Tag: employee engagement

Posted on

Mobility Strategies Are Driving Key Talent Management Trends

Fueled by relative economic strength around the world, all signs point to a prolonged talent shortage that will plague global businesses for the coming decade.

As companies of all sizes grapple with how to attract and retain outstanding employees, more organizations are recruiting internationally and expanding opportunities for current employees to pursue a variety of internal roles.

This is good news for job seekers and employees who are looking to grow their careers and seek out fulfilling work/life experiences. But it remains a challenge for employers, many of which are struggling to get up to speed with this “new normal” where a strong mobility program — both internal and external — is now a critical business strategy, not just for expanding to new markets but for addressing both acute and long-term people resourcing challenges.

Mobility, also known as global mobility or talent mobility, refers to the movement of employees across borders for business purposes. This could be employees relocating globally or domestically, taking a temporary assignment outside their home office, or even business travel or cross country or state commuting. Mobility, regardless of its form, requires modern tools and support to tackle everything from tax and immigration complexities to being paid in multiple locations.

Mobility will become a key differentiator in the war for talent, enabling businesses that get it right to overcome staffing challenges. Here are just a few examples of why organizations should prioritize mobility in the coming year:

  • To retain talent. More than 20 percent of employees say they’ve quit a job after being denied a relocation opportunity, and worse yet, 40 percent say they aren’t even aware of mobility offerings within their company. With global talent shortages, this should be terrifying news! Companies that offer internal mobility must do a better job of communicating and internally publicizing relocation opportunities when these roles become available. Make it clear that if you have the skillset, we’ll get you there through a seamless process that emphasizes employee satisfaction, lifestyle and family needs.
  • To enable fluid career paths. In previous generations, employees joined an organization and stayed there for their entire career, following a relatively predictable career path from junior level to senior management. But millennials and others are looking for faster progression, which includes lateral moves. When the average tenure at even tech giants like Google is two years or less, employees’ careers are now less tied to the organization and more tied to their personal brand and personal growth. Mobility enables this career fluidity by giving people an opportunity to grow in ways that suit their needs. In fact, a recent study found that more than 70 percent of employees saw mobility as a career growth opportunity, even without a raise or promotion.
  • To close the gender gap. Diversity and inclusion have become chief priorities, especially when it comes to leveling the gender playing field. Despite the push toward gender equality in the C-suite and boardroom, women still have less opportunity in mobility, despite its key role in leadership growth. The bottom line: if you want more women in senior leadership, you must have gender equality in your mobility population. This can also be solved with better communication and promotion of opportunities. By showcasing women in successful expat roles to demonstrate its transformational benefits for personal and professional growth, companies can entice more women to seek out mobility-based career and leadership opportunities. When they see that it works, and that your company will support them every step of the way, it’s easier to see themselves as eligible candidates.
  • To utilize data to drive efficiency. Traditional recruiting and HR management systems data have become invaluable when it comes to recruiting and talent optimization. But, as mobility begins to play a larger role in shaping a talent management strategy, it needs to be tied into the fold. The holy grail for success: the ability to identify and predict for whom mobility will be successful. By measuring factors such as how long the assignment lasted, what did the individual’s career path look like after, how long did they stay with the company, etc. we can use mobility data to optimize the process, move more people cost-effectively, foster greater success for the individual and ensure the company gets the most bang for its buck.

The potential is there for mobility to influence talent management in the coming years. While many areas of talent management have gone through a digital transformation, including recruiting, performance management, learning management and recognition and rewards, mobility has been somewhat left behind in most organizations. As a result, employees are often faced with highly fragmented experiences, forced to deal with five or six vendor systems and plagued with redundant data entry.

Adopting robust global mobility management solutions will transform the relocation process, giving companies the comprehensive tools they need to operate efficient, successful and growth-oriented programs, while also making relocation an exciting, exhilarating and life-changing experience for employees.

Posted on

Mental Health and the National Basketball Association

mental health, National Basteball Association

National Basketball Association Commissioner Adam Silver made an important comment this week at the MIT Sloan Sports Analytics Conference in Boston, saying that a lot of players are “unhappy” and acknowledging the very real impact of mental health problems on people, no matter how much fame or money they have.

As a benefits writer who occasionally covers mental health, I think it’s genuinely positive when a powerful figure makes a straightforward, sympathetic comment about mental health issues.

Still, I don’t agree with everything Silver said. According to CBS Sports, Silver said, “We are living in a time of anxiety. I think it’s a direct result of social media. A lot of players are unhappy.”

