Statistics & Data

Companies Seek More Consistency in Global Investments

In an era of increasingly sophisticated investment choices, many multinational companies are re-examining global investment policies and risk management strategies related to their retirement plans, a new survey by Watson Wyatt Worldwide, a leading global consulting firm, has found.

The survey of 101 large multinational companies based in 20 countries found that 31 percent are considering moving toward a more consistent global investment policy for retirement plans. Additionally, another 9 percent plan to implement such a policy in the next three years. Even more, about 21 percent, are implementing a consistent global risk management policy over the next three years, and another 20 percent are considering such a policy.  

"With their exposure to opportunities throughout the world, multinationals are particularly well-positioned to gain higher returns from innovative investment strategies, especially those including alternative investments," said Carl Hess, head of Watson Wyatt's investment consulting practice in North America. "However, as investment approaches become more sophisticated, the need for more globally consistent governance and investment policy increases as well."

Multinationals also are concerned about other global governance issues related to pensions and defined contribution plans. The vast majority (78 percent) of companies report that the efficient governance of worldwide pension plans is a major issue for them, and about half (53 percent) have reviewed their global governance procedures in the last three years. Eighty-three percent of those organizations have made changes. Concern over regulatory risk was the reason for the change 69 percent of the time.

The majority of companies (72 percent) say they struggle to implement policies worldwide because of regional legal and regulatory issues. As a result, many of the changes that multinationals have implemented have been modest, such as setting consistent contribution levels to DC retirement plans. However, most companies do not have a governance system in place to review DC plans: Sixty percent of companies say DC investment options are never reviewed by corporate headquarters or are reviewed only on an ad hoc basis. DC plans are company retirement plans in which employees contribute a portion of their salary and bear the investment risk, such as 401(k)s in the United States.

"Successful multinational organizations often have a huge range of retirement plans for their employees worldwide which, together with variations in local laws and regulations, makes oversight of these plans a challenge," said Simon Gilliat, global head of Watson Wyatt's international practice. "Companies can make progress by gaining a better understanding of their retirement liabilities around the world and then constructing an approach that is suitable for their particular needs and circumstances."

About Watson Wyatt Investment Consulting

Watson Wyatt Investment Consulting, a division of Watson Wyatt, is focused on creating financial value for institutional investors through independent, best-in-class investment advice. The firm provides coordinated investment strategy advice based on expertise in risk assessment, strategic asset allocation and investment manager selection to some of the world's largest pension funds and institutional investors. It has nearly 400 associates in Europe, the Americas and Asia. In the United States, investment advisory and investment consulting services are provided by Watson Wyatt Investment Consulting Inc., which is a subsidiary of Watson Wyatt Worldwide Inc. Watson Wyatt Investment Consulting is a registered investment adviser with the Securities and Exchange Commission.

About Watson Wyatt Worldwide

Watson Wyatt is the trusted business partner to the world's leading organizations on people and financial issues. The firm's global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 6,000 associates in 30 countries and is located on the Web at www.watsonwyatt.com.

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Report Finds Pharmaceutical Cost-Shifting Leads to Increased Disability and Lost Productivity

Medical costs, including drug expenditures, have continued to rise much faster than the rate of inflation, causing employers to use strategies to control costs for pharmaceuticals including higher co-pays, tiered benefit plans and higher deductibles. A new report released by the nonprofit Integrated Benefits Institute revealed that shifting costs to employees doesn't save employers money and discourages treatment essential to employees' health-related productivity and quality of life.

The study focused on the increased disability and absence-related lost productivity for rheumatoid arthritis that results when employers raise employee out-of-pocket expenses for prescription medicine. This research first examined how pharmacy design influences drug adherence and then separately analyzed the impact of drug adherence on non-occupational disability and productivity loss. The study relies on data provided by health information technology company Ingenix of more than 1 million covered lives for 17 employers from across the United States, including 5,483 employees with RA.

"As employers understand that providing effective, available health care is an investment in human capital that will pay off in real dollars by decreasing overall health-related costs, they may want to rethink their approach to measuring and investing in employee health and productivity," said Jack Mahoney, M.D., medical director at Pitney Bowes. "This is not only good for employers, but employees can benefit from less shifted costs and better health and quality of life."

