How To Know If Your Defined-Benefit Pension Plan Is In Trouble...

I'm not an expert on pension plan funding. But if you're relying on a pension in retirement, you might want to take a look at what % of obligations are funded currently in your pension plan.

Why would I say that? Because while I'm no expert, I can tell you when your pension plan is in trouble. Here's how you know: Ge1

You know your pension plan is in trouble when your company announces they're freezing pension benefits, IN THE MIDDLE OF THE BIGGEST ECONOMIC EXPANSION IN HISTORY.

More specifics from the Wall Street Journal:

"General Electric Co. GE +0.06% said it was freezing its pension plan for about 20,000 U.S. workers and offering pension buyouts to 100,000 former employees, as the conglomerate joins the ranks of U.S. companies phasing out a guaranteed retirement.

GE’s traditional pension and post-employment benefits programs, which were underfunded by $27 billion as of the end of 2018, are one of the company’s biggest liabilities. The company said the latest changes could reduce its pension deficit by as much as $8 billion.

GE is still responsible for lifetime payments to more than 600,000 retirees, workers and beneficiaries. The latest changes won’t affect retirees or others already receiving pension payments.

The company’s pension plan is the second largest by projected obligations, only behind International Business Machines Corp.’s,according to consulting firm Milliman Inc., which compiles data on the 100 U.S. public companies with the largest pension plans.

GE had funded 76% of its projected pension obligations at the end of 2018, according to Milliman, compared with 91% funded at IBM. The median funding level was 89% for the group.

Man. While freezing pension plans has become a common technique to reduce risks and shrink corporate balance sheets, when you're doing it in the middle of the biggest expansion in history, you kind of know you're screwed. 

Let's do story time and look at another classic buy high, sell low type of investment fund for the common good.

My state has a Prepaid Affordable College Tuition program, created by the Legislature in 1989 and managed by the state treasurer. It almost collapsed during the last recession. Imagine the Dow at 14,000 in early 2007. Well, that investment group was struggling to meet the member requirements in 2007, and the Dow went to 7,000 during the recession, at which time they exited securities and went to a cash position. Buy high, sell low.  Great work, team! That decision combined with sharp tuition increases (healthcare costs as a comparison in a pension, anyone?) caused the fund to go insolvent and require a state bailout.

The point? If you're freezing pensions at the Apex of the market and the biggest expansion is history, sh#t's going to get real in even a moderate recession of any length.


Leadership Signals Week: Steph Curry Says "Bye" to an Unlikable Peer...

Capitalist Note: It's "Leadership Signals Week" here at the HR Capitalist, where I talk about things I've seen leaders communicate over the last couple of weeks that speak volumes about what they want their followers to think.

Communication matters if you're a leader. It's the most visible sign of what you believe, and it drives the intensity and beliefs of those that choose to follow you. Don't be fooled into thinking all communication is part of a formal plan. Some leadership signals are purposeful, others just happen organically.

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Next up on Leadership Signals Week - Pro Basketball (NBA) star Steph Curry (Golden State Warriors).

This isn't a sports post. It's a post about the signals that leaders send when important team members Curry (unpopular to some or all in your company) decide to leave the company.

The history of the Golden State Warriors has a dramatic arc over the last 5 years. Led by the always likable and role-model worthy Curry, the Warriors won the 2015 NBA Championship, then reached the finals in 2016 - but lost to the Lebron James-led Cleveland Cavaliers. Along the way, Steph Curry was the NBA season MVP in 2015 and 2016.

Great success to be sure. But after the 2016 Finals loss, Golden State did the unthinkable, picking up another top five player in free agency - Kevin Durant. The roster addition of Durant resulted in two more titles in 2017 and 2018, before injuries resulted in a loss in the finals last summer (2019).

But along the way there was drama. Durant was known to be moody, petulant and hard to please. While the addition of top talent in Durant made the healthy version of the Warriors all but unbeatable, the work product wasn't the same as in 2015 and 2016.  Less sharing, less collaboration and less fun.  The business version? We're stronger than we've ever been as a company, but man, the old days were the glory days - and that executive sure is grumpy as hell.

