Too many in management, from ground-level supervisors to
C-level leadership, have trouble answering questions regarding their team’s
performance in an honest, fact-driven way that speaks to actual performance and
not just day-to-day habits or cultural fit. This disconnect isn’t for lack of
trying– just about everybody understands that great work must be done to create
a great enterprise. It’s articulating what that performance looks like and
actually assessing it within your employees that’s so tricky.
Make no mistake: strong performance management is the
difference between a promising organization growing into a business juggernaut
or stagnating at not-quite-there. It’s what separates a solid leadership team
from an excellent one and determines who are the flashes in the pan and who are
the sustained innovators and disruptors.
Moving forward, we’ll explore:
Why industry standard approaches to performance
management are often not efficient nor impactful
Why all businesses must modernize their approach
to performance management in the near future to address the needs of the modern
Specific mindsets, tools, and approaches
organizations can use to begin transforming their performance management
Why Most Approaches to Performance Management are Outdated
The way we work, interact with our colleagues, and use
technology on a daily basis has outgrown the traditional strategies that drove
performance management and assessment in the 20th century. Our
approach to accountability has fallen behind the pace of work, and that creates
Perhaps the greatest example of this is the fact that most
discussions about employee feedback and performance management are still built
on qualitative feedback from direct supervisors. Managers fill out a scorecard
for each employee, provide verbal or written comments, and, when applicable,
create plans for improvement.
Here’s what’s missing from this traditional approach: in
nearly every business where this legacy assessment practice is used, there are
tech-based work management systems in place creating data that could be used to
inform a much realer, more focused ongoing discussion.
That means many in business are choosing qualitative over
quantitative and giving preference to supervisors’ thoughts and feelings over
actual measures of worker quality and productivity. That method defies
everything we know about the power of data and analytics in the modern workplace.
Furthermore, the traditional performance management model
treats each individual employee as though they were an island, emphasizing only
their direct relationship with their individual work and their direct
relationship with their supervisor/manager/assessor. That approach is out of
alignment with what we’ve collectively learned about the power and importance
of teambuilding and company culture over the last twenty years.
Why Modernize Your Approach to Performance Management?
In order to gain the best possible understanding of the
potential of your team and asses your areas of strength, weakness, and need,
it’s crucial to have a modern, data-driven performance management and
assessment framework in place. Any organization articulating a performance
management strategy for the first time, or any business with a framework more
than five years old, should prioritize this work to support short- and
Talent relations is increasingly an area of federal, state,
and local regulation. Outdated performance management frameworks leave
organizations open to lawsuits, sudden terminations, and potential
non-compliance issues. An up-to-date approach to performance management sews up
those holes in policy and provides better legal protection for the organization
as a whole and each manager or assessor as an individual.
Modern, responsive performance management demystifies the
process from top to bottom, creating better support for those in charge of
assessment and greater authenticity for those being assessed. Each stakeholder
has an appropriate voice in the process, the ability to provide documentation
to back up their claims, and the goal-setting framework necessary to ensure
everybody grows professionally together.
When you bring your performance management strategy into the
era of technology, it breaks down the traditional boundaries between “boss” and
“employee” to foster a more productive overall culture and push everyone toward
Three Things You Can Do to Modernize Your Performance Management Approach
Stop Viewing Performance Management as an Annual Appraisal
A year is an incredibly long term. If you managed a sports
team, would you give every player a year of starting time before you assessed
their performance? The answer is, probably not.
Great players get the most playing time and the most
compensation, and the worst achievers are obviously sent packing, but it’s that
80% in the middle who the true coach can influence and push toward improvement.
Good coaches make constant, ongoing assessments, make constant, ongoing
feedback, and incentive the day-to-day work on a constant, ongoing basis.
Turning your management/supervisory team into “coaches”
doesn’t happen overnight, but it does have the potential to completely
transform what work and culture feel like in your business. The first step to
unlocking that potential is eliminating your yearly (or even quarterly)
performance management model and shifting toward an ongoing assessment
As we’ve said, the increased availability of worker data
thanks to technology makes this work much easier. Managers can use ERP
interfaces, project management systems, and so on to monitor what employees are
doing, how they are working toward goals and deadlines, and so on, each day or
week. It’s easier than ever to see when someone is falling behind and make a
correction or recognize an employee who is taking things to the next level at
While it seems like that kind of constant supervision creates new work for
managers and new stress for workers, it actually streamlines and reduces both
Adjusting to these new practices can take some time for
supervisors at first, but once they’re plugged into performance management
practices as part of their daily work, there’s no more quarterly or yearly
assessment season crunch, and what was once a major stressor is now a harmless
daily task. For workers, ongoing assessment means no more nervously waiting to find
out how you’re doing, and each individual assessment or evaluation feels less
stressful or punitive.
Build Clear Expectations and Establish Clear KPIs
We’ve addressed the concept of data several times already,
but it cannot be stressed enough: The only way to turn performance management
into a true performance driver is to stay rooted in data and objectivity.
One of the biggest issues managers have when it comes to
assessment is that they might be responsible for assessing a team of 25+ people
in a variety of different roles and simply don’t know where to start.
Data-minded thinking absolutely obliterates that issue and provides strong
anchor/talking points for any employee evaluation.
