Dr. Fermin Diez, HR expert, professor and author recently joined ADP in our webinar HR Analytics: Embracing your HR Data with Confidence, discussing how you can achieve greater insights and data-driven decisions with your HR data.
We ran out of time for audience questions, so here are Fermin’s answers to the ones that were submitted:
1. How do you identify and collect relevant data to reveal real insights, such as in the case of exiting employees?
There may be several ways to accomplish this, here are two ideas that have worked for me in the past. You send a survey, or even do a phone interview, with people who have left the organisation 6 months after they have left. This helps to take away some of the reservations and emotions from the employee’s final days at the company. The other way is to hold a focus group for people in the company and ask them why they have stayed.
2. What practical steps / options do you recommend for turning bad data to good quality data?
In the webinar, I did say that bad data is better than no data. There’s no magical formula for squeezing bad data into good. However, you can use bad data as a starting point to develop your hypothesis. If your data is bad because it’s a small sample, expand and diversify your sample across the organisation. If it’s bad because of the context (exit interviews with people who have been made redundant), find a way to answer your question in a less emotive situation. Or you may be aware that the data is not exact (e.g. annual reports that show executive compensation in bands as opposed to actual figures); in this case, make allowances for the fact that your results are “in the ball park”, as opposed to “precise”. The bad data can act as a signpost, directing you to which way to focus.
3. How can organisations automate HR data more efficiently?
It depends on the size of the data you are managing, but generally new-generation HR information systems will have a way to warehouse your data. Or your outsourcing vendor may be able to do it for you as well. If you run a small enough operation (including, say, a subsidiary of a big MNC), Excel – and Tableau – for doing analytics may be all you need. Download your data from where it is residing, your financial system or your employee engagement vendor, for instance, into and run simple analytics from there. In bigger cases you will require “data lakes” and powerful statistical software.
4. What are the implications of data privacy on the ability of organisations to do analytics?
Moving data across is an issue. Coding becomes challenging. Getting signatures may be cumbersome. But in the main, the results we want will be in aggregate form.
5. In the webinar, you talked about breaking down a business problem into hypotheses and variables to gather on, with the example of compensation. What kind of measures and variables are used to measure other HR challenges, such as the return on investment of training?
Let’s review the steps, as they are the same for any kind of HR problem that you wish to tackle. First, build a clear and simple statement, not a question. In the case of training, your hypothesis could be “our current training program for sales associates is ineffective.” Next, how do we prove/disprove that? What data is required? Perhaps you should survey current sales associates (anonymously) and ask if they feel that the training provided helps them to be successful in their jobs? You could supplement this with retention reports, how long does the typical sales person stay? How many make their quotas in their first year? Second year? One example I used in the past related to Quality Assurance training for the manufacturing employees. We used “yield” (amount of raw material that ended in an approved finished product) as the Y-variable, and hours of training as our hypothesis, meaning that more training, up to a point, would lead to better yield. We did, in fact, find an inverted-U relationship, but more importantly, were able to justify the cost of additional training by the improvement in yield, which was in line with manufacturing objectives of becoming world-class.
6. What trends are you seeing in the collection and use of Employee Diversity data? Our organisation wants to focus on greater diversity and inclusion, however we do not have the employee information (beyond gender) to build a data-driven business case. How are other organisations you have worked with in APAC addressing this?
The collection of personal information such as disability, sexual orientation, etc. must be done in a way that builds trust with employees and is compliant with in-country legislation. My advice is to be clear with leadership on what will be done with this information once you have it. Employees will sense if this is a box ticking exercise or if they think your organisation would use this information against them. Perhaps start with a voluntary question on the employee engagement survey (run by an external third party) to get a benchmark of where you are at as an organisation.
