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"ESS": helps balance work-life issues.

Every day, Canada's workers find themselves facing life events that have profound financial impact on them and their families. At the same time, their managers face the ever growing challenges of first, helping workers balance job performance and personal issues during these life events, and second, upholding the employer's best interests.

There is no simple, cut-and-dried approach that works for all managers, employees, and companies in every one of these instances. The needs and specific circumstances of all parties are simply too complex and too varying. Good communication of important and useful information, however, can play an enormously beneficial role in helping managers and workers find that balance between work-life issues.

The following brief examples explore problems that arise in the absence of accurate and useful information communicated to employees in a timely, efficient manner.

Medical Claims Mediation Quagmire

Margaret Doucette, a hypothetical, top-producing national sales manager for Big Sky Ltd., a fictitious large aircraft manufacturer based in a Western province, has a problem that threatens to disrupt her ability to balance her work and personal life. Margaret has just learned that her husband has been diagnosed with an extremely rare and aggressive form of cancer that requires immediate access to highly specialized medical expertise and treatment.

A star performer and leader of the sales team, Margaret's personal crisis has her frantic and unable to concentrate on her job. Her first thought is to phone Big Sky's HR department to find out whether the company provides additional medical benefits over and above the province's Medicare coverage. With all the recent local Medicare service cutbacks, Margaret does not know if the province's system will pay for the cancer specialists her husband will need.

Unfortunately, Margaret has to play a demoralizing telephone tag for two days while she is shuffled between HR staff members, trying to find an answer to her question about additional medical coverage for her husband. The HR department was downsized several years ago; now there is only one HR person for every 120 Big Sky employees.

At last, she connects with a HR staff member. This person accurately tells Margaret that Big Sky does offer a limited form of private medical insurance, and that she qualifies for coverage because of her status as a vice president. Additionally, the HR staffer informs Margaret that there is a maximum lifetime medical benefits cap of $1 million per family member under the Big Sky medical coverage plan.

The problem: the benefits cap amount is too high, exposing Big Sky to the quagmire of claims mediation. This inaccurate information may also prompt Margaret and her husband to make decisions about the course of treatment that could cost them far more than their ability to repay.

Margaret expects immediate, up-to-date, and accurate information about the private medical benefits that Big Sky affords her. But she will also require more extensive information in order to be able to balance her performance in her travel-intensive position along with the new demands of her family situation, while remaining a top sales producer for her company. The additional information Margaret needs to know include:

* How much paid vacation - and sick time - she can expect to deal with ongoing care for her husband;

* How leaves of absence from work are affected by Big Sky policy as well as by any applicable provincial and federal labour laws;

* How and where to contact relevant community support services, especially when business takes her out of town;

* How a breadwinner's long-term illness affect family finances and what steps she can take to address the problem;

* How to talk to her husband, children, other family members, and friends about the illness.

* How to handle the additional responsibilities that Margaret will now need to assume.

Information Gap Encourages Lawsuit

As Margaret faces her dilemma, another hypothetical employee named Jeremy McKuen gets the worst surprise of his life in the interoffice mail. Jeremy, who just turned 55, has worked diligently for many years to attain that coveted corner office at Tech Wizardry, Inc., a fictitious producer of integrated circuits.

Not long after Jeremy's promotion, the cyclical semiconductor industry hits another slump. This time it's especially bad. Sales are down in double digits for the second year in a row with no rebound in sight.

Even so, nothing prepares Jeremy for what is inside the white envelope marked "personal and confidential" on the top of his in-box. Tech Wizardry is encouraging employees 55 and older, like Jeremy, to accept a one-time retirement package with options never before available to "sweeten" the offer. All first-level managers and above who accept the package will be given full retirement and in addition will keep some limited private medical insurance.

Jeremy has worked for the company long enough to have accumulated a fairly sizable sum in his registered pension plan (RPP). Right now, however, that's not all he needs to know. His entire world - financial, professional, and personal - has turned upside down. He has no idea how much money it will take to support him and his family for the rest of his life. He has no idea how to invest his retirement funds if he takes Tech Wizardry's lump-sum buyout option. He's been far busier getting to the corner office than preparing for life afterward. He has just a month to decide whether or not to accept the Tech Wizardry package.

Jeremy's first instinct is to contact the HR department. After several days of telephone tag, a HR staff member informs him that the department cannot make investment recommendations, which is accurate. But the HR staffer also informs Jeremy that the financial planning firm the company has hired to answer these kinds of questions will not be available to him without a fee unless he takes the package.

The problem: that second response is inaccurate. Tech Wizardry has hired financial planners to meet with any and all executives offered early retirement, specifically to help them make a final decision as quickly as possible.

