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Also in this issue: Wise Ys: What Millennials Can Teach Other Co-workers The Future of Performance Management Pay Equity: It’s the Right Thing to Do Cracking the Gen Z Code Think You Know Them? Think Again. Bottom Line Smart Thinking for Smarter Business | Volume 27 A more human resource. SM
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Also in this issue:Wise Ys: What Millennials Can Teach Other Co-workers

The Future of Performance Management

Pay Equity: It’s the Right Thing to Do

Cracking the Gen Z Code Think You Know Them? Think Again.

Bottom LineSmart Thinking for Smarter Business | Volume 27

A more human resource.SM

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19 22Find Your Sweet Spot:How Benchmarking Can Help You Hit It out of the Park

Wise Ys: What Millennials Can Teach Other Co-workers

When it comes to building a great team, the guessing game isn’t an effective strategy. Here's a surefire method for attracting the right talent and keeping valuable employees from being lured away.

Today’s employees are finding they can learn a lot from their millennial counterparts by having an open mind and keeping their running shoes on.

The Future of Performance Management8 The list of companies abandoning traditional performance reviews seems to get longer by the day. Have you given thought to what tomorrow’s performance management will look like in your organization?

Up the Ante:Time to Play the Financial Benefits Card

As health care and insurance costs continue to rise, financial well-being is taking center stage. Freshen your benefits image among prospects and current employees by giving them both instant and long-term financial gratification.

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Federal and State Employment Law Updates

Employees Want More, but Midsized Businesses Aren’t Listening

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Stay on top of recent state and federal legislative changes.

Paths to Partnershipwith ADP® Infographic26

The right HR solutions can help you modernize your delivery, maximize your investment, and save precious time on HR management. Find out which flexible HR options best support your modern workforce.

In mid-market companies, a preoccupation with compliance often distracts employers from their greatest asset — and they’re feeling the effects. This infographic shows what employees need to stay engaged.

12 Pay Equity: It's the Right Thing to DoPay equity is also a way to attract a wider pool of talent, promote engagement, and build your brand.

Cracking the Gen Z Code: Think You Know Them? Think Again.16

At 80 million strong, millennials are the most studied generation in history and an economic force. Now, hiring managers must turn their attention to Gen Z if they hope to draw these young employees into the roles opening up as baby boomers retire.

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Up the Ante:Time to Play the Financial Benefits Card Elizabeth is your newest hire and she’s fresh out of college. When she filled out her new-hire paperwork, she checked the box to participate in the 401(k) plan you offer because in her words, her dad told her to. But he didn’t tell her how much to save, or to be sure and contribute enough to get the match, or what “pretax” means. When she received her first paycheck, she was shocked by all the deductions and said she was considering opting out of the 401(k) — even though she was only contributing 2%!

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Is her aversion to socking away money for retirement her fault? Or is it yours?

Long-term thinkingEveryone wants instant gratification, so compelling employees to think long-term can be challenging. Most employees have an employer-sponsored retirement account, such as a 401(k). Yet:1 2 3

• 60% of participants say they don’t have an actual plan for how they will manage money in retirement.

• 25% have no idea how much income they’ll need to replace.

• Only one in five project they’ll have adequate retirement savings.

If Elizabeth knew that participating in a 401(k) actually saves her money through pretax contributions — and although it looks like the money is being taken out of her paycheck, it still belongs to her — maybe her attitude about saving for retirement would change.

Employers are no longer expected to merely offer a 401(k) with an adjustable contribution rate and diverse investment options. More and more, workers want their employers to be educators. And what employees want is a more holistic service, such as one that offers lessons in debt management, investment strategies, and saving for college or a home, for example.4

Therefore, it's not surprising, that offering financial education benefits is becoming a draw for candidates of all generations. A financial wellness program could help distinguish your business as you compete for talent in today’s tight labor market. In addition to retirement savings, remind your employees that life insurance and long-term care benefits are important aspects of long-range planning.

But I’m not a financial expertServing as a financial authority isn’t necessarily a role employers want to play, but the advantages are clear. A company that offers

financial education could save $3 for every $1 they spend on their programs.4 Because money problems may cause stress that leads to poor health, financial wellness programs can reduce absenteeism and worker disability costs.

If you’re considering starting or ramping up your financial wellness support, you’re not alone. In a recent study, 35% of employers say they’ve altered their retirement savings and planning benefits in the prior 12 months in order to increase retention.5 Another 56% of employers say they are very likely to create or focus on financial well-being for employees beyond retirement decisions.

It starts with education. According to Aon Hewitt’s Hot Topics in Retirement and Financial Well Being report,6 employers are offering tools, services, and education campaigns on: • Basics of financial markets• Budgeting • Debt management • Financial planning • Health care planning • Saving for life stages • Prioritizing savings

A company that offers financial education could save $3 for every $1 they spend on their programs.4 Because money problems may cause stress that leads to poor health, financial wellness programs can reduce absenteeism and worker disability costs.

