Employee Burnout Linked to High Workforce Turnover

Employee Burnout Linked to High Workforce Turnover

While most human resources professionals admit that employee burnout is sabotaging their organization’s efforts at workforce retention, they also see no obvious solution to this problem on the horizon, according to the results of an employee engagement survey conducted by software provider Kronos Incorporated and executive development firm Future Workplace.

The national survey of 614 HR professionals at companies of varying sizes was conducted on November 14-19, 2016. The survey asked respondents about their views on workplace innovation and technology used in human resources. Although 87% said they see improved retention as a high or a critical priority, 20% indicated that because of competing priorities, they will be unable to focus on addressing this issue in 2017.

Most significantly, nearly all (95%) of the HR professionals surveyed admitted that the tendency for organizations to “burn and churn” talent makes it tough to build an engaged workforce, with 46% saying that employee burnout is responsible for up to half (between 20% to 50%) of their annual workforce turnover, and nearly 10% blaming employee burnout for causing more than half of their workforce turnover each year.

The results also showed that although burnout affects companies of all sizes, larger organizations seem to suffer more: one in five respondents at organizations with 100 to 500 employees cited burnout as the cause of 10% or less of annual turnover, while 15% of respondents at organizations with more than 2,500 employees said that burnout is the cause of 50% or more of annual turnover.

When the HR professionals were asked to identify the factors that contribute most to burnout, their top responses were unfair compensation (41%), unreasonable workload (32%), and too much overtime or after-hours work (32%). However, respondents also cited factors that fall under the heading of talent management, employee development, and leadership, including poor management (30%), employees seeing no clear connection of their role to corporate strategy (29%), and a negative workplace culture (26%).

Researchers pointed out that even though the costs of employee turnover have been well documented, the survey suggested that employers invest more in recruiting new employees than in retaining existing talent: the results showed that 97% of the HR leaders are planning to increase their investment in recruiting technology by 2020, including 22% who anticipate a 30% to 50% increase in such spending.

Meanwhile, the HR professionals frequently complained of insufficient funding when asked about programs that would benefit retention of existing talent: 16% said a lack of budget is the primary obstacle to improving employee retention in the next 12 months, and 15% reported that a lack of funding is the biggest challenge to improving employee engagement.

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.

Cognitive Aging Could Affect the Ability to Delay Retirement

Cognitive Aging Could Affect the Ability to Delay Retirement

Working longer has been suggested as an effective way to boost Americans’ retirement security, but setting a higher standard retirement age overlooks the problem that a minority of workers may experience levels of not just physical, but cognitive decline that could negatively affect their job performance, a study published in November 2016 by the Center for Retirement Research at Boston College warned.

The study, “Cognitive Aging and the Ability to Work,” was written by economists Anek Belbase and Geoffrey T. Sanzenbacher. The authors cited previous research showing that as workers age, they tend to experience a decline in “fluid” intelligence, or the capacity to process new information. It has also been shown, however, that most older workers are able to maintain their productivity despite this loss of fluid intelligence because their “crystallized” intelligence, or their accumulated knowledge, tends to increase; and because their cognitive reserves continue to exceed the demands of the job.

The researchers explained that as workers grow older and more experienced in their job, their crystallized intelligence offsets declines in fluid intelligence because the amount of information they need to learn decreases, and the steady accumulation of knowledge over time makes up for their loss of fluid capacity. Moreover, workers who perform simple or routine tasks may have more fluid intelligence than their job demands. For example, the authors said, many clerical positions require workers to perform routine activities that become automatic with time, leaving such workers with enough fluid capacity in reserve to act as a buffer against decline.

However, Belbase and Sanzenbacher noted that certain types of workers may struggle to maintain their productivity as they age, including those in high-skilled occupations with an intense demand for fluid intelligence, those who switch jobs later in life and therefore lack the crystallized intelligence needed to compensate for a loss of fluid intelligence, and those who experience unusually severe levels of cognitive decline.

To demonstrate the interplay of crystallized and fluid intelligence, the researchers cited a study of the performance of air traffic controllers that asked participants to re-route two planes on a collision course. The results showed that older controllers performed substantially worse than younger controllers, and no better than younger study participants with no training in air traffic control. In light of such evidence, the researchers noted, air traffic controllers are required to retire by age 56.

The authors also pointed to previous research showing that while the risk of dementia remains low among people in their fifties and early sixties, at about 4%; this risk rises to 15% among people aged 65-74. They also observed many individuals who develop severe dementia in their seventies start to exhibit significant symptoms while in their sixties.

Based on these findings, Belbase and Sanzenbacher recommended that as the retirement age rises, employers have screening programs in place to identify older workers who are suffering from cognitive decline—especially if these workers are performing tasks that have high cognitive demands or in which errors could significantly harm others. “Screening could protect the public from harm and potentially allow the cognitively impaired to qualify for retirement under the disability program,” the authors said.

From Benefit Trends Newsletter, Volume 60, Issue 3

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.

