Archives for May 2012

Create More Effective Informal Learning Using SharePoint

Collaboration portals like SharePoint are powerful tools for supporting informal learning in the workplace. But like all tools, the end value depends on how well it has been implemented, configured, designed, and managed to support the needs of the user community.

Think about it this way: Let’s say that today you found a shiny red Ferrari in your driveway—your very own race car! Imagine your excitement! As you briefly check it out, you’re amazed by the powerful engine. You jump in to take it for a spin, and you quickly realize that you don’t know how to harness the power effectively.

You’ve got an amazing car, but if you don’t have the proper preparation and training, its capabilities are wasted on you.

Similarly, SharePoint’s capabilities make it a great tool to support informal learning in your workplace. But to enable effective informal learning and achieve the adoption and usage rates desired, your project team must prepare properly for the project.

This means carefully determining and documenting the goals and outcomes you want the project to achieve, and learning about SharePoint’s (or any portal’s) features and functions. It requires defining the success criteria and metrics that will help you monitor your progress.

Finally, it means paying attention to the user community from the start, including how they will use the system to search for and add content, collaborate with others, and learn. Here are three techniques to help you build a foundation for collaboration and content management project success.

1) Capture User Requirements to Avoid ‘Mental Model Mismatch’

The first place to start is with the user community. Good instructional designers and performance consultants know this, and that is why they should be included on the collaborative portal team.

Unfortunately, the following scenario is not uncommon: SharePoint project is announced, and IT immediately develops a prototype portal based on SharePoint’s “out-of-the-box” functionality and features. This rarely matches the user community’s requirements or generates much excitement for the collaborative portal.

A portal developed without the right kind of input from the user community usually falls flat. Similar to the proverbial comparison of apples to oranges; we call this “mental model mismatch.”

Here’s what it means to you: As the project begins, the user community immediately begins envisioning how they might work with SharePoint to manage their content, share information and announcements, collaborate with team members, and search for nuggets of knowledge stored in the system. They unconsciously develop a mental model for how they will interact with the system. This model is based on the work they do, the outcomes they produce, the information they use, and the knowledge to which they wish they had better access.

On the other hand, IT may have in mind how SharePoint will operate from a technical perspective, based on its standard features and functions. The portal IT develops probably won’t meet the needs of the user community for the:

  • management of content and knowledge
  • sharing of information
  • ability to build a collaborative work place
  • ability to support informal learning.

Consequently, a “mental model mismatch” occurs, inhibiting excitement, creating disenchantment, and eventually, negatively impacting system usage.

To improve project success, conduct an analysis of the user community—how they approach work, how they perform work, and how they learn. This helps ensure that developers understand the outcomes they produce, the key work processes they perform to produce outcomes, and the information and knowledge they need for optimal work products.

Next, analyze the requirements gathered to consolidate them across performers, and document the user requirements and functional priorities. After interviewing several performers and documenting requirements, your team may discover that 80 percent of needs can be met by standard SharePoint web features, but a few custom web tools and automated work flows are required to meet that other 20 percent of needs.

This enables the client to make decisions about the project and to phase project activities appropriately, while better meeting the needs of the user community.

 2) Use the People-Process-Portal Model

After the user requirements are known and integrated with the technical requirements, begin portal design. As the design phase begins, use the People-Process-Portal model to keep your team people-focused and to determine the best ways to realize requirements through site branding, layout and design, content organization, and navigation.

An agile approach to portal design helps developers create quick, iterative prototypes that they can show to stakeholders to obtain feedback and deepen their understanding of the client’s needs. To achieve effective branding and design, organization and layout, structure and search, and learning support, consider the following:

  • People: Who is going to access the portal? Who and what kind of expertise is being sought? What outcomes will the expected user community produce? What types of content is usually created in the course of doing their jobs? What types of experts will they need to connect with? Will they have previous experience with content management or SharePoint? What kind of training and/or job aids will be required?
  • Processes: What processes and workflows drive daily work? Which processes slow us down? What processes actually don’t help us at all? Which workflows can and should be automated? What processes should be changed or eliminated?
  • Portal: What type of branding and design will build a sense of community? Do the organizational processes suggest any specific content organization? How should the information and content be organized to enable good access? What dynamic information will be displayed (e.g., announcements, calendars, newsfeeds, stock prices)? What key words will best fit the users’ mental model for searching for specific content and artifacts and filling knowledge gaps?