Institute researchers analyzed rheumatoid arthritis because there are clear evidence-based medical guidelines regarding prescribed medications and a strong connection between RA and work disability. Workers with RA often have three times the medical costs, two times the hospitalization rate and 10 times the work-disability rate of a similar population. The research examined adherence effects (whether patients fill and maintain prescriptions) for two types of drugs used to treat RA: symptom-relieving drugs (e.g., anti-inflammatories and analgesics) and drugs that modify disease progression (disease-modifying anti-rheumatic agents/DMARDs).

"It is unfortunate that employees appear to make medical decisions based on price and cost-shifting, rather than evidence-based medicine," said Dr. Thomas Parry, president of the Integrated Benefits Institute. "Unfortunately, increasing co-pays for workers can often make a bad situation worse."

Key findings of IBI's report, "A Broader Reach for Pharmacy Plan Design," include:

• Higher out-of-pocket expenses reduce medication adherence, with less than two-thirds of diagnosed individuals filling at least one symptom-relieving prescription and only 45 percent filling at least one DMARD.
• Lower medication adherence is associated with higher short-term disability incidence and longer duration. Employers with a higher number of employees filling at least one DMARD prescription have consistently fewer short-term disability incidents.
• Higher short-term disability incidence and longer duration results in greater costs and lower productivity. IBI modeled the lost productivity differences if those that filled no scripts had filled as many as those that had filled at least one. Compared to a baseline of $17 million in lost productivity, the savings difference amounts to $3.2 million from reduced incidence and an additional $1.2 million from shorter durations.
• Data must be integrated across all health-related benefits programs to evaluate the true impact of management interventions. If value-based benefits designs are truly going to add value, they must draw treatment, cost and impact links across traditional benefits lines.

The research was funded by IBI and conducted in collaboration with academic and industry research partners. The full report is available to IBI members. An executive summary of the report is publicly available: http://www.ibiweb.org/publications/download/637.

About the Integrated Benefits Institute

The Integrated Benefits Institute is a national, nonprofit organization supported by employers, consultants, insurers, health care providers, disease management firms, third-party administrators, pharmaceutical companies and behavioral health providers. IBI provides a full range of research, and health and productivity educational forum and benefits measurement and benchmarking tools. For additional information, visit ibiweb.org.

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Survey Finds More Fathers Seek Success in Both the Office and at Home

Dads are increasingly cognizant of balancing work demands with the responsibilities of fatherhood, according to survey results released by Monster. More than half of working fathers (58 percent) in the Monster Intelligence Father's Day Survey feel their employer should be more considerate of the needs of working dads, thus identifying an often-overlooked area of opportunity for employers to attract the best talent.

"The Monster Intelligence Father's Day Survey reveals that although working fathers deeply value work/life benefits, many feel their employers aren't doing enough to promote a healthy balance," said Peter Castrichini, vice president of compensation, benefits and HR operations, Monster. "Given the current war for talent and looming skills shortage, employers should recognize that offering benefits such as flexible work arrangements and paid paternity leave is a key tactic for recruiting and retaining talent. We've seen this first-hand at Monster, especially with the newer generation of workers, so we've adapted our work/life benefits to attract and retain these workers."

Paternity Leave and Flex Time

The Monster survey also revealed that working fathers are increasingly embracing workplace benefits that, until recently, were utilized only by mothers-71 percent of dads with a child under 5 took paternity leave when offered by their employers, compared with just 48 percent of dads with a school-aged child.

In addition, approximately one-third of dads with toddlers reported that their employer provided paternity leave benefits or flexible work schedules for fathers; yet among working men whose employers offered paternity leave, 58 percent took advantage of it, and 71 percent of men adopted flexible work schedules when it was offered by their employers. Furthermore, when searching for a job, 82 percent of working dads view companies more positively if they offer a flex time benefit.

Additional Key Findings

• If money were no object, 68 percent of dads would consider being a stay-at-home parent.
• The workplace benefit that fathers appreciate most is a flexible work schedule (53 percent), followed by telecommuting (24 percent), onsite child care (12 percent) and paid paternity leave (10 percent).
• Almost half of working fathers (46 percent) never bring work home during the week; 34 percent report one to two nights per week, 12 percent report three to four nights and 8 percent report bringing projects home every night of the week.
• According to 78 percent of working father respondents, bringing work home during the week affects a dad's relationship with his child/children.

