While there may or may not be a recession on the horizon, many employers are rightfully preparing for the worst. According to the Bureau of Labor Statistics in November 2022, there were only six tenths of an unemployed person for every job opening that existed. That means 2023 will likely remain a job seeker’s market.
As an employer, you have probably realized how critical it is for organizations to be focused on its employees. There was a time when HR was considered overhead or a necessary evil, but that line of reasoning is now ancient history. Whether your company thrived or suffered during the Pandemic, was probably due in large part to how your employees were affected during this crisis. Some organizations today are still challenged with the impact of not being able to find the right employees, while others are struggling to resume ‘business as usual’. In all cases, the goal is to create a positive and inclusive culture where employees are happy, productive, engaged and ultimately want to stay for the long term. So, in addition to a few extra pounds some of us wish to shed in the coming year, here’s our list of suggested New Year’s Resolutions for 2023 to help achieve those goals.
Be ready to be transparent and reinforce employee ‘trust’
Newsflash: Pay transparency is coming and employers need to be ready for it. For most organizations, the sharing amongst employees of their compensation is viewed as having the potential to sow distrust between employees and managers, cause consternation between coworkers, and results in unfair comparisons amongst peers. While initially this might be true, it’s all part of the desire to achieve true pay equity.
In Massachusetts, under the Pay Equity Laws, we are prohibited from querying a potential employee about their pay history. In New York, the advertisement of open jobs requires a salary range be listed. Years ago I remember working with an accountant from Norway, who was proud to share in his country salaries were public and he could google the pay of everyone in his company. This is the continuum we are on. And it’s shrinking.
I am not sure we are going to end up going as far as Norway has, but I can see where companies in the US might be required to publish salary/wage information for their jobs, much like New York is requiring them to be included in its job postings. Norway has a point, as they rank 3rd in the world with the smallest gender pay gap. And this is the goal of all the pay equity laws now catching fire from state to state.
So, what happens when everyone knows what everyone else makes? First, there are no secrets. Employers will need to justify each and every difference in pay. This is nothing to be afraid of. In Massachusetts, there’s a long list of allowable and justifiable reasons for differences in pay for comparable work. In the world of Pay Transparency, an employer may have to look an employee in the eye and tell them that “the merit of your work does not match up to Jerry’s and that’s why he gets paid more”.
That’s a hard conversation to have, but going to be one of the by-products of Pay Transparency. There IS an upside however, but it’s hidden. First, many employees may not fully understand the economics at work for their position. They may assume that ‘the sky is the limit’ when it comes to pay increases and fail to recognize that at some point increased pay becomes too much to justify for the position. When it’s all out in the open, the pay ceiling and pay floor are known and the employee knows exactly where they stand. In this way it’s easier to set expectations while also avoiding hard conversations.
In addition, it’s important to remember that where clarity is lacking, rumor and innuendo can rule. As a result, your employees may approximate what their co-workers are earning or make unfair comparisons amongst peers. This has the potential to lead to wildly incorrect assumptions that don’t necessarily reflect reality. This in turn creates an extreme amount of distrust between employees and managers, and among co-workers.
When the ‘cat’s out of the bag’, will you be ready to explain it to your employees?
Strive to be more flexible
Hybrid or remote work is now just work. Get used to it, and understand it’s not going away. Remember the term ‘the new normal’? This is it. For most employers, remote work can be inconvenient, and for many, they feel it gets in the way of productivity, engagement and learning. None of that matters anymore.
What does matter is how your organization adapts to the requirement posed to you by employees’ expectations of a hybrid or remote work scenario. If you plan on every role being hybrid, you must also consider each method of interaction that employee may have with your customers, vendors and coworkers. This includes how they will interact with managers, how they will learn and how they will continue to be engaged. It’s a lot to consider and a significant effort, but well worth it if done properly. The companies having the most trouble attracting and retaining employees today are the ones still resisting remote, or at least hybrid work.
At Commonwealth, we’ve implemented three working options and even our ‘in office’ option gives our employees at least 1 day a week working from home. Allowing for this and ensuring that we have coverage of employees tasks and responsibilities, both in-office and remote, takes the pressure off any single employee feeling ‘obligated’ to not take a day off or to be in the office.
Like most other companies, we have a need for employees to be in office, but spreading the responsibility across all employees is part of our overall HR strategy. We realized some time ago that lack of flexibility results in a lack of engagement, because what we are doing when we’re not being flexible is making an employee choose between their families and their career, tipping their work-balance in a potentially undesired direction.
As to productivity, the creation of a ‘trusting’ relationship with your employees while ensuring they are engaged will produce what you desire. As an employer, listening to their suggestions, acknowledging their contributions and providing them with the tools they need to be more productive will get you there.
Create career development & mobility, then communicate it
Time marches on. As do our ages and as we see Boomers and Gen X evacuating the workforce, they are replaced with Millennials and Gen Z. What does this mean?
Understanding what a Gen Z employee may want from their employment experience will be radically different from that of a Gen X employee. Additionally, those fundamental differences can create a challenge for employers unless it’s not identified, understood and employers focus on the needs of the now dominant part of their workforce.
