Category Archives: SHRM

Your EEOC Job Posting Statements are Hurting Your Diversity Hiring!

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Employers discriminate in hiring. This is a fact. It’s been a fact for generations. It’s the main reason anti-discrimination statements show up on job postings. That and it’s the law for Public employers and Government contractors who are required to have these statements. Many private employers use these as well to show they don’t discriminate in hiring.

For fifty years we’ve seen these statements on job descriptions and job advertisements. Recently, two Economists from the University of Chicago did a study looking at the impact of candidate behavior when these statements are added to a job posting and their findings were shocking!

In their study, the two economists posted advertisements for an administrative assistant job in ten large American cities. Of the 2,300 applicants who expressed interest, half were given a standard job description and the other half were given a description with an equal-opportunity statement promising that “all qualified applicants will receive consideration for employment without regard to sex, colour, age or any other protected characteristics”.

 

For racial minorities, those who received the pro-diversity statement were 30% less likely to apply for the job—and the effect appeared to be worse in cities with white majorities (see chart). In a follow-up survey, the prospective applicants said the statement prompted worries that they would be token diversity hires.

30% Less Likely To Apply!!! 

What the what?!?!

This isn’t a study that was done decades ago. This was done in the past twelve months!

So, what should we do? 

One thing the study found that had a positive impact on increasing diversity application is to show your senior executives, including your CEO, talk in a ‘real’ transparent way on the impact that diversity has on your organization.

No, not some overly-produced puff piece about how we are all part of the same rainbow. Include video on your career site with your CEO telling stories about how D&I isn’t just a marketing tactic, but how it’s really impacted the organization in a positive way.

Have diverse employees ask the CEO question that gets to the heart of where D&I is in your organization. Don’t be afraid about keeping this conversation open and maybe a bit uncomfortable. The more real, the more candidates will understand that you’re really trying to make a difference.

If you really want to make sure you’re not missing great minority applicants who are skipping even applying to you, embed these videos right into your job postings!

Don’t think that when you put an “EEOC” statement at the end of your job posting is letting a diverse candidate pool know you’re a great place for them to work. They don’t buy it! You have to be better than that!

What’s Your HR Vision? #Insight18

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Spoke at Saba’s Insight conference this week on How You to Get Your HR Metrics to Connect with Your Executives, and a really great question came up from the audience, and it was foundational.

This HR Pro was like, “Hey, Tim, great information, but how do we even get from doing traditional reporting of metrics to leveling up and providing business intelligence?” Great question, my talk was on how to get them to listen to modern metrics, not about why you should even be using them and how to get your organization to even want to go down this path.

So, on the fly, my answer was this:

The first step to great HR, and delivering great HR business intelligence, is you first have to have a great HR vision. What’s yours? I hope part of that vision is delivering the information the organization needs to be successful. 

Oh wait, you don’t have an HR Vision? Okay, I get it, it’s not surprising, most don’t. You’ll have an organizational vision, but for me, great leadership is when you take the organizational vision and you bring it home to your own department and function in a very real way.

The organization’s vision is we are going to make the world a better place by delivering blah, blah, blah. Okay, nice! How will HR do that? That’s different from what the organization had to do, it’s very specific.

Great HR leadership, great HR execution, starts with a crystal clear understanding of what your HR Team stands for and how what you will do, relates back to helping the organization achieve its mission.  It doesn’t mean you need to spend two months creating a vision. Ugh, be better than that. It will mean sitting down as a leader and deciding who you are, and it will mean sitting down with your team and deciding who they want to be.

You might find that some folks on the team don’t want to be what you want to be, and this could be a roadblock to you as an HR leader and your function to finding success as you define it.

It’s a really cool exercise to go through with your team, and go back each year and analyze your HR measures and determine if that vision is being reached, needs to be tweaked, etc. But, we all need that true north in terms of knowing where we are going and how we will get there.