In order to make that work, though, your organization and HR
departments must have a well-defined organizational chart with goals and
measurable KPIs established for each professional, team, or department. Again,
that sounds like a major task at first, but once it has been completed, there
is a much more comprehensive vision for the organization and talent in place,
and far greater clarity when it comes to who should be doing what.
When you have clear KPIs and measures of success for each
position or role in the company, it’s easier to onboard new hires in a
meaningful way, help laggards see where they need to improve, and identify
superstar leaders of tomorrow. Employees can track their progress over time,
and managers can mold each worker’s skillset or professional growth in
relevant, individualized ways. That data-minded thinking makes everything less
personal and less punitive, inviting each worker to create a vision of success
for themselves in their particular role.
Establish High Performance as a Key Company Value
One of the biggest reasons employees fall short of
expectations is because they didn’t fully understand those expectations. Either
the importance of the work or the
value of doing an exceptional job is unclear or employees
aren’t sure what great work looks like to you.
By making performance expectations clear, visible, and a
daily part of the work experience in your organization, you can create a
company culture in which your employees strive to be their best selves, meet
identified goals, and brainstorm new ways of doing work better. When doing
great work is a foundational pillar of what you do, employees will continuously
be encouraged to go above and beyond.
Establishing a culture of high performance is much more
complex than simply saying you want to do it. In order for that culture to feel
authentic and for workers to buy in, you must create a clear roadmap that shows
what excellence looks like and how collective excellence will grow the company
and improve the lives of each employee.
Getting that right requires strong employee education, both
to get new hires oriented and to provide veterans with the tools they need to
grab onto the evolving face of work in their organization, as well as
outstanding communication and a commitment to fostering a strong bond between
the organization and its team.
Performance assessment has the potential to help a business
become its best, most profitable self, but in order for that to happen, a
modern, responsive system is required. Remember:
Performance assessment must be an on-going
process to work well
When you get performance assessment right,
everybody gains value: the business, the individual workers, and the middle
management who does the assessing
Quantifiable data and KPI tracking make
performance assessment easier, fairer, and help the whole process stand up
better to scrutiny
The key to any performance-centric strategy is
making sure team members truly value excellence and know what excellence in
their role looks like on a day to day basis
This free webinar from Launchways will be packed with
actionable insights about emerging best practices for performance assessment
How to assess the impact of your current
performance management program and get started on building something even
How to recognize the common pitfalls of
How to replace an annual assessment system with
a continuous feedback loop
How to deliver difficult feedback and establish
a shared view of reality
How to manage both high- and low-performing
The hour-long learning experience will feature presentations
and Q&A time with an all-star panel of veteran business leaders who know
what it takes to build, manage, and continuously improve a great team.
Presenters will include:
Jodi Wellman, Co-Founder of Spectacular at
Work, a leading executive coach who specializes in helping business leaders
maximize their teams to build success and balance.
Adam Radulovic, President at XL.net, an
experienced entrepreneur and small business leader with a track record of building
and managing profit-driving teams.
Gary Schafer, President at Launchways, who
has built multiple businesses from the ground up and specializes in scaling
high-performing teams for growing organizations.
Howaniec, VP & HR Director at Clark Dietz, who has over twenty years
experience building high-performing HR processes at fast-growth organizations.
HR practices and policies must evolve over time to reflect
emerging best practices, changes to regulations, and shifting cultural values.
Throughout the last decade, our shared understanding of what
the workplace looks and feels like has gone through significant alterations,
and as we near 2020, it’s a logical time for organizations of all sizes and
industries to reassess their HR policies and procedures.
With that said, many of HR’s biggest challenges are baked
into the nature of the work, but new technologies and innovative approaches are
turning those challenges into areas of new opportunity.
Moving forward, we’ll take a look at the biggest HR
challenges that growing businesses must have on their radar as we prepare for
the new year.
One of any HR department’s main responsibilities is creating
a team and an environment in which people can do great work. No human resources
department can operate at its highest level unless there’s a company-wide
awareness of expectations and accountability. As a business, you can’t correct,
reprimand, or discipline anybody with any real authority unless you’ve clearly
articulated goals, KPIs, and an evaluation framework that everybody knows and
Getting termination right is just as important as getting hiring
right. The way you separate from former employees affects your reputation in
the talent marketplace and the morale of your remaining team.
If you don’t have a codified, iron-clad termination
procedure that’s been vetted by your legal team, you could be leaving your
organization open to potential lawsuits and fees. Regulations on termination
practice vary from state to state, so it’s important to be aware of your local
laws, especially if your organization has offices in various states.
The dialogue around planned employee leave has changed
tremendously in recent years. The aging population means that many professional
age workers are medical or legal custodians of older family members, and shifts
in parenting practices, mental health awareness, and beyond have an increasing number
of employees requesting time away from the office.
As the employer, you must be prepared for every conceivable
leave request and have policies in place that explain when and how much leave
is permitted, what process employees must go through for approval, and how their
return to the team will be arranged and executed. Any gap in your explicit
policies is a potential legal liability.
