What you should know about health insurance in 2015

Complexity will define health insurance coverage for businesses in 2015. There are myriad considerations companies must make to provide affordable coverage for employees and avoid penalties.

“The move to consumerism is very challenging for the users of health benefits, which are employees,” says William F. Hutter, CEO of Sequent. “In anticipation of this, companies should be figuring out how to fill an advocacy role for employees to help them with health benefit issues.”

Smart Business spoke with Hutter about health insurance considerations for 2015.

Are companies with fewer than 50 employees affected by new health care laws?

The regulatory reporting and penalty environment created by the Affordable Care Act (ACA) does not impact companies with fewer than 50 full-time employees. They will, however, be impacted by the changes insurance carriers are required to make by the ACA. Insurance carriers and their distribution systems will be impacted by cost increases. We won’t really understand the full impact this will have until the additional tax to carriers that’s being subsidized by the government to offset carriers’ costs expires.

Why might a company with very few employees pay different rates?

Under the ACA, small groups now fall into a community rated pool. Geographic area, self-only or family, age (not more than 3:1) and tobacco use are the only factors allowed now. Community rating, then, can be good for smaller groups.

How will the 9.5 percent affordability calculation affect companies with more than 50 employees?

Employees who are charged more than 9.5 percent of their monthly income for health insurance benefits are eligible for a subsidy for coverage in the health insurance marketplace. That also means the company has not provided employees with a plan that meets the affordability definition and will pay a $2,000 penalty for each instance.

Employers may want to establish a policy that sets the cost of health care coverage at 8 percent of income to make sure they stay under the threshold, especially during the measurement period for affordability.

Companies with more than 50 full-time employees need to account for age rating scenarios because age is one of the determining rate factors. That can be a very complicated transaction that must be closely considered to avoid the after-tax penalties.

What is a measurement period?

Companies with more than 50 employees in a variable hour workforce must establish a measurement period to take averages and determine benefit eligibility on a look-back basis. Eligibility changes from year to year and is based on the actual hours worked in a given measurement period. The administrative burden of establishing a look-back period is going to be challenging.

There are important limits on the length of an administrative period and important exceptions regarding the permitted length of the stability period.

How will companies that are geographically separated but have one owner be treated under the ACA?

Under the ACA, two companies are considered one when they’re under common control. This prevents owners from subdividing their companies to receive more beneficial treatment. If one company has 26 employees and the other has 25, the ACA treats that as one entity with 51 employees, requiring the entity to comply with the law.

Companies in this situation should consider their network coverage issues in the context of both geographies. Establish comparable coverage in which everyone is treated the same from a financial perspective.

How can employers ensure they comply with the new regulations?

Tracking data is very important. Companies need strong reporting and data management to provide the required reports to the federal government to show their plan affordability and to stay within the safe harbor rules.

Companies must also have that data formatted properly, which can be challenging for those without a good HR information system. There are seminars that offer training on reporting to help HR staffs keep up with the requirements.

Insights HR Outsourcing is brought to you by Sequent

Staffing agencies must meet ACA changes head on

Staffing agencies that supply companies with professional consultants, such as IT professionals, face a significant problem once the Affordable Care Act (ACA) rolls further into implementation this coming year. Those regulatory changes also will affect companies that utilize those services, and may uproot a long-held relationship between agencies and some of the state’s largest employers.

“The entire staffing industry is going to be reshaped by full implementation of the ACA,” says William F. Hutter, CEO of Sequent.

Smart Business spoke with Hutter about the coming ACA changes and how they will affect staffing agencies and those that use their services.

What is the problem staffing agencies face because of the ACA?

The staffing agencies like to think of these W-2 employees as independent workers/contractors. While they are legally W-2 employees of a staffing agency, they have historically been considered benefit ineligible under ‘carve out’ privileges and have not qualified to receive health benefits from the agency through which they work. The ACA, however, complicates this relationship. In January, those individuals are legally eligible for benefits, which are offered by the staffing agency.