Being an HR leader is tough, you have to walk the walk within the organization, drink the kool-aid, but you also have to do it internally within your own department, it doesn’t just magically happen. Oh, we’re all in HR, we get it. No, we don’t, we’re just like every other function. We need to know where we are going.

So, ask your team today, what’s our HR vision? Then sit back and see what comes back, you might be surprised!

Happy John Jorgensen Day! @jkjhr

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January 23, 2012, my friend and super HR influencer, Laurie Ruettimann, new my super fragile ego needed a boost, so without me knowing she rallied the other HR influencer in the space that had blogs and she created the first-ever “Tim Sackett Day“! We used that date moving forward each year to recognize other individuals in our space who we felt were awesome but underappreciated.

Today, that same friend, Laurie, wants to start a new day for those who have put tireless effort into the profession of HR, but are not as recognized as they should be, for the effort they’ve given! Which is why she reached out to that same group of influencers and bloggers and asked us to write about our friend John Jorgensen.

So, what can I say about JJ on his roast day? 

– John is an old white dude. He’s so old, he’s become diverse. I think he might have been SHRM Member #1. That’s his actual SHRM number: 00000001.

– John has the worst twitter handle of all time. I’m guessing he made it so he could remember it, not so anyone else could remember it. “jkjhr”? The two “j’s” I get, we can guess the “k” is probably his middle name. Let’s just say it’s “Ken”. Ken is very white and old, so it fits! “John Kenneth Jorgensen HR” – there, now we can all remember how to find him on Twitter!

– JJ (what I call him, but I’ve never heard anyone else call him that) is an undying Big Ten sports fan and loves to interact around that subject. The Iowa Hawkeyes are his team, so you know he’s a glutton for punishment!

– SHRM Illinois would not be where they are today, without his tireless and bitching volunteer work.

– John is SHRM’s biggest fan and one of their biggest critics. This makes an organization like SHRM better. Support them, and work to make them better from the inside.

– John invented the phrase ‘resting bitch face’. This is his actual LinkedIn bio photo! 

– John has forgotten more HR than most of us will ever know.

John tries to come off as mean and ornery, but the reality is he’s a big teddy bear. He’s the first one to volunteer, and he just loves this profession!

So, today, search out John Jorgensen and get to know him. He’ll act like all of this is annoying, but deep down he will enjoy the attention, and when you’re at SHRM National in 2019, make it your mission to search him out and take a selfie with him!

Happy JJ Day!

“Overqualified” is Just another word for Age Discrimination

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Had a really talented lady reach out to me the other day. 49 years old, college grad, great portfolio of work. She has been interviewing and is being told she is “Overqualified”.

There is some truth about her being called this. She does have more qualifications than the position requires, but she fully understands what the job is and she wants to do that job, with no notion of wanting to do more than that job, unless her performance shows she’s capable of moving up and the company needs her to move up.

“Overqualified” is just another way to say “Hey, I think you’re too old to work for me!”

Tell me I’m wrong! Give me all the reasons someone is “Overqualified” for a job they want to work at and understand what the job specs are?

I’m a Heart Surgeon but it’s a stressful job, so I decided to take a step back and just do some Cardiac Rehab work. Still get to work with heart patients, but it’s a less stressful workload and pays a heck of lot less, you need less education to do that job.

Am I overqualified to do Cardiac Rehab if I have experience as a heart surgeon? Only if you tell me I am! It’s a job I want, and I have the skills and desire to do that job, so I would say I’m quite qualified to do that job, not overqualified.

TA pros and hiring managers say someone is overqualified when they’re too stupid to come up with another reason about why they don’t want to hire someone who has great experience and more years of experience.

“Oh, Tammy, yeah, she’s overqualified to work in that job. I mean she wouldn’t be happy long-term reporting to me, and I mean she has more experience than I have!” Oh, she told you that? “Um, no.”

I constantly run into retired people who aren’t ready to retire and want to keep doing valuable work. They have great skills and knowledge, but 32-year-old Steve won’t hire them because Steve believes they won’t take his direction. That’s a Steve-issue, not the candidate’s issue!