 3) Make It Personal—Pass the WIIFM Test

The third technique is to make the collaborative portal personal. Be sure users can answer the “What’s in it for me?” question. An organization’s ability to enhance the learning of its members depends on the willingness of the members to connect, respond to requests, and consistently share new documents and other forms of knowledge.

The collaborative portal project team, together with the organization’s leadership, can do several things to encourage appropriate participation, use, and sharing: motivate users to connect, motivate users to respond and share, and build a culture of collaboration.

Motivation to Connect. According to Woody Allen, “Ninety percent of life is just showing up.” While we think there is more to it than that, it certainly is a start. You can’t share expertise and knowledge until you “show up” on the collaborative portal. One way to encourage the user community to do so is motivate them to create personal sites, such as the My Site feature in SharePoint. Your My Site serves as a point of contact for other users in your organization to find information about you, your skills and interests, and even what you are working on. Each person’s My Site provides:

–A central location for them to view and manage all of their documents, tasks, content, links, calendar, colleagues, tasks, and other personal information

–A way for other users to learn about them and their areas of expertise, current projects, and colleague relationships.

My Site pages enable each person to present content and documents to other people, create their own workspaces, provide information about themselves to other people, and learn about the status of their colleagues. This makes your collaborative portal or content management system much more personal and motivates people to participate.

Motivation to Respond and Share. Informal learning through collaborative portals won’t happen on its own. The key to portal usage and adoption is quality content and knowledgeable experts. Without this, the portal will quickly get a bad reputation for having nothing of value.

So how do you get the right types of content and the access to the right experts? One key to success is to motivate experts and recognized leaders to participate. Ensure that experts in critical content areas create “My Sites,” listing areas of specialization, and uploading content to the portal. Make a global request to experts in specific areas, asking them to set up their site and participate.

Ask managers to cover the request in their next team meeting to improve the likelihood of compliance. Informal motivators also work, such as contests. For example, one organization held a drawing for prizes from names that were entered after people completed their My Site pages or submitted content to be included.

In addition to posting information for sharing, experts must be motivated to respond to requests for information from the organizational community. For example, one global high-tech client has included responding to information requests on job descriptions for their technical staff positions.

Experts in other organizations may not need additional motivation, finding personal satisfaction in sharing their tips and techniques with individuals and project teams. Every culture is different—find out what works in yours to motivate response and encourage sharing.

Build a Culture of Collaboration. “Build it and they will come” is a great movie quote, but won’t win any change management awards. Pay attention to your culture when encouraging and leading collaboration. Command-and-control cultures, especially, will require more overt leadership over a longer term in order to achieve true content management and collaboration.

Some leaders think that a broadcast email is sufficient to get people to embrace collaboration and content management. But in fact, it requires much more than that. Popular techniques to improve an organization’s level of collaboration include:

  • assess organizational change readiness and plan ways to remove barriers to collaboration in your culture
  • hold town hall sessions to communicate why the portal is being developed, why it is important to your strategy and competitiveness, and how people are expected to use it
  • conduct webinars demonstrating how to complete a My Site
  • encourage leaders to ‘walk the talk’ and participate collaboratively in SharePoint to model the behaviors they want others to do
  • deliver virtual or classroom training on SharePoint functionality, including how to upload documents, how to tag documents with searchable key words, how to search for content, and how to connect with an expert through his/her My Site page
  • assign a job role in each business unit to keep the portal well organized, to retire old content, and monitor usage and adoption
  • include collaboration and thought leadership in job descriptions, hiring profiles, performance management tools, and competency models
  • use metrics to monitor adoption levels, usage, and satisfaction with information found, to identify opportunities to increase participation and continually improve.