Generation Z Values Face-To-Face Business Communication

Generation Z Values Face-To-Face Business Communication

In an apparent break with their technology-obsessed millennial predecessors, members of Generation Z who are starting to enter the workforce are ready to put down their devices, and are more aligned with Generation X in their willingness to engage in face-to-face interactions with co-workers and clients, the results of a survey conducted by communication technology provider 8x8 indicate.

The survey of 1,000 full- and part-time employed workers from across the U.S. who use a computer or phone for their everyday work was conducted in November 2016. The survey sample included 200 Gen Z respondents (ages 18-20), 400 millennial respondents (ages 21-35), and 400 Gen X respondents (ages 36-50).

The findings suggest that Gen Z are less tech-dependent than millennials, and are more similar to Gen X when it comes to adopting high-tech devices and apps in their personal life, with millennial respondents being more likely than Gen Z or Gen X respondents to say they use wearables, connected appliances, and virtual reality.

The results also showed that the Gen Z respondents were more likely than either the millennial or the Gen X respondents to report that they value face-to-face communication, with an emphasis on effectiveness over convenience: while one in four Gen Z respondents said they prefer communicating in person, the millennials were the most likely of the generational groups surveyed to say that face-to-face communication will be less important in the future.

Researchers observed that while millennial work styles and communications preferences clearly differ from those of their Gen X predecessors, Gen Z preferences can best be described as a hybrid of the two. The survey found, for example, that the majority of Gen Z respondents want a physical workspace (57%) combined with the ability to work remotely (48%) and have flexible hours (73%). Additionally, when asked about the types of communication tools they prefer to use, the majority of the millennial respondents said they favor the tools that will save them the most time, whereas the majority of the Gen Z respondents said they prefer the tools that are most effective, even if using them takes more time.

The survey results also showed that when it comes to using traditional workplace tools, Gen Z occupy a middle zone between the high-tech millennials and the older Gen X: less than 20% of the Gen Z respondents said they are likely to use traditional Gen X tools like email or landlines for work, but the Gen Z respondents were the least likely of the generational groups to say they expect to use tools favored by millennials, like messaging and chat apps, in the workplace. However, the results indicated that Gen Z workers are the most committed of the generations to using their smartphone as their main hub of communication: when asked which device they used to take the survey, 62% of Gen Z respondents, but only 31% of millennial and 28% of Gen X respondents said they used their smartphone.

Yet the findings further indicated that the generations generally agree on a number of topics regarding future workplace technologies. For example, of all respondents, more than half said they do not believe they will use email for work in the future, and a majority said they would prefer to use the same tools for work as in their personal life. Moreover, nearly 70% of all respondents said they believe at least some aspects of their current job could be automated by bots today, and around 80% said they anticipate that bots will automate some part of their job in the future.

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.

Employee Recognition Programs Linked to Core Company Values

Employee Recognition Programs Linked to Core Company Values

As companies seek new ways to deal with the challenges of low employee retention and high turnover, employers are increasingly tying employee recognition initiatives to their organization’s core values, the results of a new survey conducted by the Society for Human Resource Management (SHRM) and Globoforce indicate.

The survey of 798 human resources managers at organizations of 500 or more employees was conducted in April and May of 2016. When asked about their workforce management challenges in 2016, the top challenge cited by respondents was retention/turnover (46%), followed by employee engagement (36%), recruitment (34%), and succession planning (33%). Researchers pointed that in a similar survey conducted in 2012, just 25% of respondents indicated that retention/turnover was a top challenge for their company.

The results also showed that many HR managers are using employee recognition initiatives as part of their strategy for tackling these challenges: 81% of respondents reported that their company has an employee recognition program, and 60% said the program is tied to its organization’s core values. Majorities of respondents also indicated that their company’s employee recognition program has positive effects on employee engagement, workplace culture, retention, and employee happiness.

The HR managers surveyed who said their company’s employee programs are tied to organizational values reported greater benefits in a variety of areas than the HR managers who did not report such a link. For example, 70% of the first group of respondents, but just 38% of the second group, said that employee recognition programs generated a positive return on investment; 88% of the first group said the programs instill and reinforce corporate values, compared to 57% of the second group; and 80% of the first group said the programs help the company maintain a strong employer brand, compared to 49% of the second group.

In addition, the results indicated that the HR managers who reported that their organization dedicates at least 1% of payroll to recognition programs that are tied to the company’s values were more likely than the other respondents to say they believe these programs positively affect their company’s ability to attract job candidates, meet learning and developmental goals, and meet sustainability or cost control goals.

From Benefit Trends Newsletter, Volume 60, Issue 1

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.

Human Capital Is More Valuable To Economies Than Physical Assets

Human Capital Is More Valuable To Economies Than Physical Assets

Human capital is more than twice as valuable to the global economy as physical capital, but business leaders often overestimate the value of tangible forms of capital and underestimate the importance of employees to their company’s performance, a study commissioned by executive search firm Korn Ferry has concluded.

The report, “The trillion-dollar difference,” outlines the findings of a survey of more than 800 global business leaders that was conducted in August and September 2016, as well as of a global economic analysis that was conducted by the Centre for Economics and Business Research. The report was released on December 15, 2016.

