The results of the study are nothing less than shocking: while 3 in 4 (73%) employees state they are satisfied with work, only 1 in 9 (11%) state they are engaged in their job. “Engaged” is identified as “emotionally connected to their workplaces and feel they have the resources and support they need to succeed.” The vast majority of workers, almost 2 in 3 (62%) state they are not engaged — that is, emotionally detached and likely to do little more than the bare minimum to keep their jobs. But perhaps the most frightening discovery is that more than 1 in 4 employees (27%) are actively disengaged – meaning they view their workplaces negatively and are liable to spread that negativity to others.

The study continues to show that, as would be expected, organizations with higher ratios of disengaged employees have lower productivity and a higher ratio of employees with health conditions or are otherwise unhappy in their personal lives. And the organizations with the highest percentage of engaged employees report greater profits and motivated staff.

Two Engagement Strategies

One can speculate that the prolonged recession and economic uncertainty have led to these dramatic findings. Indeed, the National Federation of Small Business’s “Optimism Index,” while slightly higher in recent months, is still significantly lower than pre-recession levels indicating the employment climate is still severely suppressed. As such, the Gallup study concludes, businesses must actively pursue programs that seek to engage their employees in an effort to boost morale and productivity. Here are two brief ideas to get you started. We will explore more in future posts.

1. Recognition and Feedback. Recognizing employees’ accomplishments and providing regular feedback are ranked as two of the most important factors in creating an “engaged” workforce. Managers who find ways to measure and celebrate their staff will quickly find a drop in absenteeism, increased morale and productivity gains in the long term.
2. Training and Development. An educated workforce will not only be more productive, but will naturally be committed to the organization. Providing employees an opportunity for growth and expanding their professional skills are invaluable in promoting positive feelings towards the company. On the one hand, the employee recognizes their employer is investing in them and is looking towards the future. On the other hand, the employee themselves will be more confident in their role, thus leading to greater productivity and commitment.

These are just two quick ideas to get you thinking. Ultimately, as the Gallup study states, “High-quality jobs keep the world moving forward… Jobs that give individuals a sense of pride and dignity as they build a more secure future for themselves and their families.” Whatever you choose to implement, provide your staff the pride and dignity they deserve, and you will all come out the winner.

With lawsuits on the rise, employers must do all they can to stay ahead of the employment curve and to make compliance with 2012 labor laws a priority in the new year. The challenge for small employers, however, is understanding and complying with the multitude of regulations that affect their business. Particularly in certain states, such as California, employment laws are overwhelming and can be significantly different than their federal counterparts.

Outsourcing Human Resources with a PEO

There is a solution! In a Professional Employer Organization (PEO) relationship, the business owner outsources human resources administration to the PEO and relies heavily upon the PEO firm to to stay abreast of changing laws and regulations. The PEO/HRO firm provides clear direction and support, assisting them in all areas of HR compliance. Typically, clients are assigned a Human Resources expert to personally help them understand the law, and how the law impacts their business and employment practices. HR consultants provide support in all of the following areas:

• Resolving employee complaints
• Fielding general inquiries
• Performing terminations
• Assisting in exit interviews
• Assisting with investigations
• Auditing employee files and records
• Conducting salary surveys
• Speaking confidentially with employees regarding complaints or grievances.

Studies show that businesses that offer an outlet for employees to speak to professionals not only experience a reduction in lawsuits, but also lower health insurance costs, turnover, and workplace injuries.

The PEO also assists businesses comply with HR forms, documents, and employee management. They review the client’s current Employee Handbook and Policy Manuals, and update it to enhance compliance with all mandatory state and federal guidelines. By taking a hands-on, proactive approach, clients enjoy increased protection against unnecessary and expensive employment litigation.

EPL Insurance

Finally, most PEOs offer Employment Practices Liability Insurance (EPLI). EPLI is a comprehensive insurance that provides protection to employers against a wide range of employment practices and is designed to cover certain claims and lawsuits brought by employees alleging wrongful termination, discrimination, unlawful harassment, and other related torts, including but not limited to:
• Discrimination • Wrongful employment decision or act • Comprehensive omnibus wording • Wrongful termination or demotion • Sexual and non-sexual harassment • Wrongful demotion • Assault and battery.

While companies have long recognized the value of General Liability or Errors and Omissions insurance, many now understand the importance of EPLI.

In short, a PEO relationship can help employers in all aspects of their employment compliance, significantly reducing the chance of being the victim of an employee lawsuit. Perhaps investigating how a PEO can help protect your business should also be a priority in 2012.