By the way, this isn’t a young-to-middle-aged guy problem, women are just as bad! Turns out we all love to discriminate against old people, equally!

Tech companies are the worse. Creative companies are the second worse.

Tech companies believe only young people know technology. Creative companies think the only people who buy products and services are 26-year-olds on Instagram and Snap.

“Tim, you just don’t get it. I don’t want to hire someone who is going to retire in 5 years!” What’s your average tenure at your company? “4.2 years” Yeah, having someone for 5 years would really suck for you!

I had a hiring manager tell me this once when he interviewed a person who was 52! “I need someone who is going to stay long term!” Um, 13-15 years isn’t long term?! You’re an idiot!

I find telling hiring managers “You’re an idiot!” is super effective in getting through to them, and cutting straight through to their bias. It has worked 100% of the time in my career. It really works across all biases.

So, now tell me, why don’t you hire someone who is ‘overqualified”?

Influencers or Analysts – Who has the most impact to your brand?

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The worlds of Influencers and Analysts have never collied more than they are right now in the HR industry. Most of this has to do with the popularity of Influencer Marketing that has taken off in the past decade, and like most things in HR, we are now just catching up with the marketing trend.

Traditionally, in the HR space, companies selling products, technology, and services only really cared about two things: 1. What do our clients think of us, and 2. What do the “Analysts” think of us?

What’s an Analyst? 

Every industry has them. These are basically individuals who work for organizations like Deloitte, Gartner, Forrester Research, IDC, and hundreds of boutique firms specializing in specific parts of the HR ecosystem. The individuals spend a great deal of time understanding the landscape of a specific function in HR, the technology, the processes, what works and what doesn’t, etc. Then your organization pays their organization a great deal of money for this expert knowledge.

The hope is, using this expert Analyst knowledge will ultimately help you save time, money, and missteps because you’ve hired a firm of experts to help you make the right decisions. Many of these experts have never actually worked a day in HR, but hold MBAs and such. Some of these people are some of the smartest people I’ve ever met, and if you listened to them, they could truly help you. Some are idiots working for a big firm.

Examples of Analyst I admire: William Tincup, Madeline Laurano, Trish McFarlane, George LaRocque, Ben Eubanks, Kyle Lagunas, John Sumser, Holger Mueller, Jason Cerrato, Josh Bersin, etc.

This will then beg the question of well, then, what’s an Influencer? 

Influencer marketing has been around for a hundred years, but Kim Kardashian is the queen of modern day influencers. I’m famous! You see me talking about or using this product. You buy this product. That’s really the backbone of influencer marketing. I mean Kimmy D would never steer you wrong, would she?

An Influencer is anyone in an industry that a measurable amount of people are listening to, that will the influence their buying behavior. I write a blog post on some product that I’m using in my own shop. It’s super awesome! You go out, look at it, and decide to buy it and use it with your team. You’ve been influenced.

Most of the influencers in the HR industry are current or former practitioners, they’ve lived your life. Some are super smart and have the resume to back it up. Some are complete idiots. Any idiot can have a blog (I’m a great example!). Most influencers, like an analyst, have a specialty, something they’re better at than other stuff. Some influence full time, but most hold down ‘real’ jobs to pay the bills. So, they probably don’t have the time to deep dive into the industry, as you’ll see with analysts.

Examples of Influencers I admire: Kris Dunn, Dawn Burke, Carmen Hudson, Robin Schooling, Jason Lauritsen, Laurie Ruettimann, Jennifer McClure, Sharlyn Lauby, Steve Browne, Sabrina Baker, Joey Price, Mary Flaukner, Jessica Merrell, Janine Truitt, etc. (there’s really too many to name!)

Many of these people are HR Famous! They have worked hard to create an audience who for the most part listens to what they have to say.

You also have people that fall into this strange middle ground of Influencer-Analysts types that have no name. Maybe they started out as an influencer, then became an Analyst, or maybe they were an Analyst who became popular and started influencing. Examples in this camp are folks like: Josh Bersin, Jason Averbook, Sarah Brennen, Trish McFarlane, Ben Eubanks, etc.

