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The SESCO Report – August 2012

Healthcare Reform and Employee Communication

As lawyers, politicians, consultants and healthcare experts try to decifer what the Affordable Care Act includes and will require of employers, SESCO suggests to clients that even though the law is more confusing than ever, you should fill the void and communicate proactively with employees.

If we as owners and managers of business have questions with few answers, you can imagine how confused and concerned your employees are. Therefore, now is an excellent time to engage employees and at least communicate your organization's commitment to them in that you will continue to provide the best in pay and benefits that you can afford.

The following are some strategies to engage employees. Of course, all communications should be carefully planned and preferably reviewed by SESCO or your healthcare consultant as inappropriate or miscommunications can make things worse.

1. Think about employee education/communications as a year-round event. Don't wait until your next open enrollment to begin the discussion about employee benefits and particularly the new Affordable Care Act. The subject of healthcare reform is constantly in the media and certainly on the minds of all employees. If you only talk about benefits once a year or if you are waiting on the answers to the Affordable Care Act, you are creating a huge void and subsequent frustration among employees. Remember that when there is a void of communications, employees will fill that void with negativity, rumors and inaccurate information thereby creating mistrust and employee morale challenges.

2. Take a stand. Why does your organization offer benefits in the first place? You don't have to commit to offering benefits forever or promising something you can't deliver; however, create and share a mission statement for your benefit platform. Explain to your employees that it is your goal to improve the lives of employees and their families. Let them know that you want to attract and retain key talent. Let them know that employees are your most valued asset and that improved productivity makes the company a leader in the field and creates opportunities for all involved.

3. Make it all about employees. Look beyond fictitious examples like a "John Doe" case to illustrate how plan changes will affect employees. For example, if you have the ability to start an internal employee communications program connected with your company's benefit provider or HR Department, highlight recent stories in the news or at work and how it will directly impact employees. Take the big picture and apply it personally. Thus, your employees will understand what changes mean and how it will affect them.

4. Share information, even when it is not positive.
Healthcare costs are expected to greatly increase (30% to 40%) late this year and early 2013. There will be only two (2) open enrollment periods where insurance carriers will have this opportunity before the mandates of Affordable Care will kick in. And we know that the insurance companies plan to implement these increases. Thus, be up front with employees on why costs are increasing. Drastic increases to employee premium contributions should never be a complete surprise. Although you may not fully know the potential increase, your communications can prepare employees for the worst. Explain that there are factors outside of your control so that employees do not view the organization as the ones who are primarily responsible for increased costs.

5. Personalize employee engagement
. Overwhelming your employees with email or other "hard copy" mail is ineffective. Your insurance carrier may offer generic letters and information so as to "take the burden" of communications. However, the best and most effective information is in person, preferably in small group meetings. Involve human resources as well as senior management. Invite your benefits provider to answer technical questions as well as what they predict in the future. Also know that there are benefit sales/agents and there are professional partners who will consult as well as help provide benefit solutions. Ensure that you align yourself with a professional that takes a primary role as your partner/consultant versus a sales person who you may see once a year.

6. Remove barriers to communications
. Do employees know who they should contact regarding any benefit question? Are they aware that human resources is available? Do employees know who your benefits partner/consultant is and has that professional provided their personal contact information for employee questions? These are all critical efforts as when SESCO surveys employees regarding employee benefits, employees' number one frustration is the lack of communication and technical support when they have a need to utilize the insurance program.

7. Tell employees what to expect.
Of course, this is particularly difficult given the complexities and confusion of the Affordable Care Act. However, this in itself should be communicated to all employees. They need to understand that the details of the Affordable Care Act will be revealed over time as literally the law is untangled as there are many apparent conflicting rules and regulations.

8. Continually communicate value. Regardless of the Affordable Care Act, employers should continuously communicate, in writing, to all employees on an individualized/ customized basis the value of all employee benefits — not just health insurance. When an employer begins to consider all of the taxes and benefits paid on behalf of an employee, the cost is significant — typically 30% to 40% of total compensation and rising.

SESCO provides personalized employee benefits statements (visit at a very reasonable cost and will be happy to provide a quotation as requested.

In Summary
It is critical, regardless of how detailed the communications are that employers say some- thing and not just remain quiet. Enlist partners such as SESCO or other professionals to help prepare agendas or even talk outlines and employee handout communications. We all have questions and it is incumbent upon employers to fill the void the best we can.

The Leader's Checklist: How do You Rate?

Great leaders aren't born, they're developed. And becoming a great leader requires honest self-analysis and periodic reassessments. The following checklist will help guide you in that analysis. Use it to take stock of your people skills. Be honest with yourself.

Then, tuck it away and revisit it in six (6) months. Ask yourself: Am I working to maintain those strengths and abilities I already possess? Have I improved where I'm weak?

Look in the Mirror

Place a check mark in the box next to the behaviors that you feel confident you exhibit on a routine basis.