Flash forward to late last summer, and Durant chose to leave the Warriors in free agency. This combined with other injuries and competitive pressures means the Warriors aren't the team they used to be.

But leadership signals are still important - so in the Warriors first preseason game (and first game without the moody Durant) in a new arena, Steph Curry sent the following message (email subscribers click through if you don't see the video below or click this link to get the video on Twitter):

The message? "The person that brought everyone down isn't here anymore. I'm in charge and work is about to become a lot more fun for you."

Curry's quote after the game: “That was choreographed since, like, yesterday. I was just going to shoot it. Christen Chase Center the right way. Obviously it went airball, but obviously I thought it was fitting to take a wild shot like that and get everybody excited.”

What Curry doesn't say is that there's zero chance he takes that shot if Durant is still a part of the team. Curry had a long history of trying to keep Durant engaged by deferring to him and making sure he felt like a leader the team needed. It wasn't enough - Durant was moody and difficult as a teammate.

Things that could happen in your company when a leader with low approval levels decides (or is asked) to leave:

--The old leader didn't like any music at any company function. First all-hands meeting, the leaders that take over blast Van Halen from the speakers.

--The old leader had a parking spot upfront. The leaders that take over turn that into an "employee of the week" parking spot.

--The old leader didn't like to participate in recognition activities. The leaders that take over do a recognition event within the first week. With music.

You get the vibe. When grumpy, unlikable leaders leave, a celebration of sorts might be in order.  

Steph Curry sent a leadership signal with his first shot that win or lose, this season was going to be fun. Buckle up! Ding-Dong, the grumpy witch is dead took another job on the East Coast!


LEADERSHIP SIGNALS WEEK: Elizabeth Warren Sends a Signal on Values...

Capitalist Note: It's "Leadership Signals Week" here at the HR Capitalist, where I talk about things I've seen leaders communicate over the last couple of weeks that speak volumes about what they want their followers to think.

Communication matters if you're a leader. It's the most visible sign of what you believe, and it drives the intensity and beliefs of those that choose to follow you. Don't be fooled into thinking all communication is part of a formal plan. Some leadership signals are purposeful, others just happen organically.

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First up for Leadership Signals Week, I present democratic presidential candidate Elizabeth Warren

This isn's a political post (I'm a moderate Republican for the record, in many ways an independent), but an analysis of a recent leadership signal by Warren.

So what leadership signal did Elizabeth Warren send to the world recently? She signaled that anyone that doesn't share her values will be ejected from her Warrenorganization and the reason will be openly discussed. Before you cheer or jeer, let's analyze the signal and we'll discuss it length after this excerpt from Politico:

"Elizabeth Warren’s presidential campaign has fired its national organizing director, Rich McDaniel, after an investigation into allegations of what it called “inappropriate behavior.”

“Over the past two weeks, senior campaign leadership received multiple complaints regarding inappropriate behavior by Rich McDaniel,” campaign spokesperson Kristen Orthman said in a statement after an inquiry from POLITICO Friday morning. “Over the same time period, the campaign retained outside counsel to conduct an investigation. Based on the results of the investigation, the campaign determined that his reported conduct was inconsistent with its values and that he could not be a part of the campaign moving forward.”

In a statement, McDaniel said, "I have separated from the campaign and am no longer serving as National Organizing Director. I have tremendous respect for my colleagues despite any disagreements we may have had and believe departing at this time is in the best interest of both parties.

"I would never intentionally engage in any behavior inconsistent with the campaign or my own values. If others feel that I have, I understand it is important to listen even when you disagree. I wish the campaign and my colleagues well."

So what's the leadership signal sent here?  The real signal isn't a termination due to something that certainly seems harassment-related (most of us get that and would likely do the same if evidence warranted)- the real signal is the fact that Warren put the reason for the term openly and aggressively on display for the outside world.

I've written before about your options related to communicating reasons for terms to the rest of your organization.  Most of us aren't presidential candidates, but we still term people from time to time, and if we communicate that someone is no longer with the company, we generally just throw out a note of "separation" indicating that John Doe is no longer with the company, etc.

