hr outlook2016

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SPECIAL REPORT2016 HR OUTLOOK

HR and Payroll Resource Center ISSN 2160-4975

Copyright 2016, The Bureau of National Affairs, Inc. Reproduction or redistribution, in whole or in part, and in any form, without express written permission, is prohibited except as

permitted by the BNA Copyright Policy. 1

HR Outlook for 2016

Introduction

Human Resources Professionals always have any number of issues vying for their attention in

any given year. Bloomberg BNA conducted a series of interviews with employment attorneys and

other professionals in the human resources arena to determine which would be the top issues of

concern for HR professionals in 2016. According to those attorneys and professionals, among the

many issues that will keep HR professionals busy in 2016, in addition to their ongoing day-to-day

responsibilities, will be dealing with new paid sick leave requirements; worker misclassification;

issues involving transgender workers; and revamping recruitment, hiring and performance review

processes.




Table of Contents

Paid Sick Leave ……………………….……………………………. 3

FLSA and Misclassification Matters ………………………………. 3

Upward Wage Pressure ……………..….…………………………. 4

Rise of the ‘Gig” Economy ……….….….…………………………. 4

Online Recruiting and Employer Branding ……....………………. 4

Retaining Workers …………….……………………………………. 5

Transgender Discrimination .…..……...……………..……………. 6

‘Big Data’ and HR Analytics ………………………………………. 6

Religion and Natural Origin Bias …..……………..………………. 7

Transforming Performance Management ………..……………… 7




Source: Bulletin to Management: News Archive > 2016 > 01/12/2016, Special Report > Paid Sick Leave, Misclassification on HR Agenda in 2016 HR Outlook for 2016 Jan. 6 -- Human resources professionals will be kept busy this year dealing with new paid sick leave requirements; worker misclassification; issues involving transgender workers; and revamping recruitment, hiring and performance review processes. Paid Sick Leave As 2016 dawns, the attention of countless employers and their HR departments across the U.S. remains riveted on the spread of paid sick leave laws to numerous states and cities. In the area of sick leave, most prominently, on Labor Day, President Obama issued Executive Order 13706, which mandates that government contractors and subcontractors provide paid sick leave to their employees (66 BTM 289, 9/15/15). A statewide law in California (66 BTM S-1, 12/22/15) governs how employers must let employees accrue and use paid sick leave, Gary McLaughlin, a partner in the management-side law firm Akin Gump Strauss Hauer & Feld LLP's Los Angeles office, said in a Dec. 21 interview with Bloomberg BNA. Similar to state law requirements on vacation time, the paid sick leave law requires employers to allow employees to carry over unused leave time from one calendar year to the next. This has negative implications for California employers that had been moving to a “single bucket” system of “paid time off” for any use, McLaughlin said. “Now you have to make sure it complies with sick pay requirements as well as vacation time requirements, so you run the risk that, for example, someone uses all their vacation time and then gets sick, and the employer says, ‘You've used all your paid time off,' and the employee says, ‘What about sick leave required by law?' There's not a lot of case law on this yet.” Following up on this point on Dec. 24, McLaughlin said that if an employer's PTO policy complies with California's paid sick leave law, an employee who has used all of his or her paid time off isn't entitled to more of it if he or she then gets sick; but if the policy isn't in compliance and the employer denies a sick employee paid time off, “there could be a violation potentially.” FLSA and Misclassification Matters Another large area of concern for HR is classification and misclassification of employees, including disputes over whether certain workers are independent contractors or employees and over whether unpaid interns really should be paid employees. This also involves the enormous changes the Department of Labor proposed June 30 to the line dividing salaried employees exempt from overtime under the Fair Labor Standards Act from hourly employees who are nonexempt, more than doubling the eligibility threshold from $455 a week, or $23,660 per year, to $970 per week, or $50,440 per year (66 BTM 310, 9/29/15). “Independent contractor issues in recent years have gotten to be a highly litigated area and will only be more so,” McLaughlin said. He noted that legal disputes over the status of drivers for ride-sharing services Uber and Lyft got the most




