Why Are My 401(k) Fees So High?

BY: Victor Hicks, Managing Principal, Lumin Financial

 

Now, more than ever, employees are asking this question of their benefits manager.  In past years, this question was difficult for employers to answer, but with the adoption of the new 401(k) fee disclosure rules [sections 408(b)(2) and 404a-5], employers are now armed with the information to address this issue.

We’ve noticed that employers are unsure as to how to interpret the new disclosure information, or how to communicate it to their employees.  As you analyze the disclosure materials provided by your 401(k) service provider(s), consider these helpful tips…

1) SCHEDULE A MEETING (or conference call) WITH YOUR SERVICE PROVIDER
The disclosure materials include much detail, and typically use industry jargon.  In order to get a full understanding of “what” the services are, you might need your provider to translate for you.

2) SEEK INPUT FROM A TRUSTED PROFESSIONAL
Your CPA, benefits attorney, or independent investment advisor have a good working knowledge of these issues.  They’ll help you determine “reasonableness” of the services and fees, as well as a fee comparison.  (note: The DOL website provides a model template for 401(k) fee comparisons)

3) MEET WITH YOUR COMPANY’S LEADERSHIP TEAM
Once you’ve discovered the key issues, the leaders will know the best way to deliver this news to the employees, across the various departments.  Help everyone understand that this is a fee “disclosure”, not a fee “increase.”  For many, this will be there first exposure to the various layers of investment fees.

Victor Hicks II, CFP is the Managing Principal of Lumin Financial LLC.  Lumin is an independent RIA firm, specializing in 401(k) consulting for small and mid-sized companies.  He can be reached at vhicks@luminfinancial.com, or (248) 936-9480.

How Social Media Is Changing HR

(This is the third and final in a series of three blog posts that recap learning sessions offered at the recently concluded annual SHRM conference. Social Media Director Joan Ginsberg gave HRAGD members the opportunity to choose a session for Joan to attend and blog about. This session was chosen by Darla Schlact, who has been an HRAGD member since October 2011.)

Social media, according to presenter Jessica Miller-Merrill, SPHR, represents “the biggest shift in business thinking since the industrial revolution.” It is that shift that should make HR rethink social media, because the way we live and do business is shifting with it.

Jessica made it clear that social media really doesn’t represent changing business norms. Social media is the current pause in the evolution of business norms.

The way we do business is changed – or evolved – through social media because the prevalence of communication through social networks requires each business to be

  • Fast
  • In the moment
  • Able to provide answers immediately

So what are the problems that prevent business – and HR – from adopting social media in a broader way?

Fear of risk – the idea that social media is fraught with risk is prevalent, fueled in part by employment lawyers who don’t even use or understand social media themselves. Jessica made sure the audience understood that there are risks, but that there are also tools that can help minimize or mitigate those risks. She also explained that it was very difficult to understand and minimize risks when there is no basic understanding or use of social media. Finally, Jessica cautioned that not having a social media plan is probably a greater risk than using social media wisely.

Fear of unproductivity – According to Jessica, during any given work day there are 64 minutes of unproductive work attributable to smoking, and only 7.2 minutes that are from people on Facebook. In fact, with mobile access rising rapidly, use of mobile applications can actually help employers reach employees more effectively. In fact, Jessica claimed that 70% of the people in the bathroom are also on their phones. Using mobile to reach this employees can actually increase productivity.

Social media is pushing boundaries, and it is important for employees to know what those boundaries are. With Google logging 223 million searches for the word “jobs” every month, isn’t it important for employers to find where their candidates and employees are and use those numbers to “be where the people are”?

In order for HR to get social, they need to

  • LEARN (about social media)
  • PLAN (their social media usage)
  • ACT (just do it)

2+2=5, or Why your Bias Matters

(This post was written by guest  Victorio Milian . Thank you! One of the subjects in the picture, Joe Gerstandt, is our April speaker. Check out our events on this page for details.)

Pop quiz: Can you spot the diversity expert in this photo?

 

 

 

 

 

 

Here’s a hint: he’s the good looking one. The really good looking one.

Okay, so it’s obvious that the diversity expert is the gentleman to my right. Joe Gerstandt is a speaker, blogger, and consultant in the diversity and inclusion space. I’ve had the pleasure of meeting him and seeing his work. He’s good at what he does, so if you’re looking for someone in this arena, please check him out.

Now the reason I’m poking fun is that I’m sure some may have thought that I was the diversity expert. Don’t laugh; I’ve been approached by several well meaning people in the past who’ve thought that I was a subject matter expert in this area. I wonder why? Perhaps the person’s thinking went something along the lines of this pseudo-mathematical equation:

HR practitioner + effective communication skills + brown skin + dreadlocks  = diversity thought leader

And while I certainly have opinions on the topics of race, diversity, and inclusion, they are just that–opinions. Those that work in the D&I arena are (for the most part) very good at what they do, so while I’m flattered, I always politely decline offers. Joe and others like him don’t need me giving their profession a bad name.