(BTW – All of these people you should connect to! )

So, who has the most impact on your Brand? Influencers or Analysts? 

This is not an easy question to answer because like almost anything it depends on a lot! We all know of a certain product we love and regardless of the influence or what some expert is telling us, we will just buy it because we love it!

We also have an untold number of products and services we buy because someone we trust told us about it, and because we trust them, we go buy it.

If you’re a large enterprise level product or service, basically selling to companies that have more than 5,000 employees, you better make nice with the Analyst community! They tend to have the ear of more enterprise buyers then you’ll typically see from influencers. I doubt very highly the CHRO of Google is reading this blog! (but I know the CPO of GM is!)

What I see is companies selling to enterprise usually work with both Analyst and Influencers. They want to ensure their message is heard across the buying community, so they don’t miss out on a potential buyer, and they have the money to do both.

Companies selling to under 5,000 employees and it starts to get a little harder to determine the impact of Analysts. I mean how many HR and Talent shops in Small to Medium sized businesses have the money to pay for Analysts Research? Not many! If you run an HR shop of a 1500 person company, you do not have $50,000 to hear what the best ATS is! The ATS you buy won’t even cost $50K!

Behind the scenes, most analysts understand their biggest impact in on the enterprise buyer, and because that’s where the money is, that’s exactly where they want to be! If you have buyers across small, medium, large, and enterprise markets, it then becomes a more difficult decision on how you use Influencer marketing.

The real answer to the question above is you engage with the analyst and influencers that have the most positive impact to selling your product. Unfortunately, most organizations have little or no idea if either side is having an impact to selling their stuff.

Who has the juice? 

I call someone who has ‘real’ influence as having the “juice”. If you have the ‘juice’ you have the ability to influence real buying decisions on a regular basis. Laurie Ruettimann tells you to go out and buy this new great HR product, and that organization will see a measurable sales increase directly tied to the links in her posts. She’s got juice!

I wrote about an HR Tech company a few months ago after a demo and a month later they sent me a bottle of gin because they landed a six-figure deal directly from my mentioning them in a post. That’s gin and juice! 😉

Most people who call themselves influencers in the HR space have little or no juice. Usually, because they just don’t have a large enough, sustained audience who is listening. They might be 100% correct in their recommendations and insight, but not enough people are listening to move the buying needle.

I love what the folks are doing over at HRMarketer because they are actually showing organizations who have the juice and who doesn’t. I can tell you I have the juice and say I’m the #1 Influencer in the HR marketplace, but the reality is, anyone can say that! HRMarketer is actually giving data behind those words to let people know where the real juice is.

The truth around all of the analyst vs. influencer chatter is that you’ll find people in both groups who can help you, and people in both groups who are complete idiots and have no value. The best thing to do is build a relationship with both, find out who moves your needle and aligns with the messaging you’re trying to get out, and then measure. Eventually, you’ll find the right mix that will work for your organization.

Co-Managing with an A–hole!

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In the modern work world, we are often tasked as leaders to co-lead, co-manage a team, a function, a location, etc. The challenges to this are many, but none is more difficult when you have to do that and the other person is a complete a-hole!

What I find is that most a-holes have no idea they’re an a-hole, or they know they’re an a-hole but some broke in their brain to make them believe their actually a better person/leader as an a-hole versus a normal person.

What are the jerk, a-hole leader behaviors? Being condescending to the employees they lead. Talking behind the back of those they lead to others on the team that are a peer of that person. Not supporting their co-leader on things that were previously agreed to, etc. You know what I’m talking about!

I’m lucky that I haven’t had this issue for a while but I see it happen all the time in organizations I support, and it’s one of the most talked about issues I hear from friends and peers that work in corporate gigs. Here’s some of my advice for co-managing with an a-hole:

– A–holes hate being put in a box. Put them in a box. Get agreements on things, then get written confirmation of those agreements. I find a-hole leaders will work not to confirm via email or written communication, especially if they don’t really agree with the direction and plan to screw you later!

