HR.com's Benefits Analyst, Rebecca Kubica, spoke with Marilyn Deal about the challenges she has had on the road to winning The Principal (R) 10 Best Companies for Employee Financial Security for its dedication to employees as demonstrated by its outstanding package of employee benefits.
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HR.com: What is your role at Pharmacists Mutual Insurance Company?
MD:I have been employed at Pharmacists Mutual for 17 years. We have 241 employees, and I head up the Human Resources Department. We have an HR Specialist, a Payroll Specialist, training functions and support services that report directly to the human resource area. Our company provides insurance to pharmacists, and is licensed in 45 states. We have sales representatives who are located in 26 states. Most of our employees, however, are located in our Algona office in a small, rural community in northern Iowa. When I´m talking small, rural community, I mean 5,500 people in Algona and 17,000 in our county. We are sparsely populated, and have many small towns and communities around Algona. Some of our employees drive over 50 miles each way to work.
HR.com: What are the demographics of your company?
MD: The average age of our employees is 43 years, and we have 83 males and 158 females. Our retirement age is 65. We have 228 full-time employees, and for our home office employees, full-time is a 37.5-hour workweek. We have 13 part-time employees. The average tenure with our company is 7.4 years. Pharmacists Mutual is a growing company, and we have increased our employment approximately 7 - 10% a year. We plan to continue our growth in the future. We are planning a $4.2 million addition, which will add an additional 50% office space. The ground breaking is April 22nd.
HR.com: What are some of the problems that you are faced with at your company?
MD: Along with most companies, are faced with an aging population. We have, as well as most other organizations, flattened our organization so succession planning is crucial. We surveyed our employees who are 50 and older on their retirement plans. We have a 2005 company goal team that is looking at succession planning and developing programs to provide leadership opportunities for our present employees.
Another challenge is that some people don´t want to live in a rural community. They look at the map and say, "No way would I live there". We have a great quality of life in Algona, with access to larger cities, but we are definitely a small, rural community. Recruitment can be challenging.
HR.com: How do you address the issue?
MD: Our company is very involved with economic development in the community, and we stress the positives of the small, rural community - the safe environment and great quality of life. We also emphasize the quality of our company and our employees. We find that people who move to Algona really appreciate our company´s atmosphere and the working conditions at Pharmacists Mutual. Our benefits are a big part of that.
HR.com: When did you begin to improve your benefits to attract top employees?
MD: Our company has historically provided a great benefit package. We have promoted the benefits more in the past 10 years to increase awareness, participation and education. Education has been a big factor for us. We emphasize our benefits and we were honored to receive a national award for our benefit package, which also helps with recruitment.
HR.com: Can you tell us about the award?
MD: Pharmacists Mutual was named one of the Principal 10 Best Companies for Employee Financial Security for 2004. Principal recognizes small companies employing between 5 and 1,000 employees that excel in long-term financial security for employees through their benefits. Our company was nominated by two people, one working at Principal and our broker. The HR Team completed an application, went through an interview and additional written questions, and was selected as one of the 10 best by a panel of independent judges.
HR.com: Can you tell us about your benefits package?
MD: The cornerstone is our health plan. We offer it to our employees at a minimal cost. We have two deductibles, a $250 deductible and a $500 deductible. For our employees electing the $500 deductible, the cost for an employee is $2 a month. For a $250 deductible, it is $30 a month. We have four-way rates with the cost of our family, the most expensive, at $80 a month for a $500 deductible or $150 for a $250 deductible. This is a Preferred Provider Organization (PPO) plan. We also have a three-tiered drug plan card that allows our employees to get their prescription drugs at the pharmacy of their choice. A generic drug is $15 a month, a name-brand drug is $30 a month and a newer type of drug is $45 a month. Our company sells to insurance to pharmacists, so obviously we are very interested in promoting local pharmacists. We arranged for our employees to obtain their maintenance drugs locally and receive a three month´s supply for a two-month´s co-pay -- very similar to mail-order pharmacies.
HR.com: How is the response?
MD: It has been very positive with our employees and the local pharmacists.
HR.com: Do you fee the money you are putting into your health plan is worthwhile?
MD: While the national trend has been over 10% annual premium increases, our increases have ranged been between 7% and 8% for the last few years. We do feel that it is paying off.
HR.com: Is it a big draw?
MD: It is a very big draw. Plus, employees are eligible to participate on the first month following employment.
HR.com: Your company must be very attractive for young families. Is it?
MD: It is. We are known, not only in our community, but also in surrounding communities for the wonderful benefit package that we provide.
HR.com: Can you give us some information about your pension plan?
MD: We actually have two plans, the 401(k) plan in which we allow immediate entry for new employees. After one year of employment, they are eligible for the company match. Of the first 5% of income deferred, the company will match 35% of that amount. The employee is 100% vested from day one in the company match. At year-end, the Board of Directors provides a discretionary bonus, if our results warrant it. In the past we have had an additional 5% to15% increase in that employer match.
The second plan is a Defined Benefit Pension Plan and is paid entirely by Pharmacist Mutual. It takes one year to enroll, with incremental vesting. At three years there is 20% vesting with an additional 20% vesting each year with 100% vesting at seven years. An employee who stays with our company and is eligible for retirement will receive a monthly income for life, and this is an employer paid benefit. Last year, Pharmacists Mutual contributed about 10% of the employees´ total compensation to the defined benefit pension plan.
HR.com: Let´s look at your retirement plan.