Under normal circumstances, the lack of detail that the employee is leaving for another opportunity signals the fact that the term was for some type of cause. But, if you fired the person for a good reason and the company is better off without them, communicating in this type of fashion is a bit of a missed opportunity.

By putting the detail for the term out to the media, Elizabeth Warren sending an extreme signal.  The signal here is not just that "those who don't match my values won't be allowed to work in this organization", but that "I will aggressive eject and tell the team why I made this call in clear terms".

Of course, the cynics will say that this termination/ejection is good for her campaign. Maybe. You never want to term someone for the reasons stated, but doing so and communicating the reason with such clarity does send signals to her voter base.

But we all have a decision to make when terming folks who fall short (in a variety of ways) of our value structure. How do we communicate? Making the decision to fire fast when you see a values gap is a good leadership signal. Many in your organization will understand without you saying more.

Communicating the reason for the term in more specific fashion to your base (for most of us, that's not voters, it's employees) is going hard in the paint.

It's either genius or incredible tone deaf - I waffle. But it's a clear leadership signal, and that's what this series is about.

"Results may vary".


FLSA Games: Exempt Salary Threshold Moves from 23K to 35K...

Heads up, HR friends at all levels...

Employees who make less than $35,568 are now eligible for overtime pay under a final rule issued today by the U.S. Department of Labor (DOL). The new rate will take effect Jan. 1, 2020.

To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.

The new rule will raise the salary threshold to $684 a week ($35,568 annualized) from $455 a week ($23,660 annualized). A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high.

The new rule is expected to prompt employers to reclassify more than a million currently exempt workers to nonexempt status and raise pay for others above the new threshold. 

My experience is that the new law impacts small to medium sized business the most, as they'll have a good number of employees labeled as exempt who have a salary in the low 30k's.  They'll be some exposure to huge companies that still have salaried supervisors in places like call centers in the low 30k's as well.

Feel bad about this?  Remember that the Obama rule was going to raise the threshold to 47K, my friends.

More details here from CNBC.

A good rundown here from SHRM of second-level details you'll need to know behind the broad threshold change.

 


Chick-fil-A: Observations from the Road About Talent and Culture...

I travel a lot for work. Over the last nine years, that's meant a bit of travel fatigue and recent attempts to reduce my total number of nights in hotel rooms.

Reducing nights in hotel rooms generally means getting up as early as needed and hitting the road for mid morning meetings - rather than going in the night before.  Being up early means a need for coffee and food somewhere along the way - especially on trips where I drive into the meeting in question.

Enter Chick-fil-A

Most people know Chick-fil-A for specific reasons:

--Kick Ass chicken sandwiches (you're weak, @Popeyes. Don't @ me).

--Great service at the counter.

--You say thanks, they say, "My pleasure".  You can say thanks 5 times, they're always going to come back and say that phrase.  You could say, "I appreciate how you're going with the company line to such extremes, you robo-cop of chicken sandwich love" - you know what they're going to say?  "My pleasure".

But I'm here today not to applaud Chick-fil-A for the normal things you associate them with.  Instead, let's talk about subtle signs of how they treat people.

I generally walk into Chick-fil-A's in the morning because the restrooms are always clean, etc. I'm around about 4 or 5 Chick-fil-A locations during my normal power commutes of 3 hour trips in the car, and you know what I always see?

I ALWAYS SEE GROUPS OF ANYWHERE FROM 3-6 CHICK-FIL-A EMPLOYEES IN THE SIDE SECTION OF THE SEATING OF THE  RESTAURANT, EATING TOGETHER AND GENERALLY TALKING TO ONE ANOTHER.

I don't want to go off on too much of a rant here, but when's the last time you consistently saw that at a fast food location? 

Try never.  And I see it all the time at the Chick-fil-A locations I'm around.