Many firms have long-term contracts with their end-user companies and independent contractors at a pre-determined hourly rate that normally does not account for the cost of health care benefits. The impending change is going to dramatically increase the costs staffing agencies bear and most likely make it difficult for agencies to rebid long-term contracts with large-scale employers.

What are staffing agencies likely to do in the face of these significant changes?

Fundamentally, staffing agencies need to have a real depth of understanding about the law. For instance, some staffing companies believe that only those people working on staff — salespeople, administrators — are considered employees under the terms of the ACA. That’s not the case. When we flip the calendar to 2015, all those independent contractors working in the field who are W-2 employees of that agency are no longer exempt from employer-sponsored benefits. If benefits are not made available to these employees, employers will face potentially heavy fines.

Staffing agencies need to devise a comprehensive strategy to deal with the new conditions because, fines and penalties aside, the costs of providing benefits will be disruptive to their current business.

How does this affect those who typically find work through staffing agencies?

This may not bode well for those working as independent contractors through staffing agencies. Large companies are using some 80 percent of all the professional contractors. And Ohio’s state government likely uses in excess of 2,000 independent contractors supplied by staffing firms. When the ACA drives costs up for staffing agencies that must afford benefits for so many employees, the cost will go up for the end users to help pay for those benefits. That will cause end users to reconsider many of these relationships.

How might end-user companies react?

We’re going to have to take a wait and see attitude to examine whether or how companies change the way they manage contingent staffing. Third-party employers now provide a specialty service to companies because the skill sets contractors bring no longer reside within a single company.

Further, so many things have become complex from a regulatory and compliance standpoint and that has driven the rise of outsourced specialty services. Companies likely can’t go back to the days of employing myriad specialists under one umbrella. That model carries too much overhead. Reducing fixed costs has allowed companies to be more flexible and agile, to expand and shrink with market demands.

How prepared are staffing agencies?

With changes imminent as of January 2015, it’s clear that many staffing agencies, and the end users of those services, are not prepared. It’s a complex subject that’s important for those utilizing this model to understand.

Staffing agencies should seek advice on how to deal with these changes. Don’t try to deny the inevitable. Figure it out now while there’s still time to assemble a plan.

Insights HR Outsourcing is brought to you by Sequent

Training on HR systems helps staffers better utilize the timesaving software

Human Resource systems are software programs designed to help HR staffers better execute their job functions. However, there are often barriers to implementation with even the best systems that can be attributed to poor training, system incompatibility and unfriendly usability.

An unused HR system is no good to companies. Fortunately, there are solutions to help staffers use software that can ultimately make their jobs easier.

Smart Business spoke with Brian Donovan, managing director at IntegreatHR Technologies, about overcoming the common barriers to adopting HR systems.

What are some common complaints about HR systems?

The user experience is always top of mind when it comes to HR systems. While many systems are feature-rich, they are not as intuitive as many staffers would like, so many of the features go unexplored and unused.

Another issue is the level of vendor support. These systems are in demand, so vendor resources are not always available at a time of need and users get irritated.

Other common concerns include how systems integrate with existing systems, having multiple logins, the ease with which data is imported and exported, the look and usability of dashboards, and the system’s ability to generate business intelligence, measurements and analytics.

These issues can make adoption a common challenge. Beyond staffers who inherently resist change, insufficient training at the onset can lead to slow adoption.

What improvements have been made that can solve these issues?

As with all software, HR systems are evolving. Vendors continue to improve usability, feature availability and system capabilities by developing mobile platforms and apps for self service, data entry and access.

There is also a movement to systems that offer ‘hire to retire’ capabilities that follow employees throughout their working life, and systems through which data exchange and ‘reuse’ is possible. The latter has a feature that allows forms to be populated from information provided in other functions, which improves the user experience while reducing errors.

Why might HR staffers not get the most out of the available technology?

