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New Laws In Illinois Will Impact Your Business: Find Out How

Several new laws have been passed in the Illinois General Assembly recently that will impact both employers and employees across Illinois. The last step before enactment is for Governor Pritzker to sign off on these bills.

The new laws bring several changes to the table, including:

  • Creating limitations on contract terms and employee handbooks
  • Amending three acts: the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Victims’ Economic Security and Safety Act
  • Requiring more anti-harassment trainings for employers
  • Legalizing recreational cannabis use

These changes will impact employer policies. For example, employers will need to update discrimination policies and procedures, or if recreational cannabis is legalized, this could create concerns if an employer still prohibits drug use.

The Workplace Transparency Act (Effective January 1, 2020)

The Workplace Transparency Act (IWTA) aims to prevent workplace harassment and discrimination by improving the security of employees’ rights. Within employer contracts and policies, the IWTA prohibits specific aspects of confidentiality, non-disparagement, and arbitration clauses, unless other statutory requirements are first met.

The IWTA requires Illinois employers to both review and update their contracts, particularly their noncompete, non-solicitation, and confidentiality terms, in addition to separation or severance and arbitration agreements and employee handbooks and policies.

It’s important to note, however, that these new terms don’t apply to collective bargaining agreements, which applies to both private and public employers that have unionized workforces.

All contracts and policies:

The IWTA requires that, without exception, no contracts or agreements can contain language that prohibits employees from reporting “unlawful conduct” to officials, whether local, state, or federal, for investigation. This law is relevant to prospective, current, or former employees, and applies to all types of policy document or employment agreement (formal employment agreements; executive compensation agreements; noncompete, non-solicitation, or confidentiality agreements; or separation agreements).

“Unlawful conduct” can include criminal conduct or unlawful employment practices—for example, behavior that would violate the anti-harassment and discrimination laws outlined by the Illinois Department for Human Rights (IDHR) and the Equal Employment Opportunity Commission (EEOC).

The IWTA also prohibits, without exception, any provisions that would prevent an employee to testify in the event of a subpoena, court order, or other written request regarding criminal conduct, discrimination, harassment, or other unlawful employment practice.

Unilateral employment contracts and policies:

Employment contracts and policies—specifically those that are non-negotiated or that must be signed as a condition of employment—are not allowed to prohibit any employee, whether prospective, current, or former, from making disclosures or truthful statements regarding alleged discrimination and harassment or unlawful employment practices.

An example of what this means is that if any provision or clause could be read to indicate that it prevents an employee from truthfully stating or disclosing discrimination or harassment, regardless of how a contract provision was enforced, the clause would then be unenforceable.

If employers wish to keep this kind of provision, they could be required to negotiate agreements that contain confidentiality clauses with employees and include bargained-for consideration and a clear acknowledgment of employees’ right to do the following:

  1. Inform a local, state, or federal agency that enforces discrimination laws of good-faith allegations of unlawful practices
  2. Inform local, state, or federal officials of good-faith allegations of criminal conduct
  3. Contribute to proceedings with any local, state, or federal government agency that enforces discrimination laws
  4. State or disclose any truthful information that is required by law, regulation, or legal process
  5. Seek out or receive legal advice that is confidential

Unilateral arbitration agreements:

Certain agreements may not be enforceable that meet the following criteria: agreements that are non-negotiated and require arbitration of discrimination and harassment claims (as opposed to wage and hour claims) as a condition of employment. Similar to confidentiality agreements, however, arbitration agreements could still be enforceable under the new law if they are negotiated with the employee and include bargained-for consideration and acknowledge the five employee rights listed above.

Under the potentially amended Illinois Uniform Arbitration Act, arbitration agreements may be non-compliant with the IWTA and thus they may be void. It is still unclear whether Illinois arbitration agreement law will be preempted by federal law in some cases. Thus, these agreements must be drafted carefully to ensure that they are enforceable.

Settlement and termination agreements:

Termination agreements (also known as separation or severance agreements) and settlement agreements could include confidentiality promises that relate to discrimination and harassment if these statutory requirements are met:

  1. The employee has documented confidentiality as a preference, and the obligation is mutual under the contract.
  2. It is told to the employee in writing that he or she has a right to an attorney or representative (of his or her choosing) to review the contract before it is signed.
  3. In exchange for the confidentiality, there is a bargained-for consideration that is valid (for example, a severance payment instead of just the payout of final earned compensation).
  4. No claims of discrimination or harassment are waived in the agreement that ensue after the agreement execution date.
  5. The employee has 21 days to consider the agreement before signing it, in addition to 7 days to withdraw acceptance of the agreement. (This is similar to the drafting of waivers of age-related claims at the federal level, with people who are over 40.)

The employee would in no way be precluded from releasing discrimination and harassment claims by the IWTA, except prospective claims.

Enforcement:

If employees are successful when they challenge a violating contract’s enforceability under the IWTA (but not an employment policy), they will have the right to recover attorney fees and costs.

Other exceptions:

However, employers could require the following individuals to maintain confidentiality of discrimination and harassment allegations:

  • Employees who, as part of their job duties (e.g., human resources professionals) receive complaints, investigate allegations, or have access to confidential information regarding personnel
  • A third party or employee who is asked to participate in an open and ongoing investigation (e.g., a witness)
  • A third party or employee who gets attorney work product or communications that are attorney-client privileged, or who is subject to a recognized privilege
  • Any third party that investigates complaints, hired by the employer

Illinois Equal Pay Act Amendments (Effective 60 Days After Signed)

The following amendments would apply to the Illinois Equal Pay Act.

Wage and salary history of job applicants:

The amendments would prohibit employment agencies and employers from requesting the following information or requiring job applicants to disclose it: prior wage, salary, benefit, or other compensation history information as a condition of the application process or of employment. They are also prohibited from otherwise screening job applicants by requiring they meet minimum or maximum compensation criteria.

Both employers and employment agencies will be prohibited from seeking the above information about job applicants from current or prior employers. However, they are not prohibited from talking with applicants about wage, salary, benefits, or other compensation expectations.

