Is Investment In Employee Skills Your Secret Weapon To Increase Productivity?

I was taught at a very young age to put some pennies in my savings account each week. Money given by generous relatives at birthdays and Christmas also went into the same account. And if I did simple chores around the house, then I was sometimes rewarded with some more to add to the savings.  And it grew, slowly but surely.

But it never occurred to me that there were other ways to make my money grow more quickly.  And I don’t think it occurred to my parents either.  They were never very well off and they worked hard for every penny they ever had.  It is only as an adult that I have learnt about investment and compound interest.

Investment is a subject which we would do well to learn about, as employers.  Investment in the skills of our employees can pay rich dividends.

What do savings and investment have to do with employing people?

It is sensible to save into an emergency fund, both in personal terms and in business.  Your business may win a piece of work which requires some unusual skills not found in your workforce, or you may just need extra people, or some equipment.  If you have an emergency fund, this enables you to hire in temporary help, or people with the required skills.  Or it allows you to buy a piece of essential equipment.

Training and developing your employees is more of an investment.  Your future plans may highlight the need for new skills or a different approach and if you were to invest in training your employees, those skills will be available when the need arises.

What is the benefit of investing in my employees?

If we make an investment, we are seeking two types of return.  Investment needs to bring either a regular income, or an increase in the value of the investment.  Preferably,  both.

The same rules apply when we invest in our employees.  If we buy new equipment, or some skills training, or even an additional employee, we need to know that the money has been well spent and the return will be worth the investment.  There has to be an increase in the amount or quality of work done, or increased efficiency.  This, in itself, is evidence of increased productivity.

But more importantly, there is likely to be an exponential effect on productivity in general.   Where employees feel valued, they will be more productive.  If people have evidence that their employer is prepared to invest in them, they will go the extra mile and productivity will naturally increase.

The alternative is a decrease in productivity, brought about when employees feel undervalued, sidelined or taken for granted.  Our natural inclination is to do a good job but that can slide into mediocrity if our efforts are not recognised.

Return on Investment

Many employers are reluctant to invest in skills training for their employees.  In these days of austerity and tight budgets, that is understandable.    Such training can turn out to be a waste of time and money. The person either does not learn the right thing, or they fail to put it into practice properly.  It can feel as though you are spending the money for the employee’s benefit, rather than for your business.  Especially if the employee then leaves to work for someone else, with their new-found skills.

To get the very best return on investment, it is wise to plan beforehand.  We want to be  sure the skills training is appropriate and is likely to achieve the required result.   And what about the employee?  Do they want to do the training?  Do they have the right attitude, aptitude and attention span?  Is there a clear plan for implementing the training as soon as it is done?

This also applies to an investment in equipment or new employees.  Or, indeed, to any type of investment.

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How A Social Media Policy Avoids These Productivity Pitfalls

Social media can be good for your business.  You can use it as a marketing tool.  Or you can advertise your vacant roles.  Maybe you use it to keep an eye on your competitors.  Or it can just provide some light relief from a heavy workload.

We all use social media these days – and that includes your employees.  And that is where it can all go wrong, of course.  So do you have any control over how your employees use social media?  And should you care?

Monitoring the use of social media

Some employers may want to try the “blanket ban” approach to social media in the workplace, but this is often counter-productive and almost impossible to enforce.  Many people have access to computers at work and nearly all will carry a personal mobile phone.  Some companies even provide a mobile phone for work purposes.  Social media is available on all of these devices.

If you were to try this approach, you would find it very unpopular with your employees. A better option might be to allow “reasonable” use at work.  If your employees have a sensible workload and are engaged and interested in their work, they will not abuse this trust.  They might choose to have a quick look at Instagram whilst they grab a coffee.  But they are not likely to spend hours scrolling through Facebook posts.  If your staff are being managed properly, then you should find there is little problem with over-use at work.

Productivity Pitfalls

There is potential for more of a problem if people are posting comments, rather than just reading posts. This could become a more serious cost to productivity. If people are getting involved in long “conversations” in social media, then they are not thinking about their work.  They might only take a few minutes to post something but their train of thought is broken.  It takes a while for that concentration to return.  This can easily happen repeatedly if they are answering a string of comments on a social media post.

There may be a further problem if the content is inappropriate.   This covers a variety of risks.  It might be something which potentially damages your business reputation.  Or it could be something for which the employer is blamed (vicarious liability). It could breach confidentiality.  It could alienate your clients.

