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Talent Management Among Top Issues Facing HR Professionals in 2013, Experts Say

Monday, January 14, 2013

Human resources professionals will likely face several talent management issues in 2013 while also dealing with myriad federal regulations and the many requirements of the Affordable Care Act, experts told BNA.  

In general, the top issues for HR professionals in 2013 will be similar to those they faced in 2012, 2011, and 2010, Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School, told BNA Jan. 5.

“One thing that is striking about the list [of 2013 issues] is how many of these are employee relations/compliance issues,” Cappelli said. “If you take that away, the rest is all talent management. This suggests something about what the world of HR is about these days.”

Retaining Top Employees

In light of recent changes in the economy, the issue of retaining and rewarding the best employees will be at the forefront in 2013 for HR professionals, Jennifer Schramm, manager of the Workplace Trends and Forecasting Program at the Society for Human Resource Management, told BNA Dec. 12.


Top Issues Facing HR in 2013

1. Retaining the best employees in light of recent improvements in the job market.

2. Increasing emphasis on nontraditional workplace benefits, such as flex time and telecommuting.

3. Developing the next generation of corporate leaders as many baby boomers are set to retire.

4 Keeping corporate knowledge and finding skilled workers.

5. Immigration reform proposals will begin to take shape.

6. Keeping up with technological changes affecting work.

7. Using social media as an effective recruiting tool.

8. Implementing Affordable Care Act provisions.

9. Avoiding worker misclassification.

10. Dealing with federal agencies and various regulations.


“It still remains to be seen how rapid economic growth may be … but based on the assumption of growth, there will be a lot of people that will start looking for new jobs,” Patrick Wright, professor of business management at the University of South Carolina's Darla Moore School of Business, told BNA Jan. 3.

“The perception is always that the grass is greener on the other side,” he added.

Wright said that in times of economic recession, employees typically feel under-appreciated. As the economy improves, he said, employees will want to consider all of their options.

“Employers need to identify key employees from entry-level to upper-level management and take the appropriate steps that are unique to their businesses to retain these individuals,” Lonnie Giamela, a partner in the Los Angeles and Irvine, Calif., offices of Fisher & Phillips LLC, told BNA Dec. 28. “It's thinking outside the box,” he said.

Flex Time, Telework, and Other Tools

Giamela recommended employers consider merit pay increases, projects that increase an employee's responsibilities, or fringe benefits like flex time, telecommuting, or technologies to keep employees happy.

For example, he said, a young employee who lives in a city but wants to work at a company in a suburban area may want some sort of transportation benefit or transportation subsidy. “Employers will need to do these kinds of things more and more to incentivize employees to stay,” Giamela said.

Bob Carragher, the senior state affairs adviser in SHRM's Governmental Affairs division, said Jan. 9 that work flexibility will be a big topic for HR in 2013.

“It's an area that has started to catch on in the Congress,” he said during a meeting of the Human Resource Association of the National Capital Area, the Washington, D.C., chapter of SHRM. “The president and particularly the First Lady are very interested in more and more employers embracing [flexible work options].”

Generational Shifts

Employers and HR professionals will likely experience challenges associated with changes in company leadership, as baby boomer leaders give way to Generation X and Generation Y leaders, experts said.

Moreover, many Generation Y, or millenial, employees who are now ascending into mid-level management positions are less concerned about long term employment with a company, and more concerned about what the company can do for them, Giamela said.

Additionally, younger employees are asking for different benefits than the baby boomers. “These are the same individuals who got trophies for participating, not winning, in sports,” Giamela said. “They seek acknowledgement.”

Schramm said HR professionals must also consider just the numbers of the generation shift: Generation X is a much smaller population than the baby boomers meaning there will be a smaller pool available for replacing retiring corporate leaders. While the millenial generation is larger than Gen X, they may not be far along enough in their careers to fill the gaps, she said.