If prior compensation history is disclosed voluntarily by the applicant, the information cannot be considered when the employer is deciding whether or not to make a job offer, nor in determining the terms of the job offer. To comply with these amendments, employers will likely need to update their job boards, interviewing processes, recruitment practices, and job applications.

Wage differentials:

Employers could also be subject to increased burdens in order to justify imbalances in pay among their employees. This especially applies to employees who have similar jobs but receive different pay rates, and employers could be required to show that the difference in pay is because of job-related reasons that are: 1) consistent with the needs of the business and 2) accounts for the difference in compensation, if there have been allegations against the employer that they underpay certain employees based on their sex or for being African American.

Wage and salary information of employees:

The amendments state that employees cannot be prohibited from being able to disclose or discuss compensation information, including that regarding wage, salary, or benefits. But, if certain positions require access to this information, such as human resources employees, they can be told to keep this information confidential. To be in accordance with these changes, handbooks, policies, and confidentiality agreements may need to be updated.

Penalties:

To enforce these amendments, State court lawsuits may be filed by employees who are seeking “special damages” of a maximum of $10,000, or actual damages more than $10,000, injunctive relief, and costs and reasonable attorney’s fees. If an employee can prove that he or she was underpaid based on their sex could receive the underpayment amount, punitive damages, and injunctive relief, in addition to uncapped compensatory damages if it is also proven that the employer behaved with malice or reckless indifference. Penalties up to $5,000 could also be sought by enforcement actions from the Illinois Department of Labor for each employee that was impacted and for each violation.

Illinois Human Rights Act Amendments (Effective January 1, 2020)

To address the security of employees’ rights to protection from harassment and discrimination, the Illinois Human Rights Act (IHRA) would be amended in the following ways.

Expanded coverage:

The IHRA would be applicable to Illinois employers with one or more employees during 20 or more calendar weeks during the current year or within the year before the alleged violation took place. This amendment is significant because as the IHRA stands now, this applies only to employers with 15 or more employees. The expanded coverage would go into effect on July 1, 2020.

Expanded protected classes:

Discrimination and harassment prohibitions would be expanded so that all actual and perceived protected classes, which include race, sex, age, religion, or sexual orientation, among others, would be covered. Additionally, the amendment further defines harassment as any “unwelcome conduct” with “the purpose or effect of substantially interfering with the individual’s work performance or creating an intimidating, hostile, or offensive working environment.” This definition is more broad than federal law.

Clarified work environment:

Regarding the prohibition of discrimination and harassment, the work environment will no longer be limited to an employee’s assigned physical location.

Employer liability:

The IHRA amendment would also update harassment responsibility for the employer. They may be responsible for harassment by employees who are non-managerial and non-supervisory if the employer is made aware of the behavior and does not take appropriate action. In addition, employers would be responsible for harassment of non-employees who are in the workplace to provide services for the employer. This could apply to consultants or contractors, for instance.

Annual training:

Sexual harassment training for all employees would be required from employers, at least once a year. The training materials used will be developed by the IDHR or an equivalent body.

Restaurants, bars, and coffee shops:

A written sexual harassment policy must be made and given to all employees within their first week of employment. This policy has to meet certain statutory requirements, including that the employee must be given notice about the procedures to file a charge with the IDHR and EEOC. Mandatory training programs specific to the bar and restaurant industry will be designed by the IDHR, and this will be in addition to the training program for all employers. These policies and trainings are required to be available in both English and Spanish.

Disclosure requirements:

Every employer that had an adverse judgment or ruling against it that is related to discrimination or harassment must report information about the judgments or rulings to the IDHR, starting July 1, 2020, and recurring by each July 1 thereafter. When charges of discrimination are investigated, the IDHR could request that employers disclose information about settlements that involve discrimination and harassment allegations, though this excludes the names of the alleged victims.

New penalties:

Penalties will apply to employers that do not meet these training and disclosure requirements. The penalties are not to exceed:

  • $500 for the first offense
  • $1,000 for the second offense
  • $3,000 for the third and any following offenses

Union employees:

If the same union represents the victim and the perpetrator of alleged sexual harassment, different representatives from the union must be delegated to represent them in proceedings.

Procedural changes:

Procedures for filing charges and investigation would be included in the amendments. The changes include that either party would now be allowed to ask the IDHR for a pending charge dismissal if a lawsuit at the state or federal level is filed because of the same issues that were raised in the charge. Another update is greater clarity regarding prior amendments in 2018, which allowed the charging party to bypass investigation procedures and go directly to the state court.

The Victims’ Economic Security and Safety Act (Effective January 1, 2020)

Another amendment applies to the Victims’ Economic Security and Safety Act (VESSA), which would expand protections for victims of domestic and sexual violence, sexual assault, and stalking to those victims of gender violence.

Gender violence is an act or acts of violence or aggression that would be considered a crime under state law and is committed (at least partially) based on someone’s actual or perceived sex or gender, or based on physical instruction or invasion that is a crime, whether or not criminal charges are brought. The threat of any of these actions would also be included.

If an employee is a victim of domestic, sexual, or gender violence, or has family members who are victims, employers are now required to give them up to 12 weeks of leave within a year, with job protection, or a similar accommodation that could be determined by how large the employer is. The employee victim can take this leave for counseling, legal help, medical services, safety planning, and the like.

Hotel and Casino Employee Safety Act (Effective July 1, 2020)

Hotel and casino workers in Illinois will be protected from sexual assault and harassment under the Hotel and Casino Employee Safety Act, which requires employers within these industries to give employees assistance in the event of an ongoing crime, sexual harassment or assault, or other emergency. Employers would be required to give them safety devices or other notification tools.

This act also requires relevant employers to incorporate anti-harassment policies that meet statutory requirements. These requirements include things like temporary work assignments, reporting procedures for complaints, or paid leave to testify or file a police report. The act states that lawsuits can be filed by employees in state court and they could recover attorneys’ fees and economic damages of $350 per day and per violation.