For Millenial and Gen Z employees, it’s critical that their work has purpose, more specifically, a social purpose. They seek constant and ongoing opportunities for learning and development, and absent these criteria, an employer can and should expect retention issues. However, more than just learning, career upward mobility becomes critical and may be on a timeline that seems more urgent than most managers can identify with.
For example, we’ve seen some employers make sure that ‘something happens’ or there is an acknowledgement of a new employee’s tenure at the company, not at their one year anniversary, but after only 6-7 months in their new position. Even if it’s a nominal pay raise, bonus or increased responsibility, they’ve found this creates momentum needed for increasing employee engagement.
Those actions on their own however, often aren’t enough. Ongoing communication with these employees by their manager and usually other ‘sponsors’ within an organization can have a big impact as well. This sets the course for the employee’s career direction, learning curve, and provides a “north star” for their career within the organization. Managers themselves play a significant role here that extends outside their typical managerial responsibilities and often necessitates the role of career coach, mentor and confidant as well.
Ensuring employees and managers have regular check-ins, frequent opportunities for informal discussions and regular assessments on performance (more than once per year) will keep the conversation going.
Endeavor to focus on your organization’s superpower – your Managers
Ever hear the expression, “people don’t quit companies, they quit managers’ ‘? It couldn’t be more true for 2023. Your managers can be the strength, or weakness of your company and its culture. Statistically speaking, 82% of American workers said they would potentially quit their job because of a bad manager.
How can you make this actionable? First, understand that post-pandemic, if you’ve got managers who have survived the pandemic with your company, there’s a good chance they may be disengaged or burned out. You can’t blame them if this has an impact on their performance as managers or undermines their ability to engage those reporting to them.
In the new year, use check-ins and pulse surveys that cross reporting lines (or are anonymous) to try and identify who on your leadership team might be having challenges. Consider removing them from the negative impact they might have on employee retention and growth. However, they may still hold great value to your organization so creating an opportunity to re-challenge them with a revised position that allows them to re-engage themselves and rectify their own situation may be desirable.
Many managers, especially after the impact of COVID-19, have been saddled with conflicting responsibilities and are unclear about where their priorities should be. If employee retention is a priority for you, make sure you communicate this to them and provide them with the tools they need to achieve a better balance for both themselves and their direct reports.
For those who are actively engaging their direct reports with a positive effect, they too need the necessary tools and leeway to continue to engage with employees via regular check-ins, goal identification and tracking. Leveraging the appropriate tools will make this process less cumbersome, especially for remote situations. And more positive engagement with managers combined with some of the other resolutions will yield great results!
Mind the burn and avoid ‘The Grind’
Employees today don’t expect to “Grind”. Decades ago I can recall the admiration employers had for employees who would put in significantly excess hours to ‘get the job done’. This often included picking up the slack created by unfilled positions, or a company’s lack of cash flow that ultimately turned two jobs into one.
These circumstances still exist today, but employees willing to accept such working conditions are not. ‘The Grind’ is unsustainable and leads to burnout and resignation. Since we learned there isn’t even a whole unemployed person (remember six tenths?) waiting, or even looking for that job, it’s in the employer’s best interest to get realistic and not expect their employees to ‘Grind’.
Getting real means revising your expectations, job descriptions and accepting that competitive compensation and benefit programs should be a fundamental part of your offering. This is particularly true if your business is in a high stress, deadline-based industry that demands and creates a great deal of emotional stress for your employees. In 2022, McKinsey & Company found that 65% of employers thought their benefits properly addressed mental health needs. In comparison, about 51% of workers felt this need was met. It is this gap, or the failure of employers to adequately address it, that continues to contribute to ‘The Great Resignation’, but also to the post-pandemic pivot of careers and lifestyles as well.
Take another look at employee classification
Let’s get back to the notion of turning two jobs into one again. There are employers out there twisting the definitions of exempt and nonexempt employees to ensure work gets done without the need to pay overtime or other premium pays, and this is going to catch up with them soon.
Most states’ Attorney Generals have refocused their attention and resources to the enforcement of Wage and Hour claims resulting in negative headlines for employers, millions of dollars of penalties and interest owed to employees and allegations of wage theft. While you are revising your job descriptions pay special attention to your state’s definition of exempt and nonexempt employees. You may be surprised by the differences between your state’s definition and the federal law. The worst thing that can happen is that a disengaged or disgruntled employee finds a lawyer that disagrees with your classification of their job, and your firm ends up being accused of wage theft. It can happen easily and many employers are blissfully ignorant that anything is wrong until they are featured in a tweet by the Attorney General’s office. That tweet certainly won’t help your retention and recruiting strategy.
Time to take action!
There’s some actionable steps above and perhaps these seem overwhelming to attack all at once. Our suggestion is to find the one that resonates with you the most and start there! There are many resources and specialists available to partner with you on this journey. Technology tools, professionals such as lawyers, HR consultants, wellness and benefit providers and companies like Commonwealth Payroll & HR, who have the processes and the know how to see how it all fits together. You can be an employer, but with the help of Commonwealth, you can “Be the Employest”!
-By Jeff Plakans, President & Founder, Commwealth Payroll & HR