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Guest banality

Bank of America benefits maneuver: was it intentional, and was it legal?

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Guest banality

I've been reading about the suit surrounding Bank of America's pension plan, and I wonder why it took so long.

This reminded me of something else suspicious Bank of America did during that same period of time (around 2001). BofA announced that they were having financial problems on the deposit side of the bank, so they were taking away benefits. One of the benefits they took away was subsidies for education. A couple months later, BofA announced that they were rolling out a new subsidy for education: not as good as the one before, but still it was something that the Bank was "giving" it's employees.

The short time frame between the take-away and the "gift" makes me very, very suspicious. I think this was outright psychological manipulation. The idea is to make employees feel good about getting a new benefit (or getting back something they almost lost) when what actually happened was a cut in the old benefit. If BofA had just announced a cut, people would have been depressed. Instead what they did is create a sense of fear of take-aways, and then management road in with some unexpected largess, pumping up everyone's gratitude and energy.

Does this sound like something that benefits managers do intentionally? Do they sit in meetings and discuss how to manipulate the perceptions of the employees through the timing of benefits changes? Furthermore, if this was a deliberate attempt at manipulating mass psychology, was it legal?

Ps. When I worked at BofA, people (including myself!) raised the question of ERISA violations during meetings to acquaint us with the changes, and the managers charged with delivering the news took the position that the people who questioned the changes were just stupid. I really wish I were there now to be in on that lawsuit!

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I think this was outright psychological manipulation.

I'm shocked, shocked that you could believe such a thing!

Does this sound like something that benefits managers do intentionally?

Do you really think benefits managers have that kind of authority?

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Guest banality
Do you really think benefits managers have that kind of authority?

I have no idea - do they? In large corporations is there someone who plans benefits design at the high executive level?

Also, what are the alternative explanations for taking a basic benefit away and then bringing it back in a very, very short time with a huge fanfare?

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Better question - Will this thread turn into another very long, very rambling, off the subject thread that bashes not only benefit professionals and the decisions they need to make but human resource professionals like the last posting by Banality?

No offense intended, just my humble opinion after following the last thread to the bitter end.

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Guest quinn the car fixer

what "right" do the employees have to the first subsidy? If the replacement is not as generous as the original, are the benefit mgr/HR director supposed to denigrate the replacement? Is it still better than having no education subsidy?

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I'm with quinn...I live in Upstate NY & have seen many times in the past how the Kodak employees cried about their annual bonuses being cut year after year. I know personally people who just expected that bonus every year....crazy! Now look how many have no job at all. Having been in the workforce for 25+ years, I'm amazed at the benefits that are taken for granted until they are taken away. I know that employees need to be protected from unscrupulous employers but the small employers I've had & seen (esp. in this line of work) are trying hard to keep their companies going/profitable AND trying to do well by their employees. If my employer covered all of my health care and then decided that I needed help to pay some of the costs, should I be "up in arms"? Do I assume that because it's always been paid, that they have no right to take it away? I don't think so. I try to be thankful for every benefit I have and hope that I can help my employer be successful and profitable which will benefit us both!!

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If an employer decides that it can no longer afford a particular level of benefits, and so decides to discontinue it in 90 days, but then finds out that there is a way to pay for most of it if it is modified a little and so shortly afterwards announces with "huge fanfare" the availability of the new modified benefit, Why should this be regarded as a "deliberate attempt at manipulating mass psychology" and have its legality etc questioned?

I guess once the entitlement "gimme" mentality sets in, rational behaviour goes.

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Guest georgia

an employer hopes to attract and retain employees through it’s offering of benefits that are designed to assist the employee in meeting the employee’s personal responsibilities. responsibilities such as funding their ability to retire, obtaining an education or improving their skills, maintaining their good health, caring for their young and old family members, etc. the employer is free to withdraw it’s offering at any time and the employee is free to seek another employer whose offering best meets their needs. the economic philosophy of supply and demand.

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I really hate to jump in on this thread, considering the direction that last "Banality" thread took - but.... What seems to be the tenor of most of the comments is that the original level of benefits was a "gift" to the participants, and its elimination is purely at the discretion of the employer, and should be perceived as being neither good nor bad - but "just life.". Hence, its subsequent re-emergence, albeit in a different or lesser form is equally a "gift," for which the employer should be lauded....

Why is this not considered a unilateral reduction in total compensation to employees? I mean, for the last twenty or so years I've been conditioned to believe that my compensation was a "package," and that I, as an employee needed to consider the "value" of that package as being what I was truly being paid by my employer (with the "cash" portion being an important part of it, but by no means the totality of my worth, and expense, to my employer). Hence, when there is a reduction in the level of benefits (even one I may not take advantage of, but nonetheless had available), why isn't that considered a pay cut, for which employees should properly feel devalued? Conversely, when the benefit is restored (at least in part), why should the employee applaud? Certainly the restoration is a positive - compared to no restoration - but it still results (in the scenario posited with only partial restoration) as a net reduction in "Total Compensation."

