HR professionals were impacted by both dramatic developments and slow-burning trends during 2016. The year bowing out Dec. 31 brought focused attention on paid leave and salary transparency, a re-evaluation of annual performance reviews and raises, notable industry acquisitions (LinkedIn, Monster, Hay Group) and a contested compliance obligation on overtime pay which was shockingly halted the day before it was to go into effect.
Here are four of the most important HR trends that created a buzz in 2016 and will continue to be felt in 2017.
Paid Leave Adoption Grows
The United States has historically been one of the most conservative countries when it came to parental leave policies but a growing number of large U.S. companies are providing paid leave flexibility for family responsibilities.
According to 2016 research from the Society for Human Resource Management, 26 percent of organizations offer paid maternity leave and 21 percent offer paid paternity leave.
A few tips for employers:
- You have the ability to set eligibility for parental leave benefits.
- You can offer women more generous benefits than men for pregnancy-related conditions. But remember to provide the same amount of leave for men as women for child bonding or risk a gender discrimination claim.
- You can require employees to use vacation/sick/PTO benefits before collecting parental leave pay.
- You can run Family and Medical Leave Act leave concurrently with parental leave.
Many states are also considering implementing or have already implemented mandatory paid sick leave laws. Federal regulations are changing as well, placing new paid sick leave obligations on employers working with federal contractors beginning Jan. 1, 2017.
Employers should determine whether to maintain a single PTO policy for all types of leave or to maintain a sick leave policy separately, depending on business needs and applicable laws.
If your organization already has a PTO policy, it could be time to think about whether to maintain one all-inclusive PTO policy, or a separate policy strictly for sick time. Additionally, employers need to be aware of record-keeping and notice requirements.
Pay Equity Makes Waves
President Barack Obama highlighted pay equality throughout his term in office, and a few states took the lead in approving pay equity laws in 2016. New laws in California and New York altered how equal pay claims are analyzed, making it easier for plaintiffs to sue their employers.
Massachusetts became the first state to ban employers from seeking information about applicants’ salary history in the hiring process. When the law takes effect in July 2018, Bay State employers will be prohibited from seeking the compensation history of a prospective employee prior to making an offer, unless the candidate has “voluntarily” disclosed such information. This will require many employers to revise their employment applications and make significant changes to their recruitment and hiring processes. The new law will also make it unlawful for employers to prohibit employees from discussing or disclosing their own or other employees’ wages.
Supporters of the ban on salary history queries say it would lead to increased pay equity among workers. However, it would also upend what’s become a common recruitment practice where candidates are asked on applications or during screening interviews for their past compensation and desired pay as a quick way to whittle down large numbers of candidates for open jobs.
In addition, companies may need to submit more pay data to the federal government in 2016 due to the EEOC’s pending proposal to expand annual EEO-1 reports, which the EEOC claims would assist the agency in identifying possible pay discrimination.
Given the emphasis on pay equity issues from multiple sources, it is critical that employers conduct internal pay equity analyses and re-examine their compensation policies and practices.
Annual Performance Reviews, Raises Lose Favor
More employers announced they were jettisoning the traditional annual performance review, eliminating numeric scales and rankings and replacing the system with ongoing feedback check-ins.
Companies such as Accenture, Deloitte, Gap, GE, Microsoft and SAP are among the 6 percent of Fortune 500 companies that have replaced the annual performance review process with other approaches, according to CEB.
Some believe that it’s time to transition to a new ongoing feedback system that increases employee engagement. One option is conducting more-frequent check-ins with employees—for instance, immediate feedback after an assignment—using software that allows managers and workers to frequently report on what steps are being taken to reach goals, how far along assignments have progressed and what issues need to be addressed to finish projects.
Organizations are being advised to establish metrics and data that can be used to determine who gets promoted or receives raises and bonuses, instead of rating workers against each other, a practice that many believe creates antagonism between managers, employees and their colleagues.
GE upped the ante in 2016 when it revealed that it might also remove traditional annual raises, redefining total rewards in a way that increases employee motivation and engagement and can be used to differentiate an employer in recruitment and branding. Organizations may be begin looking at salaries on a more frequent basis and providing raises to high-performing employees who might not want to wait a year before putting themselves back on the market.
The Rise of People Analytics
In 2016, analytics-driven HR reached a critical buzz, only to be supplanted late in the year by the emergence of artificial intelligence and enhanced automation.
HR professionals are increasingly using algorithmic data systems to recruit the candidates most likely to succeed, uncover insights into employee retention, engagement and performance and to address diversity issues. The number of organizations in 2016 who said they were ready for people analytics jumped to 32 percent, according to consulting firm Deloitte.
One of the buzziest questions of the year was “Can algorithms produce better hiring results than people?” Human hiring bias would certainly be subjugated, but experts believe that a melding of practices is the best available option. Employers can first use algorithms based on a large number of data points to narrow down a field of applicants and then have hiring managers weigh in to make a final decision.
Performance and potential can be assessed through a gamified approach to analytics, wherein behavioral patterns such as problem-solving, learning agility, risk-taking and innovation are evaluated. The cost and implementation of the technology won’t be the biggest challenge for employers. That distinction will go to HR’s ability and competence in effectively analyzing and using the data results, necessitating more data analysts working in the field.
Looking Ahead: What Will the Trump Era Bring?
Employers are desperate to know what kinds of changes are in store once President-elect Donald Trump takes the oath of office in January. Andrew Puzder, the CEO of CKE Restaurants—the parent company of Carl’s Jr. and Hardee’s restaurants—and Trump’s nominee to lead the Department of Labor, means we will most likely see a more pro-business approach focused on deregulation, less enforcement and a rolling back of the Obama administration’s pro-labor agenda.
Similarly, the nomination of Tom Price, R-Ga., a vocal critic of the Affordable Care Act (ACA), to be secretary of Health and Human Services (HHS), signals that the incoming administration intends to stay true to Trump’s campaign promise to repeal the employer coverage mandate, expand the use of health savings accounts, allow employers to provide a defined contribution health care benefit and potentially cap the deduction for premiums in employer-sponsored group health plans.
Ready to get an HR strategy in place to start off 2017 right? Contact CJC Human Resource Services at 212.584.4770 or firstname.lastname@example.org