attention from outside observers in 2015 (66 BTM 388, 12/8/15). “That whole industry is very new. The litigation challenges their whole business model,” he said. Upward Wage Pressure Another area to occupy HR's attention is increasing upward pressure on wages. Some of this has taken the form of agitation to raise the minimum wage in various jurisdictions. For example, in September New York State announced a plan to raise the minimum wage for fast-food workers to $15 an hour in stages (66 BTM 316, 10/6/15). More broadly, indicators tracked by the Society for Human Resource Management show that for employers in both the manufacturing and service sectors, economic trends “eventually will translate into pressure for organizations to raise wages for existing employees,” Jennifer Schramm, manager of the workplace trends and forecasting program at SHRM, said in a Dec. 29 interview with Bloomberg BNA. “We continue to see wages grow in HR for all levels and roles,” Patricia Casey, president of Rolling Meadows, Ill.-based HR professional placement firm Arlington Resources Inc., said in a Dec. 28 e-mail to Bloomberg BNA. “The change we have seen is that candidates know it is a candidate-driven market, so we educate our clients on being able to make a decision quickly on hiring if they really like a candidate they are interviewing,” she added. “There are many opportunities available. In addition, candidates are getting counteroffers, so being aware of why the candidate really wants to move to a new organization” is important, Casey said, adding that usually it isn't just about money. Knowing what workers want will help employers be able to better recruit them by stressing the company's culture, opportunities to learn, challenges, work-life balance, or whatever else it is the candidate is seeking, she said. Rise of the ‘Gig Economy' The recent rise of the gig economy will pose important questions for HR this year. Seventy-six of the 80 Fortune 500 companies the Institute for Corporate Productivity (i4cp) surveyed this past summer believe that between 30 percent and 50 percent of their skilled workforce will not be employees within the next five years, Kevin Martin, chief research and marketing officer at the Seattle- and St. Petersburg, Fla.-based consultancy, said in a Dec. 30 interview with Bloomberg BNA. “Many factors are driving it,” he added, citing “worker demand for control over when and where they work, for whom and what type of work they do,” as well as technological changes. “People more and more want to work independently, it's more and more of a trend especially in the millennial generation, and companies want the flexibility,” said Brian Hoffmeyer, vice president of product marketing at Denver-based vendor management system and service company IQNavigator, in a Dec. 21 interview with Bloomberg BNA. Online Recruiting and Employer Branding Online recruiting trends and the need to build an employer brand are another area HR is watching in 2016. “We're seeing a significant shift in resource allocation away from traditional job boards like CareerBuilder to performance-based solutions like Indeed or non-traditional avenues like CraigsList,” W. Chris Burcham, vice president of client services at Transworld Advertising, a recruitment advertising agency and hiring consultancy based in Melbourne, Fla., said in a Dec. 27 e-mail to Bloomberg BNA. “Our clients are also investing in Facebook, Instagram, LinkedIn or Glassdoor campaigns that are managed by either our team




