Shelter From the Storm

Get your clients the full-service homeowners policies they don't know they need.

Financial Planning Magazine

By Jeanne Lee August 1, 2007- When it comes to insuring their luxury mansions and multimillion- dollar beach houses against floods, fires and other catastrophes, wealthy homeowners often have a kind of financial blind spot. Even otherwise savvy clients may default to the same basic homeowners policy year after year, perhaps increasing the dollar limit as their net worth expands, but neglecting to evaluate the quality or depth of coverage.

Two-thirds of people living in homes worth $1 million or more are insured through a mass-market insurance carrier, according to Chubb Group, which focuses exclusively on the high end of the market.

Property and casualty (P&C) coverage is becoming more critical as today’s baby boomer clients get past the stage of accumulating wealth and focus more on wealth preservation. “The affluent client needs access to the high-end insurance agent and doesn’t know where to find one,” says Gary Rathbun, chief executive officer of Private Wealth Consultants in Toledo, Ohio. “I don’t sell P&C insurance, but we need to have those relationships—it’s just part of the service we provide. It’s important to really spend time on inter-viewing and partnering with the right [P&C] firms—and the networking is not something that you’ll get paid for. But it will pay off for your client.”

THIS OLD HOUSE

Although affluent clients may not realize it, their complex insurance needs—if they have multiple homes filled with expensive art and furnishings—go far beyond a rider to cover great-grand-mother’s silver. To start, there’s the issue of how to properly determine replacement cost for a custom-built house that may have unique architectural features, uncommon materials or one-of-a-kind craftsmanship. “We find that reconstruction costs are often set too low,” says Cary Hager, an independent insurance agent with Insurance Office of Central Ohio in New Albany, who specializes in high-net-worth clients. “Many agents are not accustomed to how stonework, say, or certain types of crown moldings add significantly to the cost per square foot.”

Appraisers also take stock of the contents of the home, to make sure that antiques, jewelry, art or expensive collections are covered. “I’ve found $50,000 hand-tied silk rugs that the owner inherited, and never realized were an insurable asset,” says Hager. “I call it the Antiques Roadshow moment.”

The appraisers may offer tips to help prevent losses, such as making sure that valuable paintings are never hung over working fireplaces.

TESTED BY DISASTER

Many meteorological experts are predicting that environmental factors will make our weather more violent. This means expensive coastal property could become even more vulnerable to storms. Insurers are learning to be proactive.

Many insurers shy away from coastal risk. While the federal government runs a flood insurance program that will write up to $250,000 per house, high-net-worth clients obviously need more coverage.

Planners need to make sure that the language in clients’ contract specifies in-kind and quality replacements. “This could mean the difference between getting a mahogany door, or just a door,” at claim time,says Maureen Hackett, vice president of AIG’s private client group. They also need a guaranteed replacement endorsement, which covers the difference if rebuilding will cost more than the value of the insurance policy.

The gap between market value and replacement cost can be especially pronounced in the case of a period house with historical value. For instance, owners spent $3.5 million to rebuild a house in Salem, N.Y., that had been designed by the famous architect Stanford White—even though the house had been estimated to have a market value of only $1.5 million. The Chubb policy paid to replicate the original architectural style in period-appropriate materials because it contained an endorsement known as “law and ordinance coverage,” which provides extra funds to make sure the new structure will meet modern building codes. “If you don’t have that built into your policy and you have a historic dwelling, you’re on the hook for the additional costs,” says Mark Schussel, vice president and director of public relations at Chubb.

When disaster strikes, deluxe carriers make accommodations that would be out of the question with a standard-issue contract, including generous allow-ances for living expenses while a house is being rebuilt. In the case of the Stanford White house, Chubb provided $10,000 per month toward the rental of a comparable house nearby during the months of reconstruction.

NEW RIDERS

In the past two years, carriers have rolled out more specialized coverage for the affluent market. Clients who frequently travel overseas may be interested in Chubb’s Signature Passport endorsement, which provides up to $250,000 for emergency medical transport. “If you are in equatorial Africa on safari and are badly injured, they can get you to France, England or all the way home,” Hager says.