One solution to effectively manage employment costs is to outsource human resources administration to a Professional Employer Organization. A Professional Employer Organization, or PEO,  helps small employers reduce costs in all of these areas utilizing the following two methodologies:

• Accessing the PEO firm’s Economies-of-Scale
• Consolidating vendors and streamlining operations

Economies of Scale.

Economies-of-scale is the method through which a PEO pools resources, thereby procuring discounted rates and passing those rates onto their clients. It is the primary method through which a PEO can reduce an employers’ HR-related costs. Small employers, those with fewer than 500 employees, have limited buying-power for purchasing workers’ compensation, are often limited in the variety and scope of health insurance plans they can offer their employees, and overall have less flexibility and expertise when it comes to administering these plans. The PEO pools hundreds, sometimes thousands of businesses, and is able to aggregate workers’ compensation insurance, health benefit plans, and retirement plans. The PEO establishes close working relationships with large regional insurance companies and is in the position to offer more robust plans, with lower premiums.

The PEO is also able to provide insurance carriers greater stability to their insurance plans.  The pooled employees come from a broad range of industries and geographic areas which serve to stabilize and diversify the risk and premiums over the long-term. This provides the PEO greater negotiating power at renewal, enabling them to keep renewal rates below market averages.

Beyond rates and vendor relationships, PEOs can successfully support health and wellness programs that can help maintain low insurance premiums into the future. Most PEOs offer Work/Life balance programs, health and wellness incentives, or discounts to health clubs and gyms. A healthy lifestyle in and out of the workplace can make significant, positive impacts on the utilization and expense of future health insurance premiums.

Vendor Consolidation and Streamlining Operations.

Another method through which PEOs help employers reduce human resources overhead is by helping them streamline their internal administrative operations. When businesses join a PEO, they in effect combine many vendors under one roof, thereby eliminating the need to maintain relationships with multiple vendors.

A full-service PEO can provide all of the following services, often at a reduced cost:

• Assistance with labor law and employment compliance
• Creating and reviewing employee handbooks & policies
• Payroll processing and tax services
• Risk management and safety consulting
• Workers’ Compensation insurance
• Health insurance plans & administration
• 401 (k) and Cafeteria 125 Plans
• Management Training
• Recruiting services

These combined services streamline the client’s internal operations and enable their existing staff to more efficiently focus on core business functions. A single individual within the client’s organization is usually all that is needed to liaise with the PEO which reduces the need for multiple employees to maintain multiple relationships with different vendors. Some companies experience such a drastic reduction in administrative overhead that they are able to reduce headcount, or reallocate resources to more valuable, revenue-generating tasks.

In our next post, we will analyze HR strategy #2: Reducing Employment Risks

In part one of this two-part series, we will discuss these three strategies and what they mean to employers. In part two we will analyze how employers can effectively implement these strategies into their organization.

Stabilizing operating expenses. Following years of flat sales, employers should investigate ways to manage a lower operating budget and to minimize unnecessary expenditures. While there are potentially hundreds of areas that can be considered, employment costs usually account for one of the largest percentage of expenses in any business. These expenses include hard costs, such as payroll and tax overhead, health insurance premiums, workers’ compensation insurance, legal and recruiting fees, and payroll processing costs. They also contain soft costs such as employment administration, employee training, responding to employee questions or complaints, employee reviews and general labor law compliance. Reducing these labor costs can have a significant impact an employer’s bottom line.

Reducing employment risks. With years of experience and research to support the claim, it has been well documented that there is a direct correlation between difficult economic periods and an increase in employment related lawsuits. Stephen C. Dillard, head of Fulbright’s global litigation practice, states “Generally, litigation rises in an economic downturn as regulators tend to step up enforcement, laid-off workers head to court, and companies need to file more suits in order to collect money owed.” To head off the potential of an employment-related lawsuit, employers should be diligent in training managers on appropriate termination policies, updating various employment forms and policies, and reviewing internal accounting and HR process to ensure they are in compliance with payroll-related labor laws and regulations. As the economy strengthens, employers may find themselves looking to rebuild their workforce. In preparation for growth, they should update employee handbooks and new-hire procedures, train management on proper interviewing techniques, and review all forms, new-hire packets and offer letters for compliance.

Enhancing employee performance. Even as companies begin to hire again, it will probably take some time before staff reach pre-recession levels. This translates to managers still trying to maximize productivity with their smaller workforce. With all the downsizing, reduced bonuses, and increased workload of the past years, it is obvious that employees continue to face a stressful work environment. Furthermore, both employees and management struggle to find a healthy balance between productivity and the decreased manpower. In order to maintain employee morale and commitment to work, employers are challenged to find new ways of motivating and incentivizing their staff to maintain a positive attitude while managing the increased workloads.

