Employers leaning more toward target date retirement funds

30 Jul

Target-date retirement plans are growing in popularity, but workers should make sure it fits to their needs before deciding.

One of the major shake-ups in retirement planning has many businesses now using target date retirement funds (TDFs). However, many workers are still uncertain about their employee benefits management and how the new system works to their benefit and if it's in a company's best interest to use them.

TDFs have been around since the 1990s, but have become more widely used in the last few years because they give workers the option to invest more conservatively while employees get older, Benefits Pro reported.

The new system strongly favors equities and stocks when workers are younger and gradually moves to bonds and fixed income options once employees get closer toward their retirement age, the Motley Fool reported.

However, after the stock market crashed in 2008, many found out that TDFs took a hit as well, which made it nearly impossible to see a return on investment when workers were just two years away from retirement, the source reported.

Jake Adamczyk, associate vice president for Aurum Wealth Management Group, explained that if companies continue to stick with TDFs, employers should still comply with current regulations, but something should be done if they are going to be used as a "quantified default investment alternative," the source reported.

"The alternative is employees or participants investing on their own and all the studies done, all the research says professional guidance is better than folks doing it by themselves," said Adamczyk, according to Benefits Pro.

TDFs grow rapidly after market settles
The importance of saving for retirement is only growing since many workers are nearing their expected retirement date with little funds saved, USA Today reported. Currently, TDFs account for $670.6 billion in total assets, which is more than four times higher than the $160 billion reported at the end of 2008. One of the biggest concerns for businesses implementing these plans is if their workers will have too much equity exposure when they are getting close to the targeted retirement date, Barron's reported.

Generally, younger workers will see equity allocation make up around 90 percent of their funds, while it will slowly move to 50 percent or less when workers are nearing their retirement date, the source reported. TDFs have seen success since the market has rebounded and several industry observers believe it's not a bad idea to shift 401(k) plans to TDFs since it's a good investment.

"Target-date funds are a better choice for almost everyone than trying to manage their own retirement portfolio," said Joe Nagengast, a spokesperson for Target Date Analytics, a retirement plan consulting firm, according to financial investment publication Barron's. "With a target-date fund, you get a rational investment approach, broad diversification and a strategy for lowering risk as the retirement date approaches."

Employees looking for unique options
There are three major companies that cover 70 percent of the TDF market: Fidelity, Vanguard and T. Rowe Price, Barron's reported. Specifically, Fidelity currently has $186 billion target-date funds at the end of May 2014, which has grown since businesses are comfortable having them manage retirement-plan assets.

"A lot of what we see with smaller plan sponsors is that they're skeptical that they can find an investment manager who can beat the market over time after fees," said Greg Carpenter, CEO of Employee Fiduciary, a firm that controls 401(k) plans, according to the source. "They're choosing index target-date funds. That gives their employees a fighting chance to be retirement ready."

Experts believe that TDFs are a "sound alternative" for several 401(k) plan investors, but employees are going to want to have their funds specifically tailored to their unique needs, U.S. News and World report said. In some circumstances, workers are finding out that their TDF plan is not specifically adjusted to the date they wish to retire, which can change retirement plan outlooks.

How President Obama’s new myRA plan works for Americans

25 Jul

President Obama's new myRA plan is aimed at helping low- and middle-income workers.

At the beginning of 2014 in the State of the Union Address, President Barack Obama announced that a new way to encourage working Americans to save for retirement would be through the "myRA" (my retirement account) plan, Forbes reported.

President Obama cited the need for greater retirement savings after a study found 28 percent of U.S. citizens are not saving for retirement al all, the source reported.

"Today, most workers don't have a pension," President Obama said in an official statement. "A Social Security check often isn't enough on its own. And while the stock market has doubled over the last five years, that doesn't help folks who don't have 401(k)'s."

The myRA plan will simply work as a initial phase for workers who do not receive an employer-provided retirement income plan, the source reported. The new plan will also not replace Social Security benefits and will increase access to stock market returns.

The plans allow workers to switch jobs and not have to worry about changing their myRA plans, and only cost $25 to start, the source reported. Deductibles can be as low as $5 per paycheck and the U.S. Department of Treasury will support the plan with low-risk investment. People enrolled in the new plan will get an interest rate similar to Federal employees.