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And more companies are now partnering with financial planning service providers to give their employees access to personalized financial coaching, tools, and education that can even help them choose the medical plan that best fits their budget.

Instant gratificationIf Elizabeth thinks a 401(k) is the only financial benefit you offer, you can proudly point out how your many other benefits have helped her coworkers avoid financial disaster.

For example, Dan, your 40-year-old foreman, fell from a ladder during his annual gutter cleaning a couple years ago, landing him in traction and preventing him from working for the next six weeks. Because he was enrolled in short-term disability insurance, he had income coming in the whole time he was laid up.

The same with Katherine, your 28-year-old receptionist, who was able to take 12 weeks of maternity leave following the birth of her baby because she had long-term disability insurance to replace a portion of

her salary. Today, she takes full advantage of her Dependent Care Flexible Spending Account, which lets her set aside pretax dollars to pay for child care services so she can continue working.

Then there was Marie, your 60-year-old bookkeeper, who was devastated after her husband was diagnosed with lung cancer. However, she was able to concentrate on him and not the medical bills because she had critical illness insurance through your group plan.

HIPAA regulations would, of course, prevent you from revealing the names of Elizabeth’s coworkers, but these real-life situations are important examples of the ways your benefits mix can protect your workers from financial loss and hardship.

69% offer online investment guidance.

53% offer phone access to financial advisors.

49% offer third-party investment advice.4

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1 Aon Hewitt Financial Mindset Study.2 Aon Hewitt: The Real Deal—Retirement Income Adequacy at Large Companies.3 Employee Benefit Research Institute’s Retirement Confidence Survey. 4 Time.com. 5 SHRM 2016 Strategic Benefits Survey.6 Aon Hewitt 2016 Hot Topics in Retirement and Financial Well-Being.

Benefit Why they need itLife insurance, accidental death and dismemberment, long- and short-term disability coverage

Helps protect your workers and their families from financial loss and hardship.

Accident and critical illness protection

Safeguards the family’s finances in case of unexpected medical expenses.

Long-term care insurance Provides the opportunity to use tax-free money to pay for nursing home or in-home care.

Flexible Spending Accounts Lets participants set aside pretax earnings for health care, dependent day care, and commuter expenses. Depending on the accountholder’s tax bracket, they can save between 15% and 30%.

Health Savings Accounts (a savings vehicle available with a qualifying high-deductible health plan)

Provides triple tax benefits: when the money goes in, while the savings grow, and when the money is spent on qualifying purchases.

Identity theft protection Can be a godsend if an employee’s private information is compromised.

Other voluntary benefits that can aid in financial wellness

Legal plan, tuition assistance, student loan repayment, home and auto insurance, etc.

If you failed to impress Elizabeth with all the money-saving benefits she can take advantage of by working for you, she might sit up and take notice of perks like flexible schedules, working from home, travel and shopping discounts, fitness club memberships, day care, and more.

ADP® has you covered ADP’s HR outsourcing solutions can help you take a holistic approach to your benefits program so it meets the needs of your individual workforce. From access to Fortune 500®-caliber benefits and a 401(k) plan to communication strategies that promote your offering, to current and prospective employees, ADP has you covered.

A young worker like Elizabeth may not be able to relate to benefits she can only use if she’s sick or on leave. If that’s the case, she may be interested to learn about money-saving programs that can benefit her immediately, such as:

But I’m not a communications expertYou don’t have to be a communications expert to promote your suite of benefits. Just send simple communications using posters, text messaging, or a basic email to remind your staff how valuable income-protection and tax-saving benefits can be. Use a chart like the one above to explain why those benefits are worth considering.

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The Future of Performance ManagementIt seems we all want to leave the past of performance management behind. GE® has scrapped its old approach to annual reviews and raises. Goldman Sachs® is discarding its nine-point performance evaluations. Morgan Stanley® is ditching its numerical ratings system. Microsoft®, Adobe®, Netflix®, Motorola®, Disney® — the list of companies abandoning traditional performance reviews is impressive.

Few will mourn those old systems. But that doesn’t mean we’re clear on what the future should look like. While some organizations are eliminating ratings altogether, others are simply introducing different kinds or cadences of ratings.

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EXAMPLE 3:

CompetenciesIt’s just as bad in the other direction. Competency models were initially intended as a way to assess performance. But they sneak over into the acceleration part of the equation. We use them to define performance for our people, and link them to our learning and training content. Now something that was meant to measure your performance is guiding how we try to develop it.

So, how do we get clear? We start by realizing that when we talk about performance management, we are talking about two distinct problems.

First, we are talking about performance assessment: how do we reliably reveal performance? This is a measurement challenge. Second, there’s the problem of performance acceleration: how do we create more or better performance? It’s a development challenge.

One stone, zero birdsAlthough “two birds, one stone” seems like a model of efficiency, in practice it is inefficient to tackle assessment and acceleration together.

