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HR Bulletin July 23, 2010

The July 2010 issue of HR News magazine (4.7 MB) is now online.
The Summer 2010 issue of Public Personnel Management (2.3 MB) is available online.
Press releases on the IPMA-HR Web site may be accessed here.
To access archived issues of the HR Bulletin, click here; you must be a member of IPMA-HR in order to access these archived issues.

Target-Date Funds: Participants Are Younger, Have Lower Account Balances, Shorter Tenure—But Stick With the Funds

WASHINGTON – The use of target-date funds, a relatively new 401(k) plan option, is more likely among participants who are younger, have lower account balances, and have shorter tenure at their current job, according to a study released recently by the nonpartisan Employee Benefit Research Institute (EBRI). The reason for this pattern is that is new workers are the most likely to be automatically enrolled in their employer’s 401(k) plan, with a target-date fund (TDF) often being the default option, says the study in the July 2010 EBRI Notes.

The EBRI analysis also shows that target-date users are likely to stick with their fund over time.

Target-date funds are designed to make it easier for Americans to save for retirement by providing simplicity for investors. The name of these funds usually includes a date that represents the year in which the investor intends to retire. While their growth has been rapid in 401(k) plans in recent years, TDFs are still relatively new for most participants.

As a result, not much research has been done on how participants use these funds over time. The study focuses on 401(k) participants who were in plans that offered TDFs in 2007 to see whether they remained in TDFs, moved out of TDFs, or moved into TDFs if they were not already using them. The study uses the data in the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, which in 2007 had 21.8 million participants from 56,232 plans across a spectrum of plan administrators.

The share of all 401(k) plan participants using TDFs increased from 25 percent in 2007 to 31 percent in 2008, the study reports. Future growth can be expected as the participants in TDFs remain in them and as new participants sign up for them voluntarily or through an automatic enrollment default option. Therefore, the study says, the design of TDFs (especially the investment allocation “glide path”), as well as participants’ understanding of these funds, will become more critical to the future success of 401(k) plans.

Here are some of the other key points in the study:

  • Of those participants having an allocation to TDFs in 2007, 93.9 percent still had some of their account balance allocated to TDFs in 2008. Nearly 10 percent of participants who were in a plan in 2007 that offered TDFs but did not use them in 2007 were using them in 2008.
  • Of those participants who were in a plan that offered a TDF in 2007 and were still in the EBRI/ICI database in 2008, 36.0 percent had at least some of their account balance in TDFs. By 2008, of this same group of participants, 39.8 percent had at least some of their account balance in TDFs.
  • Participants with the lowest salaries were more likely to stay in TDFs and begin using them in 2008. However, as salaries increased, there was no significant difference in new TDF use.
  • As a participant’s plan size increased, the likelihood of new TDF use in 2008 increased, but the probability of continuing use showed very little change across plan sizes. In plans with one to 10 participants, 94.8 percent of those using TDFs in 2007 still had dollars allocated to them in 2008, compared with 93.0 percent of those in plans with more than 10,000 participants.
  • The participants most likely to stop using TDFs and least likely to start using them if they have not already done so are those with the highest levels of tenure and the highest account balances. Of those participants in 2007 with 30 or more years of tenure and having some of their account balance allocated to TDFs, 85.8 percent continued to have some assets in TDFs in 2008. For comparison, of participants in 2007 with two to five years of tenure, 95.5 percent remained allocated to TDFs in 2008 after having done so in 2007.
  • The average age of those participants using TDFs in 2007 was 43.1 and in 2008 it was 42.4, compared with 45.6 and 46.2, respectively, for those participants not using TDFs. The average age for those using TDFs in both years was 42.9.

EBRI is a private, nonprofit research institute based in Washington, D.C., that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions.

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More Than Half of Large, Downsized U.S. Businesses Plan to Rebuild Their Workforces to Pre-Recession Levels by 2012, Accenture Study Finds

NEW YORK – More than half (54 percent) of large U.S. businesses that reduced staff in the past 12 months plan to rebuild their workforces to pre-recession levels within two years, according to a study released recently by Accenture. 

“The Accenture High Performance Workforce Study” found that among all U.S. companies surveyed, only 13 percent of executives said that they plan to reduce their employee base over the next 12 months.