Another risk clients may overlook is the potential for a lawsuit by a nanny, personal assistant or other domestic employee for sexual harassment, wrongful termination or discrimination.

Finding the proper homeowners insurance for a high-net-worth individual may require the joint efforts of a financial planner and an insurance specialist, if for example, an affluent client puts his or her home into a trust.

“Now that the trust is the owner of the home, jewelry and art which was covered by the homeowners policy may no longer be covered,” says Elizabeth Jetton of Mercer Advisors in Atlanta, and a past president of the Financial Planning Asociation. “If I have a high-net-worth client with a very complicated potential loss situation, I would absolutely sit down with an independent insurance agent, because I am the advocate for the total financial picture for that client.”

(c) 2007 Financial Planning and SourceMedia, Inc. All Rights Reserved. http://www.Financial-Planning.com http://www.sourcemedia.com

How to optimize teleworkers

Flexible work schedules can help companies reduce costs and retain in-demand talent, but managers need to do more than set up remote access to enable telework to thrive

By Denise Dubie, Network World, 06/18/07

As telework initiatives spread, managers interested in adopting the flexible work model must set use policies, deploy enabling technologies and establish employee goals to guarantee their telework initiative is a success.

All indications point to the number of teleworkers increasing in U.S. companies. A recent survey of about 200 HR managers by talent and outsourcing provider Yoh found that 81% of companies have remote work policies in place and 67% of respondents said they expect telecommuting will increase in the next two years.

According to WorldatWork, a Scottsdale, Ariz., nonprofit professional association focused on human resources issues, about 12.5 million of U.S. employees take advantage of telework today.

“Telework programs typically start with one employee coming forward making a request to work out of the office for a day or two per month, and from there, telework can grow like a weed within an organization,” says Rose Stanley, the work-life practice leader at WorldatWork.

Taking the telework leap

Companies faced with a distributed workforce and limited resources for real estate often turn to telework.

For Linda Casey, senior operations manager at McKesson Health Solutions in Broomfield, Colo., telework programs help her staff virtual call centers for new clients, retain tenured and valued employees, and cut real estate costs.

“Many companies can be very reluctant to venture into telework, but once they do, there is no turning back,” says Linda Casey, senior operations manager at McKesson.

For McKesson, the benefits range from money saved on real estate -- to the tune of $1 million per year -- to increased scheduling efficiencies, also saving the company about $1 million.

“Telework helps give us diversity in hiring new people, because clients like it when we employ local talent, and telework makes it possible for us to keep tenured employees if for some reason they need to relocate,” she explains.

Yet Casey reports McKesson’s success wasn’t guaranteed when the company launched its telework program in 2003.

“There are some employees that just are not suited to telework; they simply need more social interaction. And then there are those that just don’t work,” she says.

Creating virtual communications

Clear and ongoing communications play a big part in telework’s success, experts say.

“Employers must sit down with employees to determine how they will check in with each other, how the work will be completed and how employee performance will be measured without as much face time between manager, co-workers and the teleworker,” says Jane Anderson, director of the Midwest Institute for Telecommuting Education (MITE) in Minneapolis, Minn.

Managers need to document telework policies that detail manager’s expectations for communications.

“Managers’ number one fear is losing control over employees’ productivity when they are not in the office,” says Cindy Auten, general manager of Telework Exchange in Alexandria, Va.

“Performance has to be focused on actual work output and not the perception of working. In many cases, teleworkers can have fewer distractions and tend to be more productive than their in-office counterparts,” she says.

And the relationship with those in-office counterparts is just as important as the interaction between teleworkers and their managers.

“People working at home fear there is a perception they are not actually working, and often will overdo it and work much harder to prove they deserve the same respect as in-office co-workers,” says Jack Nilles, co-founder and president of management consulting firm JALA International in Los Angeles.

Others say teaching all employees the benefits of telework and fostering communications between colleagues with video and teleconferences, on-site meetings and social gatherings will help employees continue to work toward the same goals.

