Tag Archives: corporate

What Is Your 2016 Playbook for Growth?

CEOs entering 2016 convinced they can succeed by doubling down on what worked in the past may be reading from the wrong playbook.

According to a recently released Forrester/Odgers Berndtson study, “The State of Digital Business 2015,” most companies remain unprepared for digital transformation” — an absolute must for growth. Yet executives representing the diverse sectors examined in the study expect the majority of their sales to be digital by 2020. How will they get there?

If your transformation plan to capture at least a fair share of an expanding digital sales pie is not well underway, and you feel behind the eight ball, that may be for good reason – digital transformation leading to adopting a meaningful new business model or new technology can take years. And it demands operating along a different set of practices that used to work.

Growth is within reach of any CEO…

  • Moving at least as fast as the pace of technological change,
  • Delivering on clients’ growing expectations for real outcomes, and
  • Adapting to the shifts of economic and workplace controls to the millennial generation.

The CEO must be the Chief Growth Officer. Hiring a chief digital officer or chief innovation officer or someone else carrying a fashionable CXO title assigns daily responsibility for actions to close the digital gap. This can be a good move. The CEO cannot be everyplace at all times, and, besides, micromanagement from the top of the C-suite is deadly. When it works, this added role introduces skills, fosters enterprise-wide external partnerships, signals commitment inside and outside the organization and creates the digital blueprint for buy-in by colleagues. But the CEO alone has and must use his or her authority to coordinate growth levers and make the tough calls.

The CEO is also the Chief Culture Officer. Culture is not the job of HR or any other designee. Culture is the sum of the hundreds of choices everyone makes every day. People respond to the behaviors of their leaders. What do growth behaviors look like? Think about orchids in a greenhouse. Like orchids, new and different ideas are fragile and require special care. They may need protection from the outdoors – the conditions through which a mature business can operate, but that will kill a still-emerging concept. The CEO must advance a culture of a greenhouse, using governance to support both the work wherever growth businesses are being incubated, and a smooth transfer to the mainstream at the right time.

A lot has changed, but strategy is still the starting point for execution that gets results. Good strategy means having a clear view of where you are, an intended destination and a map of the terrain with a logical path to get there. Good strategy allows for good prioritization of short- and long-term moves, including the digital agenda. Strategy is still what gives all members of an organization a common view of goals. Strategy must evolve from what it has become in too many companies — a financial extrapolation supported by a sales-y PowerPoint presentation and ungrounded assumptions.

You must govern to engage and create accountability. Bring the whole C-suite into the act – no bystanders or anonymous choristers allowed. It’s a great idea to ask your CMO or CIO (or both) to lead the digital acceleration effort, but what about the rest of the C-suite? Put a governance process in place that fosters a constructive dialog with all of the CEO’s direct reports, including the P&L leaders and functional heads. Governance must reinforce that every member of this team has “skin in the game” to achieve growth results. No one is exempt from being part of the solution.

You have to update the risk/reward equation. Face it – the traditional American corporation was built to be predictable – to control risk. But nowadays, avoiding deviation from the status quo may be the riskiest path of all. I’ll paraphrase how Joi Ito, director of the MIT Media Lab, described the issue at a recent talk: To the corporate leader, downside risk is determined by aggregating variables that are stress-tested through complex analyses in an attempt to account for unknowns. And the potential of digital is full of unknowns, so it can easily be discounted down to where it is assumed to just have incremental impact.

But here’s a whole different view: To a venture capitalist, the maximum downside is the loss of 100% of his or her investment. That investment is meted out in small chunks as milestones are passed, so exposure is clear, measurable and contained. And the upside is viewed as exponential (though low-odds).

Food for thought: Reframing the risk/reward inputs and calculation can be a liberating and responsible course of action.

Digital transformation is a non-starter without the right talent. Seek evidence beyond the skills that seem urgent now but come with an expiration date — what matters is hybrid thinking, continuous learning and a record of delivering meaningful results. Is “fit” simply a euphemism for “people like me”? Go after your complements, and even some people who don’t fit your mold, but for whom you are committed to make room. The continued homogeneity of the faces on the “Team” section of most corporate and start-up websites in this day and age reinforces the untapped opportunity to invite others in and reap the rewards.