7. How do we balance the need to experiment in HR versus the need to deliver “business as usual”?
This is a question that most departments grapple with – not just HR. Think of it this way: everyone knows of a company that fails to recognize a change or shift in the world and goes out of business as a result. Failure to innovate in HR, or recognize that the world of work is changing, including the expectations of employees, will make HR less valuable in the eyes of leadership. If you have a good business case, and enough wins to ensure the management team trusts your judgement (even if you have a few misses), then you should be well on your way to help the business improve revenue and profitability through people strategies. I hope that my webinar has given you the language to present to your leadership the sorts of insights that you could be offering with a laser focus on data-driven conversations and insights, rather than focusing entirely on the day to day work.
Thank you, Fermin! Did you miss the webinar? You can still listen in on the recording, which includes Fermin’s contact information for further conversation, just click here.
If you want goal setting to be meaningful in your organisation, employees should create goals that are meaningful, relevant and regularly monitored. As you can see, this isn’t a once a year activity. In fact, it’s probably best to think of them in terms of process. Employees create a goal, watch their progress and then, finally, evaluate their work.
At some point in the process, employees should assess their progress to determine what worked, what needs improvement and what possible changes need to take place.
How to Properly Assess Goals
Here’s a two-step process that employees can use to evaluate their progress. This should be done regardless of whether the outcome was achieved.
What went well?
Always answer this question first! Even in situations where the outcome has gone very wrong, there can be some bright spots to celebrate. Some people might be tempted to launch into the negative and it’s very difficult once the negativity has started to get back to the positive. So, start with what went well.
What could be done differently?
Notice this question doesn’t ask what went wrong. It’s possible that the goal was accomplished, but there are still things that could have been done better, faster or more economically. Goals present learning opportunities. The activities discussed here should help employees in the future, not be an exercise in placing blame.
One activity for managers to consider when it comes to assessing a goal is having the employee answer these questions as sort of a debrief — but let the employee answer the questions first. What went well? What could be done differently? Employees might be hesitant to share the positives and the manager can use it as an opportunity to provide some positive coaching. Additionally, employees could be hard on themselves and managers are in a position to provide the needed support.
Hopefully, after the employee provides their assessment, the manager has very little to add. They can support the employee’s comments. This transforms what could have been a negative conversation into a more supportive one.
Closing the Goal Loop: Modifying Existing Goals
Once a goal has been properly assessed, the work isn’t over. New goals need to be set. Old goals need to be changed or modified. Some goals need to be abandoned. To figure out next steps, focus on these two areas: people and process.
When it comes to people, goals need to be set and supported by the right people. It may be tempting to not invite “Debbie Downer” or “Stick in the Mud Steve” because they will just groan and whine, but the reality is that goals need people to push back every once in a while. Goals need people to ask the tough questions.
It’s also worth noting that when the right people aren’t given an opportunity to listen and buy into a goal, they can unknowingly undermine the goal’s success. Simple statements like, “Oh, I don’t know anything about that … ” or “I wasn’t invited to the meeting … ” can send the message that everyone doesn’t support the goal. That creates confusion and division within the team.
The second area of focus is process, meaning getting the right information so goals aren’t created in a silo. Goals are typically made based on a set of assumptions. When a goal is changed or modified, organizations need to confirm that the assumptions are still accurate. The business world is changing all of the time, and so is the data in it.
If for whatever reason, the assumptions change, or the data doesn’t look as favourable as it was previously, organisations need to be prepared to stop pursuing the goal. This is a big decision. The achievement of goals can be attached to compensation, promotion and even a person’s ego.
Modifying goals involves having the right people in the room looking at the right information. It means everyone is making decisions in the best interest of the organization, knowing that those decisions impact them as well.
Mastering the Goals Process Is a Skill
Being good at setting goals is only one step in a long process. Goals should be monitored, assessed and ultimately updated or changed. Employees who have all the right skills should be able to create self-awareness and self-learning opportunities for themselves.
Organisations should make an investment in giving employees the skills to be exceptional at goals. Not just accomplishing them, but really making sure that employees can drive their own performance.
Employee engagement surveys are widely prevalent in organizations around the globe, regardless of industry, geography or staff size. Once commonly referred to as employee satisfaction surveys, these assessments represent a means for employers to gauge employee responses and preferences for everything from benefit offerings to leadership and management practices.