Let’s consider some common examples to see why this is so:

EXAMPLE 1: OKRsSome companies have put Objectives & Key Results (OKRs) in place, thinking these will accelerate performance. Instead, these OKRs inevitably become a core part of the way we measure performance. But when people are measured by their goal completion, they will adjust those goals down to make them more achievable. OKRs, by trying to solve for both problems, solve for neither.

EXAMPLE 2: FeedbackWe use feedback to try to develop people, but it creeps into the assessment realm. We consult your bosses and peers and then we aggregate their feedback and put a number on it and use it to estimate how you performed last year — moving feedback from the acceleration bucket to the assessment bucket. The problem? When people know that their feedback is about assessment and not just acceleration, they skew their feedback.

When people know that their feedback is about assessment and not just acceleration, they skew their feedback.

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The first problem: Performance assessmentThe key problem in performance assessment is that our systems are built on the assumption that people are reliable raters of other people.

Unfortunately, decades of research reveal that we are all hopelessly unreliable raters of others. The issue is something called the “idiosyncratic rater effect.” Studies show that when I rate you, as much as 60 percent of that rating reflects me, not you. And if one person is generating bad data, then adding more raters in 360-degree assessments doesn’t remove the effect; it multiplies it.

Fortunately, there are methodologically sound ways to generate data that reveal the true range in performance and potential of our people, and to do so in a way that solves for the idiosyncratic rater effect. It boils down to three steps.

First, invert the rating questions. People are reliable raters of their own intentions. So don’t ask team leaders to evaluate their employees; ask them what they would do with each employee.

Next, identify each team leader’s rating “fingerprint” and use it in an algorithm that can produce a score that neutralizes the idiosyncratic tendencies of the team leader.

Finally, weight the data. Ratings from those who have worked with you most often and most closely should count for more than those who haven’t worked with you as much.

The second problem: Performance accelerationA significant body of research — by TMBC, Gallup, and others — shows that two simple questions are the most predictable drivers of performance and engagement:

• At work, do I have the chance to do what I do best every day?

• Do I know what’s expected of me at work?

Address these two questions successfully for every employee, and you will drive performance. The best team leaders get people to say “yes” to those two questions with one ritual: frequent, one-to-one light-touch check-ins about near-term future work. It may seem overly simplistic, but our research shows that when team members and team leaders consistently do these check-ins, engagement (the precursor to performance) can rise dramatically in a matter of months.

There’s a scene in “Raiders of the Lost Ark” where Indiana Jones realizes that his enemies are missing a key piece of the puzzle pointing the way to where the Ark is buried. They only have half of the picture, and their system will never lead to success. He jubilantly exclaims, “They’re digging in the wrong place!”

Like Indy, we need to realize that we’ve been digging in the wrong place. But this realization should excite us, because it’s the first step on the road to the future.

These are just three examples, but there are countless others, of how systems that try to solve for both assessment and acceleration at once wind up doing both badly. So, what would it look like to tackle assessment and acceleration as two separate problems?

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Pay Equity: It's the Right Thing to DoAbout a year ago, five prominent members of the U.S. Women’s Soccer team claimed they were unfairly paid as compared to their male counterparts on the U.S. Men’s Soccer team. The U.S. Women’s National Hockey team recently upped the fair pay ante, saying they would not play in this year’s world championships unless meaningful progress is made on fair pay issues.

What do these two teams have in common? They win. On the world’s stage, they are more successful than the men in both sports, yet they are paid less.

That same stubborn problem is seen throughout the workplace. The facts speak for themselves. For every $1.00 a woman earns, a man earns $1.28 on average. And, on average, men earn 28% more than women across all industries.

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But pay equity goes beyond “the right thing to do.” Attracting a wider pool of applicants and keeping them engaged is critical to your business, and your brand. You also need to stay in compliance with increasingly rigorous federal and state regulations. And, as discussed below, federal, state and local governments have been very busy battling pay inequity.

Federal government takes the leadIn 2016, the U.S. Equal Employment Opportunity Commission (EEOC) released an updated EEO-1 reporting form that will require covered employers to provide pay data starting in March 2018. Currently, the EEO-1 report, which is a compliance survey mandated by federal statute and regulations, only requires employment data to be categorized and filed by race/ethnicity, gender, and job category. The EEOC’s updated form is a significant change, because it will be the first time pay information will be required on the report. This information can be used by the government to address pay inequality.

Also in 2016, the EEOC published a fact sheet which highlights the agency’s interpretation of the Equal Pay Act (EPA). The EPA prohibits employers from paying unequal wages to men and women who perform jobs that require substantially equal skill, effort, and responsibility under similar working conditions in the same establishment. The EEOC’s fact sheet summarizes its interpretation of each of these factors:

u Skill Skill is measured by factors such as an employee’s experience, education, ability, and training to perform a job. It is important to distinguish between the skills required for the specific job and the skills of the employee in general. An employee may have skills in a certain area, but if those skills are not relevant to the job (e.g., a graduate degree in an unrelated field), they should not be considered in the employer’s analysis.

u EffortThe amount of physical or mental exertion needed to perform a job.

u Responsibility The degree of accountability required in performing a job. Note, however, that minor differences in responsibility will not justify a pay differential (e.g., turning off the lights at the end of the work day).

u Working conditions Working conditions refer to both (1) physical surroundings (e.g., temperature, fumes, and ventilation) and (2) hazards.

u Establishment An establishment is a distinct physical place of business rather than an entire business consisting of several places of business. However, in some circumstances, physically separate places of business may be treated as one establishment (e.g., if a central administrative unit hires employees, determines their compensation, and assigns them to separate work locations, the separate work sites can be considered part of one establishment).

