, an instructor at Vida Fitness in the District. She also recommends (if your hair is long enough) wearing a ponytail that requires no maintenance post-workout.
Another way to stay prepared is to keep a pair of sneakers and toiletries in your desk at work. That way, you can just grab what you need and go. Personal trainer Lee Jordan has noticed clients bringing no more than what can fit into a rolled-up T-shirt. In other words, pack light.
You also should consider arriving at the office a little early just in case it takes you longer than expected to get ready, said DeVitis, who teaches several lunchtime classes.
Scarfing down a hoagie right before a run might not be the best idea, but you should eat something, said Nancy Clark, author of “Nancy Clark’s Sports Nutrition Guidebook.”
“The goal is to enter into your workout with a normal blood sugar level,” Clark said. “If you’re exercising at a pace you can maintain for a half-hour, your body can digest the food and use it during the workout. You could eat five minutes beforehand; it all depends on your tolerance level.”
If you’re planning a high-intensity workout of burpees or jump squats, she recommends eating a hearty breakfast. For less strenuous exercise, Clark said, it’s perfectly fine to eat a banana or half of your lunch before getting started.
What you eat post-workout is also very important. To recover from a tough routine, Clark says, down a smoothie, peanut butter sandwich, chocolate milk or any other mini-meals with a balance of carbohydrates and protein.
“Protein builds and repairs muscles, but it does not refuel muscles. Carbs fuel, so you actually want three times more carbs than protein,” Clark said. “The mistake people make these days is just having a protein shake after the workout, but you’d be better off having a fruit smoothie to get carbs andprotein.”
If you’re lucky enough to work near a park or somewhere with good trails, going for a run outdoors is a great way to break up the workday. Too cold? Hit the treadmill at the gym and add in some intervals — one minute of sprints followed by a 30-second jog for several rounds could help you get the most out of your run.
Circuit training is another option for burning calories that could also build muscle if you throw some weights into the mix. Jordan recommends four to five sets of compound exercises, the kind that work two or more parts of the body. You could, for instance, grab a pair of dumbbells for a squat with a bicep curl or lunges with a lateral raise.
“You can either time your reps, say 45 seconds or a minute, or do a set number, say 10 or 15 squats with a curl,” said Jordan, an American Council on Exercise-certified health coach.
If designing your own routine is a lot to ask, there are apps for that. Nike Training Club, Sworkit, Spitfire Athlete and a host of other apps have cardio and strength-training routines that you can do in 30 minutes.
Even Fitbit, the wearable fitness monitor, is getting in on the act. This month, the company released Fitbit Blaze, a touch-screen tracker that comes with access to the workout app FitStar. The app offers diagrams that show you how to execute the moves in each routine.
Game for a class? Just about every gym has a variety of 45-minute classes, allowing you enough time to get in, get to it and get going.
“Consider classes where you don’t get as sweaty, a barre class. You’re going to sweat, but you can clean yourself off and go,” DeVitis said.
Leaving the office in the middle of the day is a no-go for some folks. In that case, Jordan recommends heading to a stairwell, one without traffic, for a quick workout. All you need is a pair of sneakers, if that much, to do a few sets of calf raises on the stairs. Or you could do high-knee runs or squats or sprint up two flights for eight-to-10 minute intervals.
Employee Relations: Electing to Talk Politics at Work has Serious Implications
Original post workforce.com
As the political races unfold in 2016, just about everyone seems willing to share their opinions on candidates, parties and issues — whether they’re asked to or not.
For many of the nation’s workers, this can lead to uncomfortable situations or outright arguments while on the job. Responding with a personal opinion might seem like second nature, but it might also be a risky move careerwise.
Employers generally have the right to limit employees’ political commentary during work time, and many of them choose to do so given the often-heated nature of the subject. Workers should always use common sense when deciding whether to discuss political issues at work, but there are some situations in which employees should definitely steer clear of such talk, such as:
When the business owner or boss is vocal about their own beliefs. It’s a concept that might be shocking to many Americans, but, in many states, private employers may fire workers for their political beliefs.
