HR : Building the Right Team

Casey Stengel said, “Finding good players is easy. Getting them to play as a team is another story.”  So building the right team does not mean necessarily the most talented, but how those talents work together and fit within your company.  There are many key factors to building a successful team but the most critical is to clearly define what skills and personalities you will need.

Hiring people with the right skills and experience are vital in the recruiting process.  Does the person have the necessary knowledge to perform the tasks you need them to do?  This is generally the focus of all hiring managers because quite frankly, employees need to be able to do the job.  Clearly defined job descriptions will be invaluable to define the skill set needed.

The often overlooked part of the recruiting process is the personality needed for a
position and, of more importance, the company.  Employees define the company just as much as the service or product you provide.  So hiring individuals who reflect the
company philosophy is just as important as skill level.  Employees should also believe in the company as wellbecause they are likely to be more productive than those not
vested in the business.

Human Resources has to focus on the aptitude and attitude when hiring to build the right team.  Companies get focused more on “can the person do the work” as opposed to will the person do the work.  This tends to be the reason for employee turnover and lack of
productivity.  The three things to focus on are can they do the job, will they do the job and will they fit within the company.

Human Resource ROI

Human Resources is generally an overlooked part of small businesses but is a critical part of the company.  Human resource functions are generally associated with hiring/firing, employee retention and compliance.  All these functions are vital to the success of a business to create a productive workforce while protecting the company from employee lawsuits, unemployment and workers’ compensation claims.

The biggest function for an HR department is recruiting and retention of employees.  Having the right workforce is critical to the success of a business.  So how do we track the ROI of this process?  Very simply, look at the effectiveness of who is hired.  Do they fit the skills of the position and the “personality” of the company?  How effective are they in their job?  How much turnover does the company have?  While recruiting the right people is the first step, retention of employees is a key to positive ROI.  As mentioned in a previous article.  Studies have shown that turnover can cost 2-3 times of the employee's salary, so a lot of money can be wasted on a bad hire.  But retention goes beyond hiring the right person.  The right person can leave the company because of other reasons such as inadequate pay, lack of benefits or not feeling engaged by the company.  These are the top reasons employees have given as reasons to part ways with their employer.  It is the Human Resources’ responsibility to be in tune with the wages and benefits that are being offered by similar companies.  HR also plays are vital role in engagement by creating effective on-boarding procedures.

Lastly, HR can protect you from various liability concerns.  Whether it be unemployment, workers’ compensation claims, lawsuits or compliance penalties, comprehensive HR guidelines and procedures can greatly limit your liability.  There are many do’s and don’ts when it comes to having employees that most small businesses are not aware of or overlook.  This can be quite costly in the long run because it opens your company to a lot of risk.  Employee handbooks, job descriptions, workers’ compensation procedures, employee reviews and warnings are just a few of the things a strong HR department can use to limit liability.

Most small businesses have a very small HR department, if any.  Having a strong HR presence within your company whether it be in-house or a consultant can be a great ROI.  The old adage “you are only as good as the people who work for you” is the primary focus of Human Resources.

Minimum Wage Increase

As of December 31, 2014, minimum wage increased to $8.75 per hour.  Not only do you have to update your workplace posters, but this is yet another hurdle for businesses to deal with besides the normal challenges.  Over the past few years, businesses had to find a way to stay afloat because of rising fuel costs and everyone’s favorite Obamacare. 

Does the increase in minimum wage really help businesses?  We all know that there is a certain “cap” you can pay an employee because you cannot recoup the costs on the service or goods you provide.  We have seen in some areas like fast food (generally the highest area of minimum wage workers) increase pricing from 30-75% in the last 10 years.  Are you really going to pay $10 for a Happy Meal?  The problem with increasing minimum wage is it creates more problems than it fixes.  Liberals wonder why we are outsourcing jobs to China and here is the answer.  Average wage in China is the equivalent of $1.36 per hour according to the Bureau of Labor Statistics.  This creates an uneven playing field because US companies have to build in that additional cost.

Employee morale and motivation has also been impacted by the minimum wage increase.  Employees who make $10 an hour now see the difference between their salary and minimum wage shrink.  So what is going to motivate them to do better and be more productive since there is no benefit to those who contribute the minimum effort for minimum pay?  Good employers will not keep employees at minimum wage if they are contributing more than the minimal amount of work.  The minimum wage increase has taken the power out of employers' hands to reward employees who go above and beyond.