Thanks to one piece of inaccurate information, Jeremy now feels isolated and doubly betrayed. He thinks Tech Wizardry is forcing him to make a critical life decision in a tight timeframe without adequate financial help or support. Jeremy begins to think about filing an age discrimination lawsuit against Tech Wizardry, and he calls several prominent province law firms to discuss his options.

Jeremy requires immediate, detailed, and specific information on whether or not accepting the offer is the best option for him and his family. But his needs for information are much more far-reaching than just financial. Jeremy's needs cover:

* Is it best for him to take a lump-sum buyout, or the company-sponsored annuity payments, or opt for an early retirement;

* The tax consequences for his RPP and retirement distributions;

* Where to find impartial investment advice if he takes the lump-sum buyout;

* Whether his changed employment status could affect his private medical coverage, even though the company has promised some benefits. This is especially worrisome to Jeremy due to the heart attack he suffered three years ago;

* How and where to find government and community resources for locating another job or starting his own business;

* Where to find assistance to create a new resume and sharpen his interview techniques;

* How to talk about the situation with his spouse, family, and friends.

Wrong Information Causes Turnover

In yet another hypothetical scenario, David Campbell is a highly experienced systems analyst working on a top priority Year 2000 project for Provincial Electric, a large, fictitious utility company. David has just learned that his second wife, whom he recently married, is pregnant with their first child. David currently has two college-age children from his first marriage.

An unexpected pregnancy, no matter how welcome, often can put a severe strain on family finances. Filled with pride and some anxiety over the prospect of fatherhood for the third time, David also has a problem balancing his work and personal life. Instead of concentrating on his job, he peppers Provincial Electric's overburdened HR department with phone calls each time he thinks of another question.

His most pressing concern is life insurance. David carries only the minimum amount of life insurance stipulated in the divorce settlement from his first marriage. Now that he's becoming a father again at age 44, the need to provide a secure financial future for his growing new family is very important to him.

A HR department staff member informs David that Provincial Electric does not sponsor term life insurance for employees below the level of vice president.

The problem: this policy is no longer in effect. Recently, the utility discovered an affordable group term life insurance plan for lower-level employees, and began offering it three months earlier in order to retain key workers such as David, who have critical expertise and skills.

David is really worried now, since his wife's employer also does not offer any kind of group insurance. His productivity suffers, and he's not as focused on his job as he was before. And as the baby's birth approaches, he becomes so concerned about not being able to afford life insurance, along with additional expenses of another child while keeping two children in college, that he takes a job at a different company that will provide life insurance benefits. This single piece of misinformation communicated to David by an uninformed HR department staffer costs Provincial Electric a valuable employee. The very kind of skilled, diligent, and hard working employee the utility hoped to keep by making affordable group term life insurance available to all levels of employees.

David expects immediate, accurate, and up-to-date information about the utility's life insurance options. But his need for additional information is far more encompassing. It includes:

* Assistance with reassessing and maintaining a household budget;

* Help with financial planning recommendations on how to save for a new future college tuition and retirement at the same time;

* How to talk with the older children and other family members about the new pregnancy;

* Where to find information about local prenatal care and courses in the latest parenting techniques;

* Accurate advice on negotiating the Medicare bureaucracy when obtaining prenatal, delivery, and other medical care for his pregnant wife;

* What, if any, paternity leave, paid or unpaid, David is entitled to under company policy.

Workers Now Manage Their Financial Future

While Margaret, Jeremy, David, and their employers are fictitious, their situations are only too real and commonplace. Over the past few years, the steady trend in Canada has been to put employees in charge of their own financial destinies. Companies are relying less on defined benefit plans, in which the amount a retiree receives is based on years of service and salary level, and more on defined contribution plans, in which investment performance determines the amount of the pension.

As a result, employees now are more likely to be responsible for guiding and directing their own investments for retirement and other goals, with employers simply providing the framework and sometimes incentives in the form of matching dollars.

Having had the opportunity to teach thousands of workers how to attain their personal financial goals through their employer's benefit programs, it has become apparent to me that sophistication about finances varies widely among individuals. Some employees are very well informed, but the majority of them are not. To be truly in charge of their financial future, workers need to have available to them the information upon which they can base sound investment and important life-event decisions. Such information is also critical to helping them balance their work and personal lives during these important events.

Workers' needs for such data usually are immediate, and they need it in an easily understandable format they can easily use. Traditionally, it takes time, resources, and people to deliver this kind of comprehensive, usable information. HR departments, however, have been subject to the same downsizing that has cut other areas of business to the bone. Although workers' need for timely, up-to-date, and accurate information is exploding, employers' ability to provide this information via traditional methods of HR staffing is vaporizing. And, as highlighted in the examples of Margaret and Jeremy, this squeeze can leave companies in a legally vulnerable position.