In our next post, we will discuss how Human Resources Outsourcing should be considered as a viable business solution to actualize these three employment priorities.

Over the past several months, dozens of new employment laws and legislative bills were signed into law that went into effect on January 1, 2012. These changes will directly impact the way employers conduct business, including areas such as payroll tax limits, new employment guidelines, and changing insurance markets.

Ari Rosenstein, CPEhr’s Director of Marketing, explains:

“Not only are employers throughout the country burdened by the weak economy, but they are confused and troubled by the seemingly unending flow of employment regulations. Many small employers recognize it is virtually impossible to stay up to date on a regular basis, especially at the turn of a new year when many new laws go into effect. It is for this reason we publish our annual HR Updates report.”

The report draws from CPEhr’s human resources experience on a wide range of employment, payroll, tax and insurance areas. Topics covered in the report include:

• New employment laws effective in 2012
• The IRS Voluntary Worker Reclassification Program
• Understanding the importance of correct employee/1099 classifications
• New 2012 Tax and 401(k) limits
• The value of employee training and development
• Rising Workers’ Compensation costs and how to mitigate them
• Creative approaches to reduce increasing health care premiums

“Our hope is that employers will read the report and, at the least, become aware of the important changes coming in 2012. At best, we hope they will take the time to investigate the new laws and adjust their business activities accordingly,” said Rosenstein.

#5. The Five Steps of Progressive Discipline

#4. 9 Lawsuits that are Changing the 2011 Landscape

#3. Important Changes to I9 Form Documentation

#2. California Labor Law Updates – 2011

#1. Maintaining Employee Personnel Files

Wage and Hour

I’m predicting that wage and hour issues will continue to be a hot-button issue next year. The Department of Labor has launched The Misclassification Initiative and recently has signed a Memorandum of Understanding with the Internal Revenue Service. Under this agreement, the Department of Labor and the IRS will work together and share information to reduce the incidence of employee misclassification, to help reduce the tax gap, and to improve compliance with federal labor laws.

Additionally, eleven states have signed similar memoranda with the Department of Labor’s Wage and Hour Division, and in some cases the Employee Benefits Security Administration, OSHA, OFCCP and the Office of the Solicitor. According to the Department of Labor, these memoranda will enable the Department to share information and to coordinate enforcement efforts with participating states to “level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law.” I’m expecting that more states will enter into similar agreements with the Department of Labor during 2012.

Upcoming State Regulations

These are only some of the regulatory changes we’re likely to see at the federal level during 2012. We haven’t talked about the changes we may see from OSHA, the Employee Benefits Security Administration, and the rest of the federal regulators, and we haven’t mentioned the regulatory changes coming at the state level. California, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington are just some of the states with labor and employment-related regulatory changes coming.

“Regulation” is the 2012 buzz word.

Regulation is likely to pose a significant challenge for employers in 2012. To meet this challenge, it’s important to stay on top of what’s happening on the regulatory front. Take advantage of the many newsletters, blogs and white papers that will inevitably be written and the webinars that will be held, and check in with the regulators’ websites. The EEOC and the Department of Labor (including all of the sub-agencies) have entire sections of their websites dedicated to compliance assistance. They even offer an email service that will send important updates right to your inbox. Once you fall behind, it can be hard to catch up. Make a New Year’s Resolution to check in routinely on what’s happening, and you’ll be able to get – and stay – compliant.

Guest Contributor:

Stephanie R. Thomas, Ph.D., is the CEO of Thomas Econometrics. She specializes in the quantitative analysis of discrimination. Dr. Thomas has authored numerous papers published in professional journals and regularly speaks to legal and industry groups on litigation avoidance, the use of statistics in litigation, equal employment opportunity and affirmative action compliance issues, and the statistical analysis of employment decisions.

As 2011 draws to a close, we naturally start to think about what the coming year has in store. We wonder about the new opportunities – and challenges – 2012 will bring. In past years, I’ve predicted increases in employment-related litigation. This year, the watchword is “Regulation”.

Reducing Barriers to Employment

In light of the unemployment situation in the US during the last three years, the government is eager to get as many people back to work as possible. The EEOC, in particular, has been spending a lot of time looking at barriers to employment for various groups of people. The Commission held hearings to explore the barriers faced by veterans with disabilities and by individuals with mental disabilities. They also explored the barriers to employment created by using unemployment status and arrest and conviction records as candidate screening tools. Furthermore, they examined the prevalence of intentional employment discrimination based on gender, race, national origin or other prohibited basis. If the EEOC believes that employers are engaging in intentional or unintentional discrimination against segments of the unemployed population, then it’s likely that we will see some proposed regulations to reduce or remove these barriers at some point next year.