Training and continuing education on the system’s features are often lacking. As with anything, staffers need to practice and apply what they’ve learned or it’s forgotten. Further, the power users — the administrators — are usually swamped with work, which makes it difficult for them to dive deeper, learn more and share knowledge.

While perpetually evolving software can bring improved usability, the consequence is that users must keep up with the changes. Some of these changes are system based, some are regulatory and compliance driven, and others are simply because of the number of systems a company may be using.

What help is available to facilitate better use of HR systems?

Most vendors have in-depth websites, both online and in-person training programs, and help desks that can deliver answers to address issues with the actual products.

But what is more important than the system is looking at the processes, workflows and business rules that the systems are designed to execute.

There are companies that provide assessment and system review services to help identify where improvements can be made and how to make an investment in the system to produce better returns.

In most cases, a customer knows where the problem areas are and where challenges and worries exist. It then becomes a matter of examining the processes and improving the workflows to address the business realities. All systems can be optimized, but they don’t need to be in every area. Find the critical functions — the areas taking the most time or causing the most errors, calls to the help desk, etc. — break them down and improve and train. Technology companies with consulting practices can help get that done, and can provide training and ongoing support. But for companies using HR systems, it often just takes an investment of time to improve a system’s implementation.

Insights HR Outsourcing is brought to you by IntegreatHR Technologies

Align your employee training strategy with the strategy of your business

Business leaders know that it’s critical to see how important employee learning and development is to their organization. What they may not know is that the days of 40-hour classes are gone. The one-size-fits-all approach to learning is being scrapped in favor of new ways of training.

The benefits are many: higher morale, productivity and profit, to name a few. Employees are likely to be better equipped to adjust to changes and challenges.

“Training used to be the first thing cut from the budget,” says Beth Thomas, executive vice president and managing director of Consulting Services for Sequent. “Now if you can show the value it has in alignment to the business goals, it should be the last thing cut from the budget.”

Smart Business spoke with Thomas about new ways to train employees through prescriptive approaches.

What is the workforce looking for regarding development?

Millennials are coming to work looking for development even more than compensation. They want to know, ‘What’s in it for me?’ or ‘How are you going to get me to the next level?’ They are interested in growing their career, but it is a two-way street. It is not just that the organization has that responsibility. The employee does as well.

It’s critical to maximize the on-the-job experiences and create a learning culture where development is expected and mentorships are offered for which leaders and managers understand how to teach and coach employees.

What is a prescriptive approach to employee training and development?

It is targeting training based on what the business needs and what each employee needs.

To get to this point, the company performs an assessment to get an understanding of what the organization actually requires, particularly to determine how the employees learn best.

People want to learn lessons from short snippets of business scenarios that they can apply immediately. They want to be trained on the job in an informal way through storytelling, coaching and gamification — learning through goal-oriented games that entertain as they train.

How effective for most employees is this type of training?

Many people I have interviewed said the best learning they have had was not from a classroom; it was from stretch assignments that push people beyond their current skill set.

These types of assignments, combined with succinct training tools, lead to higher application rates.

An example is the use of mobile devices for learning. With mobile technology on the floor through a tablet or smartphone, employees can implement new learning immediately. This allows for in-the-moment customized training, providing consistency, better retention and metrics that help ensure ROI.

How does a company invent a new training process?

When an organization is looking to create, turn around or customize its learning strategy, it has to do an assessment. It needs a broad-based survey as well as interviews with key stakeholders, highly motivated talent, people who are early in their career all the way to those tenured to determine what development is needed for the current talent pool.

This would help the talent move the business forward based on the company goals and to decide how to help employees grow their careers.

By developing your employees, it will help recruit, retain and prepare your talent and your bench strength in order to support your business for increased profitability.

It is so critical for organizations to get this right. Not only will it help recruit better talent, it will also help keep talent and develop those with high potential to the next level.

