Roundtable discussion where Ius Laboris alliance lawyers weigh in on the forces for change, how they are affecting the modern workplace and to what extent they’re driving a shift from a shareholder to a stakeholder business model
Tiffany Downs is in the middle of a high-tech boom in Atlanta with increased competition for employees. Downs, a partner who specialises in employee benefits and executive compensation, is involved in assisting clients with the hiring and retaining of the best talent in a highly competitive market.
“Instead of trying to ignore the changing employment culture, companies are better served to embrace it and try to figure out how we can make it a win for everyone”
For the millennials, money remains an obvious driver and Downs, who has practised law for more than 20 years, does a lot of work structuring competitive compensation and bonus packages and long-term incentives. This is particularly necessary for companies to retain valuable employees.
Yet such benefits are only the beginning of the conversation. “They don’t really appreciate or want to follow the typical employer-employee relationship, they are really driving companies to have a flat organisational structure and want to have some input in decision-making,” says Downs of law firm FordHarrison. They want to make sure they are getting good experiences, doing meaningful work, and feel like they are making a difference within their company, nationally, and across the globe.
In addition to traditional compensation offerings, the millennials are looking at other offerings by employers and opportunities to align their employment and further their personal, social and charitable interest through working for companies with similar corporate social responsibilities. They value social purpose and paid time off for volunteer work, while still wanting to ensure they will get credit – in career terms – for that volunteering. Unsurprisingly, they also like the idea of flexi-time and the ability to telecommute. Young FordHarrison lawyers, for example, work for Habitat for Humanity, the international non-profit organisation, which builds or restores homes for those who need them.
Downs notes an unexpected benefit to employers – through volunteering, the younger employees are getting experience of leadership and management that they would not otherwise get so early in their day jobs.
At the same time, the impact of social media accelerates everything. If a company is hiring or paying more, the word spreads instantaneously. How does the industry respond? Do they ignore the latest news or restructure their compensation or offer different types of benefits or experiences? “You have to deal with that information coming in and you have to be nimble in deciding what to do. Businesses have to be more flexible with employees than they used to be to retain valuable employees,” says Downs who advises global companies. Whether you like it or not, she believes, to remain competitive, you cannot ignore the constantly evolving change in the employment culture and employee compensation and benefits.
“Instead of trying to ignore the changing employment culture, companies are better served to embrace it and try to figure out how we can make it a win for everyone,” says Downs.
While Downs is centrally involved with retention of talent, Chris Engels, of the Brussels boutique law firm Claeys & Engels, is primarily preoccupied with the legal rights of those who lose their jobs in mergers and restructurings. Engels, a specialist in European Union law on the transfers of undertakings through the Acquired Rights Directive, as this applies in Belgium, believes that corporate divestitures and closures will continue even as the economy picks up.
“I think that is going to be a trend for the future, that the economic revival and closure of companies – and collective dismissals are all going to happen at the same time,” says Engels who has also taught European employment law at the University of Leuven, where he himself studied, for 30 years.
The reason ranges from protection of profit margins to finding the finance to expand and modernise, particularly for companies which have had “too nice a life in the past” and postponed radical change.
Another trend is that clients now expect instant and accurate legal advice in response to WhatsApp requests in the concise language of social media. Engels also notes clients increasingly want to deal mainly with experienced lawyers rather than juniors and only on the more challenging issues. In a way that wouldn’t have happened 20 years ago, simpler matters are being handled in-house or even looked up on Google.
Clients seek his judgment, for instance, on central issues such as how to lawfully avoid the Directive, or if that is not possible, how to apply it. Engels says he bases that judgment on the thousands of cases he has read but admits he is surely “going to have forgotten a few – which is not going to be the case for the computer. The computer never forgets.”
He has no fears about AI taking over completely from lawyers, but believes it is going to be part of the future. “I sometimes wonder whether, not now but sometime, smaller pieces of litigation will be replaced by some sort of automatic decision-making,” he suggests.
