Carefully Consider Your Hiring Practices

In my experience working with small businesses, particularly those without a trained HR professional on staff, I have seen many instances of illegal hiring practices.  In most cases, the problems are not necessarily intentional, but rather due to a lack of employer knowledge of the right way (legal) and wrong way (illegal) to conduct a candidate search and an interview. 

While this issue may seem to be minor within the scope of all the things a small business owner has to worry about, I assure you, the consequences can be substantial.  Consider the case of a Sonic franchisee who refused to hire a person with a speech impediment; that franchisee is currently facing Federal charges which can result in major financial penalties – read about the case HERE.

The following are links to some articles that will provide you with information to help you effectively prepare to conduct an effective, legal interview that will result in hiring the best candidate for your company:

Questions Not to Ask

Laws to Know Before Hiring

Tips on Hiring an Effective Manager

In these economic times where any employer who is actually hiring essentially has their pick from hundreds – or even thousands of candidates, that doesn’t mean that candidates should be treated any less respectfully than before.  Nor does it mean that companies can afford to be lax in the implementation of their hiring policies and procedures.  Make certain your company is protected, learn the legal guidelines and insure that those involved in hiring at your company follow them to the letter.

Financial Impact of Layoffs on a Small Business

With all the downsizing and layoffs in the last year or so, I’ve started to think alot about the effects on small businesses who have been forced to layoff employees.  While these layoffs are typically not as publicly known, in many ways they can have a much higher level of impact. 

The first impact that might be felt is that of the U.S. economy overall from the collective small business layoffs since small businesses are  responsible for between 70% and 80% of U.S. jobs.  With small businesses being at the forefront of the banking trauma going on in recent months, its a safe assumption that they’re having to layoff employees in substantially higher percentages than their larger counterparts.

The second impact, is the effect on each individual small business.  I often wonder if the small business owner really analyzes the big-picture effect of an employee layoff from a financial standpoint prior to making the decision, or do they just think about the actual cash outlay for payroll?  A recent article I read in the Effortless HR Blog lays this analysis out in a very logical, easy-to-understand methodology.  You can read the article by clicking HERE.

After reviewing the article, I challenge all small business owners who are considering a layoff to do some additional analysis before making your final decision.  Make sure you’re thinking thru the additional tasks you will personally have to take on that may prevent you from making sales, which in turn could have an even more adverse affect your firm.

Why Your Firm Needs an HR Professional

One of the questions I am often asked by small business owners is, “I only have one employee, why do I need to worry about human resources issues?”  While I can certainly understand the question – particularly if they don’t have a clear understanding of human resources, I find myself surprised that I get this same question from small businesses that are much larger than a one person firm.  In my career I have worked for (as an employee) and with (as a consultant) a significant number of small businesses that have had several hundred employees and still did not believe they had a need for a staff to perform HR functions (or even a person!).  As many times as I’ve experienced it, I’m still surprised.

However, given that experience, I thought it would be a good topic to broach as today’s blog post as I think it may launch some good discussion.  So here’s my statement of opinion, even if you have only one employee, you need to have an understanding of human resources issues.  And, if you have more than five employees, your understanding of HR and the type of HR program you put in place need to be substantially more comprehensive.  My justification follows.

Even if you are among the smallest of small business owners, you are still going to find yourself dealing with human resources related issues (even if you didn’t understand before today that those issues were human resources issues).  Some of the areas I’m thinking of would include:

·         Finding employees as you need them, and hiring the best ones that you possibly can

·         Once you’ve hired the best person, what programs and policies do you need to put in place to make sure that you can keep them

·         Training programs to help new employees learn company policies & procedures, as well as their new job responsibilities

·         Pay rates – are you paying them too much or not enough; are there any issues with a person being more than another person doing the same work though they have less experience; is there any chance they’ll train with you and then move to your competition because you don’t pay them enough?

·         Non-compete agreements.  While obviously drawn up by your legal advisor, it’s a human resource responsibility to insure that all new employees have signed them and that this information is tracked in their file.

·         Also, company key, equipment, credit cards, etc. – these need to be tracked and monitored  by employee to insure that your company is protected

·         Benefits – even if your only benefit is a paid holiday, there is still tracking that needs to be done; and if your company benefits are more extensive there is vendor identification, bidding, and management; as well as government reporting, tracking by employee and many other tasks associated with benefits.  Also, are your benefits meeting the legal minimum limits required in your state?  Are they competitive enough to help you recruit the employees you need?