Cannabis Regulation and Tax Act (Effective January 1, 2020)

Cannabis Act employer obligations:

Recreational cannabis is on the horizon for Illinois if the bill is signed, which would make it the eleventh state to legalize recreational cannabis. The Cannabis Regulation and Tax Act (also known as the Cannabis Act) will begin on January 1, 2020. This act will allow Illinois adults to both possess and consume cannabis, but it may create issues for Illinois employers. The Cannabis Act does allow employers to implement reasonable and nondiscriminatory policies that support zero-tolerance, drug-free workplaces, which could include drug testing and workplace-use prohibition policies.

The Cannabis Act permits employers to ban cannabis use to meet contract obligations or to comply with state or federal funding or legal requirements. However, employers generally cannot take an adverse action against an employee or an applicant because of their marijuana use outside of the workplace. The Illinois Right to Privacy in the Workplace Act is also amended so that marijuana products are legal and must be treated similarly to tobacco and alcohol. Employment decisions cannot be made based on whether an applicant or employee uses cannabis off-site, during nonworking hours (or non-call hours), whether medically or recreationally, as long as the use is lawful.

Employers should then assess whether or not an employee is actually impaired or under the influence of cannabis during working hours if they are considering disciplinary action against an employee, since they are not allowed to consider the lawful use of cannabis outside of work. Disciplinary action would be allowed if an employer has a “good faith belief” that their employee is under the influence in a situation that is similar to “reasonable suspicion” standards.

If an employer decides to act on this disciplining, they are required to give the employee an opportunity to contest the decision, and drug testing could be used in this case. However, legal challenges could arise because cannabis-related impairment is more difficult to discern when compared to alcohol impairment testing, for example. In addition, employee victims could recover actual damages, costs, attorneys’ fees, and fines, so employers need to make sure that they are taking these new laws into consideration before acting. Practices and procedures should be updated accordingly.

Labor peace agreements:

Labor peace agreements aim to give labor organizations the ability to access and organize the workforce of a business that is licensed to dispense cannabis. Organizations that are applying for a cannabis-dispensing license should thus note that the state government will consider whether they have entered into a labor peace agreement with a labor organization. Because these agreements can be complicated, it’s important to work with an attorney experienced in labor law.

Conclusion

Illinois’ pending legislation means that employers need to update their documents and policies accordingly. This includes reviewing and revising employment agreements, employee handbooks, and non-disclosure and separation agreements. Any other policies or agreements related to employment will also need to be revised accordingly so that employers are in compliance with these amendments.

In many cases, employers struggle to keep up with constantly-changing state legislation. Even one compliance infraction could cost your business hundreds of thousands of dollars in fines. Consider working with a compliance partner like Launchways to ensure all your compliance concerns are taken care of proactively.

Should you hire a head of HR? How to Know It’s the Right Time

If your business is like most, in the early stages it was all-hands-on-deck with everyone doing whatever it took to keep the organization afloat. You likely pieced together a human resources process with several people taking on various duties.

Managing HR may be something you can’t – or shouldn’t– use your valuable time to do, depending on the scale of your organization. If the leadership team of your small to medium sized business has been handling the HR tasks it may be time to hire an HR pro. However, how do you evaluate when is the right time to make that decision – and who you should hire to do which HR tasks?

In this post, we’ll discuss

  • Growing pains that indicate it’s time to add HR to your team
  • Tactical and strategic HR tasks
  • Types of HR employees
  • HR technology and outsourcing

Growing Pains

You’ve pieced together an HR process that seems to be working. Recruiting and hiring are handled by the business founder who’s been tasked with building a team from scratch. Your CFO manages payroll and compensation and handles benefits issues. Meanwhile, your admin or office manager processes new hire forms and requests for time off.

Then you hit a snag.

  • You’re not attracting the best candidates
  • An overburdened key employee quits
  • You face legal and compliance issues
  • You don’t have a process to make essential hires quickly and effectively

With so many competing priorities, you may find it challenging to prioritize HR. Perhaps your top pick for a critical role turned you down because you haven’t had the time to research what’s in a competitive benefits package, let alone put one together. You missed out on another candidate when they lost interest because you spent your time screening candidates for a different role instead of getting back to them. Then your admin quit because she couldn’t keep up with her “other duties as assigned” HR tasks while also assisting customers and supporting your sales team.

If that wasn’t bad enough, your legal fees are starting to add up. An employee filed a sexual harassment claim against your company. Then, because you misclassified a team member as exempt to avoid paying overtime, you’ve got a wage dispute on your hands.

But bad news isn’t the only reason to add HR to your team. Perhaps you landed a big contract and you need to add 20 people to your service team – yesterday. An important client wants you to add a second team to support another of their facilities. An online marketing campaign is bringing in three times the orders your staff can handle, and you’re starting to get backed up. HR issues can arise as your company grows because your existing team is just too busy to do it all. Other times, it’s because you “don’t know what you don’t know” when it comes to HR.

HR Duties

Low unemployment, new technology, and increasing employee expectations have caused basic HR processes to become much more involved. Putting thought into what your organization really needs in terms of HR support can help determine your long-term HR strategy. There are tactical and strategic aspects of modern HR teams. You can hire someone to prioritize tactical or strategic HR tasks: however, it’s difficult and impractical to hire someone to handle both these types of HR tasks.

Tactical HR

A tactical HR team member focuses on the manual administrative and technical tasks of HR.

Tactical duties:

  • Post job openings
  • Track and screen candidates
  • New employee orientation
  • Prepare and update employee records
  • Organizing and storing employee data
  • Ensuring state and federal compliance regulations are met
  • Processing payroll
  • Benefits administration
  • Time-off requests
  • Track mandatory compliance training

Strategic HR

Strategic HR focuses on your organization’s growth and long-term HR planning. A strategic HR staff person is more likely to be part of your leadership team than tactical HR staff. In today’s competition to recruit and retain the best talent, adding an HR strategist to your team often makes good business sense.

