Monday, January 2, 2017

Thinking About the Year Ahead in Benefits and Compensation

I was talking to a member of the benefits press the other day and after the formal interview (for an article) was over, the reporter, looking for ideas for 2017 articles, asked for a favor. Paraphrasing, if I were running a Benefits or Compensation, or HR function at a good-sized company, what are some things that I would make sure that I did in 2017 including perhaps some things I had not done in the past?

I thought that was a pretty good topic. It's something I think about from time to time and frankly, I'm hoping that that reporter will think of me in the future when writing on some of those topics.

But, if you are reading this, you might be one of my faithful (or first-time) readers and you probably don't want to wait for those articles. So, I'll give you a little preview with a few of my thoughts.

Be a Better Partner

I know -- that sounds strange for Human Resources. People in HR virtually always think of themselves as good partners for the rest of their organization. But, perhaps surprisingly to our HR heroes, their colleagues might not agree.

To Finance, HR is a cost center. Face it, HR doesn't make money. HR doesn't have a product. HR doesn't sell goods and services. HR costs money. And, because of that, Finance may not think of HR as good partners. So, if you want to be better thought of by Finance, think in terms of dollars and cents. When you find a solution that saves money, make sure your Finance partners know about it and make sure you get some credit for it.

Somewhat similarly, Legal may think of you as a litigation risk. After all, there may be more laws on the books that deal with how an employer treats an employee than any other area. And to Legal, each one of those may represent a risk. Legal would like nothing better than to know that you have sound processes and procedures and probably more importantly that you are following them. It's amazing in reading through employment litigation how often a case falls apart for the employer because they had a set of procedures and they left a few steps out in, for example, terminating an employee.


Implementing Those Partnerships

It's great to think about those partnerships, but thinking about them isn't very useful if we don't do something with those thoughts. Let's consider Finance first.

Most every element of your department has a cost associated with it. For 2017, I'm sure you have budgets. But, how about years after 2017? That's a little bit tougher, isn't it? Some of your costs are controllable. You can manage your payroll by the general cost-of-living type increases that you provide. How about your pension commitments? That's a tough one, huh?

First off, your actuary should be on top of that. You should never be getting a pension surprise from year to year or even quarter to quarter. You're not one of those who is getting surprises, are you? If you are, you don't need to be.

I've spoken with benefits people in the past who tell me that's a nice goal, but we just don't have much budget, we really don't have time and we don't have the staff to work with you so that you can get us what might be useful to us.

Suppose I told you that you don't need much budget. This is a very inexpensive project. In fact it's so inexpensive that more often than not, we'll save you more than you spend.

Suppose I told you that we don't need much of your time. In fact, I'm going to round up and say I need 15 minutes of it, but in reality 2 or 3 minutes will probably suffice. Although, to be fair, when I do have results for you, you'll probably want to save an hour or more to go through what we've found for you. After all, what good would discovered savings do you if you didn't actually know how to get them.

And, then there's that staff that you don't have to get us information and answer our questions. Don't worry -- I said that I don't need more than a few minutes of your time. It turns out that I don't need your staff's time either. It's true. All of what I said is true.

Turning now to partnering with Legal, you don't want your department to be thought of as a litigation risk, do you? Well, with respect to each of your plans and programs, you probably have a whole bunch of processes and procedures?

  • Are they current? When was the last time they were updated? When was the last time anyone even looked at them?
  • Are you following them? Every one of them?
  • Do they still make sense? Would you make changes to them not because the law changed since that would necessitate changes, but because they're just not really appropriate in 2017?
I know, this all seems a bit pie in the sky. But, read through your favorite benefits digest tomorrow. There's probably something in there about litigation. What went wrong that caused a lawsuit to have a chance?
  • A committee did not use a well-reasoned process in selecting plan investments.
  • A committee actually had such a process, but didn't follow it.
  • A plan document was vague enough that two reasonable people might interpret it differently. Counsel is telling you that you will win because of this notion sometimes known as "Firestone deference" (essentially, the administrator of a plan should have broad latitude in its administration), but even if you win, litigation may be costly and eat up a lot of your resources.
  • You had a low performing individual in the company whose supervisor doesn't like documenting performance reviews, so when that individual was terminated, there was no written basis on which to do it.
I could go on, but you get the gist. But looking at all those things is tedious and you just don't have the staff to do it, but there is a solution.

Happy New Year. Have a great 2017.

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