Payroll & HR 2022: Less People Discrimination, More Spending Discrimination

With news this week that UK inflation set a 30-year record in December, once again surprising economists to the high side, and Bank of England governor Andrew Bailey warning that monetary policy can’t do much about supply chains and gas prices, businesses are facing a moment where they’re breaking the shackles of the pandemic without quite knowing what this new-found liberation means.

To make life that bit harder, tight labour market conditions and uncertain labour costs are putting a damper on hiring, something that is bound to weigh on even the most bullish leaders as they consider major initiatives for the year ahead.

In some potentially helpful news, recent work by the IMF perhaps goes a considerable way to unravelling the mystery of the current dearth of workers, popularly known as the Great Resignation. A paper by Carlo Pizzinelli and Ippei Shibata shows that, at least where the UK is concerned, employment transition difficulties for workers exiting hard-hit industries such as hospitality, retail and tourism (a problem known as ‘mismatch’), along with reduced participation from older workers (ages 55-74), have been the predominant drivers of the labour shortage. Interestingly, the latter has been especially decisive. The IMF explains:

“In the UK, there has been no She-cession [in contrast to the US], but about 10 percent of the employment gap can be attributed to mismatch and 35 percent to older workers’ withdrawal from [the] labor force.“

This shouldn’t be a notable finding and even has a ring of tautology about it: a pandemic that has been particularly brutal on older people has kept older workers from the labour market. In fact, that this most parsimonious of explanations is not at the top of everyone’s thinking about the hiring crunch suggests a dismissiveness when it comes to the role of older workers in the economy. This perhaps won’t surprise too many older workers and those who seek to draw attention to ageism in the workplace, such as Age UK. But it ought not come as a surprise to the rest of us, either. Nonetheless, and chastisement aside, clarity on cause enables clarity on solution.

 

 

So, where does this trio of challenges — uncertain pricing, supply chain bottlenecks and a tight labour market — leave UK businesses? Sure, it might take time for the world to ramp up semiconductor production, but two concrete strategies firms do have control over right now suggest themselves: (1) making sure the path back to work is safe, reassuring and appealing for older workers; and (2) spending smartly (bear with the self-evident nature of that for just a moment).

The first strategy is a self-enlightened win for decency. Ageism was rife before the pandemic, with too many people reflexively associating everything from tech savviness to cooperativeness and organisational cachet with youth. Discrimination, essentially a mischievous way of suppressing competition, and age discrimination in particular, readily sneaks into what at first glance can appear punchy, upbeat organisational PR. But all a firm needs to do is send enough signals evoking ageist tropes, even inadvertently, and older workers — already attuned to casual exclusion in the workplace — will quickly get the hint that they’re not wanted. Add the medical risk of the pandemic and loose talk about Covid-19 being little more than a sniffle, and the message is clear.

The practical question, then, is this: what are you doing, exactly, to make your workplace, work technology and HR policies more accommodating for older workers? Are your recruiters and hiring teams truly aware just how big an impact the pandemic has had on older workers, and are they reaching out appropriately?

The second strategy, spending smartly, sounds more like a truism than a strategy, and one that usually precedes a boring homily on the virtues of frugality. (If you’ve been subjected to far too many of those from a stern pulpit somewhere, apologies!). Instead, let’s place this notion of smart spending into a broader context. From the aftermath of the Global Financial Crisis (GFC) of 2008-2009 until well into the pandemic, we lived in a world of soaring markets awash with liquidity. According to Mohamed El-Erian, economist and President of Queens’​ College, Cambridge, this is because for a long time there central banks were fighting deflation (remember the shock of the Lehman Brothers collapse and terms like quantitative easing (QE)?). But the upheaval of the pandemic is a different story, an inflationary story, and so the thought goes that maybe our mind isn’t quite as sharp as it once was when it comes to pounds and pence.

 

 

To encourage smart spending is not to advocate against central banks prioritising full employment and ensuring the economy is buoyant and capital available for investment, R&D and innovation. Rather, it is to recommend a remembering of the financial given that spending needs to count; that capital expenditure has to deliver on its claims, and partner firms have to deliver on their promises. In a world where human capital management (HCM), payroll and HR software set so much of the workplace agenda, solutions simply must make work smarter, faster and more satisfying by automating mind-numbing workflows, foolproofing compliance settings, facilitating collaboration, providing visibility, and making insight easier to glean.

This sort of tech efficiency frees up talented people to do what they do best: use their noggins to engage difficult problems and create innovative solutions. And, in the broader drama, the marrying of human expression and business outcomes through work technology is the stage upon which labour and capital become one in the passionate dance of productivity, helping drive inflation back down again.

A more discerning distribution of capital doesn’t stop with the software itself. Payroll and HR software vendors and service providers have to deliver more enthusiastically on more forthcoming SLAs. And contracts have to be transparent such that customers have everything they need to function at their best from day one, without the nagging suspicion that uncosted add-ons and upsells lurk around every other corner. In an environment of unstable prices, the last thing businesses need are partners who confound forecasting still further.

Importantly, though, smart spending doesn’t mean dumbed-down ideas, under-resourced innovation or stifled ambition; it means making sure you can bank on something doing what it says on the tin, and people delivering accordingly. The big win here that brings enlightened workplaces and smarter software spending together is the indubitable fact that no competent employee of any age wants their practice or indeed career devalued by substandard, laborious, unproductive work technology. Here’s how we express the problem in the MegaPay Guarantee:

“Payroll has always needed to be precise and compliant. Now, it also needs to unlock your payroll and HR talent by being faster, smarter and more accountable.

Nothing is more dispiriting and demotivating for talented employees than inferior tools of the trade that hamper progress. And nothing screams disregard like double handling, messy workarounds, manual overrides and unnecessary steps.

In the brave new HR world of skills shortages and tight hiring markets, the more competent the employee, the greater the impatience with substandard systems that weigh on performance. And that’s exactly as it should be.“

In this sense, smart HCM/payroll/HR spending and ambitious diversity programmes go hand-in-hand. Outwitting the hiring crunch by identifying under-valued talent and better catering for a more diverse employee body is every bit as important as driving business outcomes through the right technology.

And the fact that we understand this in 2022, and we’re starting to move beyond the old dichotomies — business vs. society, success vs. quality of life, workers vs. managers, economic development vs. environmental preservation, core workers vs. peripheral workers, on-site work vs. remote work, back office vs. front office, and many more — says a lot about how we’re maturing in our understanding of the world, and what a winning people and business strategy will look like in the year ahead.