Case Study 3: Magma Copper Company, BHP and Scotts Miracle-Gro
When it comes to employee benefits, it can sometimes be the largest companies that present the most complex challenges. For a consultant like Bernie Hynes, they also provide a superb opportunity to optimize benefits programs, reduce costs and streamline administration.
When these goals are achieved on a consistent and ongoing basis, enduring relationships are born. This is the story of a ten-year consulting relationship that spans three companies, including Magma Copper Company of Tucson, Australian mining concern BHP and The Scotts Miracle-Gro Company of Marysville, Ohio.
In 1994, Magma was celebrating another year of growth, having reaching $1 billion in revenues and employing 5,000 employees in the U.S. and another 1,500 internationally. According to George Murphy, then Director of Compensation and Benefits, “Like many growing firms, our insurance programs had evolved over time and were a patchwork. We had no leverage with carriers and no ability to integrate or optimize our plans. That’s when we reached out to Bernie Hynes.”
Initially, Murphy asked Hynes and his team to focus on integrating Magma’s disability, life and AD&D insurance plans. “Thanks to Bernie’s in-depth understanding of the insurance market and the strategic plan he developed and spearheaded, we were able to upgrade our coverage, reduce our costs and secure better service. It was a win-win-win proposition.”
Buoyed by the success of this first project, Murphy asked Hynes to add Magma’s health and wellness programs, including its medical, dental and vision insurance, to his portfolio. This was proceeding smoothly when Magma was acquired by Australian mining concern, BHP, in 1996.
“Bernie was instrumental in helping us through both the due diligence and subsequent fifteen-month post-merger integration. He also helped us expand Magma’s benefits package to cover BHP employees at our new Northern California mining operations,” Murphy explains.
The acquisition provided new leverage to optimize the combined firm’s medical insurance. “Thanks to Bernie’s great analytical strengths and knowledge of the marketplace, we were able to negotiate a much better deal with our insurance carrier,” says Murphy.
As head of compensation and benefits, Murphy was now the number two HR executive in charge of the firm’s offices in Arizona, Nevada and California, as well as its mining operations in Latin America. “Although Bernie was mainly focused on our U.S. operations, I asked him to take on our travel insurance too,” he says. “As usual, he came through with flying colors.”
Not long after, one of BHP’s employees became seriously ill with pleurisy while traveling through a remote area of the Peruvian Andes. “We had to fly him back to the U.S. in a private jet,” Murphy says. “Without the insurance had Bernie secured for us, this would have cost $100,000 or more. Thanks to Bernie, we paid substantially less.”
The strong relationship between Hynes and Murphy would continue when Murphy moved to The Scotts Miracle-Gro Company to lead its compensation and benefits organization.
This time, Murphy was responsible for an organization with $2 billion in sales and 5,000 employees; 4,000 in the U.S. and 1,000 overseas. “This often expanded to as many as 8,000 employees due to the seasonality of our business,” says Murphy.
“When I arrived, I encountered exactly the same situation as I had at Magma,” he notes. “We had a raft of expensive, non-integrated insurance products, with no overall strategic plan. So I called on Bernie for a repeat performance.”
From 1999 through 2004, Hynes and Murphy succeeded in transforming the company’s benefits infrastructure. “Bernie began by analyzing our existing inventory of products and then developed a strategic roadmap to consolidate and optimize all of our benefits. Once again, he managed to reduce our costs, expand our benefits and improve our customer service.”
To this day, Murphy remains enthusiastic about his long partnership with Hynes. “Bernie brings to every engagement a level of knowledge, integrity, analytical skills and attention to detail that is unique in my experience. He is simply a professional’s professional.”