– Always stay above the line in front of those who report to you and your peers. “Above the line” means you never allow yourself to do or have the same bad behaviors as your co-manager. You take the high road, always. Trust me, in the end, you’ll benefit greatly from this!

– Be brutally honest in your assessment of your a-hole co-manager. I find most a-hole leaders are never told by a peer that they’re being an a-hole with real specific examples. Most if told, will actually try to change those behaviors. Some are truly just a-holes and they won’t change, but it will make you feel better to address it. Also, don’t stop addressing it! Every time it happens, call them out. That is actually an “above the line” behavior by you calling them out!

As a leader dealing with this situation will probably be the most challenging you’ll have in your career, but ignoring it, complaining to your boss, to matching their behavior are all losing propositions that take your career nowhere.

I love killing a-holes with kindness! It doesn’t happen often to them, they are used to getting the opposite reaction from their behavior, so extreme kindness to them really throws them off guard and unsettles them which can be quite funny!

6 Surprising Ways Gen Z is Changing the Workforce!

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I’m in love with Gen Z! It might be because I’m raising 3 Gen Zers, two in college, one on the way, but it’s also because I love how each generation is shaped by the period of time in which they are raised, and I think Gen Z, specifically, was raised in one of the most unique periods in history!

We’ve had the Millennial “differences” jammed down our throat now for a decade! When it first started, I was fascinated with the differences, now I’m just bored. I think what we learned with the Millennials was that so much of what each Generation has, is truly just based on time in life. Then we have this much smaller percentage of some stuff that truly makes each generation standout.

Gen Z was raised during the Great Recession. This is a fact, it’s not something we can discount. The generations directly before the Boomers, the Silent Generation, and the Greatest Generation, were raised during the Great Depression, this had a significant impact on how the viewed the world, and how they viewed jobs specifically. Gen Z will have some modern similarities to these generations.

You can not be in your formidable years, have the access to information that Gen Z has always had, and see your family and friends lose jobs, houses, etc. and not then have that come out in your relationship to work in some unique way. There’s been very little out about Gen Z, to this point, but recently there was a fairly substantial study done with over 25,000 Gen Zers. Here’s what it said:

– 97% of Gen Z own a Smartphone, 93% own a Laptop! Gen Z is digital natives. They are the very first digital native generation. They grew up with a smartphone in their hands before they could even communicate what they wanted or needed in a meaningful way. Gen Z will not ever work well in an environment that doesn’t use technology to solve common problems. “We have always done it this way” makes no sense to them. No in a frustrating way, but in a truly perplexed way. Kind of like how someone looks at a Caveman exhibit in a museum.

– Gen Z is very price conscious. Employers will love them because they constantly work to get lower cost of goods and are very adept at doing things on their own when they feel they can produce similar quality for a lower cost. Again, go back to what they saw growing up. They use technology for price comparison, reviews, check availability, etc. Rarely will you be able to sell Gen Z in one meeting, and without competition also being in play.

– Only 1 in 8 Gen Zs gets their information from printed materials. Good job on those printed career fair brochures! You might as well just have a big bomb fire at Corporate HQ because your printed job material is almost worthless with Gen Z. Although, they do consume information through a ton of channels including social media (79.7%) – yeah, that Twitter/IG is just a fad…TV/Video, radio and video streaming services, etc. When we go to recruit Gen Z, we have to be ready to use multiple forms of media to reach them.

– Crazy enough, Gen Z actually loves to read books, not digital.  Again, generationally, Gen Z was raised during the Harry Potter days, etc. Some of the best young adult literature in history was written during their young years, and in hard economic times, a book is a fairly inexpensive entertainment option that takes up a lot of time. No wonder Gen Z is a generation of readers! 77% prefer to read a printed book, rather than digital. So, while we tend to focus employee development on online on-demand types of media, some leaders will find giving a book to Gen Z might be a real connection for them.