I've never seen it at another fast food franchise.  It's haunted me a bit, because like any HR geek, I want to know the people practices behind what I'm seeing. I thought about asking the employees but paused due to the jeepers/creepers factor, and have thought about asking to speak with a managers and then I saw this in a social post (email subscribers, click through if you don't see the photo below):

IMG_0058

Makes sense - free food every shift.  Taking care of people, and a meaningful perk for many they employ.

I'm sure other chains offer that as well but DAMN - I always see these Chick-fil-A employees eating with each other and they're actually engaged with each other. It's staggering and meaningful from a cultural perspective.

It all comes down to how they hire. If you know anything about the company, you know franchise are owned by individual operators who are highly vetted. A living wage doesn't hurt. They're offering family discounts as well as free food and you don't have to work Sundays.  All of those things add up to provide a place as an employer of choice, one you see in the service you experience vs other chains (airport locations excluded).

You love the chicken sandwich. I say "screw the chicken sandwich, did you see what's happening on the side?"  They have people engaging each other on THEIR OWN TIME.

Staggering. Well played, Chick-fil-A.  I see you.


@Google: Stop Talking About Your Opinion and Get Back to Work...

Without question, candidates with options in the job marketplace are looking for companies with a purpose behind their business.  That's why you see the rise in CSR (Corporate Social Responsibility) as a topic and companies like Unilever not only revamping their corporate values, but also mandating that every brand in the portfolio have a mission/purpose that people can get behind.

Funny thing about all this mission talk - It's OK for companies to dictate what the purpose-drive reason is for their corporate existence, but once employees start dictating what the purpose should be, it all goes straight to hell. Atn

That's because we live in America. We can't talk about most topics of meaning and generate a better than 60/40 split in agree/disagree.

Welcome to the difference between "purpose-driven mission" and "employee activism".  One wants to save the planet. The other?  Let's just say it's bound to be divisive.

So divisive that Google - the standard for employee voice and the company who's primary value for years was "don't be evil" - recently placed limits on what employees can say in the workplace related to their views.  

More from Recode:

"Google announced new rules on Thursday about what employees are allowed to say in the workplace — including restrictions on political expression and guidelines on internal debates about company activity.

The new rules come as Google faces increasing scrutiny from politicians, the public, and its employees on a number of issues. Republicans, including President Donald Trump, continue to make unfounded accusations that the company’s products display a bias against conservatives. Employees on both sides of the political aisle have accused Google of retaliating against workers on the basis of their ethical and political beliefs. And internal debates over controversial projects, like a censored search engine for China, and company decisions, like how to moderate abusive content on YouTube, have created a growing rift between employees and leadership.

In an email sent to employees Thursday evening, Google CEO Sundar Pichai explained the company’s revised community guidelines, which now explicitly discourage workers from discussing politics on Google’s thousands of internal mailing lists and forums, several of which are devoted exclusively to discussing politics and related topics.

“While sharing information and ideas with colleagues helps build community, disrupting the workday to have a raging debate over politics or the latest news story does not,” the guidelines state. They warn employees that their primary responsibility is to “do the work” that they’ve been hired to do — “not to spend working time on debates about non-work topics.”

The new rules are a radical departure from how the historically open company has always functioned, and they demonstrate how seriously Google is confronting its ongoing struggle with internal dissent among its rank and file and external accusations of political bias.

Hidden in the announcement and spin from Recode - activist employees don't speak for the employee base as a whole. Whether the topic is politics or a strong opinion about providing products and services to the US government, activist employees represent the polar extreme of a viewpoint.  Many of our employees have differing views, and the majority are moderate and exist somewhere in the middle of the spectrum on any issue.

Google has chosen to address the activist employee voices and get everyone back to work and doing what they're paid to do - create great products and services.

When it comes to purpose-driven work, the new rules at Google provide clarity on a reality - defining purpose is the domain of the corporation/organization - not the employee.


When Turnover Is High But That Means You're World Class...

Good leaders attract followers; great leaders create more leaders.

Turnover sucks.

