Many Executives Are Flying Blind When Choosing Innovation Strategies

Many Executives Are Flying Blind When Choosing Innovation Strategies

While global executives value innovation, many lack confidence in their ability to innovate, and are facing challenges in aligning their innovation efforts with their business strategies, according to a report recently released by professional services firm PwC.

The report’s results and insights are based on a survey of over 1,200 executives and business leaders from 44 countries and all major sectors conducted between September 12, 2016 and January 27, 2017. More than half (54%) of respondents reported that they struggle to bridge the gap between their business and innovation strategies, and are thus flying blind as they place bets on innovation.

Most of the respondents also indicated that they have low levels of confidence in their company’s innovation prowess, with just over one-quarter saying they believe they lead their competitors in innovation. However, 20% of these innovation leaders, but only 13% of the remaining respondents, said they expect their company to grow by more than 15% in the next five years.

When asked about the metrics they use for measuring the success of their company’s innovation strategies, the top response was sales growth (69%), followed by customer satisfaction ratings (43%), number of new ideas in the pipeline (40%), market share (36%), number of new products in the pipeline (31%), the net value of the innovation portfolio (28%), and time to market (24%).

The survey findings suggested that companies are becoming more inclusive, and are increasingly adopting open innovation models that bring more voices to the table, including employees and customers. When asked to name the most important internal and external partners for innovation at their organization, 60% of respondents cited internal employees, 50% mentioned technology partners, and 35% cited customers via focus groups, data mining, and other forms of feedback. Moreover, when asked what operating models their organization currently uses to drive innovation, the respondents were most likely to cite an open innovation model (61%); followed by design thinking (59%) and co-creating with customers, partners, and suppliers (55%). By contrast, only around one-third (34%) of respondents cited traditional R&D.

In addition, the report looked at what types of companies are more focused on incremental change, and what sectors are more focused on breakthrough innovation, or making significant innovations that result in the development of major new technological or market applications. The survey results showed that the companies that are most likely to be focused on breakthrough innovation are in the technology sector (58%); followed by in the pharmaceutical and life sciences (51%), health services (47%), communications (45%), and automotive (43%) sectors.

From Benefit Trends Newsletter, Volume 60, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Employers Call for New Regulatory Approaches to Workplace Policies

Employers Call for New Regulatory Approaches to Workplace Policies

Human resources executives are struggling to design a workplace for the changing economy, even as they face challenges such as uncertainty over Federal and state policies, the rise of temporary and contract work, and pressure to meet the sometimes conflicting expectations of multiple generations of workers, a report published by HR Policy Association has observed. Released on April 25, the report “Workplace 2020,” represents the views of chief human resource officers of major companies that operate in the U.S. and globally on the important issues facing the workplace today, and in the years ahead.

A major focus of the report is on changes in employment relationships. Researchers asserted that as alternatives to traditional employment arrangements continue to grow, attempts to expand the concept of “joint employer” and narrow the definition of “independent contractor” are impeding positive outcomes for workers. The authors therefore proposed a safe harbor for companies that would, for example, allow contract and temporary agency employees to take advantage of the company’s on-site day care facilities.

The report also examined how companies are coping with fulfilling their commitments to diversity and inclusion, noting that employers generally pursue these strategies for business and ethical reasons, regardless of any government mandates. The authors argued that government agencies should recognize the attempts made by companies to address the broader cultural aspects of these goals in enforcing these requirements.

In addition, the report observed that while large companies are at the forefront of providing generous leave benefits, they are increasingly challenged by a patchwork of administrative requirements regarding workplace flexibility under state and local mandates. Researchers therefore proposed the establishment of a Federal standard that would enable companies with generous paid leave benefits to operate under a single set of rules.

On the issue of immigration, the report noted that there is a global war for talent at all levels, and that countries are competing to attract and retain the human capital essential to a culture of productivity and innovation. The authors warned that arbitrary and inflexible caps on the number of annual visas for highly skilled workers ignore these market realities. They therefore suggested that foreign students who acquire advanced degrees in science and technology disciplines at American universities be given a path to U.S. citizenship.

Regarding retirement, the report observed that many senior employees in today’s workforce have both the ability and desire to have a longer career, but that legal obstacles prohibit employees from collecting a defined benefit retirement check while continuing to work for the same employer. The authors called for Federal legislation enabling older employees to collect defined benefit plan retirement income, while remaining on the job.

Finally, on the issue of health care, the report pointed out that 177 million Americans receive health care benefits through employers, and that amid the ongoing policy debate over health care reform, this workplace-based network of coverage is one of the few aspects of the U.S. health care system that is still working well. The authors therefore recommended that the tax exemption for employer-sponsored health insurance be protected.

