Webcast May 7th final

Transcription

Economic Survival Guide:
Successfully Managing your Company
through the Recession
May 7, 2009
Welcome to today’s webcast

Slides will advance automatically

How to ask a question

We are recording today’s webcast

We will email you the slides and links to access the
recording following today’s presentation
2
© 2009. All Rights Reserved. William Gallagher Insurance Brokers, Inc.
Today’s Agenda

Introductions & Overview

Reduction in Force Strategies
– Ian Levine, Founder & CEO, Outplacement Tools

Corporate Risk Management/Premium
Conservation Strategies
– Jennifer Sharkey, SVP, WGA
– Rich Leavitt, Principal, WGA

Benefits Usage and Compliance Issues
– Anita Verheul, EVP, WGA

Avoiding “Bad Hires” During Challenging Times
– Kellie O’Shea, PHR, Creative Services, Inc.

Q&A
3
Overview
Reduce
Mistakes
Reduce
Work Force
Reduce
Time Out of
Work Force
Cash
CashConservation
Conservation
Sustain
SustainViability
Viability
Reduce
Premiums
Reduce
Future
Attrition
4
Overview
MARCH 2008
MARCH 2009
↑ .9%
(6.1%)
HOUSING STARTS
HOUSING (NEW)
SALES
GDP – annual rate
SOURCE: www.economicindicators.gov
5
Ian Levine- Founder & CEO
¾Where are we in the job cycle?
¾How are companies approaching Outplacement?
¾The 2009 job search process.
¾Outplacement Services Return on Investment.
Confidential Information of G2M4U,LLC No copying or dissemination allowed.
•
Approximately 80% of all companies offer some level of Outplacement services.
•
A recent study showed an increase in the use of Outplacement across different classes of employees versus the last economic crisis in 2001. (lhh
2009 data.)
2001
2008
Executives receiving Outplacement
50%
65%
Exempt Employees receiving Outplacement
39%
55% Confidential Information of G2M4U,LLC No copying or dissemination allowed.
What has changed in career transition?
2001 Job Search
2009 Job Search
• Employee shock
¼ No surprises
• Office Space
¼ Virtual Coaches & Online services
• Newspapers or Jobsites
¼ Job site search engines
• Administrative assistance
¼ Interactive document creation tools
• Networking
¼ Online networking sites
• 3‐6 month job search
¼ 6‐12 month job search
• Broad focus
¼ Targeted
• Corporate databases
¼ Internet research
• Resume centric
¼ Personal branding
Companies provide traditional outplacement with offices and career transition coaches.
The significance of the Internet in the job search process has created the need for new tools and advice.
Confidential Information of G2M4U,LLC No Confidential Information of G2M4U,LLC
Copying or dissemination not permitted.
copying or dissemination allowed.
What do Job Seekers need?
•
•
Who’s hiring?
Who do I want to work for?
•
•
•
•
•
•
Who else may apply to this company?
What are my strengths vs. theirs? .
•
Understand you are the product
Clarity of Message.
Why are you different?
Value proposition to the role & company
•
•
•
•
•
•
•
•
•
Website
Blog
Networking Web Sites
Multimedia
Referrals
Resume
Interview Presentation
Personal Website
Business Cards
VCard
•
•
•
•
Execute, Track & Measure
Adjust the marketing plan based on feedback.
Manage Online Identity
Utilize Jobsite Search Engines
The ROI of Outplacement
Objective
Subjective
• Unemployment insurance tax
• Foster goodwill
• Health insurance premiums
• Boomerang hires
• Costly litigation
• Trust and morale of remaining workers
‐ Productivity
‐ Absenteeism
‐ Turnover
• Severance alternative
Corporate Risk Management
Presented By:
Rich Leavitt, Principal
Jennifer Sharkey, Senior Vice President
ExecutiveRisk Practice
May 7, 2009
Corporate Risk Management

Executive Risk
– Employment Practices Liability
– Directors’ and Officers’ Liability
– Crime Insurance

