Does Your Employer Have Life Insurance on You?

Chief executives are always going on about how employees are their companies’ most valuable assets. They say it even as wages stagnate and executive pay skyrockets. They say it amid layoffs and as non-executive jobs are shifted overseas along with company profits.

And they say it even though it is wrong in a technical, yet important way. For all the talk about what valuable assets employees are, employees do not show up as assets on the company’s balance sheet, for good reason. Because the company does not and cannot own its employees, they are not and cannot be assets of the company.

Yet your employer can put a value on your head.

The NY Times’s David Gelles wrote recently about banks and other companies that buy life insurance on their employees, naming the company as beneficiary. In the process, the company reaps tax-free windfalls:  The company-paid premiums are tax free; the investment returns on the policies are tax free; and the death benefits eventually received by the company, sometimes decades after employees have left the company or retired, are also tax free. To sum up: By purchasing a financial product (life insurance) the company has turned you (your life and your death) into an income generating asset  for the company, and a tax free one  at that.

It’s not illegal, but it’s dubious in the extreme.

One thing is sure: COLI is popular. A federal law from 2006 says that companies can insure only the highest paid 35 percent of employees, who must give their consent. That law slowed the practice, which was growing unchecked before, but companies still go beyond insuring key executives whose deaths might cause economic disruption.

About one third of the largest 1,000 corporations have COLI policies and an estimated $1 billion worth of new policies are put in place every year. As much as 20 percent of all new life insurance is taken out by companies on their employees.

What do the employees get? Banks and companies say the earnings from the policies are used to cover long term health care, pension obligations and deferred compensation. But in many cases they can use the tax free-gains however they want.

Banks, for instance, max out on life insurance for employees because the policies can be redeemed for cash on a moment’s notice, if needed, and are thus counted by regulators as top quality bank capital. Non-bank corporations don’t have to report their insurance holdings so there’s no reliable way to track who is buying the insurance or how it’s used.

At the very least, there needs to be better disclosure; after all, the public subsidizes COLI through generous tax breaks on the policies and so deserves to know what’s going on.

More also needs to be done to thwart the potential for unjust corporate enrichment. The law requires employees to consent to an employer buying life insurance on his or her life. But why doesn’t that consent come with strings attached? Say, that investment profits from the policies are split with employees, and death benefits shared with the employees’ families?

That arrangement would still have a queasy feel to it, but at least employees would be getting some direct benefits, rather than simply serving — alive and dead — as insurable assets of corporate owners.

(This article is excerpt from a NY Times article entitled "What Are You Really Worth to Your Employer - Teresa Tritch).

CIO's, Think Like a Business Executive

The one-two punch of digital technology and massive enterprise disruption has left many CIOs feeling as though they've been unexpectedly dropped into a war zone. What's more, there's a growing recognition that many of the tried-and-true systems and tools of the past are no longer completely effective in running IT and the business of today.

Like business executives, CIOs should actively manage their IT portfolio in a way that drives enterprise value and evaluate portfolio performance in terms that business leaders understand—value, risk, and time horizon to reward. CIOs who can combine this with agility and align the desired talent can reshape how they run the business of IT.
This means tying together disruptive technologies, including crowdsourcing, mobile only, big data and cloud.  Unfortunately, the current tools for managing risk and leveraging assets may not work in this new world,

Here's what business-based CIO thinking looks like and what IT leaders need to focus on:

• Valuation. Understand the quantitative and qualitative value the IT organization contributes to the business.

• Handicap. Grasp how the competitive landscape will likely evolve by more fully understanding product and technology roadmaps.

• Hedge. Develop a strategy to invest and divest technology and assets.

• Promotion. Build an IT brand that is respected, if not admired, within the organization.

• Talent brokering. Identify skill gaps and understand which capabilities the organization can develop internally and how to tap external talent.

• Agility. Balance nimbleness and responsiveness with architectural integrity.

A CIO must possess a complete technology inventory, have the means to evaluate the portfolio (including risk, value and strategic importance of each portfolio item), double down on winners and fold losers, and have direct line of sight to revenues.

Deliberate Practice makes perfect

Simply put, there’s a difference between doing things you already know
how to do and doing things that force you to stretch and improve your
skills.

To get better—and win the promotions and opportunities
most of us dream about—we must set out to intentionally improve our
performance. In studying why some people develop remarkable careers,
this is a key unheralded distinction between the average knowledge
worker and the stars at most companies: the former work hard while the
latter systematically practice hard skills --this type of structured
activity is called deliberate practice!!

1) Deliberate practice
requires clarity. Set a clear goal slightly beyond your current
abilities, but not too far beyond, and list specific actions that
advance you toward your goal.

2) Deliberate practice requires
feedback. Assuming you don’t reach your goal on the first try, you need a
source of objective feedback so that you can improve on your next
iteration. Without frank, even harsh, feedback, your progress will
likely stall.

3) Deliberate practice is unpleasant. You have
to stretch yourself beyond where you’re currently comfortable—not a
pleasant feeling. To make deliberate practice work, you must not only
tolerate unpleasantness (and stick with the task, regardless of your
urge for relieving distraction), but learn to seek it, like a
bodybuilder seeks muscle burn.

True standouts systematically
develop rare and valuable skills. Building these skills requires
practice, and it is not something that you gravitate toward naturally.