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8 posts from March 2016

29 March 2016

Individuality in the digital world

‘Digital’, ‘digital strategy’ and ‘digitalisation’ seem to be cropping up everywhere these days, both in my personal life and in the discussions I’m having with clients. But how carefully do we think about what we actually mean by digital? That was the challenge for the guests at our HR Leaders Club dinner last month, and it was certainly a very thought provoking and inspiring evening.

Our guest was Nina Bjornstad, Country Manager at Google for Work UK & Ireland, who gave some fascinating insights into digital disruption and the impact this is having on HR and the way that organisations manage and engage their people in a digital world.

Nina’s central point of view was that we tend to associate ‘digital’ with a new set way of doing things. But this is exactly what being digital isn’t. It doesn’t mean that you just ask (or order) all your employees to use Twitter and hope for the best. Tying incentives to management’s view of the world will always cap potential, as employees will deliver on the provided vision, rather than change, adapt and evolve with the market.

Nina described digital technology as the ultimate liberator; its power lies in helping each of us be the best we can be, both individually and collectively. Ideas can come from anyone and from anywhere, and one of things digital technology does is allow us to capture and voice those ideas. It enables employers to have an organisation-wide conversation and in sectors where frontline staff have all of the contact with customers, gives management far better access to what they know about how customers interact with the organisation.

What really struck me was Nina’s comment that, in the digital world, individuality is key and it is digital technology that allows us to easily harness the power of our individuality. But, for organisations, this means letting go of many traditional, embedded ways of working. The typical workplace is an artificial way of working – we’re told how we should do things, the equipment we should use and the processes we should follow – but where does that leave innovation and individuality? Here digital can be an enabler that supports organisations to move away from these traditional working models; to enable better sharing, collective contribution and idea generation that will ultimately improve the ways of working going forward.

This point, to me, goes much further than the digital issue. Embracing individuality, driving openness in your culture and innovation from your employees all makes sense. Digital is however not the panacea to achieving this, it is simply an enabler (albeit a very clever one). Organisations therefore need to ensure that they have the philosophy to support this type of change before implementing a digital solution to enact it. So find your philosophy and let your people wrap around it in whatever way works for them. Don’t impose; let them be what they need to be.

View Phillippa O’Connor’s profile on LinkedIn

16 March 2016

Budget 2016: A more flexible future for pensions?

It was very interesting to see today's Budget announce that the tax efficient access age for the new Lifetime ISA (LISA) has been set at 60.

If this marks the start of a transition towards reform of pensions taxation and the introduction of the pension ISA, it could also point to an eventual change in the State Pension Age (SPA) as access to private pensions has usually been around 10 years before the SPA.

PwC has previously advocated that a fixed age for the state pension is inflexible and does not meet the needs of today's workers. So I'm particularly interested to see if moves in benefit ages for LISA point to what could be a more flexible future for access to the state pension.

View Philip Smith's profile on LinkedIn

Budget 2016: NI treatment of termination payments for employers

Today's announcement that from April 2018, tax and National Insurance (NI) treatment of payments made by employers when they terminate employees is to be more closely aligned, is welcome news. It suggests that some of the more complex proposals floated by HMRC in their recent consultation on this issue have not been taken further at this stage.

The headline announcement means that employer's (but not employee's) NI will be charged on all termination payments that exceed £30,000 in the future.  This will be an additional cost to employers - potentially making these redundancies much more expensive in the future. This is clearly not the end of the complex treatment of termination payments, which continue to evolve - had the £30,000 exemption kept pace with earnings it would now be in excess of £72,000.

HMRC are also planning on consulting on wider changes to the tax and NI treatment of termination payments including:

- abolishing the Foreign service exemption, which eliminates or reduces tax on termination payments where an individual has worked overseas;

- taxing Payments In Lieu of Notice (PILONs) irrespective of whether they are contractual in nature or not; and,

- bringing in new rules to prevent contractual termination payments being "disguised" as damages in order to avoid tax and NI on them

In light of these changes and the increased costs that will result, employers may well decide to bring forward any senior management restructuring exercises into 2017 rather than wait until the new rules apply from 2018.

 

View John Harding's profile on LinkedIn

Budget 2016: Top up to Apprenticeship Levy contributions

While the drive to improve the skills base of the UK economy through apprenticeships is to be welcomed, there will be many employers, especially in those industries that don't traditionally provide apprenticeships, who will be concerned that the introduction of the Apprenticeship Levy is a new employment tax on jobs.