I contend that this argument is too simplistic. I’ve seen this argument before in research and reading, this concern that technology or social media is making people more depressed or anxious.

I prefer a more nuanced approach. Yes, social media has become increasingly ubiquitous over recent years and so has this trend of people being more open about mental health problems, but this sounds more like correlation than causation. That’s a topic worthy of more research.

Mental illness isn’t as simple as X caused Y. Being too focused on social media and technology’s impacts could blind you from other factors that could influence mental health, like personal or professional problems, going through a traumatic event or something physical like brain chemistry. In the context of the NBA, there are understandably some stressors specific to being a professional athlete.

I also don’t believe that mental illnesses are any more or less common than they have been historically. At least I haven’t seen or heard any convincing evidence of that. We need to acknowledge the very real fact that because of stigma, this wasn’t something that people talked about for a long time.

The lack of public acknowledgement doesn’t mean it did not exist. Whenever someone makes the “technology/social media causes mental problems” argument, I wonder if they’ve ever stopped to consider historical context. I wonder if they truly think depression, anxiety, bipolar disorder, borderline personality disorder and panic attacks just didn’t happen before. That sounds naïve to me.

Regardless of my preference for a more nuanced take on the causes of mental health problems, I love seeing that the league commissioner is talking about it. This also led to me read about the NBA’s mental wellness program and the organization’s decision to hire a director of mental health and wellness.

The details of the mental health program are interesting. This story references the league’s old policies to deal with mental health problems, often by team physicians who had no expertise in mental health.

It talks about the NBA’s decision to create a wellness program and the time and considerations that went into it. Basically, this is a comprehensive case study that also brings up some philosophical questions about wellness programs.

It also brings up a noteworthy point about privacy and transparency. The wellness program is run independently of the teams, league and players’ union. According to the article, Michele Roberts, executive director of the National Basketball Players Association said, “We don’t want players to be discouraged from getting help when they need it because they’re concerned that it will get back to the team, or it may affect their play, or it may affect their next contract.” Yet, the article continues, “even that can be debated when it comes to wellness.”

Data privacy and health privacy are topics I care about, which is why it’s intriguing to find debates like this. This story makes a point that when more people are open and transparent about mental health, there’s less stigma.

Wanting anonymity when you’re seeking mental health treatment helps “contribute to the continued stigma.” Further, one former player expressed concern that when people want anonymity, people like him are then persecuted for being up front.

I get this to a certain degree, and I understand this person’s idealized version of the world where everyone can be open about everything and there’s no judgment or consequences. But mostly I prefer to be realistic.

In any organization’s wellness program, privacy should be a clear choice. Health information is private, and no employee should feel pressured to talk publicly about something they want to keep private. HIPAA exists for a reason. And, yes, HIPAA doesn’t apply to many wellness programs, but that doesn’t mean that organizations should respect employee health privacy any less.

As employers get increasingly involved in employees’ physical, mental and financial health, it’s worth a reminder that many people want privacy, and that a respectful employer doesn’t pry into people’s personal data.

Posted on

Ensuring #MeToo Movement Advances Diversity in Leadership

Progress has been made in terms of women’s equality and protection over the past 10 years.metoo anniversary

In fact, it was recently the 10th anniversary of the Lilly Ledbetter Fair Pay Act, the first bill signed into law by President Barack Obama in 2009.

While there have been significant strides in reducing gender bias, harassment and sexual misconduct, clearly there is still work to be done. The #MeToo movement has been an important driver in bringing to light numerous cases of sexual abuse and misconduct.

However, it has also had the unintended consequence of causing men to refrain from interacting with women for fear of retaliation. Considering that male executives play a key role in advancing women into higher levels of leadership, this fear must be taken seriously because if unaddressed it leads to workplaces where there are fewer opportunities for women’s career advancement and informal coaching. Bloomberg recently conducted interviews with more than 30 senior executives that suggest many are startled by the #MeToo movement — some for good cause while others succumb to fear and retreat from supporting leadership diversity.

This is a huge problem for women, men, the companies they work for and society as a whole. When men shy away from mentoring women and helping them advance in their careers, it hurts everyone. Likewise, it is shameful and unacceptable when women are objectified, threatened or harmed.

In both cases no one wins. The outcome of the #MeToo movement should not be that we reverse progress on increasing diversity in leadership but that we are creating opportunities for women and men to thrive.

