Archive for May, 2010

Doing What’s Right

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Expert Perspective by Grahall’s OmniMedia Editorial Board

On April 30, 2010 Towers Watson released a statement about some changes to their Executive Compensation business (Towers Watson Aligns Executive Compensation Consulting Strategy With Evolving Range of Client Needs).  The press release announces that: “ After an extensive three-month review of the executive compensation (EC) consulting market in the U.S., Towers Watson today reaffirmed its commitment to the EC consulting business, while reorienting its strategic approach to meet the evolving needs of clients.”    The press release goes on to say that for Boards that want separate compensation advisors for the board and management, TW “will focus on providing EC consulting services to management” and an “independent, non-affiliated consulting firm, Pay Governance LLC will be formed, staffed by former Towers Watson EC consultants who will serve as Board-level advisors.”

Well that’s a very market savvy approach although we are pretty surprised that TW needed an “extensive review” to determine that independence is a necessary configuration for providing executive compensation services to Boards. 
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Filed under: Expert Perspective - Rewards



Performance and Pay: The Missing Links

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Expert Perspective  by Grahall’s OmniMedia Editorial Board

In their May 6th, 2010 article published in Bloomberg (CBS Overpaid Moonves $28 Million in Study of Chief Executives) authors Jessica Silver-Greenberg and Alexis Leondis write:  “Pay expert Graef Crystal, a former adviser to Coca-Cola Co. and American Express Co., has concluded that pay for performance is a fiction.  Using formulas he developed over 30 years in the business, Crystal crunched the numbers to see whether higher shareholder returns, the gold standard of performance for investors, led to higher pay, and vice versa. No matter how he sliced the data, the answer was no.”

Time and time again we see overly simplified answers to highly complicated questions about CEO pay.  We have written in several occasions about the imprudence of broadly applying presumptions gleaned from ill-conceived studies of limited segments.  (See for example: Typical Examples Aren’t So Typical  and The Hurd Locker.

This “research” by Crystal again follows that well trodden but pointless path.  Let’s deconstruct what little we know of about Crystal’s “formulas” based on what is described in the article:
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Filed under: Expert Perspective - Rewards



UPDATE: Heath Care Reform Redux

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Expert Perspective UPDATE by Robert Cirkiel of UHY and a member of Grahall’s Editorial Board 
Wednesday May 26, 2010

Robert Cirkiel writes: “Since publishing the blog Health Care Reform Redux (below), “interim final regulations” have been issued regarding the age 26 dependent coverage requirement.  These are not proposed regulations, and the “interim final” tag means that they are final but the agencies are accepting comments. 

If you think this means that comments will have no impact and therefore commenting is a waste of time I can’t disagree. 

Regardless, my actuarial group will be issuing a comment letter nonetheless, as we believe we have uncovered a number of potential “unintended consequences”.  Also, if the use of “interim final” is a portent of things to come, it means that the time honored process of issuing regs in proposed form that are subject to change may be curtailed. Stay tuned.”

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Expert Perspective by Grahall’s Editorial Board
Monday May 24, 2010 

In his May 15, 2010 New York Times article Health Insurance Companies Try to Shape Rules  author Robert Pears writes:  “Health insurance companies are lobbying federal and state officials in an effort to ward off strict regulation of premiums and profits under the new health care law. The effort is, in some ways, a continuation of the battle over health care that consumed Congress last year. Insurance lobbyists are trying to shape regulations that will define “unreasonable” premium increases and require them to pay rebates to consumers if the companies do not spend enough on patient care… The health care overhaul provides a classic example of how the impact of a law depends on regulations needed to interpret it.”

Weighing in at over 900 pages in length, the Patient Protection and Affordable Care Act provides little insight, however, into what employers, insurers and individuals must do to comply.  (For a little “light reading” you can access the bill at http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf). 

With such limited information and ambiguity in the bill, the regulations will be key to how both providers and users of healthcare are impacted.  Regulators have a long way to go to get the regulations drafted. Even for those elements of the bill with 2010 effective dates , there has been nothing provided other than some narrow  “guidance.”  And like any other regulatory process, once regulations are drafted, comment periods, hearings and redrafting will follow, based on input from constituent groups.    And lobbying will be part of this process.

Let’s take a closer look at the two areas that Health Insurance providers find so unpalatable: regulating premium increases and increasing medical loss ratio (MLR) requirements.  What’s the problem with these two areas as far as Health Insurance companies are concerned? 
Continue reading “UPDATE: Heath Care Reform Redux” »

Filed under: Expert Perspective - Rewards



Grahall Announces the 2nd in a Series of Seminars on Health Care Reform

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Grahall Announces the 2nd in a Series of Seminars on What Health Care Reform Means For Your Business:  Wednesday, June 02, 2010 11:00 AM – 12:30 PM (Eastern Time)

Delve deeply into the immediate concerns affecting your plans in 2010 and 2011.  Takeaways include strategies on dealing with rate hikes, dependent status, small business tax credits, and keeping your grandfathered status.

Who Should Attend?
    • Owners
    • CFOs
    • HR managers
    • Benefit managers

Presenters
    • Robert Cirkiel, Chief Actuary, UHY Advisors
    • Todd C. McDonald, President, Aisling Partners Insurance Brokerage
    • Pate Steele, Consultant, Grahall Consulting Partners

To download information from the first seminar in this series including a recording, all presentation materials, and other information go to http://www.grahall.com/knowledge/event-transcripts/.  (Note that the conference content begins about 6 ½ minutes into the recording.)