Under the at-will employment doctrine, in the absence of a contract, employers can terminate employment at any time and for any reason not prohibited by law.
Every state except Montana subscribes to the at-will doctrine.
Under this principle, organizations don’t need “just cause” to fire someone. If local or state law doesn’t prohibit it, private employers generally may terminate an individual because of his or her political beliefs.
Many misinterpret the First Amendment and believe that it applies in all cases related to freedom of speech. The First Amendment only applies to government censorship of speech. As such, it restricts public employers from engaging in this practice.
Most private employers won’t typically terminate employees for their political beliefs. The bad publicity from such actions will typically outweigh any perceived benefits.
Even in states and locations without laws protecting employees’ political beliefs, employers will have to tread a fine line. Some states, like Wisconsin, prohibit employers from taking action on employees’ legal activities, such as running for office or voting. If the discussions are union-related, they might also be protected.
Yet, employees should still be cautious. A business owner or manager who is strongly invested in their political beliefs could discipline or terminate others with opposing viewpoints.
When it wastes time. Many employers recognize that restricting all nonwork-related conversations can have a detrimental effect on morale. But if employees are spending large amounts of time debating the pros and cons of a particular political candidate or issue when they should be working, an employer is going to take notice and possibly take action. Employers generally have control over what employees may and may not do on company property and on work time.
When discriminatory language is involved. Employers have a duty to prevent and address discrimination in the workplace.
If employees are holding inappropriate discussions about a candidate’s sex, age, race, religion, ethnicity or other protected traits, the employer will likely want to take action. A business may be held liable for fostering a hostile work environment if it does not halt such conduct.
Because of the legal ramifications, most employers take discrimination in the workplace very seriously and will respond accordingly. This could include discipline and even termination.
When representing the company. If an employee is passing themself off as a company representative, or even sporting company logos (on a shirt, hat, etc.) while giving a personal interview on the subject of politics, an employer likely has the right to act. Such actions could give customers and others the impression that the employee’s beliefs are those of the company.
Think before speaking. When faced with a workplace situation involving heavy political posturing, it can be hard to consider the effects of statements prior to making them in front of co-workers.
But taking a moment to think about the consequences of certain political discussions before engaging in them might be the best way for employees to safeguard their job.
Employees should consider the career risks of bringing politics to work. The best course of action might be to leave political discussion at the door.
Workplace Mindfulness Training Benefits Extend Beyond Individuals
Original post benefitsnews.com
Much of the research demonstrating benefits of mindfulness practice – stable attention, reduced stress, emotional resilience, and improved performance at work – focus on the benefits for the individual practicing mindfulness. But the workplace benefits extend far beyond that: Mindfulness has a huge impact on relationships. We’ve seen this in our work at eMindful, and it’s supported by considerable scientific research.
Humans are relational by nature, and the quality of our relationships deeply influences our health and well-being. The importance of relationships in the work environment is no exception. Satisfaction and performance at work are strongly linked to one’s ability to work well in teams, develop leadership skills, communicate effectively and resolve conflict.
Teamwork
Team performance obviously relies on relationship skills, and mindfulness training that improves these skills affects both the experience and productivity of teams. One study of health care workers found that a mindfulness-based mentoring intervention resulted in better active listening, more patient-focused discussion and collaboration, as well as greater respect among team members. Moreover, the newly learned mindful communication habits seemed to stick; one year later the team members still demonstrated the same skills.
Leadership
Mindfulness has become particularly popular in the business world as a component of leadership training. CEOs and senior executives have revealed that practicing mindfulness helps build leadership skills, connect to employees and achieve business goals.
One study showed that leaders’ mindfulness was associated with employees’ work-life balance, job satisfaction, and job performance. In that same study, employees of mindful leaders also experienced less exhaustion and burnout. The researchers attributed these findings to leaders being more attentive to and aware of employees’ needs, while self-regulating their own impulses and personal agendas.
Studies confirm the idea that mindful leaders are more attuned to their employees’ nonverbal communication, body language and emotions. In one study, more mindful individuals were better able to recognize the emotions displayed on others’ faces. In fact, it is not uncommon for leaders who complete mindfulness training to say communication feels somehow different, like they are truly listening to their employees for the first time.