“The outlook is improving,” said David Smith, managing director of the Accenture Talent & Organization Performance practice. “But as companies grow their staff, it is more critical than ever that they understand their skills needs and approach the expansion of their workforces strategically.”

The survey confirmed that companies are shifting their focus away from cost control and returning to growth. The percentage of U.S. companies focused primarily on cost control will decrease from 41 percent in mid-2009 to 18 percent in 2011, according to the study. And the percentage of U.S. companies focused primarily on investment in growth-oriented activities, such as hiring, will increase from 24 percent today to 37 percent within the next 12 months. 

However, as companies focus on growth, a shortage of high-quality skills may be cause for concern for many businesses. 15 percent of U.S. executives surveyed described the overall skill level of their workforces as industry-leading.

“A lack of relevant skills may present a hurdle for companies as they position themselves for growth,” said Smith. “Companies need to rethink how they equip employees with the skills required to be competitive today. They must also consider new strategies for hiring and developing untapped talent currently available in the market.”
 
Companies’ sales and customer service workforces are the employee groups identified as most important by executives surveyed. However, many of the executives reported significant skills challenges in both of these critical areas. Among those executives who rated sales or customer service as one of their organization’s most important workforces, only 23 percent reported that their sales forces perform at a high level and 34 percent said the same about their customer service workers. 

“As they emerge from the recession, organizations can’t afford to have employees with outdated skills on their front lines,” said Smith. “There’s a big opportunity for companies to outperform their competitors by elevating the skill levels of their employees.”

Additional Findings:

  • Nearly one-half (47 percent) of executives do not anticipate changing the size of their workforce in the next 12 months.
  • Almost two-thirds (65 percent) have reduced the number of full-time employees in the past 12 months. 
  • When asked what criteria they used to determine which employees to let go, the top reason cited by 53 percent of executives was low-performing employees. Following closely behind, 52 percent of executives said they let go of employees whose skills were not critical to the future direction of the business. Only 11 percent said high salaries were the determining factor.
  • Nearly three-quarters (72 percent) of companies added full-time equivalent employees in the past 12 months. When asked the reasons for adding employees during the downturn, 46 percent of executives cited specific needs for new staff to support the launch of new products or businesses or their entry into a new market; 45 percent cited the need for more/different skills to drive the business in the future; 45 percent said they wanted to strengthen the workforces that are most critical to the success of their businesses and 39 percent cited the opportunity to add high-quality talent who are difficult to find during more robust economic times.
  • Only 14 percent of companies indicated that their workforce is extremely well prepared to adapt to and manage change through periods of economic uncertainty.
  • About three in 10 companies said they either cut back or completely eliminated campus recruiting, recognition programs and incentive compensation in the past 12 months.
  • Only one-fourth of respondents strongly agree that their company has the leadership necessary to help the enterprise navigate periods of economic uncertainty and the leadership development programs to prepare the organization’s future leaders.

About the Study
The Accenture High Performance Workforce Study is a research project that explores trends, issues and developments in human capital management at large companies around the world. This year’s study was conducted by GfK NOP Limited on behalf of Accenture between January and May 2010, and includes completed surveys with 674 senior executives around the world who represent companies with revenues in excess of $250M, 80 percent of whom represent companies with revenues in excess of $500 million. More than half (55 percent) of respondents are chief executive officers, chief operating officers, chief financial officers or chief information officers; 43 percent are heads of HR or chief learning officers. Respondents represent 24 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Malaysia, Mexico, Netherlands, Sweden, Norway, Finland, Denmark, Singapore, South Africa, Spain, United Kingdom, United States, Switzerland, Portugal and Indonesia. The survey includes 117 respondents in the United States.

Accenture is a global management consulting, technology services and outsourcing company, with more than 190,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of $21.58 billion for the fiscal year ended Aug. 31, 2009. 

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One Billion Man Hours Lost to Sickies Across Europe Each Year

LONDON – Across Europe, more than 120 million sick days a year are actually taken for personal reasons rather than for an illness, according to Aon Consulting, an employee risk and benefits management firm. More than one in 10 people (15 percent) say the last time they took a day off from work as sick leave they were only feigning illness, according to a survey of more than 7,500 European workers. Additionally, 10 percent of people took their last sick day in order to look after a family member.

