Human resources and remuneration strategies that maximise ROI without jeopardising compliance
Disruption is here to stay, and smart businesses in Australia are adopting organisational redesign as a good habit, rather than saving it as a last resort. Swiftly changing customer preferences, coupled with geographically mobile talent and an ever-present focus on tightening the belt, make flexible resourcing and remuneration strategies a must for organisations seeking to thrive, rather than merely survive.
Our employment and labour legal experts have taken a look at the macro trends currently affecting businesses. Here is their take on the do’s and don’ts of organisational redesign, flexible working and the digital workplace.
Organisational redesign: why it’s good for your company’s health
Organisational redesign has a bad reputation. Ever since the ‘80s the phrase has been closely associated with restructuring, bonus cuts and lay-offs, and gives chills to employees and employers alike. It’s time to start viewing organisational redesign as a part of a company’s fitness routine, rather than a crash diet.
Agility is key to thriving in a volatile and complex global landscape, and it can only be achieved through an organisational structure that can flex at will, with a lean core to which capacity can be added as required. Here are a few points that companies should keep in mind when designing a lean organisational model reliant on flexible resourcing and reasonable cost control:
Part-time work and job sharing
A possible strategy to tap into a broad talent pool while controlling overall costs is enhancing the percentage of part-time and job-sharing contributors relative to full-time ones.
From a legal perspective: attention should be given to creating a framework for remuneration, leave entitlements and career management opportunities that not only fosters equality amongst the workforce, but allows companies to exercise their discretion as needed. A well-designed contractual framework can save companies a lot of trouble down the line, especially when it comes to the risk of employee litigation on the basis of workplace discrimination, and the potential liability associated with such claims.
External contracting is an all-time favourite when it comes to addressing talent gaps in the short-term. However, it is also one of the murkier areas of law, and is getting increasing attention form the Fair Work Ombudsman.
From a legal perspective: the majority of risks related to engaging external contractors are connected to potential misclassification in status of employees and contractors. This can be mitigated by clearly defining roles outsourced to contractors, as well as by considering the level of control given to these external contributors, which are factors that may be taken into account in determining whether the relationship is in fact one of employment, and then triggering an employer’s duty of care and their legal and financial liabilities including paid leave, superannuation and workers’ compensation. Our proprietary online tool, ContractorCheck assists companies to determine contractor versus employee status, and manage the risk of misclassification across their workforce.
Service centres and offshoring
Multinationals started the offshoring trend years ago, and now mid-size businesses and even smaller organisations are jumping on the bandwagon. Compliance across geographies and supply chains remains critical to the success of this strategy.
From a legal perspective: companies should pay particular attention to the human rights track record of their subcontractors, as well as to their geographical exposure in terms of social, political and environmental risks. While most countries have specific regulation related to human rights, the United States presents an added challenge: the joint-employer status rejected so far in Australia. Companies with US exposure should consider their liability for labour violations committed by their contractors across the world, and take the necessary risk mitigation measures during the procurement and contracting process.
‘Open source’ human resource model
The stock market sweetheart is turning into a courtroom regular. Uber, once hailed for its disruptive business model, is fighting lawsuits across the world, with American federal courts referring cases to arbitrators while European regulators frown (Source: Bloomberg).
From a legal perspective: while the ‘open source’ model remains viable, to avoid legal action a few steps must be taken. First of all, the aspects of control, autonomy and exclusivity are relevant, with the issue arising of whether individuals should be classified as independent contractors or employees. Secondly, the ‘connected work market’ presents a host of technology, intellectual property and privacy-related risks which should be considered before accessing independent talent.
The ubiquitous workplace: is setting boundaries a good thing?
Employers and employees alike have been pondering this dilemma ever since mobile phones came about. However, with technology integrating all of life’s aspects, and business operating not only around the world, but also around the clock, boundaries between private and professional time are blurring.