Communication, conflict management
Much of the improvement in teamwork likely stems from improvement in communication skills and conflict management. Research suggests mindfulness is associated with better conflict management, with less aggressive communication, and better perspective-taking. During conflicts, people who rate higher in mindfulness have been shown to exhibit more positivity in interpersonal interactions, fewer inappropriate reactions, and less hostility. Mindfulness leads people to process events and feedback in a less self-referential or personal way, which fosters greater attention to group outcomes over self-concerns.
In a study of groups without leaders, teams that were randomized to a short mindfulness exercise had better scores on measurements of team bonding, and they performed better as well. These mindfulness-enhanced skills are helpful not only in better teamwork, but also in enhancing negotiation. One study showed that negotiators randomized to a short mindfulness intervention were more successful in distributive bargaining.
Mindfulness may improve negotiations and team functioning by affecting the emotional tone (positivity vs. negativity) of the team. Since mindful individuals tend to be less reactive to negative events, and recover from negative emotions more quickly, they can influence the collective mood and reduce emotional contagion – the tendency for “negative people” to “bring down” the mood of the group. By practicing focused, kind attention and skillful self-management, mindful people tend to influence through example, engaging and inspiring others.
In summary, practicing mindfulness yields personal benefits, and it can benefit everyone around you. Leaders who practice mindfulness listen differently and communicate more carefully. One result is that they have employees who are more productive and report better job satisfaction. Since mindfulness leads to less reactivity, greater focus on others’ needs, and overall positivity, practicing mindfulness also enhances teamwork through better perspective-taking and more skillful self-management. In my personal experience as a coach, clinician and academic researcher, mindfulness makes working relationships more enjoyable and productive. I’m delighted that research is beginning to confirm how the impact of mindfulness on relationships contributes to better business outcomes.
How to Navigate a Consolidating Wellness Market
Original post benefitnews.com
The corporate wellness industry is growing up. And with maturity comes mergers, acquisitions and a flurry of opportunities that can lead to advances in technology and innovation.
Eventually.
Today, the landscape is confusing. Especially for HR and benefits buyers charged with navigating it. Here’s why:
● Large wellness providers are merging with each other to get bigger.
● Aggressive funding rounds are pressuring companies to innovate and grow quickly to meet investor expectations.
● Large wellness providers are acquiring niche solutions to market.
● Providers are building functionalities that go beyond traditional wellness program capabilities.
Corporate wellness certainly isn’t the first HR category to see wild fluctuation periods. All technology markets move through cyclical waves of change, which follow a surprisingly consistent cadence:
● A period of initial growth. Companies launch to compete with one another with similar solution sets, vying for popularity and mind- and market-share.
● A period of growth stymies. Growth hits a standstill due to economic conditions or market saturation.
● A period of consolidation. Larger players acquire market-share and technology enhancements through partnerships and mergers.
The HR world saw this cycle play out with integrated talent management systems in the early 2000s.
Back then, many different providers sold recruiting, performance management and learning technologies. Hundreds in each category competed with one another, and dozens attracted significant funding to try to dominate the market.
In 2007, the talent management market hit its peak. Companies consolidated, some went out of business, and eventually, we were left with a few dominant providers — SAP, Oracle and IBM.
What did these leaders do right during the industry’s tremendous growth cycle? They mastered their core platform capability before moving on to the next stage of an integrated platform.
So SuccessFactors, now a part of SAP, hitched its wagon to performance management and built a complete vision before expanding its talent management offering. Taleo (now with Oracle) and Kenexa (now with IBM) did the same with recruiting and learning, respectively.
Other talent management providers jumped on the integration bandwagon too early. They tried to cover everything ─ but weren’t good at anything. They couldn’t differentiate themselves in a crowded, shrinking market. Most were shut down or acquired.
I don’t know if corporate wellness will follow this exact path. But the history of enterprise technology indicates an inevitable tipping point. Here are my predictions for what’s to come:
1. Consolidation isn’t going away. It’s clear we’re in a phase of consolidation. Larger companies and private equity buyout firms are acquiring smaller companies, and we expect even more mergers and acquisitions to close the capabilities gap across wellness solutions.