Other Property & Casualty
– Workers’ Compensation
– Property/Business Interruption
– General Liability/Product Liability/Errors’ & Omissions’
13
Employment Practices Liability
Employment Practices Liability, or EPL, is designed to provide insurance for
the Company and its Employees for their liability, individually and
collectively, related to alleged violations of employment practices.
Specifically,
it
affords
protection
for
litigation
brought
by
past/present/potential employees alleging that they have been victims of;
discrimination, harassment, wrongful termination, et al.
RELIGION BASED
CHARGES
1%
SEX DISCRIMINATION
CHARGES
19%
RACE BASED CHARGES
23%
14
EQUAL PAY ACT
1%
ADA CHARGES
13%
PREGNANCY
DISCRIMINATION
NATIONAL ORIGIN
4%
7%
AGE DISCRIMINATION
12%
HARRASSMENT
CHARGES
20%
1.
This chart represents sources of Employment Practice Claims brought against Directors, Officers, other
Employees and the Company.
2.
Each Policy provides different levels of coverage for each of these sources of litigation. It is important to
review your current policy to determine that you have the proper coverage for the Directors, Officers,
any other insured roles, and the Company.
SOURCE: US Equal Employment Opportunity Commission, 2008
Employment Practice Liability Insurance

Employment related issues in a tough economy:
– RIFs
– Non-Discriminatory Practices
– Severance Packages/Releases
– Budgetary Cuts to Increase Profitability
– Employment Litigation
– Americans with Disabilities Act amended (1/09) to
offer expanded protection to employees
15
Employment Practice Liability Insurance

Robust Employment Practices Liability Insurance – a
necessity in these turbulent times!!
– Utilize Insurer’s Loss Control Services
– Revisit Definitions of Employee and Claim
– Maintain Limits; Be Aware of Sub-Limits
(Wage & Hour, WARN Act)
– Reporting Claims/Circumstances

Key EPL underwriting points that insurers focus on:
– Your employment practices process
– Use of outside employment counsel
– Use of Loss Prevention services
– Alternative to RIFs (salary freezes, reduction of
benefits)
– Signed releases from the employment relationship
– Past litigation
– Anticipated employment changes
16
HOW DOES D&O INSURANCE WORK?
plaintiff
+
shareholders
VS.
company
cfo
ceo
chair
A D&O Program has one shared and aggregated limit for all of its Insuring
Clauses. The limit is used to pay both Settlements and Defense Costs.
Side A pays on behalf of
the individual Ds/Os if
Company cannot
indemnify them.
Examples of nonindemnifiable losses
could include derivative
actions, company
insolvency, and
whistleblower suits.
Protects Personal Assets
No Retention
Side B pays on behalf of
Company’s obligation to
indemnify individual
Ds/Os.
Side C pays on behalf of
Company’s liability for
Securities related Claims
only.
Protects Company’s Balance Sheet
Retention Applies
17
Directors’ & Officers’ Liability

Managing your D&O insurance related issues in a tough
economy:
– Premium Savings → consider alternative structures
– Focus on Side A
– Bankruptcy provisions
– Financially strong insurers
– Insurers with Experience in D&O, Your Industry,
Claims
– Diversify your insurance portfolio
18
Directors’ & Officers’ Liability

D&O underwriters are paying close attention to the
following risk factors:
– Strong and experienced management
– An involved Board
– Impact of the recession on the business
– Financials with a plan to survive past the economic
down turn
– Cash Flow/Burn
– Make up of Company’s Investment Portfolio (i.e.
auction rate securities)
– Loan Covenants
– Guidance – Are you giving it?
– Financial Security of insurers they are attaching over
in a D&O program
19
Crime Insurance

