September 1, 2008

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Human Resources

September 1, 2008

We’d like to give a special thank you to David Cherrington, professor of organizational leadership at Brigham Young University, for moderating the discussion and Holland & Hart for hosting the event. Participants: Back Row: Jonathan Driggs, Workforce Solutions Group; Von Madsen, ARUP Laboratories; Bill Zavatchin, SOS Staffing; Ryan Driggs, Driggs Search International; Brian Lee, Performance Progression, LLC; David Cherrington, Brigham Young University; Jeff Herring, State of Utah; Dennis Johnson, Smith Johnson Front Row: Kristen Cox, Utah Department of Workforce Services; Lora Lea Mock, Mock Professional Recruiters; Deborah Stone, Evolutionary HR; Kimberly Barksdale, Manpower Inc.; Erica Baxter, Employer Solutions Group; Clark Cottesell, Management Recruiters; Shawn Limta, Teksystems Seated: Ann Fleming, Adecco; Stacy Stetner, Alphagraphics Inc.; Monica Whalen, The Employers Council; Leslie Hackett, Express Employment Professionalsy Barksdale, Manpower In Today’s human resources and staffing professionals cope with keeping up with companies’ staffing needs by focusing ever more on effective recruiting and retention tools. Health care costs and immigration issues remain on the forefront of the discussion as possible national and local reforms approach. The panel also discussed the growth of human resources as a profession, its place within different sizes of organizations and how to demonstrate and add value to a business as an HR professional. Is human resource management viewed as a profession? WHALEN: Human resources, as a profession, has come a long way in the last decade in raising its credibility through organizing a national professional organization and testing and certification processes. This really defines its body of knowledge. And also, a new emphasis is being placed on HR as a strategic partner and being able to talk the talk of the finance department, being able to sit at the table with the executives and understand the business, understand the organizational goals and talk in terms of what the CFO wants to hear about bottom line impacts. HR is becoming more and more willing and able to rise to that level and understand that in order to gain and maintain the credibility, that’s the role that they have to play in their organization or they will simply be seen as a cost center. JOHNSON: I think all positions have that same challenge. Today you have to be connected in business and know what’s going on if you want to sit at that table with the executives. LEE: One of the first things we have to do is define “profession”. Are there little children that grow up wanting to be an HR manager? I would say no. And frankly, in corporate America, HR is filled with people who didn’t work out in other functions, or their degree is not marketable and so they gravitate to HR. But the people that come into HR who really succeed are the ones that really know the business. I spent a lot of my time advising the senior executives in a company that I worked for. They don’t have anyone else to talk to or anyone else that can advise them on the things that we do — succession planning, performance development, those kinds of things don’t hit their radar screen unless they have someone there to remind them of the importance. And I think that’s why Jack Welch says that after the CFO, the most important job in the company is the HR person. WHALEN: I’m finding HR is actually a very cross functional position. HR professionals need to know employment law. They are regulatory compliance officers as well as being involved in the finance side of staffing costs and needs. The HR profession is a little bit of every piece of a successful business. The most successful HR professionals are people who are multitalented, multifunctional and have knowledge in several different areas that impact the business. HERRING: I view HR more as a process. Whether you are a small or large organization, all of the employee issues are there regardless if you’ve got an HR shop or not. Really, it’s a management issue. HR is occurring whether or not we have designated HR or not. And HR should be in the role of consulting. When I talk with my boss, it’s not a recruitment goal that I set. It’s not a classification goal I set. It’s increasing the capacity of managers to manage, because they are the frontline of the HR process. If we can develop and train managers in some of the basic human capital issues, then that makes HR more successful because you are helping provide tools at the manager level to deal with a lot of the issues that then don’t have to rise to a crisis reactionary level in the HR department. STONE: You are talking about the value that HR brings and the benefit. And any of us at the table really would say, “Here is what I do to add value,” whether you are corporate HR or consulting or staffing. My fear is that we are seen as a necessary evil. On some level, it’s, “Oh, great. We’ve got to get HR involved.” We’ve certainly come a long way in the last 10 years when people have focused on that relentlessly in terms of being a strategic partner. There is either room for more improvement or just an acceptance that will come over time. But I don’t think we are there yet. I cannot remember how many conversations I’ve had where people were passing in the hall and said, “Oh, great. There is HR.” And on some level, there is that kind of undercurrent. HERRING: Right. I don’t think that we can define our value. Value is always going to be defined by the person receiving it. So we’ve got to look to our customers; the agency, the supervisor, the