Just grist for the mill....

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Reasonable points, but it does not follow (in all cases) that "...employees should properly feel devalued..."

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I, for one, did not intend to imply that benefits are a "gift" or that any employer should be "lauded" for removing and then reinstating a lessor benefit with fanfare. However, I was raised to be realistic (or some may say cynical :)). In this day & age & economy, I think that my employer cutting or changing benefits is always a real possibility. I don't take anything for granted. Also - don't we all have free will to look for another job? My experience and exposure is all to "the little guy" employers who try to make a living, get ahead and still take care of their employees. Sometimes this means cutting benes in order to keep things going. I see the owners who don't take paychecks in bad/slow times just so that everyone else gets paid. I'm aware that this is very different in large company situations, but I just can't believe that all of the HR Departments & Benefits Managers @ big companies spend their time thinking of ways to cut benefits for employees. My last 2 cents..............

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To hear that people think of their compensation in terms of it being a "package" reminds me of the vast number of people who have been deliberately underpaid by their employers under the guise of them being "Managers" and "Salaried Exempt". All are "con jobs" perpetrated for the sole purpose of uderpaying the employees.

Who did the "selling" of the illusion? Wasn't it done through HR? Who should have known better? HR? Who had easy access to and should have awareness of employment and labor laws? ??

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pax: "devalued" from the perspective of having their "total compensation" cut - not necessarily that they are "undervalued" - perhaps the cut actually brings compensation into line with actual worth (to the employer).

pmacduff: I too am "cynical," but my cynicism extends to include the belief that we really do NOT have free will to seek employment elsewhere. The same economic realities that cause employers to cut benefits (many times as a trade off to save jobs) also works to limit the opportunities available to us as employees in the marketplace. It seems, in some sense, that the ability of an employer to unilaterally cut benefits is a demonstration of the unequal bargaining power that exists between management and labor (and yes, that is a vast oversimplification of labor relations). In many cases the cuts will preserve jobs. In many cases, the threat of loss of a job makes the cut palatable. Unfortunately, in my experience, the reverse is rarely true (that when times are good, comp increases and job security increases). In today's economic environment, even the most profitable enterprise seems more concerned with topping next quarter's expectations, and the pressure to do more with less increases. Like I said - I'm cynical too....

But then again, as a single person with no children, I am aghast that my married, breeding brethern receive a greater "total compensation" package (through a greater absolute dollar contribution towards health care/coverage) than I do.... But alas, that is a topic for another thread....

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Guest quinn the car fixer

"belief that we really do NOT have free will to seek employment elsewhere."

i have to disagree. what exactly is stopping you? is there collusion with all the employers in your geographic location? or industry? maybe now the job market is tight but.. look at the 90's with stock options(most became worthless), signing bonuses & all sorts of perks that employers believed were needed to stay competitive in hiring ee's. the market dictates.

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Back to the original post, Banality wrote:

"Does this sound like something that benefits managers do intentionally? Do they sit in meetings and discuss how to manipulate the perceptions of the employees through the timing of benefits changes? Furthermore, if this was a deliberate attempt at manipulating mass psychology, was it legal?"

Yesterday I sat in a meeting discussing the logistics of managing a payroll error that is going to occur after the first of the year. Part of the discussion was how to inform the employees and their unions, and how the temporary "fix" and ultimate corrections will be handled. Employee perception of these issues was an important part of this discussion, as was the "psychology" of the ultimate correction, which will either be the employee owing the employer some money, or the reverse. It was decided that it that it would be much better from a PR standpoint to have the employer owe the employee at the end so that when the payroll system is ultimately fixed, the employee will receive a "little extra" in their correction check rather than receiving a "short" paycheck.

Sometimes benefits managers (as well as other managers) must sit in meetings and discuss the perceptions of employees. "Manipulating mass psychology"? You bet, and absolutely necessary. Ignoring the "psychology" of your work force is a sure recipe for disaster. Will everyone be pleased with our decision? Probably not, but we were honestly working to minimize the impact for the maximum number of people based on a business necessity. Why would a business ignore the reality of the expected reaction of its employees, and fail to take action to minimize bad fallout?

Welcome to spin city...

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Quinn: We always have "free will" to seek employment elsewhere, but my point was that specific exigences reduce the choices available and in the greater scheme of things make alternatives unpalatable. For example, I could certainly change jobs (and get calls periodically to do so), but almost all would entail relocation, which 1) has a monetary expense, 2) has an emotional expense; and 3) may not be consistent with my significant other's objectives. So, "free will" is curtailed. Considering the vast majority of households these days include multiple wage earners, free will takes on a whole new dimension.

Do employers know this? I think so. Do they take advantage of it? Some, maybe do, some don't. But the "reality" of the situation is that "one" benefit cut may not be enough to overcome the objections to job change, two maybe, maybe not. Three? Who knows. But "freedom" to do so, and "ability" to do so, are two very different things.

