Summer Update – Human Capital Challenges Are Heating Up!
For the last 18 - 24 months, the labor and business marketplace has experienced some tremendous ups and downs. We have seen unemployment at record levels, many organizations have attempted multiple times to shrink themselves to profitability, organizations have flattened and driven worker productivity numbers to new heights, the average tenure within some industries has dropped from 5 – 7 years to 1 – 3 years, and individuals have made difficult decisions to change career paths and fields to either make ends meet or to pursue more meaningful professions.
This article and several of our prior Proven Solutions Articles such as “Re-Recruit Your Top Performers,” “Rightsizing, Wrongsizing And Downsizing: Where Should You Go From Here?” and “The Organizational Stall, How To Restart Your Organization’s Engine” have indicated and predicted the challenges that are currently faced by employers and have provided realistic and actionable steps to ensure that you and your company are not “caught in the wave” of human capital change that has begun.
This article will focus on two very timely subjects that are critical to successful organizations that are committed to exceeding their business goals and objectives by maintaining and further developing their human assets. Retaining Your Top Performers
We are often asked how we define the current state of the employment market and our response is very consistent. We base much of our determination of the employment market condition on the number of unsolicited resumes we receive. For the last 24 months, approximately 85% of the unsolicited resumes that we have received at our Leader Search practice were from individuals who were caught up in the wave of employee reductions that was taking place. Within the last 3 – 5 months, 60 – 75% of the resumes we have received are from individuals who are currently employed by companies within every business sector and industry, who are now ready to make a career change.
A recent study by Spherion, a Florida-based recruiting and outsourcing firm, found that of the 3000 individuals surveyed, 51% wanted to leave their current jobs and 75% said they were likely to leave within one year. In addition, the same study found that workers surveyed would rather take early retirement and gamble that they’ll find something later than stay with their current company.
Although these numbers may not be immediately concerning because many organizations wouldn’t mind “trimming out” some of their poor performers, the same Spherion Study revealed that company’s best performers are often the ones to leave first, largely because they have more choices available to them.
With this in mind, how many top performers can your organization afford to lose over the next 6 – 9 months? What have you or your organization done to identify and address the “early warning signs” that a person might be looking elsewhere? What efforts have been made to re-recruit and further develop your top performers? The following are some simple and extremely effective methods to do all of the above.
Organizations must be sure to remove any blinders and begin to aggressively determine their current human capital depth, future needs, and what it will take to develop their internal bench. This can be done very quickly by reviewing your organization’s short and long-term strategic business objectives, assessing your organization’s current bench strength, and by developing a plan to recruit internally and externally to fill both current and future human capital needs.
We have helped many of our clients with this process by quickly and cost effectively developing internal and external candidate assessment centers to determine internal bench and recruitment needs, as well as implementing the use of fully validated psychometric assessment tools for pre-employment screening and interviewing of employees and executives, and post-hire development and succession planning. We have also developed base and incentive compensation plans to ensure that our clients are paying and rewarding their employees at market levels and in a manner that correlates with organizational objectives and customer/market desires.
Taking these necessary steps need not be painful for you and your organization. Failure to recognize this currently widespread problem, while taking remedial action, is now being discovered by many organizations to be the first step toward inability to compete in this global marketplace. U.S. Department of Labor - FairPay Regulations
You have most likely received a mountain of information from law firms and consulting firms desiring to assist your organization with the new U.S. Department of Labor (DOL) FairPay Regulations that took affect August 23, 2004.
Although this federal regulatory update was designed to make things easier and more understandable for employers while ensuring that they pay their employees correctly, it has caused much confusion for many employers.
In this update, rather than provide you with the same information that you have received in multiple forms for the past several months, we will provide you with the following DOL FairPay Implementation Checklist of actionable items to be used while determining what your organization needs to do to adhere to these updated regulations.
DOL FairPay Implementation Checklist
· Review all of your current position descriptions and ensure that they include the current essential duties of the position.
· Use the updated position descriptions to determine which exemption, if any, the position qualifies under.
· Determine necessary pay adjustments and the financial impact to the organization of those adjustments.
· Ensure that individuals whose status has changed to non-exempt are properly recording their overtime and are being paid for all hours worked.
· Determine all highly compensated individuals (at least $100,000 per year) and determine their exemption status based on the newly revised federal duties test.
· Completely remove the “preferences” of supervisors, managers and executives when determining whether an employee should be considered exempt or non-exempt. Utilize job duties and responsibilities only when determining an employee’s pay status.
· Ensure that any increased labor costs are reflected in the annual budgeting process and factored into operating costs.
· Ensure that managers understand the financial impact of overtime pay and ensure that they are properly managing this expense.
· Adjust company policies and procedures to reflect the company’s ability to deduct a full day’s pay from exempt employees for absences and infractions as indicated under the new regulations.
· Communicate all changes to management and employees.
Although the above items are not extremely difficult to implement, they do take time and resources, which are often at a premium. The important thing is that you begin now to address these items and use this implementation period to ensure that your organization is compliant.
Additionally, it is critical that you communicate the reasons for these changes to your employees in such a manner as to not bring undesired focus to your organization regarding how individuals may have been paid in the past.Conclusion
Some organizations may mistakenly take the position that they need not take any of the above actions. Some may go as far as continuing to pay individuals as salaried employees when in fact the essential duties of their job are clearly non-exempt in nature. As with other governmental regulatory changes, the Department of Labor will be looking to make examples of companies that fail to embrace and take appropriate actions to bring their organizations into compliance. It is important that the above action items are taken seriously to ensure that your company does not become a casualty of early enforcement.
Please give us a call at anytime so that we can be of assistance in helping you to ensure that your organization is compliant.
Because one of our areas of specialty is organizational productivity and financial performance, please Contact us or call us at 480-467-0344 and we would be pleased to discuss, clarify or expand on any of the above points.