manager, the employee, whoever our customer is for whatever we are doing and that’s who gets to define the value. We need to find out what they are looking for and what our customers are looking for because that’s how you have to gauge value. It’s not us as HR professionals saying, “Here is my value” It’s “What do you need and how can I help in that?” What is involved in the role of an HR professional? J. DRIGGS: Any HR person, and ultimately any manager, needs to have a basic understanding of the fundamentals of employment law. And really underlying those employment laws are common sense principles of human interaction, and when we violate those principles, there is going to be some sort of a consequence that flows, whether it’s legal liability or simply dysfunction in work environment. I think it’s important for everyone in a management position to be familiar with the basics. In addition to that, one of the issues is, do executives in Utah view human resources as a profession? I think the answer is mixed. There is a strong do it yourself as cheaply as you can ethic in Utah, which in many ways is one of the things that adds strength to us, but there is also the failure to recognize potential. And maybe that’s partly HR’s fault for not rising up. I think the classic HR story here in Utah has been the very competent administrative assistant who is placed into de facto personnel management without ever having really any training in the profession and the science of HR. I think that is beginning to change, but we are somewhere in between in that process. STETNER: I would have to agree. It has been considered an administrative function, and I think before that, people who had heard about HR would say, “Oh, so you plan the parties?” I think we are gaining some credibility as others see that culture is part of our responsibility, retention of employees is part of our responsibility. When I began in the profession, it maybe was about planning parties and it was about data entry. Now it’s so much more. I sit in on these meetings and hear these things that are critical to our survival. I would have to say it is a necessary evil, but I think it’s also proving its value because every time I get a phone call from an owner, he’s asking a question that seems so basic to me. And I’m thinking, “This isn’t even intuitive to some people.” So that’s when I say, “This is absolutely a profession. This is something that must be part of your business if you want to function appropriately.” Is there a significant difference in the professionalism and the acceptance of upper level executives of HR in Utah versus elsewhere? LEE: Yes, absolutely. I think it’s not a recognized profession in Utah. It has been very difficult for me here because in the companies I’ve worked for previously, HR was a very highly respected and highly included role in major decision making strategies. Coming here, it’s almost a dogfight. FLEMING: I’m sure that maybe we are a little behind in the cultures of the companies to really recognize the significance of HR on their bottom line and to put their HR professional at the same level with their other strategic departments and managers. But I find the mix just as great here from one end of the spectrum to the other the necessary evil to someone who is so instrumental in every decision that’s made and very involved in the strategy. So my experience has been that I don’t find Utah any different than any other market. HACKETT: I think it varies by the company. In my experiences in Utah, HR people are not as credentialed here as they are in some other states, and the roles are not as well defined. And, accordingly, that department may not have the credibility in some companies that it does in others because the people performing that function grew up through the ranks and did not come in with SHRM certifications and great backgrounds in the law. I see a huge difference between California and Utah. In the past three years, difficulty of finding people has been expressed. Is it more or less difficult than last year? Is there a problem getting good people, or is it a problem of finding the right people with a match? MOCK: Unemployment is 3.5 percent here in Utah. Full employment is considered to be 4 percent, so we are well below full employment. And last year I felt like we were standing in front of a fire hose. I still do. If we fill three positions, our customers want five more. I don’t see anything changing. In fact, I think it’s probably getting worse. We now have four people hitting 65 years old for every one coming into the market. And the people who are retiring are not going to sit on the porch and drink lemonade. They are going to travel and buy cars and get face lifts and continue to consume. We don’t have anyone coming up to cover that consumption for the next 23 years. COX: We’ve gone up from 2.4 to 3.5 percent in unemployment and our economic growth has slowed. But what’s interesting about Utah as compared to other states is we have the youngest workforce in the country right now. The average age is around 45. While the rest of the country was in a decline of population, we had this big spurt of folks that are now between 20 and 28 and are entering the workforce. So some of those dynamics that you will see around retirement issues in other states we will feel here, but the timing is going to be a little different because of the population. In the next 20 years, our challenge is going to be holding and retaining our workforce. We think it’s difficult now, but some states are in a much more challenging position than we are because of the population and the demographics, and they are going to try to grab our