Iowa’s House File 291, passed in March 2017, limits public worker’s collective bargaining and negotiating rights. This puts Iowa’s public workers and employers onto a new playing field when it comes to salary and benefits. In Wisconsin, a similar law was passed in 2011 despite months of protests. Now that the dust has settled, are there things Iowa’s benefit administrators can learn from the Wisconsin experience? Let’s take a look at how benefit structures have changed. What lessons were learned? What mistakes were made?
Here are 3 key takeaways, lessons and trends that Iowa schools and other local governmental organizations can glean from Wisconsin’s journey so far.
Lesson #1: Just because we can, doesn’t mean we should
Once Act 10 was approved, some organizations took advantage of the new law and radically changed their health insurance plans to save money – raising deductibles, lowering benefits, switching carriers and significantly increasing the employee’s share of the premiums. As a result of this sudden change, many of these schools, cities and counties saw their top talent walk right out the door.
Other schools took a slower, more cautious approach. Instead of making significant changes all at once, they opted to make small changes to ease employees through the transition. Some had conversations with their employees about the law and the changes that needed to take place. Others developed insurance committees where employees and administration met to discuss, plan for and negotiate benefit changes.
Conversing and collaborating made employees feel empowered, helped them be better consumers and taught them more about how their health insurance and other benefits work. They learned about cost and budgeting realities, how claims and benefit levels drive premiums and learned about solutions that could bring everyone together to combat the problem. They liked having a say and they wanted a partnership with their employers, rather than adversaries. These organizations came together and looked at the problem as a team, instead of sitting on opposite sides of the issue.
Coming together as a team to solve the problem helped many organizations move to a higher deductible health plans combined with a funded HSA (Health Savings Account) or HRA (Health Reimbursement Arrangement). In the past, this may have been difficult to navigate but through education and discussion, the process was much smoother. The HSA/HRA account helped employees pay for out-of-pocket costs and saved taxes for both the employer and employee. Unused funds in both plans can roll over to the next plan year and will help employees start a tax-free savings account for future plan year expenses and eventually, for healthcare costs in retirement.
Lesson #2: Taking a leadership perspective on salary and benefits
Prior to the collective bargaining/negotiating restrictions, the public worker’s contract pretty much laid everything out in writing – wages, hours worked, benefits, retirement and pension. Administrators managed salary and benefits according to the contract.
Without a contract, Wisconsin administrators needed to take on a larger leadership role when it came to salary and benefits. They quickly learned the importance of attracting/retaining employees with carefully crafted salary and benefit packages, as employees no longer had incentive to stay in one district for their career. Suddenly, employees became “free agents” and shopped for the best offer.
Just like private sector businesses, Wisconsin schools, cities and counties started to benchmark their salary and benefits with their “competitors” in order to attract and retain talent. Administrators saw how salary and benefits created a push/pull effect with room for flexibility and balance. Some organizations made benefit plan changes which resulted in health insurance savings; allowing them to give their employees wage increases.
Organizations also found that they could get more creative with salary once the contract was gone. They eliminated the single salary ladder tract, replacing it with innovating compensation systems that were sustainable with a long-term impact. Wisconsin schools, cities and counties implemented performance-based increases, annual bonuses and incentives programs for achieving specific accomplishments.
The flexibility and creativity helped them create balanced plans that honored both the employee’s dedication to public service, and lowered organizational cost, but were still attractive enough to get people to work and stay there.
Lesson #3: Policy Driven
On the wings of the vanishing contract, Wisconsin administrators also found they had to take charge of establishing and implementing workplace policies. This was a huge change in role for them. What’s needed to start? How do they establish effective policies?
Before starting to create policies, the most successful organizations started by developing a mission/vision statement first; of which all policies flowed. These types of statements clarified the organization’s beliefs, as well as, set forth the governing principles of the organization itself and for the greater community. The mission/vision statements laid out the organizations’ values, beliefs, what it stands for, its culture and its goals. It also serves as a reminder as to what’s important to the organization, drawing people together towards a common goal. Once the vision/mission statement and organizational values were established, it became easier for administrators to create policies and procedures that effectively follow it.
Almost all Wisconsin employers had to create employee handbooks for the first time which contained these policies and procedures. The handbook let employees know what is expected of them, laid out the organization’s culture, mission and values, helped ensure key policies are clearly communicated and ensured state and federal compliance. Creating policies based upon the missions/values created a good foundation that made for successful Wisconsin school districts, cities or counties, happy employees and the ability to keep quality staff while attracting new employees.
Iowa and Wisconsin Benefit Administrators – what do you think? Comment or ask questions below!
National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.