We all make assumptions. I’ll share one of my own, which involves a job candidate I was working with. I was vetting this person over the phone and we spoke for a long time. We had a great conversation and I was wrapping things up by going over the company’s benefits package. I was reviewing health care coverage, focusing on specific items for women. At that point the candidate interrupted me and, barely suppressing their laughter, made it clear to me that they wouldn’t need them–as they were a man, not a woman.

Oops.

The candidate’s voice and name led me to the wrong conclusions about this person. In this case my gaffe didn’t harm anyone. We laughed it off and moved on. Like I mentioned before, we all make assumptions. And while the examples I highlighted were more comedic than tragic, it’s important that we keep this thought front and center in our minds as we move through the world. As leaders, we should remain especially diligent, as our assumptions can have repercussions beyond mere embarrassment. Not to overstate what should be obvious, but your conscious and unconscious biases must stay out of your employment decisions.

Just like 2+2 doesn’t equal 5, make sure that your business processes and decision-making mechanisms add up correctly. It’ll save you and your organization some embarrassment, and potentially worse things.

Victorio is a creative and versatile Human Resources practitioner operating in the retail industry. Along with working for some of the most dynamic fashion and retail brands, he has been an active blogger for the past 3 years, and was recently named as one of the top 5 talent management bloggers by the illustrious Fistful of Talent.  In his words:  “My career path demonstrates an ability to take on new and greater challenges, successfully manage multiple agendas, as well as work across divisions and with diverse populations. This is Human Resources at its best-to maximize the people potential of an organization in order to create and sustain value. In short, I like working with smart people to do smart things.”

Consensus Decision Making

Making decisions by consensus is far and away the most desirable approach, but achieving it is much easier said than done.

The reason for its desirability is that consensus can lead to full digestion of the facts and arrive at sound, evidence based solutions.  Unfortunately, there is one major stumbling block: humans are social creatures and readily influenced by the views of others. Kurt Lewin , a pioneer in social psychology, demonstrated in his studies that the need to conform can lead individuals to distort or revise initially accurate perceptions.

How, then, do we take the social interplay out of consensus decision making?  Having chaired hundreds of management team meetings, I think it starts with the group leader. As the group leader, I could not sidestep the fact of my authority and people’s concern about displeasing an authority figure. To overcome that obstacle, I used many approaches to make disagreement “safe.”

I started by making it clear that this was a brainstorming decision, not a social niceties session.  Our job was to test ideas, regardless of source, fully digest them and come up with well-informed solutions. Unfortunately, what many consider “consensus” is not consensus at all.  It’s compromise in which some win, some gain. Compromise isn’t all bad, but it isn’t the best of approaches. First, some members will feel they yielded their judgment in order to reach agreement. Second, the group will not have fully vetted the data at hand.  Our political process is based on compromise, which often leads to the “least worst” solution.

When dealing with thorny issues within the management team, I sometimes opened the meeting with a teaser, like saying: “ I have this great idea that I know is too good to be true. Tell me what’s wrong with it.”   At first, there would invariably be cautious silence.  Eventually, as my team became thoroughly assured that when I asked an honest question I was seeking an honest answer, the awkwardness gave way to quick engagement.

Treat the idea as something laid out in the middle of the table for all to see and examine. That tends to reduce social fears and more readily gets down to constructive problem solving.  As I earned trust, team members quickly told me something I overlooked. I always thanked them for affirming my suspicion of “too good to be true” and went on to “now let’s look at what will work.”  The hunt was on for the best idea the team could find. Team members became fully engaged in the brainstorming effort and had only one focus: good solutions.

This enthusiastic engagement and determination to come up with good solutions led to laughter, and fearless presentation of “what-if” thinking.  This is when breakthroughs happen.

When we hit, everyone knew it.  Faces glowed with pride of ownership. A great solution somehow emerged from the middle of the table. I could never trace the idea’s origin, but that was unimportant. Most important was the feeling of jubilation over having reached our solution.  That is what consensus looks like. When it’s impossible, or no one cares, to trace sources of an idea, that’s your signal that a true consensus decision was achieved.

Sometimes people can be incredibly timid.  Here’s a technique to deal with that. Lay out the problem and ask individuals to write their ideas in a sentence or two.  Then post the ideas on a board and examine them as a group.  Allowing people to lay out their thinking anonymously is a great icebreaker.  When everyone is scanning the results on the board, the focus of discussion bypasses political correctness and yields results. Typically, you will find multiple clusters of similar ideas. That’s the place to start. Start with the highest area of agreement and work downward. The resulting discussion typically tries to assimilate all the perspectives listed. Again, the issue is well-considered and yields evidence-based solutions.  I’ve done this many times. It works.