___ 1.
Guide, don't control. Don't take a completely hands-off approach, but don't micromanage either. Explain what needs to get done, but don't dictate exactly how you want it done.
___ 2. Utilize employees' strengths. All of your employees have something to offer. Identify, recognize and cultivate their specific skills.
___ 3. Empower employees. Give them the tools they need to succeed and the op- portunities to learn new skills.
___ 4. Trust. Don't second-guess your employees' abilities. Believe that you hired good personnel.
___ 5. Take an active interest in employees as individuals. Inquire about their families and hobbies. Remember their birthdays. Offer condolences when necessary.
___ 6. Offer praise. Be quick to give a compliment for a job well done.
___ 7. Respect employees. Your position of authority doesn't excuse belittling,
abusing or humiliating workers, no matter how unintentional. Check that your tone isn't condescending or paren- tal, especially when giving instructions or critiques.
___ 8. Admit shortcomings and ask for help. There is no shame in admitting to an employee that they are more skilled in a particular area than you. Asking for help shows that you respect the employee's knowledge.
___ 9. Have integrity. Avoid a "do as I say and not as I do" attitude. Hold yourself to the same standards to which you hold employees. Give credit where credit is due. For instance, if you use an idea from an employee in a proposal you submit to your boss, give the employee credit.
___ 10. Learn from your mistakes. It's not enough to admit when you make mistakes. Learn not to repeat them. Otherwise, employees are going to consider your admissions of error and accompanying apologies as nothing more than lip service.
___ 11. Don't play the blame game. In the face of adversity, look to solve the problem, not place blame. Employees value knowing that you have their backs. That doesn't mean you should insulate them against deserved discipline. Just don't throw employees under the bus when they make honest mistakes.
___ 12. Give employees a voice. Whenever possible, let them have a say in deci- sions that directly impact them. Also, ask them for feedback. If you cannot implement their suggestions, explain why.
___ 13. Listen, really listen, to what employees are saying. Sometimes, you have to read between the lines or listen for what's not said.
___ 14. Keep employees in the loop. Let them know when, why and how decisions are made. Also, explain the reason behind new policies or changes in existing policies.
___ 15. Keep things in perspective. Don't go crazy over something trivial. Ask yourself, "Will this matter in a week from now?" If not, it might be best to just let it go.
___ 16. Don't waste employees' time. Call meetings only when absolutely necessary. Have a clear agenda and be organized. Also, recognize that employees have lives outside of work and give them the flexibility to live it.
___ 17. Compromise. Meeting employees halfway goes a long way! Be careful, however, of compromising too often. If you do, employees may start to think they can bend your will when ever they want, and, in the process, lose respect for your authority.
___ 18. Be blunt, but tactful. Don't beat around the bush. Burying your message in small talk, for example, could result in the message getting lost.
___ 19. Hold all employees accountable; i.e., don't play favorites. Not only will a failure to treat similarly situated employees similarly pit them against each other, but it could also result in a discrimination claim.
___ 20. Open your door, and walk out of it. It's important for employees to know that your door is always open to them. But be careful of waiting for them to come to you. Make a habit of walking around the department and interacting with employees in their workspaces.

All leaders, no matter how "great," will not score 100% on this checklist. Some tools and suggestions to help leaders to address weaknesses include:

Attend SESCO's leadership seminars (see page 4)
Take advantage of in-house training — special pricing on SESCO's Vital Learning Training System
Self-assess utilizing the DiSC leadership profile — available through SESCO
Ask your employees how you rate — con
duct a confidential employee survey

SESCO specializes in training, developing and assisting leaders in improving upon strengths and addressing weaknesses. Please call us should you or your team wish to discuss how we may be of assistance in improving individual or team leadership skills.

Controlling Labor Costs

Labor costs are an employer's largest, single controllable cost. As we know, we can't do much to control fixed expenses such as rent, taxes, insurance, utilities, etc. As we've discussed over the years in this SESCO Report, labor is your only truly controllable cost, re: how many employees are we going to hire?, how much are we going to pay those employees?, and what benefits will be provided to employees?

As the economy continues to slow, SESCO's strong recommendation, whether you are a public/not-for-profit or private organization, is that compensation be very closely monitored and any increases be carefully considered, re: their long-term impact.

Most of our clients have either been in a freeze mode or if increases are provided, they are provided in a lump sum bonus thereby not increasing the hourly rate and subsequent compounding expenses. Or increases have been very small, re: 1% to 2%. As the economy looks to be slow through at least 2013/14, employers, again, need to be very careful in managing compensation.

Some in the HR world would refute such statements and advise that an employer should check the market and pay market rates or above to ensure employee retention and high morale. However, SESCO has always taken the approach that compensation, including benefits, do not retain or keep employees happy on a long-term basis. Pay and benefits are not motivators, and never will be. In these tight times, employers must provide "psychic compensation" that employees expect to include:

Effective and ongoing communication
An opportunity for teamwork/input
Excellent relationship with frontline management
Opportunities for growth/training
A pro-employee/pro-employer culture that ensures that all employees feel appreciated

Concerning compensation administration (which must be managed), consider:

1. Wage Survey - We strongly recommend not to use published or online surveys. Surveys should be customized to include selecting your peers who you compete for talent and conduct a survey with those specific organizations. The survey will be valid and much more accurate and helpful.