Several risks are associated with the mismanagement of this emerging phenomenon of the ubiquitous workplace:
Mental health risk, and more specifically preventing burnout and its tangible and intangible costs.
Companies have a responsibility for their employees’ wellbeing, and legal liability for mental health issues is on the rise across the world.
From a legal perspective: Australian legislation places mental health on equal footing with all other aspects of workplace safety, and imposes a duty of care on employers (Source: Australian Human Rights Commission). There are many aspects that are critical to mitigating mental health risk in the workplace including a corporate culture of awareness and prevention, compliance with regulation concerning sexual harassment, bullying and discrimination, as well as a process of reporting, analysing and responding to incidents. It is important to keep a detailed record of incidents in order to design an escalation process which complements the official policies and mitigates risk effectively. Integrated risk management and compliance training systems such as ecomply enable companies to deliver the necessary compliance training, monitor results, and ultimately protect their people and brand.
Overtime and its impact on profitability
Overtime typically delivers less bang for more buck. Not only does it have a tangible effect upon company budgets in terms of higher dollar rates per hour in certain circumstances, it also has intangible consequences including drops in productivity, increased rates of absenteeism and burnout where significant rates of overtime have led to overwork (Source: Harvard Business Review).
From a legal perspective: in order to properly manage overtime, policy and process must go hand-in-hand. Considered and pragmatic workforce scheduling is critical to minimising overtime required. Leave entitlements are a fundamental aspect of the employment relationship and companies can direct that leave be taken in some circumstances. Attention should be given to promoting work-life balance for employees, thereby prioritising their health and wellbeing and maximising productivity.
Work in the digital age: do your employees ‘like’ you?
An aspect of the digital workplace that keeps many executives awake at night is its constant connection to social media, and the impact this can have on a company's brands, directors’ reputations, and ultimately revenue.
Human error is a leading cause of cyber incidents, and hacktivism is not far behind. However, with the social market (and gossip) place only a tap away, dissatisfied employees do not need coding skills to damage a company’s reputation through individual allegations.
Businesses have several strategies at their disposal to minimise risk, and turn their employees into brand ambassadors:
Cyber risk prevention
Several organisational measures can help mitigate cyber risk, including customising IT system access permissions, designing a multi-step approval process for external interactions, and organising regular training to develop and maintain employee cyber awareness.
From a legal perspective: it is important to not only design a cyber risk policy, but to also ensure regular reviews and stress-tests against the evolving technological landscape. Additionally, training requirements should be mandatory for all staff, and regular health-checks performed to ensure compliance.
Social media policy
While most companies are aware of the impact of social media, only some have already taken steps to create a social media policy for their employees, and connecting this to employment agreements.
From a legal perspective: social media policy design and training remain the cornerstone of managing this exposure. Policies should remain flexible so as to maintain currency with the latest social media trends and should be actively used and reviewed. A review of employment contract clauses is also advisable to ensure that employees are required to comply with policies and procedures as a condition of their employment relationship.
Spotting and managing dissatisfied employees.
Universal employee satisfaction is not achievable. However, smart companies manage the risk of dissatisfied employees carefully, and provide outlets for issues to be communicated and solved through close cooperation.
From a legal perspective: many organisations choose to develop specific processes and channels to enable whistleblowing, and promote an organisational culture of transparency, particularly when present in certain jurisdictions. Another option to gauge workforce engagement, and spot potential issues, is an annual employee satisfaction survey complemented by specific mitigation plans ranging from individual coaching to process redesign. A dynamic approach to monitoring workplace satisfaction is critical as early detection is the best way to minimise the disruptive effect on the broader workplace. A happy, settled workforce also lowers the risk of employee claims, such as workers’ compensation, discrimination, harassment and bullying claims and unfair dismissal on termination, and thus protects the company from potential legal, financial and reputational damage.
Simple measures can help companies achieve their organisational redesign goals while maintaining full compliance with legislation, and managing risks smartly.
Contact our experts to have an informed conversation on emerging workplace risks today.