As we approach year end, it’s a good time to take a look back at the trends that have affected business in the current year, and predict – and prepare for – trends that may impact business in the New Year.
Three major trends that I saw in 2015 were: 1) Mergers & Acquisitions; 2) Falling unemployment rate; 3) New laws and rules that will continue to impact businesses in 2016. I believe each of these trends will continue next year. Here’s what small businesses and HR professionals need to be thinking about and planning for as we embark on a new year.
Mergers & Acquisitions
2015 was a record year for global M&A, with deals totaling more than $4.3 trillion. Some of the bigger ones were CVS acquiring Omnicare ($12.7B); Intel acquiring Altera ($16.7B); Pfizer acquiring Hospira ($17B); and Avago Tech acquiring Broadcom ($31B). The M&A market was strong throughout the year. In June, PwC stated, “The strong U.S. economy and rising confidence signals a strong finish to 2015, making it another record year for M&A value since 2007 and the doldrums of the financial crisis.”
As we’ve all witnessed, however, not all mergers succeed. Often failures are caused by inadequate planning around assimilating cultures, integrating processes, and communicating openly and effectively with employees. Having a well-defined game plan is essential. Here are some tips.
Create a “transition team” that includes members from both companies. Their charter is to identify similarities and differences between the two organizations in terms of cultures, processes, jobs, benefits, etc. Once those differences and similarities are identified, create a detailed integration plan. What are the activities you will do over the first 90-120 days to integrate functions, processes, and people? What change management tools/activities will you implement?
Effective workforce planning is essential. What are the critical skills needed for the “new company” going forward? If there will be layoffs, how will you handle them, and what will you do in terms of outplacement for departing employees?
Whether you are the acquirer or the acquired, you need to have a comprehensive communication plan. Share as much information as you can with employees as early as you can. Nip fears and rumors in the bud by open, honest communication. Part of that communication plan should be a “new company” orientation for all employees within the first 90 days of the merger. Set expectations for cultural norms, discuss any significant changes around jobs, profit sharing, compensation, performance reviews, processes, decision making, etc. Give employees the opportunity to ask questions and air concerns.
Although this takes time and effort in the midst of the many financial and logistical components of due diligence, doing a good job of integrating the culture and people components is key to success.
You can also read our original post on tips for M&A activities.
Low unemployment rate
According to the Bureau of Labor Statistics, the U.S. unemployment rate is currently 5%. This is down from a high of 10% in October, 2009. In 2012, it hovered around 8%; last year it started at 6.6% in January and steadily dropped to 5.6% in December, 2014.
What this means for businesses and HR professionals is that employees no longer feel they need to just be “glad they have a job.” They have options. Especially those with hard-to-find skills. According to Aberdeen Group, 79% of companies indicate a shortage of critical skills available in the labor pool. Attracting, developing, and retaining top talent will become increasingly important in 2016.
Attracting talent. Companies need to develop clear and comprehensive job descriptions. They need to be sure that their recruiters are creative and resourceful in sourcing and attracting qualified candidates. Hiring managers need to be trained in conducting structured, behavioral interviews that ensure both a skill and cultural fit for the organization. Retaining talent starts with hiring the right talent.
Developing talent. One of the key factors that contributes to employee engagement is the opportunity for learning and development. Employees want to improve their skills and knowledge, and need to feel they are making progress on their career path. Best-in-Class companies provide employees with development opportunities at all stages of their career. Learning and development can happen in many forms, including cross training, classroom instruction, mentoring, coaching, free online courses, and stretch assignments.
Retaining talent. Employees need to know that there’s a place for them in the future of the company. In a recent Mercer survey, 78% of respondents said they would remain longer with their employer if they saw a career path within the current organization. Retain your top talent through professional development, clearly articulated career paths, well-trained leadership, open communication, and timely, meaningful employee recognition.
Legal Mandates and Rules Affecting Business in 2016
California Family Rights Act (CFRA). New regulations were added to CFRA effective July 1. Be sure you update your Employee Handbook to reflect them. Learn more about the changes here. It’s a good idea to refresh your knowledge about the differences between the various types of leaves. Learn more here.
Expanded school activities leave in California. SB 579 expands the right of employees to take protected time off from work when searching for a school or childcare provider, to enroll or re-enroll a child, or to address childcare provider or school emergencies. Employees may use 8 hours in a calendar month, with a total of 40 hours in a calendar year. The law applies to employers with 25 or more employees.
Increased minimum wage. As of January 1, 2016, the minimum wage in California increases to $10.00 an hour.
Fair Pay Act. This existing state law, which prohibits employers from paying unequal wages based solely on gender, now clarifies that a wage differential based on an employee’s education, training, experience, seniority, or merit-based system within the company is not gender-related, and thus compliant with the Fair Pay Act.
Temporary workers may unionize. The National Labor Relations Board (NLRB) ruled that temporary workers may vote for, and be included in, the same collective bargaining units as fulltime employees without the consent of their temporary agency or the employer.
Connect to HR will continue to monitor and report on HR and legal trends that impact businesses. Please continue to check our site for further information.