Insights HR Outsourcing is brought to you by Sequent

Why the status quo bars companies from exploring new ways to operate

Status quo thinking manifests itself in many forms. One is a “this is the way we have always done it” mentality, an attitude that sometimes morphs into a company’s culture — and that in turn could stifle a company’s growth potential.

Joe Cole, executive vice president at Sequent, says it’s often a company’s own success that fosters status quo behavior.

“Many companies founded by entrepreneurs early on, regularly challenge the status quo out of necessity as they attempt to establish themselves in the marketplace,” he says. “Then as they achieve success at some point, they become, as Jim Collins points out in his book ‘Good To Great,’ either fearful, complacent or dare I say arrogant.”

Smart Business spoke with Cole about challenging the status quo.

What drives companies to fall into complacency?

By nature, humans are creatures of habit, and that may help generate the status quo.

Also, success lulls companies into business complacency — ‘Things are going pretty well in this tough economy.’

Then there’s the concept of losing perspective. As you get immersed in the day-to-day operations, the concept of not being able to see the forest for the trees also allows the status quo to become ingrained in an organization’s thinking and culture.

Why is challenging the status quo so difficult?

The status quo is perpetuated because of myths about what is required from an organization to change and why an organization should change.
Being creatures of habits and routines, we take comfort in them, so when organizations want to challenge the status quo, change is disruptive, which equates to upheaval.

The reality is change does not need to be disruptive. In fact, any change, to be truly transformational, has to work within the natural flow of the organization. There are two types of fear: fear of the unknown and fear of being left behind, of watching others win. The latter can often blur the vision of leadership as leaders attempt to change for perhaps all the wrong reasons.

How do you keep employees from doing what they have always done?

People and organizations, including many leaders see change as ‘revolutionary,’ that it is an event with a launch, tag line, activities, etc., versus being a natural component of an organization’s DNA. Markets shift, attitudes shift, dynamics change in the marketplace and so your ability to respond to that — your nimbleness — is something that has to be part of the corporate DNA.

That is where leaders have to be willing to insist the concept of ‘We’ve always done it that way’ can’t reside in their organization. They need to lead by example. Then change can happen, and it can be a more natural change versus an upheaval.

Can change be driven from the bottom up?

Yes. Bottom-up organizations have the benefit of providing the people who directly interact with customers the ability and mechanisms to espouse their perspective derived from direct interaction with customers.

Where does a company best start the process of change?

It should step back and analyze its current operations. Don’t keep any sacred cows; everything is fair game. In our world, we focus on the people side of organizations; therefore, we seek to educate our prospective clients that perhaps there might exist a better way to attract, retain and align human capital versus the way you have always done it — that is, traditional HR.

Ask them to contemplate, ‘What might be changed in these areas that could really free you up to focus on the core functions of your business?’ The first thing is awareness and asking yourself rhetorical questions that perhaps, ‘I am a victim of my own thinking and there might be a better way to run this part of my business.’

It is at this point where a leader is open to new ideas and thinking, and he or she can truly embrace an introspective look at the business operations, customers, market opportunities and in turn challenge the status quo in a way that is liberating, transformational and ingrained in the organization’s DNA.

Insights HR Outsourcing is brought to you by Sequent

How to overcome the barriers to a European presence for your business

Once your company grows to the extent that a global presence is being considered, crossing that threshold often takes some level-headed thinking. And if it is going to be successful, the first step is a strategic one.

“It is really important to have a defined strategy before entering the market,” says Rita Hook, PHR, European Development Director, Sequent. “Companies need to have done their homework: Where is their market? What is the market potential? Do people really need and/or want their product? It also requires a rather extensive boots-on-the-ground marketing plan in the geographic area that best fits, so your strategic approach is really important.”

Smart Business spoke with Hook on how to overcome the barriers to launching a European presence.

My company wants to expand to Europe, but how long does such a project take?

