Company: Caterpillar, Inc.
Consultancy: LaMarsh & Associates
Timeframe: 2003-2006
The U.S. operates the largest and most expensive healthcare system in the world, and as it began its downward spiral into yesteryears' economic rut, construction and mining
equipment manufacturer Caterpillar, Inc. found itself in an interesting predicament: It consistently provided employees and retirees with one of the best healthcare plans in the
industry (at prices well below the national average), thus attracting and retaining top talent, but the cost of doing so was slowly but surely leading the company down a path of long-
term financial risk. After a 2003 research project illustrated the dangerous costs/benefits proportion, communications executives had to address the problem while convincing
employees of the need for a benefits change during a time of record profits.
For starters, it was déja vu all over again for Caterpillar execs, many of whom were around for the attempted benefits plan design change of the early 1990s that fell flat on its
face due to resistance from employees. Attempt #2, then, had to work, especially due to the swelling medical inflation and the national healthcare crisis. The goal: Increase
employee cost-sharing and encourage employees to be more effective healthcare consumers. And the strategy?
"We tried to help employees see that our goal was to stay profitable over the long term, which involves managing costs in the good time, too," says Chip Alford, communications
supervisor at Caterpillar. "It was helping employees understand the business, the corporate perspective, behind the decision."
To achieve this, Caterpillar executives formed a Healthcare Implementation Team with representatives from across the organization. The integrated management team was an integral
piece of the overall plan, as it identified the factors most important to employees - preventative care, affordability, lifetime coverage, timely communications and protection from
catastrophic medical expenses - and made sure they remained priorities throughout the entire plan change. Then, critical success factors were established to benchmark success:
- Committed and effective sponsorship
- Clear definition of the desired state
- Rigorous implementation of a global change management model
- Resistance mitigation
- Active governance structure
- Effective communication
- Availability and willingness of required resources
- One-team approach
Identifying stakeholders' priorities and critical success factors before undergoing a change is a necessary element of successful internal - and external - communications, but it
does not prevent challenges from arising; in Caterpillar's case, resistance themes among employees became clear and present dangers when the news of the benefits plan change spread.
Among the manifestations of resistance: an entitlement mentality, an unclear definition of what it means to be an active consumer, and the perception that corporate benefits are more
important than personal needs.
While these are not simple issues to confront, the Healthcare Implementation Team, with the help of outside consultancy LaMarsh & Associates, moved forward with the plan's
execution. They notified the 40,000+ employees and affected constituents through various communications channels, including direct mail, articles, a Web site to specifically address
questions and concerns, group presentations, and a shared drive that could be accessed by all team members. The most important aspect of the plan's execution was to convince employees
and retirees of the necessity of the benefits plan change even though profit numbers were strong, leading many to question why they had to take a hit to their own checkbooks.
The results of the effort speak for themselves. 750 U.S. employees responded to a survey in July 2005, revealing the following:
- Approximately 91 percent of respondents claimed to have sufficient opportunity for their questions to be answered regarding the plan change
- Ninety percent said their division was keeping them well informed about the healthcare changes
- Perhaps most important, nearly 86 percent said they understood the business case driving the changes to the healthcare coverage
Overall, it was a coup for Caterpillar communications executives: The plan that had once been shot down by employees came to fruition with very little resistance, thus saving the
company money and maintaining employee satisfaction - not to mention winning a Silver Anvil award from the Public Relations Society of America (PRSA). The key?
"We had to accept that our goal was never to get the employees to like this. No one ever likes paying more money," Alford says. "It was to get them to understand why it was
necessary."
Contact:
CHIP ALFORD, 309.675.1464, [email protected]