Harassment Prevention, Training, and
As we approach the fourth year of the #MeToo movement,
public and individual awareness of harassment has never been higher. That means
your prevention training procedures and reporting/investigation frameworks must
be stronger and more comprehensive than ever in order to provide the best
possible protection for you and your employees.
With that said, nothing is more important than
follow-through. If you have great policies on the books but don’t honor them,
you’re compromising your company vision and creating greater opportunity for
your organization to be hurt by legal disputes. If there’s one area of your HR
practice that you are targeting for improvement this year, make it your
harassment prevention, training, and investigation policies.
Training for Managers
Team- and department-level leadership has the capacity to
build great engagement and motivation or send employees running for the door.
The best way to ensure the former happens (and to avoid the latter) is to
provide your management teams with consistent, explicit training on how to
approach coaching, mentoring, feedback, discipline, staffing, etc.
Managers in even the best organizations – especially
fast-growing ones – often have gaps in their knowledge of new employee management
strategies and best practices. That’s because many of them were promoted into
their positions for being all-star workers. While they still have the knowledge
and perspective that they showed off in that role, they don’t have the same
degree of experience and preparation regarding management responsibilities. By
providing them with impactful training, you build your management team into
more valuable leaders.
One of the biggest mistakes organizations make is not clearly
articulating how different absences from work should be planned, coded, and
compensated. Depending on the state where your business is located, there may
be specific definitions of “Paid Time Off” versus “Sick Time” versus “Vacation
Time” that you must obey.
Policies must clearly establish a rate of PTO/sick
day/vacation time accrual, procedures and appropriate contacts for approval,
carry-over maximums, buy-back maximums, and so on. Remember, if you leave any
of those considerations out in your official policies, you can be subject to a
substantial legal penalty.
We’ve already discussed employee leave and PTO, but in
addition to those policies, every organization should have clear expectations
regarding employee attendance on record. Procedures should exist for
maintaining appropriate communication about attendance and building dialogue
around excessive absences with an eye towards creating a rich, clear
documentation trail for future discipline, termination, etc.
Of course, your exact framework must be dictated by the way you
track attendance. Policies must exist to explain expectations for both hourly
workers who have a timecard as well as salaried employees, temporary workers,
contractors, etc. The better a job you do articulating expectations, the better
you can do holding people accountable, keeping them at their desks, and
removing team members whose absenteeism affects overall team performance.
Many states have recently added or changed legislation about
reimbursement of business expenses. As 2020 approaches, it’s crucially
important that you review your local regulations to double-check that your
employee reimbursement policy is up to date.
Your policies need to explain which expenses are
reimbursable, what documentation and forms are required for reimbursement
application, how applications for reimbursement will be approved, and how
reimbursement will be delivered to the employee. The entire program must be
spelled out in specifics, or you risk noncompliance.
Legalization of Marijuana
State laws surrounding the use of cannabis have shifted en
masse over the last decade, and many jurisdictions now allow for legal medical
and recreational use. With that said, marijuana is still illegal at the federal
level, and as an employer, you need to understand how that could potentially
affect your business and employees who use cannabis.
As state and federal marijuana policy continues to evolve
and take shape, you must articulate a clear company policy for today and start
proactive planning about what tomorrow’s policy might look like, depending on
the results of elections and general direction of the culture.
Amendments Act (ADAA) Compliance
The Americans with Disabilities Act was a monumental piece
of legislation when it was passed into law in 1990s, and its scope and
complexity only grew with the ADA Amendments Act of 2008. As we near 2020 and
our understanding of “disability” continues to evolve, it’s crucial that every
corporate organization in America has a specific plan and support framework in
place to ensure compliance.
Of course, compliance isn’t just about workplace
accessibility; it’s about inclusion and providing team members with services to
ensure their needs are met. If you don’t have official policies describing how
employee needs will be assessed and met on a continuing basis, you’re only
halfway there. At the same time, it’s important to remember how employee leave,
absenteeism, and disability can all be interconnected, which means your
disability policy must account for leave and vice versa.
If not, now is the time! Illinois just became the 11th state to
permit recreational cannabis. Governor Pritzker signed this legislation, as
promised, on June 25, 2019. Beginning
January 1, 2020, the Cannabis Regulation and Tax Act (“Act”), will allow
adults (21+) in Illinois to possess and consume cannabis. While there is a lot
“rolled” into the 600 plus page law (pun intended), there are
significant employment pitfalls for employers with regard to enforcing drug
free workplaces. We are here to assist
you in avoiding these pitfalls and give you some practice tips in preparation
of the new law taking affect.
The good news is, the Act expressly permits employers to adopt and enforce
“reasonable” and nondiscriminatory zero tolerance and drug free workplace
policies, including policies on drug testing, smoking, consumption, storage,
and use of cannabis in the workplace or while on-call – which is obviously good
However, on the flipside, the Act’s language indicates that employers are not allowed to take an adverse action against an applicant or employee for their marijuana usage outside the workplace. This is bad for employers since it makes it much more difficult for employers to identify and address use of marijuana by employees due to issues with marijuana testing not being like alcohol testing which calculates more accurately impairment at the time of testing. In particular, the Act amends the Illinois Right to Privacy in the Workplace Act (“Right to Privacy Act”), which prohibits employers from restricting employees from using legal products outside of work. Specifically, the Right to Privacy Act is amended to provide that “lawful products” means products that are legal under state law, indicating that recreational and medical marijuana are legal products that must be treated like alcohol and tobacco. Thus, employers may not discriminate against an employee or applicant who lawfully uses cannabis (recreationally or medically) off-premises during nonworking and non-on-call hours. Again, a difficult task given a test for marijuana alone will not be enough since testing does not include current impairment.
