I don’t fly on Delta or Northwest much these days, so I don’t really have any personal insight into whether the proposed merger of the two airlines makes much business sense. One thing I do know, however, is that making one strong and profitable company out of two struggling ones is near impossible if you don’t get the workforce to buy in.
And, that’s where this one may have a struggle. A story in The Detroit News headlined “Wary workers cloud Delta-Northwest merger” talks about the challenge of merging the workforces of union-dominated Northwest (with about 22,500 union employees out of 32,000 total) with primarily nonunion Delta (where 6,300 pilots and a small number of dispatchers out of 47,000 employees are represented).
“Delta’s an interesting company in that it’s been able to maintain a decidedly nonunion culture while staying on relatively good terms with its employees,” said Michael Boyd, president of the Boyd Group, an Evergreen, Colorado-based consulting firm. “Even through bankruptcy, management has succeeded in convincing employees that their best representative is themselves.”
But, The Detroit News points out, “selling that culture to Northwest’s entrenched unions won’t be easy. Even before merger talk began, the Association of Flight Attendants got enough signatures on a petition requesting a unionization vote of 12,000 Delta flight attendants. Neither Delta nor the union has speculated on the outcome of the current election.”
If they can make this merger work, the combined airline would be the largest in the world. “The new Delta,” says The Detroit News, “is expected to employ about 75,000 people after the two companies are fully integrated. [But] employees worry: Will management follow through on promises not to cut jobs or close hubs? If the companies are in such dire financial straits because of fuel prices, will they be looking to cut wages next?”
Those are all good questions, because those are all reasonable worries for workers to have. Delta has promised that no frontline workers will lose their jobs in the merger, but is that realistic given the huge and unrelenting rise in fuel prices?
I question that promise, and so does Joe Tiberi, spokesman for the union that represents 9,500 Northwest baggage handlers. “There’s no way they can combine without massive losses of jobs,” Tiberi told The Detroit News. “We’re also worried about merging our unionized workforce with Delta’s nonunionized workers. We have pensions, but they don’t. We have no guarantee Delta wouldn’t want to get rid of our union.”
It’s hard enough to make one good airline out of two struggling ones when everyone is on board. But it is damn near impossible if you have union squabbling and critical workforce issues to hurdle. The only saving grace here is that Delta’s management seems to be driving this deal, and frankly, Delta’s management seems a lot more sensitive to worker issues than Northwest’s does . That raises the odds of success, but not enough for me gamble my next trip on Delta. I’d be surprised if a lot of other frequent travelers don’t feel the same way.
“McCain’s health plan centers on eliminating the tax breaks for employers who provide health insurance for their workers—a marked departure from the current system—and giving $5,000 tax credits to families to buy their own insurance,” says The New York Times. “His goal in shifting from employer-based coverage to having people buy their own policies is to encourage competition and choice, and to drive down the costs of health insurance.” But, the Times story adds, “Democrats have argued that McCain’s plan, by not compelling insurance companies to cover people who have trouble getting coverage, would ignore the plight of people with health problems.”
Steve Smith, a spokesman for the AFL-CIO, told USA Today that McCain’s plan “would push employers to drop health care coverage they currently provide, put insurance companies in charge, increase costs, and force tens of millions of Americans to fend for coverage on their own with inadequate tax credits.”
McCain is spending a lot of time this week on health care, and it makes sense. This is a critical issue in the presidential campaign. And, McCain clearly seems to be getting out in front of this issue even though he knows that his health care proposal may need to be tweaked and changed as time goes on.
For example, the Times story indicated that “McCain’s speech here implicitly acknowledged some of the shortcomings in his free-market approach. But rather than force insurers to abandon cherry-picking the healthiest patients, McCain proposed that the federal government work with the states to cover those who cannot find insurance on the open market. With federal financial assistance, states would be encouraged to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.”
And by the way: the two Democratic candidates have very different thoughts on this subject. “Unlike McCain … both Senators Barack Obama and Hillary Rodham Clinton would both make it illegal for health insurance companies to deny an applicant because of age or health status,” the Times story says. “The two Democratic rivals argue that such regulation is needed to end discrimination against those with pre-existing medical conditions.”
This is just the beginning of the debate over health care by our presidential candidates, and my guess is that it will be a hot-button topic for both parties right down to Election Day.
But, give Zell his due on one thing—he took a very aggressive approach to the health and wellness of his workforce. Under his leadership, Tribune took the “stick” approach and started the new year by charging workers $100 more per month if they were smokers. Although it was a policy originally put in place by previous Tribune management, Zell and his new management team ran with it, probably because it was a classic Zell approach to a workforce issue: aggressive, in-your-face and heavy-handed. It also made Tribune one of a small but growing group of employers that have chosen to take a punitive approach to workers who engage in a less-than-healthy lifestyle.