2. The pressure’s on for heavily venture-capital-backed firms. Investors see a ticking clock in front of them. Many want their payoff, and they want it fast. The period of market consolidation doesn’t last forever — and the opportunity to quickly expand to get bought is often made at the expense of product stability, support and internal innovation. Exit pressure increases later in the life of a venture fund as well (for all but the most long-term investors).
3. Providers will jump into unfamiliar waters. Companies with niche offerings will try new things. Recognition providers might add well-being and learning services, and performance companies might try to add analytics tools. But merging different companies, cultures, customer-facing teams and approaches can be difficult and time-consuming, and potentially confusing for employees. Even when providers acquire companies that already specialize in purely complementary capabilities, the devil is in the details. Every acquisition takes time to integrate, and every new feature set takes time to develop.
4. Buyers will be frustrated with all of it. If you’re looking for stability and measured outcomes, then the wrong provider can be a nightmare of new account representatives, technology change and product difficulties. Corporate wellness as a category has room to grow into solutions that embrace the whole employee. Choose wisely.
Three things to focus on
It’s not an easy time to choose a long-term wellness partner. But buyers can take precautions to avoid getting swept into the carnage of acquisitions and consolidations. Here are some best practices to follow when you’re purchasing technology in an unsteady environment:
1. Prioritize your needs as an organization. What major issue is your organization trying to solve? In a crowded market, many challenges and solutions exist ─ but you need to prioritize what’s critical to your success. What is your company trying to achieve in the market? What key capabilities do you need to meet your overarching business goals? What features aren’t as important?
2. Address those needs. This seems obvious, but broader platforms often lure buyers into making decisions that compromise on critical areas. The solution you choose should have excellent bench strength in your highest priority area. For instance, if your main goal is improving employee well-being (and related outcomes), look for a partner that specializes in it ─ not a benefits provider with one small well-being feature.
3. Consider integration capabilities instead of a one-size-fits-all. One positive development of the consolidation phase? Companies want to make it easy for you to connect with different services. This means you don’t need a provider that does everything. Choose the (integration-ready) one you love ─ and tailor it to meet your own unique needs.
Choose technologies that meet your core needs rather than finding a provider that claims to do it all. If it seems too good to be true, it probably is. Focus on what’s important to your organization:
● What’s going to improve your employee experience the most?
● Who has the capabilities and people to guide you to your desired outcomes?
● What do you need right now, and what can you wait a few years for?
You are the only one who can answer these questions for your organization. When you do, you’ll find the corporate wellness provider that aligns best with your business strategy – and your employees’ needs.
5 things to know about the DOL fiduciary rule
Original post benefitspro.com
Tomorrow marks the last day the White House’s Office of Management and Budget will accept meetings with industry stakeholders hoping to influence the finalization of the Department of Labor’s fiduciary rule.
1. When will the DOL fiduciary rule be finalized?
That means a final rule could emerge as early as next week, but more likely by the end of the month, according to Brad Campbell, an ERISA attorney with Drinker Biddle.
Campbell and Fred Reish, who chairs Drinker Biddle’s ERISA team, addressed a conference call on the DOL rule’s potential impact.
Nearly 1,000 stakeholders participated, testament to the wide-ranging impact the rule is expected to have on advisors and service providers to workplace retirement plans and individual retirement accounts.
2. Will the DOL rule be stopped?
Several legislative efforts that would delay or defund the rule’s implementation, as well as strategies to address the rule through the appropriations process or the Congressional Review Act, are “real and substantive,” said Campbell, but stand little chance of blocking implementation of the rule.
“The likelihood that Congress can stop DOL is low,” said Campbell.
He expects more Democrats to find the rule to be problematic once it is finalized, but not enough to create the two-thirds majority needed to override a veto from President Obama, which would be all but guaranteed of any legislation Congress passes.
3. When would compliance be expected?
Campbell also said he expects the Obama Administration to waste little time making industry comply with the new rule. An end-of-year compliance date should be expected, he said.
