Volume 2, Issue 1 (January, 2008)

Human Resources Management – 2008 Trends
 

It has been said that there is one constant in human resource management and that is CHANGE. This month’s newsletter will focus on some HR trends and changes to be expected for 2008. Information in this newsletter will help small and large business owners take a big-picture look at their human resources management for 2008 and start to prepare necessary changes to enhance efficiencies and stay in compliance.

Health Care Cost

Premiums are expected to continue to rise and take a bigger portion of your employees’ paycheck. In 2007 premiums rose on average 6.1%, which continues to be significantly higher than the average wage increase, which was 3.7%. According to the Government Accountability Office (GAO) there are several trends in health care benefits:

• The number of employers offering health benefits declined from 68% in 2001 to 61% in 2006.

• Many employers that offer health benefits are requiring their employees to pay a higher share of out-of-pocket cost. More employers are offering plans with higher annual deductibles to keep the cost of health insurance down.

• Mini-medical plans are now being offered to employees. These plans have lower premiums but also have more-limited coverage.

• It is becoming more difficult for low-wage earners to afford health care coverage through their employer.

Actions employers are predicted to take with their 2008 health benefits are:

• 21% will raise workers’ premium contribution

• 13% will increase office visit cost-sharing

• 12% will increase deductibles

• 11% will increase prescription drug cost-sharing

According to a survey conducted by Watson & Wyatt (global consulting firm specializing in employee benefits) 2100 employees surveyed reported:

• 51% are highly concerned that they will not be able to afford health care coverage

• 35% are concerned that a major medical expense would ruin them financially

• 77% expect their deductibles and co-pays to increase

• 61% see a connection between maintaining a healthy lifestyle and controlling cost

Employers and their insurance agents are becoming more and more creative to help soften the blow of high premium increases. Some strategies expected when preparing in 2008 for 2009 health insurance premiums are as follows:

• Shifting more costs to employees through higher premiums, deductibles and co-pays.

• Implementing strategies for keeping employees healthy.  This can be done by encouraging preventive care and developing special programs designed to address the needs of employees who have chronic health conditions.

• Offering unconventional plans such has consumer driven in combination of utilizing a Health Savings Account (HSA).

Recruitment:

Demographics are changing that will impact employers ability to attract and retain quality employees – a couple of major changes are:

• The workforce is aging.  In 2005 25% workers were age 50 or over compared to the prediction that by 2012, nearly 33% workers will be age 50 or over.  Employers are increasingly offering incentives to retain older workers by offering flexible work schedules, opportunity to learn a new skill and work/life balance

• A weak housing market – is making it increasingly more difficult to attract professionals to the area.  If an employer in South Florida is relocating someone into the region, they will have to make some costly decisions in supplemental housing and relocation costs.

Regulations:

FMLA (Family Medical Leave Act) – Military duty has been added to FMLA which requires that employers provide 12 weeks of FMLA leave to the immediate family members (spouses, children or parents) of reservists or members of the National Guard who are called to active duty in the U.S. military. Under the new law, employers also must offer up to 26 weeks of unpaid leave to employees who are providing care for family members wounded while serving in the U.S. military. Workers can take the leave in increments of the shortest time periods tracked by their employers’ payroll system.  It is predicted President Bush will sign the bill soon—most likely before Christmas. The measure does not stipulate an effective date for the FMLA expansion, which has left many wondering if the law will take effect on the day the president signs it.  Sources familiar with the issue say that while the federal government won’t begin strict enforcement of the new leave requirements immediately, employers do need to review the changes and be ready to comply with the new law as soon as possible.

Same sex harassment – A recent court ruling by the Equal Employment Opportunity Commission (EEOC) has announced that United HealthCare of Florida, Inc. will pay $1.8 million to settle a same-sex harassment and retaliation lawsuit charging that a male former regional vice president subjected a male employee to repeated verbal sexual harassment at the company’s Sunrise, Florida location.  The EEOC said that after the employee complained several times to upper management, the company retaliated against him by subjecting him to discipline.  The employee could no longer tolerate the retaliatory conduct, so he quit, the EEOC said.  The settlement requires United HealthCare to pay $1.8 million to the former employee; distribute a new anti-harassment policy to all Florida employees; and train all employees and managers at the Sunrise facility on federal employment discrimination laws including sexual harassment and retaliation.  Employers today should be extremely sensitive to “same sex harassment” complaints and act appropriately.

New I-9’s to start 2008 - On November 7, 2007, a  revised Employment Eligibility Verification Form (I-9) was released.  It is a federal requirement that US employers complete an I-9 form for all employees within the first three days of employment, and retain the form for one year after termination of employment or three years, whichever is longer.  See Team HR’s December newsletter for greater detail.

Outsourcing Human Resources

Many employers today feel they gain a major competitive advantage from outsourcing.  According to recent market study by an advisory firm called EquaTerra to discover what is and is not working in HR outsourcing (HRO) and trends for 2008, the following findings were made:

• While outsourcing single HR processes such as payroll, benefits, and training have been occurring for many years, the scale and scope of HRO has been changing since 2000.  Multi-process HRO where five or more HR processes are bundled into a single outsourcing effort is becoming more common.

• It is estimated that approximately 2.5 million employees are being supported by HRO today and that number is growing.

• Buyers of HRO (employers) remain generally positive and most plan to stay the course with HRO.

• HRO is becoming a mainstream tool for employers to use when addressing cost savings and process improvements to the HR operations.

Outsourcing your human resources is an important business decision.  When evaluating potential benefits to outsourcing consider the following:

• Financial stability – make sure your outsourcing partner is in it for the long term

• Service – make sure you receive the ultimate in service and satisfaction

• Cost – make sure there are no hidden cost

• Technology – ensure that your changing needs due to increased staff or expansion into other regions are met

• Quality implementation – insure that you are provided with commitment to the successful implementation of your solutions

 According to a 2007 PricewaterhouseCoopers (PwC) Global Outsourcing study:

• 87% of clients served state that outsourcing delivers the benefits projected in the original business plans.

• 91% of clients served state that they will outsource again.