Engagement is a somewhat elusive concept in management. What, exactly, is an engaged employee? An effective employee engagement survey should yield the answers to that question. But, while many companies conduct these surveys, not all are equally adept at taking away meaningful insights from their survey results.
The goal isn’t just to ask employees for their opinions — it’s to act on those opinions in ways that can both boost engagement and benefit the bottom line.
1. Overall Level of Job Satisfaction
One foundational bit of information that employee engagement surveys provide is the level of job satisfaction among employees. Based on the demographic information you gather (e.g., work location, age, sex, years of tenure, etc.), you will also be able to compare and contrast levels of satisfaction to identify both best practices and areas of opportunity for improvement.
2. Effectiveness of Communication
Employee engagement surveys can gauge how valuable employees find the information they receive from the organization, senior leadership and their managers. Do they feel they are communicated with in a timely fashion? Do they feel the communication they receive is relevant? Useful? Transparent?
3. Motivation Tools
Asking questions about how satisfying or positive employees find various aspects of their work experience can yield insights into things that are important, what motivates them and can highlight aspects of their work or the organization that may be perceived negatively. Asking questions that seek both ratings of “importance” and “experience” can provide comparisons that can be used to identify opportunities for improvement.
Engagement surveys can also point to issues in leadership that may go undetected or ignored otherwise. In his webinar with ADP, Dr. Fermin Diez recalled an interesting discovery in his organisation’s employee engagement survey — employees who reported disliking their manager, had managers who were highly rated by senior leadership. He found that these managers were putting undue pressure on their teams to deliver, causing burnout and high turnover. Research from Culture Amp, a Melbourne-based company that helps companies measure their culture, has found that employees don’t actually leave bad managers – they leave poor leadership.
5. Tracking Issues Over Time
According to Engage Rocket, a Singapore based HR analytics firm, pulse surveys are used to complement an annual engagement survey. Pulse surveys can focus on a particular issue or policy, and because it is shorter and more narrow in focus, it is much easier to summarize and act on quickly. Having shorter, more frequent surveys can be helpful for predicting trends or the overall health of an organisation over time.
6. Levels of Engagement
Employee engagement surveys can highlight or measure levels of employee engagement through responses to questions exploring how motivated they feel by their work and how likely they would be to seek employment elsewhere. Ryan Fuller, in Harvard Business Review, does caution that there is a certain level of bias that can creep in – employees are often influenced by recent events, for example, and may be displaying behaviours (such as discretionary effort) that are actually better indicators of how engaged they actually are.
7. Departmental Comparisons
Employee engagement data should not be used to target individuals, rather it should be used.to identify and track issues at a group level, says Culture Amp. Are there potential turnover risks or indicators for particular roles, such as sales versus engineering managers?
8. Turnover and Tenure
One final area of insight is related to how long employees plan to stay with your company. Social media management company Buffer asks their employees how long they envision working there, not only to calculate their net promoter score, but also as a way of gauging how long they should be expecting people to stay. They also use their turnover rate to benchmark themselves against other tech companies (who would be competing for many of the same talent).
And while it may seem obvious, there is one final, important best practice for getting the most out of an engagement survey – share the results with your employees. This will help them to understand the process, feel heard and see the value in participating next time.
The whitest lie ever told to new small business owners is that hard work guarantees success.
Hard work is vital to success, but it’s not the only quotient. Perhaps aspiring entrepreneurs have listened to starry-eyed blog writers (although ADP has its feet on the ground) and charismatic airbrushed suits telling them that they can’t lose if they try hard enough. Well, there are over 2.24 million small businesses in Australia, and a third of those will fail regardless of how hard they try. It’s a morbid truth, but it’s a truth nonetheless.
Another truth is that a lot of businesses fail because they don’t plan the tax side of things well enough. From payroll tax to super guarantee contributions to GST — businesses have been blindsided by hefty penalties and tax debts because they put their obligations out of sight and mind.
Here are the five most common tax mistakes killing small businesses – avoid these mistakes, and your chances of making it can only increase.