Much like with the Illinois medical marijuana law, this Act changes the
emphasis from whether an employee “used” marijuana while employed, to whether
the employee was “impaired” or “under the influence” of marijuana while at work
or working. As a result, drug testing without any other evidence of the
employee actually being impaired at work or while working will open the door to
legal challenges. Specifically, refusing
to hire, disciplining, terminating, refusing to return an employee to work or
taking an adverse action against an employee or applicant who fails a
pre-employment, random, or post-leave return to duty drug test for marijuana
will arguably create a claim for the employee against an employer for a
violation of Illinois law.
For example, an employee who undergoes a urine drug test (which shows use
of marijuana within 30-45 days) following a workplace accident may argue that
“recreational cannabis was lawfully used outside of work, and the
accident/injury was unrelated to the employee’s legal use of cannabis outside
of work.” Without more than the drug
test result, the employer would be in a vulnerable position to argue against or
defend such a claim. However, if the
employer completed a post-accident report, which included a reasonable
suspicion checklist, in which a trained
supervisor observed and recorded symptoms/behaviors of drug use, the employer
would be in a much better position to take an adverse action against the
employee and dispute any such claim by an employee based on the observations
and positive drug test.
With the changes to the Right to Privacy Act, it is important for employers
to understand the potential exposure and damages. Under this Act, aggrieved
employees can recover actual damages, costs, attorneys’ fees and fines. As
such, employers should make sure their practices and procedures are practical
in light of these changes, until and unless the legislature or a court provides
Interestingly, the Act neither diminishes nor enhances the protections
afforded to registered patients under the medical cannabis and opioid pilot
programs. The catch here is that while
cannabis use is not protected under federal law, the underlying medical
condition for which the employee is using cannabis is likely an ADA and IHRA-covered disability! Much like
under the Illinois medical marijuana law, the Act appears to require employers
to take an additional step before disciplining or terminating an employee based
on a “good faith belief” that the employee was impaired or under the influence
of cannabis while at work or performing their job. After the employer has
made a “good faith belief” determination and drug tested the employee – but
before disciplining or terminating an employee – the employer must provide the
employee with a reasonable opportunity to contest that determination. Once
the employee is provided a reasonable opportunity to explain, an employer may
then make a final determination regarding its good faith belief that the
employee was impaired or under the influence of cannabis while on the job or
while working, and what, if any, adverse employment action it will take against
the employee without violating the Act. Requiring an employee to go through drug
testing is still currently the best practice as a positive drug test will
provide additional support for a
supervisor’s reasonable suspicion determination.
Here Are Some Practice Tips to Protect Your Workforce
and Diminish Risk:
Educate yourself and evaluate all Company policies and practices that touch on providing and ensuring a safe workplace, including job descriptions (especially those safety-sensitive positions). Speak to legal counsel on an intimate basis. Assess workplace cannabis-tolerance and implement policies that can be enforced consistently amongst similarly situated employees. Policies that should be reviewed (and that could be affected) include those addressing health and safety (including accident reporting, smoking, and distracted driving), equal employment opportunity policies, workplace search/privacy policies and drug testing policies. You should also review with legal counsel, your drug testing vendor as well as your Medical Review Officer, the drug testing methodology being used to make sure that such is producing results that are useful, accurate and well vetted (e.g., using a test that determines cannabis use within the last 30 days is not as helpful as one that may test usage within 6-12 hours).
Ensure managers and supervisors are well trained and capable of enforcing policies. Remember – exceptions and favoritism lead to discrimination claims. Conducting training, especially training on reasonable suspicion detection, will be necessary to avoid legal challenges to a supervisor’s reasonable suspicion determination. Creating and/or updating forms for accident reporting (including witness statements), reasonable suspicion checklists, and established protocols for addressing suspected impairment in the workplace, is now more critical than ever.
Clearly communicate management’s position and policies to employees, especially where there is a shift in current policy or practice. Educate employees on the effect of lawful and unlawful drug use and the employer’s policies regarding marijuana. Remember, marijuana is still illegal under federal law, and, thus, you may have a zero tolerance policy within your Company. We now just have to balance that right with Illinois’ newest law.
If your Company does not have a process already, institute a reasonable accommodation process and policy for employees who are medicinal users of cannabis. While a Company is not required to keep an employee who must use marijuana while on the job or report to work under the influence, you still have obligations of going thru the ADA process with the employee to determine if you can or cannot reasonably accommodate their disability so that they may perform the essential functions of their job while not being impaired.
Engage competent legal counsel to assist you in this process and in addressing difficult situations before they lead to costly and time-consuming litigation.
