Building Ecosystems to Gain Competitive Advantage

Building Ecosystems to Gain Competitive Advantage

As global business leaders become increasingly concerned about disruptions to their current growth strategies, many report that they are seeking to gain a competitive advantage by building ecosystems in which they join forces with other companies to share data, customers, technology, and industry knowledge, a recent study by professional services provider Accenture Strategy has reported.

The findings of the study, “Cornerstone of Future Growth: Ecosystems,” are based on a survey of 1,252 C-level executives at large companies spanning 13 industries and seven countries that was conducted in January 2018. The survey found that only 25% of the business leaders indicated that they are very confident they will achieve their 2020 growth targets, while 56% said they are concerned that current growth strategies are at high risk of disruption. The results also showed that 76% of the executives polled agree that their current business models will be unrecognizable in the next five years, and that ecosystems will be the main change agent.

In the study, an ecosystem is defined as a network of cross-industry players who work together to define, build, and execute market-creating customer and consumer solutions. Researchers estimated that ecosystems enabled by digital platforms could unlock $100 trillion of value for business and society over the next decade, and noted that the companies that are currently in the strongest position to take advantage of the synergies provided by ecosystems are operating in the telecoms, banking, and utilities sectors. Examples of such ecosystems include a furniture retailer partnering with an online job site to connect customers with workers willing to assemble the furniture, or health care providers that partner with rideshare services to transport patients to appointments.

The business leaders surveyed reported that they are seeking to capitalize on the opportunity by forming ecosystems to make major innovation plays (63%), increase revenue growth (58%), access new markets (55%), and attract new customers (55%). The results showed that 60% of respondents are looking to build ecosystems to disrupt their industry, 46% are actively seeking partners, and another 77% believe their company will generate more than half of its revenues from ecosystems in the next five years.

The study also pointed out, however, that many executives lack the experience and capabilities needed to design and execute market-leading ecosystems, and thus are not realizing the revenue growth they had predicted from ecosystem participation. The survey found that 58% of respondents targeted a growth rate of 3-4% from ecosystems, but only 40% are achieving it; and that just 12% are seeing growth of 5% or more from ecosystems.

Moreover, while half of executives surveyed said they are using platforms to share data and/or information across businesses, more than one-third admitted they are concerned about sharing intellectual property data (34%) and about cybersecurity (35%). In addition, while nearly two-thirds (63%) of respondents agreed that the technology/platform is the most important thing to get right in an ecosystem, nearly half (44%) acknowledged that they are worried about sharing company assets and secrets.

Nonetheless, large shares of the executives surveyed anticipate that ecosystems will have an impact on their business over the next three to five years: 56% of respondents said they believe ecosystems will create a new competitive advantage, 50% predicted that ecosystems will allow them to use data and analytics to better serve customers, 46% said they believe ecosystems will create new customer experiences, and 44% expressed confidence that ecosystems will drive innovation and disruption over this time period.

From Benefit Trends Newsletter, Volume 61, Issue 8

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 © 2018 Liberty Publishing, Inc. All rights reserved.

Role of Employers in Providing Benefits Expected To Diminish

Role of Employers in Providing Benefits Expected To Diminish

When it comes to providing health insurance and retirement benefits and ensuring the financial security of workers, Americans expect the role of individuals and government entities to increase and the role of employers to decrease over the next 10 years, according to results of a recent survey by the American Benefits Council.

The survey of 800 registered voters was conducted on November 5-9, 2017. When asked which entity they trust the most to provide them with high-quality health coverage, 43% of employed respondents said employers, while smaller shares cited the individual health insurance market (28%), the Federal government (13%), or state government (8%). However, when asked which entity they trust the most to provide them with opportunities to save for retirement, 56% of working respondents cited the individual financial services market, while 27% named employers and 9% cited the Federal government.

The working survey participants were also asked to identify the type of benefit they consider most important in the next 10 years. The top response was employer-provided health insurance coverage (35%), followed by employer-provided retirement benefits (31%). Much smaller shares of respondents cited student loan reimbursement and tuition assistance (7%), a financial and retirement planning program (7%), paid medical and family leave (6%), or paid vacation (5%).

When asked which entity they expect will play a larger role in providing individuals with health insurance and retirement savings opportunities over the next 10 years, more than half (52%) of respondents said they anticipate that individuals will play a larger role, while significant shares said they believe the Federal government (45%) or the state government (39%) will play a larger role. By contrast, only 29% of respondents said they expect employers will play a larger role, with the remaining respondents indicating they expect the role of employers to become smaller (35%) or stay the same (34%).

The survey participants were also asked to identify the tax incentives they view as most important over the next 10 years. More than one-quarter of respondents chose tax deferral on contributions to retirement plans (27%) or tax-free employer-sponsored health coverage (26%), while smaller shares selected the mortgage interest deduction (20%), a lower rate on capital gains (13%), or a deduction for charitable giving (9%).

Moreover, when asked if they would prefer a compensation package that emphasizes quality benefits or more take-home pay, 60% of respondents said they would prefer more generous, high-quality benefits in exchange for lower take-home pay; while 34% of respondents indicated that they would prefer less generous, lower-quality benefits in exchange for higher take-home pay.

From Benefit Trends Newsletter, Volume 6,1 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 © 2018 Liberty Publishing, Inc. All rights reserved.

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.