Strategic duties:

  • Company culture development
  • Employee engagement planning and implementation
  • Professional development and training
  • Job description creation and updates
  • Hiring to develop future leaders
  • Employee retention plan

Types of HR Employees

You can learn more about various HR positions through the Society for Human Resources Management (SHRM) or other sites such as Human Resources Education. We’ll give you examples of a tactical HR position and a strategic HR position typical in small to medium-sized businesses.

Human Resources Specialist (Tactical)

A Human Resources Specialist typically has a bachelor’s degree and is early in their HR career. They are a generalist more focused on tactical HR tasks rather than strategic HR tasks.

Duties

  • Recruiting: Coordinate job postings, process resumes, and applications, screen job candidates, perform background checks and conduct initial interviews
  • Records: Prepare and update employment records related to hiring, compliance, promotions, and terminations
  • Onboarding: Conduct new employee orientation by explaining employment policies, procedures, job duties, schedules, and benefits
  • Discipline and complaints: Address work complaints and harassment allegations, tracks employee discipline

The U.S. Bureau of Labor Statistics notes that the median pay for an HR Specialist in 2018 was $60,880 or $29.27/hour.

Head of People (Strategic)

You can count on a strategic HR hire to handle the overall administration, coordination, and evaluation of your HR plans, programs, and goals. This person typically has five or more years’ experience in HR and a bachelor’s degree. The strategic HR hire is your organization’s link between employees and your leadership team.

Duties

  • Management: Develop and administer your HR records, plans, procedures, programs, and budget and manage other HR staff or personnel tasked with HR duties
  • Programs: Develop and manage compensation program, personnel policies and procedures, employee handbook, employee evaluation process and benefits, and wellness programs
  • Recruiting: Develop staffing plan; create and revise job descriptions and employment ads; oversee all recruitment; develop interview process; and conduct new employee orientation
  • Retention: Develop employee recognition program and professional development plans; manage employee relations counseling, and conduct exit interviews
  • Planning: Develop corporate culture with the leadership team and recommend new policies, programs, and procedures based on long-term goals and current HR best practices

Although the paygrade for this position will vary greatly commensurate of the candidate’s experience level, the salary for an HR Manager can be used as a point of comparison. The U.S. Bureau of Labor Statistics notes that the median pay for an HR Manager in 2018 was $113,300 or $54.47/hour.

You may save on salary costs initially by hiring a less experienced HR team member, but someone who has been keeping up on HR trends and technology may save you money in the long run. Rather than focus on hiring when employee count reaches a specific number, think about who’s handing HR now and whether that time could be put to better use generating revenue or innovating new products.

HR Outsourcing & Technology

Now that you have a better idea of what an HR team member can do for you and what they’ll cost, you may be thinking hiring another full-time person just doesn’t make sense at this time. Utilizing HR technology and outsourcing HR tasks may be a more cost-effective solution for your business.

Outsourcing can help you to adapt to your changing HR needs as your business grows. Working with an HR partners also ensures your HR technology will meet the expectations of today’s tech-savvy millennial workforce. Your outsourced HR partner will track and provide data to help you better manage all aspects of HR as you grow your business and your team.

HR Technology

Launchways offers the top HR technology and can advise and customize based on your business needs. Launchways HR technology solutions ensure your business can effectively handle tactical HR duties such as:

  • Payroll
  • Compliance
  • Recruiting and application portal
  • Time scheduling and tracking
  • Online benefits portal
  • Online performance reviews

Outsourcing
Launchways offers fully-outsourced solutions for payroll, benefits administration, and compliance. Working with the Launchways team ensures all these important aspects of your business are handled correctly, while freeing up the time of your leadership team for more important duties.

Key takeaways

When your organization is experiencing growing pains – and ideally before you run into compliance and other legal issues – it’s time to add to your HR capabilities. HR duties are many and varied, from time-consuming tactical administrative tasks to strategic HR planning to help your organization be more attractive to top talent.

In many cases, outsourced HR help can be the most cost-effective option for growing businesses. Learn more about Launchways’ custom HR solutions.

Why Gen Y and Gen Z Employees Leave and What You Can Do About It

Generations Y and Z will become the largest living generations in 2019, having already have surpassed Generation X in the workplace, and by next year will represent half of all workers globally. With so many working for you, understanding what makes them tick – and stick with you – is essential to attracting and retaining the best available talent to support your business goals.

You’ve got your work cut out for you: the younger generations don’t have a very high opinion of business. The 2019 Deloitte Global Millennial Survey found a decreasing percentage of Gen Y – 55% in 2019 versus 61% in 2018 — believe business has a positive impact on society and that 67% of businesses “have no ambition beyond wanting to make money.” That’s important because Generations Y and Z often put purpose before their paycheck.

But despite their reputation as job hoppers, Generations Y and Z are slightly less likely to leave a job after a short time than Generation X. In 2018 about 50% of Gen Y reported working for their current employer for at least five years, and 80% said they had stayed at their job at least 13 months.

Jobvite noted a 20% drop in workers who say they change jobs every one to three years (16% in 2018 versus 20% in 2017). However, despite job satisfaction at 68%, workers say they’re still open to other opportunities. With unemployment at record lows, these workers have more possibilities if they choose to leave.

What’s driving them away? Gallup’s 2017 “State of the American Workforce” report noted 91% of the thousands surveyed said they left their last job because there wasn’t a compelling reason to stay. And Deloitte found that almost half would quit their current job within two years if they had a choice.

It’s well past the time to rethink your recruiting, hiring, and retention practices to keep Generations Y and Z in your workforce.

In this post, we will discuss the state of employment in 2019 as well as what the younger generations believe is important at work, what Gen Y and Gen Z don’t value at work, and strategies to keep these employees working for you. We’ll cover:

What’s not important to Millennials at work:

  • Perks such as free food and games
  • Certain benefits, such as 401(k), are less important
  • Being told the company holds their values – without backing it up with action
  • Maintaining the status quo

What’s important to Millennials at work:

  • Company values and transparency
  • Work-life balance, including flexible work hours, working from home
  • Diverse and inclusive culture
  • A variety of benefits

Strategies to keep Millennials working for your organization:

  • Create a company culture with their input
  • Develop their talent

What’s not important to Gen Y and Gen Z at work

Pointless Work Perks

The startup and tech culture of the West Coast perpetuated the idea that free cereal bars and fancy coffee machines in the breakroom, foosball and ping pong tables in the hallways, and artsy open concept office spaces were all that was needed to attract and retain workers. This is not so. Gen Y and X employees know that perks like these don’t equal benefits – or say much about the true nature of a company’s culture.

