The Art of Building a Solid Human Capital Strategy
Posted on July 10, 2018
We’ve said it before, and we’ll continue beating that drum: Your most valuable asset is your workforce. Your people are integral to the success of your company, so not having a sound strategy to help attract, retain and engage your employees is a big mis-step for any business. And, very few things can make you more vulnerable to your competition than losing your best workers. So, let’s take a hard look at what you should be doing with your human capital management strategy. You can also click through to our benchmarking quizzes to see where your company either falls short or is doing it right.
Every employer understands that a solid recruiting program has a direct impact on their bottom line, as well as their brand. But, with unemployment rates sitting at historically low numbers, it’s getting tougher to find the people you need. If you’re having trouble attracting the best and the brightest to your company, it’s time to evaluate what’s going on (and why that top talent is going to your competition). Take our recruiting quiz to see how you measure up.
It’s important that your recruiters are making data-driven hiring decisions. Having a grasp of certain metrics – such as offer acceptance rates, where your candidates are coming from, how long it’s taking you to fill certain roles, reasons an applicant wasn’t hired – can make the recruiting process more targeted and effective.
From onboarding to developing employees throughout their career, it’s key to keep your people engaged and motivated. According to Gallup’s 2017 “State of the American Workplace” report, only 33% of U.S. workers say they are engaged, and that’s a big concern.
Employees who are actively disengaged (looking for a new job, coming in late or not at all, etc.) are more liable to steal from their employer, have a negative impact on coworkers and chase off customers. Even worse, though, is the financial impact: Gallup estimates that these disengaged employees cost U.S. businesses a whopping $483-605 billion each year in lost productivity.
Even though these disengaged employees might not be your best, any turnover is costly. A good rule of thumb is that replacing an employee costs 1.5 times their salary. When that number is extrapolated across the entire company (executives included), you can see why improving engagement is so important.
Simply throwing money at the problem through raises and bonuses won’t necessarily work with a lot of employees. Just like money can’t buy love, it also can’t buy employee loyalty and engagement. You don’t have to break the bank to improve engagement, though. Effective tactics can include:
- Supplying the right tools so that employees can effectively perform their jobs
- Giving individual attention and understanding individual needs
- Providing training and coaching
- Listening to employees and making them feel heard
- Helping employees find purpose through work
- Investing in supervisor training to help decrease turnover and increase engagement
Benefits administration is an area of a HCM strategy that’s central to the human resources function. Unfortunately, it’s also complicated and time consuming. (Think about the hours your HR team spends looking for the best deals on insurance plans that will also be valuable your employees.) But, having a comprehensive benefits offering can be a game-changer for your business. It can also serve as an effective recruiting and employee retention tool.
Offering health insurance is practically a given, but you also can’t forget about the complicating factor of the Affordable Care Act. Dental, life and vision insurance are very common, as well. Paid time off and a retirement savings program such as a 401(k) are benefits the majority of job seekers expect.
If you really want your company to stand out in a crowded field of competition, consider offering more exotic benefits such as pet insurance, gym memberships, Friday happy hours or student loan debt reimbursement. Of course, you’ll need to ensure that these benefits fit your company culture. Is your benefit program all it can be? Find out here!
HR management should involve much more than administrative work. The key to successful people management is utilizing “soft skills” to engage and develop employees.
Performance management: Managing your employees’ job performance should involve more than a once-a-year review. You should be helping and encouraging them to set goals and objectives, and enabling your managers to easily assess their team’s progress, as well as giving continuous feedback to help ensure that your workforce is achieving their career objectives. Aligning employees’ goals with departmental objectives and overall company strategy translates into positive business results. Find out how well your HR team manages and develops people by taking this quiz.
Succession planning: A Gallup survey found that about 33% of today’s workforce (nearly 75 million) is represented by the Baby Boom generation. More than 44 million of them are still working. The most seasoned Boomers turn 72 in 2018 and the youngest are in their mid-50s. At the opposite end of the spectrum, Pew Research found that Gen X adds around 53 million workers to the U.S. economy. When you do the math, that leaves a deficit of about 10 million employees to fill the gap from retiring Baby Boomers. If you haven’t already identified the new business leaders who can replace your Boomers when they leave the company, you could be in for some trouble in a few years. Succession management can boost retention rates, don't delay the planning.
Learning management: In addition to helping build a progressive culture and brand, offering professional development by way of a comprehensive learning management system can create a whole new group of talent in your company. When you create, manage and deliver targeted training to your employees, you’re improving employee engagement and retention.
Owning a small business is not easy and keeping track of and managing compliance with federal employment law can easily eat up hours of your day. Especially in an increasingly litigious society, it’s more important than ever that your company is protected from lawsuits that result from improperly handling HR matters. A few to concern yourself with include:
Hiring – Asking inappropriate questions and conducting inappropriate background screens can result in hefty consequences. Fines depend on the size of your organization, and larger employers (more than 500 employees) can be fined up to $300,000 per incident by the Equal Employment Opportunity Commission for running afoul of their laws. If you don’t toe the line on federal regulations regarding age, gender, race and other federally protected classes you can be hit with sizable penalties.
Wages – Whether willfully or unwittingly, failing to abide by wage, hour and overtime laws can be devastating to your company. Take this example: In May 2018, a family-owned restaurant in western Oklahoma was ordered to pay $335,687 in back wages and damages to 84 employees for its willful violation of the Fair Labor Standards Act (FLSA). The court also found the restaurant to be in violation of the FLSA’s child labor provisions. A $42,190 civil penalty was also levied. For most businesses, this would be an enormous blow.
Classification – With the uptick in freelancers and contractors in today’s gig economy, misclassifying employees as independent contractors can be a big problem. Misclassified employees don’t get the benefits and protections they’re entitled to, such as minimum wage, overtime, family and medical leave and unemployment insurance. The Department of Labor’s Wage and Hour Division is getting tough on compliance and increasing its number of workplace audits. In 2015, their investigations collected more than $74 million in back wages for more than 102,000 misclassified workers. Find out if your organization is at risk by taking our quiz.
When you don’t have a precise picture of how much you’re spending in labor costs, you can’t easily identify trends and pinpoint issues within your workforce. For example, think about overtime costs. When they’re suddenly too high, do you know why? Can you easily find out? To discover the underlying cause, you have to be able to see when the most overtime hours were clocked, exactly who was working that overtime and see whether a similar uptick took place in the past. Benchmark your labor costs here.
By having actionable data, you can strategize with your managers to create a method to correct the problem. In addition to helping you solve today’s challenges, access to labor information helps you to plan for future needs.
A Paycor survey found that 75% of successful, high-functioning HR teams spend their time on six areas of HR: recruiting, benefits, labor costs, compliance, people management and employee experience. We’ve created dedicated resource hubs on each of these topics complete with articles, guides and other content to give HR professionals and business leaders insights and advice to make a lasting impact on their organization.
More than 30,000 organizations trust Paycor to manage their most valuable asset, their people. Our HR software helps every aspect of human capital management from recruiting and retaining employees all the way through to payroll and learning management. See how we can help your organization by contacting our team.
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