This coming at the same time as increases in Pension Auto Enrolment and the National Living Wage, gives rise to a growing concern by employers at the escalating cost of employing people.

With this in mind, I imagine that today's Budget announcement of a 10% top up or "sweetener" to their monthly Apprenticeship Levy contributions will be very welcomed.

View John Harding's profile on LinkedIn

Budget 2016: Lifetime ISA introduced and a rise in ISA limit - So what does this mean for pensions?

In line with our pre-budget prediction, today's Budget introduced a new Lifetime ISA for younger savers and a rise in the overall ISA limit to £20,000 per annum.  However, despite George Osborne feeling the time isn't right for major pension reform, my view is that the race is far from over.

Our recent citizens' jury on inter-generational fairness highlighted the demand for savings products that help people save for a home whilst building for the long-term. Today's announcements mark the start, not the end, of the story in getting people to save more for their long-term future.

Market forces are now likely to drive more younger savers towards ISAs and away from pensions, a trend that will be accelerated if the Chancellor goes ahead with the type of flexibility offered in the US that allows savers to withdraw savings and repay later.  It's interesting that older savers have not been included in the new Lifetime ISA. This may point to a future dual track system, leaving the current pension system in place, but introducing the pension ISA by stealth. Once the market beds down, a change to a fully fledged pension ISA becomes much easier.

I am particularly interested to see the impact on the auto-enrolment market, and employers' reward strategies as pension saving for those under 40 has just become a whole lot less attractive. For those with a significant proportion of millennials in the workforce, a key question will be whether or not to introduce a Lifetime ISA alongside an auto-enrolment pension. In my view, employers that offer pension and Lifetime ISA from a single platform could be the big winners as the pension reform race heats up.

View Philip Smith's profile on LinkedIn

Budget 2016 - Salary Sacrifice

The announcement that the Government is considering limiting the range of benefits that attract income tax and NIC advantages when provided under salary sacrifice schemes, comes as no surprise to me.  HMRC has been looking at salary sacrifice with increased interest over the past year. While the devil will be in the detail, it's clear that when it comes to salary sacrifice HMRC take a view that there is a clear "Good, Bad and Ugly".

Employers will be delighted to see that pension savings, childcare and cycle to work are clearly in the category of the "Good" salary sacrifices. However, we are suggesting that employers with wider salary sacrifice arrangements and flexible benefit schemes take the time now to review what they are offering so as to ensure that the benefits do not fall into HMRC's "Bad" salary sacrifices and that they continue to operate as intended in order not to be deemed as "ugly" by HMRC.

View John Harding's profile on LinkedIn

HR in a digital world - Five myths and what to do about them

The first wave of the digital revolution was all about technology: the kit, the devices and the IT infrastructure. Now we’re some way into the second, the people and organisational dimension is taking centre stage.

Almost 90% of nearly 1,500 business leaders said that technological breakthroughs will impact their organisations, but they admitted that they lacked the talent they need to make this transformation possible. Only 39% said that their HR function is well prepared to support this degree of change (source: PwC Digital IQ Survey).

In any time of significant change reality tends to get blurred by tall tales, urban myths and scare stories, and digital is no different. So here’s my take on the top five digital myths, and what they mean for people, organisations and HR. And even more importantly, what can be done about them.

Myth 1. ‘Digital natives’ and generation Y are driving the change - FALSE

In fact, research shows that digital natives haven’t actually changed their working patterns that much, while it’s generation X who work at home more, using cloud and mobile technologies as many of them embrace family life. Organisations and HR teams need to understand their workforce as individuals, as consumers, rather than generation-based stereotypes if they are to create a truly differentiated organisation. The good news is that the information available to HR, coupled with comprehensive data analytics, can play a hugely positive role here, allowing companies to design a tailor-made people value proposition based on real and specific insight. Speaking of which…

Myth 2: HR does not have the data, capability or insight to support digital change - FALSE

HR has access to lots of data, but much of it does not sit together, and is hard to cross-reference and draw conclusions from. There is also a confidence problem. You need to clean this data up, integrate it properly, and ensure you’re collecting the right information in the first place. Again, there’s good news in that many of the building blocks to do this are already in place in many HR functions. They just need an effective approach, and leadership to knock them into shape. But start; with a small pilot and a key business issue. Experiment, learn and keep trying. It's only through this approach that you will build business confidence.

