HRIS & Payroll Excellence January 2023

- Nick Shah, CEO and Founder,

36 HR Teams Can Use AI To Decipher And Respond To The Labor Market’s Mixed Signals

Businesses can preserve, empower and maximize existing resources and talent by introducing automation

- Rebecca Jones, General Manager, Mosaicx

4

- Jeetu Patel, Cisco’s Executive

The Future Of Payroll

5 trends that will make huge impact in future

- Jeff Ryan, MD, AWCape

Going Global: Tackling A World Of Payroll Challenges Across

Borders

With distributed teams and remote work, payroll must keep pace with the changes

- Kira Rubiano, Vice President, Global Payroll Operations, Atlas

Top Human Resources Management Predictions For 2023

8 trends that await HR this year - Part I

- Josh Bersin, HR analyst, CEO, The Josh Bersin Company

Top Picks 14 19 26 32

Total

Rewards Holds An Exciting Role In The Future Of Work

3 trends and resulting implications for the total rewards profession

- Jesse Meschuk, Career and Human Resources Expert, and Senior Advisor, Exequity

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Payroll Challenges 2023

From pay transparency laws, to payroll tax for hybrid teams, to employee data collection and distribution, there is a lot that payroll and human resources (HR) teams should be careful about, lest they fall into the non-compliance trap.

What will be the biggest payroll law and compliance challenges HR and payroll leaders face in 2023? What should they do to address these issues and maintain compliance at the workplace?

Check out, Top Payroll Challenges HR Will Face In 2023, featured on the cover month, where we bring you a list of payroll matters HR leaders expect to face this year and what are they doing to address them.

The payroll industry is known for “moving slowly”. However, even though, aside from ongoing legislative changes, it can appear like not a lot is happening or changing in the world of payroll, but the industry is not immune to continual technological advancements.

In addition, evolving workplace practices and a fluid tax and regulatory environment keep payroll administration personnel on their toes. In The Future Of Payroll, AWCape’s Jeff Ryan lists the trends shaping payroll in 2023 and beyond.

Total rewards has a much more strategic function today compared to its original “payroll” roots, charged with helping drive the attraction and retention of talent through effective and efficient delivery of cash compensation, incentives, benefits, and recognition programs.

Check out, Total Rewards Holds An Exciting Role In The Future Of Work by Jesse Meschuk of Exequity, where the author talks in detail about top technological trends and how they will impact the total rewards profession.

Also, read Josh Bersin’s Top Human Resources Management Predictions For 2023, and Going Global: Tackling A World Of Payroll Challenges Across Borders by Kira Rubiano.

That is not all! We have featured several other articles this month, and we hope this edition of HRIS & Payroll will help you achieve excellence in your core HR and payroll processes.

Happy New Year!

HRIS & Payroll Excellence: (ISSN 2564-2030)

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Deepa Damodaran Editor, HRIS & Payroll Excellence

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Excellence publications are my ‘go-to’ resource for contemporary and actionable information to improve leadership, engagement, results, and retention. Each edition offers rich and diverse perspectives for improving the employee experience and the workplace in general.

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COVER ARTICLE

Top Payroll Challenges HR Will Face In 2023

How to address payroll law and compliance issues in 2023

By HR.com Excellence ePublications Team

Frompay transparency laws, to payroll tax for hybrid teams, to employee data collection and distribution, there is a lot that payroll and human resources (HR) teams should be careful about, lest they fall into the non-compliance trap.

Learn what will be the biggest payroll law and compliance challenges HR and payroll leaders will face in 2023 and what should they do to address these challenges.

With pay transparency legislation expanding substantially in the past several months, and with New York and California laws going into effect, nearly one in five Americans will reside in a state that requires pay transparency on job postings. Not only does this impact candidates, but also internal employees, who may see job postings for a similar role with a pay scale, and for the first time understand where they sit on this scale.

This could create doubt among employees that they are being paid fairly if they are on the lower end of the range.

Employers – regardless of if they are in a location that requires disclosure of salary ranges in job postings – must focus on becoming more transparent to prepare for more conversations with employees around salary and prepare for potential future compliance with pay transparency laws. Employees have more information than ever on the market rate for their role and will likely be more proactive about requesting compensation adjustments.

For employers, providing your employees with more information about their pay (e.g., total compensation, internal salary ranges, etc.) and training managers to have these discussions will be crucial in keeping employee concerns at bay.

Jennifer Shewan, VP of People, Wonolo

I think, the biggest challenge facing HR or payroll teams is going to be employee data collection and salary hygiene. In California specifically, newly passed SB 1162 requires more diligence in employee demographic and personal data collection than ever before. More and more states are adopting compliance practices like this (if they haven’t already). It will be key to ensure that the systems or processes currently in place are built in a way that can support these new requirements like this.

The most helpful thing a payroll or HR team can do right now is to audit their current data. They should understand where they are with their data collection - what they collect, how they collect it, and where they keep it. This is an easy action every team can take and something we all can do “right now”.

From there it will be key to build longer-term compliance plans, the “what’s next?”. Helpful questions to ask ourselves are: “am I confident in what my salary bands are?” “do I have all my employee demographic and salary band data in an accessible state?” “how am I ensuring this data is up to date?” The answers to these questions should be the foundation of a payroll and compliance plan.

Many companies are still wrestling with the payroll tax implications of a more dispersed workforce, whether it’s employees working in multiple regions or not accurately reporting on where they’re working. This can be a driver for companies to reconsider in-office mandates.

Even a hybrid arrangement that requires working onsite one day per week may help ensure that there’s tighter compliance and visibility over where employees are working. However, an unintended consequence of this solution could be added frustrations for workers who are continuing to prioritize autonomy over where and when they work.