This shift needs to happen at the organizational level with changes implemented by leaders so that men can invest in the career advancement of women without fearing they will be classified as #MeToo participants and so that women will have confidence that they are working in a safe environment. These changes should include:

  • Providing sexual harassment and communications training for men and women. Employees and managers need to understand what is acceptable and what is not. Men and women respond to nuance differently, and everyone needs to understand what behavior crosses the line. Insight on how to be friendly, kind and foster appropriate relationships will benefit both men and women at all levels within the organization.
  • Ensuring there are confidential reporting protocols in place. All employees need to have a clear and confidential venue to report misconduct so they will not be retaliated against by their colleagues. Similarly, they need to know that because they are empowered to report any misconduct (perceived or overt), their concerns will be taken seriously and senior leadership will take appropriate and supportive action. By formalizing the process, men will feel confident that if a woman retaliates and misuses her power in a destructive way there is a recourse. Both men and women should not be driven by fear but rather they should understand that if they adhere to clearly specified boundaries and are treated unfairly, they will be supported.
  • Making evaluations less ambiguous. We know that when there is ambiguity in assessments it can lead to bias. An article in the Harvard Business Review sums it up as, “Without structure, people are more likely to rely on gender, race and other stereotypes when making decisions — instead of thoughtfully constructing assessments using agreed-upon processes and criteria that are consistently applied across all employees.” When managers use comparable data to evaluate employees and include insight from subordinates, peers and other leaders as well as self-evaluations it will help ensure that constructive criticism relayed to a subordinate is not viewed as subjective, but in fact is based on data and information gathered from multiple sources.
  • Rewarding positive behavior and swiftly addressing inappropriate or illegal actions. By recognizing men and women who serve as successful models of mentoring colleagues, leaders will gain confidence and others will better understand the best way to help both men and women advance in their careers. Likewise, punishing the bad actors will improve working conditions for everyone.

Men and women are asking some important and tough questions about the workplace. Women have earned a seat at the management table and are rightfully demanding it. The #MeToo movement has been a powerful force for change in bringing to light sexual harassment and misconduct and removing perpetrators from positions of power. It’s time to capitalize on that momentum and change our workplace policies — starting from the top down — so that we can turn the #MeToo era into a movement that is constructive, encourages human interaction and supports appropriate career advancement.

Posted on

Globoforce Renames Itself as Workhuman

This year, Globoforce celebrates 20 years of providing employee rewards and recognition solutions. Workhuman

And 2019 also marks another milestone as co-founder and CEO Eric Mosley said that Globoforce is renaming itself Workhuman.

Headquartered in Framingham, Massachusetts, and Dublin, Ireland, Workhuman also is the name of Globoforce’s annual conference, which this year is scheduled March 18-21 in Nashville. The conference features actors George Clooney and Viola Davis as keynote speakers.

“I’m thrilled to announce that our company name now clearly reflects the power of bringing gratitude into the workplace,” Mosly said in a Feb. 27 press statement. “We are Workhuman. This evolution acknowledges both the traction and effectiveness of our Workhuman Cloud platform and the demand from progressive global organizations who want to motivate and empower their people to do the best work of their lives.”

Some 4 million people in more than 160 countries access Workhuman Cloud, according to the press statement.

“Great leaders instinctively know that the more gratitude in a company, the better it performs,” Mosly said in the press statement. “Turnover is cut in half for employees who receive a moment of gratitude from a fellow employee at least once every 60 days. And safety records are more than 80 percent better for teams that express gratitude.”

Workhuman
Workhuman CHRO Steve Pemberton

In December 2017, Globoforce named veteran human resources leader Steve Pemberton as its chief human resources officer.

Pemberton, the former chief diversity officer for Walgreens Boots Alliance, the well-being enterprise of the drug-store giant, was brought on to work with Globoforce HR leaders and senior management executives worldwide to help them create relationships with their employees so they feel recognized, respected and appreciated, according to a statement from the company. Pemberton also was assigned to manage Globoforce’s WorkHuman movement.

Companies including JetBlue, the Hershey Co. and Procter & Gamble Co. utilize Workhuman’s recognition programs, according to the annual Workforce magazine Hot List of Rewards and Recognition Providers.

Along with a new name, Workhuman also announced their newly expanded $4.5 million headquarters expansion in Dublin along with the creation of 150 new jobs, the press release stated.

Posted on

Focus on Entry-Level Employee Development

employee development

Employee development is a buzzword that human resources professionals and business owners alike are accustomed to hearing. It’s also a powerful and critical success strategy. When executed properly, its benefits are fruitful. Employers will find that development fosters loyalty among their team, inspires engagement and cultivates an attractive workplace for prospective new hires.