Also important to note: more changes are coming to Illinois for employers on January 1, 2020! On August 9, 2019, Governor Pritzker signed Senate Bill 75 – the Workplace Transparency Act – into law. Effective January 1, 2020, major new changes will forever alter how Illinois employers manage harassment and discrimination issues as well as other workplace controversies. This new law requires mandatory sexual harassment training for employees; reporting and disclosure requirements; restrictions on employment agreements and several other mandates related to sexual harassment in the workplace. Be on the look out for an upcoming blog on these details so you are prepared for the new Illinois world of dealing with sexual harassment prevention.
About the Author
Heather A. Bailey, Esq., a partner with SmithAmundsen LLC, focuses her practice on labor and employment law issues for employers for the past 18 years. Heather may be contacted directly at: Direct Dial: 312.894.3266, Email: email@example.com.
Illinois is seeing some big changes to anti-harassment training requirements for employers. Governor Pritzker signed Senate Bill 75, the Workplace Transparency Act, on August 9th, 2019. This bill amends the Illinois Human Rights Act to add sexual harassment training requirements, in addition to other changes to discrimination laws in the state.
The law is still being formalized by lawmakers, but this is
a major accomplishment, as Illinois hasn’t seen laws quite like this ever
before. This new bill comes after the Illinois Capitol in Springfield garnered
scrutiny and criticism for sexual harassment and related “pervasive behavior,”
as state senator Sue
Rezin told the Chicago Tribune,
particularly within Democratic House Speaker Michael Madigan’s office.
The law is also a response to the entire #MeToo movement
that picked up in 2017. According to a report from the National Women’s Law
states have now passed new protections, including approximately 200 bills,
which are related to protections against workplace harassment.
As these new regulations are going through the approval
process, you’re now tasked as an Illinois employer with following updates and
understanding what it means for the way you run your business. Here’s
everything you need to know about the new requirements, some of which are still
being hashed out.
Annual Training Requirement
The bill outlines that employers must give mandatory annual
trainings on the following topics, beginning January 1st, 2020. The
comprehensive sexual harassment training program has to include the following
Description and clarification of what sexual
Examples of sexual harassment conduct
Information about government provisions, such as
what remedies are available to sexual harassment victims
Information about the employer’s responsibility
to prevent, investigate, and correct sexual harassment
Guidelines for the Service
The bill also outlines requirements for employers in the
bar, restaurant, hotel, and casino sectors. Hotels and casinos must offer
employees a way to alert security or managers with a portable notification
device if they need help, are being harassed, or witness an instance of
Bars and restaurants now must have a policy around sexual
harassment that gives employees guidelines on how they can report allegations
or file a charge with the state Department of Human Rights. These employers
also must offer annual harassment trainings, specific to the industry, in both
Spanish and English.
The law also states that employers cannot require their
workers to sign nondisclosure agreements or arbitration agreements that are
related to harassment, discrimination, or retaliation.
In addition to protections for regular company employees,
independent contractors are also protected from harassment and discrimination
under the new law. As the gig economy is picking up, this is important, since
companies are working with contractors and consultants more now than ever
before. An NPR poll last year showed that one
in five jobs in America is held by a contract worker.
The bill also sets out requirements for employers and labor
organizations to disclose administrative or judicial decisions that are adverse
regarding harassment or discrimination in the previous year to the Illinois
Department of Human Rights. July 1st, 2020 is the first date of required
disclosures, and will be required every July 1 thereafter.
What happens if you
fail to comply?
The bill outlines penalties for employers that fail to
comply with the new requirements. These include civil penalties of:
$500 if the company has less than four employees
$1,000 if the company has more than four
Repeat violations could be as much as $5,000 for each
The bottom line is that Illinois may pass legislation that
all employers, regardless of their number of employees, must provide sexual
harassment training to each and every employee.
Key points to remember about the proposed bill are:
If the bill is finalized, training programs must
be implemented beginning January 1st, 2020.
There are specific guidelines you must follow as
an employer when implementing the harassment trainings, such as disclosing information
about what harassment is and steps victims can take to report it.
Employers that are bars, restaurants, hotels,
and casinos have additional guidelines to follow regarding the safety of their
Employers cannot require workers to sign
nondisclosure agreements related to harassment, discrimination, or retaliation.
Independent contractors are also protected under
Penalty fees may apply if employers fail to
implement the sexual harassment trainings.
Launchways is your
trusted resource, always keeping you informed of upcoming changes related to
compliance. Once the sexual harassment training requirements are solidified, we
will offer a strategic solution to the training requirement.
Chief Financial Officers (CFOs) are now becoming more and more engaged in the HR function, and ensuring that each and every aspect of HR is reviewed carefully and regularly is an important step forward for any organization.
Data from a Robert Half survey shows that HR is the top area where CFOs have expanded their reach over the last three years (39%), largely because CFO involvement in HR allows them to address staffing challenges from a financial perspective.
As CFOs continue to put more time into HR, it’s first crucial to understand the major areas in which CFOs should begin their assessments regarding whether an organization has a sound HR operating structure in place. In this post we will overview the main areas of focus a CFO should assess to ensure a healthy HR function.
HR Areas of Focus for CFO Assessment
Company Culture Audit Company culture is one of the most important aspects of maintaining a competitive modern workplace. In a study conducted by RippleMatch, company culture was the leading reason that a candidate decided to accept a job or not, with almost three quarters of respondents (who were 700-plus recent graduates) reporting that this consideration was the most important. When it comes to auditing your organization’s cultural health, measuring employee satisfaction is key.