This, of course, leads to potential disciplinary action.  That is inevitably another drain on productivity for the employee who posted the comment and others.  It will affect all the people involved as witnesses or doing an investigation.  Or those involved in the hearing.   The productivity of the whole team will also take a knock.  They may need to take on extra work whilst the disciplinary action is ongoing.  Additionally, they may well be talking amongst themselves about it.  And, depending on the severity of any sanction, they may have to adjust to a different person in the team, or a realignment of the work.

Other concerns

Other things which employers may want to guard against include:

  • There is evidently a risk of introducing malware into your systems.
  • Reputational cost. This depends on the content of the employee’s comments.
  • Negative comments about colleagues – or even threats. I have been involved in the dismissal of an employee where they had made a physical threat to a colleague on social media.
  • Loss of trust between employee and employer. This could even lead to a situation where the relationship is untenable.

This is not a complete list of the things which can be a problem in social media posts, from an employment perspective.  You may be concerned about other issues as well.   If that is the case, then I would urge you to take professional HR or legal advice.

How can employers avoid this productivity drain?

My approach would be to allow reasonable use of social media at work – or at least not to try and stop it.

I would urge any employer to safeguard themselves by producing a Social Media policy.  If there are clear rules and they have been properly communicated, this can go a long way to achieving acceptable use.  In particular, it is important to lay down what is NOT acceptable.

If people are allowed the freedom to make sensible choices, they will generally behave as adults.  We all like to know our boundaries and work within them.  If the guidelines are not restrictive, we do not generally breach them.

You may have exceptions to this in your workforce.  With a clear policy in place, you have the means to deal fairly with any issues.

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Why Long Working Hours May Not Be Productive

Managing the working hours of your team is a delicate balancing act!

It seems that most workplaces include at least one workaholic who feels the need to work excessive hours every day.  It is likely that they are not as productive as they might otherwise be, and the quality of their work usually suffers.

On the other hand, you may have concerns about someone who is not doing their contractual hours.  They seem to be “getting away” with doing the minimum of work and it is likely that their colleagues have noticed and are resentful.

So how can you reconcile these two extremes and find a middle way which works for everyone?

Finding a balance

Most people have a specified number of working hours as a clause in their contract of employment (their “contractual hours”).  Some may stick rigidly to those hours and work no longer, nor any less. Some can even be fairly fanatical about working the exact hours they are paid for.

A good manager can work with all of these people and most teams have a mixture.  But when does it become a problem?  And what can you do about it?

Excessive working hours

If you have an issue with people working excessive hours, then it might be a good idea to look in the mirror.

If the boss is seen to have long working hours, then people will follow that lead.  Even if you tell them that you do not expect them to work long hours, they will watch you and follow your example.   The old adage “do as I say, not as I do” just does not work.  We humans have a herd mentality.We want to fit in with others and be accepted.  The obvious way to do that is to mirror the leaders.  It is not a conscious decision, but it is a fact.   So if you want to change a culture of long hours, you may need to model the required behaviour.

The other reason we work long hours is because we feel under pressure to get more work done.  In busy workplaces, the temptation is always to do just that little bit more before you finish for the day.  That “little bit more” can then stretch into a great deal more.  And it can quickly become a habit.  It is counter-productive, of course.  After a few hours, we quickly become stale and no longer produce good quality work.  So work which gets done in extra hours is often poor and needs to be done again. Mistakes creep in when we are tired.  And we work more and more slowly and everything takes more effort.

What about those who do the bare minimum?

On the other hand, there are people who seem to coast through work, doing the very minimum and seemingly “getting away” with it.

This one is difficult to deal with, because some people are just very quick and efficient.  They do manage to get through a huge amount of work in a minimal timescale. This can upset others who think those people are not pulling their weight.

The best way to manage workload is to decide what you think is a reasonable result for the amount of time available.  For example, you may think an acceptable average time for, say, writing a report is 7 hours or one day.  One team member may take 10 hours, while another may only take 5.5 hours.  In both cases, the quality of the report is good and meets the requirements.  My assessment would be that both are acceptable.  If the person who took longer has done a good job, then maybe you could adjust their workload to give them time to work to the acceptable standard.  If the person who worked less time still produced a good report, then you are safe to give them a little more work to fill their time.  But it is all a balancing act.  If you thought a day was acceptable and they finished early and had some more time for their own personal things, then good for them.

The point of this is that the end result is what matters, not the exact time taken to achieve that result.  You will probably find that the slower person has other areas where they excel.

Stopping the gossip

If you have a team member who appears to be working for fewer hours and their colleagues are not happy, then you may need to intervene.

It may be as simple as a team meeting, where you explain to everyone that you judge their work on the results they achieve.  If they produce good work in the required timescale, then let them know that you will not be checking their hours.