1. Forgetting to allow for fringe benefits
Fringe benefits tax (FBT) is payable on some items or even services a business provides to its employees. FBT can often be missed as it has its own tax “year”, which ends 31 March, as well as the fact that some employers are simply unsure about which benefits are taxable and which are not. If your employees use company-owned vehicles for personal use for example, or you provide them with food or entertainment, or reduced-price goods, you may be liable for FBT. Failure to allow for FBT can result in hefty ATO fines, so keep track of all employee benefits you provide.
2. Not getting the status of your workers right
Not getting the engagement status of workers correct can land employers in unforeseen hot water (see our recent blog post). Chris Crooks hired a group of contracted cleaners every week to tidy up his party hall after functions, but ended up in trouble with the law. “I thought because they were contractors I didn’t have to pay super. I was wrong.”
3. Not keeping good records
Good records means good business – there’s no way around it. Gillian Charles had a truck delivery business, but because she didn’t keep track of her fleet’s fuel usage, she missed out on valuable fuel tax credit claims. Small business owners need to keep track of their finer details.
4. Not keeping track of changes to tax laws
Did you know payroll tax rates changed this year? Rufus Rich didn’t. “I’ve got 14 employees working for my electrical estimation business, and I didn’t withhold enough to cover the rate increase. Now it’s tax time, and I’ve a tax penalty because my books weren’t right. My tax agent couldn’t warn me until it was too late.”
If you’re not following tax law closely, it’s understandable you’ll miss things. Luckily, there are resources online that can keep you up to date with the latest rulings and determinations that actually apply.
5. Not using a tax agent
Mary started a jewellery business from home. “For the first year, my revenue was relatively small. I didn’t think I needed an accountant or tax agent to do my return. I thought I could just leave it. The only problem is, I missed out on claiming a deduction for my pendant-pressing machine. If only I’d used a tax agent!”
“If-onlys” are crippling for small businesses, and they’re avoidable. It doesn’t cost much to consult a specialist – they’ll help you avoid regrettable scenarios, and the cost is generally deductible anyway.
Abhijit Bhaduri, former WiPro executive, talent expert and best-selling author, recently joined ADP as part of our “Getting Paid and the Changing HR World” webinar series, to discuss Design Thinking for HR and how you can apply this methodology to all facets of HR, even payroll!
Here Abhijit answers the questions submitted by our webinar audience.
1. Is there anything common between “Instructional Design” and “Design Thinking”?
Absolutely – they both put the experience of the user at the forefront. Instructional Design is specifically used for creating learning experiences, and done well, makes the learning experience more efficient and appealing for the user. Design Thinking is a methodology that can be applied to all areas of HR – including learning and development.
2. How would Design Thinking as a process help a recruitment firm that has fewer than 10 employees?
The great thing about Design Thinking is that it can be used by organisations of all sizes and in some ways, smaller organisations are more agile to try out these methodologies. Say your small recruitment firm would like to review or implement an employee benefit program. This is an excellent opportunity to engage the employees and design a benefit program that would actually motivate and excite them. What are the current pain points for your employees? Are there areas of their lives where you could give them more time back? What is feasible and viable to implement? You could use it to figure out how you can reimagine the candidate experience. That could help you create a differentiator for your business.
3. What do you see as a key behavioural change for HR professionals when implementing design thinking? Is it empathy?
The biggest shift for HR teams today that I see is moving away from top-down approaches to policy and process adherence to engaging with employees to create dynamic workplace cultures and engaging employee experiences. You’re absolutely right – empathy is a big one, seeing your policies and existing processes from an employee perspective is a big one. So is the willingness to adapt to a rapidly changing world and create the mindset of HR seeing themselves as innovators. HR leaders tend to think of innovation is being the domain of the R&D team. We know that employee expectations of work, and its place in their lives, is changing.
When you think of a policy as work in progress, we get to use the design thinking mindset and innovate. Thinking of something as a final, finished product does not leave possibilities of innovation.