It’s not a two- three- or four-month endeavor. It is more like an 18-month endeavor. You have to make that commitment. More U.S. companies fail to get established in Europe because they didn’t plan properly.

So in terms of that success rate, they may think, “We should go to Poland, we should go to France” There are many more employer friendly countries. In fact, many Europeans would advise against setting up in France.

However, with an understanding of your niche market and access to distribution, with preparation, you can avoid the potential of failure. An example of the importance of understanding your market is this point: employment contracts in particular countries must be provided to your job candidate in his or her native language as well as in English.

What can be the risks and the complexities of such a venture?

The notion is probably correct that you can expand your foothold in the European market, but there is a lot more planning needed than if you were to expand your market locally.

Americans also think there’s only going to be a little bit of a language barrier … doesn’t everybody speak English? They may, but the rules and regulations are much more complex and are not very employer friendly.

So make sure that you have your HR structure set up properly. It is important to plan your exit when the time comes to unwind your project or support with employees in Europe, so you are in a better position to avoid undue financial hardship. You can avoid foreign pitfalls by setting up the project correctly from the get-go.

What should I know about building my own plant in Europe?

We met with a company recently that felt it really needed to go to Poland to set up a manufacturing plant because it had an interested client. Our advice, before it invested $500,000-plus to set up a small plant, was to see if there was a more cost effective way to get into that niche market.

Often there’s no need to set up a costly permanent entity. An HR B.V. is an alternative to setting up a permanent structure, and you can establish an HR B.V. in Western Europe that represents an American company.

Consider incorporating in the Netherlands. It is more akin to crossing state lines to conduct business than it is to say, “We are going to cross the pond.”

An HR B.V. would be comparable to setting up a corporation in the U.S. like an LLC. We recommend that everybody base that out of the Netherlands. The employment rules there are a little bit friendlier than they are in France or some other regions.

Any other differences should I be aware of?

In France, for example, employees expect a meal ticket, and they are allowed an extended time to go to lunch.

In European countries, it is not unusual for a new mother to get a two-year paid maternity leave. Most U.S. companies are not familiar with such practices.
You don’t want to be surprised that you didn’t know about those matters. The major benefit of partnering with a shared services organization is that when it comes to setting up employment, this inside knowledge can be crucial to a successful global presence.

Insights HR Outsourcing is brought to you by Sequent

How to avoid common mistakes during the hiring process

It’s no longer a buyer’s market for hiring managers. Companies that aren’t careful about the hiring process could be shut out when it comes to attracting top candidates.

“Websites like Glassdoor and Indeed allow people to write reviews about a company’s interview process. Creating a negative candidate experience could be very detrimental to the company and its image,” says Li-Lun Chen, a recruiter at Sequent.

Smart Business spoke with Chen about top hiring manager mistakes that should be avoided.

Where do companies make mistakes in preparing  job descriptions?

Often, hiring managers aren’t sure what they want, or they have a list of criteria or prerequisites that is too long or unrealistic. A good description should provide a sense of the day-to-day work involved with the job.

One of a recruiter’s biggest pet peeves is a hiring manager who says, ‘I’ll know it when I see it.’ Translation: The hiring manager doesn’t know what he or she wants. At the other end of the spectrum, some managers will have a page-long list of criteria. That’s called a ‘purple squirrel’ in the industry. It’s the nonexistent, mythical creature that a hiring manager thinks is ‘out there.’

If you’re hiring a payroll specialist and your company uses certain payroll processing software, you don’t have to find someone who knows the exact same software. A candidate who has experience with any other software should be able to learn your system quickly.

Make sure prerequisites are vital to the job. Don’t mandate that someone have three to five years of experience, for example. Length of time in a position (even in a similar job title) doesn’t equal success.

Another problem occurs when companies combine jobs. They need a payroll person and a front desk coordinator but can’t afford two full-time hires. As an alternative, hire part-time employees rather than combining two completely different roles.

What’s the best way to conduct interviews?

