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.

  • Unlimited Paid Time Off- The What, How, and Most Importantly, the Why

    Unlimited Paid Time Off- The What, How, and Most Importantly, the Why

     

    If you believe employees need strict rules and enforcement to be productive, hiring and retaining high-performance people will be a challenge for you. You hired these people for their tenacity and talents. Get out of the way and let them be great. Deal with any people who choose not to meet expectations on a case-by-case basis.” 

    Sue Bingham, HBR article

     

    My husband came home one day and told me about a conversation he had with a friend about her company’s recent switch to unlimited paid time off (PTO).

    “Is that really a thing?” he asked me.

    “Yep,” I said. “That’s what we do.” 

    “Your team has unlimited PTO?” he inquired.

    “Yep. It works well,” I said. 

    “Well, she was saying that she feels like she’s less likely to take time off now that it’s ‘unlimited’ than when there was a clear-cut policy on how much she had and if she didn’t use it, she would lose it,” he said.

    “Interesting,” I said.  Culture, I thought, with a little bit of personality probably mixed in as well. 

    Unlimited PTO is, in fact, a growing trend. Whereas only about 2% of companies offer it and 9% of workers have it, the growth of unlimited PTO is a real imperative in recruiting and retaining talent given that the number one priority of job seekers is work-life balance, as cited in a recent study by LinkedIn. 

     

    What is it? 

    In most cases, it is exactly what you think it is.  It is that time off, whether for vacation, illness, or any other reason, that is paid and unlimited.  People aren’t assigned a set number of days off they can take and time off isn’t earned and accrued. 

    This means some good things for organizations:

    • If done right, it should build a culture of trust and productivity between employees and leadership, leading to more positive outcomes- ie- what most organizations claim to be doing it for- improving recruiting and retaining the best talent.
    • You don’t have the administrative burden of keeping up with and regulating it.
    • You don’t have the administrative burden of answering questions about how much people have or don’t have.
    • You don’t have to (if this has been your normal policy) pay it out when people leave.

    This means some good things for employees:

    • They can take off when they need it for whatever reason and don’t have to justify, lie, or explain why they are taking it.
    • They don’t have to track it and keep up with it either.
    • If done right, it should build a culture of trust and productivity between employees and leadership leading to employee engagement and satisfaction.

     

    How you do it

    In order for unlimited PTO to be successful, there are some keys for organizations and employees. 

    For organizations: 

    • Like almost everything, you train leaders of people how to handle it, with the focus on managing and developing performance, not managing time, and instead focusing on trust and autonomy as key drivers of productivity and positive outcomes.  You ensure leaders are ensuring rewards and motivation are based on results, not time. Train leaders to help them understand how to handle underperformance related or unrelated to the unlimited PTO policy on a case-by-case basis. 
    • If you are changing to it, communicate clearly what it means and how it will be implemented and what it will change for people.  Make sure you handle how any accrued time under an old policy will be handled.
    • You ensure your leaders model it by taking time off when they need it; people believe demonstrated behaviors more than they believe policy.

    For employees: 

    • Take time off when you need it.
    • If you perform well, everything will take care of itself.

     

    Why to do it

    Unlimited PTO, like any other policy or lack thereof, should be linked back to your organizational values and should be lived in the day-to-day behaviors of all people that are a part of the organization.  

    Yes, you do it to enhance business outcomes, but that is not the end or why.  This is the outcome of the right why. 

    I don’t know why my husband’s friend felt she would take less time off with an unlimited PTO plan. I don’t know if that feeling was more about the intent of her employer for shifting to one, linking back to their culture and values. Much has been written about this as it relates to the perceived malicious intent of employers switching to it.  It may have simply said more about her personality and her view of work. 

    But what I do know is that it works for our team.  And I trust that it will continue to even as we hopefully grow our business and team. And I hope and pray that is because it says something about our culture and its link to our value of People First. 

    How do you feel about unlimited PTO? 

     

    To read more and to see references to statistics cited in this post, check out these articles: 

    Forbes

    Fortune

    TandemHR

    SHRM

    Why Unlimited PTO is Becoming and Industry Standard

    The Stats Behind Unlimited PTO

    Unlimited PTO is a Deceptive Ploy

     

  • Benefits Benchmarks: North Central Alabama

    Benefits Benchmarks: North Central Alabama

    A few weeks ago, I asked the question “Are Employees Utilizing Those New Perks?” and highlighted benchmarking as a critical activity for evaluating workplace benefits. Now, we have the published results from the 2022 North Central Alabama Wage & Benefit Survey!