Father's Day Career Advice

For career advice specifically for fathers, visit Monster's "Fathers' Balance" micro site at http://content.monster.com/fathers-balance/Archive.aspx.

• Fathers' Quest for Balance : We love our kids. We love (or maybe just need) our jobs. Balancing the responsibilities of both is no small task.
• Putting Families First : Despite their desires to succeed in their careers, many men are scaling back on work for the sake of their families.
• The Perpetual Time Crunch : Work, wife, kids, house, school-dads have a lot going on. Is there any way for a modern father to find flexibility and do it all?
• What Dad Taught Me about Work : Whether through words of wisdom or a simple example, many Monster members have learned work lessons from their fathers.

Methodology

The Monster Intelligence Father's Day survey was an online study conducted from May 30-June 1, of 1,011 full-time job seekers, including 330 working fathers and 473 working mothers. Monster Intelligence is the careers and recruitment research initiative of Monster.com.

About Monster Worldwide

Monster Worldwide Inc., parent company of Monster, the global online employment solution for more than a decade, strives to bring people together to advance their lives. With a local presence in key markets in North America, Europe and Asia, Monster works for everyone by connecting employers with quality job seekers at all levels and by providing personalized career advice to consumers globally. Through online media sites and services, Monster delivers vast, highly targeted audiences to advertisers. Monster Worldwide is a member of the S&P 500 Index and the NASDAQ 100. To learn more about Monster's industry-leading products and services, visit www.monster.com. More information about Monster Worldwide is available at www.monsterworldwide.com.

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Workplace Wellness Programs Target Preventive Care

Workplace wellness continues to be a growing concern for companies. Health care costs are increasing from 5 percent to 15 percent a year, with a vast majority (80 percent) attributed to costs associated with chronic illness. In fact, Harris Interactive reports that direct medical costs for chronic conditions increased even faster than prevalence, accounting for $510 billion in 2000. Total yearly medical expenditures for a person with a chronic condition ($6,032) are more than five times higher than for a healthy person ($1,105).  

"The National Chronic Care Consortium reports that the number of Americans with chronic illnesses projected to grow to 157 million by 2020 and that medical costs are expected to increase to $1.07 trillion," said Gus Stieber, national director of sales, Bensinger, DuPont & Associates. "There's no doubt that employers must take proactive steps to manage this problem head-on."  

Many companies are combating the issue by implementing workplace wellness programs. They're finding that these initiatives result in not only a direct health benefit for employees, but also cost-saving opportunities from influencing healthy employee behaviors:

• Motorola reported saving almost $4 for every $1 invested in wellness programs.
• Microsoft realized a 132-percent return on investment during the first year of its wellness programs including increased access to health care information and tools and the addition of a nurse line.

So the question can be asked, "How do companies provide quality, coordinated health-related services to employees without increasing costs?" According to Stieber, the following programs have been shown to be effective:

• Onsite health screenings programs that may consist of blood draws and other testing allow for early detection of many diseases and conditions. Typically, program costs are offset with coordination of existing health care prevention benefits.
• Health risk assessments are designed to measure lifestyle risks and their interaction with certain biometrics. Health risk assessments can be done online or at company-sponsored benefit fairs.
• Flu vaccination programs have been growing considerably in the last two years. Employers or employees can share the costs of onsite vaccinations. Remember, sick employees can't work.
• Health coaching services also are finding their way into the workplace. These services are structured to help individuals achieve their health goals. Health coaching can be a stand-alone program or is sometimes integrated with disease management programs.

"Employee assistance programs are beginning to integrate wellness prevention within their service model," Stieber said. "This new model provides employers and their employees with a comprehensive collection of resources to encourage better health and promote preventive care."

Bensinger DuPont & Associates is a privately owned professional services company that is dedicated to promoting healthy outcomes for employees, the workplace, individuals and their families through a wide range of consultation, training and counseling services. For additional information, Gus Stieber can be reached at 1-800-227-8620.

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