Rather than allow compliance requirements to dictate organizational culture, it’s always preferred to start with a clear vision of what culture and work structure will best support your people and your business. It’s a good opportunity for employers to listen to what employees truly value about their work arrangements through surveys and focus groups. HR teams should revisit company philosophies, study the impact of in-person collaboration, and review real estate commitments and portfolios.

Some companies have found significant value in sunsetting their leases and instead offering stipends for day passes to coworking spaces or team bonding experiences, like an outing to an escape room, improv comedy show, or cooking class.

Anne Jacoby, Founder, Spring Street Solutions

For good reason, transparency in compensation will be a major focus for HR leaders with regard to payroll law and compliance in 2023. As a result of legislation at the state level, organizations need to plan how to disclose their compensation and benefits packages, including wages, salaries, and bonuses, to satisfy employee expectations and keep them engaged.

HR leaders need to be thoughtful and tactful to both create a culture of transparency and trust, and support company goals and objectives.

Alexandria Genetti, Head of People, Enable

Jess Elmquist, Chief Evangelist & CHRO, Phenom

HR teams never need to look far for law and compliance challenges, but in 2023 I would recommend they pay very close attention to the emerging trend toward privacy and disclosure of employee personal and protected information. With the advent of the California Privacy Rights Act (CPRA) employers who meet the criteria are on the hook to be very clear about how, where, and when they are using employee information, even if the person in question was just a candidate for a job. If the past is any measure of the future, it’s likely that other states will follow the CPRA closely and begin to draft their own versions.

Reporting and managing personal information about every employee, and potential employee would be essentially impossible if that data isn’t stored in a central, consistent way. Many HR departments still use a variety of repositories for information, some high-tech, some very low-tech (printed files, post-it notes, and so on).

So the most important step to take to be ready for any privacy legislation is to centralize and normalize data on employees – putting everything into one place. This has the added benefit of making it easier to automate HR processes too, which reduces workload, so it’s a definite win-win.

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Geoff Webb, VP Solutions, Product & Marketing, isolved

Tracking Time For White-Collar Workers

Benefits of using electronic timesheets when tracking time for white-collar workers and project management

By Mairead Walsh, Softworks

Employees have been clocking in and out for well over a century. In 1888, a New York Jeweller Willard Legrand Bundy invented the first employee time clock. By 1898, the company had sold more than 9,000 Bundy Time Recorders.

The clocks were mainly used by manufacturing companies to measure their employee hours. It was a perfect way of measuring hours worked by so-called blue-collar workers on production lines, who were often paid solely for the hours they worked.

Fast forward to 2023 and today it is a legal requirement in most countries, for employers to keep detailed records of the hours their employees work each day and week. They must also keep a record of any leave, rest periods, and breaks employees take.

In the U.S. while specific rules and regulations differ by state, there are a number of federal requirements that apply to all U.S. employees. The Fair Labor Standards Act (FLSA) requires that records state the date and time a worker starts and finishes work, the number of hours worked each day, and the total hours worked each week. In 2019 the European Court of Justice (the CJEU) held that employers must have a suitable system in place to ensure they are recording employees’ daily and weekly working hours.

Today, we have moved beyond Bundy’s clock and have sophisticated automated time, attendance, and scheduling technology solutions. Along with ensuring your business is compliant with labor laws and health

and safety requirements, there are many benefits of recording your employees’ time, attendance, and absences.

What may have originated as a way to track “blue-collar” workers’ hours in manufacturing companies is now commonplace across all industries and jobs.

In this article, I look at the benefits of using electronic timesheets for white-collar time tracking and project management.

1. Removes Manual Processes, Improves Accuracy, and Ensures Compliance

One of the easiest and most unobtrusive ways to accurately track employee time and activities is via electronic timesheets. Electronic timesheets replace the need for paper timesheets and gather information on hours worked by employees. They interface with payroll and human resources systems.

Electronic timesheets are designed to allow employees to easily enter their daily hours worked or assume their standard contract hours, as well as paid time off via their PC, laptop, tablet, phone, etc. They were developed to reduce administration and manual tasks, increase payroll accuracy, ensure compliance with working time legislation and health and safety and protect organizations against payroll fraud.

2. Automates Payroll Calculations

Once timesheets are completed and approved, the system can then calculate payable hours, based on what is entered thereby avoiding the need for any manual calculations. With electronic timesheets, supervisors do not need to sign off on “paper” timesheets which can be open to errors; instead, they approve employees’ electronic timesheets online directly from their email or via their phone app.

This ensures that timesheets cannot be changed later as once approved they go directly to payroll rather than back to the employee. With electronic timesheets, you can allow employees to view and edit their time, enter absences, submit requests for leave and review their schedules reducing time spent looking for this information from others.

3. Discourages Payroll Fraud

The most common type of payroll fraud is the padding of timesheets by employees and the best control over this is ensuring that timesheets are completed and signed off regularly and in a timely fashion.

With an automated system, there is no need for administration staff to re-enter this information into the system. This allows you to completely eliminate the middle steps which could leave your business open to human error or fraud. The quicker that timesheet information is processed the more exact it will be. By leaving a time lapse between work done and approval you leave your business open to mistakes and deliberate fraud.

4. Makes Timesheet Approval Quick, Easy and Hassle-free

If tracking time and attendance become too much hassle for employees and supervisors, timesheet accuracy goes down. The easier it is for employees to fill in timesheets and for supervisors to approve them, the more accurate this information will be and the faster errors or attempted fraud will be spotted.

Line managers do not want to waste time chasing their team for timesheets and HR and finance departments do not want to waste time chasing line managers. Good electronic timesheet systems have built-in functionality, such as email alerts and SMS messaging, reminding employees and managers about timesheet submission and approval.