Adding enabling technologies

Part of enabling communications involves companies adopting new technologies to keep teleworkers in touch with the home office.

Teleworkers must have at least the same technology available to them as their in-office counterparts.

“The technological requirements have to be there and employees need to be trained upfront on how to meet those requirements working outside the office,” Telework Exchange’s Auten says.

With baby boomers exiting the workforce, more companies will find new employees using mobile communications in their day-to-day lives, making the idea of instant messaging, texting and cell-phone use more standard for office operations.

Companies also have the choice to work with vendors offering new collaboration tools to enable telework in their organization.

“Teleworking can put a big technology burden on some companies,” says Jeff Kaplan, managing director of consultancy ThinkStrategies. “[Software-as-a-service] and managed services providers are drafting their managed service agreements to include not only the centralized office but also the customer’s teleworkers.”

Tangled Up in Tasks

Multitasking and frequent interruptions are inescapable aspects of office life, but they can exact a toll.

CFO Magazine

Edward Teach

July 01, 2007

According to Basex Inc., a knowledge-management research firm, work interruptions cost the U.S. economy at least $650 billion a year. Analysts Jonathan B. Spira and David M. Goldes reckon that 28 percent of the typical knowledge worker's day, or 2.1 hours, is consumed by unnecessary interruptions and recovery time.

Surely, skepticism is appropriate regarding such a staggering sum (amounting to 5 percent of the gross domestic product). Still, there is justified concern over what researchers call "work fragmentation," associated with interruptions and multitasking.

For example, in a 2005 study, researchers at the University of California at Irvine found that information workers at an outsourcing company spent an average of 11 minutes on a project or task before they were interrupted. Once diverted, it took them 25 minutes to return to the original task. Spira and Goldes cite a British researcher who administered IQ tests to different groups of people; the group that was distracted by E-mail and ringing telephones scored an average of 10 points less than a control group (and 6 points less than a group in another study that smoked marijuana before taking the test).

Edward M. Hallowell, M.D., a well-known expert on attention deficit disorder (ADD), says he increasingly sees people who exhibit symptoms of what he calls ADT, or "attention deficit trait."

An Inverted U Of course, multitasking can be a boon as well as a bane. According to a 2006 study by researchers at MIT, it can lead to higher productivity. Sinan Aral, Erik Brynjolfsson, and Marshall Van Alstyne studied workers at an executive-recruiting firm, reviewing data on more than 1,300 projects over a five-year period and monitoring more than 125,000 E-mail messages for 10 months. They found that workers' revenues were "a function not only of how fast they work, but also of how much they multitask." Heavier multitaskers were able to complete more projects than others, even though their speed per project may have been slower.

But the MIT researchers also found that the relationship between multitasking and productivity is shaped like an inverted U. More multitasking means more output only up to a point, "after which there are diminishing marginal returns, then negative returns to increased multitasking." They noted that previous research has shown that multitasking is associated with "cognitive switching costs," which means that as tasks pile up, efficiency drops and errors multiply.

Another 2006 study, by researchers at UCLA, suggests that multitasking can lead to less-than-optimal learning.

These results have implications for learning in multitask situations, suggesting that, even if distraction does not decrease the overall level of learning, it can result in the acquisition of knowledge that can be applied less flexibly in new situations," concluded Karin Foerde, Barbara J. Knowlton, and Russell A. Poldrack.

A World Gone ADD Edward Hallowell says that multitasking can be desirable, adding variety to the job. But he believes the kind of multitasking in which attention shifts rapidly from spreadsheet to E-mail to Web page to BlackBerry can be damaging. Hallowell's most recent book, CrazyBusy (Ballantine Books, 2006), offers "strategies for coping in a world gone ADD."

For those too busy to read the book, here's what Hallowell told CFO about how to calm down and regain focus. One, take control over your life, while accepting that total control isn't feasible or desirable. Two, prioritize: decide which tasks matter the most. Three, rebuild the boundaries that technology has broken down. "Close your door and turn off the cell phone," he says. "Decide that your day does have an end point, that there are places where you can't be disturbed."