Well, Tribune seems to have had second thoughts on the matter.
This week, Tribune rescinded its $100 per month penalty for employees who smoke. “While well-intentioned, we think the tobacco-use fee implemented by the previous management team is inconsistent with the new culture we’re developing—we’d rather you use your own judgment when it comes to tobacco use, not impose ours upon you,” said a memo from Tribune management.
Notice the backhanded dig at Tribune’s previous management here? That’s complete BS, as far as I’m concerned. If Sam Zell has shown anything during his brief time as owner of Tribune, it is that he doesn’t feel bound by anything that previous management was doing. In fact, the opposite is true: Zell seems to revel in talking about how screwed up Tribune was/is and how different his regime is going to be.
Zell was, finally, taking a very different and groundbreaking approach to a tough problem. It’s unfortunate that he chose not to follow through. Unlike so many of the things he says and does, this one makes a little sense.
Getting workers to get a handle on health care costs can be a tricky business, but here’s an easy way to think of it: Basic employer-sponsored health care coverage for an average American family costs nearly one month’s salary.
The income for a median household in the U.S. is $48,201 annually, according to the U.S. Census Bureau’s report “2006 Income, Poverty and Health Insurance Coverage in the United States,” which Aon uses to reference the number.
The $3,120 amount is obviously not one-twelfth of $48,201, but seems to assume about a 25 percent tax bracket overall, meaning take-home pay of about $3,000 per month.
And, Aon’s report takes some literary license since it says that “the amount these families spend on employer-sponsored health care per year continues to edge closer to one month’s salary.” In other words, YMMV—your mileage may vary.
Clearly, the notion that health care coverage is edging “closer to one month’s salary” is a hot-button “hook” to the survey—one that I happily fell into—to get you to read more. That’s a good thing, because there are some other interesting findings beyond the dollar amount. For instance:
Overall, Aon says that the 1,100 U.S. organizations taking part in the survey say that their health care costs have increased 10 percent annually since 2006.
The cost to workers has gone up even more—15 percent in 2007 and 22 percent since 2006.
Although employers have traditionally used cost shifting to reduce rising health care costs, organizations are now focusing on implementing employee wellness programs. “For example, 46 percent of employers today are implementing smoking cessation programs, up from 14 percent of employers in 2007,” Aon reports.
Surprisingly, despite the push for more health and wellness programs, “the majority of employers do not have a process in place to measure program impact or track return on investment. For example, 92 percent of organizations do not have a data tracking process in place for overweight employees, and 87 percent of employers do not have a data tracking process in place for tobacco users.”
I was surprised by that last finding because one would think that organizations would be focused on how wellness programs do in furthering the ultimate goal—lowering health care costs by getting workers to focus on taking better care of their health.
The Aon study agreed, almost understating the obvious: “Tracking and benchmarking employee metrics must go hand in hand with implementing wellness programs and must be measured to determine the return on investment and changes in productivity.”
If America can’t ultimately solve the growing health care crisis, it won’t be for lack of talking about it.
I’m here this week at the Fifth Annual World Health Care Congress in Washington, where an intimate group of some 1,800 “prestigious leaders from business, health care and government” have gathered at the Marriott Wardman Park Hotel to “have an honest exchange of ideas … to create a dialogue to advance quality, improve cost and expand access in health care, both nationally and abroad.”
That’s a lot of lofty talk, and the speakers are pretty lofty too. On Monday morning, I was treated to a discussion on “The Presidential Health Care Agenda” with representatives of the three leading presidential candidates, the chairman and CEO of the Kaiser Foundation Health Plans and former Secretary of State George Shultz. Their conclusion? It’s that 2009 “is the year something will happen” for health care reform.
Unfortunately, that’s the kind of analysis you sometimes hear when you get so many CEOs, big shots and health care muckety-mucks together to discuss something that everyone knows we need to fix—but just don’t know exactly how to do it.
What I was expecting here was more focused discussion and analysis, such as we recently had in Workforce Management with our special report on consumer-driven health care, or our story a few months ago when we wrote about health care transparency. Unfortunately, I didn’t get that in any sessions or hear it from any of the speakers.
In fairness to everyone at the World Health Care Congress, the high-flown discussions may all be moot, depending on who wins the race for the White House. My guess is that the new resident there will have a lot to say about how we tackle the health care crisis.
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