You must measure client outcomes. What gets measured gets done. And the wrong metrics stifle innovation. Applying yesterday’s metrics with blunt force is a death sentence for new ideas. The CEO must take a stand on how to gauge digital progress. Implement metrics that: 1. Align to the strategy. 2. Reveal how well you are delivering outcomes to the client (i.e., fulfilling the benefits that brought them to you in the first place). 3. Focus on how well the team is delivering results to clients. 4. Relate to drivers of the P&L and overall franchise health now and in three to five years.

You need to generate speed and momentum through constant progress in small chunks. It beats all-at-once precision that misses the market. Iterate, iterate, iterate, as fast as you can. Make live prototypes and show them to clients. Test and learn. Be flexible to new data and insight. The word “failure” does not appear in this playbook. “Failure” is something you bring upon your team when you don’t take the learning from a study, a test, a prototype, a client conversation and have it fuel the next improvement, however large or small, to allow you to move closer to success. “Failure” is what happens when the water cooler talk echoes with, “That doesn’t work, so we killed it.” A culture of “failure” has gum in its gears.

You must pursue three stages to finding your digital leverage: Step one: Identify the sources of revenue from new clients or relationship expansion (see above point on speed) and the drivers to win this business. Step two: Define the profit model. Step three: Go for scale. I worked under a CEO who set up this one-sentence approach during our early days of digital transformation: “Find the unit profit model and then see if you can scale it.”

You need to collaborate. Some people are wired to collaborate. Others are expert at advancing their own goals through silos. Evidence of growth effectiveness: an environment where colleagues build on each other’s ideas with the goal of shared success. Make collaboration a hiring competency that is taken seriously. Make it an expectation and demonstrate through your own behavior what that means.

Finally, you must get out there and get your hands dirty. We all learn by doing. Fast and valuable knowledge exchange takes place when corporates and start-ups interact. Corporates will find the speed, iteration and absence of failure as a concept inspiring. Start-ups are always looking for mentors and advisers with financial, marketing and operating experience. This quid pro quo can be the basis for a mutually beneficial and mind-expanding relationship. Make the meeting ground any space that is not a corporate conference room.

This post is also published in Amy’s regular column on Huffington Post.

Why to Simplify Corporate Structures

With their variety of business strategies and product innovations, financial services organizations often have very complex corporate structures. The mix of regulated operating, distribution, investment, holding and dormant companies – together with various special-purpose vehicles – means that few employees fully know the complexity of an enterprise’s legal entity structure.

Generally, management prefers simplicity and accountability. Accordingly, it typically organizes enterprises into distinct, separately managed, strategic business units (SBUs), which are overlaid on top of the existing legal entity structure, with the SBUs sharing various legal entities. This management approach creates a simplified internal view of financial performance relative to the legal entity structure; however, it often masks the considerable extra work (and therefore potentially avoidable cost) associated with the corporate structure within an organization’s corporate accounting, tax and other back-office functions.

Few organizations start off with a complex corporate structure or seek to achieve one, but a combination of factors can lead to complexity:

  • Growth by acquisition – Entities inherited as part of an acquisition and entities (such as holding companies) formed to make acquisitions;
  • Tax strategies – Entities formed to minimize multi-jurisdictional taxation, preserve the utility of tax attributes (such as basis, losses and credits) or effectively manage product state taxes;
  • Historical regulatory requirements – Companies formed to facilitate various regulated pricing tiers (particularly in property and casualty (P&C) insurance); and,
  • Business line expansion and reorganization – Organic growth into new product areas, alignment within different market segments (sometimes under reinsurance pooling arrangements), discontinued business, etc.

Complexity adds to administrative costs and can slow production of management information. In the capital structure work that PwC performs, we frequently find that a company’s structure is out of date; for example, the original rationale for a tax planning structure is no longer applicable because of a change in law, or a legal entity structure established to facilitate a line of business has survived even though the line of business has not. As another example, an entity that was established before the advent of the entity classification election regime (i.e. “check the box” rule) now may be unnecessary to achieve the intended tax benefits. Accordingly, organizations should examine the costs and benefits of maintaining current structures.

The complexity of corporate structures in financial services is evident in the insurance industry’s use of legal entities. As the table below shows, among P&C and life and health (L&H) insurers, the top 25 insurance groups hold a majority of industry capital (69% in P&C, 58% in L&H). Despite this concentration, there is evidence that inefficiencies exist: There is a high number of dormant entities relative to total legal entities and the number of domiciles some groups are managing. The number of domiciles tends to be five or fewer for most insurers, but in some extreme cases there are as many as 12 domiciles for P&C companies and 31 for L&H companies (primarily because of health maintenance organization (HMO) entities). When factoring in the potential costs (real and opportunity costs) of maintaining unused or underutilized legal entities, the impact on the industry as a whole is very real.