Except when people promote themselves by leaving you, and you have a track record of that being the primary cause of your turnover. Saban

Football season is upon us, and no one has more people leave them for a better job than University of Alabama football coach Nick Saban.  Consider the following stats from Inc:

Let's talk about Nick Saban, the head football coach at the University of Alabama.

Among other things, his teams have won six national championships (five at Alabama and one when he was the head coach at Louisiana State University). But now, he's getting credit for something else -- a statistic that might seem a mixed blessing, but one that truly great leaders will recognize for the compliment that it is. 

It's that Saban's team endures (or maybe "enjoys") near-constant churn among his assistant coaches. 

In fact, as The Wall Street Journal points out, not a single on-field assistant coach remains on the team today who was there when Alabama last won the national championship in 2017.

Fully 38 assistants have moved on since 2007. A key point here is that most of the assistants leave for jobs with a higher profile or more responsibility elsewhere.

As of 2018, USA Today calculated that there were 15 former Saban assistants in head coaching jobs in either the NFL or college football. That list doesn't count Michael Locksley, who left Alabama earlier this year to become the head coach this year at the University of Maryland.

It also doesn't count former assistants who are now working at a higher level -- but who aren't head coaches in their own right.

Saban is known as a hard boss - see the endless videos of him losing his sh#t towards an assistant on the sideline - but people don't want to work for him because they'll be treated with courtesy. They want to work for him because the assignment is a springboard to better things.

If people hate you and leave for lateral moves, that's on you and it's not great.

If people like or hate you and leave for a better position after a short period of time, that's a compliment.

Context matters with turnover.

#wareagle


Why "Unlimited PTO" Is Stupid and Needs to be Replaced with Work/Life Integration...

Remember when "Unlimited PTO" was a fresh thought and really made you think about the relationship employees had with the organizations they worked for?

Yeah, me neither.

I just did a google search titled, "The Long Con of Unlimited PTO".  It didn't give me what I wanted, which was a simple take on a once hot idea.  I'm probably going to write that post in the future, just for the SEO benefit.

Most people have discounted Unlimited PTO at this point, citing the following downsides: Vacation

--Many jobs don't fit unlimited PTO (work that has to be scheduled).

--The worst employees always take advantage of the system.

--Without official rights to a certain amount of days, politics and perception intervene and employees will actually take fewer days.

--The whole premise of "just perform at a high level, then take all the time you want" is clouded by the fact we're HORRIBLE at measuring performance in most organizations. What's good? What's great?  Hmmm - I know it when I see it, which isn't actual guidance you can use.

Taking vacation was always about having work-life balance.  For those of you that routinely rep the need for balance and the need to disconnect, I feel you.  You do you and let me do me.  Here's my big thought:

For most people with families and complex lives, work-life balance isn't the issue. Flexibility is, which means we should probably be talking about something called work-life integration rather than work-life balance. 

There's a lot of confusion between the two terms. As work-life balance has shifted toward work-life integration, organizations have worked to understand the gap between the concepts. UC Berkeley offers a smart description of the difference between the two. They suggest using work-life integration in place of work-life balance because "the latter evokes a binary opposition between work and life."

Futurist Jacob Morgan suggested in a piece for Inc. that this is simply a progression of the way we do business. Morgan wrote that since it's nearly impossible to avoid work and life merging, today's employees should align their goals and experiences to create the life they want.

Amen. Work and life have been merging for awhile, and the higher up the food chain you go, the less you can uncouple the two sides of your life from one another.

That's why Unlimited PTO should be dead and work-life integration should be what we're working on.  A quick summary of what most professional grade employees need could be summarized like this:

"I have enough vacation (suck it, unlimited PTO!). What I really need is to leave work when I want/need to with you (my manager) not backbiting me when I leave at 4pm to get to an activity for one of my kids/<insert what people with no kids want the flexibility to do here>, because you understand I'm going to be on email later tonight or (gasp) while I'm actually doing the personal thing I left at 4pm to do."

That last part is critical. Work-life integration is a two-way street. As an employee, you've got to be willing to do things when you're not at work (which most of you are, anyway). If we could all grow up a bit and say that's how we're living our lives, maybe our organizations would step up and be more supportive of you booking out from work whenever you want/need to.