MD: Our company offers eligible retirees a payment each month to help defray the cost of their Medicare supplemental insurance. For employees who were employed 20 years or more Pharmacists Mutual pays a dollar amount towards their Medicare supplement. This is for our retirees 65 and older. The Board authorized up to $171 a month for the retiree and $120 for their spouse for 2005. Up to 100% of that amount is paid if they worked at Pharmacists Mutual for 25 years. We prorate it down 7% a year to 65% at 20 years. Eligible retirees and their spouses are reimbursed for the actual cost of their insurance.
HR.com: Can you tell us about your work/life programs?
MD: We have flexible work schedules to accommodate work/life issues. We want people to feel secure about their jobs and their finances. I think that is reflected in the policies that we provide. With our wellness days, we encourage people to be at work. We will give a half-day off for each month a person does not miss a day of work due to illness, leave of absence or inclement weather. That way we encourage people to come to work, and yet provide time off to meet an employee´s work/life issues. The company also pays for sick time. Pharmacists Mutual provides a set number of days per illness. During the first 12 months of employment, an employee is eligible for up to 10 days of sick time. If a person started working at Pharmacists Mutual yesterday and is sick today, the employee will be paid for a sick day. After the first 12 months of employment, the employee receives up to 6 weeks paid time off per illness. Right now, we have a situation in which we have an employee who began employment a little over two years ago. She started in November of 2003 and had surgery in December of 2004. She was eligible for 6 weeks off for the surgery. Unfortunately, cancer was discovered, and she underwent chemotherapy, so she was off from work another 6 weeks. Then she needed another surgery, and she was off another 6 weeks. She had a total of 18 weeks paid time off, and she had been here a year and a half. In 2005, she was looking forward to good health when she fell and broke her leg. She was off for an additional 6 weeks. And the woman was again paid her full salary.
We also encourage community involvement of our employees. Our company pays up to $150 per year per employee for the dues to belong to a community organization. This is for anyone in our company. We do have sales representatives in other states, and we pay for them as well.
In addition, we have a wellness program that offers company paid health screenings every other year. We invite spouses to participate for a nominal fee. We have been able to catch some pretty severe illnesses early. Also, yearly physicals are paid through the health insurance plan.
We also encourage people to exercise everyday. We have wellness points that can be earned by exercising. The company pays a penny a point for each point earned to 70 points a day or a maximum of 1,000 a month. Individuals can earn up to $10 a month just through daily exercise. For instance, walking 10 minutes earns 5 points. Fastening a seatbelt is 1point as is limiting caffeine. We´re trying to motivate employees to exercise daily. Everyone keeps their own tallies and turns them in at the end of the month.
HR.com: What about your EAPs?
MD: We have just started the Employee Assistance Program, including a company paid financial counseling program. Investment counselors come to our office four times a year and meet one on one with our employees. They go over their 401(k) and retirement plans and give financial planning advice right here at our office. The program is utilized by many employees.
HR.com: Can you tell us about your healthcare cost seminars?
MD: I ask people if they would like to increase their compensation by $20,000. I then provide play money, "benefit bucks," with our founder´s picture on it. Employees are told they can have a $20,000 raise, but they have to pay for their benefits. I have a series of slides that show the cost of each benefit. As I give a brief explanation of the benefit, employees pay for the benefits with their "benefit bucks." Employees spend their $20,000 and can not pay for all the benefits they are receiving. It´s very eye opening for those who participate.
HR.com: Can you tell me about your employee-run programs?
MD: We have the SHARE team. It started about 15 years ago when we had two of our employees´ spouses diagnosed with cancer. There was a lot of concern and people wanted to do something for the families, so the SHARE team was developed. It stands for "Supportive Help Among Reassuring Employees". It is employee run, with a board of directors. We consider ourselves a work family and SHARE does things a family member would do for another family member. They will take in a full meal if there is a death in the family, and we have some very large families in these rural areas. They´ll send cards or a gift certificate if someone is in the hospital. Our company will do some things for our employees, but this goes beyond that for the employees´ family members. We also have a prayer chain with about 65 volunteers. It is set up through our email distribution, and it is completely voluntary and confidential. The SHARE team earns money by employees volunteering to bring treats and other employees in the company donate for the treats. This is one program for which we receive a lot of recognition and heartfelt thanks from employees and their family members.
HR.com: How do you let your employees know that all of this is available?
MD: The key is education and promoting the programs with available resources. Our company has an EAP program. Employees can get counseling on a confidential basis. We also educate our supervisors on the programs. We keep our benefits in front of our employees by being creative. For instance, to increase the participation in our 401(k) we have found that simple emails and providing targeted educational programs two to three times a year is effective.
MD: Human Resources works very closely with a broker and looks at the different programs. We then make recommendations to the team leader group. There are also trustees for our 401(k) and our pension plans.
HR.com: Have all of your efforts toward improving your benefits been worth it? What has your ROI been like?
MD: I think the statistics speak for themselves. For the 401(k) plan, employee participation the percentage is 92.2% of all employees. For those who have been employed over one year and receive the company match, the percentage is more like 96% to 97% participation-well above the national percentage.
Our elective deferrals for 2004 were 7.79% for our highly compensated and 7.04% for our non-highly compensated. We have not had any issues with the discrimination testing. Our highly compensated have been able to contribute to the plan as they desire.
Our turnover rate for 2004 was 5.6%, which was below the national average.
Our average sick days were 3.8 days per individual.
Pharmacists Mutual is a very stable company. We are in our 96th year, and we have had only five CEOs. Our company have also been honored as one of only 15 companies nationwide that have an A.M. Best A insurance rating for property/casualty insurance companies for over 50 consecutive years.
HR.com: What is your company´s mission statement?
MD: It is to help our customers attain financial peace of mind. Our HR mission statement is to help our customers attain financial peace of mind. We want our employees to have the tools available through their benefits so they can have financial peace of mind.