workers, and that’s going to be tough. One of Governor Huntsman’s big priorities is to determine how you maintain and retain a quality workforce here in this state. What are your benefits, your incentives, your quality of life issues so that you can keep people here in the state and not have them go elsewhere? FLEMING: I think the IT sector is the toughest to keep people in Utah because they are by definition, young. And they want to explore and they want to see the world. Utah is not as swinging a state as some of the others that they have to choose from, and they are being lured away. MADSEN: At ARUP we are not the highest payer in the IT market, and IT is notoriously high paid. These are gunslingers. We don’t have much trouble with turnover in IT because we build a place where people have a balanced life. We don’t have a Rush Street like Chicago, but we have a lot of beautiful places that people really like to enjoy. We have been very successful in creating a work life balance that’s very deliberate for IT people, many of whom will leave and go take a six figure job somewhere else, and in a year or two, they are right back. COX: We just had our work life awards. And when this started off years ago, we maybe had 10 people apply. We had almost 200 companies apply now. Awareness is growing significantly about the need to create a work life balance. Generation Y and X have that expectation about a different work environment than a traditional, older worker, and companies are starting to respond to that. It’s a demand supply issue, and I think companies are starting to understand that they’ve got to be responsive. BAXTER: I think that one of the advantages that Utah has to offer is that focus on family and work life balance. I worked for a company that had its headquarters in Illinois. It was very interesting to see the different management styles. And now I work for a company that was founded in Utah. The difference between work life balance at the companies is a boss coming to me and saying, “Don’t work so many hours. We don’t want you getting burned out,” versus, “Hey, you stay until your job gets done.” R. DRIGGS: I don’t think there is any doubt that as a recruiter, we cater towards the needs of the age. Sitting in a cubicle just doesn’t work for Generation Y. Flexibility and work environment are key with this new generation. As we all know, the days of staying in a company for 20 or 30 years are almost gone. Finding top talent is not only key, but finding top talent that’s going to keep your people happy and keep retention high is key. And I think that’s what people are doing, especially at the executive level. They want to find people that are going to be good leaders, and part of being a good leader is keeping your employees happy and keeping retention high. ZAVATCHIN: It’s also paying attention to the retention level of those entry level, higher turnover positions. For a long time in our industry, the attitude was that for those entry level positions—staffing specialists, service representatives—we understood that people get promoted, they leave, that’s a high turnover position. Now we’re taking real strides to say, “How do we retain those people longer, put them elsewhere in the company, but also make the job that they are currently doing a job that also fits them?” Before it was, “This is the job, you do it, and if you don’t like it, fine.” It is a very different switch today. BARKSDALE: I know that there is a concern with workforce optimization, and management isn’t going back to the large corporate staff that they used to have. They have to do more with less. To try to retain talent is going to involve employment branding where HR is doing a lot with public relations to market your company as one that recognizes the importance of a paradigm shift. It’s a different mindset, recognizing that there is a huge need for diversity and being more open to those demographic changes, as well as being able to have job satisfaction, benefits and perks that work for different generations. Because of the workforce changes, there is going to be a larger workforce of seniors with a good work ethic who are staying in the workforce longer. There is a need for it because health care benefits are not as they used to be. Maybe these employees don’t have to work a 40 hour week anymore, and they should get that part time opportunity. Be more flexible. It doesn’t have to be in the box type of schedules or perks as it used to be. HERRING: We did a survey looking at employee commitment. There are differences in the generations. What we were really trying to focus in on and find some correlation with was in employee engagement and employee commitment to the organization. The driving factor was socialization, your onboarding. Getting employees to understand what your organization is, how you fit in and how they fit into that organization. Second was training and development. People wanted to know that they can do something, they could be something and grow somewhere. And third it was a distant third, actually, of the top three was the actual compensation. So taking a look at how you can improve your onboarding process is going to be a big driver for businesses in the future to attract and retain talent. A lot of our programs are gearing towards that. How do we get employees ingrained into the culture? How do they understand how they fit in? FLEMING: We are a staffing company, but we do a lot of direct hire recruiting. And one of the things that we’ve done is learn to do some of that preliminary onboarding during the recruiting process. We actually get deeply involved in understanding the culture of the company. We use a company’s