From Benefit Trends Newsletter, Volume 60, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Zenefits pays $3.4M to misclassified employees

Human resources startup Zenefits will pay $3.4 million to 743 current and former employees the company misclassified as exempt from overtime and minimum wage rules, the U.S. Department of Labor said Tuesday.

An investigation by the Labor Department’s Wage and Hour Division found Zenefits incorrectly paid account executives and sales representatives a flat salary. The employees worked in San Francisco and two now-shuttered offices in Arizona.

Zenefits also entered into an “enhanced compliance agreement” with the labor department, which includes monitoring to avoid future misclassification violations. A copy of the document wasn’t immediately disclosed.

“This case allows us to level the playing field for all of the employers who play by the rules,” said Ruben Rosalez, the Wage and Hour Division’s regional administrator in San Francisco. “We are dedicated to protecting both workers and employers.”

Jessica Hoffman, vice president for communications at Zenefits, said in an email the company, which creates software that manages businesses’ payrolls, insurance offerings and other benefits, is “happy to have this issue behind us.”

“We are pleased that after the Department of Labor’s review regarding classification of two jobs at Zenefits, there were no penalties, fines or damages,” she said.

Allegations of missed payments and worker misclassification at Zenefits go back to 2015, when the company offered former employees payouts of approximately $5,000 if they gave up their rights to file claims over unpaid time-off and overtime, The Wall Street Journal reported.

In November, Zenefits agreed to pay up to $7 million to settle claims by California regulators that the company had sold insurance policies without obtaining the necessary licenses for their employees first. Two months ago, the state of New York fined Zenefits $1.2 million for allowing unlicensed insurance brokers to sell policies.

The company in February announced that it had laid off about 45 percent of its workforce in an effort to cut costs.

Originally published on The Recorder. All rights reserved.

Small and Midsized Businesses Face Challenges When Hiring

Small and Midsized Businesses Face Challenges When Hiring

As small and midsize companies seek to expand their workforce, many are struggling to get the hiring process right, and are suffering the consequences of having made poor hiring decisions, the results of a survey by recruitment firm Robert Half show.

The survey asked more than 1,000 business owners and human resources managers at U.S. firms with between one and 499 employees about their views on a variety of hiring issues. The findings, released on March 21, indicated that nearly half (49%) of respondents believe that most hiring managers underestimate the complexity of the hiring process. Moreover, 65% of respondents said they had experienced problems with their company’s hiring process, and 81% admitted that their company has made a bad hire.

The results also suggested that hiring the wrong person can have serious consequences for small businesses. The owners and managers surveyed estimated that they had wasted an average of 45 hours on hiring and onboarding people who ultimately did not work out. In addition, 53% of respondents reported increased stress on the team members who were working with the bad hire, and 20% said the experience of dealing with a bad hire had decreased their confidence in the responsible manager’s ability to make good hiring decisions.

The findings further indicated that while a bad hire could be identified rather quickly, correcting the mistake took longer: 58% of respondents said it took less than a month to realize they made a bad hiring decision, but that it took more than twice that time on average (8.8 weeks) to let the person go. Moreover, the respondents reported that an average of nearly five more weeks passed before a replacement started working, with 68% acknowledging that the extra workload was placed on existing staff during this period. By contrast, just 18% of respondents said their firm brought in temporary professionals to assist with heavy workloads while in the process of replacing a bad hire.

However, the survey results also suggest that there are several ways businesses can address deficiencies with their hiring process and minimize risks of making a bad hire. More than half (58%) of respondents said the best new hires come from referrals, including employees, friends, recruiters, and others in their network.

Researchers also observed that companies tend to be more successful in hiring the right person when they go beyond simply posting a job opening and hoping the right person will apply: among the respondents who reported using recruiters, 76% said a recruiter was able to find a candidate they would not have found on their own.

In addition, the survey showed that 45% of owners and managers believe that the most challenging hiring step is evaluating candidates based on their skills and potential fit, with 26% admitting that it takes them too long to fill open roles. The findings indicate, however, that delegating these duties to an outside resource can cut hiring timelines and save money: 43% of respondents reported that working with a recruiter saved the firm time because the recruiter did most of the work, while 36% said that using a recruiter saved them money by finding the right candidate more quickly.

Paul McDonald, senior executive director at Robert Half, noted that several factors can complicate hiring in smaller organizations. “Some firms lack dedicated recruiting staff or a human resources function altogether,” he said. “Multiple demands on a business owner’s time also can pull attention away from recruiting and cause it to fall to the last priority.”

From Benefit Trends Newsletter, Volume 60, Issue 5

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

HR Goals May Not Align with Those of Employees or Executives

HR Goals May Not Align with Those of Employees or Executives

Even as competition for talent intensifies and traditional business models are being rapidly disrupted by technology and socio-demographic shifts, many human resources professionals are still taking an evolutionary approach to their talent strategies, a recent study on global talent trends by HR consultancy Mercer warned.