Lip-Service-Only Values

If your recruiting materials and HR discuss a company culture that embraces diversity and inclusion, but leadership at all levels doesn’t support those ideals, Gen Y and X will figure that out quickly – and they don’t appreciate these inconsistencies. In fact, about two-thirds of those surveyed by Deloitte said business leaders only give lip service to diversity and inclusion in the workplace.

Retirement-Focused Benefits

The younger generation saves for retirement and wants you to contribute to their 401(k). However, this cash-strapped generation saddled with student debt also emphasizes other financial benefits available to them now and emphasize financial wellness such as access to financial education platforms, budgeting tools, and financial coaches.

Change-Adverse Workplace

A “this is the way we’ve always done it” philosophy perpetuated by managers and staff resistant to change will turn off younger employees. They want to be heard, and have their suggestions taken seriously. They have spent their lives adapting to ever-changing technologies and expect to use technology to enhance work productivity.

What is important to Gen Y and Gen X at work

Company Values

How they spend their time, who they work for, and what they do is often more important to Gen Y and X than earning a big paycheck. These generations do not only expect their employers to strive for financial success, but also want the organization to make a positive impact on the world. Working for an organization that supports charitable causes and gives back is also important to 75% of job seekers.

They’ll also expect you to maintain transparency by communicating about finances and leadership. Generations Y and X want to learn about challenges and mistakes made by their organization from leadership, not the rumor mill.

Work/Life Balance

Flexible schedules and work-from-home options are no longer benefits offered to favorite employees. Employees from the younger generations understand that technology makes it easy for them to work remotely and they don’t want to commute to the office every day. They expect you to treat them as adults and understand they will be productive from home and outside of the traditional 9 to 5 working hours. This isn’t a new concept: the 2015 AfterCollege Career Insight Survey noted 68% of Gen Y wanted the option to work remotely.

The United States isn’t exactly known for work/life balance: employees are expected to work long hours, take work home, and skip vacations. But the AfterCollege survey noted that 68.78% of entry-level job seekers value work/life balance more than any other factor after salary. A flexible work schedule was No. 4 on the list, with 53.8% noting flexibility as an essential factor.

Diverse and Inclusive Culture

It won’t take employees from Gen Y and X long to learn whether you back up your diversity and inclusion policies with real action. They will review your leadership – C-suite and corporate board – for diversity of race, ethnicity, age, gender identity, and more. In the era of the Me Too Movement, these employees won’t settle for an organization that’s mostly-male with a top-down management style.

Good Benefits

Don’t be mistaken, a focus on values and flexible work schedules does not mean Gen Y and X are willing to forego traditional benefits. Gen Y and X are more cash-strapped than previous generations because of student loan debt, and many entered the workforce during the Great Recession. In addition to flexible work schedules, traditional and non-traditional benefits that are important to Millennials include:

  • Financial wellness and literacy programs
  • Student loan repayment assistance
  • Unlimited PTO plans
  • Opportunities for advancement
  • Health and wellness benefits

What you can do to keep Gen Y and Gen X working for you

Company Culture

Gen Y and X want to work for companies that understand and support their values and understand their differences and the challenges they face. Generally speaking, generations Y and X are better educated than previous generations – and a higher percentage of women have degrees than men. But they also have more student debt. They are more racially and ethnically diverse. Many delay marriages and creating a home longer, often living with their parents. More would rather travel and experience the world than buy a home. And they’re delaying parenthood.

Diversity and Inclusion

There is a correlation between Gen Y and Xers who want to stay with their current employer and their belief that the organization supports diversity and inclusion. How they define diversity and inclusion varies from typical demographics to ideas/ways of thinking, and tolerance, inclusiveness, and openness in the workplace, Deloitte’s global survey noted.

Share how your leadership defines diversity and inclusion. To understand what your workforce values under diversity and inclusion, ask them. Then develop policies that support these values and train all levels of employees as these definitions evolve.

Work/Life Balance

These generations often value experiences over financial gain and possession. However, they also want to be paid for the work they do rather than work long hours in salaried positions that cause their work/life balance to suffer.

Because they’re choosing to delay becoming parents, flexible and work-from-home work options help retain Gen Y and Xers who want to keep working for you but still be close to their kids.

These generations also want the flexibility to work a schedule that supports vacation time for travel. And employers are responding: the State of American Vacation 2018 found that employers are beginning to encourage vacation cultures and as a result, employees are feeling more confident about using earned time off. For three years in a row, the amount of vacation time used increased. Still, 52% of American workers didn’t use up all their vacation time in 2017. The younger generations are likely to decrease that number.

Talent Development

Career growth opportunities rank No. 1 on the list of factors most important to job seekers surveyed for a 2019 report by Jobvite. The same survey noted only 17% of those who left their jobs within the previous 12 months did so for more money.

Accurate Job Descriptions

Providing Gen Y and X with clear expectations of their work begins during recruitment and hiring. A Jobvite study found that 43% of new hires who left within their first 90 days did so because their job duties were different than their expectations based on job descriptions and interviews.

Training that Adapts

Nearly two-thirds of employees are concerned about the impact of AI and robotics on the workforce. Although generations Y and X are a tech-savvy generation, many feel unprepared for Industry 4.0. They expect their employer to provide the training they need to be productive and successful.

Just because purpose may be more important to many younger workers than the size of their paycheck, don’t think that means Gen Y and X aren’t ambitious: Deloitte found that more than half strive to be high-earners. They’ll seek out opportunities for training and advancement at work, and if they don’t find what they want, they’ll move on. They are more comfortable than other generations in striving for jobs for which they don’t have all the required skills if training is offered.