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com

Filed under: Announcements



Filling the Gap – 3 Strategic Moves to Make Now

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Expert Perspective by Grahall’s OmniMedia Editorial Board

In her May 12, 2010 article titled The Workforce Paradox: We’re Short on Talent, Not Just Jobs for Bloomberg’s Business Exchange, Tammy Erickson writes:  “There are significant, growing shortages of skills in critical job categories. The recession may have obscured this trend for a couple years, but it marches steadily onward. Even at the height of the recession in 2009, U.S. companies were struggling to fill certain kinds of positions… [and] many of the jobs now being created require skills that the workforce doesn’t possess in sufficient quantity.”

There is vast evidence to support this from authoritative studies, anecdotal information and empirical evidence.  We all agree that there is a shortage of labor with the necessary skills.  

And we can all agree that this is NOT a new problem; in fact, this trend has been observed for nearly 40 years. 
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Filed under: Expert Perspective - Organization Development



I Love My Work

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Expert Perspective on Employee Relations

As John Hammond begins his thoughtful article I Love My Work: “When we truly enjoy our work (or play) we are most likely to commit ourselves to it, extend ourselves – in terms of time and effort – to make sure we do the best we can. In a perfect business world, every organization would ensure its own success by employing those people who most enjoy doing the organization’s work. The structure of each organization would simply evolve to maximize the efficiency of its employees’ efforts.”

To learn how to help your employees feel empowered to do the work they want to do, that they are best at, while sharing a common commitment to organizational success click here: I Love My Work.
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Filed under: Expert Perspective - Employee Relations and Communications



Good Better Best, Never Let it Rest

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Expert Perspective from Grahall’s OmniMedia Editorial Board
 
In his May 07 2010 article in New Scientist (Economic recovery needs psychological recovery) author Stephen Lea writes: “A psychologically sophisticated recovery policy would focus attention on what George Katona, one of the founders of economic psychology, called the “better-better” group: people who feel they are better off than they were a year ago, and who believe they will be even better off in a year’s time. Katona showed that their behaviour was the motor of economic recovery. It is the better-betters who are most likely to spend the economy back to stability.”

We wondered if and how a company might use this concept by identifying, hiring and motivating its “better better” employee group to fuel its own financial success.  
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Filed under: Expert Perspective - Organization Development



The Politics of Leadership

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Expert Perspective on Leadership

In his soon to be published book about organizational politics (The Politics of Leadership, Joe Davidson writes: “Politics is the same phenomenon whether in the civic life of nations, communities, organizations, or groups. The full consideration of political implications for any exercise of power can mean the difference between success or failure for leadership decisions and actions. Effective leaders need a clear perception of the political landscape in order to achieve personal and organizational results. By recognizing political awareness as a key leadership competency and designing developmental interventions to build that competency in current and future leaders, leadership development practitioners can directly contribute to improved organizational performance and results.”
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Filed under: Expert Perspective - Organization Development



Heath Care Reform: What You Need to Know NOW #2

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Ask the Experts: Pate Steele, Robert Cirkiel and Todd McDonald Discuss Health Care Reform and What it Means For Your Business

On May 4, 2010, Grahall hosted a webinar on the new heath care reform bills signed into law in March 2010.   Presenters Pate Steele of Grahall, Robert Cirkiel of UHY Advisors  and Todd McDonald of Aisling Partners  reviewed the main provisions of the reform, discussed the timeline of events and actions required, and shared information and tools needed to respond to health care reform.

As Robert Cirkiel said pertaining to the Health Care Reform bill, “What you like about the Massachusetts plan you will like about the Federal plan, what you don’t like about the Massachusetts plan you won’t like about the Federal plan”.  Essentially, Massachusetts provides a barometer to gauge the Federal plan’s impact on challenges and opportunities that will face every state in the coming years.

Key issues to look for 2010 and 2011 include:

• Changes in dependent status
• Small employer tax credits
• Reinsurance program
• Grandfathered plans affected by some provisions and not others
• Fall 2010 communications for 2011 open enrollment
• Proceeding with caution to avoid losing your grandfathered status

Todd McDonald shared that, yes, Massachusetts did insure the uninsured and now boasts the highest coverage rate in the country up from 83% to over 97%, but the goal of reducing heath care costs was not achieved.   Healthcare costs for Massachusetts have increased 68% from $1 billion in 2006 to an estimated $1.7 billion in 2010.

There were important lessons learned from the Massachusetts reform including:
• Merger of non-group and group – Increases cost
• Employer mandate – Socially responsible, not necessary
• Minimum creditable coverage – Full disclosure is the issue
• Administrative responsibilities – Keep it simple

Complete recording of the conference call, all presentation materials, and other information are available for download on the Grahall website.  To listen to the session and access the presentation materials, go to http://www.grahall.com/knowledge/event-transcripts/.  The conference content begins about 6 ½ minutes into the recording.

Or contact our presenters:

Pate Steele at pate.steele@grahall.com
Robert Cirkiel at rcirkiel@uhy-us.com
Todd McDonald at tmcdonald@aisling-partners.com

Filed under: Ask the Expert



Win One for the Organization

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Expert Perspective on Employee Relations

As John Hammond shares in his insightful paper Win One for the Organization: “To compete under today’s cost pressures, companies must streamline and restructure to run leaner and respond to change more nimbly. While most employers have little difficulty justifying cost sharing with their employees, they have been extremely reluctant to involve employees and HR in identifying cost sharing opportunities.
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Filed under: Expert Perspective - Employee Relations and Communications