To quantify the relative value of human and physical capital, researchers developed a lifetime income calculation for measuring human capital that encompasses the ability of people to perform labor and add productive value over time. Physical capital was measured by the value of tangible means of production (such as technology, real estate, and inventory), and was calculated using the same principles that were applied to the value of human capital, or potential earnings from the asset in use. The analysis found that human capital represents a potential value of $1.2 quadrillion to the global economy—or 2.33 times that of physical capital, which was valued at $521 trillion.

According to the analysis, human capital is also the greatest value creator available to employers, as for every $1 invested in human capital, $11.39 is added to GDP. Researchers cited two main reasons why people represent not only significant financial value but also value generation capability to employers: potential and appreciation. They explained that because the performance of people can be influenced, it has great potential; and that humans, as capital, can gain experience and knowledge over time in ways that even the most sophisticated machines cannot.

The study also analyzed the relative value of human to physical capital in eight countries, including the U.S. Researchers emphasized that markets with service-based economies have an especially high human to physical capital ratios. Of the countries analyzed, the U.S. was shown to have the human capital of greatest value, at $244 trillion. Thus, with its physical capital valued at $62 trillion, the U.S. was found to have the second-highest human to physical capital ratio of the analyzed nations (after the United Kingdom), at 3.92. The results further indicated that even in countries weighted toward agriculture and industry, the value of human capital exceeds the value of physical assets. For example, for China the value of human capital was found to be $110 trillion and the value of physical assets was found to be $49 trillion, resulting in a human to physical capital ratio of 2.23.

However, the results of the survey of global business leaders suggested that many CEOs and other senior-level executives have a blind spot that leads them to undervalue human capital, while placing a higher value and degree of focus on technology and tangible assets. The survey of business executives indicated that 67% believe technology will create greater value in the future than human capital, and that 63% predict that technology will become their firm’s greatest source of competitive advantage. Moreover, the survey found that 64% of respondents see people as a bottom-line cost, not a top-line value generator.

Researchers speculated that these perceptions could be based on a failure to properly account for the role of human capital: 46% of the business leaders polled admitted that their organization does not understand how to measure workforce performance, and 40% said their company lacks an executive with specific responsibility for tracking employee performance. The survey also showed that 40% of the respondents have experienced shareholder pressure to direct investment to tangible assets like technology.

From Benefit Trends Newsletter, Volume 60, Issue 1

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. 

Digital Technologies Linked To Better Company Performance

Digital Technologies Linked To Better Company Performance

Companies that extensively employ digital technologies perform better and are more efficient than companies that have not fully taken advantage of those technologies, according to the findings of a survey of senior information technology (IT) and non-IT executives conducted by The Economist Intelligence Unit (EIU) for digital solutions provider CSC.

The survey of 514 CEOs, senior IT executives, and other C-level executives from global enterprises was conducted in March 2016. The aim of the survey was to investigate the link between digital technologies and business success. Specifically, respondents were asked about their views on the strategic benefits and operational value of IT, and about their company’s current and planned investments in IT.

Researchers identified as “digital leaders” the 8% of respondents who reported that their company is entirely digital across major functions. Compared to the other executives surveyed, these digital leaders were far more likely to report that their company views IT as crucial to meeting strategic goals, is globally integrated, and is effective at information-sharing across functions and regions. Digital leaders were also more likely than the other respondents to indicate that their company is prioritizing investments in the public cloud, collaboration software, and cloud-based applications services. Most strikingly, 37% of these digital leaders, but only 11% of the other respondents, said that their company’s financial performance was much better than that of their competitors in the past fiscal year.

In the survey, 63% of the digital leaders, but only 52% of the other respondents, said that their company plans to increase overall IT spending somewhat or significantly in the next three years. Moreover, 44% of the digital leaders reported that the CEO is the primary driver of IT strategy at their organization; a result that researchers cited as an indication that an organization places added emphasis on the importance of technology in achieving business goals.

Researchers observed that even though most of the executives surveyed reported that their company will increase its investments in IT over the next three years, most organizations have yet to take full advantage of newer digital technologies. While 57% of the digital leaders surveyed reported that IT is seen as a crucial partner in meeting their company’s strategic goals, 27% of all respondents acknowledged that their company regards IT as operationally helpful, but not as crucial to strategy. Thus, not surprisingly, the survey found that 85% of the digital leaders, but just 63% of all respondents, reported that the central IT function at their company controls at least some of the IT budget.

Among all of the executives surveyed, 54% indicated that their company is becoming more digital to raise efficiencies, while 35% admitted that cost-cutting is the primary goal. Slightly more than one-quarter of respondents said they view digital technology as a way to keep up with new, fully digital companies; while just 10% said they view technology as a way to surpass competitors. Noting only around one-third of all respondents said they plan to start using cyber security tools in the near future, researchers warned that spending on cybersecurity is lagging far behind spending on other tools, and that this is especially concerning given the risks involved.

From Benefit Trends Newsletter, Volume 59, Issue 12

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 © 2016 Liberty Publishing, Inc. All rights reserved.