Final Word

Collaborative portals and content management systems have become a critical tool to support the learning process, while also enabling easier collaboration and communication. But don’t let your collaboration and content management system resemble the fancy race car that no one is prepared to drive. In this article we have described three techniques to facilitate collaboration and informal learning through collaborative portals. These techniques will help ensure that you get the organizational value and ROI you need from these informal learning tools.

  • First, capture user requirements to avoid a mental model mismatch, and to make it more likely that the user community will use and adopt the system.
  • Second, apply the People-Process-Portal design model to ensure that the portal design reflects the organization and supports the people who will use it to collaborate, search, reuse, share, and learn.
  • Third, make it personal to pass the “what’s in it for me?” test. Encourage users and leaders to actively participate, connect with others, share expertise, and respond.

Don’t let informal learning be an afterthought in your organization. Plan for it, support it with well-designed tools, motivate participation, and involve learning and performance specialists in its design and management.

About the Authors:

Dr. Karen McGraw is the founder and Principal Consultant for Cognitive Technologies She leads strategic consulting and performance improvement engagements for both commercial and government clients.  Dennis Mankin is the founder and Managing Partner of Platinum Performance Partners  Mr. Mankin has an extensive professional background, including 25 years in senior management and consultative positions working in business consulting, executive coaching, sales, and Human Performance Improvement (HPI). He was certified by ISPI and Dr. Joe Harless as a CPT in August 2003 and he is a project manager and facilitator of HPI processes worldwide.

Reprinted from Learning Circuits

How to Build Executive Alliances

Chief Learning Officer Bob Bennett joined FedEx Express in 1979 and has worked in myriad areas of the company. This offered him a comprehensive view of its operations and services, but 10 years ago his insight nearly got him fired. He said it was the best thing that ever happened to him.

A native New Yorker, Bennett received his bachelor’s and master’s degrees in industrial engineering from Cornell University. He earned his MBA from Bernard Baruch College at the City University of New York. When he became a senior engineer at FedEx, Bennett moved his office space from the company’s headquarters to the closest station — where package pickup and delivery take place.

His project was setting the time for FedEx morning delivery. The other three senior engineers stayed in Memphis, but Bennett knew his project couldn’t be completed without working alongside the operating staff.

“Moving created a reputation for me, a reputation of caring,” he said. “This led to instant credibility in the field among operations and helped facilitate the implementation of ideas I may have in the future. It opened the door for the rest of my career.”

Before long Bennett was promoted to vice president of planning and engineering in Latin America. At this time — 10 years ago — he was asked to help the company’s board restructure FedEx, an invitation he credits to his move to that packaging station years before.

FedEx had grown since it began operations in 1973, and so had its individual organizations. “In my mind, while this had optimized the various organizations — internal departments — it may not have optimized the overall business; all we had was optimized silos. Truly successful companies realize the impact the entire infrastructure has on the bottom line and overall organization’s health. At FedEx it’s a comprehensive look at the people, service and profit side of the business.”

Bennett and nine other individuals dissected the company’s structure, role and responsibilities across all divisions to see where there was duplicate work or service gaps. The intent was to improve the company’s profit margin and employees’ ability to provide better services and more offerings to customers.

“Rather than leaving incumbents in positions, it was more important to have the right skills in the right positions,” he said. “After the company was reorganized I was convinced I had strategically fired myself.”

The initiative moved employees across the company into positions that were the best match for their skills regardless of their titles. A draft ensued. Every vice president would either get a call from human resources to discuss the procedure when exiting the company or from the senior leader in his or her division, congratulating the individual on keeping his or her position within FedEx.

When Bennett came home at 9 p.m. one evening, he was shocked to receive a call from Larry Brown, senior vice president of HR for FedEx.

“‘Bob, this is Larry,’” Bennett said. “My first reaction was to turn to my wife and whisper, ‘Holy mackerel, I’m getting fired.’ His next line was, ‘I hear you’re a problem solver, I hear you make things happen. I want you in the HR organization.’”

