Rising healthcare costs - Part II

I wouldn't consider reducing benefits because it's too hard to find great employees.

-- director at a high-tech Seattle-based company

(to see Part I, including the survey responses, click here)

1. Does your organization currently pay 100% of the medical premiums for employee, spouse, and family? If not, what percentages are paid?

I was surprised by how few respondents indicated that their companies paid 100% of the insurance premiums for employee, spouse, and dependents.

Apparently, I've been spoiled. I've always worked for small companies, and they've almost always taken care of all the incidentals. Those that did stand out in my mind as great companies. And not just from my point of view: They were also highly successful.

The sample is small--I've only worked for eight or nine companies in my 18-year post-gratuate career (and I haven't always had a spouse/dependent)--yet, I've sensed a trend: The most successful companies were those that focused less on managing income and expenses, and more on creative product development, competitive strengths, and a sense of community within the organization.

Income and expenses are important, of course, but secondary to the real work of running the business.

2. Does your organization have plans to reduce that benefit, particularly for spouse/family?

I was pleasantly surprised by the answers to the second question. A reduction in benefits, particularly while a company is turning a profit, is probably counterproductive.

It's true, health insurance premiums are sky high. Something has to be done. And a company should shop around for health insurance at a good rate. But what does it mean for a company to reduce the amount it pays by increasing the amount the employee pays?

It would be perceived as a pay cut, pure and simple.

It's true that the employee's portion can be deducted on a pre-tax basis, which would help. But it still has the exact same effect as a pay cut. And in my experience, a pay cut is a sign that it's time for employees to start searching for the life-rafts. Whether the company is profitable or not, the employee takes a small kick in a sensitive spot. Companies that make themselves more profitable by taking away money from their employees are really shooting themselves in the foot. After all, where does the company derive productivity, and where does the employee get money?

The most profitable companies I've worked for (as measured either by how rich the owners were by the time we parted ways, or by how immense the profit-sharing bonuses became over time) all followed what I call the "C-E-O Principle."

The What?

The following is a restatement of a "principle" I first put forward on Ward Cunningham's original wiki:

The C-E-O Principle:

In order to be truly successful, a company must foster a community of customers, employees, and owners. Decisions containing conflicting interests among these groups should be made in a way that favors those groups in the specified order: Customers, Employees, Owners.

I did get some grief from people who pointed out that CEOs are legally bound to serve shareholders (Owners). And apparently those naysayers were right: I just watched The Corporation, and learned that, indeed, CEOs really are beholden to shareholders and the bottom line. But that doesn't mean the principle is false, or (as some have claimed) illegal. Someone else on the wiki came to my rescue and pointed out that many CEOs have the freedom to follow their own instincts and experience in these types of decisions.

What I'm saying is that, in the long run, this is the best approach for the bottom line. And even though I've only once (okay, twice) worked for a company that was larger than 40 people and publicly traded, I'm apparently not alone in my beliefs.

There is the example of Hyperion's offer to give $5k to each employee who buys a hybrid car (mentioned in the wiki discussion). And how about Ray Anderson, CEO of Interface, who was interviewed in The Corporation? You may think he's gone bananas, but I can see pure clear-eyed common sense in his words and his expression: This man has somehow seen through the haze of corporate greed to a better way to run his company. (Actually, he credits his employees for nudging him towards his "epiphany.")

As far as I know, no CEO has recently been terminated or jailed for turning the organization into a better corporate citizen. If nothing else, it's extremely good PR. Consumers like to know that someone is watching out for the "little guy."

General Motors (GM) may be heading for bankruptcy down the road, but I had to buy my 2006 Toyota Prius sight-unseen because they're selling as fast as Toyota can make them. Sure, in a lot of cases consumer choices are driven by self-interest. But Toyota has turned self-interest and environmental concern into a benefit to their own organization. Toyota saw a need and answered it, years before anyone else. Good for Toyota, good for me, good for America, and good for the Earth. A "Win-Win" scenario, and it has the added appeal of being more than just an idealistic mirage.

Of course I care about American jobs, and I groaned when I heard about Ford's huge layoffs. Let it be a message to American auto manufacturers: Follow the consumer's needs, not those of your oil-barron shareholders. If they follow this one simple rule of thumb, perhaps they will be the first to offer a sexy hybrid convertible, and I'll trade in my Prius!