However, there is an overlooked group in professional development: entry-level, nonprofessional workers.

According to a report published by the Bureau of Labor Statistics, more than 78 million Americans — or nearly 59 percent of the U.S. workforce — are hourly workers. Encapsulating such a substantial percentage of the workforce, it’s vital that companies implement employee development programs that will focus on this underserved sector of the American workforce.

There are many reasons organizations should enact employee development programs that serve entry-level, nonprofessional positions:

Benefiting from your untapped workforce

Too often, development programs are slanted toward people in professional careers. These individuals are groomed for higher-level positions, which lead to higher salaries and increased responsibilities. Left behind are those who are overlooked by upper management: entry-level workers.

While the backgrounds of these individuals vary, more often than not they have less education and less experience than those already in professional positions — one reason why they often get passed over for promotions and development opportunities. Typically, individuals in these roles serve in jobs such as customer service representatives or manual laborers.

To offset this problem, employers should create professional development programs that are offered to everyone — regardless of position, title or experience. By changing the professional development program to a deliberate effort rather than a checkbox exercise, those who wouldn’t typically raise their hand are able to opt-in more readily. Programs that everyone can participate in push all employees to focus on professional and personal growth.

It will also help prepare the organization to pivot and shift focus as needed in order to improve efficiency. Being a forward-thinking organization that focuses on what’s next, through means such as employee development, can have a positive impact on the team.

Reduced turnover rates

When training is offered from the bottom-up, employers will see a reduction in turnover rates. According to Accenture, 56 percent of those in entry-level jobs don’t plan to stay in their positions for more than two years. Since recruitment takes time and money, investing in lower level employees can greatly benefit a company in the long term.

Moreover, employees who are offered opportunities to be trained and grow are more likely to be engaged in their role and want to stay in the organization. This is a great perk for selling employee development programs to those in upper management who are always watching the bottom line. To some, a program of this sort may not seem beneficial enough to financially back it. However, over time, the impact is evident through advantages such as higher retention rates.

Becoming an employer of choice

When a company places an importance on development and caring for their employees, they inevitably become the employer of choice for individuals looking to grow professionally. In turn, this benefits culture, engagement, hiring and retention. It will help companies become highly sought after and will attract top talent.

Even when development doesn’t appear to directly benefit the company, showing team members that their employer cares can be extremely impactful.

By implementing a robust employee development program that emphasizes the growth of entry-level and nonprofessional workers, companies will witness reduced turnover rates, inspire a generation of underserved workers, and develop into a highly sought-after employer.

Also read: It’s Time to Rethink the Value of Training and Development

Also read: J&J Human Performance Institute Banks on the Science of Behavior Change in the Workplace

Posted on

Employees Prefer a Raise, But They’re Also OK with a Promotion

A recent survey conducted by HR consultancy Korn Ferry revealed that 55 percent of employees prefer a raise with no promotion. However, 45 percent of them are just fine with a new title and no salary bump.HR Promotions

The survey, conducted in December and released in January, collected 1,327 responses from professionals. The key components of the survey could offer employers insight to how their employees consider which reward matters most.

Dennis Baltzley, global head of leadership development solutions at Korn Ferry noted, “Appropriate compensation is key to a professional’s job satisfaction, but at least as important as recognition for a job well done. One of the most visible forms of recognition is a promotion.”

When asked what the most likely action would be if they wanted to attain a promotion, 77 percent of respondents said they would have a conversation with their supervisor directly and identify areas of growth. When asked what they would do if they were passed over for a promotion, 66 percent said they would identify the reason(s) and work to improve while 20 percent said they would take on more responsibility.

Professionals are saying that they are willing to improve their workplace performance in order to be recognized. However, bottlenecking, or having nowhere to go, were the biggest likely reasons respondents said they were passed over for a promotion. If passed over, 31 percent of respondents said that they would start searching for other job opportunities.

In order to retain and motivate talent, Baltzley advised that, “Organizational leaders must set expectations of constant learning, and this means development and career plans at all levels, so employees see a path broadening, deepening, or advancing.”

In the next 12 months, half of the respondents said that they will ask for a promotion.

The other half, if they haven’t already received a promotion, said that they are afraid or don’t know how to ask, or they admit that they are not ready to be promoted.

Some 90 percent of respondents said they expected a promotion in one to five years. Of that, 44 percent were in the two- to three-year range. Employers need to be prepared for both cases while also considering how long an employee expects to stay in a role before being promoted.