That was Bennett’s introduction to learning and development, where he said his ability to influence business strategy was welcomed with open arms.

“Getting a seat at the table has to do not with what you do today, but what you’ve done over the long term,” he said. “The whole concept of earning a seat at the table is building and earning the respect of your internal customers. For me it was about an adherence to FedEx’s people-service-profit philosophy from day one, staying up to speed on the business needs and providing solutions on the front end. It was focusing on the company goals and objectives. It was making sure I was providing more than just my salary back to the company, that I was always providing value as well.”

Be a Translator

Bennett attends other divisions’ department meetings regularly. He is involved at the C-suite level, but finds it equally important to spend time at stations, as much time as he did in 1979. “I cannot be expected to provide them knowledge on how to help run their business if I don’t know what their business is,” he said.

Similarly, Michael S. Hamilton, chief learning and development officer for the Americas at Ernst & Young, said he believes it is the CLO’s role to be a bridge between the company’s learning and development resources and operators. Acknowledging this idea is part of the recipe to please internal and external customers, and Hamilton may have a point. Ernst & Young is the only company to be on Fortune’s “Best Places to Work” list 14 years in a row.

“Our inventory — what we sell — is our people,” he said. “The better our people are, the easier it is to serve the needs of our clients. We invest in our people like other companies invest in their products and services.”

Previously a managing partner for Ernst & Young, Hamilton was asked to join the HR team because of his success managing his audit staff. “I joke today that I’m a translator,” he said. “The operators, the people who run the business, aren’t always sure what learning and development executives have to offer as solutions to their business needs. The learning and development executives don’t always understand the business challenges from an operator’s perspective. Knowing the talents of our learning and development team and having been one of those operators has made me a great intermediary.”

Ernst & Young conducts an annual global people survey of employees in every service line across the business. Last year Ernst & Young studied the linkages between the survey conducted in 2009 with 2009 and 2010 financial, operational and brand measures for all organizational units. Hamilton and other business leaders were hoping to learn how people practices align with business results and what people factors most enhance the company’s performance and brand, including learning and development.

Ultimately he observed that more payoff comes from being “best-in-class” at engaging employees when compared to external benchmarks. For example, the year after the 2009 survey, best-in-class performers in engagement saw retention rates 11 points higher than those below the local norm. In fiscal year 2010, revenue per person was 24 percent higher in units that were best-in-class in engagement compared to others who were above average.

“Specifically looking at learning and development, we found that in business units where people see the opportunity to build their skills, we generally see higher profitability and stronger brand favorability,” he said.

In Ernst & Young’s 2011 survey, when employees were asked if they believe they have adequate access to meaningful experiences that help them grow and develop, 80 percent responded favorably, which was 15 points higher than the external norm.

According to Hamilton, these are the scores the CEO wants to see. This is what gets the board invested in learning and development.

Focus on Customer Needs

Bonnie Fetch at Caterpillar, who was recruited to serve as president of Caterpillar University after running manufacturing and engineering operations for a small drive-train system within the company, said delivering metrics consistently to the CEO and fellow executive team members is key to remaining relevant.

Fetch provides monthly updates on Caterpillar University to the CEO, Douglas R. Oberhelman, and writes a separate report for the CFO. Once per quarter she delivers an update on leadership development programs to the entire C-suite.

“We will need to develop as many as 17,000 leaders between now and 2020 to accommodate growth and retirements,” Fetch said. “Now more than ever before, it is important to focus on building current leaders and to ensure we are developing leaders who will join the company or get promoted into leadership roles.”

Oberhelman is championing leadership development by talking internally to the organization about the need to develop leaders, and focuses on Fetch’s reports when talking to Wall Street. Specifically, he homes in on the company’s leadership assessment, a 360 feedback tool that measures leaders’ use of competencies, leadership styles and the nature of the work climate they create — direct reports, peers and direct supervisors participate in the assessment.

Fetch measures the percentage of leaders who create a high-performing work climate and the percentage who use a broad repertoire of styles. Each individual gets an assessment report that is subsequently used for developing and coaching.

