jobs – Saxon – Employee Benefits, Insurance & Wealth

Tax Cut Spurs Employers to Boost 401(k) Contributions

Following one after the other, large employers including Wal-Mart, Aflac and SunTrust have announced significant compensation and benefits changes and attributed them to the Tax Cuts and Jobs Act, which President Donald Trump signed into law in December.

Experts expect hundreds of other employers to join suit.

A new study from global consulting and advisory firm Willis Towers Watson found that about half of 333 large and mid-sized companies polled plan on making changes to their employee benefits, compensation, total rewards and executive pay programs within the next year.

All told, 66% of employers surveyed have either made changes to their benefits packages or are considering making changes. The most common changes are expanding personal finance planning (34%), increasing 401(k) contributions (26%) and increasing or accelerated pension plan contributions (19%), according to WTW.

About 22% of employers say they plan on addressing pay gap issues — a hot topic in the wake of the #MeToo movement and the public firings of top CEOs, editors and TV anchors, politicians and chefs — as part of a broad-based approach to compensation, according to the report.

“The tax reform law is creating economic opportunity to invest in their people programs,” says John Bremen, managing director of human capital and benefits at Willis Towers Watson. “While a significant number have already announced changes to some of their programs, the majority of employers are proceeding to determine which changes will have the highest impact and generate the greatest value.”

Although the Tax Cuts and Jobs Act slashed the corporate tax rate to 21% from 35%, one expert says the decision of where to place those extra savings is going to vary by employer.

“Clearly you have that situation where there has been a tremendous amount of activity,” says Jack Towarnicky, executive director for Plan Sponsor Council of America. “I haven’t seen a comparable situation in the past where somebody announced a particular change and so many others have moved in the same direction. I think it would be as varied as the enterprises themselves where they deploy any corporate reduction.”

Some companies, such as Boeing, Disney and MidWestOne Bank, announced one-time bonuses and student loan repayment contributions, respectively, but said those decisions were not made with consideration to the tax reform.

The heavy lift of raising retirement benefits

Any changes to a company’s employee benefits plan require analysis and strategy to determine the predicted costs, which is more time-consuming than giving every employee a one-time bonus, Towarnicky says.

“There have been a handful of employers that have announced changes in 401(k) savings plans, but it’s clearly dwarfed by the number of employers that announced one-time bonus payments,” he says. “There is a difference between a one-time action and a change to your 401(k) match. It is reasonably predictable if you’ve got a match and you’re going to increase it.”

Employers may also apply those extra savings to voluntary or employer-sponsored benefits, a growing trend for 2018, and wellness initiatives that transcend the benefits package.

Companies with larger, campus-like office buildings are beginning to invest in bike trails around the area and ergonomic work stations, says Catherine O’Neill, senior healthcare consultant at Willis Towers Watson.

Employers are “trying to blend their work environment with their benefits strategy or wellness strategy to make it more successful,” O’Neill says.

While the changes will remain to be seen, Towarnicky warns employers faced with reinvesting their tax savings that those rates may not remain in effect indefinitely.

“Too many times, particularly when it comes to retirement, people develop expectations,” he says. “Any reductions [to benefits or compensation] have a negative impact on employee relations.”

Tax Law Fuels Changes to Benefits and Compensation Programs

What changes will your employee benefits embark on with The Tax Cuts and Jobs Act passed? This article from Employee Benefit Advisor touches on the topic.

The Tax Cuts and Jobs Act is fueling changes to corporate America’s employee benefits, compensation and executive pay programs, according to a survey by Willis Towers Watson.

Of 333 large and midsize employers who responded, 49% are considering making a change to at least one of these programs either this year or next.

The most common changes organizations have made or are planning or considering include expanding personal financial planning, increasing 401(k) contributions and increasing or accelerating pension plan contributions.

Beth Ashmore, the senior consultant for retirement risk management at Willis Towers Watson, says when it comes to expanding personal financial planning and increasing 401(k) contributions, for an employer, the value of making adjustments in those areas is to ensure employees they are going to be taken care of.

“Whenever any employer is thinking about making a change in total rewards, they need to be thinking about it from the perspective of the compensation as the benefit,” Ashmore says. “What is the best value and impact I can make for my employees?”

As for increasing or accelerating pension plan contributions, Ashmore says with the tax law change the majority of employers have a short-term opportunity to make a pension contribution and potentially deduct at a higher tax rate at the beginning of 2018. “Going forward, that tax deduction will be less for a lot of employers under the new tax law,” Ashmore says.

Other potential changes to benefit programs include increasing the employer healthcare subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family and Medical Leave Act’s tax credit available for paid leave for certain employees.

Compensation plans

At least 64% of employers are planning to or considering taking action on their broad-based compensation programs, or have already taken action. The most common changes organization have made or are planning include conducting a review of their compensation philosophy, addressing pay-gap issues and introducing a profit-sharing or one-time bonus payout to all employees.