Proposed Mandatory Hiring Regulations

But the EEOC isn’t the only agency focusing on employment. On December 9, the Office of Federal Contract Compliance Programs (OFCCP) published a proposed rule that would require contractors to set a hiring goal of having individuals with disabilities comprise seven percent of their workforces. The proposed regulatory changes detail specific actions employers must take with respect to recruiting and training individuals with disabilities, accommodations record-keeping and data collection regarding the number and percentage of disabled candidates and hires. According to Secretary of Labor Hilda Solis, “this proposed rule represents one of the most significant advances in protecting the civil rights of workers with disabilities since the passage of the Americans with Disabilities Act.” The OFCCP is accepting comments to the proposed rule through February 7, 2012. I’m expecting that we’ll see some movement on this proposed rule by early summer.

More Documentation Regulations

The OFCCP has also proposed some changes to its scheduling letter that would require employers to produce detailed employee-level compensation data, among other changes. This data would have to be produced for all full time, part time, contract, per diem, day laborers and temporary workers. Under the proposed changes, compensation is defined as the base salary, wage rate and hours worked. Additional compensation or adjustments such as bonuses, incentives, commissions, merit increases, geographic differentials and overtime would be produced as well. The OFCCP is encouraging employers to submit information regarding any other factors used to determine pay, such as educational attainment, prior experience, location, department, function, etc. The proposed changes would also require employers to submit organizational policies to reasonably explain compensation practices. With this new detailed data set, OFCCP is planning on reviewing each employee’s compensation at the individual employee level. The general consensus is that the proposed changes to the scheduling letter will be adopted during the first quarter of 2012.

In part 2 of this series, we’ll view additional regulations and other 2012 labor law updates that are looking to become important employment factors in the coming year.

Guest Contributor:

Stephanie R. Thomas, Ph.D., is the CEO of Thomas Econometrics. She specializes in the quantitative analysis of discrimination. Dr. Thomas has authored numerous papers published in professional journals and regularly speaks to legal and industry groups on litigation avoidance, the use of statistics in litigation, equal employment opportunity and affirmative action compliance issues, and the statistical analysis of employment decisions.

To kick off the holiday season, let’s talk about the Corporate Holiday Party. If you are like most businesses, you will be hosting one sort of party or another. Before you start uncorking the champagne, we suggest you read the following articles:

Jon Hyman’s post on Booze, Sex and HR: maintain perspective; accept corporate responsibility

Shaun Reid’s article, The Company Holiday Party: HR’s Role as Party Planner

Mark Toth’s post, Top 5 Holiday Party Tips.

Do you have any employees planning on celebrating their holidays with a new baby? Here is Andrea W. S. Paris’s post on California Pregnancy and Parental Leave Laws to help set the facts straight.

With 75% of employees active in Social Media, it’s just a matter of time until one of your staff posts their favorite picture taken dancing with the boss’s wife on their Facebook page. However, before making any brash decisions, be sure to check out Robert B. Fitzpatrick’s post, Sternly, and in Writing, Warn Clients Not To Mess With Facebook. Or, even worse,  they may actually share their lewd pictures over email with each other! Wondering how to manage that?? See Philip Miles’ Ranking Workplace Porn Emails.

Now, if things escalate and you are in the unfortunate position to let that employee go, you should read John Holmquist’s Note to Employers: Avoid the Aggie Way before taking the first step.

But we all know what happens next – faster than a speeding sleigh, the employee files a wrongful termination lawsuit (does your Employee Handbook say anything explicitly about not emailing lewd party images to co-workers??). Dawn Lomer provides some good advice in Bad News Can Be Good for a Wrongful Termination Lawsuit.

If you’re lucky enough to avoid a lawsuit, don’t be surprised if your ex-employee starts badmouthing  you to your clients, ruining everyone’s holiday cheer. Uh-oh. Better check out Adam P. Whitney’s post  You’re Damned if You Don’t Deal with Rogue Ex-Employees before things get out of hand.

Once the holidays wind down, employees will no doubt share their vacation experiences over breaks with their co-workers. Heather Bussing covers the hot topic of breaks and lunch periods in her post, Are Employers the Lunch Police?

Whew! And when it’s finally time to move on and recruit new talent to replace your former employee, Donna Ballman offers an employee-side perspective  regarding Employment Offer Letters and Joan Ginsberg has some suggestions for conducting video job interviews, Legal Concerns – Video Job Interviews.

If you are feeling exhausted and depressed and sapped of all your festive cheer, Robin E. Shea helps us get back into the spirit with her uplifting post, 10 Reasons for Employers to be Jolly about the ADA.

And who ever said the holidays weren’t fun??

Happy New Year everyone!