Alternatively, some employers may be dealing with baby boomer employees who are staying past the age at which they were expected to retire, Wright said.

Employers may have issues retaining talented employees blocked from promotions by co-workers choosing work over retirement, he said.

Corporate Knowledge, Skilled Workers

According to Wright, the key to a successful shift between generations of employees will be in knowledge retention. HR must connect employees from different generations to keep that knowledge in-house, Wright said. One option for retaining such knowledge, he said, is to find ways to let people retire and still work part-time.

Employers may also experience challenges finding and developing skilled workers in labor industries such as manufacturing, Wright said.

The high school-to-university system is designed so that guidance counselors are focused on sending graduates to college, but there are some students who would do better in a skilled trade, according to Wright.

Until that mindset is changed and individuals are trained in these trade school professions, attrition rates at universities will continue and labor industries will still be “strapped for appropriate workers,” he said.

According to data from HR consulting firm Towers Watson, there is a “significant shortfall” of talent in the United States, in part due to changing workforce demographics, Ravin Jesuthasan, global practice leader of Towers Watson's talent management practice in Chicago, told BNA Jan. 3.

Jesuthasan said there is a gap among college-educated talent in terms of skills that are relevant to today's industries. Eventually, he said, these kinds of shortages will come to manifest in terms of reduced output in gross domestic product.

Immigration also plays a major role in talent management, Jesuthasan said. In prior decades the United States imported high-caliber talent from around the world, but that has diminished due to uncertain immigration policies, he said.

Immigration Reform

Comprehensive immigration reform is likely to be on the agenda of the Obama administration later this year, Carragher said, or “definitely by next year.”

“Immigration reform is clearly on the horizon,” he said, “and [President Obama] knows it's going to be a tough issue for Republicans, particularly with the requirement that there be a road to citizenship for folks currently in the country illegally.”

The Department of Homeland Security announced June 15 and launched two months later, deferred action for childhood arrivals (DACA), a policy that averts deportation of and provides work authorization to illegal immigrants who came to the United States as children and who meet certain criteria.

“Regulatory action will be coming out to basically identify the framework of how the administration is still going to implement this,” Carragher said. “I think it will be coming out in the next six months. That's something to be aware of.”

Carragher said employers have expressed concern about what would happen if, for example, an employee acknowledges where and how long he has been employed in an effort to prove he has been working in the United States. “If that happened, the employer would be a target for an audit,” he said.

Technology Changes Jobs …

In 2013, companies will be much more “nimble” in how they tap into the “virtual workforce” that is now accessible due to technology advances, Jesuthasan said.

Instead of hiring one individual to have a job with many tasks, companies have the option to use outsourcing, contract employees, part-time employees, and consultants via the internet to accomplish specific tasks, he said. For example, there are multiple websites available to HR professionals to find and hire software writers and application creators for specific projects, he added.

“This [trend] is causing companies to challenge the very definition of a job,” according to Jesuthasan, because they can now be accomplished at less cost to the employer through this “piecemeal” process.

… and Recruiting

Technology, specifically social media, will also likely affect the way HR views recruitment, Schramm said. According to data from SHRM, more than half (56 percent) of surveyed organizations used social networking websites in 2011 when recruiting potential job candidates. That was a “significant increase” from 2008, when a little over one-third (34 percent) of organizations were using these sites as a recruiting tool, Schramm said.

However, she cautioned that easy access to potential candidates on social media sites has the potential to create an HR mentality of “I can always find the perfect person for the job” instead of developing that talent in-house.

Impact of the Affordable Care Act

Obama's reelection victory means efforts to repeal and replace the ACA are essentially “dead,” Carragher said. House Republicans might lead efforts to fine-tune the federal health care law, he added, “but they're not going to change it.”

Implementing regulations related to the ACA are being promulgated almost weekly, Carragher said. In 2013, areas HR practitioners charged with implementing the ACA are focusing on include:

• Health flexible spending account changes: Effective in 2013, the ACA requires a health FSA funded through a cafeteria plan to limit pretax employee salary reduction contributions to $2,500 per year.