Employee Satisfaction In HR’s current “war for talent,” with the unemployment rate the lowest it’s been in decades, it’s more important than ever to create a solid recruitment strategy that’s complemented by employee satisfaction as a serious driving force. CFOs looking to assess the current health of the HR department need to put time into assessing employee satisfaction, whether by: • Implementing regular employee satisfaction surveys • Inviting employees to join company discussions or meetings • Gauging interest in benefits like company events, outings, professional development opportunities, and work-life balance benefits • Ensuring a sound manager-employee review system is in place that happens at least once or twice per year
Addressing Critical Culture Issue Areas Another aspect of a company culture audit is identifying the most critical issue areas. To really have a complete, successful HR program, any company culture problems must be proactively addressed. Critical issues often include that the company has no clear values that employees can recognize and thus cling to; that leadership isn’t accessible or transparent; or that there are no long-term goals in place.
If these three common issues can be recognized and addressed by CFOs, company culture will be on the path to being revamped and competitive.
Compensation and Rewards
Of course, another important aspect of HR is compensation and benefits. And part of staying relevant is ensuring that you’re offering competitive salaries and benefits packages to employees.
Benchmarking Salaries Especially with top-level talent and executives, it can be challenging to know if an employee will be tempted by a better offer within a competing organization. One way to ensure you remain competitive and retain this top talent is to benchmark, which means assessing your own compensation structure and comparing it to other companies within your industry. Then, salaries can be updated if necessary (or, benefits can be improved to balance out any salary discrepancies).
Bonuses and Incentives It’s common knowledge that employee satisfaction increases when employee contributions are overtly recognized and celebrated. This is why bonuses or performance-based incentives can be impactful in HR retention strategies. CFOs should try implementing an incentive that’s based on an employee’s performance, giving them something to work towards and thus improving motivation. Year-end bonuses can also help employees feel recognized and satisfied with their jobs. While a simple “thank you” may work at times to encourage and inspire, HR and CFOs should work together to create an incentive program that the organization can afford and which motivates employees.
Benefits Package Similar to compensation benchmarking, CFOs should do their research to ensure that the company’s benefits package is competitive and updated regularly. This means knowing what modern top talent is looking for. According to Harvard Business Review survey data, the most desirable employee benefits are: • Health, dental, and vision insurance • Flexible hours • Vacation time/paid time off • Work-from home options • Unlimited vacation • Student loan assistance • Tuition assistance • Paid parental leave
One of a business’ largest expenses is the annual dollar amount spent on employee benefits. CFOs should make sure that benefits dollars and being invested wisely into crafting a thoughtful, impactful benefits package.
Technology and Data
Another big consideration for HR departments and CFOs alike is data. With the rise of automation and machine learning, businesses can now streamline processes and analyze large amounts of data to make future plans and projections. And these changes apply to HR efforts, such recruitment and retention, which now depend on sophisticated data and a method in place to analyze it, such as a useable online dashboard.
According to a report from KPMG, 92% of strategic HR functions now see automation as having a significant impact on the HR function, and 66% of organizations are putting a greater focus on the automation conversation within their company.
However, actual strategies are still lacking in HR, KPMG data also shows. While around two thirds of HR executives recently reported to believe that HR is undergoing a big digital transformation, only 40% of these leaders said they have a plan in place at either the enterprise or HR level. So, putting these considerations at the top of the priority list could give your business a significant competitive edge.
Assessing the Existing Technology Stack First, CFOs should start by assessing their HR department’s current technology utilization. Is there a method in place to not only gather data, but to analyze it and incorporate it into a long-term strategy? What databases and dashboards are being used, and are they successful? And of course, cost is an important factor in implementing new technologies, so CFOs are encouraged to always consider technology ROI in terms of process improvement.
How to Find the Right HR tech for Your Business Every organization has different needs and trends, so it’s important for you to help your HR department figure out which technologies will best meet your business’ needs. Some important considerations to keep in mind include: • How automation will impact the need for long-term HR staff • Training for HR staff to be able to properly use technology to handle and analyze data • Implementation processes and timelines for new technology
Key Data Metrics to Track Over Time So what metrics should your HR department care about most? Here are some of the top data metrics for HR to track and use for future planning: • Cost-benefit analysis: tracking the benefits of a program weighed against the cost (such as a benefits package) • Revenue per employee/productivity: tracking the total amount of company revenue divided by the number of employees so that efficiency and productivity can be measured via human capital • Recruitment: tracking how long it takes to fill a position, and how much it costs • Turnover: tracking how long employees stay at the company and which departments see the highest turnover, in addition to the cost of turnover • Retention: tracking the company’s actual ability to retain key talent
Hiring and Retention
Next, CFOs should analyze hiring and retention strategies, one of the most important parts of the HR function.
Recruitment Tactics How is the HR department currently approaching recruitment? This includes considerations like where job advertisements are being posted, whether recruiters are engaged with platforms like LinkedIn or other social media outlets, and whether competitors’ job posts are being assessed and incorporated into the company’s own job ad approach.