This research is part of the Aon Consulting European Employee Benefits Benchmark, a survey of more than 7,500 workers from across Belgium, Denmark, France, Germany, Ireland, The Netherlands, Norway, Spain, Switzerland and the U.K., 10 of the leading economies in Europe. The Benchmark focuses on the views of workers across Europe on topics such as retirement, employee benefits and other pension-related issues.

More than 800 million sick days are taken each year, and assuming the average work day is eight hours long, Europe’s “sickies,” the practice of feigning illness to avoid work, are costing employers close to a billion hours in lost man hours. Taking the size of the workforce in each of the 10 countries surveyed and applying the percentage of fictitious sick leave (15 percent) multiplied by the average wage cost of sick leave for employers brings the total cost to an incredible €40 billion. The number of sickies this year are expected to have increased with many people taking time off work in order to watch the World Cup.

The Spanish are the most likely to admit having taken a sickie (22 percent), followed by U.K. workers, the Irish (both 21 percent) and the Dutch (20 percent). The Danish (four percent), the Norwegians (10 percent) are the least likely to have taken a sick day off from work under false pretences. 

Peter Abelskamp, director of health and benefits EMEA at Aon Consulting, said, “A billion hours taken as fictitious sick leave across Europe and the associated financial cost for businesses are probably conservative figures, considering the number of people who don’t admit to faking sickness and the fact that these costs only account for direct wages. Employers would be well advised to tackle the issues of sickness and workplace absence, as these seriously impact efficiency and hit their balance sheets.

“Fifty-six percent of workers say they would not feel forced to take a day as sick leave if they could just be honest and have access to flexible working hours or “social days.” Of course employers should also not ignore the fact that 15 percent of people say that more interesting work would keep them in the office.

“The economic turmoil facing Europe has probably reduced the number of sick days taken, as 11 percent of people say the threat of redundancy would actually force them to cut down the number of days off for non-medical reasons. Perhaps not surprisingly, nearly a quarter of respondents say a cash incentive on top of their salary would also encourage them to come in to work.”
 
According to Aon’s research, the top five things which would encourage Europeans to take less time off work include:

  • Benefit of social days to take for non-medical, personal reasons (31 percent)
  • Provision of flexible working (27 percent)
  • Substantial cash incentive (25 percent)
  • Provision of on-site medical care (19 percent)
  • More interesting work (15 percent)

Aon Consulting recently launched the European Sick Leave Index, allowing companies to measure the cost of sickness and absence and compare it to their national averages. To participate, visit the European Sick Leave Index Web page.

Aon Consulting is among the top global human capital consulting firms, with more than 6,300 professionals in 229 offices worldwide. The firm works with organizations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007, 2008 and 2009.

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New CareerBuilder Survey Finds the Economy May be Making Workers Healthier

CHICAGO – The resounding effects of the economic downturn have some workers making healthier choices when it comes to lunch breaks and smoking habits during the workday. According to a new CareerBuilder survey, 47 percent of workers report they have been packing a lunch more often to eat healthier or help save money. When it comes to smoking habits, 44 percent of workers who smoke said they are more likely to quit smoking given today’s economic conditions. In addition, one-in-five said that they have decreased the number of times they smoke during the workday (21 percent) or actually quit altogether (20 percent). The CareerBuilder survey was conducted among more than 4,400 workers between May 18 and June 3, 2010.

“Economic stress over the last year has caused some workers to reflect on their habits, and many of them have turned to healthier routines,” said Rosemary Haefner, vice president of human resources for CareerBuilder. “In addition to helping cut personal costs, employees who limit their smoking and lunching out habits are taking better care of their overall health. This type of ‘better-for-you’ behavior can be encouraged by companies who implement wellness programs, healthy living challenges or smoking cessation support.”

While some workers are embracing healthier habits, heavier workloads and added stress associated with downsized operations may have other workers taking a different direction.