4. You said the Design Thinking Process is a process which includes considering emotions, so can we say that Design Thinkers need to have a high EQ ? Or how do you relate EQ with Design Thinking?
EQ (or emotional intelligence) is absolutely essential for the Design Thinking process, because you have to be able to imagine the perspective of another (or even multiple) people. The hallmark of design thinking is “user first” thinking, and you need a reasonably high level of emotional intelligence to imagine the experience of another and the emotions that they could possibly experience as part of a particular process or current product experience.
5. What are the key competencies required for the new emerging roles of Design Thinking?
Design thinking is an iterative process and relies heavily on prototyping to build knowledge, test and validate concepts. Here are some key requirements of this methodology
6. How do we develop the ecosystem to use Design Thinking in HR? How do we go about having a mindset shift from the traditional way of looking at problems to this unconventional approach of Design Thinking?
Change is slow in every organisation and like with most things – it’s easier to start small. Identify a problem that everyone (or the majority of people on your team) can agree has so far been resistant to change using traditional methods and try to use design thinking to come up with a solution. The nice thing about design thinking is that while educating the entire team on the methodology is helpful, it doesn’t require in-depth training or time away from the office. When people experience success with a particular method or approach, they’re more likely to be open to adopting it.
7. As HR professionals we deal with people of different generations in our workplaces. How would Design thinking process work for millennials vs Generation X or Y? Should different prototypes be created?
The answer, as always, depends on what you are trying to tackle. Design Thinking doesn’t mean that you’re going to come up with the solution that will make absolutely everyone happy, it means that you come up with the best, most feasible and viable solution, then test it out (on different generations, genders, levels of technical expertise, etc.) And some added food for thought, this article states that empirical research tells us that millennials are not really that different from what they want from their workplaces.
8. Can you please share an example from the HR world to differentiate between what’s feasible and what’s viable?
A simple way to understand this is to say that feasibility is always about resource constraints needed to do this. You may discover that the ERP system you have just implemented is inadequate. But the cost of implementing a new ERP system may also have other implications besides financial demands. The alternative ERP system may not have support besides English and you need to implement it in other languages, eg Mandarin or Thai or Spanish to cater to your employees. That may limit the viability of the new system even when it is feasible.
9. What factors will be critical for driving Design Thinking in an organisation?
To adopt Design Thinking into an organisation you need the willingness to understand an issue from another’s perspective, the desire to adapt and grow, and patience to fail fast and try again! These sound simple but a culture that allows some risk taking and creates psychological safety for making mistakes and “trial and error” to better understand and tackle a problem are crucial for its success.
10. How do you measure the success of Design Thinking Process? How can ROI of design thinking based interventions be measured / differentiated from regular practices, especially when it is used to enhance the culture or brand value?
The success of Design Thinking can be measured in multiple ways. The broad principle is that it should solve the problem we set out to solve.
Customer (or Employee) feedback must show improvement
Design thinking adoption across the organisation
Traditional KPIs eg financial performance, market success, and revenue outcomes
Reflective Measurements – questionnaires and surveys completed internally and externally by participants in design thinking processes including the practitioners, employees, and consumers
Working culture impact eg motivation, team collaboration, and engagement
11. How can Design Thinking help change the perception of the HR department as innovators?
Design thinking is a great way to tackle issues that have been impervious to previous solutions. If you engage in this process properly, you will engage with the people you’re trying to help and improve for, design thinking doesn’t all happen in a boardroom! Traditional problem solving methods would have just the HR team brainstorm on the problem and think of a solution. The big missing link is often that in this methodology the HR team can only solve the problem that the employee has stated. Quite often the employees give responses that are socially desired rather than the real issues. Being able to step in to the user’s world and looking at it with a new lens can be a great experience.
Design thinking requires you to really understand, imagine and empathise with the human beings impacted by this particular problem. Remember in the webinar how the problem of “how do we cut down on time wasted by employees in traffic commuting to work” led to “how might we cut down on the commute time for our employees” and then became “how could we make flexible working more common in our offices, so employees can still be productive and only need to be in the office for face to face meetings”? When you can prove that HR can be empathic and user-centric in approach, you will change the perception of HR’s place in the organisation as culture and employee champions.