If you don't want that as an employee - I get it.

I've got something else for you.  It's called Unlimited PTO, and it's FANTASTIC.


"The Villain Is The Person Who Knows The Most, But Cares The Least."

"The Villain Is The Person Who Knows The Most, But Cares The Least." I-Wear-the-Black-Hat-jacket_612x612

--From Chuck Klosterman In I Wear The Black Hat

When it comes to Employee Relations, any investigation you do of general bad stuff is going to uncover a lot of ugly things.  Human nature takes over and people do things they shouldn't.

However, at times you still need to look at all the bad in any situation and determine, who's really responsible?  Who is the bad guy/gal in this situation?

I think this quote gives us the best guidance in those situations.  The true villain is the person who knew the most about what was going on, but never had his/her sense of doing the right thing kick in.  

If you're thinking about firing people for conduct unbecoming of a professional teammate, let this quote be your guide.


Bernie Sanders: Proving the Compensation Side of the People Business is Problematic...

Let me start by saying this is not intended to be a political post. It is intended, however, to show the complexities of running a SMB (small to medium sized business).

Need a case in point?  Try Bernie Sanders.  Sanders is a Democratic presidential candidate, and part of his platform has been the need to pay workers a living wage.  No one really Bernie argues that this is a good idea, but once you get into the execution of the idea, it gets complex.

Let's look at the Minimum Wage in America.  Sanders is on record that the minimum wage should be at $15 per hour nationwide, etc.  That's where it gets tricky as he attempts to build out his campaign organization for his presidential run.  More from the New York Post:

"The Vermont socialist senator made history by agreeing that his paid 2020 presidential campaign workers would be repped by a union, United Food and Commercial Workers Local 400, with all earning $15 an hour. But now the union complains some employees are getting less. Worse, someone leaked the whole dispute to the Washington Post. Worse yet, Sanders’ response could be a violation of US labor law, all on its own.

The union’s gripe centers on the fact that field organizers, the lowest-level workers, often put in 60 hours a week but get paid only for 40, since they’re on a flat salary. That drops their average minimum pay to less than $13 an hour.

“Many field staffers are barely managing to survive financially, which is severely impacting our team’s productivity and morale,” the union said in a draft letter to campaign manager Faiz Shakir. “Some field organizers have already left the campaign as a result.”

The campaign’s immediate response, now that it’s all gone public, is to restrict the field workers from putting in more than 40 hours a week. Hmm: If it then brings on more unpaid volunteers to pick up the slack, that’s a different union grievance."

The HR pros who read the Capitalist - regardless of political orientation - know that Sanders has experienced the following:

1--He believed workers should be paid no less than $15 per hour.

2--While he partly accomplished that with how he set up his organization, he either didn't understand or cut a corner by classifying field organizers as "exempt".  My guess is he told his people his intent and they found the path of least resistance to make that marching order a reality while maintaining cost certainty - aka, salary over hourly.

3--The good people that read this site understand it's debatable that field organizers would be classified as "salaried" under the FLSA.  But collective bargaining with a union pushes some of the burden of classification to the background - at least initially.

4--Overtime pay kills all SMBs.  The Sanders campaign has a budget - they can't reclassify those workers to hourly status and make their budget (paying them $15 per hour for all hours worked and OT for hours past 40 per week).  Also, if they reclassified, they'd be on the hook for back pay for OT.  So they do what the only thing available to them - telling salaried field organizers to stop working at 40 hours.

What Bernie Sanders has ran into is a classic small business problem. As a business owner, you'd like for the vast majority of your workforce to be salaried - so you have cost certainty and instruct workers to work until their objectives are met - no overtime. The FLSA exists to provide legal boundaries for SMBs (as well as large companies) related to classification of workers.

The devil is always in the details.  There's never enough resources when you're attempting to bootstrap an organization, and that fact makes you look for the most affordable labor possible in some situations.  

Bernie Sanders is bootstrapping an organization in America.  It's an interesting contrast of ideas, market forces and math.