Myth 3: There’s no business case for digital transformation, and HR has no role to play - FALSE

The business case for digital transformation is remarkably clear. Research has shown that digital leaders are 20 - 30% more profitable than their competitors, and are better able to attract and retain a high performing and effective workforce. The best part is that you don’t have to invest millions in the latest technology to see the benefits. Far better to put the effort into showing current and future employees how innovative and flexible you are, applying joined-up thinking to things like workforce planning and talent management. Digital is a people and organisational opportunity and mind-set shift.

Myth 4: Because our digital strategy isn’t yet clear, HR doesn't need to do anything yet - FALSE

As we’ve been saying for some time, you don’t need a digital strategy, but a business strategy for a digital age, and that’s as true in HR as it is everywhere else. HR leaders have a real opportunity to help the business understand the human challenges and blockages to digital transformation, to assess the skills needed and the skills gaps, and facilitate more and better collaboration across the whole organisation. Creating a culture and incentives that reward innovation, agility and empowerment is a critical enabler of successful navigation of digital change.

Myth 5: Digital is all about technology, marketing and customer experience. It’s just another fad - FALSE

From virtual reality, to wearable tech, to driverless cars, digital certainly has its fair share of ‘Next Big Things’. But that doesn’t mean it’s all a passing craze. For people and organisational leaders, in particular, it’s less about apps and more about aptitudes. The human side of digital is about changing behaviour – developing new skills, and adapting old ones to new challenges. Skills like creativity, flexibility, lateral thinking, and collaborative working are key.

Organisations that understand that digital is as much a people and organisational challenge as a technology challenge will succeed. This provides HR with its greatest opportunity to build real differentiated talent and organisations. I’d love to hear about your experiences within the digital sphere, the challenges you face, or the opportunities you have seized along your journey.

View Anthony Bruce's profile on LinkedIn

07 March 2016

Are Line Managers stuck between a rock and a hard place?

We've long been blaming Line Managers for not having the skills to effectively manage their people and performance. As a result, companies tend to heavily invest in management training and development programmes. However, this investment doesn’t seem to be working. ‘Line manager capability’ is as big an issue as ever.

But are Line Managers stuck between a rock and a hard place? They are held accountable for overall team performance, usually through weekly or monthly business reporting, but they manage individual performance through annual objectives. To make it even harder, the data that they need to assess in relation to employee objectives is usually sat on different systems and updated at different times.

It's not surprising that 83% of our surveyed clients* are considering making changes to performance management in the next 2-3 years. In a bid to try something different, we've seen organisations seeking bold alternatives to the traditional performance cycle, whether it’s removing ratings, ditching the distribution curve or other headline-grabbers. However, many of them are failing to bring in systems which are more transparent for the individual or their Line Manager.

We believe that to drive an improvement in business performance, Line Managers have access to each of their teams’ real-time performance data. This would allow them to identify each individual’s specific areas of strength and development, and in turn give the business ‘in the moment’ feedback as to why certain business goals are on or off target. In short, we believe that Managers need more timely performance data to create more timely performance improvement.

We have been testing our theory at PwC. As an organisation, we rely heavily on 360 degree feedback when managing performance. However, over 90% of feedback is requested at year end. This means that our managers have very little evidence upon which to base their coaching conversations during the year. To solve this problem, we have just built and finished piloting an app that allows our people to give and receive real-time feedback; ‘Snapshot’. It allows people to quickly request and give feedback in line with our PwC capability model, giving managers timely insight in their people’s strengths and development areas across the firm.

Over a two month trial period, we saw a huge improvement in the quality of conversations between Line Managers and their people, simply through having access to up to date data which can enrich and support conversations. Due to the success of this approach, we have now rolled out real-time performance feedback across the entire UK firm.

The potential of digital led change is limitless, for business and for HR. However, it is also creating challenges for Line Managers, who are being asked to manage performance through business transformation, changing agendas, widespread cost cutting, and radically different people strategies. Let’s make things easier and give them the data they need to manage performance on the front line. And if we won’t give them the right tools, how about we give them a break?

*participants of PwC’s 2015 Transforming Performance Management report

Sarah Passmore

e: [email protected]

p: +44 (0)20 780 41732