Crime Insurance – More important Now Than Ever!
– Association of Certified Fraud Examiners has found
that the average organization loses 7% of its total
annual revenue to employee fraud/theft by its own
employees.
– Employee Theft/Fraud typically can go on for years
and once discovered the financial impact can be
enormous. The median length of time a fraud
scheme went undetected was 24 months.
– 90% of all significant theft losses involve white collar
employees. These are typically long term employees
with knowledge of gaps and holes in the internal
controls.
– Most companies are underinsured.
20
Crime Insurance
Crime Insurance provides:
– Affordable broad coverage that reimburses
businesses for losses due to employee dishonesty
– Responds to a wide range of losses
• forgery or alteration, theft of money and
securities, robbery and safe burglary and
computer fraud
– Designed to enable businesses to secure essential
protection cost-efficiently, with high limits of
coverage and low minimum deductibles

Crime related issues in a tough economy (domestic and
international):
– Increased employee theft
– Computer Fraud
– Vendor Fraud Schemes
– Bookkeeping & Accounting schemes
– Padded Payrolls
21
Crime Insurance

Current key underwriting factors insurers
concentrate on:
– Well established internal controls and procedures
– Fraud training for employees
– International exposures – do they tie in with US
controls?
– Mergers & Acquisitions
– Without sound policies and procedures, it will be
more difficult and more costly to obtain insurance
22
Other Property & Casualty Insurance
Payrolls
Revenues
Inventory
Workers’
Compensation
3
⎯
⎯
Business
Interruption
3
3
3
Property
⎯
⎯
3
General Liability/
Product Liability/
Errors’ & Omissions
⎯
3
⎯
23
An Employee Benefit
Perspective on Maintaining
Business Viability
Presented By:
Anita Verheul, Executive Vice President
Employee Benefits Practice
May 7, 2009
Business Viability: A Balancing Act
Today’s Reality

Reduction in hours and/or layoffs

Understand the full impact of these actions
Balanced with . . .
Tomorrow’s Need

Throughout a turbulent time, how do you keep good
employees engaged

What active steps can you put in place now, to limit
unwanted staff turnover when economy recovers
25
Today’s Reality
Reduction in Hours – Layoffs

Avoid unintended consequences

Many group insurance contracts require “minimum
hours worked” to qualify

Layoffs result in loss of coverage, but so can reduction
of hours

Typically affects Health & Welfare plans such as Life,
Disability, Medical, Dental and Vision
26
Today’s Reality
Reduction in Hours – Layoffs : 401(k)

401(k) plans not affected once initial eligibility reached

Reduction in Hours = Reduction in Salary = Reduction in
Deferrals

Use of Loans and Hardship withdrawals will likely increase
causing additional reductions in deferrals

Loans must be repaid and may cause employee to reduce
other deferrals

Deferral reductions can have negative impact on passing
required discrimination testing
27
Today’s Reality
Reduction in Hours – Layoffs : 401k

An employer provided, discretionary match, is impacted
by changes in salary and employee deferrals

The discretionary match can usually be changed or
removed with Board approval

Not required, but advisable to give employees at least
one payroll cycle notice of discretionary match changes
28
Today’s Reality
Reduction in Hours – Layoffs: Health and Welfare

Loss of healthcare benefits can result in eligibility under
COBRA or state continuation programs

Continuation claims are typically 40% higher than
claims for active members

These claims impact employer claims, utilization and
renewal calculations
29
Today’s Reality
Severance Plans

Depending on how they are structured may be
considered an ERISA plan

If ERISA plan, must be included in Plan Document and
5500 filing

Not all benefits can be continued beyond an employee’s
termination date

Consult insurance contracts for continuation provisions
of life, disability and other programs

New COBRA subsidy only applies to the extent there is
participant premium
30
Tomorrow’s Need
How Employees Feel Today

What will you do today to ensure employee loyalty
tomorrow?