Depending on your industry, recruiters should be involved in researching and reaching out to top talent who they find would be great candidates. This could be through networking events or via online platforms.
Hiring Processes It’s also important to consider the efficiency and effectiveness of hiring procedures, such as: • How resumes or cover letters are received (email, online application, etc.) • How long it takes HR to respond • How the interview process works (i.e., phone interview followed by two in-person interviews) • How job offers are relayed (email, formal letter)
Onboarding and Training A good onboarding strategy can make or break recruitment efforts and retention strategies. It’s important to set up a welcoming, informative program that educates new hires and aims to integrate them into company culture by involving multiple departments and individuals. These early connections are important for any new hire to feel like they made the right decision in accepting a job.
Just as important is training and development that new hires will need, so each department should have its own system in place in addition to the overall HR employee training program. These are important considerations: 69% of employees have a higher chance of sticking with a company for three years if they have a great onboarding experience.
Identifying and Addressing Turnover Issues One of the biggest threats for modern businesses is high turnover. The Center for American Progress says that on average, the cost of turnover is 22% of an employee’s annual salary.
The first step in addressing turnover problems is figuring out when employees leave—if it’s near the start of their tenure at the company, greater focus is needed for onboarding and training, perhaps. If it’s later in the employee’s tenure, the reasons could be related to company culture, benefits, compensation, management, or room for growth within the company. All of these considerations deserve a detailed plan from your HR function.
CFOs play a major role in HR compliance, since penalties or legal issues could be involved if required policies and procedures aren’t followed. Here are the top areas for CFOs to review regarding compliance.
Employee Handbook Every HR department should create an employee handbook that lists all policies and procedures. This levels the playing field so that employees don’t think one worker is getting special treatment. The handbook should be updated as the industry changes or as new laws and regulations are put into effect, and it should include things like benefits, leave policies, dress code, flexible working opportunities, tuition reimbursement, and more.
Employee Files CFOs should take a look at how employee files are currently handled. There are many records that need to be kept confidential, so it’s crucial to ensure that there is a security system in place for these sensitive records.
Benefits Compliance Review There are important acts and laws for every HR professional and CFO to understand and ensure compliance with. Some of the most important include: • Family and Medical Leave Act (FMLA): related to required time off for new parents, health issues, or family issues • Fair Labor Standards Act: overtime regulations, minimum wage, etc. • Disability coverage regulations for employees • COBRA: required continued insurance offering after an employee leaves the company
An important aspect of the HR function is ensuring all of these important regulations and policies are followed and applicable requirements are met.
Strategic Alignment Evaluation
Because HR is such a crucial part of company operations, it’s important that the department is aligned with other areas across the organization. HR is often the first point of contact for job candidates, so HR professionals have a unique obligation to reflect company values as well as the positives of working at your business.
Aligning Finance, HR, and Company Goals Part of the CFO’s involvement in HR is to ensure that practices are aligned with finance and overall company goals. Some of the HR metrics to track that were described earlier will apply here, since they’ll be important in determining cost-benefit ratio, the cost of recruitment/new hires, and other HR finance considerations.
Company goals and values should also align with HR for the reasons previously mentioned: HR is often the face of the company during recruitment and hiring, so it’s crucial that these professionals reflect the organization’s mission, vision, and goals. Leadership from each of these areas within the company should meet regularly and discuss any issues so that key team members are aligned across the board.
Long-Term Workforce Planning Many of the considerations already discussed are necessary for efficient workforce planning. This means integrating a company’s goals and mission while ensuring that the organization has the human capital it needs to succeed. HR professionals, in conjunction with the CFO, need to evaluate both current and future needs in personnel and departmental structure, and figure out how to make these efforts cost-effective.
Another consideration here is the professional development and training that will keep personnel effective within the given industry. As mentioned, in regards to technology, systems and processes are constantly changing, and companies have to ensure that they keep up by educating employees, ensuring they can operate with the most cost-effective and efficient tools in place.
In today’s workforce, CFOs are tasked with ensuring that HR not only functions as it should on the appropriate legal and financial level, but also that it is making successful efforts to integrate technology and implement high-impact recruiting and retention strategies.
When assessing the current state of an HR department, CFOs should remember to look at the following key areas:
Compensation, Benefits, and Incentives
Technology and Data Strategy
Hiring, Onboarding, and Retention
Strategic Alignment and Workforce Planning
Only after reviewing these key aspects of HR can CFOs better make decisions about personnel, policies and procedures, cost considerations, and departmental structure that will drive the business forward.
The LGBTQ community has yet to have full federal protection in the workplace against discrimination. In May 2019, the House of Representatives passed the Equality Act, which bans discrimination because of an employee’s sex, sexual orientation, or gender identity, but the bill is resting with the Senate, who may decide not to pass it.
In your workplace, diversity and inclusion should be two main priorities, and adequately addressing these matters means that you are both recognizing and encouraging the LGBTQ community to feel open, safe, and normal living and working as they are.
Here are key reasons why you should take action to create a more inclusive and diverse workforce, and the ways to do it.
