Benefits for the New Workforce

February 13, 2007

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The purported talent shortage, together with a tightening labor market, is forcing organizations to adapt to the changing demographics of the workforce. They are being held more accountable. They are using rewards and recognition. In some cases, they are even offering to buy homes for their employees. Find out just what benefits you might be lucky enough to reap in 2007.

Some are tangible — such as cash-balance pension plans and duplicate housing reimbursements upon relocating; others are more conceptual — recognition and commiserate legal recourse against employer retaliation. Here are some "benefits" expected for 2007's workforce, as recently proposed by Workforce Management.

Health Benefits As companies slowly implement consumer-directed health plans as a way to alleviate rising medical costs, organizations are now focusing on teaching their employees how to be better consumers of healthcare.

To help employees make smarter decisions, employers are offering online financial modeling tools. The trend to better educate employees could help boost enrollment in consumer-directed health plans, which has proven to be a difficult task for employers.

Consumer-directed health plans, which include a personal employee spending account and a high-deductible policy, are designed to persuade employees to become more prudent about their treatment decisions since they're spending their own money.

Consumer-directed plans are expected to continue to increase among large employers, and small to medium-size employers should see some growth as well, according to Tom Billet, a senior consultant at Watson Wyatt.

Retirement Benefits Retirement benefits will likely see a resurgence of cash-balance pension plans in the next few years, now that any legal uncertainty over age has been put to rest with the recent passage of the Pension Protection Act.

Cash-balance plans are a cross between defined-benefit and defined-contribution plans. The benefits are expressed in the form of an account that grows over time with interest and contributions from the employer.

For the same level of employer benefit as a defined-contribution plan, cash-balance plans are significantly less expensive, in part because of professionally managed investment performance for the entire group of plan participants, Alan Glickstein, a senior consultant at Watson Wyatt, tells Workforce Management.

The pension legislation has also paved the way for 401(k) plans, in which more companies are expected to offer automatic enrollment this year. The legislation "helps encourage a smarter version of automatic enrollment" because it allows the contribution rate to increase over time, Glickstein says.

Rewards & Recognition Companies today are increasingly using rewards and recognition to tackle strategic business issues. In the past, recognition has lived in human resources, with the aim to decrease employee turnover.

While that goal still exists, "we're seeing recognition raised more to a business level," says Adrian Gostick, managing director of O.C. Tanner Co.'s Carrot Culture Group. Companies are tying recognition to their business goals, such as driving innovation and improving customer service. Moreover, these directives are coming from organization heads such as CEOs and COOs.

Training & Development Companies today are investing more in training and development, but at the same time, corporate executives are demanding more proof that training dollars are tied to sound business results.

"Companies are getting better at linking learning efforts to strategy and business," by using more sophisticated metrics to assess learning programs, says Pat Galagan, executive editor at the American Society for Training & Development. Employers want to know whether sales improved or if employees were up to speed more quickly on using a new product.

While there's added scrutiny on training programs, there's been a consistent trend among employers the past five years to increase spending, according to ASTD's most recent State of the Industry Report (December 2005).

Relocation With baby boomers retiring, employers are adapting their relocation policies to reflect the changing demographics of the workforce. Employers are "sweetening the pot" to encourage more employees to relocate, reports Workforce Management.

Organizations are beefing up their home sales assistance programs. More employers are offering to buy the employee's home. In other cases, some employers are providing duplicate housing reimbursements when a transferee is paying mortgages on two homes.

As far as the change in global relocation policies, according to Worldwide Employee Relocation Council Vice President Cris Collie, more companies will continue to use short-term assignments of a year or less, due to both escalating costs of long-term assignments and members of a younger workforce being more reluctant to move their families for the traditional three-year stint.

Legal Treatment After ethics scandals such as that of Enron, employers are being hit heavily with retaliation charges. "There's been a sharp acceleration since Enron, and I don't see this slowing down," says Garry Mathiason, a partner with Littler Mendelson, a national labor and employment law practice.

The numerous ethics scandals have shown workers that if they do experience retaliation and file a complaint, the law will be on their side more than ever before.

As well, a U.S. Supreme Court decision in June expanded the definition of what constitutes retaliation. The definition of retaliation now is much broader and covers more subtle acts, such as giving an employee the silent treatment or not considering the employee for promotion.

Which of these do you find mattering most?


An Ever-Changing Workforce Management Landscape by Leslie Gross Klaff Workforce Management, December 2006

Watson Wyatt

O.C. Tanner Co.

American Society for Training & Development

Worldwide Employee Relocation Council

Littler Mendelson

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