Key Takeaways

The great news is that making your workplace more friendly for Gen Y and X will benefit your employees of all ages. Offering flexible work schedules and work-from-home options not only appeal to younger workers but also Baby Boomer caretakers of aging parents and grandchildren. Supporting a variety of community organizations better ensures your employers will feel you value what’s important to them. Developing the talents and strengths of every employee while training them to adapt to ongoing changes in technology increases productivity and adds to your bottom line.

Are you a CFO in Charge of HR? What You Need to Know

Are you a CFO in Charge of HR? What You Need to Know

As a CFO, your job isn’t easy even at the best of times. You’re responsible for managing the company’s financial health, capital investments, and return on those investments. And as if that wasn’t enough, many modern CFOs have now been given ownership over their company’s HR.

This change can be particularly difficult because as a CFO, you’re probably a numbers person – now you’re supposed to be people person too? You may well be wondering how you’re going to juggle it all.

The good news is that, with the right approach, managing HR as a CFO can be extremely rewarding and empowering. You get to guide the financial and people side of your business, coordinating the two to maximize your company’s growth. That’s a pretty good position to find yourself in, as long as you know how to handle it.

Launchways recently hosted a webinar that covers some of the most common issues CFOs face while managing HR. In today’s blog post, we’ll cover some of the main points that were discussed on the webinar. In this post we’ll cover:

  • Aligning business strategy with HR strategy
  • Owning and leveraging company culture
  • Examining HR processes
  • Identifying key HR metrics to track and evaluate

Align Business Strategy & HR Strategy

The two main uses of a company’s capital are technology and people. As a CFO who is also responsible for managing HR, you get to guide the success of your investments in human capital. Instead of seeing your hybrid role as an irritating added responsibility, you can see it as an opportunity for greater control over your company’s growth and financial health. You get to use your financial expertise and familiarity with the company’s business strategy to maximize the return on investment in your company’s people.

The best way to do this is to align the HR strategy with the business strategy so that all parts of the company are working in sync towards the company’s goals. That doesn’t just mean approaching HR from a finance perspective, though. For the best results, you must aim to see things from an HR perspective.

It’s important to bring in the right people and to make sure that they stick around for the long-haul. At the same time, cross-department alignment is critical. Every department needs to be aligned with each other and with the company’s goals so that the company can work as efficiently and productively as possible.

Many companies dismiss the impact that HR can have on their growth and continued success. They underestimate the cost of turnover and so under-invest in their people. But the fact of the matter is that talent acquisition, development, and retention are critical to a company’s long-term success. And as a CFO in charge of HR, you have control over these processes.

Build and Maintain Your Company Culture

Company culture is one of the main drivers of employee acquisition, productivity, and retention. A culture based on the company’s mission/vision and in-line with business strategy motivates exceptional employee performance. Employees who are driven by the company mission are not just contributing to a company’s profits in exchange for a salary, they are part of a greater community working towards higher goals.

That matters because providing meaningful work is one of the main challenges that companies face in today’s market. The truth of the matter is that a good salary and benefits package isn’t enough to keep employees around anymore, and as a result, turnover rates continue to increase year over year. By creating an intentional culture that is genuinely integrated into company operations, you can solve many of your HR challenges and reduce talent-related expenses.

When it comes to company culture, you need to establish a strong foundation that will set you up for future success. Mistakes early-on will lead to bigger problems down the road, so it really is worth taking the time to get your company culture right. That’s especially true for growing companies since maintaining a focused and effective culture and strategy gets harder as companies scale. Not taking the time to get things right while you’re still small can come back to bite you as you grow.

You want your team to be aligned with your vision, driven by your values, and focused on your core objectives. The first step to accomplishing that is deciding what your values are and how you can express them in your company culture. After that, you should establish an excellent team of key management-level employees who will direct how that culture will become part of the lived reality for their departments or teams. Then make sure that all of your managers are dedicated to the company’s mission/vision and driven by your culture, objectives, and career progression.

Examine HR Processes

Now it’s time to get down to the nitty-gritty of how your company operates. In order to effectively guide your company’s HR, you need to understand how the processes in place work and start to mold those processes to support the company’s business strategy.

The first step is to conduct an audit of your HR situation. Take a look at what the current HR processes are and who owns what responsibilities. Examine workflows and interview key employees to get a sense of the current state of affairs. Then, think about what works and what can be changed to establish an effective and sustainable workflow.

The next step is to look at your own responsibilities as the company’s “HR generalist”. Generally speaking, these are:

  • Human capital decisions: who to hire, promote, or fire.
  • Day-to-day people operations: ensuring individuals, teams, and departments are operating smoothly and working together towards the company’s goals.
  • Compliance: making sure that your company is following labor rules & laws regarding fair labor standards, anti-discrimination, sexual harassment and more.
  • Payroll: managing employee salaries, adding new employee files and editing existing files, complying with tax laws.

When examining these responsibilities, it’s a good idea to think about what you can handle yourself, what you can delegate, and what you can outsource to third-party providers. You want to establish a sustainable HR approach that leaves you with enough time and energy to manage your more traditional CFO responsibilities. Think of your managers as allies in establishing and maintaining effective HR processes in addition to the company’s HR professionals.

Once you’ve established your HR processes, it’s time to figure out how to track and evaluate HR performance.

Key HR Metrics to Evaluate

Identifying key HR metrics can be a huge asset when evaluating your current HR situation and future HR performance. That way you can make your human capital decisions backed by concrete data and clear trends. You should look for metrics that you can use to measure performance on the individual, team, department, and company level.

Starting with the broad-strokes metrics, you can establish departmental KPI’s and objectives to track performance between departments. These metrics should help you answer the question of which departments are performing better than others, and why. You also can and should track turnover rates on the company, department, and manager level to measure employee engagement and avoid the costs associated with turnover.