At the end of the day, the process should be quick and easy and provide no disincentive to doing it. By enabling supervisors to easily and quickly edit, authorize and analyze, time, attendance, absences, and additional time from one screen you will increase timesheet accuracy and alert supervisors quickly to any discrepancies. A good electronic timesheet system should offer all of this.

5. Keeps Track of Employees Centrally

Managing variable working hours, times, and days and tracking large numbers of employees and/or contract workers dispersed at multiple locations in real-time can be quite a challenge. With electronic timesheets, you can allow employees and/or contractors to check in from off-site locations.

Electronic timesheets are 100% web-enabled so both employees and supervisors can log in anytime and anywhere via their PC, laptop, tablet, phone, etc. making it easy to record employees’ working hours, times, and days and track large numbers of employees at a central source, no matter where office premises or employees/ contractors are located. This, in turn, makes it easier to track any discrepancies or unusual time and attendance which leads us to management reporting.

6. Management Reporting

In order to keep a close eye on timesheets, managers, and supervisors should be able to generate and view reports easily. This will help them to analyze employee costs, overtime usage, and time off as well as easily and accurately track hours spent on projects or tasks. Furthermore, having a system that generates good reports will prevent employees from booking time for projects that do not exist or are completed or favoring employees on projects, without taking into consideration the cost implications.

7. Legal Compliance

Most countries today have working time legislation for health and safety reasons. As an employer, it is your responsibility to accurately record your employee’s working hours, overtime, annualeave, and start and finish times. If you do not, you could be at risk of prosecution for non-compliance or even face a lawsuit from employees. There is a growing body of case law involving class action lawsuits for unpaid overtime. With so many people now working remotely, it can be difficult to track employee time without an automated system in place to assist.

Conclusion

Undoubtedly, there are many benefits to using electronic timesheets for white-collar time tracking and project management. Electronic timesheets are designed to accommodate the complete spectrum of salaried and hourly-paid, as well as on and off-site employees. It is an easy and unobtrusive way to track employee time.

They are particularly suited to organizations supporting a high level of salaried staff or where a “non-clocking” employee empowerment culture exists. They are an easy and unobtrusive way of tracking employee time, activities, absences, and project costs.

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Mairead Walsh is the Chief Marketing Officer of Softworks.

The Future Of Payroll

5 trends that will make huge impact in future

By Jeff Ryan, AWCape

The payroll industry is known for “moving slowly”. However, even though, aside from ongoing legislative changes, it can appear like not a lot is happening or changing in the world of payroll, but the industry is not immune to the continual technological advancements.

In addition, evolving workplace practices as well as a fluid tax and regulatory environment keep payroll administration personnel on their toes.

The payroll in 2023 and beyond will be shaped by a few of the key trends listed below.

1. Vision 2024

Every February, payroll teams wait to hear about upcoming PAYE changes for the new financial year in the finance minister’s budget speech. These changes typically involve only small tweaks to payroll calculations.

However, beyond 2023, we can expect more significant changes as the government and SARS start to move ahead with long-delayed items on their agenda — National Health Insurance is one.

SARS’ ambitious Vision 2024 envisages doing away with the filing season in favour of a more real-time approach to personal tax. Vision 2024 anticipates using third-party data from third-party returns to pre-populate an “assessment” for the individual through a SARS app, where near real-time tax liabilities will be shown.

Employers may be expected to withhold employees’ tax (PAYE) based on this data. For example, if an employee contributes to a personal retirement

annuity policy or generates income from interest on a bank account, employers will be asked to adjust withholding tax appropriately.

It is not clear how close this vision is to fruition, but it is something payroll managers should be thinking about already.

2. Artificial Intelligence (AI) and Robotic Process Automation (RPA)

It is early days for AI and RPA in payroll, but we are starting to see some interesting use cases emerge. We could envisage AI playing a role in data validation and anomaly detection, helping companies to further sharpen accuracy and more rapidly detect potential fraud or errors.

RPA, meanwhile, could help to streamline manual processes, such as capturing data from scanned documents. An example of this is the “intelligent time” capture software that analyses previous timesheets as well as your calendar to prepopulate timesheets entries.

3. Seamless Workflows

Mid-sized companies are likely to increasingly follow the example of large enterprises by adopting solutions that enable tight integration of finance, human resources (HR), employee self-service and payroll. This helps them to reduce costs and improve efficiencies by working off consistent data everywhere in the business and eliminating the need to capture the same data multiple times.

Organizations integrating HR and finance with payroll spend less money and use fewer resources, improving the overall business performance of the company.

Furthermore, they have accurate, real-time business information to support better decision-making. Integration between payroll and HR systems also enable self-service experiences that empower the workforce.

4. The Fluid Workforce

The world of work has changed for good. Hybrid work is here for good, with many people working remotely all or some of the time. Many companies are sourcing remote talent nationwide or even worldwide. And many employers are embracing more flexible modes of work, such as using contractors and freelancers more extensively, or offering more flexible arrangements for people who want to work part-time.

Trends such as the four-day week promise even more change to come. Payroll teams need to adjust their processes to accommodate a wider range of working models.

5. Data-driven Decision-making

Most businesses are looking to use analytics to drive better decision-making, and the payroll is a potential goldmine of data. Data about absenteeism, overtime, employee attrition and retention, compensation,

job costing and budgeting can yield powerful insights about employee wellbeing, engagement and satisfaction.

The data becomes even more powerful in a business with an integrated view of HR, payroll and finances. For example, it can also paint a picture of organizational KPIs like productivity or revenue per head. We can expect to see payroll teams ramp up their use of analytics this year, going beyond basic reporting to partnering with other functions on strategic growth.