Lastly, Executive Order 13665, which applies to federal contractors, prohibits policies and practices that prevent applicants and employees from freely discussing their pay. Federal contractors must also incorporate a prescribed pay transparency nondiscrimination provision in employee handbooks (or implement a stand-alone policy) and post it for applicants and employees. Specifically, this provision must provide applicants and employees with notice that the federal contractor will not discriminate against them for inquiring about, discussing or disclosing their pay or, in certain circumstances, the pay of their co-workers.

The federal government is not acting alone. Rather, its rules and regulations are part of a climate of increasing regulatory measures aimed at closing the pay gap, with a particular focus on restrictions on the use of salary history to set pay.

CaliforniaOn September 30, 2016, California Governor Jerry Brown signed into law two bills designed to address ongoing concerns of pay inequity.

• Effective date: January 1, 2017.• Prohibits employers from relying on

an employee’s prior salary to justify a disparity between the salaries of similarly situated employees.

• Prohibits employers from paying employees of one race or ethnicity less than employees of different races or ethnicities who perform substantially similar work, subject to some exceptions. For example, exceptions include seniority, merit, a system that measures production, and/or another bona fide factor.

MassachusettsGovernor Charlie Baker signed a bill amending Massachusetts’ Equal Pay Act on August 1, 2016.

• Effective date: July 1, 2018.• Prohibits employers from screening

job applicants based on wage or salary history.

• Prohibits employers from seeking the salary history of an applicant from a current or former employer, unless the prospective employer made an offer of employment to the applicant, and the applicant provided written authorization to the employer to confirm wage or salary history.

• Employers cannot prohibit employees from discussing their compensation with coworkers or colleagues.

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New YorkOn January 9, 2017, New York Governor Andrew Cuomo signed two executive orders.

• Requires state contractors to regularly disclose employee job title and salary data. Contractors must disclose this data for all state contracts, agreements, and procurements issued and executed on or after June 1, 2017.

• Prohibits state agencies from making pre-job offer inquiries about candidates’ prior or current salary. This requirement is now in effect.

On May 4, 2017, New York City Mayor Bill de Blasio signed into law legislation regarding pay equity.• Effective date: October 31, 2017.• Prohibits employers in New York City from

inquiring about, relying upon, and verifying a job applicant’s salary history, subject to some exceptions. For example, if an applicant makes an unprompted and willing disclosure of his or her salary history to the prospective employer, the employer may consider salary history in determining the prospective employee’s salary, benefits, and other compensation, as well as verify the applicant’s salary history.

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Not sure where to begin?Start with ADP®. Our HR solutions can help you see if a pay gap exists at your company. From compensation analysis, to helping you with a pay equity evaluation, we have the expertise that you need to stay in compliance and ahead of changing federal and state regulations.

What should employers consider doing now?Employers cannot afford to operate in this regulatory climate without knowing whether there is pay inequality among their own employees and where risks may lie. Consequently, employers are advised to conduct a review of their pay practices to identify and correct any pay equity problems.

Similarly, for employers that operate in locations that prohibit the use of salary history, all applications, interview forms, and related HR documents should be modified to avoid the use of unlawful questions.

New JerseyIn March 2016, the New Jersey Legislature gained bipartisan support to pass a new bill on pay equity.

• The bill would have required equal pay for “substantially similar work,” allowed damages for the entire period of discrimination, and required certain public contractors to report employment information.

• Effective date: None. Governor Chris Christie vetoed the bill.

Philadelphia, PAOn January 23, 2017, Philadelphia became the first major U.S. city to make it illegal for employers to inquire about a potential employee’s salary history.

• The Wage History Ordinance makes it unlawful “for an employer, employment agency, or employee or agent thereof” to “inquire about a prospective employee’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history.”

• Originally effective May 23, 2017, the ordinance was temporarily halted by a now-dismissed lawsuit. It remains in effect pending further legal challenges.

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Cracking the Gen Z Code:Think You Know Them? Think Again.

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It’s been a given that when one generation of workers retires, there’d be a new generation to take their place in the workforce. That “given” might be changing, as the current crop of 18 to 22-year-olds (known as Generation Z or Gen Z) is finding different ways to earn a living. With job openings on the rise and 10,000 baby boomers retiring daily, what can you do to attract workers who have a more independent mindset than previous generations?

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Born in 1995 and after, Gen Z came of age during difficult economic times that culminated in 2009. A New York Times article compared Gen Z to the Traditionalist Generation (born before 1946). By growing up in a time of recession, they’re more pragmatic and skeptical than their slightly older peers.1 Both professionally and financially, stability will likely be very important to Gen Z.