It might be a good idea to keep a careful eye on the situation, of course.  If someone is taking advantage and really is slacking, then you may want to take some action.  Equally, someone may be taking too long because they are struggling, or need some training.  Again you may want to do something about that.

What about the clockwatchers?

Of course, many people work the required number of hours and no more.  If the quality and amount of their work is acceptable, then this is not a problem.  It could cause a difficulty if they take too long to do the work, or if they are not being productive.  This might indicate that they are stretching the work to fill the hours available.  Or it might show that there is too much to do in the timescale, but they are not prepared to work longer.  Either way, the workload may need some adjustment.

Outcomes and results

The nub of the matter is that many managers confuse hours worked with being productive.  My approach has always been to judge on outcomes.  If we try and judge people on their number of working hours, then we are paying them for their presence, rather than their contribution.

We all have productive days and days which we feel have been wasted.  We work at a differing pace, depending on our emotions, our health, and a myriad other factors.  I am sure we have all had working days when we might as well not have got out of bed.  But equally, everyone has a day when they shine and achieve miracles.

A productive workforce is made up of people who are at all stages and work at a different pace.  A good manager will recognise this and judge on results.

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WARNING: What you must know about your contractors before April 2020

Earlier this year, I wrote an article about the UK Government’s consultation on the introduction of IR35 tax rules.  This is in relation to contractors in the private sector. If you use contractors in your workplace and you are a medium or large sized company, then you need to prepare for these changes.

Many employers remain unaware of these changes. If you do know about the changes, have you discussed them with your contractors? Have you agreed on their taxable status?

The Government announced in July that the consultation had finished and changes would be effective from April 2020.  Tax and National Insurance payments for contractors will become your responsibility.

It is best to avoid the blanket payment approach

These rules were brought in for the public sector back in 2017. Most public sector employers decided to tax their contractors as employees.  But they did not give those contractors the other benefits of employment. As a result of this approach, many contractors stopped working in the public sector. Public sector employers now find it much harder to attract contractors. Where they do still use contractors, they often have to pay a huge amount more than before.

What are the tests which prove whether or not a contract worker is genuinely self-employed?

Unfortunately for employers (and contractors), the only real test is in employment tribunal. There have been several high profile cases about employment status and there are likely to be more.

There is no hard-and-fast rule which shows that one person is genuinely self-employed. But there are some indicators which the Courts will consider in these cases. So it would be wise for employers to consult with their contractors about these issues.  This will help to determine how their tax should be calculated. Not all of these indicators apply to every contractor.  But they can give a guide to the true status of employment.

Some of the factors

  • Can the individual work at times and from a location to suit themselves? Or do you require them to be at a specific location, at specific times.  Do you require a set number of hours? If so, then that would indicate that you are their employer, not their client.
  •  Does the individual use their own equipment and tools? Or do you expect them to use tools and equipment which belong to your company? Again, this would indicate they are employed by you. If you are happy for them to use their own tools, this is another indication that they are not your employee.
  •  If you provide skills training, this might indicate they are considered an employee. Especially if you require them to undertake such training. A true contractor (supplier) should already be trained and skilled in what you need.  So it should not be necessary to provide any skills training for them.
  • Is there an expectation that you will continue to provide work once the specific job has been completed? Alternatively, are they expected to do work for you, other than what is specified in the contract? Or do you expect them to continue to be available for work for you once the project is done? Any of these things would suggest “mutual obligation” between you. This indicates that they are an employee.
  • What happens if they are unavailable (off sick or on holiday)? Do you allow them to provide a substitute to do the work while they are off?
  • Are your contractors free to do work for other companies at the same time as they work for you?
  • Do you provide transport, uniforms or other “employee benefits” for your contractors?  For example,  can they use a company subsidised gym or restaurant?

This is not an absolute or exact science

The answers to these questions can help you and your contractors decide on the fair way to deduct tax and National Insurance. Should it become clear that they are an employee, then you may need to offer employment terms and conditions and benefits. If you do not do so, then it is unlikely that the individual will be prepared to continue to work for you.

Your discussions  – and their answers – might indicate that they are a true contractor or “supplier of services”.   This will not guarantee that HMRC does not investigate further, of course. But your records of these discussions and their answers will help to show that you have investigated their employee status and have valid reasons for your decision.

Discussions sooner rather than later

If you want to avoid last minute decisions about the status of your contractors, then you need to start these consultations now. Otherwise you might face significant disruption and loss of talent at the last minute. Many public sector organisations are still facing skills shortages. Some are finding it hard to attract and retain contract workers.

The Government has developed a tool to help businesses to decide on the tax status of their employees. There has been some criticism of this Check Employment Status For Tax tool, but it may help employers and their contractors to make an informed decision.

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