Despite current conditions, retaining talent remains vital
to your organizational success

Employees feel disengaged; they are stressed
financially at work and at home

Financial protection is growing concern for employees
31
Tomorrow’s Need
Understanding Employee Drivers

Recent MetLife study of Employee Benefit Trends identified
top influences to employee loyalty: (1)
Employee Says
Employer Thinks
1. Salary/Wages
1. Salary/Wages
2. Health benefits
2. Health benefits
3. Retirement benefits 3. Company Culture

Significant gap between employee and employer:
–
–
72% employees said retirement benefits were
significant factor influencing loyalty, compared with
40% of employers
69% employees say non-health benefits play a
strong role in the workplace loyalty (sizeable
increase from 51% in 2007); yet only 41% of
employers realize this (2)
32
Tomorrow’s Need
Understanding Employee Drivers

41% of employees strongly consider workplace benefits to be
the foundation of their financial safety net (3)

Economic downturn has affected consumer buying patterns
which are linked to key human needs and emotions

McKinsey research into downturns over the past two decades
notes a 43% increase on spending for personal insurance and
pensions (4)

The savings rate in the US was -1% in 2006 and 2007, but
recently climbed to the 3+% range
33
Tomorrow’s Need
Employers Take Action

Employer reaction to recession:
Action taken - 2008
- 39% cut workforce
- 25% raised employee
healthcare
contributions
- 32% increased
benefit
communication
(5)
Action to take-2009
- 23% plan layoffs
- 17% plan higher
employee healthcare
contributions
- 35% plan additional
benefit
communication
34
Tomorrow’s Need
Employers Take Action

Take this opportunity to communicate your existing benefits
package

Highlight both traditional employer-paid group benefits and
any employee paid voluntary benefits

Include non-core offerings such as EAP’s, discount purchasing
programs, travel assistance, etc.

Ideal time to provide additional voluntary benefit offerings that
assist in financial security; life, long term care, disability, credit
union, legal, identity theft, etc.
35
References
(1), (2), (3)
Seventh Annual MetLife Study of Employee Benefit
Trends: Findings from the national survey of employers and
employees 2009
(4)
The McKinsey Quarterly, “industry trends in recessions,”
December 2008
(5)
Watson Wyatt, “Recession Forcing More Companies to Make
Changes to HR Programs,” December 2008
36
How Well Do You Know Your Applicants?
May 7, 2009
Presented by
Kellie O’Shea, PHR
of Creative Services, Inc.
Topics For The Session
Why Companies Screen
Establishing a Screening Program
Background
Screening Components
Adjudication Process
FCRA Compliance
Questions
“Trust, but Verify”
-Ronald Reagan
Why Companies Screen
Hire Quality Employees
Provide a Safe and Secure Workplace
Reduce Liability Exposure
Regulatory Requirements
Did you know…

Reports say that more than 5 million people
across the U.S. are on probation or parole?

U.S. corrections systems (including jail and
prison inmates) now exceeds 7.3 million people?
That’s 1 in every 31 U.S. adults!
Source: The Boston Globe, March 3, 2009
Burger King Franchise
West Bridgewater - Highway Rest Stop
Paul Leahy
Wikimedia Foundation
Chief Operating Officer
Carolyn Bothwell
UBS Paine Webber
Systems Administrator
Roger Duronio
Smith & Wesson
Chairman of the Board
James Minder
Pre-Employment Screening Statistics

42% of applicants misstate
facts on their application

8% of applicants have
criminal records

19% of applicants
misrepresent employment
history

33% of applicants falsify
higher education credentials
W hy Screen?
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
42%
33%
19%
8%

motor vehicle
violations including
DUI's and possession
of drugs

negative credit
information

5% test positive for
drugs
W hy Screen?
34%
35%
30%
30%
25%
20%
15%
10%
5%
5%
0%
Pre-Employment Screening
Employer Liability

Negligent Hiring
When an employer knows, or should know, of an
employee’s unfitness for a particular position, yet hires
that individual despite his or her inadequacies.
Employers lose 72% of all
negligent hiring suits and
the average jury plaintiff
award is $2,000,000.