Plan aimed at helping lower income workers
According to CNN, the myRA plans are targeted toward low- and middle-income Americans, which account for 75 percent of part-time workers and almost half of all employees. Essentially, the new plan is supposed to work as a supplement to an existing 401(k) plan and can be used by workers with income that is lower than $191,000 per year.

"The good news is you don't have any risk on this account," said David John, a senior strategic policy adviser at the AARP Public Policy Institute, according to CNN. "The bad news is of course you're not going to have a huge amount of earnings on this account either."

The myRA​ plan gives employees the opportunity to use the plan as the safe investment portion of a retirement income portfolio, Forbes reported. According to a recent report from the Center for Responsible Lending, the average U.S. household only had $100 remaining each year after basic expenses and debt payments in 2010.

"This deals with the small saver problem," said John, according to CNN. "Very often the administrative costs of those tiny accounts actually eat into the principal."

Managing whistleblowers in the company

23 Jul

Every business has to be prepared to handle whistleblowers and building a better company culture can help.

Whistleblowing is a serious concern for many businesses and finding a way to manage any occurrences can be difficult. According to Simply-Communicate, one of the best ways a business can protect itself from whistleblowers is by building the best company culture possible.

A report from the National Business Ethics (NBE) Survey, 45 percent of employees in 2011 admitted to viewing misconduct at work. From those who saw misconduct, 65 percent of respondents said they reported the bad behavior they witnessed. The report also found that 1 in 5 employees who reported misconduct felt they went through some form of retaliation.

With 42 percent of respondents saying their workplace environment has weak ethical culture, businesses have to find ways to improve corporate culture.

What exactly is a whistleblower?
Whistleblowers are oftentimes known as employees who complain about company misconduct for reasons connected to health or safety violations, shareholder fraud or financial mismanagement, legal site Nolo Press reported. Typically, employees who don't engage with the initial complaint are titled protected whistleblowers, which are protected by several state and federal laws.

Daniel Goleman, an author, psychologist and journalist, explained the most common reaction to whistleblowing is a worker getting dropped from the company through either transfers or being fired, Simply-Communicate reported. Goleman added that for government and private industry workers, 80 percent of whistleblowers "suffer immensely."

"The paradox of this is that the whistleblower is actually highly loyal to the organization," said Goleman, according to the source. "He/she is not blowing the whistle because they want to get someone, but because they feel the basic mission, the higher ideal is getting violated and they can't live with that. Their own ethics drive them to tell the truth. The organization, paradoxically feels betrayed, angry and retaliates."

How retaliating can harm business operations
When companies retaliate against whistleblowers, retention rates are severely damaged and top performers will realize how quickly businesses can turn their backs on workers, the source reported. The NBE survey also found that 7 out of 10 employees who suffered retaliation planned to quit their job within five years.

Businesses should always keep the anonymity of the whistleblower to avoid any sort of retaliation claim, the New Hampshire Business Review reported. When companies are oblivious to the whistleblower, the less likely any lawsuit can be instigated.

Instead, companies should keep open and clear communication between the worker and not push the idea too much to keep the report confidential. According to the source, businesses should let the employee know both parties remaining quiet about the situation will be best for everyone and that the complaint is being addressed.

Whistleblowers often notify the government because they believe their first report didn't receive enough attention and to protect themselves from any sort of retaliation. According to the source, businesses shouldn't keep employees from contacting the government when they are making a report as it could be reported in a claims case.

"All of these people feel they are loyal and that they are doing what they should be doing," said Jim Lukaszewski, a crisis communication consultant, according to Simply-Communicate. "They believe they are saving the company from further damage. However, from the standpoint of management, they are considered to be disgruntled employees."

Companies have a responsibility to avoid retaliation and to resolve the issues with the initial report.

Employee Retention Remains a Top HR Concern

21 Jul

Keeping workers at the company remains important.

HR professionals know that recruiting talented workers is just the beginning of their employee management duties, with retention being one of the core workforce elements every HR department needs to focus on. According to a recent poll by Human Resource Executive (HRE) Online, HR professionals continue to see numerous challenges, with employee retention being one of them. 