Steve Seelig, executive compensation counsel at Willis Towers Watson, says when it comes to changing compensation philosophy employers should re-evaluate their pay structure to determine if they want to continue to offer the same compensation.

“Employers may want to consider a more fixed compensation — similar to what Netflix started — where the CEO is paid much more salary and less performance-based compensation,” Seelig says.

Many employers answered questions on addressing pay gaps from the perspective of closing a gender pay gap. However, Seelig says employers could also refer to pay gaps between levels within an organization, such as an associate to a supervisor.

“The CEO pay ratio will be disclosed later on this year and employers could take this time as an opportunity to narrow the gaps between positions before the disclosure,” Seelig says.

Taking the Long View of New Hires

By Mark McGraw

May 22, 2012

Source: Human Resource Executive Online

Don't be too quick to measure the impact of new hires, experts say. Even though many companies are "concerned" about the way they appraise new professional and managerial-level hires, it's important to allow them to develop and grow before determining their worth to the organization. It's also important to establish meaningful metrics.

Professional football franchises are big businesses that depend on frequent injections of new talent to remain successful.

Look at the recent NFL draft, where each of the league's 32 clubs carefully selected a handful of college athletes they hope will lead their organizations to success for the next decade or so. These pro prospects are poked, prodded and closely scrutinized for months leading up to draft day, and teams have become increasingly thorough in testing the physical and mental capabilities of these young men before making sizable investments in them.

Still, predicting a just-drafted player's career trajectory is an inexact science. Highly touted players with big-name college pedigrees don't always pan out at the pro level, while unheralded, under-the-radar picks from smaller schools sometimes blossom into superstars.

And NFL teams and their highly paid talent evaluators are left to contemplate their methods for measuring the potential impact of these skilled, but unproven, new employees.

Sound familiar? There's an almost 50/50 chance it does, if findings from theFuturestep Global Talent Impact Study 2012 are any indication.

The survey of more than 1,500 HR professionals in five continents finds that 40 percent of respondents report they "are concerned" about the metrics and measurements they have in place to assess the impact of new professionals and managerial-level recruits on their organizations.

There is no one-size-fits-all approach to measuring a new hire's potential impact, says Byrne Mulrooney, CEO of Futurestep, a global recruitment company with U.S. headquarters in Los Angeles.

More than half (52 percent) of survey respondents say they rely on two to five metrics to assess a new hire's potential value within the organization, he says.

Measurement tools will vary based on the industry and type of position, but there are broader measurements that an organization can use to assess the possible worth of a new hire, according to Dave Ulrich, professor of business at the Ross School of Business at the University of Michigan and a partner at the RBL Group, a Provo, Utah-based consulting firm.

For example, he says, "there are some generic metrics such as perceived performance (perceptions of those that work with the person), behavior (the extent to which the new hire's time is spent on the appropriate business issues) and 'time to productivity,' which is the time before the new manager or hire is fully productive in the new job."

Ideally, these essential processes should be in place before hiring a candidate for a managerial-level position, adds Ulrich, "then those expectations can be the standards to determine if someone is doing the right job."

A new hire's impact will evolve over time, and companies and their HR leaders should rely on a combination of metrics to assess value in the short-, medium- and long-term, says Mulrooney.

"There are three distinct dimensions to a new hire's impact," he says. "First is the immediate impact, when a candidate with the right skills arrives to get the job done. The consequential impact is when an individual's contributions transition from the actions within their own role to influencing others. The third dimension is when additional value is brought to the organization over time, and an employee shows potential to be promoted and grow within the company."

A key reason many companies wind up questioning their assessment tools is that they place too much weight on short-term results as a predictor of future, rather than more long-term success, says Mulrooney.

He notes that about two-thirds (67 percent) of respondents identify the immediate performance of a new professional and managerial-level employee as a critical indicator of a successful recruitment process.

"Our study unearthed an alarmingly short-term approach, with one-in-three respondents (35 percent) measuring impact within a new hire's first six months. Although it's encouraging that measurement is taking place, it's essential that a meaningful process is engaged to maximize impact in the long-term and retain staff," he says.

Indeed, HR leaders should take the long view when evaluating new managerial-level employees, says Keith Strodtman, research fellow of HR strategies at HfS Research, a research-analyst organization with U.S. headquarters in Boston.

"Most would acknowledge that it's more important to hire a quality employee than it is to hire a poor employee quickly," says Strodtman. "Yet, when it comes to hiring metrics, speed-of-hire or cost-of-hire are much more commonly measured than quality-of-hire. Speed and cost are important, but don't forget the big picture."

In the grander scheme, HR must be instrumental in defining the processes and measurements of the recruiting process that are meaningful to their organization and industry, and can often find reliable predictors of new hires' performance within their own organizations, says Strodtman.

"Profiling existing successful employees will provide the key indicators required to assess the potential value of a new hire," he says.

"HR leaders must also work with line-of-business hiring managers to define the metrics and processes that provide insight into the success of a new hire. The metric will vary depending on the goals of the business and the type of role being filled," he says.