In the end, getting organized, setting boundaries, and learning time-management skills aren't enough, says Hallowell. Emotions are important, too, and people underestimate the role they play in peak performance. Get plenty of sleep, eat well, and make sure you have some positive human contact during each day, he recommends.

"You're not a machine," says Hallowell. "Managing your brain is right at the heart of what success and failure hinge on." And happy brains, he observes, "think better."

Edward Teach is articles editor of CFO.

Web 2.0 Goes Corporate

ComputerWorld

— Sue Hildreth

June 04, 2007 -- For Jeff Herrmann, co-director of research at investment company Manning & Napier Advisors Inc., the impetus to invest in Web 2.0 came abruptly late last summer. That's when one of Herrmann’s analysts left the company — and much of his recent research vanished as well. It wasn't stolen — just lost somewhere on the former employee's hard drive, Herrmann says. Jeff Herrmann

Herrmann realized that a wiki — a collaborative Web site to which everyone can contribute content — might have prevented the loss.

2.0 Tools & Terms

What are Web 2.0 applications, exactly? Here are the main types:

Blog. Short for "Web log," a blog is a Web journal that lets users post comments or news. Often, they also let readers post feedback.

---

Podcast. An audio or video file distributed over the Internet through RSS or another syndication feed.

---

RSS. Really Simple Syndication is a technology that lets users subscribe to feeds that deliver wiki or blog updates or even more general information such as traffic alerts.

---

Wiki. A collective Web page that allows users to post or link content without having to use HTML.

Herrmann is among the growing wave of executives to recognize the business value of Web 2.0 tools. Innovations such as wikis, blogs, RSS feeds, podcasts and social software are ubiquitous in the consumer market, and many people have quietly downloaded Web 2.0 tools at work to use on their projects. In a survey conducted earlier this year by consulting firm McKinsey & Co., nearly three-fourths of the 2,847 executives polled said they planned to maintain or increase their spending on Web 2.0 collaborative technologies, for use either externally to communicate with customers and partners, or internally to improve collaboration among employees.

CIOs have concerns about security, governance, IT support and integration of Web 2.0 applications with existing systems. "Web 2.0 is decentralized," explains Schmelzer. "There’s no centralized authority to mandate or control." Major vendors of Web 2.0 tools for corporate use are addressing these concerns, however. They are adding management and security features, and some are assembling these tools into suites that can be implemented and administered as a platform. Meanwhile, more businesses are experimenting with Web 2.0 tools for a wide range of activities, from content management to employee recruitment.

The Case for Web 2.0 Information Management. Honolulu-based Hawaiian Airlines Inc. recently grappled with the problem of how to organize and pare down a glut of content built up over time by customer service staff in airports, at the airline’s call center and on its Web site. The airline wanted to consolidate all that content into one repository that could be easily referenced, searched and updated by the service staff. The solution: a single customer service FAQ on a wiki, using the Web 2.0 features in Micro­soft Corp.’s SharePoint Server 2007. Wikis aren’t the only Web 2.0 tools used for information management.

Networking. The use of LinkedIn Corp.’s networking service saved Jeff Hoffman from making a major hiring blunder last December. Hoffman, CEO of Basho Strategies Inc., a sales training firm in Burlington, Mass., was interviewing applicants for a midlevel business development position. As part of the process of collecting references, Hoffmann sent queries to people listed in the Linked­In networks of the most promising candidates.

The feedback he got on one job seeker was particularly revealing. "Two people responded that she was abrasive, didn’t work well with salespeople and had not had much success in her jobs. But what was really interesting was that one of them was from a company not listed on her résumé," says Hoffman. "The feedback was enormously important, because any new hire exposes us to a big risk. It's arguably the most expensive mistake you can make."

