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4th Quarter 2009 Executive
Summaries
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An electronic medical records (EMR) system is a key information technology that will help lead to management information systems that go a long way in attacking health care inflation. This article explains some of the ways EMR can be used to drive these efficiencies, especially given the recent shift in workforce demographics. These efficiencies include increasing prescription drug compliance, reducing gaps in care and providing safe redirection from the emergency room to other more appropriate care settings. The authors assert that even though the larger role of information technology is not so easily heard amid the ongoing private/public debate about U.S. health care reform, it nonetheless is essential to controlling health care costs.
The Great Target-Date Fund Debate: Calculating the Impact of Managing Target- Date Funds “To” Versus “Through” Retirement
by Jason L. Ellement, Capital Markets Research Group, and Lori Lucas, Callan Associates
A debate about target date funds has emerged in the industry. Should a target-date fund glidepath be constructed with the assumption that retirement is the end date (“to retirement”), or should a glidepath be designed to last effectively until the presumed end of a participant's life (“through retirement”)? The authors provide various investment simulations under two glidepaths to address the different impact on income replacement ratios of managing glidepaths “to retirement” versus “through retirement.” They find that one size does not fit all plans in target-date investing any more than it does in other types of investing, and that the vast differences in target-date fund glidepaths can be viewed as a virtue.
Global Positioning: Managing the Far-Reaching Risks of an International Assignment Program
by Charles “Skip” Odell, Metlife, and Cheryl Spielman, Ernst & Young
Global mobility risk, a huge component of the broader area of business risks triggered by globalization, is closely tied to the human resources (HR) function and one of the business environment's most underrated types of risk. As the world continues to become smaller, the potential impact of global mobility risk on an organization is likely to grow even larger. This article explores three major risks associated with an international assignment program: talent management, compliance and accidental expatriates. It then lays some groundwork for risk mitigation and demonstrates how investing time, effort and money in risk management now can forestall the potentially exorbitant future costs of inaction.
The New 403(b): Plan Design in Light of New Regulations Post-1/1/09
by Aaron Friedman, Principal Financial Group
It's a whole new world for 403(b) plans. Many nonprofit retirement plan sponsors are scrambling to figure out how to make their 403(b) plans comply with new Internal Revenue Service regulations and guidance. This is a complex undertaking and represents sweeping changes for 403(b) plan sponsors. Compliance is made even more complicated by the fact that not all 403(b) plans are structured alike. Plan sponsors must take different actions depending on the structure of their plan. This article explains the new rules, helps plan sponsors sort through the various options specific to their respective types of plans and concludes with a short list of key action items to help plan sponsors navigate the new 403(b) frontier.
Managing Human Resource Cost in a Declining Economic Environment
by Edward M. Pudlowski, Ernst & Young
The human resource (HR) function within an organization can be the biggest and fastest growing cost the organization has to manage. Employer responses to HR costs during the recent economic downturn have varied, but many focus too quickly on changes that directly affect their employee populations. Instead, the focus should first be on transparent cost-saving opportunities— those that are nondisruptive to the employees' understanding of their program of benefits. Once transparent and minimally disruptive approaches are considered, employers may want to assess the competitive level of their benefit plans. This article gives examples of the type of savings these approaches can achieve, all without significant disruption to the employees' benefit design.
Tough Times Demand Focus—Total Rewards Strategy
by Andy Hiles, Hewitt Associates
A total rewards strategy is a focused game plan that allocates resources and tailors activities to achieve a target performance level within a prescribed timetable. It must be unique to the organization that develops it and, when done effectively, will help drive sustainable, competitive advantage in the ever-tightening market for key talent by carefully considering the full list of potential sources of value to employees. This article resolves common areas of confusion over total rewards strategies and provides some potential value drivers for consideration. A total rewards strategy can drive differentiation from the competition and allow for cost-reduction steps that save needed dollars but do not have a commensurate negative impact on employee appreciation and engagement.
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