Horizon Point Consulting

Category: Human Resources

We know HR. Read our Human Resources blog archives for stories and best practices from our work with real clients and personal experiences in the world of HR.

Crafting a Thoughtful Performance Management System

I recently asked a room full of managers representing dozens of organizations if they actually liked their own company’s performance management system. What do you think they said?

Some of us may think of Performance Management as a rubber stamp on an annual review. We often don’t think of it as a living, breathing, system. Others of us may think of Performance Management as monitoring what we’re doing wrong. We may not think of it as monitoring and developing what we’re doing right.

When an organization thoughtfully designs, implements, and continuously improves a performance management system, it should look like the graphic below, representing a continuous, living cycle.

OBJECTIVE

Company objectives should be driven by the organization’s vision, mission, and values, and these objectives should cascade and influence manager and individual contributor objectives. Read more from Mary Ila on 6 Ways to Design Your Performance Management System Around Company Values.

How are you writing company, department, and individual objectives?

MONITOR

Progress towards objectives should be monitored regularly, and “regularly” should be a customized cadence that works for your organization.

For the context of this post, let’s assume that formal performance reviews are held annually. We recommend formal and informal monitoring in addition to the annual review. This may look like an informal monthly one-on-one and a formal mid-year review with your direct supervisor.

How are you effectively and regularly monitoring progress towards objectives?

COACH

If there’s anything you take away from this light reading, I hope it’s that everyone needs coaching. High performers, low performers, and everyone in between.

Coaching is critical to successful performance management systems. This is where we catch potential issues and allow time for correction before a formal review period ends. This is also where we acknowledge and reinforce positive behaviors and results in real-time instead of waiting for the formal review.

How often are you coaching your direct reports? How often are you receiving coaching from a supervisor? Is the coaching meaningful?

EVALUATE

The formal evaluation is an important element of any performance management system. It often drives rewards (stay tuned), succession planning, and development opportunities. All organizations should have a structured performance evaluation process that gauges the successful completion of objectives (or lack thereof) and sets the foundation for future objectives.

One of the most critical components of evaluation is that team members be made aware of the evaluation methods and criteria at the start of the evaluation period. In other words, if my performance is evaluated from January to December and my annual review is in December, I need to know by January at the latest what my objectives and expectations are for the upcoming year. I need to know what I’m going to be evaluated on. What chance do I have of performing well if I don’t know what I’m expected to do?

When and how are you letting people know what methods and criteria will be used in their formal evaluations?

REWARD

This is where we put our money where our mouths are. In order for a performance review to be effective, the rewards or incentives need to be clear, relevant, and meaningful. Employees want to know: “Why should I work hard to achieve goals? Why does it matter whether I score low or high on a review?”

Do your policies clearly outline the rewards structure, including how rewards are determined? Are rewards actually relevant and meaningful to your employees?

When I asked a room of nearly 50 managers if they truly liked their own organization’s performance management system, only 3 people said yes. What are you doing to help your own managers answer “Yes!” to that question?

June 14, 2022
Are Employees Utilizing Those New Perks?
Organizations have been extra creative lately with new benefit offerings and retention strategies. Is it working? Are employees utilizing those new perks and sticking around? Yes and no. SHRM explored the issue nationally, and our team has some local insight from the 2021 and 2022 North Central Alabama Wage & Benefit Survey.

Aon reported in April that enrollment in voluntary benefits increased 41% from the previous year. Most of the increases were tied to medical benefits, as to be expected, but some may be surprising:

The fastest-growing voluntary benefits employees enrolled in amid the COVID-19 pandemic include supplemental health insurance policies such as critical illness, accident, and hospital indemnity…Other popular voluntary benefits in 2021 were life insurance, student loan assistance programs, identity theft protection, legal benefits, pet care, and auto/home protection.

Graphic source: https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/employees-want-voluntary-benefits-but-dont-always-understand-them.aspx

SHRM referenced another survey from Voya that found that people are more likely to work for employers offering voluntary benefits, but people also reported that they don’t quite understand all of the benefits available to them.

Employers may be missing a critical piece of the puzzle – literacy. Information literacy, financial literacy, digital literacy… Do employees have equal access to education and training on what benefits are available, how they work, where to learn more (in various learning styles), etc.? If everything is available online, do all employees have home or work access to the internet? Is information available in different languages?