“They key to job progression is ongoing development and coaching to ensure professionals are receiving feedback in terms of how they are doing in their current role and what they need to do to be ready to take on added responsibility,” Baltzley said. “And even if an employee is not yet ready for the next role, knowing that there is a potential for a promotion to a more challenging role is an excellent way to retain top talent.”

Posted on

Benefits Roundup: The Employer Mandate and Fair Compensation

Andie Burjek, Working Well blog

When you write about topics as broad as benefits and wellness, it’s easy to have too many ideas and want to write about a million things at once.

But that’s impossible. So these are some topics in the health and benefits space that have intrigued me these past few weeks. They relate to employee wellbeing based on compensation; the employer mandate; days off; and a wellness conference.

What’s been on your mind recently? Any trends, debates or legislation that you find especially fascinating? Let me know!

Unpaid Internships and the Government Shutdown

I had many reactions to the government shutdown, which doubtless made a lot of employees’ lives difficult, having to work in some cases while not getting paid while benefits were compromised and many people had to deal with things like not being able to afford basic necessities like food and rent. I recognize that the struggle this put on federal workers was very rough.

It made me think of unpaid internships. These interns must go through these exact same struggles (unless they’re wealthy, or their family is) of needing to work their asses off while not getting paid. A lot of students can’t take internships that would be good experience and look good on their resume because they need to make money and pay basic expenses. Proponents of the unpaid internship argue that they are a valuable learning experience or that students can get class credit.

But in my opinion as a millennial in the beginning of my career, most of us in college needed to take out loans to afford an education. Couple that with unpaid internships and entry-level jobs that for many fields pay minimally. The financial burden put on young people through education costs and unpaid work can be significant.

All I’m saying is, at least pay your interns minimum wage. It’s the least you can do. People should get compensated for the work they perform.

Some Employer Mandate News

I came across a couple of BenefitsPRO articles recently that highlight two opposing ideas of the same debate. In late 2018 the U.S. Department of Labor, Department of Health and Human Services and Treasury Department proposed a rule that employers could circumvent employer-mandate penalties by setting up a health reimbursement account that employees could use to purchase health care in the individual market.

The 2018 tax reform legislation struck down the individual mandate. But the employer mandate, an Affordable Care Act provision that states employers must provide affordable health insurance to employees or else face a fine, is still in place.

On the pro side: Large employees would realistically continue to offer group health plans to attract and keep talent. Meanwhile, it could potentially help smaller employers in the 50- to 100-employee range. Also, to avoid penalties, employers would have to make an HRA contribution such that “any remaining premiums the employee would have to pay wouldn’t exceed a percentage of his or her income to be considered affordable under the employer mandate.”

On the opposing side: Employers and employees may not fully understand the differences between employer-sponsored health care and the individual health insurance marketplace, and the limitations that exist between them. Also, the new rules could potentially incentivize employers to switch sicker, more expensive enrollees to the individual market.

“If employers could move sicker patients toward individual and short-term plans — some of which have more restricted coverage — the employer could save money. In addition, short-term plans often are more restrictive about pre-existing conditions,” the article states.

If these rules are finalized, they wouldn’t take effect until Jan. 1, 2020 at the earliest, according to BenefitsPRO.

What do you think?

Should the Super Bowl Be a National Holiday?

I want to give a shout out to a Twitter user and lawyer @SonyaOldsSom who responded to a Workforce tweet with something obvious but important. Also, it speaks to an even broader idea than what she was specifically talking about.

We posted a podcast in February 2018 in which hosts Rick Bell and Frank Kalman briefly discussed if the Monday after the Super Bowl should be a national holiday. That idea, simply, came from organizations’ frustrations that people often aren’t as productive as usual that day.

This was @SonyaOldsSom’s response:

Amen! Sure, National Super Bowl Monday is a cute idea to debate, but employers (and whoever decides what national holidays are) should consider the thing that’s been right under their noses for a long time. In general, for any organization, it can be easy to get swept up in trendy sounding ideas — whether that’s open office spaces, yoga classes or some other buzzword — but what’s more valuable to people are these straight-up practical ideas, like having voting day as an official holiday.