For European employment and immigration lawyers, one of the biggest issues over the next few years will be the effect of Brexit. It will, Engels believes, complicate everything and lawyers will have to almost start from scratch to understand the implications of whatever form the EU’s new relationship with the UK turns out to be.
“I think it’s going to complicate things for businesses in the UK more than the other way around,” says Engels.
If Brexit creates uncertainty for Engels then the arrival of President Donald J. Trump in the US increases complexity for another Ius Laboris partner, Jorge De Presno Arizpe in Mexico City. Jorge, who specialises in labour and employment issues as well as immigration, acknowledges that Trump has introduced uncertainty into Mexican labour and employment polices but points out that some of the uncertainty and change had already begun under President Obama.
As President Trump pushes protectionism, Jorge observes that “Mexico is an open society and an open economy now and hopefully will remain so.”
Apart from geo-politics Jorge, who has practised for 31 years, is interested in the shareholder-stakeholder debate and how it is playing out in different ways on both sides of the Atlantic. His grandfather came from Spain to Mexico and set up a denim jeans factory and always said the employees were most important because they will ultimately become the company’s customers. “He was a very socially inclined, not socialist-inclined employer, so although I always defend my client I also look for good deals for employees and unions so they can all make a living,” says Jorge who has been involved in a number of high-profile strikes.
Outside California and New York he believes “the Americans are still stuck with very strict and very protective labour legislation towards employers,” Jorge adds. His approach is to try and ensure clients are not just clients but business partners as well although “not all of them get it” – that there should be social motives beyond profit.
The lawyer believes that what he sees as European social values are increasingly spreading to the Americas “not because the Americans want it but because they need it.” Staff turnover ratios in the multi-nationals have increased, certainly in the middle and upper ranks, although the trend does not affect Mexican organisations to the same extent, because of residual “mother-taught principles” of loyalty and social purpose.
Jorge De Presno Arizpe, of Basham, Ringe y Correa, says he does not try to impose his way of thinking when advising multi-nationals as long as they do not contravene Mexican policies.
“Stockholders or investors deserve a great return on their investment but if they don’t focus on their stakeholder clients, customers, service providers, suppliers then you are going to have a limited way of doing business and a limited return,” he says. His grandfather, the blue jean manufacturer, would surely approve of such an approach.
In London, James Davies of Lewis Silkin expresses fascination at the extent to which the companies he advises are having to adapt to a rapidly changing world – not just Brexit and Trump but technology, globalisation and something that preoccupies him greatly in his professional life – demographic change.
“To have transparent decision-making, you need trust and openness”
At one end of the age spectrum, the pace of increasing life expectancy is slowing down and the era of wealth generation through inflationary house price rises is over, Davies believes.
Combined with the abolition of the mandatory retirement age and pressure on pensions, this means that “people are forced to work longer whether they want to or not” because they can’t afford to retire.
At the other end of the age spectrum the millennials, and generation Z which follow, really are different in their expectations, and employers have to adapt to attract, retain and get the best from the new workforce. Nowadays the employer brand is critical for both employees and consumers. As a result of social media, millennials see the organisation’s products and services as an extension of their personal brand and how they “market themselves amongst their friends and associates.”
They want to work for organisations that fit their personal brand and, as a result, the employer has to behave differently on everything from pay and gender equality to diversity.
Lewis Silkin lawyers are increasingly advising clients on how to tackle historic harassment cases and prevent anything like it happening in the future because of the instant reputational damage that would result.
These millennials want “a career development opportunity” rather than a mere job and also want to be able to balance parental responsibilities with work in a way that did not happen in the past.
Davies sees it as more a philosophy than a change of managerial structures but if you want to focus on encouraging personal creativity and developing a diverse and inclusive workforce appropriate reward incentives are vital.
Davies is concerned about tick-boxing culture and what he regards as an over-reliance on data applied to characteristics that cannot be easily measured. “To have transparent decision-making, you need trust and openness and that is more challenging if you are exercising judgment rather than falling back on data, which is often poor at measuring what you are trying to measure,” Davies concludes.