HRE Online's "What's Keeping HR Up at Night?" poll received more than 400 responses from HR professionals, and found retaining workers came in at No. 3 on the list. Employee engagement and productivity earned the top spot with 36 percent of responses, while development leadership talent secured No. 2 with 28 percent. But retaining key talent was considered by 24 percent to be a key challenge. In fact, 37 percent of respondents said they gave their concern about losing top performers a 4 out of 5, showing many are very concerned about their retention of crucial workers.

Rebecca Ray, executive vice president of human capital management practice The Conference Board, told HRE Online that keeping workers at the organization is important for every business, large or small.

"There is no greater challenge than the need to have high-performing, engaged employees and effective leaders to deliver on a business strategy," Ray said. "This is the same in every region, in every market, in every industry."

According to an article in TLNT, HR professionals don't have to let their worry about employee management stop them from getting their needed eight hours of shuteye. There are numerous strategies to increase retention, and many have a talent management element to them. Recruiting the right workers in the first place is one of the easiest ways to improve retention, but providing workers professional development opportunities, rewarding and recognizing strong performance and promoting strong leaders can also make a difference to retention. 

Tapping into the Talented Millennial Generation

21 Jul

Recruiting and retaining millennials can be difficult for many companies.

Millennials, also called Generation Y, is the latest generation in the workplace, and many recruiters and HR professionals have been looking for ways to recruit the most talented from this generation and what works best to keep them at the organization. Many companies have tried different tactics to drive recruiting and engagement from this age group - from offering fun competitions to giving them flexible work hours, employers are taking a lot of approaches to ensure their human capital is strong. Before HR professionals start implementing new ideas and strategies to recruit, engage and retain workers of this generation, they need to first understand what has already worked.

Determining What Resonates with Millennials
To some, millennials act entitled and jump from job to job, but Brent Grinsteiner – a recruiter at Manpower who also happens to be part of this generation – thinks negative perceptions about these workers overshadow their true benefits. Grinsteiner wrote millennials have experiences that are unique from other generations, and they are often driven to succeed and welcome professional development. They do best when they are given clear but concise information and are able to communicate through digital channels, such as email. LinkedIn's Lydia Abbot noted in an article that millennials are also strong multitaskers and collaborators who desire career advancement and a work-life balance. Grinsteiner wrote HR professionals need to understand that to reach out to millennials – whether they are employed at the company or are currently involved in the recruitment process – is that they want communication with their managers and to feel a sense of accomplishment from their tasks.

Therefore, best practices for acquiring and keeping top millennial talent often revolve around taking advantage of these attributes and leveraging their existing experience and abilities. Here are just a few best practices:

  • Recruit where millennials are: Many millennial workers use social media and online job boards to look for jobs, but they also often try to network both online and through their mentors. 
  • Make professional development fun: Gamification is one way to train and educate millennials, but collaborative training sessions can encourage teamwork and also be ben​eficial. 
  • Offer them opportunities to challenge themselves: Most millennials want to advance in their careers and develop new skills, so assigning them projects that can help improve their abilities and experience can be a great way to encourage loyalty.

One company that has been innovative with millennial employee engagement is Marina Maher Communications (MMC), which ended up creating a competition among the members of its workforce. According to an article in Forbes, MMC asked all of its employees to compete but collaborate with one another to raise money for the nonprofit She's the First. What resulted was a more creative and social company culture. The millennials in the workforce used their existing abilities, passion and resources to start fundraising, despite having no previous experience doing so. They were able to succeed at their goals because the company found something their millennial workers were passionate about. The Forbes article noted the company took away from this experience that millennials are resourceful and innovative, and the company culture has changed for the better because of it.

The Importance of Creating an Equal Opportunity Work Environment

17 Jul

Although businesses were required to be equal opportunity employers 50 years ago, it's still important for human resources to follow guidelines.

Approximately 50 years ago, Title VII was created as a federal law that prohibits workplace harassment and discrimination with all private employers, state, local and federal governments, and education institutions, Business Legal Resources reported.