or their internal teams. We're seeing a movement away from mass-posting opportunities and trying to create company specific content to grow their employer brand.” “In the high-volume hourly hiring space, social still seems to be in its early days as a cost-effective sourcing tool, partly because of the amount of time required to reach potential applicants but also the cost in getting ads in front of them,” he added. Online recruiting can become “smart recruiting” in a number of areas, David Bernstein, vice president of San Ramon, Calif.-based talent acquisition and recruitment marketing firm eQuest, said in a Dec. 22 e-mail to Bloomberg BNA. For example, he said, employers can examine “how to craft your marketing messages and job announcements, who looks like a best skills fit, where and when to place your marketing messages, which candidates are likely ready to leave their current job, assessment testing, predicting the likelihood that the candidate you want to hire will stay, and predicting success of the candidate's performance based on their reference checks.” Martin at i4cp drew a distinction between employer branding and “talent branding.” The latter, he said, consists of “how is your company perceived and talked about by your employees and prospective employees—for example, perceptions through Glassdoor and social media. Companies are starting to realize that if they don't manage these talent brands, they will be managed for them.” The goal, he added, is to brand the company for employees who have critical skills or hold critical roles “as a place where they can achieve their dreams.” A continuing trend in online hiring is “an increase of hiring tools and software packages that allow employers to easily administer video interviews,” Mike Zani, CEO of Wellesley, Mass.-based workforce behavior company Predictive Index, said in a Dec. 30 e-mail to Bloomberg BNA. “With the fluctuation in cost of video hardware and software, more and more companies will be leveraging video to qualify candidates earlier in the hiring process. A growing trend in 2016 will include candidates recording video responses to a few canned questions using their laptop or tablet and uploading them to the potential employer. This makes it easier for an employer to find quality candidates in a scalable way that doesn't break the bank for the candidate.” Retaining Workers HR can't help being nervous about tighter labor markets leading to greater retention challenges. Employers are trying out all kinds of perks to hold onto valued employees, such as student loan repayment (66 BTM 399, 12/15/15). “Demand for skilled talent will continue to outweigh supply in several areas, particularly in roles where specific skills are needed to take advantage of rapidly changing technology,” Brandi Britton, district president for Menlo Park, Calif.-based staffing firm OfficeTeam, said in a Dec. 28 e-mail to Bloomberg BNA. “As competition for highly skilled professionals remains strong, and top candidates realize they have more options, companies must work harder to keep valued staff on board,” she added. “Offering higher pay is just one of the tactics companies are using to attract and retain employees—they're also evaluating their perks, bonuses and work/life balance programs. Others are doing more to focus on employee recognition and build morale. When hiring, employers that don't move quickly, seem too selective, or are not active in helping to sell their company risk losing top candidates to the competition.” “In 2016, in order to increase efficiency and find qualified people, we will see the use of behavior, personality, cognitive ability and skills assessments used earlier and earlier in the hiring process to ensure only the best-fitting candidates are moved through,” Zani said. He added that thanks to the Internet, “organizations now find themselves competing beyond their local




market. Additionally, sites like Glassdoor (which provides transparency about what it's like to work at a company) further shift power from the employer to the well-informed job seeker.” To deal with this more competitive environment, he said, “companies that encourage a fluid, entrepreneurial approach to work and get involved in causes on a local and global level will be successful in attracting top talent. Social media will continue to grow as a force that drives employer branding, advocacy and the perception of potential candidates.” “[The] single best way to improve retention is to hold first-line managers accountable for it,” Dick Finnegan, CEO of Longwood, Fla.-based employee engagement and retention solution provider C-Suite Analytics, suggested in a Dec. 30 e-mail to Bloomberg BNA. The manufacturing and service sectors have had increasing difficulties with recruitment for certain jobs “with the biggest effect on the bottom line,” SHRM's Jennifer Schramm said. The problems are the greatest they have been since before the 2007-09 recession, she said, and are requiring employers “to rethink compensation strategies” and take additional steps such as luring socially conscious candidates with strong corporate social responsibility programs. Transgender Discrimination In an issue involving diversity and discrimination, LGBT employment rights have been expanded to include transgender workers in localities such as New York City (67 BTM 3, 1/5/16). Twenty-two states and the District of Columbia now bar discrimination on the basis of sexual orientation in the workplace, and 19 states and D.C. have the same type of protection for gender identity, Michael S. Cohen, a partner at Philadelphia-based management-side law firm Duane Morris LLP, said in a Dec. 23 interview with Bloomberg BNA. The Equal Employment Opportunity Commission “is taking a clear stand and will prosecute those cases,” he added. Cohen suggested that employers should ensure compliance in this area by: • “Updating your policies to reflect that it's 2016 and there have been changes in law that affect anti-discrimination and anti-harassment policies.” Sexual orientation and gender identity should now be regarded as “protected classes” in employment policies, he said. • “When training on diversity, include examples” that relate to sex stereotyping and gender nonconformity. • Making sure managers understand that the Family and Medical Leave Act applies to leave to care for an employee's same-sex partner with a medical condition. • Being sensitive to transgender employees' right to use the bathroom of the gender they identify with, Cohen said, which is a frequent source of misunderstanding and conflict. ‘Big Data' and HR Analytics HR will continue to explore the use of big data and analytics in 2016. “Most companies are still building capability in human capital analytics,” Mary Young, principal researcher at the Conference Board, said in a Jan. 5 interview with Bloomberg BNA. That should be distinguished from the use of “big data” in HR, she said. Some HR professionals think they are making use of big data, when they really are only looking at a lot of data, she added. “It's putting the cart before the horse. Companies want to do predictive analytics when they can't even calculate turnover.”