“Obama is going to want to have a deadline in place before he leaves. That will make it much harder for the next administration to undue” the rule, said Bradford.
4. Will others try to block the rule?
While Congressional efforts to block the rule will likely prove impotent, Campbell said private lawsuits seeking to block the rule’s implementation are “a very real possibility.”
“DOL has done some things I think they lack the authority to do,” explained Campbell, who referenced a recent majority report from the Senate Committee on Homeland Security and Governmental Affairs.
That report alleged the Obama Administration was “predetermined to regulate the industry” and sought economic evidence to “justify its preferred action” in directing the DOL to write a rule that would expand the definition of fiduciary to include nearly all advisors to 401(k) plans and IRAs.
The report also claims DOL willfully ignored recommendations from the Securities and Exchange Commission, the Treasury Department and the OMB as it crafted its proposed rule.
Campbell called those arguments and others enumerated in the Committee’s report “legitimate.”
If lawsuits from stakeholders do emerge, courts may delay implementation of the rule as claims are litigated, but Campbell seemed to dissuade stakeholders from holding out too much hope for that possibility.
“No one can predict where the courts will go,” he said.
5. What will the fiduciary rule’s impact be?
Fully preparing for the rule’s impact is of course impossible before it is finalized.
Nonetheless, Campbell and Reish itemized the ways a final rule is likely to impact industry. They are hoping regulators address several vague areas of the proposal in the final weeks of the rulemaking process.
Still unknown is whether the rule will provide a grandfather provision for tens of millions of IRA accounts already in existence.
Also at question is the proposal’s education carve-out, which could greatly impact how service providers’ call centers interact with plan participants, and whether including specific funds in asset allocation models would rise to the level of fiduciary advice.
Campbell said he expects the DOL to finalize an education carve-out that is a bit more forgiving than what was initially proposed. He expects a final rule will allow specific investments to be mentioned, so long as a range of comparable options are offered as well.
There also is the question of whether or not 401(k) and IRA platform providers will be allowed to offer access to 3(21) and 3(38) fiduciaries, and whether or not doing so would be a fiduciary action.
But the biggest questions impacting a final rule’s ultimate impact relates to the proposal’s Best Interest Contract Exemption, said both Campbell and Reish.
How those exemptions are ultimately finalized will shape the IRA market and how providers and advisors recommend rollovers from 401(k) plans.
The attorneys said they expect a final rule to consider rollover recommendations a fiduciary act.
One concern for advisors will be when they need an exemption to advise on a rollover.
If general education on rollovers is offered, without advice, one natural consequence is that investors will ask advisors what they should do, said the attorneys.
“Is no advice better than so-called conflicted advice?” asked Reish rhetorically. “Prudent advice can still be prohibited” under the rule’s proposal, he said.
That fundamental question is likely to make whatever rule that emerges “extraordinarily disruptive” to the IRA market, the attorneys said.
The Dish with Leigh Rathje
The March edition of The Dish is serving up Saxon's own Leigh Rathje's favorite foods.
When she's cooking for friends and family she enjoys making Dorothy’s Chicken Divan “Hot Dish." "It’s my Grandmother’s recipe, so I only make this when close friends and family are over," she shared. In Minnesota casseroles are called Hot Dishes, "so I like to share this funny fact with new friends," Rathje says. According to Leigh this Chicken Divan is best enjoyed around the dinner table, because you’re going to want a second serving!
Recipe: Dorothy’s Chicken Divan “Hot Dish”
3-4 Boneless Skinless Chicken breasts
2 Packages of 10oz Frozen broccoli spears
1 can of Cream of Chicken soup
2/3 cup Mayonnaise
1/3 cup evaporated milk
1 cup grated cheddar cheese
2 teaspoons of white wine
½ or 1 cup of fine bread crumbs
2 tablespoons of butter
Directions: Cook chicken and cube. Cook broccoli. Spray 9x13 pan and line with broccoli. Place chicken on top. Combine the next 5 ingredients and pour over top. Sprinkle bread crumbs and melt butter and pour over top. Bake at 350 for 1 hour.