Next-generation Payroll: The Cloud Is the Foundation

Many payroll teams are finding it hard to keep ahead of admininstration at a time when employee and tax regulations are becoming more intricate.

They also recognize that tough data privacy data regulations mean they need to be careful stewards of employee’s personal information. And of course, the pressure to become more efficient never ends.

This is why we are seeing more and more payroll departments using manual/on-premise systems move to the cloud. A cloud-based system allows HR and payroll employees to work online and collaborate wherever they are – essential in these times of remote and hybrid working models. It is also the foundation for seamless workflows, data-driven decisions and AI adoption.

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Jeff Ryan is the MD of AWCape, a Sage Platinum business partner for HR, payroll and financial solutions.

Time Tracking For White Collar Workers And Project Management

What is gained? What is lost?

By Charlotte Garry Carne, Dykema

Time tracking is already well-known for non-exempt, or hourly, employees. Since the dawn of the Fair Labor Standards Act, these employees have clocked - in and - out of work at the beginning and en+d of the day and for meal and rest breaks.

However, a new type of time tracking emerged over the past few decades.

Productivity monitoring, where every minute is measured for efficient work performance, has become prevalent in both exempt

Indeed, since the Covid pandemic and the transition of executive, administrative and professional employees to remote work, both traditional time-tracking and productivity tracking are becoming more common for white-collar employees.

What Is Gained?

Employers claim that adding both traditional time-tracking and newer productivity monitoring to the white-collar work world allows them to manage the workforce with more equity. The software used for this tracking takes out of the equation subjective management. Especially with the influx of remote work, diligent workers can be rewarded and inattentive workers can be identified.

Employers claim that if they are going to give more flexibility in alternative work schedules, these systems help with maintaining management and productivity. Employers can identify employees playing video games, shopping and/ or using social media during work time. Employers also state that other employees become more efficient, wasting less time on things that can be done by lower-paid employees.

Many traditional billable employees, such as attorneys and accountants, also like the advent of these technologies because it helps them better track their billable hours by logging emails sent and received and phone calls made to clients. In addition, some employees at financial firms like the transition to time and productivity tracking because it helps with compliance as well as time tracking.

What Is Lost?

On the other hand, many white-collar employees state that

both traditional and productivity time tracking do not capture their labor. For example, some finance employees state that the software does not account for time spent away from the computer reading spreadsheets, doing calculations and/or just thinking. Many employees are also skeptical of the growing surveillance over each moment of the workday.

employment decisions based on that knowledge.

Last, unionization efforts will likely result in some of the most draconian surveillance being blocked. As we start 2023, this mix of unionization, legislation and business lobbying will likely produce a blended system of manual and software time-tracking to ensure all work is captured properly.

Recommended Resources: The Society for Human Resource Management, www.shrm.org

U.S. Chamber of Commerce, www.uschamber.com

Of these complaints, the most common complaint is that the productivity trackers are just inaccurate and unreliable because they do not assess all time spent on a task properly.

Conclusion

In short, time and productivity tracking software solutions are here to stay for all employees. In 2023, employers will be tasked with learning how to effectively use these tools to track performance without alienating the workforce. In addition, we will likely see an increase in legislation requiring employers to reveal the type of information they collect on employees, so employees know how they are being rated and can make

Charlotte Garry Carne is Senior Counsel, Labor and Employment Practice Group, at Dykema. For more than 20 years, Charlotte has practiced employment litigation, traditional labor law, and education law. She routinely provides advice, counseling, and training to management on employment law issues, leadership issues and avoiding litigation. She also excels at written advocacy and drafting employment policies, collective bargaining provisions, and executive employment agreements. She has represented clients in state and federal courts in Michigan and California, as well as in various state courts and administrative agencies.

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Time and productivity tracking software solutions are here to stay for all employees

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Going Global: Tackling A World Of Payroll Challenges Across Borders

With distributed teams and remote work, payroll must keep pace with the changes

By Kira Rubiano, Atlas

Going global is an exciting prospect as companies grow and scale, and flawlessly executed payroll is crucial to making this expansion a success. As expansive as a company’s vision may be, at the end of the day, it is all about the individual human experience – and being paid for hard work is the very essence of the trust employers build with employees.

With teams becoming more and more distributed and working remotely around the world, payroll has to rise to the occasion while maintaining that trust. Payroll must also keep pace with the speed of work in ways that comply with local laws and policies. Regional support structure backed by country specific expertise and knowledge is key to international payroll compliance.

Spanning five regions of the globe, my team of payroll professionals embrace the term “global geeks” to describe ourselves. We are part of a growing trend as global HR operations continue to expand across several industries. Many qualified payroll professionals who work across international borders process payroll in the most complex and challenging jurisdictions around the world, having the needed expertise and insight to manage the challenges that are faced in those jurisdictions.

For these “global geeks,” who keep the world properly compensated, it is crucial to continue to educate ourselves on the evolving legal landscape of each of the countries we serve – because each region presents its own unique set of challenges. What may work well for Europe may not be feasible in Central and Southern Africa as regions due to complexity with managing payments, filings and submissions.

Political environments can also hinder compliant compensation. The war in Ukraine, for example, has devastated and disrupted the lives of so many. But for those with international employers, payroll can be the lifeline that sustains them and their families. As payroll professionals, we must always be cognizant of the human impact of our work, which makes it all the more meaningful.

Beyond the human aspect of our work, at the core of what we do is accuracy. In fact, there is a saying that is a common refrain in the realm of payroll: Nothing short of perfection is good. Calculating payroll (gross to net processing), generation of statutory filings, and submission of payments must all be accurate.