benefits, especially when they are unique, to bring in the right people and I think it’s the most important part of retention. You can bring people in the door day in and day out and train them, but if they walk back out the door a year later, you’ve lost leaders, costs and time. WHALEN: It has been said for decades that people don’t quit their jobs, they quit their supervisors. And that socialization and that onboarding and the development and training, study after study showed us that those aspects are more important than a 50 cent per hour pay increase. But surprisingly in the last two years, our major national employee satisfaction survey has shown that for the first time compensation moved into the number one spot as the top indicator of employee satisfaction. So what does that tell us? First of all, you need to be sure that your compensation and benefits are competitive. Be in the game. You don’t necessarily have to be the leader, but you need to present a total package, whether it’s the ping-pong tables and the white board where people can write graffiti that Backcountry.com provides, or the complimentary season ski passes that Amer Sports gives employees. Benefits are also becoming very, very important. In fact, another study just showed that 76 percent of employees preferred $7,500 in employment based health insurance over that same amount in taxable compensation. Also, what’s the hot thing right now? Rising gas prices. That’s a compensation and benefit issue, and what are we doing? The Employers Council all of a sudden started getting all these phone calls when gas prices went up to four dollars a gallon from our member companies asking, “What can we do? What are other people doing?” We just did a survey where we found that more than 25 percent of the employers who responded have already lost people who quit to take a job closer to home. At the same time, Governor Huntsman announced going to a 4/10 work schedule. Seventy percent of the Utah employers are already offering a 4/10 work schedule. Those are your manufacturing base, your smaller companies, your call centers and so on. We need to really focus on being quick to respond to the market factors. COTTESELL: I think something that is important with retention is how you hire. I haven’t played a video game since I was 12 and I don’t have an XBox at home. And I think when companies get too hung up on what Omniture or Backcountry.com is doing, they can struggle. What they can do a better job of is recognizing what their culture is and becoming more effective at finding that person that’s going to fit their culture, as opposed to trying to be what they are not, because those X and Y Generation folks are going to recognize you as not being legit. In the last few years, I’ve placed about 50 people with GE, and they are not setting up game rooms or XBox tournaments and people still want to work for them. They are still a Fortune 10 company. STONE: One of the things I tell companies is find benefits that are beneficial. What your workforce values is really key to what you are going to offer. I think it’s very easy for companies to stay lockstep, whether it’s an XBox or retirement benefits. J. DRIGGS: I also think there is a fear that you can’t do a thorough interview screening process with new hires without violating the law. There is this general understanding that there are certain questions you can’t ask, but you don’t really know what those questions are. The best way to avoid having to deal with problem employees is to not hire them. Spend the time and the resources up front to do a thorough, legally compliant screening process and you will benefit from doing so. LEE: Another aspect to that is the actual fit, skill wise. One of the problems that I see in Utah is a tendency to hire somebody you know or you believe you know. I had one experience with one of my largest clients where they were looking for a controller. Had the CFO not been committed to getting the right skill set for the job, he would have ended up with somebody who didn’t belong there. FLEMING: If you hire in a high level job and the skill set is not there, people that did have it within the company will be very discouraged with the upward mobility. STETNER: I think we also need to talk about the work we provide. It is most appropriate to really define the job before you hire the person, but I think a lot of us try to sell the position because of the run for talent. I think that providing challenging work is a way to retain employees, so it’s not always just about the benefits. We are not one of the top people for compensation, either. But the work and the pace that we provide is a fast paced environment. It’s challenging. WHALEN: It’s beyond asking the right questions to discover the skill set. We really need to focus on “behavioral interviewing,” making sure that there are certain core competencies that are required, but you need to look at past behavior as an indication of future behavior. BARKSDALE: And change that behavioral interviewing depending on the position that you are interviewing for. Those criteria are going to change based on what their job responsibilities are going to be. FLEMING: One of the things that we do is run assessments before we do the interview because we can see some of the areas of concern and questions are directed at that particular concern. WHALEN: Be careful with your assessments. Be careful with your preemployment testing indicators because that’s one of the areas that the EEOC (Equal Employment Opportunity Commission) has announced that it is particularly feeling employers are getting carried away with. And they are making sure that our preemployment testing