Changes impacting the workplace are many, and they are happening fast. The most senior HR executives working for America’s largest employers are at the forefront of these changes and the challenges they bring, with a uniquely encompassing viewpoint of how they are impacting the workplace here in the United States and globally. The Initiative on the Emerging Workplace seeks to faithfully represent their views in a series of reports, beginning with the Workplace 2020 project, which was released spring of 2017.
While immigration reform continues to be mired in legislative gridlock, companies face serious challenges as a result of the existing law’s inadequacies. Many companies continue to experience difficulty finding sufficient workers to fill both lesser-skilled positions and high-skilled ones, depending on industry, season, and demand, among other factors.
However, the U.S. debate over immigration reform often fails to place immigration policy in the broader economic context. In recent decades, policymakers have largely failed to adjust immigration rules to admit the manpower—from Ph.D. scientists to unskilled workers—that U.S. companies require to compete and grow. The consequences of inaction negatively affect our national economy, communities, workers, and global competitiveness.
Workplace 2020 aims to be a travelogue for senior HR executives and government policymakers alike, mapping the trends shaping the workplace, the outdated policies that govern it—and the way forward. It is the product of countless conference calls, surveys, in-person meetings around the country, discussions, and interviews with the most senior HR executives working for America’s largest employers. It represents their firsthand knowledge of the workplace, and not the independent work product of HR Policy staff or any other organization.
The changes detailed in this report are many, and they are happening fast. Recent developments in the economy, technology and workplace demographics are impacting where, when, and how work is done. A compelling example is the rapid advancement of communications technologies and phenomena such as artificial intelligence and social networks, which are ubiquitous now but were created as recently as 2002. Millennials, often associated with being at home with such technologies and the largest generation of workers since the baby boom, are becoming a large plurality of an increasingly diverse workforce. Furthermore, the ongoing debate regarding worker status in the “gig economy” highlights a significant evolution in the traditional employer-employee relationship.
With these changes come a number of challenges. In order to remain competitive, companies must craft timely and effective policy. Many companies, however, are falling behind in keeping up with shifting worker expectations and preferences. In some cases, internal resistance to change can be as difficult to navigate as significant outside barriers. Human resources is often at the helm of these efforts to implement modern workplace policies. As with any aspect of business, failure to remain current with marketplace demands can spell failure.
One of the greatest challenges, however, comes from an outdated workplace policy regime. The legal architecture that sets the contours for federal workplace regulation is generally composed of a handful of major statutes. These laws (not to be confused with regulations implementing them) reflect assumptions about the workplace of the time they were enacted. The most recent of these—the Family and Medical Leave Act signed by President Bill Clinton in 1993—will be nearly 30 years old by 2020. Some date back as far as the 1930s. On the other hand, policies that allow employers the flexibility to accommodate modern workers’ needs would be a building block for increased national competitiveness.
Chief human resource officers are on the forefront of these issues and challenges, with a uniquely encompassing viewpoint of how they are impacting the workplace here in the United States and globally. Workplace 2020 delves into the issue areas most important to employees and employers today, from the shifting nature of the employer-employee relationship, to Millennials, flexibility, retirement, and workplace security, among others. Each section explores the state of these issues in workplaces across regions and industries, and will be followed up with accompanying reports providing more in-depth analyses.
Though there have been intensive efforts to impose new restrictions and liabilities on alternatives to traditional employment arrangements, the reality is that existing law already contains significant deterrence to their overutilization, and in many cases impedes positive developments for workers.
Recommendation: 1) Legal definitions of employment relationships which include safe harbors for actions and policies taken by employers that benefit their own employees and other workers. 2) Increased portability of employee benefits that are not tied to tenure with a single employer.
To the extent there are discernable trends among Millennials, they are most often attributable to causes other than generational differences. Correspondingly, companies with policies effective in attracting and retaining Millennials often find them to also be well received by employees of other generations. Millennials, however, differ from previous generations in accruing an outsize amount of student loan debt.
Recommendation: A tax-preferred system in the mold of a 401(k) that would help employees to save and pay off student loan debt sooner.
While large companies are at the forefront of providing generous leave benefits, they are increasingly challenged by a patchwork quilt of varying administrative requirements under state and local mandates.
Recommendation: Companies already providing generous paid leave benefits should have a federal safe harbor from being hampered by the varying requirements of state and local leave mandates.
Large companies are committed to diversity and inclusion as it is the smart thing to do from a business perspective. However, the fixation of government agencies with numerical targets downplays the broader cultural goals companies have, and most would be pursuing diversity regardless.
Recommendation: Meeting a company’s diversity goals is more about culture than numbers and, in enforcing the relevant laws, government should bear in mind the spirit of the law in enforcing its specific requirements.
Compensation is a vital tool used by every company in the ongoing effort to attract, retain and competitively reward well-qualified and productive employees.
Recommendation: In order to encourage employee stock ownership, the government could give favorable treatment to companies with employee stock purchase plans. For example, the Financial Accounting Standards Board requirement that companies recognize ESPPs as an expense if a discount greater than 5 percent is provided could be discontinued, or companies could receive tax breaks for subsidizing stock purchase plans.
Over 177 million Americans receive health care benefits through employers, and the broad scope of these benefits is a bedrock and one of the few working aspects of the American health care system.
Recommendation: Protect the Tax Exemption of employer-sponsored health insurance (ESI). The employer deduction of ESI and the employees’ ability to deduct their premiums on a pretax basis lowers the after-tax cost of health insurance for most Americans.
As companies far outpace the U.S. government in funding the education, training, and development of America’s workforce, career progression—or lack thereof—is the No. 1 retention incentive and the No. 1 driver of turnover, respectively.
Recommendation: Look for ways to more closely align federally funded programs and tax incentives to privately funded education, training and development programs which result in in-demand skill development. This could include increasing the cap on Section 127 education benefits to incentivize employers to invest more in educating their workers and to encourage workers to take greater advantage of employer-provided tuition assistance programs. Separately, corporate partnerships have proven highly successful in companies’ efforts to educate, train and develop the workforce, and have potential to bolter these efforts further.
The labor laws in the United States assume conflict in the workplace to solve problems, presuming that the existence of economic weapons by both sides is what brings the parties to the negotiating table. However, today, the institution of social media and other mediums has replaced traditional economic weapons without the threat of job loss. The legal model of the past is simply not compatible with an environment of successful employee engagement, where employees prefer cooperation over conflict.
Recommendation: The labor laws and their enforcement need to ensure that, while employees have the option of forming unions and engaging in collective bargaining, they should also be able to make an informed choice in exercising that option by ensuring that the free speech rights of both labor and management continue to be preserved and respected and that employees have sufficient time to hear all sides of the issue as well as the use of a secret ballot election to determine union representation.
We are seeing increasingly more senior employees in today’s workforce who have both the ability and desire to have longer careers. However, legal obstacles prohibit employees from collecting a defined benefit retirement check while remaining employed by the same employer.
Recommendation: Federal legislation enabling employees to collect defined benefit plan retirement income earlier while permitting them to continue to work for their employer—ideally, with no required “bona fide” break in service.
Significant cybersecurity and workplace violence threats, which face all U.S.- based companies, endanger not only workers and company property, but national security and competitiveness as well.
Recommendation: Faster intelligence investigations and more resources are needed to stop intellectual property theft and cyber crimes.