SHRM also highlighted this from Buck’s 2022 Wellbeing and Voluntary Benefits Survey report:

“We found that key drivers of employee retention include employees’ perceptions of their organization’s commitment to their overall well-being, diverse benefit options, and effective communications that raise awareness of their employer’s offerings,” said Ruth Hunt, a principal in Buck’s engagement practice and co-author of the report. “To continue to attract and retain top talent, it’s critical for employers to implement and promote programs that address whole-person well-being and substantively close the gap between management perceptions and employee realities.”

The bottom line seems to be that employers will only see strong engagement with benefit offerings when they carefully and strategically implement and evaluate the effectiveness of such offerings. SHRM shares six tips from Krystie Dascoli, executive board president at the Voluntary Benefits Association.
1. Understand workforce demographics.
2. Find the gaps.
3. Benchmark, benchmark, benchmark.
4. Communicate information.
5. Ensure integration.
6. Conduct a compliance review.
Benchmark, benchmark, benchmark is where third-party survey administrators like Horizon Point come in. We partner with the local economic development agencies in our area to administer an annual North Central Alabama Wage and Benefit Survey representing employers across all sizes and industries. We ask general and specific questions about pay practices, compensation data by position, aggregate wages by occupational group, benefits for full-time versus part-time, and more.

Results for the 2022 local survey will be published in the coming weeks. Do you think we’ll continue to see an increase in voluntary benefit offerings? Stay tuned!
May 24, 2022
1099’s – The Cost of Misclassification

In the last few weeks, I have come across multiple cases of employers hiring individuals as independent contractors in violation of the IRS guidelines. Some have done so because they aren’t aware of or don’t understand the IRS guidelines and/or state regulations and some have done so knowingly. Either way, none are aware of the potential risk of misclassifying workers as independent contractors and just how costly such a mistake can be to their organization.

The IRS has a 20-Factor Test to help organizations determine if a worker meets the requirements to be an independent contractor. You can read more about what those requirements include in my blog post Taking the Guess Work Out of 1099s. In 2019 California adopted a more rigorous test, the ABC Test, and since then a handful of other states have adopted the ABC Test for some or all workers in their states.

The DOL recently announced that they would be hiring 100 additional investigators and focusing on warehouse and logistics companies in a “vigorous” campaign to enforce wage and hour laws. In 2021, 80% of DOL investigations resulted in organizations being found guilty of wage and hour violations. Many of these investigations began with a small payroll issue reported to the DOL by an employee. The top ten private employer wage and hour class actions in 2019 cost employers almost $450 million, close to double the total in 2018 ($253.5 million) (SHRM). As the DOL increases its resources and efforts to crack down on wage and hour violations, more companies may find themselves subject to review. And once a claim is filed by an employee, it opens the company up to have all payroll records investigated. So, while an employee may file a claim for an overtime violation, the DOL may find additional violations by the company, thus increasing the company’s penalties.

So what should you do if your organization misclassified employees as 1009s? First, contact an employment attorney to assist you with resolving the issue. There are options to minimize your penalties and an employment attorney can help you determine the best option for your organization. These options include submitting an Advance Determination of Worker Status Form to the IRS, the Classification Settlement Program, and the Voluntary Classification Settlement Program. You can find out more about each of these options at IRS.gov.

May 17, 2022
Is Your Organization In the Learning Zone?

Over the past few years, I’ve spoken with a lot of organizations about the importance of psychological safety. A 2012 study by Google showed that psychological safety is far and away the most important factor of a team’s success, yet many organizations lack the psychological safety required to be successful.

A few years ago, I worked with a client that was going through some major changes and employee morale was at rock bottom. As I began speaking with employees one theme stood out, employees didn’t feel safe speaking up. There were a number of reasons for this, including the fact that they felt their voices weren’t heard, their ideas were shot down or ignored, their requests for improvements fell on deaf ears, and yet they were expected to increase performance, meet tough deadlines, and help get the company out of the red. They were working in an organization that fell into the Anxiety Zone. There was low psychological safety but high accountability.

Amy Edmondson, a Harvard professor, is the top authority on psychological safety. She has spent the past thirty years studying the effects of psychological safety on work teams and has found that there are four zones that organizations fall into.