    First up, Average Benefit-Cost Per Employee (Annual) increased 25% over 2021. Employers reported an average of $16,608 spent annually per employee in benefits, compared to $12,459 one year ago. Some hot categories for increased benefits spending are Child Care Support, Adoption Support, Pet Insurance, and Elder Care Support. These types of benefits are increasingly attractive, and the Huntsville/Madison County Chamber Foundation is now providing the Best Place for Working Parents® program in recognition of companies that are focusing on family care.  

    Next up, 72% of companies are now offering a PTO (Paid Time Off) structure in place of set hours/days for Sick Leave, Vacation, etc. Last year, only 58% were using a PTO structure. This shift aligns with increases in Flex Time and Remote/Telework benefits as options to give some autonomy back to employees. If you’re thinking about shifting your Leave and/or PTO policies, look for a blog post coming soon from Mary Ila Ward on Flexibility and Unlimited PTO. 

    Paid Family/Parental Leave is more available, with a 17% increase in the number of employers offering any amount of leave designated specifically for family/parental leave. The median leave times in weeks jumped from 2 weeks to 4 weeks.  

    If you are in the North Central Alabama Region, how do your benefit offerings stack up against these benchmarks? 

    If you are outside of this region, where can you find local data? Check with your local Economic Development Agency and/or Chamber of Commerce to find out if local data is available. 

    Benchmark, benchmark, benchmark! 

    This wage survey covers Cullman, Lawrence, Limestone, Madison, and Morgan Counties in Alabama and represents 132 company respondents in 2022. Learn more here. 

     

  • Are You Misclassifying Employees?

    Are You Misclassifying Employees?

    The Supreme Court recently agreed to hear a case that could have a big impact on the Fair Labor Standards Act (FLSA) and the classification of employees as exempt versus non-exempt. The case of Hewitt v. Helix Energy Sols. Grp., Inc. involves a highly compensated oil rig worker who was paid a weekly “salary” and upon his termination sued Helix for unpaid overtime on the basis that he was not paid an annual salary and therefore was not an exempt employee. The outcome of this case could impact employers who pay a daily or weekly “salary” as well as those who pay salaried employees on an hourly basis.

    In the past couple of years, we’ve seen a large number of FLSA cases arise, costing employers millions. Below are just a few recent headlines: 

    Amazon.com Services and its Contractor Fined $6.4 Million (March 2021)

    Court Approves $8.5 Million Settlement for Juicers in Misclassification Case Against Lime (July 2021)

    Holland Acquisition Inc Pays $42.3 Million in Misclassification Case (October 2021)

    DoorDash Agrees to a $100 Million Settlement (November 2021) 

    Last month I talked about misclassifying employees as Independent Contractors. This month I want to talk about misclassifying employees as exempt. 

    I’ve recently been working with a couple of clients on classification projects and in each of those projects I’ve come across employees who were misclassified. In some cases, it was an easy find for me. But in others, classifying employees is not an easy determination to make. So how can employers ensure that they are classifying employees correctly? 

    The FLSA has very detailed guidelines on what qualifies an employee to be classified as exempt for the purposes of overtime pay. The first, and easiest, determination is pay – if any employee makes less than $684 per week ($35,568 annually) they MUST be paid as a non-exempt employee eligible for overtime wages. 

    If they meet the salary requirement, the next step is to determine which FLSA exemption test, or tests, apply to that position. A position can potentially qualify under more than one exemption test. The exemption tests are:

    • Executive
    • Administrative
    • Professional/Creative
    • Computer Professional
    • Outside Sales

    Once you determine which test, or tests, apply to the position, you will need to do an in-depth analysis of that position using the exemption test to determine if a position meets the requirements to be exempt. 

    As I mentioned above, some positions are relatively easy to assess, but others are much harder. A great example of this is Healthcare Case Managers. By evaluating the position of Case Manager against the FLSA exemption tests that apply, many evaluate the position to be exempt. However, the Department of Labor issued an Opinion Letter in 2005 in which it determined that Case Managers did not meet the qualifications to be exempt employees under the FLSA. The DOL has a searchable database on all Administrative and Non-Administrative Opinion Letters regarding FLSA which is a great tool to use if you’re unsure whether a position qualifies as exempt. 

    A great way to ensure that your employees are classified correctly is to ensure that you have updated and accurate job descriptions for each position within your organization and to review the job descriptions at least every 2-3 years. 

  • Crafting a Thoughtful Performance Management System

    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? 

  • Are Employees Utilizing Those New Perks?

    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!