One problem, according to Young, is that “the use of big data in HR makes people very nervous because it's unfamiliar.” There are concerns about companies being seen as “spying on” workers and potentially violating strict European privacy laws if they operate in those countries. But big data programs can be run to meet or exceed those standards, and “this is not something in the long term that companies will be able to opt out of” if they want to stay competitive, she said. An even more optimistic take came from eQuest's David Bernstein. “Generally speaking, I believe 2016 will be the year that we look back and can say, ‘that was the year where “smart talent acquisition” really began to emerge,' ” he said. “The roles of data, metrics, analytics, big data, advanced/predictive analytics, machine learning, the IoT [‘Internet of things'], marketing techniques, location-based services, etc. are beginning to fuse and meld to create a capability for talent acquisition that has never existed.” Also bullish on HR analytics is HR consultant Michael Moon. “In 2016, we can expect to see significant investments being made by HR leaders in analytics,” she said in a Jan. 6 e-mail to Bloomberg BNA. “We will see money being spent not only [on] new technologies but on building the right set of people resources. In terms of the technology, we will continue to see organizations moving toward cloud-based analytical products that are integrated with their HCM [human capital management] systems, some of which enable organizations to bring together both structured and unstructured data, simulating a big data-like capability.” Religious and National Origin Bias Religious and national origin discrimination is front and center due in large part to recent terrorist attacks and reactions to them. Julia Méndez, a New Orleans-based principal business consultant with HR software firm PeopleFluent, noted in a Dec. 30 interview with Bloomberg BNA that the EEOC issued a statement Dec. 23 by Chair Jenny R. Yang “to address workplace discrimination against individuals who are, or are perceived to be, Muslim or Middle Eastern.” The statement links to a question-and-answer document for employers on this subject, and a separate question-and-answer document for employees. “I'm seeing more and more cases filed with the EEOC of discrimination against women for wearing a head scarf,” Méndez noted, and even of Hispanics being mistaken for Middle Easterners and facing discrimination on that basis. She added employers should offer diversity training to demonstrate “that not all people of a certain religion or nationality are a certain way.” Transforming Performance Management Efforts to transform performance reviews are a perennial headache for HR. “We continue to see a lot of interest in dropping the traditional annual performance review process—General Electric did it this past year—and changing over to a more frequent process. We see that continuing this year,” i4cp's Kevin Martin said. It's common for both managers and employees to view the traditional annual review as “a horrible process,” he added, so most companies will try to move away from them and toward “a multiphase process with frequent touchpoints. That's going to happen because the business economy is very dynamic, the macroeconomic environment is very unstable and there are such rapid technological changes.” This environment of constant change means that annual goals for employees quickly get out of date, he explained.




Not everyone thinks change in this area will be so drastic. “We've found out in working with clients that they aren't necessarily getting rid of the annual review, but are making it a part of a larger process,” Adrianne McVeigh, executive director of assessment solutions at Atlanta-based talent management software and human capital management consulting company TalentQuest, said in a Dec. 29 interview with Bloomberg BNA. For example, she said, employers are getting employees more actively involved in their own performance development, and getting them more frequent feedback from supervisors. The problem is, supervisors don't necessarily know how to do performance management, Martin said. “In most companies, people at the manager level aren't equipped and don't have the capability. Millennials like development and want coaching, but most managers are not equipped to coach.” To contact the reporter on this story: Martin Berman-Gorvine in Washington at [email protected] To contact the editor responsible for this story: Simon Nadel at [email protected]

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