On a night out, you can find her at Oak Tavern in Cincinatti, Ohio. She enjoys the unassuming digs of this typical, dive sports bar. "Nothing about the inside is special or even remotely looks like they serve food," she says. You come there to watch sports and eat chicken wings. And CHICKEN WINGS INDEED! At the Oak Tavern they smoke their large chicken wings all day, so you can smell them from the streets. The wings come smoked and lightly seasoned, then handed to you with an assortment of 6 different flavored sauces
She prefers the Carolina Gold, but everyone knows their secret spicy berry sauce is where it’s at!
Oak Tavern is @ 3089 Madison Rd. Cincinnati, OH 45209
Using Compliance Reviews to Prepare Employers for Audit
Original post benefitsnews.com
A retirement plan sponsor has a fiduciary duty to ensure that the plan complies with all federal and state rules and regulations. Plan sponsors must follow the plan’s provisions without deviating from them unless the plan has been amended accordingly. Failure to follow the provisions can lead to plan disqualification. For the 2015 fiscal year, the Employee Benefits Security Administration reported that 67.2% of employee benefit plans investigated resulted in financial penalties or other corrective actions.
An operational compliance review can help. It’s different from a financial audit. An audit reviews the plan as it relates to the presentation of financial data; it is not designed to ensure compliance with all of ERISA’s provisions or other requirements applicable under the Internal Revenue Code. Operational compliance reviews, on the other hand, are concerned with validating the process being reviewed, with no restriction on whether it impacts the financials. An operational compliance reviewer wants to know that the process works, whether it is replicable, and consistent with the plan document.
Where to Begin
First, employers need to define the scope of the plan. To help define the scope, advisers and employers consider the following questions:
- Does the plan sponsor have a prototype, volume submitter, or individually designed plan document?
- Have there been any recent changes to the plan document?
- Have there been any changes to any of the service providers, including payroll and record keepers, over the past few years?
- Has the plan sponsor had to perform any corrections recently, perhaps without fully understanding how the errors occurred?
- Have there been any data changes or file changes as they are provided to the record keeper?
- Is there money in the budget to cover the review?
With the scope defined, a thorough operational compliance review should involve the following key steps:
- Review of the plan document and amendments, along with summary plan descriptions and a summary of material modifications;
- Review of required notices sent to participants, such as quarterly statements, initial and annual 404(a)(5) participant fee disclosures, Qualified Default Investment Alternative notices, safe harbor notices, etc.;
- Review of service provider contracts, such as record keepers and trustees/custodians;
- Discussions with the people who administer the plan, which may include the record keeper, trustee/custodian, payroll and benefits administration personnel;
- Review of plan administrative manuals, record keeper operational manuals, procedural documents and policy statements; and
- Review of sample participant transactions and data for each of the areas being reviewed.
Reviewing and comparing a record keeper’s administrative or operational manual with the plan document is an essential step in the review process. There tends to be a higher propensity for errors to occur when a record keeper is administering a plan that has an individually designed document versus its own prototype document. Lack of documented procedures can be cause for concern in ensuring the consistency and integrity of administering the plan, especially when there are any changes to the record keeping infrastructure, such as changes to plan provisions, modifications or upgrades to the record keeping system, or even personnel turnover.
While this process may lead to the discovery of errors you don’t necessarily want to find, you do want to gain perspective and overall confidence on your plan’s operations. Aside from finding errors, here are some things you should capture from an operational compliance review:
Areas of improvement for operational efficiency, including opportunities to maximize record keeper’s outsourcing capabilities;
- Answers to questions on whether the plan’s provisions and administration would be considered “typical”, and how they compare to industry best practices;
- An overall rating or report card of how a record keeper or service provider compares to industry peers; and
- Confidence that if your client’s plan is approached by the DOL or IRS, it’s ready for an investigation that will conclude with a letter saying “no further action is contemplated at this time”.
Embarking on an operational review may seem intimidating but, with a well-thought-out plan, process, and the right resources, a successful review will uncover potential issues that can be resolved the IRS or DOL arrive at your client’s door. The rewards for your efforts may include perspective on industry best practices and how you can operate the plan more efficiently.