Only when ideas – regardless of origin – are thoroughly vetted does a group arrive at true consensus.

This post was written and submitted by John Macek, a CEO for 17 years. He is the publisher of Bosshandbooks (www.bosshandbooks.com) and  creator of My Life Preferences (www.mylifepreferences.com.) 

Five Tips For Handling Problem Employees

It is inevitable that you’re going to run into a problem employee at some point in your career. How you handle the situation will determine whether a problem is minimized or becomes an ongoing struggle. A good suggestion is to identify the who, what, where, why and how of the matter. Only then can you start finding the best solution.

1. Head problems off at the pass

Problem employees often have the same sense of entitlement as a toddler. When a two-year-old realizes she isn’t getting what she wants, the pouting starts. After a short five minutes with no results, she turns on the waterworks. If that doesn’t seem to work, she ups the stakes again with a shrill scream until her parents give in, or she wears herself out and comes back down to reality.

Employees will often work in the same way. What might start as a low grumble to a co-worker can quickly escalate to a big problem involving multiple employees, managers and HR. Be proactive and try to rectify the situation before it becomes a screaming situation.

2. Don’t fight anger with anger

It’s natural to feel angry when someone is being unreasonable, but fighting anger with anger isn’t going to fix any problems and will often only create more headaches. If the problem employee sparks your temper, take time to gather yourself before handling the issue. Two angry parties are likely to talk over one another and aren’t often inclined to listen. Talk with the employee after giving him or her some time to cool down. Only then will you start to fix whatever issue is at hand.

3. Don’t ignore the rebel with a heart of gold

It is easy to root for movie characters that are a mix of rebellion and kindness (think Ferris Bueller). Rebelliousness may work in Hollywood, but it can get everyone in trouble at the office.  A lot of companies have that employee who may do a great job and perform well, but also can’t help themselves from breaking company rules.

While looking the other way might seem like a good answer, it’s merely like putting a piece of gum over a leaky pipe…sooner or later it’s going to fall off and start gushing. The problem employee will start breaking more rules and other workers will see that corners are being cut and be apt to follow suit. Your mouth is going to get really tired trying to chew all that gum to cover up the leaks!

As soon as you see a rule being ignored, address it with the employee. Explain that procedures are in place for a reason and that no one is above following them. By giving them a warning and handling the situation with respect, you’ll send the message that you’re aware of what’s going on and that you won’t tolerate rules being broken.

4. Inconsistent attendance might be caused by a problem

Do you have an employee who is always calling out of work? Are the excuses getting more and more stretched from the truth every time? Your employee may have a serious problem that they’re trying to deal with at home. It’s important to sit down and try to find out what might be going on. Try to work out a plan of action (from a work standpoint) to help the employee with the issue and get them back on track. If it seems to be a personal problem that isn’t going to go away, action may need to be taken to ensure the company is running at its greatest capacity.

5. Know your limits

Not every problem can be solved by you. Understand when professional help might best serve everyone involved, especially the well-being of your employee and co-workers. Some problems won’t ever be solved, often because the person refuses to make the necessary changes required. Termination may be the only alternative.

No matter the problem, treating everyone involved with respect should help relieve tension and move toward fixing the issue at hand.

 

This post was originally published at www.joanginbsberg.com. University Alliance submitted this article on behalf of Villanova University’s online programs. Villanova offers online human resources training courses in addition to a masters in human resources development program. For more information please visit their site at http://www.villanovau.com.

US Citizenship and Immigration Services (USCIS) Announces Completed Expansion for E-Verify Self Check

 

 

 

 

 

 

 

 

 

(CLICK ON THE LOGOS ABOVE FOR MORE INFORMATION ON THESE PROGRAMS)

 

On February 9, 2012 the U.S. Citizenship and Immigration Services (USCIS) announced that Self Check, a free online service of E-Verify that allows workers to check their own employment eligibility status, is now available in all 50 states, Washington, D.C., Guam, Puerto Rico, the U.S. Virgin Islands and the Commonwealth of Northern Mariana Islands.

The program was launched in March 2011 by Secretary of Homeland Security Janet Napolitano and USCIS Director Alejandro Mayorkas, with the goal of expanding Self Check nationally within one year.

Since the initial launch in March, approximately 67,000 people have used Self Check and anticipation that participation will dramatically increase with service now available to individuals across the country.