Another core component is timeliness. Meeting deadlines for processing, deliverables, statutory filings, and payments is key. Part of this is responsiveness – the speed of response to critical and non-critical items establishes a reputation for reliability. Accuracy plus timeliness, and responsiveness are the formula for customer satisfaction. While all of the above adds up to a quantitative view of the service being provided, customer service is also about a qualitative experience. You can have 100% compliance across the metrics mentioned above, but if a customer does not sense the relationship is valued and being nurtured, the overall client experience will not be positive.

Cultivating customer relationships not only makes dollars and cents, adopting a holistic view empowers you to better understand the market and the clients’ needs.

Bottom line: while money makes the world go ‘round, relationships built on trust, respect and prompt compensation - regardless of geography - are key to building and maintaining a thriving company culture.

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Kira Rubiano is Vice President of Global Payroll Operations for Atlas.

Getting Cost Optimization Right

Tips to avoid common mistakes when implementing cost optimization strategies

By Nick Shah, Peterson Technology Partners

There was a lot of debate on whether or not the U.S. will enter into a recession by year’s end. Two consecutive quarters with negative GDP growth later, it’s seeming inevitable. The last quarter also saw a rise in inflation, a decline in the stock market, and an inverted treasury yield curve. While the job market continues to stay strong the Federal Reserve has indicated that interest rates will continue to rise through the year, in an attempt to combat inflation. These are all traditional indicators of a slowing economy and we could enter into a recession by the end of the current financial year i.e. 2022-2023.

Coupled with the economic slowdown is the recent pandemic, the effects of which we are still feeling and will continue to do so for some time to come. The global economy is yet to recover fully from the COVID crisis, though the US has fared better than most.

Pressure Leads to Errors in Decision-Making

In the face of looming uncertainty over recovery from this pandemic, executives and leaders are under a lot of pressure to restructure their organizations to reduce costs while maintaining performance and staying competitive. According to a recent study by Gartner,

“Nine in 10 organizations resorted to cost reductions in response to the pandemic-driven recession. This is expected to continue, with more than three times as

many executive leaders expecting cost reductions to continue, rather than abate, in the coming 12 months.” (Finance Research Team, Gartner, 2022)

While restructuring is the right move, the unusual circumstances we’re all operating under could lead to errors cropping up in executive decision-making. Spotting them in advance will help businesses make better choices in the coming months.

Unintentional Mistakes

Whether you’re making time-sensitive decisions about cutting overheads, reallocating resources, or funding growth, leaders need to recognize common cost optimization errors and avoid them.

Using recent research by Gartner, I am recommending the following strategies to avoid common mistakes that businesses make when implementing cost optimization strategies.

Setting Unrealistic Targets

Only 43% of organizations achieve their cost savings target in the first year of cost reduction

A common response to economic turbulence is to set unrealistic cost savings targets based on current financial outcomes. You think, “We’re doing well financially now, so let’s use major cost-cutting as a way to save early.” This is short-sighted.

Across-the-board cuts penalize the more efficient parts of your organization and can result in eroding important sources of value. It can also leave you without a buffer when your income dips during difficult periods. Equally important is the effect it can have on your team, who might get demotivated by big budget changes and feel like they’re being forced into unwinnable situations when meeting performance goals.

A much better approach would be to plan cuts in tranches that can accumulate across the recession. Instead of making aggressive cutbacks right at the start of the recession, keep them pliable and agile to meet requirements as they develop.

Optimization Built Without Behavioral Change

Only 11% of organizations can sustain cost cuts over three years.

It’s not enough to slash the budget and then move on as if it were business as usual. You need to introduce behavioral changes to your organization that can support the optimization effort. Short-term

cost-cutting strategies will not lead to smart spending decisions.

Although some costs— travel, bonus payouts, benefits, and luxury packages—can be limited by introducing changes in policy and adding restrictions, costs tend to reoccur as you fall back on old habits to maintain growth.

You need to accompany cost-cutting measures with definite changes in operational wisdom and strategy. Changing spending habits across the organization will keep your larger optimization efforts on track and fruitful.

Backing Away from Innovation

Only 9% of organizations create enough capacity to take on the growth and innovation opportunities they pursue.

Cost reductions can drain resources from high-impact innovation projects or indefinitely delay funding. This might seem like a good step in the short term, but in the long term, you will lose ground—and market share—to competitors who will keep innovating.

Don’t let innovation become a casualty of your need to save resources. A better bet would be to shift the focus of innovation, from product development to retraining. Invest the inevitable downtime in production toward helping your employees gain skills they will need to stay current in the industry and improve product development once your finances are back on track.

Delaying Digital Transformation

Although most organizations have plans for digital business transformation, only 11% have achieved it at scale.

A primary reason is that organizations are underspending on digital transformation. More than 60% of CIOs are self-funding their digital business initiatives through cost savings from other budget areas.

However, realizing scale from digital efforts requires more substantial funding than what is generated by IT budget savings; digital transformation is not a zero-sum game.

Organizations must plan for the cost of integrating new digital business capabilities into their business and the impact this will have on operating costs, otherwise, they will be left dealing with underfunded digital initiatives that do not generate competitive results. Another way to approach the situation

is to research digital alternatives that could help you reduce overheads and optimize your current resources.

Ignoring Data and Network Security

The vulnerability of private data is a growing concern for organizations, as almost 60% of data privacy failures result from organizations’ own employees.

Cybersecurity is quickly growing to be the biggest data-related concern for organizations that are capable of leveraging future tech. Yet only 50% of future-ready businesses have a cybersecurity plan in place. And, of those, about a third haven’t changed their plan since the pandemic. The recent shift to a remote-working environment has also compounded the security risk.