Insurance industry capital is relatively concentrated
P&C L&H
Groups ~330 ~250
Legal entities ~2,700 ~1,800
Capital in top 25 groups 69% 58%


But there are indications of inefficiency

Dormant entities 150+ 300+
Fronting entities 500+ 100+
Range of domiciles/groups 1-12 1-31


Source: SNL, PwC Analysis

Legal entity cost

Organizations rightly consider the costs of administering legal entities a normal part of doing business. Such frictional costs vary by organization and entity usage and typically include:

  • Financial reporting costs – Licensed insurance companies require separate annual and quarterly financial statement preparation in their state of domicile. The time spent on statement preparation correlates to complexity. The greater the number of legal entities, the greater the complexity and the higher the risk
    of misstatement.
  • Auditing costs – These costs will vary with the size and complexity of the balance sheet. Again, costs tend to be correlated with complexity (e.g., degree of intercompany transactions, complex reinsurance structures, investments/financial products, etc.).
  • State assessments – Premium or loss-based assessments for a variety of state programs will vary in size relative to the business written in the legal entity. It is important to recognize that minimum assessments also can apply even when business is no longer written on a direct or net basis.
  • Regulatory exams – State regulators conduct both market conduct exams and financial exams of insurance companies domiciled in their respective jurisdictions. Market conduct exams occur on an as-needed basis and relate to examination of operational (sales, underwriting, claims) business practices. Certain domiciles are more challenging than others. Financial exams occur every three to five years, at the insurance company’s expense.
  • Tax – Each legal entity in the structure adds to the company’s overall compliance burden, as insurance companies are required to prepare and file forms with state and federal tax authorities on a periodic basis even when dormant. A company also may be required to respond to periodic inquiries about its activities, or lack thereof, and may be subject to minimum taxes and filing fees. Active operating companies must monitor and manage the interplay of premium tax rates and retaliatory taxes, which arise when states in lower tax jurisdictions increase state taxes to match the level of the domicile state, if it is higher.
  • Management time – Spans all of the above areas. The more complex a legal entity structure, the more time middle management and, in some cases, senior management have to spend on issues related to excess legal entities.

In light of these frictional costs, the expense of administering an overly complex legal entity structure can be considerable. Eliminating redundant or unused entities through merging companies, outright sale of the insurance company (or companies) or clearing out the liabilities and selling a “shell” company can result in significant savings.

Improving access to capital

Moving capital through legal entities can be complicated by regulatory constraints and often involves frictional costs such as sub-optimal tax consequences (e.g., withholding taxes on dividends from a foreign subsidiary and excise taxes on premiums paid to a foreign affiliate). Capital trapped in dormant or underutilized entities will provide sub-optimal returns and therefore serve as a drag on the overall group return on equity. For example, an organization with a 15% corporate required rate of return and a 5% average investment portfolio rate of return has a 10% opportunity cost of maintaining the capital in a redundant legal entity. Accordingly, one of the few positive outcomes of the financial crisis has been insurers’ streamlining their corporate structures to simplify internal access to capital and gain capital efficiency.

One method of improving capital deployment in a dormant or underutilized entity is through merger with a continuing entity. However, before merging a licensed company out of existence, insurers need to consider the marketability of the unwanted entity in terms of the number and location of state licenses, the degree to which the company has gross liabilities, the type of liabilities (e.g., excluding asbestos and environmental), the domicile state, the credit quality of the counterparty backing the reinsurance contract or contracts used to create the shell, etc. In light of the regulatory hurdles and time delays that accompany the obtainment of state licenses, there is a market for selling licensed companies as “shell” companies. The process typically requires transferring insurance liabilities out of the legal entity through indemnity – or preferably assumption – reinsurance. This market has yielded significant value to its customers. That said, it is critical to gain proper restructuring advice before entering into these transactions because undesirable accounting and risk-based capital outcomes can result from poorly structured reinsurance transactions.

Simplifying corporate structure: Opportunities & challenges

Eliminating unnecessary organizational complexity and reducing associated frictional expenses are the main reasons to undertake a corporate simplification program. The benefits of corporate simplification are:

  • Streamlined financial management across a manageable number of entities;
  • Removal of unnecessary frictional costs;
  • Reduced overall state tax burden, leading to competitive advantages in market pricing;
  • Consolidation of entities within favorable state regulatory environments;
  • Identification of alternative capital structures or mechanisms to free trapped capital for the top-tier company to use for other purposes;
  • Generation of capital through the sale of unnecessary licensed companies as “shell” companies.