Impacts on the LGBTQ community when they feel excluded
It’s easy to see why LGBTQ workers would continue to feel excluded in the workplace. They often don’t feel understood or acknowledged, and they may feel like they’re not able to participate in normal discussions or activities because of the fear of being judged or stereotyped.
Many people in this community feel overly sexualized. Essentially what this means is that when it becomes known that they have a certain “nontraditional” sexual orientation, they become their sexual identity, instead of coworkers seeing them for themselves and their work capabilities.
This feeling of exclusion leads to negative feelings and even lack of productivity at work: 25% of LGBTQ workers report feeling distracted from work, as the Human Rights Campaign report shows, 17% report feeling exhausted from having to hide their sexual orientation, and 31% report feeling unhappy or depressed at work.
Why encourage openness and acceptance?
According to the aforementioned report, 46% of workers who identify as LGBTQ remain closeted, and half of those surveyed said that there aren’t any employees at their organization who are open about it.
While it’s of course not always a great idea to have everyone discuss or admit to their sexual experiences in the workplace, the reasons behind staying closeted show how fearful a non-inclusive workplace can be for this community. The top reasons that they stay closeted are:
• The potential to be stereotyped by coworkers
• To avoid making others feel uncomfortable
• To avoid losing connections or relationships
• To avoid coworkers thinking they are attracted to them because they are LGBTQ
Make sure in your efforts to encourage openness that you aren’t forcing LGBTQ workers to disclose things they aren’t comfortable with; the key is to educate staff and have serious discussions about these topics. If they aren’t talked about, LGBTQ workers will feel like they have to remain closeted. And while some topics are “supposed to be” taboo at work, like sex or politics, the truth is, many employees talk about their lives outside of work on a daily basis with their coworkers.
Why educate employees?
It’s also important to keep all employees educated about policies and aware of how best to behave in the workplace. You aren’t telling them what to believe, just how to represent the company and treat others while they’re on your watch.
Many employees may just not be aware of these issues, and so they may not even recognize that their behavior is out of line or could be offensive to their coworkers. It’s your responsibility to thus educate them so that they are more thoughtful and deliberate about how they treat certain topics and talk to each other at work.
The Workplace Divided report revealed an additional alarming statistic in this area: 1 in 5 LGBTQ workers have experienced being told by a coworker that they should dress either more feminine of masculine; only 1 in 24 non-LGBTQ workers reported this having ever happened to them. Additionally, 36% of non-LGBTQ employees said that they would feel uncomfortable if an LGBTQ coworker started talking about their dating life.
So, there is clearly still a bias in place that needs to be addressed in each and every workplace. Part of ensuring you are fostering an inclusive and diverse office is educating everyone to get them thinking about their behavior and the way they treat others.
Benefits of inclusivity for your company
Your LGBTQ workers will not be the only ones who benefit from addressing these issues. Think about the benefits your organization will also experience: • Less discrimination lawsuits and therefore less in legal fees • Less turnover, as 1 in 4 LGBTQ workers said they stayed in a job because the workplace was accepting of LGBTQ people • Health insurance costs may go down because the health of all employees is given more consideration • Partnerships could increase as your company becomes known as a socially responsible organization
Another big reason to address discrimination and encourage inclusivity and diversity in the workplace is because a more diverse office is a more profitable office. A study from Boston Consulting Group last year found that companies with above-average diversity on management teams earn 19% more in revenue than companies with below-average diversity on these teams.
Why? Because diverse teams create diverse perspectives; gone are the days of the bureaucracy, where one team of older white men makes all the decisions for an organization. For any company to grow and succeed, diversity, and therefore greater inclusivity, are assets.
Additional strategies to foster inclusivity and diversity in the workplace
So where should you begin? Try implementing these strategies to foster inclusivity and better educate the workforce about discrimination and how to create accepting, inclusive workplaces: • Talk about how detrimental stereotyping can be, in general and also related to someone’s gender or sexuality. • Share statistics similar to those presented in this article to show employees how important these issues really are for a functioning workplace. • Engage with learning materials that present workplace scenarios so that employees can learn how to approach certain topics and actually visualize how to behave to encourage inclusivity. • Always stress the importance of diversity and make sure the executive team shares with the company about efforts they are taking in these areas (for example, those in charge should admit when they become aware of areas they could improve, such as diversifying the board of directors). • Provide resources for LGBTQ workers if they experience harassment or discrimination from coworkers, or if they just need someone to talk to, like an HR representative or counselor. • Implement actual company policies that protect workers against discrimination and harassment in the workplace. Make sure these policies are distributed to all employees and are available for reference.
• Because discrimination rights based on sexuality continue to stall on a federal level, take action in your individual workplace
• If the LGBTQ community feels excluded in the workplace, they’re more likely to leave and are more likely to feel unhappy or depressed at work
• Encourage openness and acceptance at work so that LGBTQ workers don’t feel like they have to remain closeted to be liked
• Educate employees, especially non-LGBTQ workers, so that they are aware of these issues and are better aware of how to behave
• Recognize the financial and productivity benefits that an inclusive and diverse workplace provides
• Create support systems and company policies that address these issues
When you’re able to educate and encourage, and foster diversity and inclusivity—teaching your employees what they mean, why they’re important, and how they help the entire workplace—your company culture will shift toward being more socially aware and responsible.