Insights turn county into a trend-setter

Published June 26, 2006

by JOANNE WOJCIK

jwojcik@BusinessInsurance.com

REDWOOD CITY, Calif.--San Mateo County, Calif., Benefits Manager Paul Hackleman has always been ahead of the curve.

He implemented health risk reduction programs in the early 1990s when most other employers were still paying them lip service. He introduced work/life programs before they were called work/life benefits.

He got out of self-funding when he noticed that adverse selection was driving up the county's health care costs.

Mr. Hackleman learned how to pave the way for benefit plan changes with labor organizations before the county entered into collective bargaining.

He arranged for a detailed analysis of the county's retiree health liabilities more than a year before the Government Accounting Standards Board rule was to take effect.

He has published three books on how the approach to public sector benefits management needs to evolve and grow like that of his counterparts in the private sector.

And the county has permitted him to share his knowledge with other public-sector employers as an independent consultant.

It is for these and numerous other accomplishments spanning over 23 years as San Mateo County's benefits manager that Mr. Hackleman has been named Business Insurance's 2006 Benefit Manager of the Year.

Strategic outlook

"I spend a lot of my time thinking about at least six months, if not a couple of years from now, what issues will be pressing upon us and how we are anticipating dealing with such change," said Mr. Hackleman, describing himself as "a strategist."

"The private sector really figured out in the 1990s that benefits weren't 'fringe' anymore. I absolutely just cringe when I hear the word 'fringe.' There's nothing fringe about it, either financially or just in terms of the strategic position of an organization. Benefits are very central to compensation, and done well, they serve your organization in mighty ways, and if done poorly they can frustrate your organizational objectives of attracting and retaining employees," he said.

In the private sector, "the benefits position got elevated to a vp level or fairly strategic level because somebody recognized there was a lot of money associated with it, and that it needed to be an integral part of the overall organizational strategy," Mr. Hackleman continued.

"I think here, more than any other public-sector organization with which I'm familiar, we have almost what I think is a private sector model," he said.

He's never been told, for example, that he did not have the authority to interact with the board or get involved in labor relations or strategic initiatives the county pursues.

By contrast, his counterparts in other public-sector organizations often are "kind of transactional people. They're kind of clerks who've come up a bit. I think that's so penny-wise and pound-foolish given the cost of employee benefits. We spent $55 million on employee benefits here. That's not chump change," he asserted.

"I'm absolutely convinced that year in and year out the work that I do saves the county literally millions of dollars, and I'm absolutely convinced that the difference between a efficiently managed benefits function and a poorly managed benefits function is literally millions of dollars a year to the organization."

And he's done most of the work on his own.

"I work for organizations that have a budget of $700,000 or $800,000 for a consultant. Do you know what we spend here? Pretty much zip," Mr. Hackleman quipped.

From time to time, though, he has hired actuarial consultants to do studies or other specific tasks, Mr. Hackleman said he firmly believes it's the benefit manager's role to be the consultant to his or her own organization.

"Paul's whole approach to benefits was something that I had not seen in the public sector before, concurred Geoffrey Rothman, principal consultant in the public law group at law firm Renne Sloan Holtzman Sakai L.L.P. in San Francisco, and co-author with Mr. Hackleman of "Public Employee Benefits: From Inquiry to Strategy," which was published by the Brookfield, Wis.-based International Foundation of Employee Benefit Plans in 2000.

"Paul had looked at the landscape and had identified all sorts of opportunities for growth, for development, for responsive programming, whether it was the child care center or studies that he collaborated with Stanford on doing," Mr. Rothman said.

Mr. Hackleman firmly believes "that benefit managers could be proactive, could initiate, could identify and recognize needs in the workplace and develop responsive programs," according to Mr. Rothman.

It was Mr. Hackleman's approach to benefits management, an approach that Mr. Rothman shared when he was director of employee relations for the city and county of San Francisco, which led to their collaboration on a book about public-sector benefits.

The book is not a how-to but rather offers an exploration of the major influences operating in the public sector, leading the reader to ask a series of questions on various subjects to design a responsive employee benefits package.

"It's a conversation, not a primer. It's intended to make people think," Mr. Rothman explained. "If you ask the right questions, you find the right answers."

Teaching and learning

In addition to providing an opportunity for him to become an author, Mr. Hackleman's experience in revamping the county's self-funded health benefits plan led to a second career as a benefits consultant. He said he was approached by the deputy manager of San Jose County, which was experiencing similar cost problems with its self-insured health plan.

Among his clients are the counties of Santa Clara, Tulare and San Bernardino; the cities of Pasadena and San Jose; the cities and counties of Honolulu and San Francisco; and the Alameda County Water District.

Though he does mostly benefits strategic planning or requests for proposals for public-sector clients, Mr. Hackleman has had the opportunity to address labor/management conflicts, which he has diligently worked to resolve in his own organization. "In almost every other environment that I go into, labor and management are pretty contentious," he said. "And I let them know that my bias is not that way. So if they're excluding people from the process, I let them know that I think that's a huge mistake and that it's going to have consequences at the other end."

Mr. Hackleman is getting paid for his consulting work, but "consulting pays enormous dividends back to the county," he said. "I've learned so much."

The foreword in his book "From Inquiry to Strategy" addresses the different roles assumed by consultants vs. in-house administrators.

"There are certain blind spots in both of those stances," Mr. Hackleman said. "The consultant has certainly a lot of support for understanding the big picture, usually has a much broader field in which they understand how things play themselves out very differently from one organization to the next, vs. an administrator who is going to be very detailed and knowledgeable about the specifics of their organizations and all of the eccentricities of their organizations and how things work."

"Those two don't often marry very well. I think that's why sometimes when consultants come in, they may be recommending absolutely terrific solutions...but oftentimes they don't stay around for implementation or post-implementation."

Organization-specific plan

Moreover, even if organizations have a viable strategy, the way that strategy plays out in two organizations may be completely different, Mr. Hackleman added.

Factors such as characteristics of the workforce, geographic location, the segment of business, who the players are, what the dynamics of organization are all will affect whether an idea takes root, he said.

"I'm a big believer that you can't transplant cut flowers. What works well in an organization can be wholly unworkable in another for any of a variety of absolutely legitimate reasons. So your task in employee benefits is to have enough sense of the organization so that you know what can grow there."

Understanding how an organization arrived at its values is also essential, he believes.

"If you don't understand how you got there to those values, then you're likely to treat them very lightly because you don't understand why you chose that path and not some other path. And you have to have that sense. You have to have a sense of the paths not chosen just as much as the paths chosen to really be intelligent about how you offer employee benefits of any kind," Mr. Hackleman said.