The law prevents employers to discriminate against employees because of race, color, national origin, religion and sex. In the half-century since the law was created, many businesses are still under pressure to make sure they follow all the correct hiring, firing and recruitment processes that abide the federal regulation.

Since there are many more opportunities for employees to take legal action against a company for not being an equal opportunity employer, it's critical for human resources departments to ensure their firms are providing fair opportunities for everyone.

According to XpertHR, many businesses understand the importance of being an equal opportunity employer, but failing to stop discrimination in the workplace can lead to higher employee turnover and absenteeism rates, lower morale, reduced productivity and higher insurance premiums and defense costs.

Affirmative Action in Recruiting
Human resources departments have to understand that affirmative action in company recruiting policies are more important than ever. According to the Houston Chronicle, the whole purpose of affirmative action is to create a more diverse group and in the recruiting process, it will help the pool of qualified candidates grow larger.

Businesses can reach out to more qualified candidates by reaching out to specific programs designed to attract women and minority workers, the source reported. There are many routes employers can take to ensure their companies are being completely fair and balanced in their recruitment process.

Shift in Employment Practices
In the last 50 years, there have been major shifts in employment practices with affirmative action. According to Northern Illinois University College of Law's "Regulating Appearance in the Workplace," in the last several years, the amount of appearance-based discrimination claims has had a significant increase.

These appearance lawsuits have come from claims about dress codes, makeup, body weight, body art and grooming, the source reported. Since the federal law first started, now more employers are being cautious about age discrimination or disability claims.

The risk of litigation is possible for many companies and that's why human resources departments have to stay up to date with the latest regulations and federal laws to not only protect the business, but their employees as well.

Key Insights Into Offering Tuition Reimbursement Programs

16 Jul

Providing tuition reimbursement can help workers develop their skills and stay at the company.

Developing workers' skill sets and knowledge can help their employers become more successful and have greater shares in the market. HR professionals are key when it comes to the talent management of the workforce because they are integral in providing training and education to workers. However, many workers often need to go back to school, or have gone to college and are in high demand among employers. Offering tuition reimbursement can encourage employees to gain the knowledge they need to help the business and also lead to acquiring more talent within the company. Even though these programs aren't new, they are seeing a revival, and employers and their HR professionals need to establish whether it is in the best interest of the company to invest in a tuition reimbursement program.

The Benefits of Offering These Programs
Tuition reimbursement initiatives are becoming more popular. One of the most cited models for this type of program is the one used by Starbucks. The Hill noted Starbucks offers full tuition for workers who choose to study at Arizona State University, and there are 40 programs Starbucks allows them to decide from. The program specifically aims to get those workers who are partially done with their degrees to finish their education.

According to an article in Forbes by finance expert Luke Landes, employers can gain much from providing workers with this type of benefit. Landes said he took advantage of this employer's tuition reimbursement program specifically to help him with his day-to-day tasks. Yet just better performance isn't the only gain – these programs can help with employee retention and loyalty, and can even encourage stronger talent acquisition and management. This is because higher-quality workers tend to be attracted to companies that value these initiatives.

Tuition Reimbursement Initiatives Should Be Part of Company Culture
These programs shouldn't just be an add-on to the company's current talent management and professional development initiatives – they should be an integral part of the entire company culture. Because worker quality is critical to employers' success, their training and development should be as well. The company culture should drive workers to improve and be better, but only making tuition reimbursement programs open to certain employees or not giving workers information on these initiatives can cause talent management to stagnate at the organization. HR professionals should look to ensure all workers understand the benefits of taking advantage of the company's tuition reimbursement perk. 

Wearable devices could boost employee engagement

14 Jul

Wearable devices are growing among businesses since the wealth of data can be provided to doctors from workers to help keep them healthy.

Human resources departments are beginning to use more technology to boost employee engagement and motivation. A new report from the International Data Corporation explained by the year 2018, there were will be nearly 112 million wearable computer devices purchased by not only consumers, but employers and businesses as well. In 2014, the report expects 19 million wearable devices to be sold, which would be a nearly 79 percent growth from 2018 figures.