The Rush to Employee Self-Service

It's not surprising, then, that employers are turning to employee self-service, or ESS. The use of Internet and multimedia technology can now be combined to make information about company benefits available to employees according to employees' personal schedules. The goal of ESS is to provide up-to-date, accurate, and easily usable information to employees without placing more demands upon already thinly staffed HR departments.

Among employers currently using Web-based ESS systems, it is possible for employees to log on to a computer and perform back-office functions, such as enrolling in certain benefits online, changing their home addresses and telephone numbers, or changing the named beneficiary of their RPP and life insurance. Some ESS systems are beginning to move toward actual online purchases of stock or insurance, although the majority of systems do not yet permit direct monetary transactions.

Up to 20 percent of HR staff time is spent performing back-office, transactional, repetitive tasking. The use of an ESS system can reduce time and dollars devoted to these chores by shifting these back-office functions from the HR department to employees.

Buy why limit ESS just to transactions? The true value and enormous potential of ESS lies in the ability of Web-based and multimedia technologies to deliver vast amounts of information and even training to large numbers of people whenever they want to receive it. An ESS system easily can contain online benefits along with many other information elements that are comprehensive and useful - to employers and employees alike.

Thus when employers and HR staff begin redefining and using ESS as employee self-sufficiency, the real power of Web-based technology will begin working for everybody.

Communicating The Way People Think

The key consideration for the use of an employee self-sufficiency system is its ability to organize vast amounts of information so it can be communicated quickly and easily to individuals online. Employee self-sufficiency Web sites are best organized the way people think, by "life event." A life event is just that: a serious illness in the family, a change in employment status, the birth of a child, or another momentous life occasion. When ESS sites are organized around life events that are familiar to employees, it is simple and easy for them to find the information and resources they need that are relevant to that particular life event.

As a result of events in their lives, Margaret, Jeremy, and David had informational needs beyond up-to-date, accurate, and timely descriptions of their company benefits. For example, if Margaret were using an ESS Web site, she could quickly and easily have located cancer patient and family support groups in her community. She could have read about ways to discuss the situation with family and friends. She would be able to use an online calculator to set up a household budget that takes into consideration her husband's lost wages, or their disability income needs should he become disabled permanently.

There are similar applications for David. He could apply for group term life insurance online, and use the online calculator to determine his insurance capital needs and establish a new household budget. Additionally, David could find the link to a Web site for a service that could inform him about the latest in prenatal care and parenting techniques.

What about Jeremy? His information needs were somewhat different, but not less significant to him and possibly to his employer. Had Tech Wizardry instituted employee self-sufficiency, Jeremy's white envelope could have included a special password that would allow him access to visit a confidential section of the ESS Web site. In that section, Jeremy could find out about the financial options and information regarding the buy out program, including tax issues, investment planning basics, retirement income calculators, and methods of selecting professional investment advisors. He would not need to phone the HR department, and he would not have obtained misinformation from an overburdened HR staff member unaware of all the details of the buyout package. The possibility of an age discrimination lawsuit would not arise.

The purpose of an expanded ESS system is to help employees to become informed through better communication, and therefore as self-sufficient as possible. In turn, this enables them to concentrate on their job performance while balancing events within their personal lives better. Expanded and implemented as employee self-sufficiency, ESS can provide employees with enhanced knowledge and tools to become more self-sufficient, thus boosting their morale and productivity. Employee self-sufficiency benefits employers by reducing their exposure to certain legal risks.

Employee self-sufficiency also benefits workers, and thus their managers and companies, by helping them cope far better with important and sometimes devastating life events. When they are better able to balance work-life issues, employees remain more productive in the long run, and everyone benefits.

Brian A. Ambrose is president, chief operating officer, and cofounder of LifeMap Communications, Inc. which offers BeneMap(TM) System, a comprehensive, Web-based employee self-sufficiency tool. Ambrose is a Certified Public Accountant and a Certified Financial Planner, with more than 18 years of experience as a corporate consultant teaching thousands of employees at major corporations the Self-Applied Financial Education (S*A*F*E) approach to achieving their personal financial goals through their company benefits program.
COPYRIGHT 1998 Canadian Institute of Management
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

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Title Annotation:employee self-service
Author:Ambrose, Brian A.
Publication:Canadian Manager
Article Type:Cover Story
Geographic Code:1CANA
Date:Dec 22, 1998
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