Current Trends in HR

NEERAJ PAWAR STUDENT OF MBA(HA) AT INSTITUTE OF MANAGEMENT AND STUDIES ,INDORE

Current Trends

Current Trends

Current Trends

Harnessing New Technology

Current Trends

Rising Compensation Costs

1.Rising cost of benefits, especially health care

Great News: 2008 Health care costs for most employers is expected to be around 7%, a moderate increase compared to previous years

Employer Responses

 Aggressive health care initiatives, such as higher deductibles, co-pays, and employee contribution levels. 88% of employees are required to pay some of the insurance premium out of their own pockets. The employee share rose from 14.0% in 1992 to 22.1% in 2005.
Source: Economic Policy Institute, 2008

Employee Contributions for Health Care

Employer Responses

Changes or elimination of employee health care coverage

Statistic: Employer coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest aggregate data available)
Source: Economic Policy Institute, 2008

Employer Responses

Focus on changing employee behaviors

 Wellness programs  Smoking cessation efforts  Education of employees on health care options and associated costs

Employer Responses
 Some employers have been holding their health care costs to a 1% increase.  They're doing it by taking a multipronged approach, with programs to prod employees to take more responsibility for their health and to make more informed health care decisions.
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 Successful employers are aggressively pushing consumer directed health plans (CDHPs) Combines a high deductible insurance policy with a tax advantaged health savings account  Firms are setting the premiums at 30% below traditional plans to encourage participation Participation hit 15% this year, up from 10% in 2007 and likely to hit 20% in 2008
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 Saving money by providing free drugs and supplies for chronic diseases (e.g., asthma, diabetes) that are known to lead to costly complications.
 Goal is to get patients to stick to their treatment schedules; often tied to classes or coaching  Upcoming survey from Hewitt Associates indicates nearly 20% of firms do this now, and 47% are considering doing so in the future
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 Paying the full amount of common preventive services can also help reduce costs
 These include annual physicals, mammograms, prostate screenings, flu shots, colonoscopies and prenatal office visits
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 Sending the sickest employees to the best doctors is gaining as a strategy
 Dubbed by some as a 20-20 approach - employers and their health plans use data to identify physicians rated in the top 20% for effective treatments and match them with the 20% of employees who most need care.  Employers provide financial incentives, (e.g., lower copayments) as incentives to use the top providers.  Eventually, firms will try predictive modeling to identify the sickest 20% of employees so steps can be taken today to "get ahead of the curve
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 Increasing financial penalties for employees that poorly manage their health  Many companies continue to reward workers who take health risk assessments and participate in health management programs, while punishing those who do not  Employers may deny a worker access to higher-benefit

plans if worker declines participation in wellness programs

Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses
 On-site medical clinics are growing in popularity

 arge companies staff clinics with own employees while smaller firms contract out to nearby clinics
Help provide primary care to workers at low or no cost On-site clinics lessen time employees spend away from work. On-site clinics expanding to include rehab services, dentistry, X-ray and lab work Forms inviting specialists to come on-site and offer their services. Clinics moving into more active management of workers' health conditions
Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer Responses

 Putting health care into employee s hands

As health insurance costs continue to rise, employers are adopting a controversial new approach: ending group coverage and giving employees $50 to $200 or so a month to help buy their own health care
Source: USA Today, March 26, 2008

Rising Compensation Costs

2. Competitive pressure on increasing employee wages

 inking pay to organizational goals, employee productivity, and labor market norms
Pay-for-Performance Programs Performance Management

Success of Programs Pay for Performance Works When:

It is measurable and objective There are clear expectations There is commitment to training and support Flexibility for input

Source: workforce.com 5/05

Failure of Programs Pay for Performance Falls Short When:

It pits employees against each other It pushes one outcome to the detriment of the others It is so subjective it opens the organization and managers to allegations of bias
Source: workforce.com 5/05

Key Drivers of Success

 Better communication of performance standards with all levels of the organization  Clearly Specify Incentive Measures
Organizational measures: service quality teamwork income growth cost savings Individual measures: based on established performance goals within individual areas of responsibility
Source: JE Rocco. http://danenet.wicip.org/snpo/