What devices are being used?
Businesses have found wearable devices can work effectively as a healthcare or medical device. Human resources are able to keep productivity levels up with wellness programs, which wearable devices would benefit workers. Wearable technology is used to measure or track height, weight, blood pressure, pulse, sleep patterns, cholesterol and glucose, the Media Post reported.

Wearable devices can include bands, watches or even eyewear that could record or track personal information. According to the source, wearable devices make it easier for doctors to access more information about a person's medical history or what prescriptions they are using.

Wearable devices could also remind workers when to take certain medication, track calorie levels and send alerts when to exercise or when blood sugar levels get dangerously high, the source reported.

"These devices can tell you under which conditions your workforce is most productive, under which conditions your workforce is most alert and what makes them happier and more satisfied in their jobs," said Dr. Chris Brauer, a professor with the Institute of Management Studies at Goldsmiths, University of London, according to Bloomberg BNA.

Legal debate over wearable devices
Employers looking to provide wearable devices for workers are causing a lot of debate. Businesses sometimes offer rewards and incentives to lose weight or to eat healthier so their workers live longer and medical costs for controllable diseases are lower.

However, businesses have to make sure their employees acknowledge wearable devices are fully optional and will not affect their job whatsoever if they decline to participate in any sort of wellness program, Bloomberg BNA reported. Personal health information should remain disclosed for workers if they choose so.

"Organizations are going to be in extremely difficult positions in choosing between being able to harness the power of data that could give them a competitive advantage and the implications of requesting or requiring from their employees that they reveal behavioral data that extends well beyond the scope of traditional workplace studies," said Brauer, according to Bloomberg BNA.

Employers benefiting from additional information
Some businesses are seeing benefits to giving their workers wearable devices. The wearable devices are providing businesses with additional health information that might not have been accessible before, Bloomberg BNA reported.

"The real problem is employers often don't know what people are doing at work, and that's the core of business so we need to measure that," said Ben Waber, the co-founder, president and CEO of Sociometric Solutions, a company that makes devices to measure movements in tone of voice, according to the source. "It will enable subtle changes in the work environment. It will help organizations identify what shapes interactions and then change the environment to support those interactions."

The devices are also proving to be of value in terms of saving companies money on healthcare costs. According to the Vitality Group, through a five-year study, hospital costs fell by 6 percent for those who were using wearable devices to track health-related issues that were once inactive. For those who were active the entire time through the entire five-year research, those participants were able drop their hospital costs by 16 percent.

Data could be used to figure out what improves productivity 
Employers will also be able to store information in the cloud to help get a better understanding of which health conditions need the most improvement. It could also increase job satisfaction when companies can clearly understand what health-related issues boost or hurt work productivity.

However, Brauer said the accuracy of the information collected all depends on the duration of time in which workers wear the devices and how much employee information is recorded, BNA Bloomberg reported.

When companies are able to keep their employees more involved with their health, workers begin to feel more appreciated by their employer. Retention rates and employee engagement will increase with more focused workers who are eating healthier and paying more attention to their well-being.

The Best Strategies to Gain Honest Employee Feedback

14 Jul

Receiving honest feedback from workers is important.

Employee feedback is important for HR professionals to understand how well teams are running and how managers are leading their teams. Yet sometimes workers choose to only say what their HR departments and managers want to hear, instead of communicating about what they are truly feeling and seeing in the workplace. This honesty is crucial, because without the truth, HR professionals are unable to have effective human capital management. This lack of sincere communication can also negatively impact talent management and retention at the company because HR professionals may not be able to accurately identify the state of the workforce's morale.

Here are four ways HR professionals can encourage honest employee feedback:

1. Advise Managers to Be Truthful with Workers
Employees often follow their leaders' actions, and one of the best things HR professionals can do is to encourage managers to be honest when workers ask them hard questions. According to Inc. magazine, leaders who provide useful feedback can motivate workers to do the same.

2. Have Open Door Policies
HR professionals need to be open to receiving feedback, and having an open door policy is a great way to do this. According to Entrepreneur magazine, an open door policy means more than just leaving the office door part-way open – it means being approachable. Workers aren't going to take up offers to talk whenever needed if their HR professionals aren't accessible and receptive to the information they are being presented.