screening and assessments are really a good match of what is actually required on the job. BARKSDALE: I think interviews and assessments need to be coupled with some on the job training opportunities because as the shortage continues to grow, we need to find ways to offer people with aptitude the opportunity to grow on the job. They may have the aptitude to do it but not the skill level needed. So as you are interviewing and finding out their behavioral ability, what their performance will be in the critical dimensions for that position, offer the opportunity for them to grow. One of the retention pieces that’s so crucial to retaining a satisfied employee is on-the-job training and not pigeonholing someone in a position. Because as workforces are getting smaller, we will need to have employees capable to do more than just the position they were hired for. COX: Looking at the global environment we work in now, how does our workforce compete in terms of skills and abilities? And subsequent to that, does the younger generation of the workforce have the skills that people are looking for? Is it just a shortage issue or is it also a skills and ability issue? COTTESELL: I think one difference is we don’t have many Fortune 500 companies here in the state. I do a lot of work outside Utah and have seen a difficulty in individuals that have been with a 200 person, $15 million company join the ranks of a Fortune 500 company because it’s just a different environment. They seem to be just a bit more professional in corporate America than a lot of these entrepreneurial, family focused companies, which is good, but I think these workers struggle in the environment. We often hear recruiters say that one of the greatest exports of the state of Utah is talented people. How do you see this trend reflected? MOCK: The real heartburn is, with the exception of BYU and Westminster, it’s mostly our tax dollars being spent to educate these people that are now running companies outside of the state of Utah, and then people turn around and pay me big dollars to bring them back in 10 years. In a perfect world, we’d never let them leave to begin with. MADSEN: Our experience with BYU students in the laboratory profession is when they finish school, they want to go home for a little while and get back to their roots. What are your feelings about the impact that immigration is having and what ought to be done? J. DRIGGS: Believe it or not, we’ve actually had a pretty quiet period as far as new regulation for employment related matters. And I suspect that we may be entering a new phase with this presidential election. Especially if Barack Obama is elected president, there is a potential for a fair amount of change. Even if John McCain is elected, I think the water has been building behind the dam. I would suspect that we’re going to see a more active regulatory environment come 2009. WHALEN: Proposed to be finalized are new Department of Labor regulations on the Family Medical Leave Act. Also with immigration, there is pressure there for the feds to step up and do something. In fact, on many state levels, especially in the West and on a federal level, they have taken that first step of requiring people who do business with government to start using the E-Verify system. I believe we are going to see big changes, especially if Barack Obama wins the election, in the way the National Labor Relations Act is interpreted and applied in management union negotiations, bargaining and election issues. J. DRIGGS: Related to immigration, this new Senate Bill 81 doesn’t become effective until July of 2009. There is a provision in there stating that a terminated employee would have a cause of action to sue the employer if they find a similarly situated employee who is not legally eligible. I’m not sure if we have really thought through that and the larger ramifications of having such a provision. WHALEN: From the Utah employer’s perspective, we need to be very thoughtful about how we deal with the issue of immigration. It is not simply a law and order issue. That is just not realistic. And many, many segments of our economy rely upon the labor of people who are already here and have been here for years. FLEMING: That’s correct. In focusing on it as a law and order issue as opposed to an economic reality, how are we going to provide a legal workforce so that we can continue to run our businesses? MOCK: And you need to consider the law of unintended consequences. If we ship all the illegals home, we’ll be paying $10 for a Big Mac at McDonald’s, if we can get one. I don’t think our national leadership is thinking it through at that level. It’s a political issue for them. J. DRIGGS: We are now developing a patchwork of state laws regarding immigration that’s going to become very complex for national employers to deal with, and I really don’t think we want to deal with it on a state level. I think it needs to be a federal solution. What’s happening with the enormous increasing costs of health care and should employers be the ones that manage health care? WHALEN: The Employers Council survey that just came out in May shows that in Utah our average premium projection is going to be a little bit higher. The most common things that employers are doing to help contain the costs are plan design things such as increasing copays, increasing the deductible, increasing the share of the premium that employees pay. But many of those things have already been done. Our average increase is going to be 9.7 percent, where, according to Kaiser, the average increase across the country is 6.1 percent. In Utah, we’ve got to do even more. I am really beginning to hear now that larger