Team interviews are a good option when a new hire will probably be working with multiple people. Part of the interview process is not only evaluating if someone can do the job, but also how they will interact with others. Team interviews are great for making an assessment of cultural fit.

As far as mistakes go, there’s a big one — a hiring manager who is distracted or late for an interview. You’re busy, but so is the candidate. Checking emails or scanning your phone creates a negative impression.

Also, too many hiring mangers like to hear themselves talk. Ask the candidate a question and listen to the response.

Hiring managers forget that they still need to hook candidates, especially those who may be happily employed elsewhere. Be enthusiastic and tell why you enjoy working for your company. But be realistic — you don’t want to oversell it.

How should referrals be handled?

Referrals are a great way to get additional candidates, but a referral shouldn’t replace the interview process or sway a decision. These candidates generally are a better fit for the company because a friend or former co-worker has informed them about the workplace and the job. But you should ask the same questions and evaluate referrals the same way as other candidates. A referral doesn’t mean you hire the person because your VP said he or she was a good candidate.

What contact needs to be made after the interview?

Definitely maintain contact with all applicants who were brought in. Let them know the decision, good or bad. Being timely about interview feedback helps everyone. And, no — telling a candidate six weeks later that he or she didn’t get the job isn’t timely. You don’t want a candidate’s bad experience to go viral and give your company a virtual black eye.

On the applicant side, a thank you note goes a long way. It shouldn’t impact the hiring decision, but it creates a good impression — particularly if it’s handwritten.

For the past six years, hiring managers have been in charge. Now the tide has turned — candidates have more power. Hiring managers need to adjust. They need to be mindful of their company’s brand and sell candidates on the benefits of the firm.

Insights HR Outsourcing is brought to you by Sequent

How to attract and retain a multigenerational workforce

Terri Walker, SPHR, Principal Human Capital Consultant, TriNet, Inc.

Terri Walker, SPHR, Principal Human Capital Consultant, TriNet, Inc.

For the first time in modern U.S. history, companies are employing four generations of workers. Four generations in the workplace can mean more opportunity for success or more problems, depending on how an organization deals with the generational differences.

“We’ve never had four generations working side-by-side, a 20-year-old working with colleagues that may be 50 years older. In order to work together, you have to honor those differences, and you can’t expect everyone to act and think like you do,” says Terri Walker, principal human capital consultant at TriNet, Inc.

Smart Business spoke with Walker about the ways various generations view their jobs and how to manage employees to create a happier, more productive workplace.

What challenges come with having four generations of workers?

An older, more experienced worker (born before 1946) or baby boomer (1946-1964) may have different values than someone coming to the workplace for the first time. Those employees likely expect a level of respect that a Generation X (1965-1977) or Generation Y/millennial (1978 and later) employee wouldn’t automatically give just based on age. The younger workers value the knowledge and achievements you bring to the workplace more than just the fact you’ve been there a long time.

Additionally, there are differences in how generations communicate. Frequently, Gen X/Gen Y workers prefer instant messaging (IM) or email, whereas other workers might value meeting face-to-face and going to a person’s desk to have a conversation. Older workers may feel it’s rude to IM or send a text when you’re in the same building, while the younger worker thinks you’re bothering them by taking time to walk to their desk.

No one way is right or wrong; they’re just different. When you understand and respect these differences, you’ll have a more productive workplace. You don’t have to agree with each other’s values, but you have to respect them.

What are the risks of managing everyone the same?

You’re going to have employees who are not satisfied with their work environment because policies are too loose or too stringent. Employees generally know and understand work duties, but management style is what drives them toward other opportunities. High turnover brings costs in recruiting, management time and loss of productivity. The last thing you want is churn because of the work environment.

It’s up to management to bring everyone together, to find what motivates employees and tailor rewards that keep employment interesting for all. Someone who’s been with the company for years may be waiting for that gold Rolex watch at retirement, while a younger employee wants an immediate — though smaller — reward for a job well done, maybe a Starbucks gift card.