For one thing, they want to be in charge of their own destiny, even more so than earlier generations. Instant access, social media, and digital technology have always been part of their world, and virtual connections are the norm. Because they have nearly unlimited access to information, media, and data, they tend to be aware of the world around them, making them arguably the savviest generation in history.

Who’s the boss?So, how does this generation envision their careers? Here are some important findings uncovered in an extensive survey of Gen Zers by Northeastern University:3

• In general, Gen Z is composed of self-starters who have a strong desire to be autonomous. 63% of them report that they want colleges to teach them about being an entrepreneur.

• 42% expect to be self-employed later in life, and this percentage is higher among minorities.

• Despite the rising cost of higher education, 81% of Gen Z members surveyed believe going to college is extremely important.

• Gen Z has a lot of anxiety around debt, and not only student loan debt. They’re very interested in being well educated about finances.

Shifting gears in the workplaceAgainst this backdrop, attracting the next generation to traditional jobs will be challenging. While you may not be able to change the inherent job duties, you can adjust the job experience.

Flexible work schedules, including part-time and freelance opportunities, are expected to be a big part of the Gen Z world. Supporting this fact: there are now 53.7

million freelance workers in the U.S. — a third of the nation’s workforce.4 For those who do choose to work for a company, these young employees do not expect to remain with the same business for more than a few years.

Gen Z snapshot Like their millennial counterparts, Gen Z is composed of digital natives who are constantly connected.

According to Digitalist Magazine, Gen Z (which some call the iGeneration or heads-down generation) was born with a digital device in their hand. They will try to swipe any graphic they see, will not memorize anything they can Google, and really don’t need to know how to use a pencil.1

They’re accustomed to accessing information and entertainment instantaneously, and prefer to solve problems by turning to YouTube or other video platforms for tutorials and ways to troubleshoot before asking for help.2

The age of one-size-fits-all HR is overNeed HR solutions as personal as the business you run? With ADP® as your strategic HR partner, we can design a strategy that responds to changing economic conditions, the digital revolution, the freelance economy, and changing talent demands.

1 “8 Important Things You Must Learn From Millennials,” June 2015.2 “What Gen Z’s Arrival In The Workforce Means For Recruiters,” October 2015. 3 “Generation Z Is Entrepreneurial, Wants to Chart Its Own Future. 4 “ADP, Reinventing HR for the Digital Economy.” 5 “Recruiting’s New Reality: A People-Centric Paradox,” July 2015.

For recruiters and company leaders, hiring and retaining employees from Gen Z with its evolving preferences about work means modernizing decades-old policies on acceptable work hours and other business norms.

Be ready to communicate continually, using a variety of platforms.

Know where to find Gen Z by connecting to the same professional networks (which will frequently change).

Be transparent, since this generation is skeptical and demands authenticity.

Offer flexibility, which will be increasingly important as we move away from the traditional 9-to-5 structure and work becomes more about life and less about work.

Planning to call their own shotsInterest in entrepreneurship runs high in Gen Z. Even though only 6.6% of the American workforce is currently self-employed,2 the growth of online retailing and devices from Squareup.com, which allows small businesses to process credit cards from their smartphones, is making self-employment more achievable.

Prepare to allot more money to retrain existing staff to cover positions that are difficult to fill as more employees turn to less traditional income opportunities.

Adapt to the new reality of the “liquid workforce,” which is focused around projects rather than roles.

Use internships to teach Gen Z various aspects of your business.

In light of the dramatic workplace changes that Gen Z and millennials are demanding, it is critical for business owners to find new ways to attract and engage employees. In short, recruiting in this environment will require employers to be “part wizard, part astronaut, part diplomat, and part guidance counselor.”5

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Find Your Sweet Spot:How Benchmarking Can Help You Hit it Out of the ParkDid you ever throw spaghetti at the wall and if it sticks, it’s done? That’s the approach many managers take when it comes to hiring, even though they know there are better ways.

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Before blaming your hiring woes on the marketplace, the economy and other factors beyond your control, take a look at the things you can control.

If you’re continually struggling with turnover or finding the right candidates for your business, you’re dealing with issues that are common to all companies, large and small. According to Xerox HR Services (now Conduent), 53% of employers say retaining talent is a top priority.1

If you’re tired of merely guessing and are ready to uncover actionable facts, take these three steps to enhance the future of your business.

For starters, ask yourself questions: • What’s the average age and tenure of

our workforce? • What is our turnover rate? • What’s our average pay increase

schedule and how often do we evaluate performance?

• What benefits do we offer? • Do employees have a career path and

opportunities for advancement? • Do we communicate regularly with

our workers?

Answering these kinds of questions will give you a good snapshot of your business based on your workforce data and your perceptions.2

Poll your employees to learn whether their opinions sync up with your perspective. You may think you communicate plenty, but maybe your workers don’t agree. Determine what’s unique and compelling about the environment you provide and use it to your advantage. Here are some sample questions to include in a survey of your employees:• Do your managers communicate too much,

enough, or not enough?• Does the information you receive have

value?

