Tina Hamilton, an Entrepreneurs' Organization (EO) member in Philadelphia, is founder and CEO of myHR Partner, a human resources outsourcing firm that manages HR for small- and medium-sized businesses in 26 states. We asked Tina about significant trends in the HR realm for the upcoming year. Here's what she shared.
As we enter the new decade, there are two evolving HR challenges that entrepreneurs must address regardless of company size: hiring and regulatory compliance. Both require constant focus and vigilance--or you risk derailing your business.
Let's talk hiring first.
With only eight people searching for work for every 10 open US jobs, the lack of talent is becoming a crisis. It's causing entrepreneurs to alter business strategies--often at critical junctures of the business lifecycle.
Why is this happening? The strong economy is one obvious answer. But even if it slows, macroeconomic forces will likely cause the problem to persist:
- There are fewer people in the workforce, as fewer children were born to the generations after the Baby Boomers.
- Overall, there are more opportunities available for people in business, which lowers the availability of laborers, construction, food service, warehousing, trades and other traditionally hourly workforce members, many of which do not require a college degree.
- Employees have options and mobility. They don't need to stay in a job if they're not happy.
Entrepreneurs must establish long-term strategies and procedures to overcome the talent shortage. Three focus areas are essential:
- Retention. It should be the number one focus for any company experiencing the shortage now and in the future. Aim to create a best-in-class work environment that employees don't want to leave. Survey employees and get feedback with exit and stay interviews to monitor your progress. Improve manager training. (Bad bosses are the No. 1 reason people leave jobs.) Finally, show employees they're appreciated and valued.
- Applicant attraction. What are you doing to attract candidates based on what matters to them? Create a workplace that meets the demands of the demographics that work for you. It could mean adding flexible schedules, working from home or other adjustments. Market your workplace with the same vigor you market your products and services. Attend to your website's careers page, Glassdoor presence and social media to look your best.
- Recruiting. Running ads solely on one or two big jobs sites is no longer a viable solution in most cases. Look at pay-per-click services through Indeed and Glassdoor. Proactively search for candidates on LinkedIn, Indeed and industry-related sites. Weigh tried-and-true options such as referral bonuses. And consider getting help from a trusted recruiter or outsourcing company.
Fast-changing regulations are the second big HR trend for the coming year. Regulations have changed more in the past 10 years than in the previous 50. It's critical to understand that regulations are changing at all levels of government--federal, state and local. As your business expands into new markets or reaches a new employee threshold, you could unknowingly face compliance issues.
Here are the top four areas entrepreneurs should watch.
- Fair Labor Standards Act (FLSA). As of January 1, 2020, the federal law raised the "standard salary level" to $684 per week (equivalent to $35,568 per year for a full-year worker) and altered the rules for highly compensated employees, bonuses and incentives among other changes. This will be the new normal in 2020 and beyond.
- Medical marijuana. Employers face a confusing patchwork of federal, state and local laws regarding the drug and the process of testing for it. At the federal level, marijuana is still illegal. But states range from full legalization for recreational use to total prohibition. In Maine and Nevada, where both medical and recreational pot are legal, lawmakers say employers can't make adverse decisions about most workers' employment based on their marijuana use outside of the workplace. And in New York City, new laws tackle the issue of a job candidate's marijuana use and prohibit most pre-employment tests for marijuana. Now and into the future, such laws will continue to evolve.
- Sexual harassment. Training and mandatory requirements have arisen in many states as a result of the #Metoo and #Timesup movements. Thirty states either require or recommended training. The laws vary in the amount, type and even format of training required. It is recommended that you start an annual training to stay ahead of it and to be proactive in the event of a lawsuit. In addition, it sends a good message to your staff. Regardless of the law, it's the right thing to do.
- Pay history questions and pay equity. While pay or salary history was once a common interview question, it's now prohibited in many places. An increasing number of state and local governments have adopted laws that ban employers from requesting salary history information from job applicants. Proponents believe the legislation will help eliminate pay discrimination among women, minorities and other historically underpaid workers. Meanwhile, The Equal Pay Act requires that men and women in the same workplace earn equal pay for equal work. The jobs need not be identical, but they must be substantially equal. Job content--not job title--determines whether jobs are substantially equal. It's a best practice to familiarize yourself with the facts around equal pay and compensation discrimination.
It's natural for entrepreneurs to focus on the aspects of their businesses that will drive growth and profitability, such as product development, new market expansion, service delivery, process efficiency and financing. However, HR will continue to be a crucial driver of success in 2020 and beyond. Savvy entrepreneurs will stay ahead of the trends to keep their workforces prepared and compliant.