The zones are defined by the level of psychological safety and motivation (keep in mind motivation can be negative or positive) and accountability the team has. The zones are described as follows:

Learning zone: In a learning zone, team members experience high accountability and high psychological safety. This is the ideal learning environment for innovation and growth because even though members are responsible for their actions, their team offers continuous support.

Comfort zone: Team members have high psychological safety and low accountability. While this zone is more relaxed, almost like a vacation, there is no push for creativity and growth.

Apathy zone: With low psychological safety and low accountability, team members fall into the apathy zone. There are no repercussions for mistakes, teams lack adequate communication and support, and individuals struggle to care about their work.

Anxiety zone: Team members experience low psychological safety and high accountability. Communication breaks down and when mistakes are made, people are often too scared of punishment or humiliation to take responsibility. Opportunities for learning and innovation are scarce.

Which zone is your team in and if you’re not in the learning zone, how can you help your organization get there?

April 26, 2022
Are Your Company Policies Holding You Back?

If there’s one thing I’ve learned in my almost 20-year career in HR it’s that the world of HR is ever-changing. And while sometimes we all sit back and take a big sigh and think “not again”, it’s a good thing. Change allows us to grow and adapt. But are there policies that we are holding on to because we’ve always done it that way or everyone else is doing it that way?

In this time of the “Great Resignation”, I find myself thinking about what could be changed to make the biggest impact. Not only in the short-term to get people in the seats, but to keep them there for the long haul.

Throw out the 40-hour workweek: Henry Ford implemented the 40-hour workweek to give employees a work-life balance that they didn’t have in the 1920s. There were no regulations on working hours, but Ford took a chance, a risk, and did what he knew was right for his employees. One hundred years later, we’re still pushing a 40-hour workweek, even though it’s estimated that the U.S. Labor production has increased by over 300% since 1950. Iceland conducted a study to test out a shortened work week and the results were so powerful that 90% of the workers in Iceland no longer work 40 hours per week. Shorter workweeks have led to happier employees and in many cases an increase in productivity. Other countries, such as the United Arab Emirates, are following suit.

While reducing the workweek may not be an option for all organizations, what are some options you could explore? Maybe flexible work schedules, shared shifts, or compressed workweeks.

Rethink your background checks: A recent study by RAND Corporation shows that by age 35, 64% of unemployed men have a criminal history. This figure doesn’t even account for unemployed women who struggle to find work due to a criminal history. And many of those who struggle to rebuild their lives and find gainful employment don’t have violent histories, they have drug histories. In recent months we’ve been talking the “great resignation” to death, trying to figure out how to keep employees, how to recruit new hires, and what we need to do differently. But rethinking our background check requirements hasn’t been a part of that conversation. Why does your organization conduct background checks? What are your guidelines for what gets past and what gets passed on? Yes, there are industries that have bona fide background requirements, I understand that. But if you’re not one of those industries, does your background check policy really make sense for your organization? Is it helping you or hindering you? Imagine the potential talent you could tap into by making changes to that requirement or doing away with it completely.

Rethink your benefits program: Why do we create benefits packages that are “one-size-fits-all”? A recent study conducted by Lighthouse Research & Advisory shows that employment priorities are different by age group, with the #1 priority for younger employees being work-life balance, while older employees are focused on finances. How can we as employers create a benefits program that meets all of their needs and wants? Imagine a plan that would allow younger employees to elect extra PTO while older employees could elect a cash incentive. Could creating an al a carte benefit program be the wave of the future? Where employers offer a benefit stipend and employees could pick and choose how they want to use that stipend, and their options include conventional benefits such as health and dental coverage and unconventional benefits such as gym memberships and extra paid leave, or even just a payout?

These are just a couple of examples of rethinking your company policies using a growth mindset. I challenge you to take a look at your policies, read your Employee Handbook, and ask yourself why your company policies are what they are. Start with your workweek, background, and drug testing policies, benefits, paid leave, and go from there. If the answer you come up with is “we’ve always done it that way” or “it’s similar to what other companies are doing” then you’re focused on a fixed mindset. Ask yourself if there’s a different option that would work better for your organization.

March 15, 2022