ASSESS

• What is your preferred means of communication (e.g., email, text, phone, face-to-face)?

• What do you like best about working here?• What do you like least about working here?• On a scale from 1 to 10, how satisfied are

you with your job?• Is there anything missing from your

employee experience?

One caution: Surveying your workers sets up an expectation that their employment experience will improve. If you take no action as a result of the survey, your credibility could take a hit.

Perhaps the most important discovery you can make is whether those things you believe are valuable to your workers actually are. According to Aon Hewitt’s 2016 Workforce Mindset™ study, the top characteristics employees seek in an employer are:3

• Rewards• Fun• Flexibility• Fit with their values• Stimulating work• Innovation

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ADP® eliminates the guesswork There’s a new benchmarking tool in town and it’s helping businesses like yours become more competitive across the HR spectrum. From talent to compensation and benefits to risk mitigation, ADP’s benchmarking capabilities allow you to develop the strategies that can lead your business to greater success.

So you’ve assessed your business and performed your benchmarking. Now it’s time to analyze the data. Use the information you’ve gathered to find the gaps. Where are you low when you should be

high? Where possible, bring your numbers in line with companies that are having greater success with hiring and retention. See what benefits are valued most, how compensation compares, and which voluntary benefits are trending.

1 Xerox Services Survey Finds Retention Tops Cost Management for Employers’ 2017 Priorities, Business Wire, October 18, 2016.2 The Competitive Advantage of Benchmarking: How Do You Measure Up?, ADP Spark blog, February 21, 2017.3 2016 Workforce Mindset™ Study, Aon Hewitt, November 2015.4 How to Benchmark Your Business, Bert Markgraf, Retrieved from http://smallbusiness.chron.com/benchmark-business-23855.html on

6/13/17.5 10 ways to...benchmark your business, Institute of Chartered Accountants in England and Wales, February 2008.6 Midsized Businesses: Poised to Lose Balance in Time of Uncertainty, ADP Research Institute, 2017.

Do you know how you stack up against other employers in your industry or area? Is the salary you’re offering competitive enough to entice new employees to join and current workers to stay? Are your benefits in line with those offered by other employers? Could you provide perks such as flexible hours, virtual work options, paid volunteer hours, or employee discount programs?

To find out what other employers are doing, benchmarking is your best bet. Benchmarking compares the operation of your business with similar businesses and establishes a performance level to shoot for. It starts with identifying measurable business processes that exist in other businesses.4

First, decide who you want to benchmark against. Pick firms of a similar size and with similar objectives. Consider benchmarking against firms outside your sector if there are areas they excel in.

You can work with an HR solutions provider

COMPARE

PLAN

If you can’t offer the same salary range as peer companies, that’s okay. According to recent ADP research, 47% of employees would consider taking another job that pays the same

or less, proving money isn’t everything.6 Adding low-cost perks and rewards such as flexible schedules, a fun work environment, family-

inclusive activities, and lunch and learn programs may capture the imagination of top talent and enhance the package.

In completing these three steps, you'll realize that becoming more competitive is easier than you thought. Businesses of your size have distinct advantages over large corporations: you typically don’t have a lot of bureaucracy, so you can react more quickly to trends, implement changes faster, and have the power to make the big decisions.

that offers benchmarking services. If you do it on your own, your local trade association should be able to suggest benchmarking partners. Another approach is to contact businesses and offer to swap data so you can gain insights into their strategies. Continue to collect data until you have a large enough pool from which to confidently draw conclusions.5 2

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Wise Ys: What Millennials Can Teach Other Co-workers

Millennials, also called Gen Y, represent a third of the American workforce and are expected to grow to 75% of the global workforce by 2020.1 While baby boomers and Gen Xers lived through the advent of high tech, millennials were raised on it, making them the perfect go-to people for adapting quickly and teaching other workers new tricks.

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Worth emulatingIt may be true that many people tend to resist change, but millennials expect and even embrace it. Business owners would be wise to tap into the can-do spirit that millennials embody and cascade it throughout the organization for a fresh approach to success.

1. Embrace change Technology is constantly evolving and changing the way we do business. Millennials adapt by quickly learning new and different skills. They’re used to the speed at which technology moves, and they eagerly await the next release of their mobile devices, fitness trackers, and electronic gaming.

2. Ask questions There’s a reason Gen Y is called “Generation Why.” Millennials ask questions if they don’t understand the reason behind a process, procedure, or practice — opening the door for newer, fresher ways of getting things done. For this article, Bottom Line asked a few millennials how they help shape the workplace.

3. Get flexible A 9 to 5, Monday through Friday workweek in the confines of a cubicle can be a soul killer for millennials. For a generation that grew up on the internet and stayed connected at all hours, face-to-face meetings and a set schedule hold little value. Having the freedom to work on their own terms is key.