“Learning leaders like to spend a lot of time on how many butts are in seats, how the learners feel about learning and what the ROI of the program is,” she said. “While I think that’s a fine indicator for learning, these don’t always translate to business numbers. For example, our ROI for leadership development is somewhere in the 700 percent range. That sort of number doesn’t make sense to the rest of the business world. When I mention 700 percent ROI to the C-suite, the conversation derails immediately. Business metrics are the ultimate measure of success; sometimes the metrics CLOs focus on are too learning specific.”

Eileen Walsh, audit partner in charge of KPMG Business School, agrees with Fetch. She said to have a seat at the table, learning leaders need to thoroughly understand and be able to articulate the company’s business and strategy. They must be intimately familiar with the company’s market position and industry, its challenges and opportunities, and skills and competencies professionals need to operate effectively within that industry and marketplace.

“Your credibility with the rest of leadership relies on your ability to effectively interpret data and use it to provide training that helps your professionals perform at the highest level,” she said. “Effectiveness is driven by people. Hiring, developing, supporting and retaining the best people is essential to providing quality service.”

Reprinted from Chief Learning Officer magazine

The Exit Interview: An Engagement Tool?

Organizations employ a variety of methods to measure and track employee engagement, but probably none as surprising as this: In a recent survey by the Society for Human Resource Management (SHRM) and Globoforce, an employee-recognition-services firm, 65 percent of firms reported using exit interviews as one of the ways they measure engagement.

“It’s like closing the barn after the horse is already out,” said Kevin Kruse, author of We: How to Increase Performance and Profits Through Full Engagement, in reaction to the finding.

“It’s after the fact, and engagement is something that happens when they’re employed,” added Jim Harter, chief scientist of workplace management and well-being at performance management firm Gallup.

Even Derek Irvine, vice president of client strategy and consulting with Globoforce, was taken aback by exit interviews’ prominence as part of the engagement measurement process.

The bottom line, all three said, is that the exit interview is not the best place to have a comprehensive engagement conversation with an employee. Some even questioned the validity of an exit interview altogether.

Yet the three did agree, after some thought, that if an exit interview is going to be used to track engagement, there are some instances where the data could be used to help firms add value.

Harter said the exit interview might become a principal engagement measurement tool if a firm is experiencing a rash of employee defections. “If you’re bleeding, you’ve got to get the stitches out and fix it if you’ve got a deep cut,” he said.

In this case, the exit interview becomes especially important, since HR managers need to figure out what to change in the short term to boost retention and get a gauge on engagement.

“Maybe they’ve lost some of their best performers,” Harter said. “[The exit interview] is more of a short-term fix from my perspective: ‘Let’s understand what we need to do differently right now.’”

Exit interviews can also bring forth surprising candor on engagement-related subjects from departing employees, Kruse said.

“Even if you get seven out of 10 leaving that are just going to give you the party line, maybe three are going to give you good data,” Kruse said.

It’s best to conduct anonymous surveys following an employee’s departure from a company maybe three or six months after they’ve left.

“Broadly speaking, you could learn something in an exit interview that could inform you about how to improve benefits, culture or improve a bad boss … and then those things could lead to improved engagement,” Kruse said.

Globoforce’s Irvine agreed: “You do catch an employee at a very particular time in their relationship with the company where there is a very candid and frank discussion.”

That said, employers shouldn’t count on employee candor too often during exit interviews — because many are afraid of being brutally honest.

“It helps the company,” Kruse said, referring to employees’ candor during the exit interview. “It doesn’t help them.”

About the Author:

Frank Kalman is an associate editor of Talent Management magazine. Reprinted from Talent Management Magazine

Selling Skeptics on New Learning Technologies

“What we find cool, others find intimidating. What we find useful, others find threatening. What we find magical, others find scary. And the very benefits we tout are sometimes exactly what others fear.”