1 out of every 138 US residents were incarcerated by June
of 2004.
4,500 convicted sex offenders have relocated in the wake
of Hurricane Katrina.
12.3 million American workers are current illicit drug
users.
650,000 inmates were released from US prisons in 2004.
46.8% of ex-inmates are reconvicted of a felony within
three years of release.
Establishing a Screening Program

Resume
Employment Application (Disclosure)
Release and Consent Forms
Interview
Background Investigation
Drug Screen
Physical Exam
Assessment Test
Adjudication Process
Background Components

Credit History
Civil History Search
Criminal History Search
Driving Record
Drug Screening
Education Verification
Employment Verification
Fingerprinting

Government Agency
Debarment Lists
Military History
Professional Licensing
Reference Check
Restricted Party Search
Sex Offender Registry
Social Security Trace
What Types Of Background Checks Are
Appropriate?
Regulatory (State and Federal)
Non-Regulatory – What is reasonable and legal?
New Hires, Promotions, Periodic Reinvestigations
Contractors, Temps, Vendors, Volunteers

What Types of Background Checks Are Appropriate

Social Security Trace / Credit History
Employment Verification / Military Verification
Reference Check

Based on Position

Motor Vehicle Driving Record
Licensing / Credential Verification

Name Scope – Provided, Developed
Investigative Scope – Residence, Employment, Education
Statewide Repositories

Massachusetts Criminal Offender Record Information Systems
County/Lower Courts
Federal - U.S. District Court
National Criminal Record Databases
Sex Offender Registry
International Watch List
Fingerprinting
Criminal History Search Process
John Doe aka John Smith

Residential History – 7 Years

Criminal History

Providence, RI – RI Statewide
Miami, FL – FL Statewide
Attleboro, MA – Attleboro District Court
Attleboro, MA – Bristol County Superior Court
Federal Criminal History: U.S. District Court

Rhode Island
Florida
Massachusetts
Validation of Criminal History

Accuracy and Validation
Identifiers (Name, DOB, SSN, Address)
Alias Names
Credit Report - Alerts

Possible Fraud
Victim of Identity Theft
Employment Verification

Validate provided information
Identify gaps of employment
Verify self-employment

The highest degree (including high school
diploma or GED) earned by an applicant and
dates of attendance should be verified through
the issuing educational institution.
Diploma Mills

$210 Million Industry
Authentic looking documents
Accredited and non-accredited schools
Diplomas, transcripts, references
Expertise required for verification
481 Diploma Mills known
Examples: Harrington University, University of San
Moritz, University of Palmers Green, University of
Devonshire, and Columbia State University
Diploma Mills
Fake Diploma
Original Diploma
Making The Hiring Decision

Establish standard for adverse information

Consistency
Falsification of records

Job related
Underlying conduct
Patterns in behavior
Employment application
Resume
Convictions for crimes of violence, theft and dishonesty
Adverse Action (notification to applicant)
Compliance with the FCRA
The Federal Fair Credit Reporting Act (“FCRA”) directly
affects an employer’s ability to obtain background
information on applicants and current employees through
contracts with third-party “consumer reporting agencies”
(“CRA”).
Vendors that conduct background checks are CRA’s.
The FCRA regulates the circumstances under which
employers can use CRAs to obtain background
information and to rely on that information to make
employment decisions.
5 Steps To FCRA Compliance
1.
2.
3.
4.
5.
Consent & Disclosure
FCRA Summary of Rights
Preliminary Adverse Action
Wait and See
Adverse Action
State Compliance Issues
States have laws that limit the use of information
you can obtain and how to use it once it is obtained
Arrests
Convictions
First Time Offenses
Salary Restrictions

Q&A
Questions?
65
THANKS
Thank you for participating in today’s program. We encourage you to
contact our speakers directly if you have specific questions.
Rich Leavitt, [email protected]
Ian Levine, [email protected]
Kellie O’Shea, [email protected]
Jennifer Sharkey, [email protected]
Anita Verheul, [email protected]
66