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Modernizing Your Approach to Performance Management

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 workforce
  • Specific mindsets, tools, and approaches organizations can use to begin transforming their performance management processes

Why Most Approaches to Performance Management are Outdated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 risk.

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 long-term viability.

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 excellence.

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 structure.

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 your organization.

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 over time.

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.

Key Takeaways

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

How to Learn More

If you’re a business leader looking to build an impactful, forward-facing performance management strategy, be sure to join us on Wednesday, December 11th to learn about The Future of Performance Management! 

This free webinar from Launchways will be packed with actionable insights about emerging best practices for performance assessment including…

  • How to assess the impact of your current performance management program and get started on building something even better
  • How to recognize the common pitfalls of performance management
  • 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 talent effectively

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.
  • Jon Howaniec, VP & HR Director at Clark Dietz, who has over twenty years experience building high-performing HR processes at fast-growth organizations.

Any business leader, HR Director, or manager hoping to improve their skills as a coach, mentor, or accountability partner should make time to check out The Future of Performance Management: How to Modernize Your Approach and start the process continuously improving their team this December.

Top 10 HR Challenges Growing Businesses Must Prepare For in 2020

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.

1.   Employee Performance

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 cares about.

2.      Terminations

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.

3.   Employee Leave (FMLA, Parental, Personal, Other)

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.

4.   Harassment Prevention, Training, and Investigations

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.

5.   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.

6.   PTO/Sick/Vacation Policies

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.

7.   Attendance

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.

8.   Reimbursement Policies

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.

9.   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.

10.  ADA 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.

Illinois Employers: Are You Ready For Legalized Recreational Cannabis Affecting Your Workplace?

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 for employers.

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 further clarity.   

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:

  1. 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).
  2. 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.
  3. 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.
  4. 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.
  5. 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: hbailey@salawus.com.

Illinois Employers: What You Need to Know about the New Sexual Harassment Training Requirements

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 Center, 15 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 information:

  • Description and clarification of what sexual harassment is
  • 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 Industry

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 assault.

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.

Other Provisions

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 employees

Repeat violations could be as much as $5,000 for each instance.

Key Takeaways

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 employees.
  • Employers cannot require workers to sign nondisclosure agreements related to harassment, discrimination, or retaliation.
  • Independent contractors are also protected under this law.
  • 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.

The CFO’s Complete Guide to Assessing the Health of the HR Function

The CFO’s Complete Guide to Assessing the Health of the HR Function

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

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.

Compliance Review

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.

Key Takeaways

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:

  1. Company Culture
  2. Compensation, Benefits, and Incentives
  3. Technology and Data Strategy
  4. Hiring, Onboarding, and Retention
  5. Compliance
  6. 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.

This post is brought to you by Paycor.
How to Make Your Workplace More LGBTQ Friendly (And Why You Should)

How to Make Your Workplace More LGBTQ Friendly (And Why You Should)

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.

Marriage equality is now a federal law, impacting all 50 states, yet there are still 31 states without discrimination protection for this community, according to the Human Rights Campaign Foundation’s report, A Workplace Divided.

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.

Key takeaways

• 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.