Thank you, Abhijit! Did you miss the webinar? You can still listen in on the recording, just click here.
If your business is looking to put on more staff, then by all means congratulations are in order. But it would also be prudent to heed the following cautionary pointers.
In these days of the “gig economy”, the engagement status of workers has become an even more important distinction – whether they are employees or independent contractors – and has consequences that can get many employers into unforeseen hot water.
Sometimes contracting is necessary, for example when you require specialist skills that are not easily covered by placing a job ad. Some workers only want to be put on as a contractor, particularly where they service multiple clients. Contracting can also prove more cost efficient than employment.
However, there are dangers in engaging an individual as a “contractor” without having a proper understanding of the law. You may find that the individual is considered to be an “employee” regarding several and different legislative requirements, and this brings with it a range of legal obligations – and liabilities if you get it wrong. The ATO even encourages taxpayers to dob in a business incorrectly treating employees as contractors.
The ATO says businesses that incorrectly treat employees as contractors face penalties and charges, including:
PAYG withholding penalty for not meeting their PAYG withholding obligations
super guarantee charge (for not meeting their super obligations), made up of:
super guarantee shortfall amounts (amount of super contributions that should have been paid into a complying fund)
an administration fee.
There are several areas of both tax and employment legislation that can trip up employers regarding the contractor/employee divide.
Naturally the ATO expects that PAYG withholding is withheld from payments to employees, and it has an online employee/contractor decision tool to determine the status of workers (there’s also a similar tool on the business.gov.au site).
If you enter into an arrangement that is through a partnership, trust or company, that operates under a bona fide contracting arrangement and provides an ABN, this may mean that no PAYG amounts are required to be withheld. But this is the sticking point for many ATO decisions — whether arrangements are genuine or sham.
The Superannuation Guarantee (SG) law requires that contributions are made on behalf of “employees”, which is a term that is even defined in the relevant ruling. “If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.”
This extended definition of employee means that, if you engage an individual as a contractor, you may need to pay superannuation contributions for their benefit, even if your written contract with them does not provide for this, and even if they use an ABN.
One impending change to the SG rules is a measure that would allow employers to fix unpaid compulsory super payments to employees without penalties. The “12-month superannuation guarantee amnesty” is intended to apply retrospectively once enacted and, as the name suggests, it’s a once-off offer (from 24 May 2018 to 23 May 2019), so affected employers are warned that they should take advantage or miss out.
The legislation, Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018 (read it here), mean that catch-up payments made (which are tax deductible) will not attract the penalties and charges under Part 7 of the SG legislation that usually accrue to late SG payments, nor will administration charges be applied.
Most states and territories have provisions written into their payroll tax laws to cover the use of contractors (scroll down). These generally deem payments made to contractors to be “taxable wages” and thus subject to payroll tax — although there may be concessions and exemptions depending on the jurisdiction, so it’s best to check. This Payroll Tax Australia page has links to each state and territory legislation.
Be aware that in some jurisdictions in Australia, workers compensation legislation may require such insurance cover for workers taken on as contractors. In Queensland for example, this is required for any “worker”, the definition of which includes a contractor put on for “labour only or substantially for labour only” (this WorkCover Queensland site explains this).
The ATO says that it has encountered several myths and assumptions adopted by both workers and employers when it comes to trying to decide the tax status of a job appointment. See this ATO page for the differences between the two.
Webinar: Employees vs Contractors Covers the definitions of employees and contractors, and the consequences of being an employee or a contractor. The recording is available here.
Featured Writer – Tax & Super Australia
See the following Business.gov.au webpage for free brochures “Contracts made simple” (helps independent contractors save time and money by explaining how to minimise business risks and negotiate good contracts) and “The essential handbook” (tells independent contractors and their hirers all they need to know including tax, super, insurance, workers compensation, negotiating contracts and much more).