Ultimately, the most important metrics for planning and evaluating your HR initiatives and processes occur on the individual level. After all, HR is about building, maintaining, and leveraging the company’s people power – which is made up of individual contributions. That means that some of the most useful metrics to look at include employee engagement, employee happiness, and cultural health. These may seem difficult to measure, but you can collect invaluable data by gathering employee feedback.

Learn More About Managing HR as a CFO

In this article, we’ve covered several of the basics of effectively managing your HR responsibilities as a CFO, including:

  • How and why you should align business strategy and HR strategy
  • Building and maintaining an effective and sustainable company culture
  • Evaluating and establishing HR processes
  • Identifying key metrics that will allow you to plan and measure the success of your HR initiatives

There’s a lot more to learn about becoming an effective HR leader as a CFO, though. That’s why we put together a webinar that covers many of the key aspects of managing HR as a CFO. Learn what webinar panelists Dan Gloede, President and CFO of Codeverse, Jim Taylor, Founder and CEO of Launchways, and George Nissan, Director of Finance at BenchPrep have to say about what they’ve learned about guiding HR as a CFO.

DOWNLOAD THE COMPLETE WEBINAR AND WATCH INSTANTLY HERE.

Why Data-Driven HR is More Important Now Than Ever Before

Why Data-Driven HR is More Important Now Than Ever Before

The U.S. Bureau of Labor Statistics announced that April 2019 marked the lowest unemployment rate in 50 years and that year-over-year average hourly earnings have risen at or above 3% for nine straight months.

While that’s good news for the U.S. economy, as an HR professional you know both decreasing unemployment and increasing wages affect your ability to recruit and retain talent.

Just as customer experience is driving brand loyalty, employee experience – their perception of the way your organization treats them – will become the employment differentiator in an increasingly competitive market for talent. If your HR team hasn’t prioritized technology that collects then analyzes employee data, how will you understand what your differentiators are? 

The technology already exists to help you analyze your workforce and plan for future needs. However, HR has been slower than other areas of a business to adapt to the digital age.

A KPMG survey of 1,200 HR executives found

  • Two-thirds agree HR has undergone or is undergoing a digital transformation, but only 40% have a digital work plan in place at the enterprise or HR level
  • HR execs who believe HR has a strategic role in their business are more likely to be pursuing digital transformation; 67% support a strategic role compared to 48% who view the HR role as unchanged

There are many reasons you should use data and analytics in HR. In this post we’ll discuss a few reasons that will help you make the decision to invest time and resources in the technology you need.

  • Become more analytical. To be taken seriously as an HR pro, have conversations around data and look at initiatives analytically.
  • Build a business case for HR initiatives. Data-driven HR will allow you to build a business case for initiatives and get the budget you need approved.
  • Keep your job. As more HR tasks are automated, becoming an expert on understanding and using HR analytics will increase your value as a team member.

Use HR data to become more analytical — and be taken seriously

A PricewaterhouseCoopers survey found 77% of CEOs believe the limited availability of skilled workers is the single biggest threat to their business. They feel pressure to find and retain talent. It seems counterintuitive, then, that HR doesn’t always have a seat at the leadership table.

Often that’s because there is the perception that because HR is people-focused, HR professionals make critical decisions based on relationships or personal experience rather than facts. As an HR professional, you must lead your organization to adapt HR processes that are tech-driven to assure leadership that your recommendations are based on data, not intuition.

And, if you’re still focused on reporting the same tired statistics such as how many employees you have and cost of compensation and benefits, it’s time to step up and report more meaningful information. With the right technology, HR can glean more meaningful insights from the information you already have. Some experts refer to this as “people analytics.”

“Headcount, turnover, and tenure are helpful metrics, but people analytics are really about uncovering more meaningful insights that drive better workforce decisions, productivity, and business outcomes,” Paylocity’s Ted Gaty noted.

Data Builds the Business Case for HR Initiatives

Sales and marketing professionals collect and analyze data about customers, then make decisions based on what they find. So why should the approach be any different for your organization’s most valuable resource – talent?

You likely have the data you need already: you just need the tools and training to analyze the information in ways that tell what’s happening now and help you build a competitive talent strategy for the future.

As an HR professional, you need to integrate data into processes so you can collaborate better with your organization’s leadership to make better business decisions. To get resources allocated to HR, focus on how HR can deliver new value for the organization.

For example, data can aid in making decisions about the right time to hire by compiling all of the costs that go into recruiting and retaining each position, beyond just salary and benefits costs.

Your organization’s leadership may only take a critical look at culture and retention when there is a crisis, such as a huge upset when a key employee unexpectedly quits. Educate them that data analytics can track slow-moving trends that warn of potential problems. With constant monitoring, you can collect data – then act on it.

After initiatives are implemented, use data to prove Return on Investment by showcasing positive changes in key people metrics.

Keep Your Job

HR tasks that once were paper-based transactions are becoming increasingly automated. Technology has automated everything from payroll to recruitment and performance reviews, and new HR tech to tackle more tasks is being developed every day.

Rather than seeing technology as a threat to your role, view the digital transformation of HR as a way to provide you with more time for higher-level strategic tasks. Show the importance of your role by becoming your organization’s expert on analyzing HR data as it relates to overall strategic goals.

In this way, being a data-driven HR person will allow you to contribute more to your organization’s leadership team. But you must act decisively rather than standing back and watching what other organizations are doing.

Understanding what your data means will help you to forecast the future and make intelligent decisions about talent needs that propel goals for revenue growth.

We agree with Paylocity’s Ted Gaty: “There’s a lot of data out there about your workforce and if you can take that data and make use of it with advanced analytics, then you will start to optimize your workforce and design programs that improve key HR metrics.”

Don’t Miss Our Webinar

Now that you understand why you should be collecting and analyzing HR data want to learn more about using this resource? Sign up for Launchway’s webinar “How to Build an HR Business Case: The Modern HR Leader’s Complete Guide to Metrics, Analytics, and Proving ROI.”

Emotional Intelligence: An Increasingly Vital Skill for the Modern CFO

Many CFOs have built their careers on technical skills and financial smarts, but performance today is no longer solely measured on those abilities. For the modern CFO, a new set of soft skills built around emotional intelligence have become increasingly important in recent years for their ability to help business leaders build relationships, resolve conflicts, and motivate high-performing teams.