Self Check was developed through a partnership between the Department of Homeland Security (DHS) and the Social Security Administration (SSA) to provide individuals a tool to check their own employment eligibility status, as well as guidance on how to correct their DHS and SSA records. It is the first online E-Verify service offered directly to workers. Available in English and Spanish, Self Check enables individuals to enter the same information into Self Check that employers enter into E-Verify.

 . . . and now for the rest of the story.

FAQ’s for Self Check:

May I require my employees, or potential employees, to use Self Check? 

No. You may not require your employees or potential employees to use Self Check under any circumstances. Requiring applicants to provide proof of their employment authorization before establishing an employment relationship is known as “pre-screening” and it may constitute a violation of the anti-discrimination provision of the Immigration and Nationality Act. Additionally, you may not require an employee, once hired, to use Self Check. You may use the E-Verify program to verify the work eligibility of hired employees. More information about E-Verify can be found here.

If a new employee has used Self Check, does a Form I-9 still need to be completed?

Yes. A “work authorization confirmed” from Self Check does not take the place of the Form I-9 requirement. Newly hired individuals must still fill out Section 1 of the Form I-9 and present unexpired work authorization documents. You, as the employer, must examine the documents presented and fill out Section 2 of the Form I-9.

If a new worker has used Self Check, must I still create a case in E-Verify for that employee?

Yes. If your company participates in E-Verify you must create a case in E-Verify for all newly hired individuals, including those who may have used Self Check. Self Check does not provide users with a work authorization credential. Please remember that you can never under any circumstance require a worker (current or potential) to use Self Check.

If Self Check shows that an employee is authorized to work, am I protected from any future claims that I hired an unauthorized worker?

No. Self Check does not create a legal presumption that the employer has not violated immigration law.

 


 

 

Credential Check is the nextgen of background checks and drug testing, streamlining your hiring process from job requisition – backgrounds – hire packet. Contact Michael Pachuta, President, at 888.689.2000 or michael.pachuta@credentialcheck.com. Visit their website for more information.

Do You Have A Paul Revere Or A William Dawes Network?

35 x 28 1/2" (88.9 x 72.3 cm)

Paul Revere Image via Wikipedia

 

Back in 2009, when I was an active job seeker, I often promoted my social network on my resume, cover letter, or recruiter phone call as a valuable personal resource that I could use to aid the potential employer. Unfortunately, most HR pros and recruiters didn’t understand how my network was an asset that could be of any use to them.

My actions were validated at the HRAGD October chapter meeting, where speaker Brian Uzzi of  Nortwestern University’s Kellogg School of Management  presented “The New Science of Networks”. In this presentation, he made it very clear that it was not only important for business leaders to have a  network,  it was necessary for leaders to strategically create that network.

Brian began by discussing Paul Revere, that legendary night rider of the Revolutionary War, and how we obviously all knew who he was and what he had done. How about William Dawes? Do you know who he was? Me, either.

William Dawes, it turns out, was also a midnight rider tasked to warn colonials about British troop movements, just like Paul Revere. In fact, William Dawes road further and longer than Paul Revere did on the night of April 18, 1775.

So why have most of us never heard of William Dawes? The difference, according to Brian Uzzi, was  the composition and value of their networks.

Revere was a talented silversmith with many customers, a dentist, a Mason, and a political activist. He connected with multiple people across all walks of life. According to Malcolm Gladwell and his book The Tipping Point, Revere was a connector and Dawes a more “ordinary man.”

William Dawes

William Dawes Image via Wikipedia

 

The Dawes network was low in diversity and high in redundancy, with no brokers to move the message outside to other networks – the contacts were all familiar with each other and unable to spread the word beyond those who had already heard it. In words familiar to the online HR world: an echo chamber.

The Revere network had 3 key properties that Uzzi claimed made it “rich in social capital”:

  1. TRUST – the willingness to share private information
  2. DIVERSITY – multiple skills and backgrounds
  3. BROKERAGE – key contacts who can push information out to other networks

Most people have a Dawes echo chamber or clique because networks are created with people we trust and feel comfortable with for one or two reasons:

  • The Self-similarity Principle – picking ties that have similar training, experiences, and intellectual backgrounds.
  • The Proximity Principle – we are inclined to choose ties in the same departments, units and teams as us.

According to Uzzi, the way to build trust, diversity, and brokerage into your network is by embracing the Shared Activity Principle. Engaging in activities that require interdependence of two or more people, have something at stake, and attract people who are passionate about the activity are those that best connect you to a cross section of people and create a network with the most value. Examples of  these activities are team or partner sports, volunteer groups and associations, community service, and cross-functional work teams.

In fact, Uzzi claims if your network is more than 70% self-similar, you will have diminishing or negative returns instead of value.

So I will continue to play flyball, do community theatre, and volunteer extensively to keep my network diverse. How about you?

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