However, the simplification program does present some challenges:

  • Internal resource constraints may limit design and implementation of the simplification;
  • Regulatory approvals for material changes may prolong implementation;
  • Product filings may need to be updated;
  • Re-domestication of entities may present political or regulatory issues (including perceived or real job losses or transfers, closed block regulatory requirements, etc.) that can delay the process;
  • Changes in legal entity structure can affect near-term business operations and supporting technology platforms. For example, changes in legal entities used by the insurance underwriting organization may require process changes in the distribution channel as new and renewal business is mapped to different entities;
  • Selling or merging active operating companies can also present challenges for management, including: identifying intercompany accounts between merged entities; updating intercompany agreements, such as intercompany reinsurance pooling agreements, to reflect the changes; cleaning up outstanding legal entity accounting reconciliations, if any; re-mapping ledgers for historical data; re-mapping upstream company eliminations; creating and maintaining merged company historical financials for statutory and GAAP/IFRS financial statements; locating and analyzing details of historic tax attributes (such as basis and earnings and profits) and studying qualification for tax-free reorganization; potential reversal of subsidiary surplus impacts from asset purchase/sale transactions within the holding company structure; and potential scrutiny over differing methodologies, if any, used for accounting (e.g., deferred acquisition cost) or actuarial reserve methodologies used by the entities to be merged.

The corporate simplification process

Many large insurance organizations have some level of corporate simplification on their annual to-do list, but the initiative often gets pushed aside because of gaps between corporate and business priorities and available resources. The corporate simplification process requires a champion who can take into account and balance varying points of view, call upon required resources, facilitate project management and authorize access to subject-matter expertise. Moreover, a corporate simplification program must balance corporate (tax, regulatory, governance and financial reporting costs) and business (customer, distribution, products, process and technology) needs and considerations. Depending on the complexity of the organization and underlying challenges, a simplification initiative can take several months to well over a year.

The three stages of such an initiative include:

  1. Assess – The ultimate goal of a corporate simplification process is a streamlined corporate structure that corresponds to business core competencies and strategy. This structure will have an efficient balance of cost, risk, regulatory, tax, capital, governance and operational parameters that aligns business operations with the legal entity structure. In the initial phase of the initiative, representatives from corporate and business areas must come together to review the current use of legal entities and create the desired future organizational structure, as well as take into account the existing corporate environment (rather than what existed in the past). If the simplification effort is part of a broader business unit re-alignment, the assessment and design phase will require a significant commitment of time and effort to redefine the desired business strategy. If the simplification is taking place within a well-defined business unit structure, then the focus can be limited to streamlining and reducing overall cost within the existing business unit strategies.

A complete inventory of legal entities should be created outlining information such as the business use, applicable business unit, domicile, direct and net business written (for insurance companies only), required/minimum capital, actual capital, potential for elimination, and other information as defined by the group. Furthermore, to complete the assessment of the simplification effort, a business impact analysis that includes a premium tax analysis by state domicile and a regulatory domicile analysis should occur at this stage. Companies also need to carefully look at their portfolio of companies to ensure they have the entities they need today and for the near future.

  1. Design – As the plan starts to take shape, the project team must conduct a deeper analysis of accounting, business and technology transition issues. The deliverable will be a proposed road map that:
  • Outlines a streamlined legal entity organization structure with greater capital efficiency and alignment with business strategy;
  • Identifies the proposed combinations/eliminations of insurance and non-insurance entities;
  • Describes the proposed movement of capital (including extraordinary dividends required) and reinsurance transactions to effectuate the change (if applicable); and
  • Establishes a communication plan within a high-level timeline.

This outline of proposed changes must be well vetted internally before the organization approaches regulators, rating agencies and other constituents.

  1. Implement – Once the design is ready, project management and subject-matter expert resource requirements must be confirmed. Program and change management and associated governance structures are critical throughout the planning and implementation phases as the number of work streams, constituents, interdependencies and issues can be substantial for larger-scale simplification programs. Once the team is in place, it must create detailed implementation project plans, identify quick wins, establish an effective communication plan and establish an issue/dependency management process. Communication to all constituents – employees, sales force/agents, regulators, rating agencies and policyholders – is vital in any simplification initiative.