"Companies may want to consider a global metric to measure overall quality-of-hires and specific metrics for key roles in the organization. A key is to focus on business outcomes and how successful employees deliver against the desired outcomes," he says.

Ultimately, HR professionals are "like architects who design the processes that capture the desired meaning within the company," says Ulrich. "And, like architects, HR professionals need to listen carefully to the desires of their clients -- in this case, line managers -- so that they can design the right systems."

by 6d-destani

Job Gains by Demographic

May 21, 2012

By Michael J. O'Brien

Despite the weakening jobs data of late, signs of an economic recovery abound. But is the rising tide lifting all demographic boats equally?

Economists continue to argue about the overall significance of jobs-report figures released by the U.S. Department of Labor, but debates notwithstanding, data from earlier this year shows that older workers -- those ages 55 and older -- may be making a better argument for their employment than their slightly younger competitors.

According the Labor Department's March 2012 figures, those older workers gained 2.8 million jobs since March 2010, compared to a net job loss of 258,000 for workers between the ages of 45 and 54 during that same time period.

Such figures should not come as a surprise, says John Challenger, CEO of Chicago-based Challenger, Gray & Christmas.

"The 55-plus population is expanding rapidly and, whether by choice or by necessity, many of these older workers plan on working beyond the traditional retirement age of 65," he says.

Some of these older workers are continuing in the occupations and industries where they spent most of their careers, he says, but many others are starting entirely new career paths.

"Because they may be more willing to work fewer hours or accept lower pay in exchange for better health benefits," Challenger says, "employers are welcoming these older job seekers.

"The older worker's experience makes it more likely that he or she can hit the ground running with little or no training and, in many cases, can do the job of two younger workers, simply by knowing the 'tricks of the trade,' " he says.

But, despite the advantages that many older workers offer to employers, Challenger says, recent college graduates should be stepping into a labor market that is more positive than in the recent past.

"Each year, we continue to see improvement in the college-graduate job market," he says. "Last year was slightly better than 2010, and this year should be slightly better than 2011."

Challenger points to two surveys to support his theory: one from the National Association of Colleges and Employers that finds employers plan to increase hiring of spring graduates by 10 percent over last year; and a survey from Michigan State University's Collegiate Employment Research Institute, which finds that employers are planning to hire bachelor-level graduates at a 7-percent higher clip than last year.

Indeed, according to DOL data from March, workers ages 20 to 24 gained 939,000 jobs during that same March 2010 to March 2012 period -- second only to the 55-plus segment.

Challenger says that, while the slowly improving economy is creating more opportunities for all job seekers, many companies have started looking beyond recovery toward expansion, and those organizations have to make sure they have started to develop the talent they will need to fuel the next period of growth.

"That means beginning to build the entry-level ranks now," he says, "so that, over the next five or six years, it is possible to identify and cultivate the high potentials who will drive the company forward."

There is also new data confirming that the economic recovery is impacting passive candidates.

According to the Corporate Executive Board, for the first time in five years, the ranks of passive candidates -- or employees who aren't actively looking for a new job -- shrank in the first quarter of 2012.

While still below pre-recession levels, active job seekers now make up 27 percent of the employed workforce, which the Board calls "another sign that the job market is recalibrating."

"Overall, this is a positive trend," says Christopher Ellehuus, managing director of the Washington-based Corporate Executive Board. "It means candidates in the labor market are feeling more bullish about job opportunities in the labor market and are more willing to take risks and move to another job with better career opportunities or better pay."

Ellehuus says the Board's new data also finds that employees who left their old companies in the second half of 2011 received 10-percent higher pay with their new employer, up from 8.5 percent in the first half of the year.

"While the global downturn provided organizations with selective opportunities to 'trade up' on talent for bargain prices," he says, "that opportunity appears to be fading quickly as the market begins to re-equilibrate in favor of candidates."

But one demographic that is not enjoying any effects of a revived economy is disabled workers, according to a new study based on DOL data analyzed by Allsup, a Belleville, Ill.-based provider of Social Security disability representation.

The Allsup Disability Study: Income at Risk finds that the unemployment rate for people with disabilities was nearly three-quarters (74 percent) higher than for non-disabled workers during the first quarter of 2012: 15 percent for disabled workers versus 8 percent for non-disabled workers.

And compared to the first quarter of 2011, the figures show no positive movement for either group: 13 percent for disabled workers versus 8 percent for non-disabled workers.

Allsup has been tracking such figures since the first quarter of 2009.

"People with disabilities often face a much greater challenge in securing employment," says Paul Gada, personal financial planning director for the Allsup Disability Life Planning Center. "Their health condition may make it difficult to continue to work for extended periods, or it worsens so they are forced out of the labor market entirely."

With all this data, it's no surprise many HR executives are unsure of their next step, says Challenger.

"This is complex time for HR executives," he says. "HR has to manage staffing demands for the next six months without losing sight of what will be needed over the next six years.

"Unfortunately," he says, "those expecting a rapid turnaround and sudden burst in hiring will be disappointed."

by 6d-destani