The findings of the study, published on March 21, are based on the survey responses of more than 1,700 HR professionals, 5,400 employees, and 400 business executives from 37 countries and 20 industry sectors. When asked about their top priorities for 2017, the leading responses among the HR professionals surveyed were attracting top talent externally (44%), developing leaders for succession (41%), identifying high potentials (37%), and building skills across the workforce (37%).

Researchers pointed out that while these priorities reflect the desire to evolve employee capabilities, they may not align with executives’ goals for more substantial workplace change. They noted, for example, that business executives appear to be more concerned about talent scarcity than HR professionals, with 43% of business executives saying they expect a significant increase in competition, compared to 34% of HR professionals.

While 70% of HR professionals said they feel confident about the talent management processes they have in place, significant shares of employees reported that they are still looking elsewhere for new opportunities, with 34% saying they plan to leave their current role in the next 12 months, even though they are satisfied in their job.

In addition, researchers cautioned that HR professionals may be missing opportunities to leverage the issues that employees say are important to them. For example, even though 61% of the employees ranked their health as more important than their wealth or career, and 47% indicated that they expect their workplace to become more focused on employee health in the next few years, health and well-being ranked second-to-last on the HR professionals’ list of top talent management priorities this year.

Researchers also emphasized that flexible work arrangements are important to employees, with more than half reporting that both their direct manager (61%) and company leaders (57%) are supportive of flexibility. Nevertheless, 56% of employees said they want more flexible work options, and 50% said they are concerned that working remotely or part-time could adversely affect their promotional opportunities. And while more than three-quarters (77%) of the full-time employees surveyed said they would consider working on a contingent or contract basis, the study found that neither business executives nor HR leaders indicated that they expect the “gig economy” to have a major impact on their business in the next two years.

In addition, the results showed that HR professionals are lagging behind the expectations of both executive leadership and employees in adopting new technologies. Whereas 61% of business executives said they believe technology at work is the workforce trend likely to have the most impact on their organization in the next two years, less than half (49%) of HR professionals agreed.

From Benefit Trends Newsletter, Volume 60, Issue 4

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Business Benefits From the Use of Big Data

Business Benefits From the Use of Big Data

Executives at large U.S. companies report that investments in “big data” are helping them achieve measurable results and business benefits, but they also express concerns about the potential disruptions to business that can arise from the adoption of big data technologies and the cultural challenges associated with using big data, according to the results of a survey conducted by business consultancy NewVantage Partners.

The findings of the survey of executives from 50 Fortune 1000 companies published in January 2017 found that 80.7% of respondents characterize their firm’s big data investments as successful, and that 48.4% believe their company has realized measurable benefits as a result of their big data initiatives. Moreover, 21% of the executives surveyed said that big data has been disruptive or transformational for their firm.

The survey also showed, however, 52.5% of the respondents believe that lingering organizational impediments prevent the realization of the broad business adoption of big data initiatives. The leading impediments identified by the respondents include a lack of organizational alignment, business and/or technology resistance, and a lack of middle management adoption.

When asked about the ways in which their company is using big data, 69.4% of the executives polled said their firm is striving to establish a data-driven culture, 64.5% said their company is attempting to create new avenues for innovation and disruption and to accelerate the speed with which new capabilities and services are deployed, 62.9% reported that their company is using big data in launching new product and service offerings, 54.8% said their firm is attempting to monetize big data through increased revenues and new revenue sources, and 51.6% indicated that their company is using big data to transform and reposition their business for the future.

Researchers emphasized, however, that the leading reason for using big data reported by the executives surveyed is to cut costs: 72.6% of respondents said they are seeking to decrease expenses through operational cost efficiencies, with 49.2% reporting that their big data investments have already resulted in reduced costs.

The survey also found that 55.9% of respondents indicated that their company has appointed a chief data officer (CDO). When asked what role they believe the CDO is currently playing or could play in the future, 56% of respondents said they see the current role as largely defensive and reactive in scope, driven mainly by regulatory and compliance requirements; 48.3% said they believe the primary role of the CDO should be to drive innovation and establish a data culture; and 41.4% said the role of the CDO should be to manage and leverage data as an enterprise business asset.

The results further showed that the executives surveyed fear that technological disruption is looming on the immediate horizon: 46.6% of the respondents expressed the view that their firm may be at risk of major disruption in the coming decade, and envision a future in which “change is coming fast” and companies will have to “transform or die.” The respondents said they see disruption coming from a range of emerging capabilities, including artificial intelligence and machine learning (88.5%), digital technologies (75.4%), cloud computing (65.6%), block chain technology (62.3%), and financial technology solutions (57.4%).

From Benefit Trends Newsletter, Volume 60, Issue 2

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.