Project Management and Collaboration. Web 2.0 technologies are also being leveraged as project management aids, either alone or as part of larger project management applications. RT Logic, a maker of satellite systems in Colorado Springs, relies on the wiki function in Code­Beamer, a configuration management tool from Intland Software, to document the progress of products in development. James Sullivan, configuration manager at RT Logic, says lightweight wikis are ideal for project collaboration because of the ease with which engineers can add comments. "It's a living document that progresses as the development progresses. It's very flexible and easy to use," says Sullivan. "Since we can back up and see what the history was, it gives us a snapshot of where we've been and where we are now."

Content Publishing. The Discovery Channel’s Educator Network offers Web 2.0 technologies to help teachers share ideas. Among them are Six Apart Ltd.'s TypePad service for blogging, StikiPad Inc.'s StikiPad for wikis, iLike Inc.'s GCast for podcasts, Simulat Inc.'s Vyew live conferencing tool and Yahoo Inc.'s Flickr photo-sharing application. Some teachers who recently went to South Africa and New Zealand as part of the Discovery Educator Abroad project used Flickr to post their photos, for example. "They're tools to communicate with other teachers," says Dembo, noting that Web 2.0 technologies are easy to use. "With these kinds of tools, anyone can jump in."

Inherent Limitations Despite the benefits of Web 2.0 tools, smart corporate users realize that they can’t effectively replace face-to-face and phone contact between people.

Security Concerns There are also lingering concerns about Web 2.0 in the corporate setting. Hawaiian Airlines' Osborne worries that uncontrolled use of wikis and blogs could lead to unsuitable content being distributed. "We’re not going to let people just have a free go at everything. There's liability around that," he says.

So the airline will implement an approval process for creating wikis, as well as employ the security features in SharePoint to control who can post content.

David Osborne, CIO, Hawaiian Airlines

Experts note that it isn't that difficult to set up a controlled Web 2.0 environment. But the flip side is that too much security can negate the benefits of Web 2.0. "If you’re trying to create an open, collaborative community and you lock it down, you won't have one," says Jim Murphy, an analyst at AMR Research Inc. in Boston.

Another issue is that many Web 2.0 applications are hosted services. The idea of having a blog, wiki or even a podcast with private company content on someone else’s server can make executives nervous. Hosted service providers offer security measures, of course, such as SSL encryption, passwords, firewalls, backups and archiving, but if those aren't sufficient, it's often possible to buy the software and bring it in-house.

Here Come the Big Boys Until recently, the Web 2.0 market was dominated by smaller vendors. But the major players have begun adding Web 2.0 capabilities to their existing products. As Web 2.0 becomes part of leading business applications, more organizations are likely to adopt them. According to a recent survey by Forrester Research Inc., large organizations prefer to purchase Web 2.0 products from incumbent vendors. Of the 119 CIOs surveyed, 71% said they would like to buy them from a major vendor, and 74% said they would prefer to get Web 2.0 technologies as a suite.

Support and maintenance is another motivation for buying from a single vendor. "It’s much easier to manage one piece of technology that is integrated and runs on one box," Osborne explains.

Whatever you ultimately decide, the time to start considering Web 2.0 is now. "We’re at the stage where it’s so easy to experiment that it's almost a liability," Murphy says. "You don't want people going down the wrong path with a tool that isn't usable in the long run." The best move that a CIO can make, he says, is to start asking department managers what Web 2.0 functionality they need, and find the common denominators that will dictate which products to purchase. Then make a decision before your employees do.

Hildreth is a freelance journalist specializing in enterprise software. Contact her at Sue.Hildreth@comcast.net. For more about next-generation Web tools in the enterprise, see our Web 2.0 Security special report.

The Young & (not so) Restless

Employee Benefit News

By Lydell C. Bridgeford

July 1, 2007

Current research shows Generation Y is 75 million strong and becoming the fastest-growing segment of the U.S. workforce, increasing from 14% to 21% over the past four years to about 32 million workers.

As their ranks continue to swell, employers must become more strategic in their efforts to understand, and therefore retain, Gen Y employees (born from 1978 to 1989). Yet some labor analysts assert many employers are clueless as to what this generation wants from a workplace environment, thus hurting their chance of success to woo and keep Gen Y employees with their companies.