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Guest quinn the car fixer

the issue is its your CHOICE to take another position or not. not that you can't--its that you won't(the emotional expense?). there is no inherent barrier in the market to prevent you.

it just seems the tone of your posts and banality's are that hr/benfit mgrs plot to stick it to the rank and file ee's(of which i am one). i don't believe that, nor do

i really believe that ee's are so dense that they don't realize a benefit has been reduced and can be convinced by "manipulating mass psychology"

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Guest georgia

I’m a member of the “silent generation” born 1925 – 1945 so I'll soon be retired. my generation has experienced many changes in the economics of the workplace and of the marketplace. some changes have been expansive and the overall results have been positive for both the employer and the employee while others have taken a dreadful toll on many employers, employees and whole communities. in my experience I can say that I’ve met very few people who actually plotted against others, some who felt they had been plotted against but my favorites are those who chose not to keep score. whether we are an employer or an employee there are many “choices” to be made in the course of a lifetime.

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Quinn: I think if you carefully review my posts, you'll see I make no value judgements about an employer's ability or right to reduce a benefit - just that I think employees may have the right as well to view such a reduction as being a unilateral (justified or not) reduction in total compensation. Yes, the market will dictate to an extent what employers can, or cannot do, in terms of such compensation adjustments, but my point is that it isn't necessarily a totally efficient employment marketplace where there is perfect elasticity between compensation and labor. Other factors do exist at a personal level that impact employees ability to make changes, and hence their reactions to compensation adjustments won't be linear - and the fact that they choose to remain employed with the reduction shouldn't be viewed as a realization that they were being paid "above market" prior to the reduction. It's a "grin and bear it" situation, and management should be cognizant of the hardship, even if people aren't leaving. There may be justification for the reduction (based on the competitive environment), but long term, management needs to be responsible for either inappropriately providing benefits in excess of market driven benefits in the first place, giving rise to the need for the cut, or otherwise mismanaging other aspects of the business, giving rise to the need for such cuts impacting employees.

I don't believe that employers routinely pull the shenanigans that Banality proclaims - although I'm sure there is some of it going on. I do believe that employers try to find the best face to put on all adjustments to compensation - whether it be reductions in benefits, or the return of benefits (even in a more limited form). And I think most (but not all) are sincere in these endeavors. BUT, if we, as employees are to value the entire package provided to us by our employers, then employers must appreciate that changes in that package that reduce its total value will be, and should be, perceived by employees as a reduction in compensation. My experience has been that employers tend to do so without proper explanation. In my past, I've had employers, who have provided small cash pay and large benefit package pay, reduce the benefits to bring them more in line with "competition" without ever addressing the "small" cash pay part of it. I've also had employers who have periodically benchmarked total pay to competitors, and make upward adjustments appropriately. The key isn't in the action, its in the understanding, and treating employees like human beings, rather than like commodities.

If there is justification for it, then so be it. However, if the justification is merely to meet some arbitrary earnings or expense projection issued by management that can't otherwise be met, then I think maybe the problem lies more with managements abilities, and I do have problems with that.

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Guest banality

I'm glad other people raised the point that Benefits have been described as part of Total Compensation, and also that the "freedom to leave" is not so free or equitable in a system where the employers control the supply and the track record stigma accrues to the employee. It seems I have a credibility issue. Apparently, I should respond to document destruction and dishonest/dishonorable HR representatives, activities that seriously hurt me in life, with admiration and laudatory praise.

As far as bashing goes, I reserve my disgust for HR representatives in the employment field - and even then I don't think they're all bad apples. I also appreciate the systemic pressures and the rationalizations that make otherwise good people do shady things. I don't know any Benefits Managers personally, and I don't assume anything about them.

I'm still highly suspicious of Bank of America handled the education benefit. Thank you for confirming that Benefits Managers do discuss employee psychology and how changes will be received. I appreciate that this is a reasonable employer approach, and when the "spin" is abused part of the problem is the level of employee education and the ability to recognize spin. I'd also argue that part of the "exempt" disadvantage is that employees without their own "organization" will suffer from the problem of not knowing whether their opinion/response is widely shared.

In the case of the Bank of America education benefit, however, it looked to me like there was a deliberate attempt to trick people into feeling grateful for a cut. This occured at the high point of Bank of America's share value ($80/share), so it seemed to me that the economies were about pumping up the share value and capitalization rather than belt-tightening in the face of falling profits. The shift of the pensions into Bank of America stock occured at the same time, giving employees near retirement a vested interest in keeping the stock high (as opposed to worrying about cuts in Total Compensation). If this was indeed a deliberate Benefits Manager spin strategy, I think Bank of America crossed an ethical line.

I repeat - I don't know what actually happened here, and I have no particular enmity for Bank of America. The ERISA lawsuit just reminded me of the weird thing that happened to the education benefit at the same time as the pension changes. As this is a forum for Benefits Managers, it seemed like this was the right place to raise the question. My sympathy is with employees when corporations practice to deceive, though. I don't regard the playing field as even.

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Guest banality

Thanks - you rock just for being nice, WDIK!

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