Lunch breaks
Taking the time to recharge during the work day can be a challenge for some workers. Nearly one-third (32 percent) report they take less than a half hour for lunch, while five percent take less than 15 minutes. One-in-10 never take a lunch break and 16 percent report they work right through their lunch hour. Nearly one-in-five (18 percent) typically don't leave their desks during their lunch break and eat in their workspace five days a week.

As some workers struggle to fit in break time during the day, others choose to multitask on their lunch hour, using their breaks for the following activities:

  • Hanging out with coworkers – 23 percent
  • Running errands – 18 percent
  • Doing work – 16 percent
  • Walking – 10 percent
  • Shopping – Seven percent
  • Working out – Three percent

Smoke breaks
Of workers who smoke, 78 percent of them said they take up to ten minutes for each of their smoke breaks a day. Seven-in-10 (70 percent) report they take up to three smoke breaks a day, while 12 percent take more than five smoke breaks in a work day.

Survey Methodology
This survey was conducted online within the U.S. by Harris Interactive on behalf of CareerBuilder.com among 4,498 U.S. workers (employed full-time; not self-employed; non government); ages 18 and over between May 18 and June 3, 2010 (percentages for some questions are based on a subset of U.S. Employees, based on their responses to certain questions). With a pure probability sample of 4,498 one could say with a 95 percent probability that the overall results have a sampling error of +/- 1.46 percentage points. Sampling error for data from subsamples is higher and varies.

CareerBuilder is a leader in human capital solutions, helping companies target and attract their most important asset—their people. CareerBuilder works with employers, providing resources for everything from employment branding and data analysis to recruitment support. Owned by Gannett Co., Inc., Tribune Company, The McClatchy Company and Microsoft Corp., CareerBuilder and its subsidiaries operate in the United States, Europe, Canada and Asia.

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Submit your Sample Policies, RFPs and Related Documents to the HR Solutions Site

The HR Center’s HR Solutions Web site continues to be updated with relevant topics. If you have any questions, feedback, polices or information to submit, please e-mail Heather Corbin, IPMA-HR’s professional development and research coordinator, at hcorbin@ipma-hr.org.

The HR Center wants YOU to be involved! Submit your articles, sample policies, RFPs and other related documents to IPMA-HR’s HR Center and your organization will receive an honorable mention in the monthly magazine, HR News. All articles, sample policies, RFPs and other documents should be submitted via e-mail to Heather Corbin at hcorbin@ipma-hr.org.

Some Recently Updated Topics Include:

The HR Center relies heavily on you to provide current and relevant information. Thank you for your continued support of the HR Center.

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Deadline Today to Submit Application for Ronald Gabriel New HR Professionals’ Conference Scholarship

The deadline to submit an application for IPMA-HR’s new Ronald Gabriel New HR Professionals’ Conference Scholarship, which was established in memory of the late Ronald Gabriel, a longtime IPMA-HR member who left a bequest to the Association, is today.

IPMA-HR is offering two Ronald Gabriel scholarships to new HR professionals for the 2010 International Training Conference. To be eligible for this scholarship, an individual needs to be an IPMA-HR member—either an individual member or a covered staff member (CSM) of an IPMA-HR agency member—and have less than five years of HR experience. The value of each scholarship is up to $2,000, and the scholarship can be used for conference-related hotel, travel, and meal expenses.

The 2010 International Training Conference will be held October 2-6, 2010, at the Sheraton Seattle Hotel in Seattle. All scholarship applications must be received by close of business today, July 23, 2010.

Completed applications should be submitted to Jessica Allen, IPMA-HR’s director of membership and professional development, either by fax, at (703) 684-0948, or by e-mail at jallen@ipma-hr.org.

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On the Calendar

August 25
Online Course
Developing Competencies for HR Success

September 19-22, 2010
Eastern Region Conference
Adlephi, Md.

September 22
Online Course
Developing Competencies for HR Success

October 2-6, 2010
2010 International Training Conference & Expo
Sheraton Seattle Hotel & Towers
Seattle, Wash.
Contact IPMA-HR Director of Membership and Professional Development Jessica Allen at jallen@ipma-hr.org or click here for more information.

October 6
Online Course
Managing Employee Performance as an HR Business Partner

Watch the HR Bulletin and our Web site for more information on educational opportunities.

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