Most of us grew up with the golden rule that you treat others the way you want to be treated. However, a new rule has come into play, the ‘titanium rule’ — treat others the way they want to be treated. That involves understanding what motivates them and treating them accordingly.

How can a company bring people together?

First, look at and understand your employee base. What are the different generations? Does one generation dominate your workforce or management team? How well do they work together?

What methods does your organization use to communicate? How is technology being utilized? How are managers communicating with employees? Also, look at turnover to see if there are peaks in a particular department, which could indicate a problem with communication or work style.

Once you’ve conducted an analysis, work with executive management to find the gaps where you could be doing better. Make sure managers, supervisors and all employees feel they are valued. This approach creates a robust, productive workplace where everyone is engaged and respected, which brings real benefits in dollars and cents.

Ensure that your leaders have the knowledge and skills to communicate and work effectively with all employees. It takes flexibility and open-mindedness, a willingness to look at different ways of doing things. Successful organizations and managers incorporate these elements into their structure and practice them daily.

Terri Walker, SPHR, is a Principal Human Capital Consultant at TriNet, Inc. Reach her at (510) 352-5000 or [email protected]

See how companies grow their business and engage their employees, or follow us on Twitter: @TriNet.

Insights Human Resources Outsourcing is brought to you by TriNet, Inc.

How to design a road map toward an engaged workforce

Kelly Pacatte, MBA, SPHR, senior human capital consultant, TriNet, Inc.

Kelly Pacatte, MBA, SPHR, senior human capital consultant, TriNet, Inc.

Can you prove the ROI of employee engagement? According to a Gallup survey, companies with world-class engagement have 3.9 times the earnings per share growth rate compared to their competitors with lower engagement. The challenge is planning a route to get employees engaged.

“Our research has shown that there are three buckets — the engaged group, the disengaged group and the people in the middle. Ideally, we want all employees to be engaged. The first step is to move the disengaged group to the middle bucket,” says Kelly Pacatte, MBA, SPHR, senior human capital consultant at TriNet, Inc.

Smart Business spoke with Pacatte about strategies to move workers forward to becoming engaged employees.

How can companies motivate disengaged employees toward that middle bucket?

There are four basic tips to follow:

  • Pay according to market value. Many executives don’t like to hear it and would rather offer training or take similar steps. But paying accordingly is critical in moving disengaged employees up.
  • Limit organizational reductions in force. While hard to do, it’s impossible for employees to become engaged if they fear losing their jobs.
  • Manage organizational changes. Whether a market change or leadership change, proactively communicate it to move disengaged workers into the middle.
  • Increase trust. Make sure all employees see the value in their company and believe in the brand. Executives must be visible and accountable.

While paying accordingly is important, pay isn’t necessarily a motivating factor; it’s a baseline. Employee motivation is like Maslow’s hierarchy of needs. People need to be taken care of, have the supplies needed to do the job, know what their job is and be paid accordingly. Once those baseline needs have been met, you can move employees to becoming engaged.

Does engagement strategy differ by company?

To have an engaged workforce, every company needs to deliver key components:

  • Leadership that clearly communicates goals and where the organization is headed.
  • Leadership that connects with employees.
  • The jobs employees are doing must provide meaningful work.

Implementation varies by company, but those are factors that all companies use to increase engagement. Sometimes, that may mean increasing employee development or focusing on mentoring opportunities; the ways these are done differ by company and industry.

How do you decide which programs will accomplish these goals?

The process starts with an employee engagement survey to determine what areas need work. The survey provides a baseline for how engaged the workforce is. To achieve best results, develop the survey with experts from a third party who understand what motivates employees. In addition, employees are more likely to respond because there’s no fear of retaliation.