• Medicare payroll taxes and retiree drug subsidies: Employees' share of the Medicare tax on wages in excess of $200,000 (or $250,000 for joint tax filers) increases in 2013, SHRM noted. Employers will no longer be permitted to take an income tax deduction for the Medicare Part D retiree drug subsidies they receive from the federal government.

• Employer notifications:Employers must notify workers by March 1 about the new health care exchange program that is to take effect in January 2014 under the ACA. Workers must be provided with a basic communications package that: describes the exchange and its services, provides contact information, explains the percentage of essential health benefits provided, points out that employees who buy insurance from an exchange can lose the employer's tax-free contribution to health coverage, and identifies whether employees are eligible for a premium tax credit if they buy a plan on the exchange.

• Employer reporting on W-2s: In 2013, employers must begin recording the aggregate cost of employer-sponsored medical coverage on each employee's Internal Revenue Service Form W-2, Wage and Tax Statement.

• Women's health: Guidelines requiring nongrandfathered U.S. health insurance plans to cover women's preventive services, including contraception, without charging a copayment, coinsurance or a deductible, take effect Jan. 1, 2013, for most plans, SHRM noted.

 

The ACA also will have implications for how employees are classified within the company in 2013, Jesuthasan said, as the number of full-time equivalent employees gains importance in terms of employer health care requirements.

Employee Classification Concerns

Overall, employers should reassess how employees are classified, such as part-time, independent contractors, or consultants, to avoid penalties in the event of an audit, Giamela recommended.

In a depressed economy, employers were aggressive in misclassifying employees as independent contractors to avoid paying overtime, he said. However, Giamela said, as the economy improves, it will be important for employers to audit their classification practices to make sure they are compliant.

Increased Regulation

“I think the running theme for 2013 will be a whole bunch of new regulations coming out in the second term of the Obama administration,” Wright told BNA.

“That's something that everyone will have to worry about,” he said, noting that more action should be expected from the National Labor Relations Board, the Equal Employment Opportunity Commission, and the Occupational Safety and Health Administration. “These are not positive or negative trends,” Wright said, “but I think HR professionals should be aware.”

Issues awaiting final action from the Department of Labor include a proposed rule to expand military family leave under the Family and Medical Leave Act, Carragher said. That is due out soon, he said.

A DOL “persuader” proposed regulation also might be promulgated in 2013, Carragher said. This proposed rule would expand the requirements for reporting persuader agreements between employers and labor relations consultants.

The Labor Department updated its fall 2012 regulatory agenda Dec. 21, adding more than a dozen new items to a list of about 70 agency initiatives on which some action is anticipated next year. The agenda calls for the Office of Federal Contract Compliance Programs in April 2013 to issue a final rule revising existing regulations under the Vietnam Era Veterans' Readjustment Assistance Act and enhancing federal contractors' affirmative action obligations regarding protected military veterans.

OFCCP also set an April 2013 target date for issuing a final rule on contractors' affirmative action obligations under Section 503 of the Rehabilitation Act. The proposed rule, issued in December 2011, would increase contractors' data collection obligations, revise recordkeeping requirements, and for the first time, establish utilization goals for contractors employing persons with disabilities. OFCCP received approximately 400 public comments on the proposed Section 503 rule.

“There's a thought that OFCCP might also start delving into pay equity,” Carragher said.

In addition, Carragher said guidance from the EEOC could be released this year that addresses employers' use of consumer reports and credit information related to hiring decisions. “There was a lot of concern that the use of such information in particular with the downturn in the economy would have an impact on certain Americans and certain classes of Americas as well,” he said.

EEOC might also release guidance addressing whether leave is a reasonable accommodation under the American with Disabilities Act, Carragher said.

By Genevieve Douglas
Rhonda Smith contributed to this report
 

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