– Gen Z demands information. Gen Zers, for the most part, won’t demand to be the boss, but they will demand to be kept in the loop. Why? Because they’ve always been able to find out anything they wanted in seconds, so you playing the power position of keeping information from them will not go over well! When you’ve never not had information, working in a corporate culture that uses information as power, is a stifling environment to be in.

– Gen Z is the most diverse generation in American history. I will tell you my sons are somewhat confused by old people’s obsession with diversity issues. They understand America is far from perfect, but they also have grown up in a generation that is much more accepting than any generation before them, so they find ‘our’ obsession with these topics sometimes overdone. They would prefer to focus on how we are similar, then to how we are different.

By 2020 (2 years away!) Generation Z will be 40% of our workforce. The largest generation in the workforce, with Millennials being a shrinking second place. Gen Zs are not Millennials, just like Millennials are not Gen X, etc. Each is mostly similar, with some differences. Gen Z will take some getting used to for some leaders, but those who embrace their uniqueness will truly get rewarded!

The One Bias We All Agree On!

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At this point, we’ve been educated enough to know we all have biases. The reason for our biases is different for each of us. We’ve gotten to a point in our society where we judge each other’s biases on a scale of “this is a bias, but its not really a bad bias” to “you’re an awful person because of your bias!”

If you won’t hire someone based on the color of their skin,  then well you’re an awful human being with a really awful bias.

If you won’t hire someone based on the fact they went to the University of Michigan, well, then, you’re just smart! 😉 But still a pretty stupid bias!

This continuum of biases game we play is somewhat comical.

Some new research has come out, though, on a bias we can all finally agree on! No matter what skin color you are, black, white, some combination in between, we agree on this. No matter what religion, what socio-economic background you come from, your religion, your political beliefs, whether or not you actually believe Star Wars or Star Trek is better, we all agree that Fat People are bad.

Um, what!?!

Yeah, Americans can’t stand obese people!

We don’t want to hire them, and when we do, we pay them less and give them the worse jobs.

All of which is fairly comical as well, since most Americans are overweight! 74.1% of Americans are overweight! You see the continuum thing again, right?!

“Oh, God, that dude is giant! Yuck! You know he won’t work! I’m just so happy I’m not ‘that’ fat!” Come down, Sparky! It’s not like you’re winning any Crossfit challenges, either!

It’s gotten so bad in America we hate fat people more than smokers! Secondhand smoke actually kills people. Mikey eating his eighth donut of the day is only killing himself!

Okay, I know you think all of this sounds insensitive. I’m not a skinny dude. I’m built like a fire hydrant, and that’s never good. It is, so I can prove a point. A bias is a bias. There shouldn’t be this continuum of what biases are ‘okay’ and what biases are ‘bad’.  The point being if you find yourself or your hiring managers rating biases, you’ve got a problem.

We hate on obese people because we believe it’s a personal choice, not a disease or a condition, something they control. “Yeah, Mikey is just lazy and has no self-control!” The reality is, like drug addicts, food is no different for many, many people. You like cocaine, Mikey likes donuts, you’re both filling a hole.

There are some companies in super-low unemployment markets right now who are actually hiring candidates who test positive for opioids and then paying to put them through treatment and guaranteeing them a job upon completion. Do you think you would do something similar for a candidate that is obese? Hey, Mikey, we’ve got a program, we want to see you healthy before you start work, go through it and we’ll guarantee you a job.

What do you think?

Are Work Friends, Really Friends?

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So, I get pimped on the daily by PR firms to share their stuff with you guys and I rarely do! But, every once in a while a PR firm gets that I only read the headlines and sends me a good one! Like the one above!

So, this is the juice from the study –

“Only 15% of people believe they have a ‘real’ friend at work.” 