Money is not everything

There still lingers a misconception among some CEOs that many younger workers only care about how much they are being paid.

However, Peter Hart, CEO of New York-based Rideau Recognition Solutions says, “At my company, we call them the Nintendo Generation because they have been literally brought up as kids playing online and video games. When you think about it, they are getting recognized almost every second,” noting how video games reward players for achievement at each level.

Therefore, Hart says Gen Y similarly expects instant recognition in the workplace. In some cases, they are even looking for recognition before they have been assigned a task to complete.

Company culture also is meaningful to this generation, Hart says.

“It’s really not about the money, but creating a culture that rocks,” which means creating an environment where young people enjoy coming to work, he says.

Managing Gen Y

Compared to baby boomers and other generations in the workforce, Gen Y tend to be more concerned about meaningful work and relationships with coworkers, attitudes that are key for employers to remember in retention efforts, says Mark Lifter, national practice leader of the talent solutions consulting at Aon Consulting.

Corporate decisionmakers are boomers, so workforce decisions about quality-of-life issues and benefits likely are framed through their experiences, Lifter explains. “As a result, I am not sure if they are as sensitive to the needs of Gen Yers as they could or should be.”

Arturo Coto, CEO of Inquisite, a Texas-based human management software company, agrees. Consider, for example, one of Coto’s clients, a manufacturing company with an attrition rate less than 3%. However, when the company’s leaders started to drill down on that number by segmenting employees by age, they realized young managers — mainly newly minted MBAs — were largely driving the number.

“They were not sticking around and the average [tenure] was about year,” Coto explains. “You had people on the front lines that had been there for nearly 30 and 40 years. Now all of sudden, you have a [twenty- or thirty-something MBA] coming in to gradually implement changes and improvements,” he says.

The situation, if not handled properly, can create a stressful work environment, stemming from generational differences in communication, expectations and entitlement.

In addition, management discovered through employee surveys and interviews that their young mangers did not find the work on the front line challenging enough to put in the time to continue their career path with the organization.

It’s all geared toward “better coaching, nurturing and developing of young talent and teaching them how to walk before they run,” Coto says.

“I think it’s important to validate these trends within your workforce and really understand the new generation within your organization,” Coto remarks. “What are their implicit needs and what do they expect from you?”

Appealing benefits

Gary Cumpata, senior vice president at Aon Consulting believes consumer-driven health plans and voluntary benefits are poised to resonate with younger workers and reverse such turnover trends.

Young employees tend to be attracted to the variety of wellness programs and online health information typically touted by consumer-driven heath plans, and voluntary benefits by their very nature allow employees to select the benefits that are important to them, Cumpata suggests.

“Often employers will augment voluntary benefits with entertainment, coupons, books and discounts features to social activities,” Cumpata adds, saying that younger workers find value in these features. They like that “instead of saying, ‘Here is what you get,’ it’s, ‘Check the list for what you want.’” —L.C.B.

Job satisfaction and the ‘Nintendo Generation’

A 2006 online survey by Harris Interactive, commissioned by the Massachusetts-based American Business Collaboration, polled 2,775 exempt and non-exempt workers at medium and large corporations about job satisfaction. Among employees under 30: • Exempt women cite salary as the most important factor in job satisfaction. Other top priorities are meaningful work and work-life balance. More than half of this group say financial security is most important to achieving a general sense of fulfillment. • Exempt men and women cite advancement as an area of dissatisfaction. In addition, men cite meaningful work and work-life balance as areas of dissatisfaction, in contrast to women, who cite dissatisfaction with benefits and workload. • Exempt women are extraordinarily committed to their jobs. They have the highest engagement level of any group. • Exempt men cite advancement second to salary as the top priority in job satisfaction. This group ranks family life as most important to personal fulfillment. • Non-exempt workers tend to be dissatisfied with utilizing their abilities and with salary. • Non-exempt men also cite dissatisfaction with advancement. Source: The American Business Collaboration