Cyberattacks will only increase in size, sophistication, and scope. If you’re planning on making organizational changes without giving due consideration to your cyber vulnerabilities, you’re leaving yourself open to cyber risks, both from malicious attackers and careless staff.

Every business that isn’t operating in a rapidly expanding industry will be looking to implement cost optimization measures over the next year to combat the looming recession and beat inflation.

During times of uncertainty, businesses feel cornered into taking ad hoc cost-cutting measures. To anticipate and manage such uncertainty, business leaders must plan cost optimization measures that will drive short-term efficiency and effectiveness while sustaining long-term growth.

Being mindful of these mistakes is the first step for leaders trying to improve strategic cost optimization.

Nick Shah is the CEO and Founder of Peterson Technology Partners

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Top Human Resources Management Predictions For 2023

8 trends that await HR this year - Part I

By Josh Bersin, The Josh Bersin Company

1. People Analytics Continues to Evolve

In the 1980s and 1990s, “people analytics” focused on understanding pay, rewards, the annual engagement survey, and to some extent capturing data on employee retention and engagement. Then, we added

other dimensions like culture, organizational network analysis, and started looking at things like DEI.

But the field has hardly stopped still, and now we have more and more tools that give us even better insights into employee

sentiment, activity, and productivity. People analytics has in effect expanded from an experiment in psychology to a business function delivering data-based insights across all areas of the business (not just HR).

But we have to focus on a new problem: can we use HR data to help the company grow? Here, look for the imminent explosion of interest in ‘talent intelligence;’ harnessing all your data to do things like tell the CEO with specific numbers and projections how many people you can hire, reskill, and grow or which jobs you can redesign.

2. New HR Tech Orientations

Meanwhile, the HR tech market is taking on a new form: integrated skills-powered talent platforms that create, infer, or store skills. Every HR vendor, from Oracle to SAP SuccessFactors to Workday, Gloat to Cornerstone, Eightfold to Beamery, wants to be the “system of record” for skills.

Until this shakes out, keep an open mind, and only work with vendors committed to API-based openness to other systems if you demand it. And keep an eye on AI, which has just become ubiquitous in our world.

3. A New Business “Operating System” with HR at its Heart

The pandemic forced HR to become focused on infection prevention, working at home, wellbeing, and mental health. Think about how many new policies you built over the last three years by working with colleagues across the business — this is what HR needs to look like now.

Going forward, everything we do in HR should be part of such integrated, cross-organizational, working.

4. Keep Pay Equity and Non-cash Benefits Top of Mind

This last year has been the most disruptive period in pay practices I have seen in a long time. Every company has been raising pay, changing pay models, and benchmarking pay, at a fevered pitch. Our research shows that it is not the gross amount that is the only thing workers care about; they are six times more impacted by pay equity than they are level of pay.

In other words, if you want to allocate budgets well, fix the disparities in pay before you give everyone a raise. Every time a new person is hired, promoted, or moved, your pay system may need adjustment. Salesforce, for example, spends millions of dollars every year to keep on top of pay equity issues — a process that is built real trust with employees.

By the same token, you reward people in more ways than just money — in 2022, U.S. employers paid over 30% of their total payroll in “non-cash” benefits (e.g., insurance, leave, educational benefits, etc.). Keep an eye on keeping competitive on this front — if the reward system helps your people stay focused and productive, the payoff is always massive.

5. Not Just Global, but Workforce Sustainability

Global companies are framing a new idea: “People Sustainability.” This is a combination of more conscious support for employees on physical and mental health but also financial wellbeing. And this is happening against a new background of the need to be aware of contractor health and safety, non-discrimination/ DEI, child protection, a right to collective bargaining, freedom from sexual harassment, and the right to have leave for personal needs.

Instead of looking at fairness, equity, belonging, and wellbeing at work as separate projects, a better approach may well be to unify them into one roof under the label of “long term organizational sustainability.”

6. Performance Management in the Flow of Work

If revenues slow, companies will look at layoffs. How to make these decisions in context with the performance process?

The good news is that we are moving to more of a continual performance model and away from the inflexible annual appraisal. We are seeing a lot more OKRs (mutually agreed objectives and key results), more formal check-in processes, and new tools that let team leaders manage performance “in the flow of work.”

SuccessFactors, which pioneered cascading goal software in the

early 1990s, has introduced a team-management, OKR-based system that lets you manage performance among matrix teams, hierarchical teams, and individual contributors; Microsoft is bringing OKR-based goal management into your MS Teams workspace. Fuel 50, which is primarily a career management and talent marketplace platform, has added performance management functionality, for example.

7. Consciously Supporting Workforce Wellbeing

CEOs, CFOs, and CHROs understand that today, when both business landscapes and technology change so fast, skilled and highly engaged employees are the most important asset they have. As a result, once considered a benefit to be offered along with vacation and insurance, wellbeing is now a defined strategy for corporate growth.

Wellbeing is also something we have to deal with, as delayed stress and burnout from Lockdown is a real factor now. One of the largest U.S. telecommunications providers told me 68% of its employees felt they had too much to do.

Employee burnout is a management problem, not a personal issue for each worker. HR can help by fighting for things like space for teams to rest, reflect, learn, and grow, and push for permanent new ways of worth like four-day work weeks. Data shows that once workers work more than 50-55 hours,

their total work output decreases, for example.

Maybe we are finally figuring out that the old industrial model of 8-5/five days a week just no longer applies.

8. Cherish Your Recruiters

A key learning for the sector over the past few years is that while technology is important, the real key to high-performance recruiting is the strength, skills, and relationships of your recruiters.

To maximize this insight, organizations should focus on making recruiters the kings and queens of talent acquisition. Stop seeing them as just salespeople, and more as trusted advisors who can help decide if a candidate fits your culture, and arm them with powerful tools for sourcing, assessment, and selling you as a brand.