Following the design phase, those entities that have common activities, objectives, operational process or customer segmentation can be merged, which should effectively align business and legal entity structure. The remaining, redundant legal entities should be eliminated, sold as-is or sold as a shell. This final step will result in cost savings and the raising of new capital through the sale of licensed shell companies.

chart 2

Conclusion: Corporate simplification is a priority

In light of the need to be nimble while reducing costs, corporate simplification should be at the top of the corporate to-do list. A well-managed corporate simplification program provides strategic alignment of entities, reduces costs and facilitates more efficient use of capital. The companies that execute an effective corporate simplification process and maintain a commitment to simplification over time will succeed in reducing costs and be able to devote their time and attention to valuable activities.

Decision Dysfunction in Corporate America

Nancy Newbee is the newest trainee for LOCO (Large Old Company). She was hired because she is bright, articulate, well-educated and motivated. She is in her second week of training.

Her orders include: “We’ll teach you all you need to know. Sammy Supervisor will monitor your every action and coordinate your training. Don’t take a step without his clearance. When he’s busy, just read through the procedures manual.”

Nancy is already frustrated by this training process but is committed to following the rules.

Upon arriving at work today, Nancy discovers the kitchen is on fire! As instructed, she rushes to Sammy Supervisor. Interrupting him, she says, “There’s a major problem!”

Sammy is obviously disturbed by this interruption in his routine. “Nancy, my schedule will not allow me to work with you until this afternoon; go back to the conference room and continue studying the procedures.”

“But, Mr. Supervisor, this is a major problem!” Nancy pleads.

“But nothing! I’m busy. We’ll discuss it this afternoon. If it can’t wait, go see the department head,” Sam says.

Nancy rushes to the office of Billy Big and shouts, “Mr. Big, we have a major problem, and Mr. Sam said to see you!” Mr. Big states politely, “I’m busy now …,” all the while wondering why Sam hires these excitable airheads.

“But, Mr. Big, the building…,” Nancy interrupts.

“Nancy, see my secretary for an appointment or call maintenance if it’s a building problem,” Mr. Big says impatiently, thinking, “Where does Sam find these characters?”

Near panic, Nancy calls maintenance. The line is busy. As a last resort, Nancy calls Ruth Radar, the senior secretary in the accounting department. Everyone has told her that Ruth really runs this place. She can get anything done.

“Ruth Radar, may I help you?” is the response on the phone.

“Miss Radar, this is Nancy, the new trainee. The building is on fire! What should I do?” Nancy shouts through her tears.

“Nancy, call 911!” Ruth says calmly.

Of course, this dysfunction is a ridiculous example. Or is it?

Assuming you are the boss, try this eight-question test:

  1. In your business, do you hire the best and brightest and then instruct them not to think, act or do anything during their training except as you tell them to do?
  2. Do you promise training but substitute reading of procedure manuals?
  3. Do you create barriers to communications, interaction and effectiveness by scheduling the new employee’s problems and inquiries to the busy schedules of your other personnel?
  4. Do you and your staff ignore what new employees are saying?
  5. Is the process more important than the result? Does the urgent get in the way of the important?
  6. Do layers of bureaucracy between you, your employees and customers interfere with contact, communications and results?
  7. Is “Ruth Radar” running your shop?
  8. Do you have any fires burning in your office?

If you answered “no” to all of these questions, congratulations!

Now go back and try again. The perfect business would have eight “no” answers, but very few businesses are perfect. If you are like LOCO (a large old company), you might be so far out of touch with your trainees, employees and customers that you won’t hear about a fire until it starts to burn your desk.

Look back at IBM, GM and Sears in the late 1980s. These were kings of their jungles. Yet all nearly burned to the ground. Many thousands of employees were terminated, profits ended and stock values fell. If you would have talked to any of these terminated employees you would have learned that the fire had burned for a long time and that many people had tried to sound the alarm.

Remember the large old insurance companies that are no longer here – Continental, Reliance, etc. Did their independent agents smell the smoke? Did the leadership of these carriers ignore the alarm?

Sam Walton, who had reasonable success in business during his lifetime, once said, “There is only one boss – the customer. Customers can fire everybody in the company from the chairman on down, simply by spending their money somewhere else.”

Sam was right. In your business, do you or Nancy have the most direct contact with the customer – the ultimate boss? If Nancy has the most contact, is she adequately trained, motivated and monitored? Is she providing feedback to you? Are you listening?

Take one minute to draw a picture of your organization. Are you, as the boss, at the pinnacle? Are Nancy and her fellow trainees at the base? Is it prudent to have the least experienced personnel closest to the customers?