Okay, the full breakdown was actually this:

  • 41% are just Coworkers. We work together. We get along. But we never hang.
  • 22% are Strangers. They work in the same place I do, but I have no idea who they are.
  • 20% are Only At Work Friends. We sit at lunch together, we talk about our families, but after work, we have separate lives.
  • 15% are Real Friends. These are my people. We work together, but we also vacation together, go for drinks, play on the same softball team, etc.
  • 2% are Enemies. I spend most of my waking hours searching or ways to ruin their lives.

The Gallup friend research from two decades ago showed us that one critical component of having an engaging work-life is if you have a “Best Friend” at work. In hindsight, I’m guessing Gallup was probably talking about this ‘real friend’ category. Someone you actually have a relationship with outside of work, someone you look forward to seeing when you go to work, etc.

For me, this really brings up the entire concept of Friendship. I’m a middle-aged dude. I’ve got a wife and kids and a dog. Middle-aged dudes and friendships are weird. I’ve got people I would consider super close friends that I’ll go weeks without communicating to. Some of my closest friends I only see a few times a year in person. So, when you ask me if I have a ‘real friend’ at work I need some defining traits about what that really looks like.

For me a ‘real friend’ probably has one or more of these characteristics:

– I’m willing to share personal stuff with them and know they won’t break my confidence.

– They’ll come and help me move to a new house/apartment/etc. Let’s face it that’s a real friend!

– We spend time together outside of work on stuff not associated with work because we enjoy being around each other.

– The friendship is two-way, meaning, we both think about and do stuff that is important to each other.

– The friendship would not go away if you stop working with each other.

That last one is the real defining characteristic of a real friend vs. a friend at work, right? We have so many people that we actually enjoy working with and we would introduce them as ‘friends’ but if we stopped working with them each day, we would probably just become Facebook friends and maybe never see them again!

So, I’ll ask you to think about all those people you work with right now and determine do you have a real friend at work? The study says 85% of us don’t! What do you say?

 

401(K) Program – Retirement Plan or Student Loan Repayment Plan? Both!

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If you didn’t see this week the IRS ruled on a request by a private employer to use their 401(K) plan to be utilized as a sort of a student loan repayment program. Here are the details:

“Here’s a quick (but not complete) summary of the plan proposal. According to the PLR, the taxpayer (who is anonymous in publicly released PLRs) proposed to amend its 401(k) plan to offer a student loan benefit program. Under the proposal, the employer would make nonelective contributions on behalf of the employee conditioned on the employee making student loan repayments (“SLR nonelective contribution”). The program would be voluntary and after enrolling the employee could opt-out… 

Under the program, if an employee makes a student loan repayment during a pay period equal to at least 2% of the employee’s eligible compensation for the pay period, then Taxpayer will make an SLR nonelective contribution as soon as practicable after the end of the year equal to 5% of the employee’s eligible compensation for that pay period.”

So, a couple of thoughts on this proposal:

  1. While this isn’t a perfect or complete solution, it’s something and as employers, we have to help out our employees who come in with life-altering amounts of student loan debt.
  2. Holy crap – this is really great, innovative HR work by some private employer who is really trying to figure this stuff out! I want to meet the HR Leader/Pro who even thought of this.
  3. It’s the chicken or the egg scenario. Do you start your retirement savings or do you first pay down debt? Obviously, this employer believes you need to solve the debt issue first, then go back and focus on the retirement.

The HR Nerd in me loves this stuff!

You had an employer who saw a major pain point with employees and hiring of potential employees. They started to brainstorm and somehow came up with an idea, what if we gave the employees money into their 401K which then would be used to pay down student loan debt, and because we are doing it through a qualified plan the IRS will work with us to make it non-taxable?

Um, what!?!?

99.9999999% of HR pros would give up on this as soon they heard IRS! But this employer decided to just ask the IRS the question and it sounds like the IRS was like, “Yeah, this makes total sense, for sure we need a few rules around this, but let’s do it!” The freaking IRS did something that makes sense?!?

So, this is a lesson for me and my HR brothers and sisters. I’m not saying anything is possible, but many things are possible if you keep trying to innovate, try stuff, and just every once in a while be naive or smart enough to just ask the question.

Keep HRing out there!