·         Payroll – I know that most small businesses think this can be handled by the bookkeeper, however, there are a great many legalities involved at the state and local level with regard to employee payroll administration, time tracking, records management, etc.  If not handled properly, this issue alone can put your company in serious jeopardy!

·         How do you counsel an employee if they are having trouble with a co-worker

·         How do you counsel an employee if they are having performance issues

·         Terminating employees who are not performing or who have broken a company policy (and by the way, development of those policies is another HR issue)

·         Annual performance evaluations that need to be done on every employee

·         Worker’s compensation – are you paying the correct rate?  How do you handle it if someone gets injured at your place of employment or on a jobsite?  Do you know what the procedures are and how it will affect your company?

·         Do you have an employee handbook so that everyone knows the rules and understands them clearly?  If not, this leaves your company vulnerable if an ex-employee decides he or she has cause to sue you.

·         Do you have job descriptions for every position – and performance standards?

Convinced yet?  This is by no means a comprehensive list, but I believe it will give you some perspective on why the average small business owner shouldn’t be trying to handle human resource issues without the assistance of professionally-trained HR staff member or similar resource.

Remember, the right staff can help you build your company to a great deal of success – or they can contribute significantly to its downfall.  As a small business owner, you have enough on your plate with the many hats you are already wearing.  Therefore, it’s not in your firm’s best interest for you to manage the details of human resources legalities and such for which you have no training.  Just as you need a professional skill level in an attorney and an accountant, I would recommend if you still believe that your firm is too small to have a full-time HR need, then you should hire at minimum a part-time staff member or outsource the work to a consulting firm who specializes in such issues.  Either option will give you the benefit of the expertise you need while still keeping your costs as low as possible.

If this article has caused you to re-think the way you are handling your firm’s human resources issues, please feel free to contact us to schedule a free consultation with one of our HR associates to discuss your areas of concern and how we may be able to assist you so you can go back to doing what you do best – increasing the profitability of your company!

Steps to Downsizing with an Outplacement Program

Though it may not have occurred to you if your firm is currently experiencing difficult circumstances, making use of an outplacement service can help to strengthen the relationship between your firm and its departing employees.  In spite of the fact that economic or other circumstances may have required that you ask an employee or group of employees to leave your firm, you can show your understanding of the difficult transition they’re about to undertake, and at the same time you can thank them for their previous service to your company.  This can be accomplished by providing outplacement services to ensure they are provided with the tools to move on to the next phase of their careers as quickly as possible.

Historically when most companies downsize, they send employees off with a severance package and little else.  However, companies that want to do right by their former employees enlist the aid of an outplacement firm to help displaced employees transition quickly into new jobs, or advise them on alternate career paths that can lead them to exciting new opportunities.  

And as beneficial as this service may be for the employees, surprising to most employers, it’s also good for the company.  Benefits provided to the firm from an outplacement program can include public enhancement of the company’s image, aiding the company in its reorganization efforts, and reducing the risk of legal liability from downsized employees or government entities who decide that the company did not act in good faith in its downsizing process.

If your company is in a position where it is considering a layoff, I encourage you to consider the following action steps as you finalize your plans.

Action Steps

Hire an outplacement service company or consultant – Outplacement firms assist not only in helping employees transition out of the company, but also in helping the company understand the legal issues regarding employee termination. Outplacement firms provide career coaches that work one-on-one with employees by helping them to update their resumes, assess their strengths and weaknesses, and prepare for new career opportunities.  If you’re undertaking a company-wide layoff, outplacement firms can handle the transition process for a single employee, for dozens or even hundreds of employees. And due to their experience, such companies know the type of services and support that former employees need most during this time, as well as ways to make the layoff process easier for both employer and employee.

Make an alumni program part of your outplacement strategy  – Though circumstances may require you to lay off employees in your current situation, you may find your firm needing to rehire them if the company’s financial state improves, the economic climate changes, or if new positions open up for which their skills (and existing company knowledge) would be transferable.   Adding an alumni program to your planned outplacement services allows you stay connected to valued former employees while also providing them with a way to stay in touch with colleagues and friends for support during their transition and beyond.