The MBGH Wellness Forum

I recently attended an employer-only wellness forum hosted by the Midwest Business Group on Health, and although I’ve already written about some of the major takeways, there were a few other ideas that came up that are worth exploring:

  • I spoke to a man who expressed to me one of his greatest frustrations in the workplace wellness space: when companies go gaga over wellness programs without addressing cultural concerns like an abusive or toxic work environment. I agree!
  • One of my unlikely tablemates was Bruce Sherman, medical director for the National Alliance of Healthcare Purchaser Coalitions. I’ve coincidentally already interviewed him for a story coming up in our March issue! At this conference, he gave a talk about addressing employees with multiple chronic conditions [note: “multimorbidity” is the coexistence of multiple chronic conditions] in your wellness programs. One of his ideas: disease management programs that specifically address one chronic condition oftentimes do not sufficiently help employees with multimorbidity!
  • Sherman also mentioned that while people in the health care industry tend to have a narrow, clinical mindset with patient health, patients have many more focuses and stresses in their life. Personal health is just one of them — and, according to one survey, it’s not even the highest priority. Ranking factors that stress people out, “personal health” is No. 8, below other factors like finances, family health and work schedule. Personal health is not something that exists in a vacuum for employees!
Posted on

Emojis Are Starting to Pop Up in Discrimination and Harassment Cases

Law.com recently pronounced, “The Emojis are Coming!” 

That article got me thinking, are they coming to workplace litigation, too? After all, emojis are a form of communication, and work is all about communication. Which would suggest that we would start seeing them in harassment and discrimination cases.

According to Bloomberg Law, mentions of emojis in federal discrimination lawsuits doubled from 2016 to 2017. Let’s not get crazy. The doubling went from six cases to 12 cases. But, a trend is a trend.

While harassment cases dominate these filings, it’s not just employees who are using 🍆 to establish a hostile work environment. Employers are using employees’ use of emojis to respond to alleged acts of harassment (such as 😄, or 😉, or 😉) to help establish that the alleged hostile work environment was either welcomed or subjectively not offensive.

For example, in Murdoch v. Medjet Assistance (N.D. Ala. 2018), the court held that the plaintiff’s use of a smiley face emoji in a text message to her accused harasser helped establish an absence of a hostile work environment. Similarly, see Bellue v. East Baton Rouge Sheriff (M.D. La  2018) (😉) Stewart v. Durham (S.D. Miss. 2017) (😘 and 😉); and Arnold v. Reliant Bank (M.D. Tenn. 2013) (😊).

On the flip side, consider the salacious sexual harassment lawsuit filed against celebrity chef Mike Isabella. According that lawsuit, Isabella referred to attractive female customers as “corn” after one of his chef’s commented that one woman was “so hot, [he’d] eat the corn out of her shit.” The lawsuit alleges further acts of harassment via text messages with with corn emojis 🌽.

Also read: Harassment By Emojis

These cases all beg the questions, “Do you need a workplace emoji policy?” I answered this question in 2017 with an emphatic “NO.”

Most employers already have an emoji policy. It’’s called your harassment policy. You do not need a separate policy to forbid your employees from using what is becoming an acceptable form of communication … .

We can have a healthy debate over the professionalism of emoji use in business communications (like this one). Indeed, according to one recent survey, “nearly half (41%) of workers use emojis in professional communications. And among the senior managers polled, 61% said it’s fine, at least in some situations.” My sense is that your view of this issue will depend on a combination of your age, your comfort with technology, and the age of your kids.

As for me, I use emojis all the time, even at work. Email is notoriously tone deaf. It’s easier for me to drop a 😊 into an email to convey intent than to tone down my sarcasm.

In other words, 😁. Emojis are 👌, and it’s perfectly fine to ❤️ them at work 👍.

Posted on

Labor Issues a Costly Concern During Acquisitions

When a company is considering a merger or weighing the idea of an acquisition, it is crucial to assess the impact on operations and, specifically, on labor and employment issues.acquisition

Deal attorneys and bankers focus on the underlying value analysis and purchase documents, which clearly are important.

However, liability for labor and employment issues can be created by acts or omissions and rarely is avoided solely by virtue of indemnification clauses or seller warranties in deal documents.

Put simply, our legal system operates in large part to protect the “little guy,” which in the employment context, means the employee, not the company. This means that, despite the iron-clad separation of entities from a financial perspective, if operations continue following deal closure, an acquiring entity may be held liable for workplace obligations agreed to by the seller-predecessor or for acts or omissions creating liability prior to the close of the purchase. 

The Employee’s Right

How can this be, you ask? Remember the little guy. If they felt like they were wronged before the deal closed, they will chase both companies (especially if the selling entity was in financial distress). From a legal standpoint if, from our employee’s perspective, nothing changed after the deal closed — same physical office, same managers, same processes — it is possible the buyer may be found liable for the wrongdoings of the predecessor entity.