Your organization was formed to meet the needs of customers. You exist to serve these same customers. Where are these customers in the organizational chart? Did you forget them? How much distance is there between you (as boss) and the customers?

Does this pyramid model facilitate the free flow of information between you and the customers or does it buffer you from the thoughts and feelings of the real boss (the customer)? In your business, is the customer and her problem seen as an interruption of the work or the very reason for your existence?

If your customers voted tomorrow, who would be retained? Who would be fired?

Think about it! Do you dare to ask?

The Key to Building Effective Risk Culture

Building an effective risk culture is much more than changing your organizational culture in line with your vision, mission, corporate values and risk appetite — you must factor in the interests of competing national cultures, sub-cultures, Maslow’s theory on individual self-actualization and the informal groups in the company.

The interactions among all of these are not predictable, and variables cannot accurately be isolated.

An effective risk culture is not a matter of risk assessment or level of compliance; it is a matter of “conviction” — a corporate state of mind where human beings can take well-informed risk decisions because they want to, not because they have to.

ERM policies, systems and reporting dashboards are all part of the foundation for good risk management. Once you have all of these in place, you can start building an effective risk culture. Remember also that there is too much complexity and subjectivity in culture to assume that individual reactions and responses can be aggregated to reflect or give an accurate picture of the whole organization’s  risk culture. You cannot “pop” an effective risk culture in the microwave; it takes a lot of preparation, dedication and time to get it to perfection.

You can have the best staff retention rates in the industry or the most awards for long service — both of these can also indicate a high risk of employee fraud. According to ACFE research:  53% of fraudsters have more than five years of  service and the median loss for fraudsters with six to 10 years of service is $200 000. 52% of fraudsters are between 31 and 45 years old, and older fraudsters tend to cause larger losses.

Scanning the horizon might just be the most important thing to do. You cannot control or stop what is coming; you have to prepare to respond to it. So many organizations spend large amounts of money to focus and report only on what is happening inside the organization, where they actually have control. Your biggest risks are outside of the organization, where you have no control.

Key elements for the future of your risk strategy should include internal networking; you have to talk to the informal groups and their informal leaders just as much as you do talk to the executives and managers, maybe even more. The real business does not always get done in the formal “boxes and lines” structure.

Just as important are the aspects of desk research and external networking. To have a good risk management strategy and action plan, you have to know everything about your industry, markets, competitors, supply chain, alternative supply chain, global risks in a connected world and many more. Failure to adapt your business model to the ever-changing internal and external risk environments will lead straight to the corporate graveyard.

The future of risk management is just: “risk management through people.” You can have the best systems, great models and scenario analysis with elaborate dashboards; at the end of the day a person will take a decision.

Are your employees aiming at more than one target, or do you have a clearly defined risk for reward strategy and risk appetite statement to guide them? Business strategy and risk culture are parts of an interdependent system.

Start working on your success by training every employee with some basic risk management skills.

As my Moody’s colleague Sarah Tennyson wrote last year: “Enterprise-wide risk management requires a shift in the behavior and mindset of employees across an organization. To realize the full benefits of improved systems, tools and analytical skills, people need to learn new ways of perceiving situations, interpreting data, making decisions, influencing and negotiating.”

This was originally published at Zawya.

Why Wellness Scams Cost Employers and Harm Employees

This is a headline in an LA Times article: “Why ‘Wellness’ Program Scams Cost Employers and Harm Employees.” The article, written by Michael Hiltzik, is yet another major mainstream media hit on corporate-sponsored wellness.

Hiltzik writes, “Perhaps the most popular fad at large today in the employee health benefit world is the ‘wellness’ program.”

Doubts about the efficacy of wellness are popping up left and right. “Now there’s more evidence that the programs don’t save companies money….”

Hiltzik says,  “Despite these emerging data, the Kaiser Family Foundation has calculated that more than half of all companies with more than 200 workers offer health screening programs; 8% of those offer an incentive to participate or a penalty for refusing.” Wellness can even backfire and harm employees through false positives, etc.

Corporate sponsors of wellness had the noblest of intentions. However, now it’s high time for corporations to take a good, hard, steely-eyed look at their wellness programs.

This is my mea culpa. In my career in managing benefits for large companies, I implemented programs that looked promising but didn’t work. When the facts showed they didn’t work, though, I simply stopped them. The only thing worse than implementing a flawed program is keeping it around when the facts show it is a failure.