Having said that, you will struggle even more than usual in a tight labor market this year without having a fantastic employment brand. This is a leadership job, not an HR program. Would you like to comment?

Josh Bersin, an HR analyst, is the CEO of The Josh Bersin Company

Technology And Workplace Predictions 2023

4 trends that might just defy conventional wisdom

By Jeetu Patel, Cisco

Predicting the unexpected is a tricky business. Especially in technology and business, where constant change and disruption are a given. But that won’t stop me. So, here are four trends that I expect to play out in 2023—all of which might just defy conventional wisdom.

Beyond the Age of Malware: From Detection to Prediction

In 2023, we will move beyond the age of simple malware because just detecting malicious code won’t be enough to combat the sophistication of current threat actors (who use modern ‘toolkits’

consisting of modular malware). The next evolution of security is about sensing anomalies and behavior patterns, which will aid in predicting a breach. Advances in AI and machine learning will make this possible, and smart organizations will get ahead of this trend.

The Next Critical Influencer for Technology Purchases? Human Resources

Hybrid work has changed so many dynamics within an organization, including buying patterns. Human resources (HR) has traditionally focused on work-related software like Workday, but with hybrid work so essential to productivity and worker satisfaction, HR will continue to get more involved in technology software influencing. In 2023, look for HR to expand its knowledge of and influence in all kinds of technology and software purchases.

Choice Over Mandates Will Matter More Than We Think

Another disruption to hybrid work will be the countless employees who will not want to go back to rigid, in-office work schedules. Many organizations may choose to double down on workplace mandates in 2023, but they’ll ultimately lose. Progressive companies will create a flexible, secure hybrid-work experience and a great physical workspace — that people will want to visit, but only when they choose to or the work calls for it. Such organizations will win on talent, agility, sustainability, and worker satisfaction and see long-term success.

An Uptick of Technological and Ethical Dilemmas with Transformative AI

AI and machine learning have pretty much stuck to relatively

rote (but helpful!) tasks. We’ve already seen mind-blowing capabilities from DALL-E, for example, and in 2023, there’s no doubt even more truly transformative AI use cases will emerge. The next era of AI, and the use cases that follow, will have big implications in 2023 and beyond — both good and bad. As AI continues to take over important decision-making (such as employee recruitment or deciding who gets approved for loans), bias may become an unfortunate “side effect” of utilizing such technology.

Additionally, AI will also enable more advanced scams, incidents of identity theft, convincing deep fakes, and more. Despite the tremendous positive impact AI can have, it’s more critical than ever that the industry ensures responsible and ethical use cases, guidelines

are implemented, and, when appropriate, restrictions win out.

Jeetu Patel is Cisco’s Executive Vice President and General Manager of Security and Collaboration. Jeetu combines a bold vision, steeped in product design and development expertise, operational rigor, and innate market understanding to create high-growth Software as a Service (SaaS) businesses. Prior to joining Cisco, Jeetu was the Chief Product Officer (CPO) and Chief Strategy Officer (CSO) at Box, a role he pioneered.

Total Rewards Holds An Exciting Role In The Future Of Work

3

trends and resulting implications for the total rewards profession

By Jesse Meschuk, Exequity

Total rewards has a much more strategic function today compared to its original “payroll” roots, charged with helping drive the attraction

and retention of talent through effective and efficient delivery of cash compensation, incentives, benefits, and recognition programs.

Here are three trends and resulting implications for the total rewards profession:

1. Pay Transparency and Pay Equity

On January 1, California joined New York City, Colorado, Seattle and many other governments in the escalating trend of bringing further transparency to salary ranges for candidates and employees. More states and regions (including the entire European Union) will begin enacting similar laws.

Additionally, the trend of employees and other stakeholders (e.g., LinkedIn, Glassdoor, and salary.com) allowing self-reporting and aggregation of compensation data will continue. At no point

in history has a potential or current employee had more insight into the “market rate” for their compensation, which will, in turn, shift more power to employees and create more pressure to provide equitable compensation for similar roles and responsibilities.

Implications:

● A need for more insight and consultative guidance to establish and utilize compensation ranges, and how to communicate how those ranges were developed and the philosophy behind the structure. Communication skills, change management, and other traditionally soft skills will become

increasingly important in total rewards.

● How to better “value” each individual’s unique contribution will need to be more effectively captured and incorporated into the compensation approach. Tools will emerge and provide suggestions, but this will require the companies to have a more rigorous approach to their job evaluation practices and force them to think through which responsibilities and skills (beyond traditional “role” definitions) are more or less valued, given their particular business strategy.

● In a world where salary ranges, bonus targets and expected equity grants are transparent, companies will need to effectively capture performance and productivity, and be able to better explain how that impacts and differentiates compensation.

2. Data Analytics

Advanced trends in analytics, machine learning and AI will permeate the total rewards function and help to drive increased innovation. The more basic “analyst” capabilities will increasingly be handled by programming and automated services, including traditional benchmarking activities, pay equity analysis, and job valuation ― all done in real-time.

Implications:

● These new analytical capabilities will provide increased insight for teams that develop new and innovative ways to capture performance, productivity, and competencies that can predict potentials like learning agility and resilience. The best total rewards teams will partner closely with their HRIS and People Analytics teams to utilize this information.

● As analytical capabilities become more and more sophisticated, total rewards teams will increasingly be asked by business teams for advice on better, more objective ways to measure and analyze performance. This means methods traditionally observed by scientific research teams will increasingly find their way into total rewards.

● As the focus for total rewards shifts from the analyst function into the research arena, increasingly, those with skills in data science, behavioral science, and game theory will be in more demand.