I help moderate the weekly #lrnchat Twitter discussions (Thursdays, 8:30 – 10 pm ET), and while I’m not much of a TV watcher, I admit on occasion to running Grey’s Anatomy in the background. A recent episode included a storyline about a woman’s second surgery to repair a botched first one. The surgical resident came out to talk to the patient’s husband, who thought his wife was in surgery for a major but not extraordinary repair.

The resident began to gush about the surgery and said, “They’re putting her heart back in [husband looks shocked]… They had to take her heart out to repair the valve, but they’re putting it back in now. It’s good.”

The resident thought this was just the coolest, most awesome-est thing ever, to be able to take out a human heart – on the spur of the moment – to fix it.

The husband did not find this cool or awesome in the least.

Shooting ourselves in the foot

I see this

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happen all the time with people trying to gain support for implementing new learning approaches and technologies, and I am sure I am often guilty of it myself. What we find cool, others find intimidating. What we find useful, others find threatening. What we find magical, others find scary. And the very benefits we tout are sometimes exactly what others fear

(Figure 1 is a historical fantasy, but accurate).

Figure 1: Bell invents the telephone.

So in our enthusiasm I worry that we are often shooting ourselves in the foot and generating the very resistance we’re trying to avoid. So, what to do to sell ideas?

Find examples that show value

I have an entire presentation that is nothing but screenshots of the use of social tools and mobile apps to support performance, from Apps for the Army to YouTube videos designed to offer emergency medical services staff just-in-time information on procedures.

The challenge: for every great example, there are 10,000 more instances of kittens riding Roombas and babies biting each other’s fingers. For every great instance of using virtual classroom technology for engaging, interactive training, there are 1,000 more bad, sales-pitch-y online seminars.

Our challenge is to find those good examples, relevant to our work, and get them in front of those we seek to influence.


Rentokil L&D Manager Shannon Tipton, in a conference presentation on influencing leaders, talks throughout about her success with the “chip, chip, chip” approach. Do not expect to generate change in a one-shot meeting. Chip away at resistance. Chip away at the bad examples. Chip away at individuals and their objections one at a time. Bring the idea up again on Tuesday, and again on Friday.

Look for opportunities to demonstrate a small idea, and people amenable to listening.

Stop Talking

I can’t tell you the number of times I have heard someone – people from L&D, no less – try to “explain” Twitter, or the advantages of storyboarding, or use of a new navigation plan.

Stop talking; start showing.

Become fluent with examples, mockups, and demos. What the competition is doing. What the competition is not doing. Watch for opportunities to fit a solution to a real problem: my own example, for instance, in introducing Google Docs to my boss at the moment of need by just setting one up in response to her real problem, without convening committees or offering lectures (

Find Small Wins

The lust for

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“enterprise solutions” can make us slow. Look for opportunities to conduct small pilots. Recognize small wins, then document and share them. Find pockets where there is a greater likelihood of acceptance.

Find the Right People

The network administrator is not the person who sets policy for your organization. Find that person’s boss, or someone else who has influence over those who create the barriers and silos. Identify ambassadors who can help carry your message elsewhere.

Get Clear About What You Really Need

I see people contact IT and say things like, “I want to do Facebook” or, “We should buy a Webinar product” with no supporting information. That’s not going to get you past any obstacles. Instead, try “We have a large community of graduates from our leadership academy, and I need to find a way to help them stay connected after they finish the course… “ or, “I need a virtual tool that provides good breakout room capability, so people can work in private groups on the sales roleplays without flying them in.”

These are better ways to begin more productive conversations.

Get Clear on the Business Case

I find people have a hard time articulating business need or desired result. “Because it’s cool” is not a reason, and “because we can” is not a strategy. What problem will it solve? Will you sell more product? Will employees in the call center be able to calm angry customers more quickly? Will we be able to keep customers from getting angry in the first place? Will we lower the rework rate? Will we decrease the time spent looking for information by 34 percent?

It’s no secret that I love new technologies, but I need to be careful not to be just the geek girl wandering around with a tool in search of a problem.