For Rachel, “Questioning the norms, seeing situations from a different perspective, and understanding that things aren’t usually black and white” are among this generation’s most important lessons.2

4. Seek feedback Few employees believe no feedback is good feedback, but millennials go a step further by not only asking for feedback, but requesting it on a regular basis (preferably monthly).3 While some have criticized this as a need for constant praise and attention, Gen Y considers continuous feedback — not to be confused with micromanagement — the best way to grow.

5. Follow your passion According to one millennial, “Baby boomers got caught climbing the corporate ladder and hated every rung.”4 Gen Y believes that doing something just because it pays well won’t make you happy. The greater reward is in figuring out what you want to do what fulfills you and then doing it. By pursuing your passion, work-life balance occurs automatically since this mindset lets you fit both work and play into every day.

Millennial Janna, who works virtually, is a good example. “I prefer fewer meetings, especially for things that can be accomplished over email. I can’t stand having a [conference] call for a call’s sake.”2

Bottom Line24

Be part of the new generation of employerHighly functioning multigenerational workplaces thrive by leveraging the strengths, similarities, and differences within each generation. When your employees relate and communicate as one, your business wins. Want to make this a reality at your company? Contact ADP® HR Solutions.

1 Thomson’s 2015 Global Employee Benefits Watch. 2 Informal in-house Millennial Survey, conducted May 2017.3 Millennials Want to Be Coached at Work, February 2015.4 What Old People Can Learn From Millennials, September 2014. 5 Management for All Ages: How to Better Lead Your Multigenerational Team, February 2017.

6. Give back What you do in life shouldn’t just make you money; it should make the world better. Sure, millennials want a fair wage and to live comfortably like the generations that came before, but they also want to do good, support and promote causes they care about, and feel a broader connection with the world. Regardless of the generation, most people want to do good for society and give back. But before millennials became a force in business, work wasn’t traditionally the place to achieve both personal and professional goals at the same time.

7. Be authentic Millennials have a corporate-speak threshold that’s set very low. They don’t have patience for jargon and spin. Their own lives are pretty much an open book and they’re comfortable with the honest viewpoints exchanged through their social networks.5

8. Take risks While not all millennials like taking risks, many consider it a necessary means for achieving their goals. Occasional failure is merely a trade-off for infinite possibilities.

In the final analysis, every generation — every individual — wants the same basic considerations at work: respect, trustworthiness, stability, feedback, and loyalty.

When we interviewed millennial Madeleine, she echoed the sentiment: “Younger or older, regardless of age, I treat my co-workers with the same level of respect and care.”2

25Bottom Line

Federal and State Employment Law Updates

Federal Employment Law Update:President Trump Issues “Buy American and Hire American” Executive Order On April 18, 2017, President Trump signed the “Buy American and Hire American” Executive Order (EO), which addresses H-1B visas. The EO calls for the application of existing U.S. laws to visa recipients and the re-evaluation of the H-1B program. Employers of current H-1B visa holders and employers that seek to secure H-1B visas on behalf of workers in the future should remain alert for federal agency regulations and guidance that may affect this visa program.Effective Date: Currently in effect.

State Updates:Arkansas, Iowa, and South Carolina Ban Local Minimum Wage and Employee Benefits LawsArkansas, Iowa, and South Carolina are three of the latest states to pass laws prohibiting local jurisdictions from passing their own minimum wage and employee benefits laws. This includes laws providing for paid sick leave.Effective Date: Currently in effect.

Georgia Updates Ban on Local Minimum Wage and Employee Benefits Law, and Enacts Law Setting Paid Sick Time Standards On May 8, 2017, Georgia amended its existing law precluding local minimum wage and sick leave laws, and enacted a law setting standards for employers who choose to offer paid sick time. Georgia law has prohibited local government from implementing any law in relation to minimum wage or employment benefits in excess of what state or federal law requires since 2005. On May 8, 2017, Georgia Governor Nathan Deal signed HB 243 which amended that existing law to expand the definition of “employment benefits” to include “additional pay based on schedule changes.” Effective Date: Currently in effect.

Illinois, Indiana, and Wisconsin: 7th Circuit Finds Sexual Orientation Discrimination Prohibited by Title VIIObserving that it would require “considerable calisthenics” to remove “sex” from “sexual orientation,” the U.S. Court of Appeals for the Seventh Circuit ruled that “discrimination on the basis of sexual orientation is a form of sex discrimination” and unlawful under Title VII of the Civil Rights Act of 1964. Employers should ensure that Equal Employment Opportunity and Harassment policies and training cover sexual orientation discrimination. Effective Date: Currently in effect.

New York Paid Family Leave Benefits Law The New York Paid Family Leave Benefits Law (“PFL”) will provide eligible employees up to 12 weeks of paid family leave to (1) care for a family member with a serious health condition, (2) bond with a child during the first 12 months after the child’s birth, adoption, or placement in foster care, or (3) attend to a “qualifying exigency.” Leave will be funded through deductions taken from the pay of full-time and part-time employees. Effective Date: January 1, 2018.