The country was built on the sweat and tears of small businesses but this seems to be lost on our elected officials.  Obamacare, unregulated energy costs, unemployment, workers compensation and minimum wage increase has contributed to the downfall of small business and the American economy.  Made in the USA should be an everyday focus not a Patriotic notion on July 4th, Memorial Day and September 11th.  Minimum wage for minimum effort, you want to make more be more of an asset to your company.

Orientation & Onboarding - Setting the Tone for New Employees

Orientation and Onboarding are key components for setting the tone for new employees.  Well-constructed programs can reduce turnover and create a positive company culture.  Each employee should be provided with same orientation and onboarding process with the exception of work responsibilities for different positions.

Orientation is the initial process to provide details on the expectations of the employee, details of their position and company policies and procedures.  A staff member will go over things such as employee handbook information, tour of facility and introduce employee to other staff.  While many orientation programs fall heavily on company identity, studies show that orientation programs that focus on the individual are more successful.  Orientation should focus on how the employee contributes and fits into the overall focus of the company.  The employee should know they are a valued member of the team as opposed to an employee in the company.

Onboarding is the process where employees on acquire the necessary knowledge, skills and behavior expected as part of their position.  Companies may use job shadowing, manuals, lectures, videos, computer-based learning for onboarding employees.  Research shows onboarding processes that focus on personal attention create more efficiency and productivity.  Some skilled positions may require more hands-on training than others.  Onboarding process should not only be for new hires but are effective for an employee who switches positions within the company.

Orientation and Onboarding programs should be well-defined and followed with each new hire.  Employees are more productive and dedicated if they feel a part of a company rather just an employee. 

Employee Handbooks

"Was it in your Employee Handbook?"  For those of us who have been part of unemployment hearings, we have heard this phrase many times.   When the answer is "no", the case is generally closed.  While Employee Handbooks can help you against unemployment claims, it is much more than that and vital to your organization.

Employee Handbooks are an important communication tool between you and your employees.  Every employee receives the same information so handbooks should be well thought out and contain all aspects of the employer/employee relationship.  It sets the tone for the employee's future with your company by providing information, expectations and guidelines for all of your employees.

Employee Handbooks should include Company History / Mission Statement, Compensation & Benefits, Job Descriptions, Employee Conduct Policies, Workers Compensation Policies, Time & Attendance Policies and Human Resource Laws (i.e. EOE & FMLA).  Handbooks should also include pertinent company information, industry information and other state regulations and guidelines.

Because an employee handbook sets the tone for your employee, it should not be a cookie-cutter type document.  While it will have need for "legal-speak" in some areas, your tone for your handbook should be positive and in plain terms.  It should engage your employees as an overall part of the working relationship.  The handbook should just be one part of your company's "engagement" with your employees.

Employee Handbooks have to be distributed and understood by all employees.  Companies should review the material with each employee to make sure they are aware of all policies and understand them.  Once the handbook is put in place, all things contained in it must be adhered to by every employee for it to have any significance.

Employee Retention

Employee turnover can be very costly for a company both in direct and indirect costs.  Most companies will only take into consideration direct costs such as recruiting, interviewing and training of new employees.  The training cost generally is initial training, but does not include training up to the level of the person being replaced.  Many companies do not also consider the indirect costs of opportunity and morale.  Opportunity costs are lost business based on staff shortages to handle business or lost connection/rapport with a client due to the relationship with the former employee.  Morale can suffer due to the added workload to current staff, as well as, relationships built with the former employee.

Due to the high cost of turnover, companies must focus on employee retention and measure employee satisfaction.  Employee retention and satisfaction start as the first contact with that employee.  Professional recruiting and interviewing processes set the tone for the employee.  Orientation and on-boarding are very important to lay the foundation of their time with your company.  It will set the expectations and vision of the company.  It will help the employee to “buy in” as a member of the team.  Also with the increasing cost of benefits, companies must be creative in recognizing employees.  While recent studies show pay as the most important aspect of job satisfaction, opportunities to use their skills and their relationship with their supervisor, rank a close second.  Also in the Top 5, is communication between employees and management.

Communication and rapport with employees is vastly less expensive than replacing them.