Ontario has enacted legislation eliminating compulsory retirement at 65. This legislation will come into effect in the fall of 2006.
We recommend that employers review their policies and practices to determine what impact this change in legislation will have on company operations. It is important to do this sooner rather than later.
When reviewing such policies it would be advantageous to conduct an audit of the Human Resource function.
The initial reaction of many employers, particularly smaller ones, will be to discard such an idea as being costly both in time and talent, feasible for a large organization loaded with HR personnel, but not for them.
Still, there are a number of reasons why conducting such an audit makes good sense for all organizations.
Where are your costs?
In many organizations, personnel represent the greatest variable cost after raw materials. Frequently these costs are incurred year after year without a detailed review.
If there aren’t a lot of complaints, benefit programs are renewed without looking at the cost of premiums or design of the programs. As a result, benefits often are being provided that employees don’t value, or which are not responsive to their needs.
For example, employees value having an income replacement program, but many organizations do not review what such a program is costing, or even study the workings of the program, until a few employees take advantage of the benefit. At that time it is often determined that there is no clear corporate policy on the matter.
Some organizations give increases to individuals year after year without looking at the salary level the employee has reached. This usually occurs in those situations where the worker has long service and has done the same job for many years. Each job provides only so much value, and if a program of annual increases is in effect, it is quite possible that the pay level for some jobs gets far higher than what they are valued in the market place.
Changing Legislation
At the start of the article we mentioned the enactment of the Ending Mandatory Retirement Statute Law Amendment Act, 2005. In addition, legislation governing time off for various family reasons is now in effect, and will have greater impact in the workplace as the workforce ages. Safety and health laws continue to evolve. Employers must ensure that they access, learn, and comply with the provisions of such legislation.
Penalties for non-compliance
The various branches of government have determined that employers must comply with legislation affecting the workplace. The penalties for failing to comply are becoming more punitive, both in terms of financial cost as well as possible incarceration. Discrimination and harassment charges have become onerous, particularly in cases where employers have failed to institute strict policies, or have explicitly violated provisions of legislation. The number of civil suits for wrongful dismissal continues to rise. Organizations that do not have well-developed policies in this area are vulnerable to very expensive litigation.
Employee Morale
Recently we completed a Human Resource audit for a relatively small employer with no human resource department.
Part of the audit included holding meetings with the employees. On the whole we found that they liked working for the company. However, there were a few policies that were ill-conceived, and troubling to those we surveyed.
We reported our findings to the organization’s executives, and they quickly corrected most of the issues. The result? A satisfied employee group with much-improved employee morale. The cost of the changes to the company was minimal, but they represented a major accomplishment to the employees, and a significant boost in their productivity.
Summary
Start the year with a new business plan to achieve greater growth and profitability, and make part of that plan a review of your Human Resources policies and practices. You’ll save your company money that needn’t be spent, and ensure your staff are well-covered.