Finally: Stop cajoling

Finally: Stop cajoling and complaining and dragging. Figure out a space in which you can act, and JUST DO IT already.

About the Author:

Dr. Jane Bozarth is the E-learning Coordinator for the state of North Carolina. She is the author of ELearning Solutions on a Shoestring; Better than Bullet Points: Creating Engaging Elearning with PowerPoint; From Analysis to Evaluation: Tips, Tools, and Techniques for Trainers; and Social Media for Trainers.Reprinted from Learning Solutions

Rules for Retirement: Plan Fees Have Companies Scrambling to Comply

Despite the dizzying array of new fee rules that 401(k) plan administrators and companies providing services to those plans must implement this year, Debbie Hoover says her small manufacturing company is ready for them.

Hoover, director of human resources for Los Angeles-based industrial paint maker Ellis Paint, says that although she initially was overwhelmed by the new wave of regulations, her retirement plan administrator, Fidelity Investments, coached her on the changes and new responsibilities.

Ellis, with 150 employees, decided that Fidelity would do the detail work and would later explain it to its plan participants.

“I was concerned about how we were going to do this when the regulations first went through,” Hoover says about the double dose of rules governing fees charged to retirement plans like 401(k)s. The regulations, which were issued by the Labor Department in several phases, all must be implemented this year. “As a small company, having Fidelity handle it seemed to be the most efficient way to do this.”

The rules are the Labor Department’s two-step way of making sure that plan sponsors such as Ellis Paint know how much providers like record keepers, money managers and plan administrators are charging to service 401(k) plans. Another regulation, which was finalized in October 2010 but goes into effect this summer, requires plan sponsors to tell participants about these fees and how they affect their account balances.

Even though the first regulation

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has providers like Fidelity doing a lot of work, companies shoulder a lot of responsibilities too. Experts say larger plans are ready for the change, but many midsize and small companies are trying to establish deadlines for information and the actions they should to take once it’s assembled.

“The challenge for many plans is following the process,” says David Wray, president of the Plan Sponsor Council of America, formerly the Profit Sharing/401k Council of America. “That means going through and making sure [plan sponsors] can assemble all the information so it can be benchmarked.”

The requirements can be confusing, says Sam Henson, senior ERISA counsel for Lockton Retirement Services in Kansas City, Missouri. To help plan sponsors through the process, Lockton created a checklist to make sure plan sponsors are reaching the right service providers before deadlines for information hit.

“Lots of plan sponsors are scrambling to make sure they are doing this,” Henson says. “The intent of the rule is great. The [Department of Labor] wants to make sure plan sponsors are getting what they are paying for, but in order to get there, the DOL has put a tremendous burden on them.”

Plan sponsors should be contacting all service providers that charge the plan at least $1,000 or more annually. By May 1, plan sponsors had to figure out whether fees are reasonable, Henson says. If providers haven’t given the information by July 1, plan sponsors should issue a written request. If providers haven’t complied by Nov. 1, plan sponsors should notify the Labor Department.

Plan sponsors need the provider fee information so they can give participants data on fees. This regulation comes in two waves: the first requiring plan sponsors to give participants plan and investment information due Aug. 30, and the second delivering quarterly information on fees and services to participants’ individual accounts, due Nov. 14.

The key to the process is documentation, experts agree. It’s important the plan sponsor have a paper trail to show the Labor Department, Henson says.

“You’ve got to have a really detailed file to show you tried to comply with the rules to the best of your ability,” Henson says. “That’s the way the DOL does everything.”

The penalty for not complying is draconian, says Marcia Wagner, owner of Boston-based Wagner Law Group. If a provider doesn’t give the plan sponsor the necessary information, or if fees are found unreasonable, the plan sponsor must fire the provider.

Plan sponsors ignoring these outcomes could be sued by participants and the Labor Department as well as face a 15 percent excise tax and other penalties, she says.

“You don’t want to mess with this law,” Wagner says. “The Labor Department isn’t playing around with this.”

About the Author:

Patty Kujawa is a freelance writer based in Milwaukee. Reprinted from Workforce Management

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