companies are really starting to latch onto HSAs (health savings accounts). Now, the problem with the HSAs is that it takes an incredible amount of employee education time. It’s complicated, and your average worker doesn’t get it. One of our member companies is Zions Bank. They have gone to an HSA model because they were just bleeding out on their health insurance costs. And their VP of HR told me that he just budgeted for an hour one-on-one with every employee to educate them about the HSA. That is the amount of time it takes. Plus, they did something just completely creative and out-of-the-box. They gave the employees a 100 percent guarantee that they would spend less money out of pocket under this model of health insurance than if they had stayed with its fully insured plan and showed them how that would work. BAXTER: We deal with two-man companies all the way up to 800 people companies. So when we’re talking about health insurance, that’s often something that an employer will want to use to attract employees. And we push the HSA model quite a bit. But one way that we do that is we use it internally in our company. I’m on an HSA and I know how it works. This isn’t always a good option for larger companies, but for smaller companies. If they have employees that can go on an individual coverage, the approach is to let an employer give an employee some additional money to help offset that cost, and then put that through an HSA so they still get some tax benefits. LEE: It’s called consumer driven health care in other parts of the country. But through the HSA model, you have a very high deductible and then you see the bills. You pay those bills out of your HSA account, which is pretax dollars, basically. And you get a sense for what you are spending. If you are going to run down to the doctor for every little sniffle and it only costs you a $15 copay, that’s one thing. But when you see and write the check for $80 for the office visit, that’s a different story. When people write the checks, they are still insured and the company is still paying the lion’s share of it, they feel more responsible for the bills and more of a consumer. It changes behavior dramatically. STONE: To answer your question in terms of whether it’s responsible social policy, as an employee, I would prefer to have responsibility and some latitude in how I access my benefits. The mindset needs to change from, “I have a $15 copay, I’ll take the kids to the doctor all day long,” to “Wait a minute, it’s going to cost me. Where do I need to spend the dollars most effectively?” That’s what consumer driven health care does. It really makes people think about their own access to health care. HERRING: Davis County went to a mandatory wellness where, instead of the carrot approach to wellness, they use a stick approach. It was a $5 a paycheck premium that they took out of employees’ salaries. And it wasn’t results based. It was education based on the wellness program. Employees got all of that money back if they just went to get a health assessment. In two years, the premium increase was zero percent. You look at the carrot approach to wellness that a lot of us have been using and see that the people that are using that are the people that are already well, and that’s not what is driving the premium increases. It’s the people that are not taking advantage of that. JOHNSON: The healthy people will go out and get the insurance and the unhealthy people can’t or don’t and your premiums just skyrocket. All you have is unhealthy people on the group plan. COX: I’m sure everyone is tracking what’s going on nationally with health care changes and what Governor Huntsman is doing with health care changes. A lot of those changes are centered on giving a defined benefit to the customer and letting them shop the market in a portal so that you create competition and you can still get around some of the community modified rating systems. There are a lot of folks on the Hill and in the governor’s office looking at this very issue to reduce health care costs and to expand your access pool. Medicaid tends to be the highest risk factor in any state budget at this point. If you look at the federal budget, Medicare is consuming your federal budget and reduces your domestic spending across the board. BAXTER: I’d hate to see medical insurance go to a completely socialistic extreme. One of the things America does the best is competition and doing things in a private sector. And I really like how insurance companies are forced to compete with each other. I just worry a little bit about moving to a completely socialist medical insurance industry. HACKETT: I am a registered nurse, and I had 11 years of intensive care experience before getting into staffing. I have to agree that we don’t need a lot of these expensive physicians, and we don’t need a lot of the expensive testing. A lot of the stuff that we do in the United States is because there is a third party payer and somebody will pay for it, and it’s not the end user. We do a lot of unnecessary medical care and the money that’s spent there should be spent on preventative care for the people who can’t afford it and don’t have insurance. MADSEN: We have a clinic in our building that employees and their families can go to for free at no cost to them. It doesn’t cost us a lot of money because for us, it’s simply supplies and labor. We don’t have to pay an insurance premium. There are no costs that go along that line, so it saves us a lot of money. We can also focus more on wellness. The whole concept of community based, localized delivery of health care is really an important thing.
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