Entrepreneur also noted HR professionals need to reiterate that they have open door policies in place. Leaders must ensure workers feel as if they aren't necessarily winning time with their HR professionals, but rather believe it is a right they have within the workplace.

3. Listen and Acknowledge During One-on-One Meetings
Workers may feel as if they aren't allowed to say what they need to if their concerns aren't taken seriously on a regular basis. According to TLNT, HR professionals need to allow workers to talk during individual discussions and show them their opinions and feelings are valued and acknowledged. Employees may be more apt to provide honest feedback when they feel it will be heard. Every time HR professionals are presented with information – even if it is negative – they need to respond without becoming defensive and show workers what they are saying is important. TLNT noted it can be easy for HR professionals to discourage all employees from giving truthful feedback if they shut workers down when they give it. 

4. Develop Mechanisms that Allow Workers to Express Their Opinions
Town hall meetings and one-on-one discussions can give employees spaces in which to communicate their true feelings, but these ways to gaining feedback can backfire for HR professionals. Workers may feel as if they are setting themselves up as targets when they are giving feedback face to face. While these methods are beneficial, HR professionals should also adopt anonymous methods of communication that allow workers to think about what they want to say and for them to do so without fearing for their jobs.

Dangers Office Politics Have on Talent Management

14 Jul

Office politics can negatively impact an organization's talent management.

In almost every workplace at every organization there are politics. According to Talent Management magazine, office politics are common, and it can harm worker productivity and performance. Many HR professionals and managers discount just how political their workplaces truly are. A poll by email content provider SmartBrief on Workforce found the vast majority of workers consider interdepartmental or office politics to be significant at their organizations. In fact, 9 in 10 respondents said being part of the office-politics game helps them get ahead professionally.

While Talent Management notes it may be difficult to get rid of office politics altogether, HR professionals need to have a strong handle on their employee management if they want to be able to bring in and retain talented workers at the company. According to a blog in Harvard Business Review, HR professionals who ignore the impact office politics have on the workforce can be setting themselves and their workers up to experience high stress levels and dissatisfaction on the job. Talented new hires may feel uncomfortable entering into a workplace environment that thrives on internal politics, and there's always the possibility they will be the subject of envy by their co-workers. HR professionals need to ensure they unite the office and have a strong handle on the power struggles of their workplaces to prevent high turnover of key performers and top talent.

Productivity and Performance Risks
According to HBR, there are many important reasons HR professionals should understand the problem intense office politics play on talent management. The perception of workers advancing in the organization through illegitimate means and of employees undermining others' ideas and ambitions due to feeling threatened by them can be harmful to the entire organization. HR professionals can see their management of talent disrupted by company leadership wanting to promote workers who may not be qualified for jobs.

An article in TLNT noted office politics can impact the entire company's culture, allowing workers to move up due to favoritism rather than merit. The most talented workers in the business may then feel like their hard work isn't being rewarded and so they don't have to produce high-quality work because it doesn't matter to their development or advancement at the company anyway. HR professionals can then see productivity and performance slip, harming the entire organization, and also experience high turnover of strong workers.

What HR Can Do
According to Inc. magazine, HR professionals need to ensure all reward systems are fair and the company is focused on being unified rather than divided. It's all too easy for reward systems to be convoluted and secretive, Inc. noted, and this can cause resentment among workers and lead to office gossip. Giving solid reasons for raises and promotions is important to ensuring employees feel they are being rewarded for their merit and performance rather than because they are friends with management. 

Talent Management also suggested HR professionals be involved in employee management, because it is all too easy for human resources to simply learn information through the grapevine instead of seeing issues and solutions first hand. According to the magazine, HR professionals need to meet with workers on a regular basis to stay informed on what is happening in the workplace. The magazine gave the example of a project not being finished by the established deadline. HR professionals can determine if interpersonal issues between employees is to blame for the problem or if the involved workers are unable to finish the project because they don't have the skills to do so. This is an important distinction, and can make a big difference to how talent management is handled at the company.

HR professionals can't ignore how much office politics impact the talent management of the workforce. HR reps need to stay in the loop and be aware of how rewards are being handled to prevent low morale and high turnover.

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