Ohio Gun Law Expands the Rights of Concealed Carry Permit Holders Employees with valid concealed weapons permits now have the right to bring their licensed firearms into company parking lots. Ohio employers can no longer ban these employees from transporting or storing their firearms or ammunition inside their privately-owned vehicles as long as (1) the firearm is locked in the trunk, glove box, or an enclosed compartment within the vehicle, (2) the firearm and ammunition remain in the vehicle when the employees are in their vehicles, and (3) the vehicles are parked in a permitted location. Employers can still prohibit employees from carrying weapons into company-owned buildings and in company-owned vehiclesEffective Date: Currently in effect.

This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP® is not rendering legal advice.

ADP® assists clients in meeting their compliance challenges. Timely communication, clear action plans, and helpful resources allow ADP clients to focus on their business objectives, while helping them mitigate risk associated with employment law compliance. The following is a summary of recent significant federal and state HR compliance developments:

Bottom Line26

PATHS TO PARTNERSHIPWITH ADP®

Flexible options for your modern workforce.

9 10OUT OF

CEOs recognize the need to change HR strategies1 The average company's HR

investment per employee is

OVER $2,0002It’s time you got more out of your employee investment.

HR’s Secret Sauce:You Need to Give to Get

Employees who view their salary, benefits and paid time off as competitive are

Payroll + HR Software: Get easy, accurate, and convenient software to pay employees and help manage HR responsibilities.

HR Outsourcing: Choose one area to extend your in-house HR capabilities, or get an all-in-one HR solution with modern technology and dedicated professionals who provide hands-on guidance specific to your company's unique needs.

80%2.5X MORE engaged than others3

of employerscite performance-based bonuses as the biggest factor in retaining top talent4

What’s the right path for you?

From payroll software to HR outsourcing, ADP modernizes how you deliver HR, maximizes your HR investment, and saves you precious time. Explore ADP’s multiple support options — we know there’s one

that will help you get more from Human Resources.

1PwC 2014. 2PwC People Analytics, 2015. 3AON Hewitt 2015. 4Wall Street Journal.

27Bottom Line

PATHS TO PARTNERSHIPWITH ADP®

Flexible options for your modern workforce.

FIND THE PERFECT HR SOLUTIONFOR YOU AND YOUR INDIVIDUAL BUSINESS NEEDS WITH ADP

ADP Workforce Now® can help you grow and manage your team, simplify compliance challenges, and manage payroll from a single partner, while ADP Workforce Now Comprehensive Services goes even further in extending your in-house HR team’s capabilities.

ADP Workforce Now

Payroll and HR Software HR, Payroll, and Benefits Shared Services

ADP Workforce Now Comprehensive Services

For businesses with 50 – 1,000 employees that crave a real all-in-one HR technology solution.

Go beyond payroll done right for a seamless experience customized for your workforce. Automate complex payroll, HR management, benefit administration, time and attendance, and talent needs with one system.

For businesses with 50 – 1,000 employees that want the most out of their HR system and seek to optimize their in-house HR team’s capabilities.

Connect into ADP’s technology and extend your in-house HR team’s ability to drive employee engagement and HR strategies. Complete your current HR service by choosing comprehensive administrative support for payroll, HR, and/or benefit administration.

For more information, visit adp.com or contact your local ADP representative.

WHY?

48%

Companies focused on their people get aheadCompanies stronger in people management have a correspondingly higher financial performance.1

Attracting and retaining good employees takes more than money

Reasons people stay or go, beyond compensation3

To learn more, visit adp.com/talentlb.

Sources: (1) Fixing the Talent Management Disconnect: Employer Perception vs. Employee Reality in the U.S. Midsized Market, ADP Research Institute, 2017, (2) Midsized Businesses. Poised to Lose Balance in Time of Uncertainty, ADP Research Institute, 2017, (3) Boston Consulting Group: Creating People Advantage 2014-2015: How to Set Up Great HR Functions.

The ADP Logo, ADP, and ADP Research Institute are registered trademarks of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. All other trademarks and service marks are the property of their respective owners. Copyright © 2017 ADP, LLC. ALL RIGHTS RESERVED.

30

40

50

2015 2016

41%

34%

Yet, concern over employee engagement is on the decline2

48% of businesses are concerned about the level/volume of government legislation.2

The number of companies hit with unexpected costs jumped

from 40% in 2015 to 51% in 2016.2

40% 51%

20152016

But midsized businesses are pre-occupied with compliance

Employees want more, but midsized businesses aren’t listening

Focusing on complicance distracts them from their greatest asset:

And employees are feeling the effects.3

Unengaged

Under valued

Demotivated

46%

49%

50%Their People

Why They Stay Why They Go

36% Poor Direct Manager Relationship

27% Work Hours

26% Poor Company Culture

24% Lack of Career Development Opportunities

26% The Work Itself

42% The Work Itself

37% Work Hours

26% Paid Time Off

24% Cost of Benefits

28% Flexibility

23% Personal Connections


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