From understanding and managing emotions to aligning talent with business needs, the CFO as coach, collaborator and motivator is a growing trend. In this post, we’ll look at how emotional intelligence has become a critical skill set for today’s CFO and examine the five core components of emotional intelligence and the role they play in helping to bolster leadership performance.  These key components include:

  • Self-awareness 
  • Self-regulation 
  • Internal motivation 
  • Empathy  
  • Social skills

Changing the CFO skill set equation

The skill of emotional intelligence refers to the ability to identify, use, understand and manage the emotions of themselves and others in a positive way. For some individuals, the ability to understand and assess emotions may come effortlessly, but for others, not so much.

Since CFOs need to be able to induce change through others, this ability to inspire and influence has become a valuable skill in today’s collaboration-centered workplace.  CFOs need to be able to respond to divergent points of view and differences in the way people think. By extension, they need to harness their emotional intelligence to get through difficult situations.

With fewer layers of management in today’s organizations, leadership styles lean toward less authoritative. Moreover, the shift towards more knowledge-focused, team-based roles means that workers tend to have more independence and self-governance, even with lower levels of an organization. As a result, CFOs are finding themselves connecting and collaborating with people they would not likely have interacted with in the past.

Previously, the finance function required a number of core skills, including technical expertise, analytical thinking, comprehension, and assertiveness. While these attributes may not have changed, today’s CFO also needs to exhibit a wide range of soft skills, including an ability to collaborate effectively, build relationships and perceive, evaluate and manage emotions.

Clearly emotional intelligence is important to everyday social interactions, but how does it relate to CFO performance? When you make tough decisions based on hard data that can have an impact on non-finance departments, you could come across as tough or inflexible. Not a good reputation for a leader. That’s where emotional intelligence comes into play.

Growing need drives resurgence

Emotional intelligence first gained widespread attention back in mid 90s with the release of a book by Daniel Goleman simply titled, “Emotional Intelligence”. The subject has since been the focus of numerous studies, many of which point to it being a better predictor of leadership success than a person’s general cognitive ability. The reasoning? An executive skilled at understanding what makes people tick can better motivate teams and drive more effective interactions. 

Several factors are contributing to a renewed interest and growing need for leaders with strong emotional intelligence skills:

  • Market disruption.  New and emerging technologies are creating substantial market disruption and business transformation across industry sectors, resulting in corporate restructuring, flatter hierarchies and greater cultural diversity. 
  • New workplace demands. The digital age and broader enterprise connectivity is intensifying workplace pressures, creating the need for leaders with greater self-awareness, better emotional understanding and superb social skills. 
  • The need to innovate.  Rapid technology acceleration and the speed of new service deployments requires better collaboration, agile teams and a culture that allows for continuous feedback, honest communication and individual empowerment,  which are core emotional intelligence-based attributes.
  • Service-oriented economy. As we move to a more service-based economy and a more customer-centric focus, relationship building, superior communication skills and better self-management abilities become more important than ever. 
  • Globalization. The ability to empathize and relate to different attitudes, perspectives and cultures is essential in today’s global environment.  When managed properly, this diversity can lead to higher performance and better outcomes.

A recent report from World Economic Forum ranked emotional intelligence as the sixth most important skill needed in 2020 in order to manage the coming fourth industrial revolution.  Emotional Intelligence wasn’t even on the list for 2015. This may explain why many organizations have begun offering employees more opportunities to improve their emotional intelligence.

Gaining a performance advantage

According to the model developed by Goleman, emotional intelligence consists of five core components. 

  1. Self-awareness. Self-awareness is knowing your own feelings and understanding your strengths and weaknesses in relation to how they affect behavior. Leaders who are in tune with their own emotions are better able to control their own impulses and tend to enjoy better relationships. To improve self-awareness, take time to better know and evaluate yourself. Then understand how you relate to others.
  2. Self-regulation. CFOs need the emotional flexibility to collaborate effectively without letting egos interfere. Self-regulation is the ability to control outbursts, disruptive impulses, and moods. It also encourages a “think before acting” attitude. Instead of being held hostage by your emotions, learn to use them strategically as a performance improvement tool.
  3. Internal motivation. Internal motivation is the passion to work for internal reasons such as personal joy, curiosity or mental satisfaction. CFOs need to be continuously monitoring their performance, making sure they’re hitting their targets and dealing with issues when they arise. Internal motivation provides the clarity of focus and the drive needed to initiate change and take action while opening the door to positive feedback and learning. 
  4. Empathy. Most of us are not taught how to deal with our emotions or the emotions of others. Empathy requires reading feelings and understanding the needs of others. Learning to control your own emotions will enable you to help others manage theirs. By becoming more aware and understanding how others feel in various situations, you’ll be better equipped to inspire, motivate, and connect with others across the organization.
  5. Social skills. Having good social skills and sound situational awareness can be a powerful tool for leading a team. While a clash of opinions is sometimes inevitable in a cross-functional team, the ability to negotiate the needs and viewpoints of others and find common ground is vital for a CFO. Creating the harmony and agreement needed to move initiatives forward hinges largely on the ability to managing relationships. 

Key takeaways

It turns out cognitive intelligence and technical skills are an incomplete predictor of performance. The ability to influence, collaborate, and communicate effectively across departments, cultures and generations is a key component of effective leadership. 

The reality is there is a strong link between the emotional intelligence of its leaders and the financial performance of an organization. Today’s CFO needs to be both a strategic and tactical thinker. Not surprisingly, hiring managers are increasingly placing higher value on emotional intelligence and are incorporating these characteristics in their leadership search criteria.   

While technical and financial expertise is important, CFOs can take their performance to the next level by combining financial know-how with emotional intelligence. Like any form of self-improvement, building and strengthening your emotional intelligence will stretch your comfort zone and challenge some long-held notions about effective leadership styles. The good news is the effort you make to improve your emotional intelligence will pay dividends far beyond the initial investment.