2. Consider Affordability - Always involve financial staff in considering compensa- tion practices. Your gross revenue (total pie) must be considered and subsequently a budget set forth as to how much your organization can and wants to spend on compensation and benefits. This percent- age of total revenue needs to be a part of the budget when considering compensation practices and labor costs.

3. Internal Equity - Internal equity has and always will be the most critical factor. An organization can be the highest payer in town, yet have internal fairness issues and subsequent turnover and morale issues. Internal fairness/equity based upon performance as well as job value is absolutely critical. As such, job analysis and subsequent labor grade determination is a critical part of any compensation program and should be in itself challenged on an annual basis. This is not to say that increases will be provided or compensation ranges will be changed; but, we simply want to ensure that compensation practices are internally fair.

SESCO specializes in compensation administration consulting to include wage surveys, job analysis as well as labor grade determinatiion and pay grade administration practices, and we would be happy to assist your organization with your compensation plan. Those organizations who more effectively manage their compensation practices are more likely to be successful and profitable.

SESCO Client Feedback

"Bill, Jamie Hasty is a very valuable asset to your company! I wanted to send you an email regarding one of your employees, Jamie Hasty has recently been working with us (VADA) closely on several HR and employment processes and we have been extremely impressed with her professionalism and expertise. With her guidance we have been able to update several of our processes here at VADA, both HR and compliance. Jamie is extremely helpful and prompt with her responses and we are well pleased with her service to our organization and we look forward to her continued support and relationship with VADA!" ~ Steve Hoffman, VADA Insurance

Special Thanks to New SESCO Clients!

MiniFIBERS, Inc.
Johnson City, TN
First National Bank
Ronceverte, WV
Loudoun Community Health Center
Leesburg, VA
Restaurant Management Corp.
Chambersburg, PA
Midwest First Star, Inc.
Dayton, OH
Citizens Bank
New Tazewell, TN
University of Minnesota
Minneapolis, MN

SESCO Products of the Month

Affordable Healthcare Act Compliance Manual - $25.00

Federal Five-in-One and Six-in-One laminated posters — $10.95 per poster
State Kits - $10.95 per kit

SESCO Client Inquiry — Staff Response

Question: "We have an employee who has exhausted their 12-week entitlement under Family and Medical Leave. Can we proceed with termination?"

Answer: No — under ADAAA regulations (Disabilities Act as Amended), an employer must engage in an interactive communications process with the employee to determine whether or not the employer can reasonably accommodate the employee's medical leave before termination. In fact, the ADAAA now requires that before any employee is separated due to a medical concern, to include a workers' compensation or long-term illness, whether protected by FMLA or not, that the employer engage in this interactive communications discussion to, again, determine if they can reasonably accommodate an employee's request. For example, an employee who has exhausted their leave may be able to return the following week. Would it be reasonable for the employer to wait another week until the employee can return? Or the employee simply may state that the physician has not released them or released with light duty/restrictions. The employer must consider if they can or cannot accommodate the request. This communications process should be supported by written documentation. Disability cases through the EEOC are on the rise and all supervisors, managers and human resource professionals that separate employees need to know and under- stand this important piece of legislation. Employee handbook policies and procedures should also reflect ADAAA requirements.

Special Insert — Fall Seminar Series 2012

Seminar Agenda

Effective Leader/Manager September 11-12, 2012 (Richmond, VA)
September 19-20, 2012 (Bristol, VA)

Using Your Management Style Effectively
Effective Leadership Skills
Practicing Performance Management
Setting Goals and Motivating Employees
Positive Approach to Discipline
Supervision Basics — EEO, ADAAA, FMLA, EFCA, Wage-Hour, Safety Compliance

Human Resources The Basic Course October 24-25, 2012 (Richmond, VA)
October 24-25, 2012 (Bristol, VA)

Pre-employment Recruiting, Screening, and Hiring
The Importance of Employee Handbooks and Clear Discipline Policies
Determining Pay Rates and Developing Compensation Systems
Effective Performance Appraisal Systems
EEOC and Wage-Hour Regulations and Practices
ADA, FMLA, COBRA, Workers' Comp Compliance

Human Resources The Advanced Course November 13, 2012 (Richmond, VA)
November 14, 2012 (Bristol, VA)

Union Avoidance/Awareness
Responding to EEOC Charges
OFCCP Compliance
Strategic Planning for the Human Resource Department
$375.00 per person for 2 day classes and includes comprehensive take-home materials ($275.00 for 1 day)

Richmond, Virginia Location:
Virginia Community Healthcare Association (VCHA)
3831 Westerre Parkway — Henrico, VA 23233-1330

Bristol, Virginia Location:
Courtyard by Marriott
3169 Linden Drive — Bristol, VA 24202

Earn 12 HRCI Credits and 1.6 CEU Credits for Effective Leader/Manager seminar
Earn 13 HRCI Credits and 1.6 CEU Credits for Human Resources The Basic Course
Earn 6.5 HRCI Credits and .8 CEU Credits for Human Resources The Advanced Course

For complete information and registration click HERE or contact Betty Treadwell by phone at 423-764-4127 or e-mail: to register.