The idea is that a company should not be able to escape liability to its employees solely by changing its corporate name and closing a deal. Someone needs to make sure the little guy’s wrongs are righted.  The way the courts often do it is by extending that liability to the “new” entity. The question is, how does “NewCo” avoid this? Ensure labor and employment are key components of due diligence, including the following:

Wage and hour. If you are the seller, conduct internal policy and practice audits on wage and hour issues as part of due diligence. These audits can reveal existing procedural violations that could mushroom into “bet the company” class actions if not cured (or expressly carved out of the purchase price!). Some examples of such issues are pay stub compliance, meal/rest break issues, and employee or contractor misclassification. One of the most frequently overlooked areas of exposure is unpaid vacation or paid time off for employees of the selling entity — all of whom would technically be terminated (and thus owed these monies) in an asset purchase. Even if the buyer hires every one of them.

Employment agreements. Know your obligations to employees, no matter the role. High-level executives who are key to the transition often have change in control or severance provisions in employment agreements that trigger significant payouts in an asset deal. If the buyer wants to retain these folks, the terms of new employment should be agreed-upon before closing. The buyer also should be conscious of any restrictive covenants — if key personnel are departing as part of the deal, make sure you are protecting your assets by limiting their ability to go across the street and start a competing concern. Even in California, noncompetition arrangements are available for limited purposes in the context of a purchase or sale of a business.

Turnover/hiring practices. Prepare yourself for WARN Act obligations, which require extended notice/payout periods, even if employees are not going to miss a day of work because they are being hired by NewCo. Diligence should include a discussion of which entity will be handling WARN and COBRA notices. And once NewCo takes over, to help avoid the type of pass-through liability described above in the context of an asset deal, it should follow standard hiring practices for each of the “old” employees. Assess them like any other new hire, and ensure all paperwork is completed to establish the new business relationship.

Labor union issues. Make sure you know about the seller’s union agreements or activity. Ask whether there have been organizing drives or union activity.  If there is any organized labor, ask to see all collective bargaining agreements and review all grievances. The CBAs may contain clauses obligating the buyer to assume the terms contained therein and the seller to expressly disclose the potential of a deal. If you are not planning to transition the organized operations to NewCo post-close, you may be responsible for posting a bond to cover the withdrawal liability for the multi-employer pension plan into which the seller previously contributed. This can be hundreds of thousands (or even millions) of dollars, and it is held in escrow for five years.

Immigration. Understand your employee base. Does the selling entity have employees for whom it has sponsored work visas? If so, there needs to be an assessment of transferability and a discussion regarding that process. Does the deal involve international payments or taxes or transfers of operations that will necessitate analysis of non-U.S. issues?

Any company considering a merger or acquisition is acutely focused on the potential effect on its balance sheet from a pure numbers standpoint. It is axiomatic that a business’s largest asset (or liability) can be its workforce. Remember that effectively transitioning operations requires careful planning and educated decision-making as to how, or if, NewCo will be adopting the prior workforce and the policies and practices that applied to it. In order to make responsible decisions regarding the value of any prospective transaction, and the risks associated with it, both sides should look beyond the balance sheet to the people on the ground.

As these issues highlight, diligence regarding matters of potential exposure stemming from the labor and employment function is crucial when assessing the true net impact of a potential deal on your company’s bottom line. The little guys can have a huge impact; don’t overlook that in your focus on the paperwork.

Posted on

Labor Relations in the Public Sector, Part 2

public sector negotiations
public sector negotiations
Jerry Glass

Despite the Bureau of Labor Statistics reporting that 10.7 percent of all wage and salary workers in the U.S. are union members in both the private and public sector, union membership of public sector employees at the federal, state and local levels is well above that at 34.4 percent.

Just in local government, the rate of union membership is 40.1 percent and includes teachers, police officers and firefighters. In contrast, only 6.5 percent of private sector employees belong to unions. That number is significant because average private sector compensation costs average $34.19 per hour, compared to an average  of $49.23 per hour in state and local government — a 30 percent difference in private to public employment costs.

So how do public sector unions achieve such important gains when some of these same unions don’t have the ability to strike? First, let’s take a quick history lesson.

The New York state Legislature was one of the first states to pass labor laws protecting women and children. Labor unions continued to gain strength in the subsequent decades, resulting in the passage of the Railway Labor Act in 1926, allowing railroad employees to unionize, and the 1935 National Labor Relations Act, which guaranteed basic rights of private sector employees to organize into labor unions and encourages collective bargaining — generally defined as the negotiation between an employer and a labor union on issues of wages, hours and working conditions.