3. Personalization

A number of converging trends suggest the future of both compensation structures and benefits programs will be personalized based on an individual’s needs, circumstances and responsibilities.

First, flexible and remote work (at least in knowledge roles) will demand strategies relevant for the location in which individuals work. Second, as the economic downturn continues to take hold, companies will be looking to individuals to take on additional, new, or combined responsibilities which will require a more customized way to reward them. Third, the make-up of the workforce continues to shift from one in which a regular, long-term employee is the norm to one in which a myriad of models exist: regular full-time, part-time (including returning retirees, those who just don’t want to work 40 hours for home life or other reasons), contract workers, consultants, or “gig” workers.

Implications:

● Compensation and benefits strategies will need to adapt to properly capture each of the different employee segments and deliver on their needs.

● A localized, personalized strategy will be needed to ensure offerings are market-competitive in the various locations people work.

● Given the sheer number of variations in each employees’ circumstances (location, responsibilities, employee status, family dynamics, etc), companies will increasingly be providing employees choice with regard to their compensation and benefits

approach: the degree of risk in their compensation scheme, focus of benefits spend, and the relative mix of fixed, variable, cash, non-cash and non-financial rewards may all vary to a certain degree to help employees to effectively manage their own rewards profile.

This presents an exciting, dynamic time for the total rewards field, which may help shape the future of work for a number of years to come.

Jesse Meschuk is a Career and Human Resources expert, and a Senior Advisor with Exequity Jesse has more than 20 years of consulting and human resources experience, and has worked across a wide variety of industries including technology, entertainment, gaming, retail, hospitality, manufacturing, and sports. Jesse’s work has spanned across the Americas, Europe and Asia.

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HR Teams Can Use AI To Decipher And Respond To The Labor Market’s Mixed Signals

Businesses can preserve, empower and maximize existing resources and talent by introducing automation.

By Rebecca Jones, Mosaicx

Demand for workers is intense. As states reopened their economies in 2021, employers drew from a smaller pool of available workers. Wages increased, and job openings soared, remaining high in 2022. The number of workers quitting their jobs has also remained elevated.

Despite the number of job openings, the unemployment rate ticked up to 3.7% (by 306,000 people) in October. The new data comes amidst ongoing layoffs, as seen in the tech industry

This “contradictory labor market” leaves business leaders, including HR teams, scratching their heads, potentially unsure how to move forward.

Examining How the Complex Labor Market Impacts HR

The unprecedented number of U.S. workers leaving jobs across industries in the Great Resignation — and the resulting mad dash of hiring — added to the

pressure on HR teams struggling to keep a pulse on their current employees.

Workforce planning is an essential function of HR. HR professionals must understand talent supply and demand and how it relates to the company’s goals. Achieving this perspective has been tricky in today’s market. At the same time, HR teams (like other departments) are strapped for talent. They’re responsible for balancing workforce planning with fewer resources.

How AI Can Support HR Operations

AI solutions can streamline HR processes, enable automation, and increase productivity and savings. Diverse sectors are finding that AI is an effective solution for HR and business operations. In fact, 25% of companies already use AI to support recruiting, hiring, training, performance management and other HR-related operations.

Below are three examples of how AI can support HR operations.

Innovate Recruitment and Reduce Hiring Bias

Job seekers have been in the driver’s seat since the Great Resignation. Employers can adjust their recruiting processes in new and innovative ways to find talent to fill open positions. AI is one tool HR teams can use to innovate the recruitment process. For example, AI and machine learning can filter applications and flag profiles that match the job description. AI can also determine what candidate sources provide the best-matched workers, which can improve a company’s recruiting efforts.

AI can also play a vital role in helping businesses avoid bias in job advertisements and descriptions. Biased language in job descriptions can discourage capable and talented candidates from applying for a position for which they are ideal. AI-enabled

tools can analyze job descriptions to highlight and remove discriminatory language. These tools might identify biased language such as “guru” or “ninja.”

They might also encourage gender-neutral pronouns. Ultimately, AI-enabled tools can suggest changes without sacrificing the passion and impact you want to demonstrate to potential applicants.

Streamline Operational Tasks Such as Scheduling

Today’s employees want flexible schedules, and they want to manage their schedules autonomously. Businesses can deliver on these expectations with intelligent virtual agents (IVAs). An IVA is an AI-powered software that engages humans in natural and sophisticated conversation. Let’s say an employee needs to adjust their scheduled shifts. The employee can easily text or call an IVA to notify leaders of the change and suggest alternative staffing options. Leaders and HR teams can then use the IVA to share the updated schedule with other employees.

Not only do IVAs streamline shift changes, but they grant the autonomy workers want.

Answer Questions About Company Layoffs

As previously mentioned, some industries are experiencing large-scale layoffs. The way a company communicates a reduction in staff can have an impact on its current workforce, future employees, and reputation. AI-enabled tools can support a company’s communications efforts about layoffs.

For example, an HR team can create an FAQ for employees to reference. The FAQ can answer questions about the state of the business, what led to the reduction in force, what actions they’re taking to support affected employees, what remaining employees can expect going forward, etc. Companies can then program their IVA to answer these questions from employees and direct them to knowledge base articles for more information.

The labor market has been sending mixed signals for a few years now. HR teams can decipher and respond to these mixed signals with the help of AI and AI-enabled tools. Businesses can preserve, empower and maximize existing resources and talent by introducing automation of everyday tasks and improving communications.

Rebecca Jones is the general manager of Mosaicx. In her career of 25+ years, she has held a broad range of operations executive roles focused on growing businesses, people, and profit margins. Rebecca also serves as a member of the board for the Families for Effective Autism Treatment (FEAT) of Louisville.

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