SharedHR Releases List of Top Five SMB HR Trends for 2011

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Increased Workplace Investigations, Performance Management, Independent Contractor Regulation, Cloud Computing, and Retention Top List of HR Priorities in the New Year.

"Small and midsize companies will continue to be at the eye of the US economic storm in 2011," said Paul Finkle, CEO of SharedHR.

Increased workplace investigations, a tighter focus on performance management, compliance with independent contractor rules, use of cloud computing for administrative solutions and employee retention are the five key trends facing employers in 2011, according to SharedHR (, an HR outsourcing, consulting and technology firm.

“Small and midsize companies will continue to be at the eye of the US economic storm in 2011, said Paul Finkle, CEO of SharedHR. “With healthcare reform requiring employers to serve as the enforcement arm for universal coverage while shouldering increased costs – along with a raft of other compliance and technology issues on the horizon -- it’s harder than ever for companies to keep their heads above water, let alone the create jobs that will lead to an economic recovery. With that in mind, we assembled our list of Five Key HR Trends for 2011 to help small and midsize companies keep a step or two ahead in the coming year.”

The list is based on a variety of industry indicators as well as a recent survey of SharedHR clients:

Trend 1: Increased Workplace Investigations
In addition to overall healthcare reform, there were also sweeping regulatory changes enacted for the financial industry. Embedded in this legislation are many new avenues for “whistleblower” complaints by employees. If employees suspect (or claim to suspect) unethical, or possibly illegal, behavior on the part of management, they now have new ways to make complaints both internally and externally. In either instance, these workplace complaints will require a careful investigation.

“Even casual observers of the employment law landscape recognize that when a complaint is made, realistically, an employer has a duty to investigate that complaint in order to protect itself. The more serious the complaint, the more detailed and professional the investigation will be required,” said Finkle. “This trend has already begun. For example, public institutions have already seen a spike in complaints according to a recent exchange among members of the California Association of Workplace Investigators (CAOWI).”

Trend 2: Employers will Focus on Performance Management
Staff reductions have tapered off in 2010 and some organizations may be ready to hire again, especially since they had to cut staffing levels to the bone since the recession began in 2008. Employers however, are under more pressure to maximize the return on investment in existing staff, especially since healthcare costs continue to increase. In fact, employee medical cost increases are continuing at double-digit rates toward the end of 2010; in many industries healthcare costs are now approaching 30 percent of total compensation.

“As the cost of adding staff (and maintaining a workforce) becomes ever more significant, employers are asking how to measure the ‘return on investment’ in employees,” said Finkle. “Such questions inevitably lead to conversations of performance management, metrics, and rewards based on productivity, not mere tenure. Setting goals, and translating those goals into simple, measurable and trackable systems, tied to compensation, will be on the top of many lists of HR initiatives in 2011.”

Trend 3: Regulatory Pressure will Pinch Independent Contractor Relationships
From a government regulatory perspective, employers are at the center of the universe because they represent a body of entities that can be controlled, taxed and regulated. Independent contractor relationships, however, represent an “escape hatch” that many regulatory agencies are stepping up efforts to close in 2011. The IRS, for example, has announced thousands of 1099 audits launched for the express purpose of identifying “misclassified workers”. Many small and midsize employers would be well advised to take a fresh look at their independent contractor relationships to be certain they are defensible.

Lack of written contracts, lack of invoices, limited business investment by the contractor, lack of distinction between contract work and employed work easily occur over the passage of time and are red flag indicators in a misclassified worker audit.

“With improved technology and data sharing between agencies, parameters can easily be set to flag employer tax ID numbers with high 1099’s,” said Finkle. “We have also seen a growing number of disgruntled contractors, unhappy with a contractor relationship and unable to find work elsewhere in a tight economy, suddenly joining forces with an investigative agent and attempt to convert the former contractual relationship to an “employment” relationship. We think these trends will increase significantly in 2011.”

Trend 4: Employers will Seek Administrative Efficiencies through Cloud Computing
Each individual employer, hitching up its administrative horse and wagon and finding its own plot of land to homestead may have been fine in the past, but it is grossly inefficient in 2011. Updating employee handbooks, keeping employment applications compliant, making certain all the appropriate updated forms and documents are available as well as connecting HR data with payroll and employee benefits has become a necessity. Yet purchasing and customizing software and tracking down compliance is cost prohibitive for most small to mid-size employers.

Progressive organizations will find an increasing number of HR offerings provided as software as a service (SaaS) and hosted on the Web. A growing number of applications can be seamlessly connected in a virtual environment to greatly streamline the administrative side of human resources. “Making these applications secure, yet visible over the Web, is sensible for many employers, even those with a single location, since managers and employees can access critical business information 24/7 with no special hardware or software required to connect the team,” said Finkle. “Just as business travel will be reduced in the future by virtual meetings, tedious HR functions and compliance updates will be handled over the Web in 2011 and beyond.”

Trend 5: Employee Retention Concerns will Dominate in 2011
It still takes people to run technology, make products and deliver outstanding customer service. Retaining outstanding employees -- particularly those that can adapt and perform well under changing circumstances – will be a critical success factor. Staying in touch with those key employees, keeping them engaged, adjusting rewards to meet their changing needs in exchange for achieving company goals, will all be increasingly important in 2011. In fact, in a recent survey of SharedHR clients, employee retention and maintaining staff morale were cited as a top concerns for employers.

“While we do not predict that there will be a large number of new-job options in general, the best employees always find jobs - even in a down economy and the investment in time and resources in top employees is worth protecting,” said Finkle.

Based in San Rafael, Calif., SharedHR is a human resources outsourcing, consulting and HR technology firm - connecting HR, payroll and benefits. Services range from SharedHR Central(software); SharedHR Essentials (virtual HR and benefits administration); and SharedHR Custom (integrated outsourcing and HR/business consulting). SharedHR's web-based solutions enable employers to cost effectively build, manage and protect the institutional knowledge of HR function, including HR workflows, information management, employee self-service and benefits portal, risk management, integrated payroll, and multi-state HR compliance.

No other HR outsourcing and Web-based HR system offers SharedHR’s level of customization and professional support to make payroll, benefits and HR administration fit an organization’s culture and evolving needs. SharedHR clients agree: in a 2010 survey, 100 percent of clients said they found SharedHR solutions practical and effective, and 100 percent of clients would recommend SharedHR to colleagues.

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