When you receive the results, company management needs to realize you can’t change everything. Based on responses, develop a plan for areas that require immediate attention. If there’s something that can be done, work on a plan to change that. If not — and this is key — explain why. It’s important for employees to know that action is taken regarding a survey. Maybe there was overwhelming feedback that more training is needed, but you don’t have the ability to do that right away. Senior leadership needs to let employees know they were heard. While leadership can’t work on a development strategy immediately, it will take specific steps to deliver on the request.

If you’re doing a survey, some changes have to be made. Employees don’t want to spend time filling out a survey, only to find out nothing has changed.

After you implement changes, measure to see if there’s been an increase in revenue or productivity. Generally, a baseline is measured before the survey and six months to a year later to see if those factors increased.

Engagement takes a long time. But if you are genuinely trying to increase employee engagement, you will get a return on your investment.

Kelly Pacatte, MBA, SPHR, is a senior human capital consultant at TriNet, Inc. Reach her at (972) 789-3960 or [email protected]

See how companies grow their business and engage their employees, or follow us on Twitter: @TriNet.


Insights Human Resources Outsourcing is brought to you by TriNet, Inc.

How upfront planning leads to a higher return on your investment

Some leaders take an “old school” approach to change management — employees get a paycheck, so they’ll deal with any changes without a need for much explanation. But that sets the organization on a path toward failure.

“The biggest problems are when leadership does not account for the fact that resistance is definitely an option,” says Mark Deans, practice leader in Organizational Development & Change Management at Sequent.

“You could build a perfectly streamlined business process, or add the most efficient tool, but if employees don’t understand how to execute it to meet your expectations, it’s not going to succeed. Try as you might, you can’t make people do things,” Deans says.

Smart Business spoke with Deans about ways to ensure successful implementation of a change process.

What is involved in change management?

It’s supporting a change in business processes or systems, technology, etc. The practice of change management applies to any significant change in an organization, including leadership change as part of an acquisition or divestiture. It’s about how employees are supported through the change process.

The methodology is that there is a journey the organization, departments and individuals go through, and each has a completely different time path. Two people might do the same job, but each has his or her own change capability, and it’s a matter of identifying and managing all of those within an organization to make the change as seamless as possible.

How does the change process work its way through an organization?

First and foremost, leadership must be on the same page. Start with getting leaders aligned so they can be the driving force behind the change, helping each individual understand his or her part.

Organizations are taking a more holistic view nowadays. A change might mean more work for some departments but provides an overall net benefit for the organization. It used to be that each silo fought for its own interests. Now, it’s about how departments operate together, and some teams taking a hit if necessary to ensure the overall organization is as successful as possible.

One of the first steps is acknowledging the need to change, and the benefits. There should be some compelling reason, whether it’s regulatory changes, an attempt to improve market share or boost the bottom line. If the overarching goal is to improve margins, explain what that means for each group, and ultimately for each individual. You have to manage change upfront and get everyone onboard at the start rather than waiting for problems. It’s analogous to going to the dentist. If you see your dentist on a regular basis, keep your teeth clean and get X-rays, you can catch cavities when they start and are easier to fix, instead of not going for a long time and having major damage. The same holds true for change management, if you start a project and haven’t thought about how to communicate it to employees, going back and fixing it is much more difficult.

Is it important to state a desired outcome?

Absolutely. That is where some companies fail as well. They make a change and aren’t sure why. A company buys hundreds of iPads as part of a mobile technology strategy without addressing the intended use. So people are updating their Facebook status or playing Angry Birds because they don’t have a burning business reason to utilize these tools. That might be a ridiculous example, but there are plenty of cases in which companies want to hurry up and do something because it’s a shiny, new object.

You also need to accept it if a change didn’t work. Evaluate the success of the change, including what happened and didn’t happen as planned. Change projects always take longer and cost more than expected. Organizations that handle change well go back and figure out what they did well, and what could have been done differently. Then they remediate anything that did not get executed as well as planned. They learn from the experience so the process can be improved next time.

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