Notably, the NLRA did not extend those protections to employees in the public sector for fear that public employees would strike, leading to paralysis of government until their demands were met. In 1943, the New York Supreme Court in Railway Mail Ass’n. v. Murphy, said, “Nothing is more dangerous to public welfare than to admit that hired servants of the state can dictate to the government the hours, the wages, and conditions under which they will carry on essential services vital to the welfare, safety and security of the citizen.”

Please read: Labor Relations in the Public Sector, Part 1

Today, most states have laws that formalize the bargaining process for some or all public employees, and some states permit only “meeting and conferring” on work-related issues. Only 11 states allow public employees to strike. Of those, most prohibit striking for essential employees and in cases where striking would endanger public health and safety.

For example, New York’s Taylor Law grants public employees the right to organize and elect union representatives, but also makes work stoppages punishable with fines and jail time. Some states prohibit collective bargaining for teachers while others prohibit all public sector collective bargaining.

The Power of Public Sector Unions

Without either limited or no ability to strike, public sector unions may try to leverage their power to help elect the very politicians who sit across from them at the bargaining table and influence legislation that affects public employees’ wages and availability of jobs. According to the California Fair Political Practices Commission, the California Teachers’ Association spent more than $211 million from 2000 to 2009 on political campaigning — more than any other donor in the state and as much as the pharmaceutical industry, the oil industry and the tobacco industry combined. In 2005 alone, the CTA spent $54 million to defeat initiatives intended to cap the growth of state spending and make it easier to fire underperforming teachers.

Politicians who attempt to limit the power of public sector unions and their lobbying arms need to come to the table prepared to make realistic changes. A case study of how not to negotiate with a public sector union is the Chicago Teachers’ Union strike in 2012, which was in response to some of Chicago Mayor Rahm Emanuel’s initiatives. Emanuel campaigned to improve the education of Chicago schoolchildren and used his political might to pass an aggressive education-reform bill without consulting the teachers’ union.

The CTU brought other public unions to their cause and engaged in a 10-day strike. After an unsuccessful attempt to get a court order to force teachers back to work, both sides reached an agreement. While Emanuel did get a longer school day and longer school year, the teachers got an average raise of 17.6 percent over four years, health insurance increases, seniority pay increases and raises for additional education.

public sector negotiationsIn jurisdictions where striking is prohibited, there are ways to reach final resolution of negotiations if parties disagree. These include arbitration, mediation, fact-finding and bargaining without a final resolution mechanism.

In arbitration, a neutral third party facilitates discussions, examines the facts and makes a binding determination. In mediation, the parties agree on a professional who facilitates discussions and proposes solutions that both parties can accept or decline. In mediation/arbitration, the parties jointly choose a mediator and if both parties fail to come to an agreement, the mediator becomes the arbitrator. Fact finding is a labor dispute resolution measure where an independent “fact finder” examines the arguments of both parties and offers a nonbinding resolution. In the public sector, as many state and local governments are in poor financial health, the fact finder generally sides with the employer and finds the unions’ proposals unreasonable to allow the employer to control costs.

Unions strive to secure good outcomes for the employees they represent during the initial stages of negotiations. Allowing a dispute to lead to arbitration takes the decision away from management and labor. Since arbitrators must adhere to certain standards, the awards are somewhat predictable. Generally, arbitrators reach decisions that neither labor nor management view as the best solution. In a world where labor-management cooperation has become so important, having someone with no vested interest in the outcome decide a union and agency’s fate is a poor outcome that can take years for the parties to repair.

It is encouraging to see that some state and local governments and unions are using tools borrowed from the private sector that help lead to voluntary agreements. The following are important methods that increase the likelihood of fair, voluntary agreements:

• Engage employees at the workplace.

• Use interest-based bargaining techniques in contract negotiations, where both sides declare their interests and then work together to draft agreements that align common interests and balance disparate interests.

• Share information and consult with unions on long-term strategies. Since most labor agreements are in effect for at least three years, a government’s labor relations strategy should align with its own short- and long-term financial planning and overall strategy. Given the repetitive nature of the bargaining process, successful labor-management relationships have management communicate with and involve stakeholders regularly, not just during negotiations.

Bargaining involves transparent communication between labor and management regarding terms and conditions of employment. Effective bargaining is usually measured by whether labor and management can reach an agreement without involving a third party. By demonstrating interest in building rapport, exploring alternatives, refusing to put limits on the number of topics for negotiation, and coming to the table with the goal of a solution, management can maximize the chance of a favorable outcome without compromising the operations of government.